may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (1998).
STATE OF MINNESOTA
IN COURT OF APPEALS
Glen Conrad, d/b/a Edgeworks,
Clark Memorial United Church of Christ,
Filed March 16, 1999
Affirmed in part, reversed in part, and remanded
Concurring specially, Harten, Judge
Dakota County District Court
File No. C9-97-7692
Robert D. Butterbrodt, 155 South Wabasha Street, Suite 103, St. Paul, MN 55107 (for respondent)
Considered and decided by Randall, Presiding Judge, Harten, Judge, and Shumaker, Judge.
After a nonjury trial, the district court found that respondent had entered into contracts with appellant and had breached those contracts, but that appellant failed to prove damages. The court awarded costs to respondent as the prevailing party. We affirm in part, reverse in part, and remand.
Appellant submitted two written proposals. One was for exterior painting for a price of $20,890 and the other for interior painting at a cost of $13,625. Each proposal required a downpayment upon acceptance.
The church member discussed the proposals with a committee designated by respondent to locate and evaluate contractors. He then modified the exterior work proposal by changing the price to $20,200 and adding an instruction to appellant: "Glen, Change Contract or Initial." On the proposal for interior painting, the church member wrote, "Glen - Hang Onto This - year - 1998." Respondent's "Finance Chair" signed both proposals as modified and the church member returned them to appellant, who initialed the price change for the exterior job. At this point, appellant assumed that he had contracts for both jobs.
Thereafter the church member asked appellant to provide a performance bond. When appellant indicated that he did not think he could do so, the church member asked him to modify the payment schedules. Appellant agreed to do so and to provide a "clean copy" of the agreement. Appellant sent a "clean copy" of the document relating to the exterior work. It showed the price modification and a new payment schedule.
By mid-January, 1997, appellant had received no deposit check and he called the church member, who replied that he would look into the matter and get a check to appellant. Having received no check, appellant called again just prior to Valentine's Day. The church member assured him that he would look into the matter and that appellant should not worry about it. On February 17, 1997, the church member told appellant that respondent had decided not to have him do the work.
Ultimately, appellant sued respondent for damages for breach of contract. After a nonjury trial, the district court found that the parties had entered valid and binding contracts for both jobs, and that respondent breached those contracts, but that appellant failed to prove damages.
At trial, appellant presented evidence of the agreed contract prices and of the costs of his performance. He contended that the difference between contract price and performance cost constituted recoverable damages as lost profits. Specifically, he presented evidence as to profit losses of $15,683.13 on the exterior contract and $12,108.65 on the interior contract.
The district court ruled that appellant's damages were "conjectural and uncertain." The court stated:
No evidence was presented at trial about the reasonableness of his profit margin. Plaintiff claims that his profit margin on the exterior of the church is 78% while his profit margin on the interior of the church is 89%. There was no evidence adduced at trial as to his past performance or future success. Also, plaintiff testified that he was able to schedule other work and actually fill his schedule in advance of the date he had arranged to paint the church. He argues he could have done this work and Clark Memorial.
The district court also awarded costs and disbursements to respondent as the prevailing party.
Appellant made no motion for amended findings or a new trial, but appealed from the judgment alleging as error the district court's failure to find damages. Respondent requested review of the court's finding that the parties formed binding contracts.
Existence of Contracts
The district court found that appellant's proposals were bids to do clearly specified work for expressly stated prices. Respondent received the bids and clearly modified them, changing the price of one and the time for performance of the other. In doing this, respondent made counteroffers. The district court found that appellant manifested his acceptance of the counteroffers by signing the proposals, providing respondent with a "clean copy," and communicating his assent to the church member with whom he had been dealing.
The existence of a contract is primarily a question of fact to be determined by the trier of fact based on the evidence. Malmin v. Grabner, 282 Minn. 82, 86, 163 N.W.2d 39, 41 (1968). A binding contract is formed if there is an offer, an acceptance, and consideration. Cederstrand v. Lutheran Bhd., 263 Minn. 520, 529-32, 117 N.W.2d 213, 219-21 (1962). An offer must be reasonably definite in form and must be communicated. Pine River State Bank v. Mettille, 333 N.W.2d 622, 626 (Minn. 1983). Before a binding contract will result, an acceptance must assent to the exact terms of the offer. Markmann v. H.A. Bruntjen Co., 249 Minn. 281, 286, 81 N.W.2d 858, 862 (1957). If a response to an offer varies the terms of the offer, the response becomes a counteroffer, which in turn must be accepted before a binding contract will result. See Podany v. Erickson, 235 Minn. 36, 38, 49 N.W.2d 193, 194 (1951).
The district court found that the parties' writings, words and conduct constituted offers, counteroffers and acceptance of the counteroffers resulting in binding contracts. The evidence supports the court's findings and conclusions.
Respondent argues that the requirement of a downpayment in each proposal was a condition precedent to the formation of binding contracts. The district court rejected the argument. The evidence supports the proposition that the parties manifested their intent to form contracts even without contemporaneous downpayments. Appellant signed the modified proposals and prepared and delivered the "clean copy" despite not having received any downpayment. The parties negotiated a revised payment schedule which included a modification of the downpayment terms. In discussions between appellant and the church member regarding respondent's delay in making the downpayments, the church member gave assurances that there was no problem with the contracts and that checks would be issued. Thus, the evidence shows that the parties treated the downpayment as a performance term rather than a condition precedent. A condition precedent must be satisfied before a binding contract arises. See Lake Co. v. Molan, 269 Minn. 490, 498, 131 N.W.2d 734, 740 (1964). The district court did not err in finding that the parties intended the downpayments to be part of the payment terms of the contracts rather than conditions precedent to the formation of the contracts.
