may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (1996).
STATE OF MINNESOTA
IN COURT OF APPEALS
Maki-Hall Oliver, Partnership,
Heigl Mortgage and Financial Corporation,
Filed February 17, 1998
Toussaint, Chief Judge
St. Louis County District Court
File No. C395601769
William B. Butler, William B. Butler, Ltd., 4100 Multifoods Tower, 33 South Sixth Street, Minneapolis, MN 55402 (for respondent)
Jerome J. Simons, Messerli & Kramer, P.A., 1800 Fifth Street Towers, 150 South Fifth Street, Minneapolis, MN 55402 (for respondent)
Considered and decided by Randall, Presiding Judge, Toussaint, Chief Judge, and Forsberg, Judge.**
Retired judge of the Minnesota Court of Appeals, serving by appointment pursuant to Minn. Const. art. VI, § 10.
Maki-Hall Oliver Partnership brought a claim seeking enforcement of a contract and monetary damages for breach of a contract. At trial, Heigl Mortgage and Financial Corporation's motion to exclude all evidence involving discussions between Heigl and Edina Realty regarding Edina Realty leasing the vacated premises was denied. Maki-Hall asserts that this discussion constituted an admission of liability and was contrary to Heigl's position that Maki-Hall abandoned the property. The district court fashioned a jury instruction allowing each party to assert its theory of the case. The jury found that no contract existed between Maki-Hall and Heigl. The district court denied Maki-Hall's motion for JNOV or a new trial. Because the district court judge did not err in giving the jury instructions and denying Maki-Hall's motions, we affirm.
The disputed jury instructions were based on Minnesota Rule of Evidence 408, which provides:
Evidence of * * * attempting to compromise a claim which was disputed as to either validity or amount, is not admissible to prove liability for or invalidity of the claim or its amount. Evidence of conduct or statements made in compromise negotiations is likewise not admissible. * * *
Minn. R. Evid. 408.
Maki-Hall contends that the jury was incorrectly and prejudicially instructed in the law applicable to their claim. At issue is the following portion of the instructions:
You have heard evidence that Heigl and Edina Realty had discussions regarding Edina's possible lease of space formerly occupied in the Hunter Building (What has been referred to as Space A). Maki-Hall claims this is evidence that should be considered by you to be inconsistent with Heigl's claim the lease was abandoned or rescinded. Heigl claims the discussion(s) with Edina should be considered only as evidence of Maki-Hall's attempt to mitigate--or reduce--any damages it may have suffered and also only an attempt by Heigl to resolve this dispute.
Minnesota Rules of Evidence generally provide that offers of compromise or settlement are NOT admissible on the issue of liability. That is because offers of compromise may simply represent an attempt to settle a dispute and may not reflect any admission of liability. Therefore, while it is for you as the finders of fact to consider the discussions with Edina and determine whether they:
show that the parties did not abandon or rescind the January, 1994 lease for space B;
evidence Maki-Hall's attempt to reduce its damages;
are only an attempt to settle a dispute by Heigl;
or represent all or some of the above;
You should not conclude that Heigl's discussion(s) with Edina Realty, if found to be a settlement effort only, constitutes an admission that it is liable to Maki-Hall.
The district court crafted this instruction to ensure that both parties could argue their theory of the case. In its memorandum denying Maki-Hall's motion for JNOV or a new trial, the district court explained that Maki-Hall should be able to argue that the sublease discussions were an admission against interest and an admission inconsistent with Heigl's claim that the lease had been abandoned, cancelled or rescinded. The district court left "it up to the jury to determine how the evidence regarding the sublease discussions was to be construed."
Maki-Hall argues (1) that the district court should have concluded as a matter of law that the discussions did not constitute settlement negotiations within the meaning of Rule 408 and (2) that the court should have instructed the jury that the discussions constituted, as a matter of law, an admission that a lease contract existed.
The record includes correspondence between Maki-Hall and Heigl that the jury
could have construed as settlement negotiations. The first letter, dated January 23, 1995, is from Heigl's attorney to Mr. Maki and states:
I am writing you to advise you that if Edina Realty wishes to lease the space it may be in your and Heigl's interest to see such a lease entered into. Additionally, your standard lease requires mitigation and if Edina's proposal to lease the space is ignored, mitigation will not occur. Please contact me immediately to discuss Edina Realty's interest in the space formerly leased to Heigl and how this interest may be finalized in everyone's best interest.
Mr. Maki responded by a letter dated January 3, 1995 "acknowledg[ing] receipt of your letter of January 23, 1995." The second letter states:
I whole heartedly agree that it would be in my and Heigl's interest to enter a lease with Edina and I believe it is from my efforts Heigl was approached by Edina. I absolutely agree to mitigate and will encourage and allow Heigl to sublease to Edina.
The third letter, dated March 13, 1995, is from Mr. Maki to Heigl's attorney and states that "it is the opinion of Maki-Hall * * * that Heigl * * * has failed to mitigate by failing to sublet the demised premises." Heigl's attorney, Jerome Simmons, testified that he conducted negotiations with Edina Realty "to make [the] dispute go away." The sublease document required Maki-Hall's signature before it could be executed between Heigl and Edina Realty.
From this evidence, the jury could have concluded that Maki-Hall referred Edina Realty to Heigl and that Maki-Hall was aware of the subsequent discussions. Therefore, we examine the record in a light most favorable to Heigl, the prevailing party, and conclude that the evidence was sufficient to create a genuine issue of material fact regarding the nature of the discussions between the parties. See Cox v. Crown Co., 544 N.W.2d 490, 496 (Minn. App. 1996) (reviewing evidence in light most favorable to prevailing party). Because material facts were disputed, it would have been improper for the district court to make the instructions requested by Maki-Hall.
Maki-Hall argues that negotiations with a third party do not constitute an offer of compromise for purposes of Rule 408. But Maki-Hall's cited authority, Blue Circle Atlantic, Inc. v. Falcon Materials, Inc., 760 F. Supp. 516 (D. Md. 1991), is distinguishable. In Blue Circle Atlantic, the federal district court admitted interoffice memoranda not communicated to the other party, reasoning that Federal Rule of Evidence 408 "does not apply to internal memoranda unless communicated to the other side in an attempt at settlement." Id. at 522. In this case, the disputed evidence does not refer to negotiations between Heigl and Edina Realty conducted without Maki-Hall's knowledge; it includes letters exchanged between Maki-Hall and Heigl regarding those discussions. See Conroy v. Book Automation, Inc., 398 N.W.2d 657, 660 (Minn. App. 1987) (applying Rule 408 to all discussions relating to settlement, not just the offer and acceptance).
Because factual issues were disputed and the district court correctly permitted the jury to determine whether the discussions constituted settlement negotiations, the district court did not err by refusing to instruct the jury that the discussions constituted an admission of liability.