Finally, on the contract issue, the district court found that respondent breached its contracts by refusing to allow appellant to perform the work agreed upon. There was no error in this determination. See Wormsbecker v. Donovan Constr. Co., 247 Minn. 32, 42, 76 N.W.2d 643, 650 (1956) (where a party to an executory contract prevents performance, other party may treat contract as anticipatorily breached); Zobel & Dahl Constr. v. Crotty, 356 N.W.2d 42, 45 (Minn. 1984) (Minnesota Supreme Court decisions support a finding of breach of contract for an owner's failure to allow a contractor to complete work agreed upon).
Proof of Damages
In a breach of contract action, the damage award is intended to place the nonbreaching party in the position he would have been had the contract been performed. Johnson v. Garages, Etc., Inc., 367 N.W.2d 85, 86 (Minn. App. 1985).
The longstanding rule as to the measure of damages in the breach of contracts such as those binding on appellant and respondent is the difference between the contract price and the nonbreaching party's cost of performance. Zobel, 356 N.W.2d at 46; Glaspie v. Glassow, 28 Minn. 158, 161, 9 N.W. 669, 670 (1881). Appellant presented specific and virtually unrebutted evidence of damages of $15,683.13 and $12,108.65 on the respective contracts. The district court ruled that appellant failed to show the reasonableness of the profit margins represented by these figures, and thus failed to prove damages with certainty. The ruling was reversible error. The correct measure of damages does not include a showing of the reasonableness of profit margin. Furthermore, damages need not be proved with certainty, it being legally sufficient that a reasonable basis for approximating loss is shown. Polaris Indus. v. Plastics, Inc., 299 N.W.2d 414, 419 (Minn. 1980). Appellant testified to the costs of labor and material and included the cost of possibly hiring additional help with the projects. This evidence was not speculative.
Finally, the district court noted that appellant testified that he had scheduled other work to be performed at the same time as the church project, and ruled that appellant failed to corroborate his contention that he could have done all projects. We are aware of no rule that requires corroboration of such testimony.
Respondent argues that the appellant's failure is not one of corroboration but of mitigation of damages. Respondent contends that it is entitled to a reduction or offset in the amount that appellant earned on other jobs obtained to replace the church project. The established law in Minnesota is to the contrary:
And when the contract is entire, and the breach total, the plaintiff may recover his whole damages, present and prospective, for the loss of his contract, in a single action, and these may be established by showing the difference between the contract price and what it would have cost the plaintiff to perform.
Ennis v. Buckeye Publ'g Co., 44 Minn. 105, 106, 46 N.W. 314, 314 (1890).
Appellant's contracts with respondent were entire and the breaches were total. Appellant was entitled to receive damages according to the settled legal standard of measurement.
Costs, Disbursements and Prejudgment Interest
The prevailing party in a lawsuit is entitled to an award of reasonable costs and disbursements. Minn. Stat. § 549.04 (1998). The district court awarded costs and disbursements to respondent as the prevailing party. Because we have reversed the court's finding as to damages, appellant is now the prevailing party and is entitled to his reasonable costs and disbursements. The matter is remanded to the district court for further order respecting those items.
At trial, appellant claimed entitlement to prejudgment interest. The district court, having found in favor of respondent, did not award interest. Appellant did not include prejudgment interest in the issues for review; thus, we do not consider that issue.
Affirmed in part, reversed in part, and remanded.
HARTEN, Judge (concurring specially)
I write separately to highlight application of the mitigation of damages rule.
The court quotes the following from the district court memorandum:
No evidence was presented at trial about the reasonableness of his profit margin. Plaintiff claims that his profit margin on the exterior of the church is 78% while his profit margin on the interior of the church is 89%. There was no evidence adduced at trial as to his past performance or future success. Also, plaintiff testified that he was able to schedule other work and actually fill his schedule in advance of the date he had arranged to paint the church. He argues that he could have done this work and Clark Memorial.
Not quoted are the next sentences:
In order to do so, he would have hired more help. No evidence was presented at trial corroborating defendant's [plaintiff's] argument that he would have been able to handle all of this scheduled work plus Clark Memorial.
These last two sentences suggest to me that the district court found inadequate proof of appellant's claim that he would have been able to do all of the substituted work plus the Clark Memorial work. Apparently the district court placed the burden to prove mitigation of damages on appellant (plaintiff below). But caselaw provides that
[w]hile it is well established in Minnesota that in the case of a breach of contract the injured party must use reasonable diligence to minimize his damages, it is also well established that in the case of a breach of contract the burden of proof is upon the defendant [here respondent Clark Memorial] to show that damages were or could have been mitigated by reasonable diligence.
Lanesboro Produce & Hatchery Co. v. Forthun, 218 Minn. 377, 381, 16 N.W.2d 326, 328 (1944) (citations omitted). The doctrine of mitigation of damages remains alive and well in Minnesota. See Costello v. Johnson, 265 Minn. 204, 208, 121 N.W.2d 70, 74 (1963) (confirming Lanesboro Produce rule as well-established in Minnesota); Deutz-Allis Credit Corp. v. Jensen, 458 N.W.2d 163, 166 (Minn. App. 1990) (nonbreaching party duty-bound to use reasonable diligence to mitigate damages); Thoen v. First Nat. Bank of Moorhead, 199 Minn. 47, 52, 271 N.W. 111, 113 (1937) (party injured by breach has legal duty to minimize damages). At trial, had respondent proved appellant's failure to mitigate damages, in my opinion, that proof could have been dispositive, notwithstanding this court's reference to Ennis v. Buckeye Publ'g Co., 44 Minn. 105, 46 N.W. 314 (1890).
 I assume that the district court's reference to defendant's argument was inadvertent; the district court no doubt meant plaintiff's argument.