STATE OF MINNESOTA
IN COURT OF APPEALS
A.B.S. Services, Inc.,
d/b/a A.B.S. Lawn and Landscape,
Filed April 6, 1999
Hennepin County District Court
File No. 96016796
Leland S. Watson, 836 Norwest Midland Building, 401 Second Avenue South, Minneapolis, MN 55401 (for appellant)
Considered and decided by Toussaint, Chief Judge, Lansing, Judge, and Foley, Judge.*
In an appeal from summary judgment, A.B.S. Services, Inc., challenges the district court's ruling that the contractual term "extreme acts of nature" did not contemplate a period of unusually cold winter temperatures. Tandem Properties cross-appeals the district court's sua sponte dismissal of its claim for consequential damages for lost profits. Although the rulings rely to some extent on factual determinations, the parties essentially submitted the case for final resolution, and we find no reversible error in the court's procedure or determinations. We affirm.
Tandem Properties, a real estate developer, contracted with A.B.S. Services, Inc., a landscaping company, to plant and maintain a large number of trees and shrubs over a two-year period on a parcel of land known as the Big Woods Development. The contract documents included a provision requiring A.B.S. to replace any trees that died within one year of planting, but excluded from the guarantee damage resulting from "extreme acts of nature, such as tornadoes, or excess amounts of wind." A.B.S. completed planting in October 1995. In late January and early February 1996, a cold wave occurred. For six consecutive days the average low temperature was colder than 30 degrees below zero and the daytime high temperature rose above 12 degrees below zero only once. Approximately 115 trees died within one year of planting. A.B.S. refused to replace the trees, claiming that the cold weather killed the trees, that the cold weather was an extreme act of nature, and that it was therefore not responsible for their replacement. Tandem replaced the trees at a cost of $52,760.
Tandem filed suit against A.B.S., seeking restitution of the money it expended to replace the dead trees and consequential damages for lost profits due to slow sales of the lots at the Big Woods Development. The suit went to trial, a jury was empaneled, and Tandem proceeded through the presentation of its evidence. After Tandem completed its case and during the presentation of A.B.S.'s testimony, one of A.B.S.'s officers suffered a heart attack while testifying, and the court declared a mistrial.
Tandem subsequently moved for summary judgment, arguing that the contract term "extreme acts of nature" did not encompass periods of severe winter cold. In response to Tandem's motion, A.B.S. submitted the affidavit of an expert meteorologist, who testified that the cold wave of 1996 was one of the coldest ever recorded in Minnesota and constituted an extreme act of nature. A.B.S. and Tandem stipulated the term "extreme acts of nature" was not ambiguous, but argued that their interpretations of the term would lead to different results. The file contains no transcript of the motion argument, but the written submissions indicate an intent to submit the breach-of-contract issue to the court for final resolution.
The district court granted Tandem's motion, holding that the sustained cold period could not, as a matter of law, constitute an "extreme act of nature." The district court awarded Tandem $54,482.66 in damages and sua sponte dismissed as speculative Tandem's claim for consequential damages. A.B.S. and Tandem challenge the court's rulings.
Construction and effect of a contract present questions of law, unless the terms are ambiguous. Trondson v. Janikula, 458 N.W.2d 679, 681 (Minn. 1990). "Ambiguity exists when the language of a written document, by itself, is reasonably susceptible to more than one meaning." Id. (citation omitted).
Tandem and A.B.S. agree that the term "extreme acts of nature" is unambiguous. See Carl Bolander & Sons, Inc. v. United Stockyards Corp., 298 Minn. 428, 433-34, 215 N.W.2d 473, 476 (1974) (phrase "extreme depth pockets" not ambiguous). Similarly, they do not dispute that the temperatures recorded in late January and early February 1996 were among the coldest in Minnesota's history. They dispute only whether the term "extreme acts of nature" includes the cold weather conditions of 1996.
The district court determined, as a matter of law, that the term "extreme acts of nature" did not encompass a sustained period of significant cold. Based on the contract language, it found that the parties considered the likelihood of winter survival because Tandem required that A.B.S. be experienced in landscaping in Minnesota and use only native plant materials likely to survive the harsh winters. Therefore, the parties' failure to expressly reference cold weather in the warranty exemption, combined with the exemption's provision of specific examples of sudden and unforeseeable disasters "such as tornadoes and excess amounts of wind," indicated that the parties did not intend that a period of severe cold should void the warranty. Because the district court resolved the issue as a matter of law, it did not directly address expert testimony, provided through affidavit, that the temperatures were an "extreme act of nature."
Having considered the manner in which this case was submitted and having reviewed the record, we find no error in the district court's procedure or decision. Neither party indicated an intention to submit further evidence; the parties essentially submitted the question to the district court for a decision on the existing record. The district court's conclusion that the term "extreme acts of nature" did not encompass periods of unusual cold is reasonably supported on this record. See Telex Corp. v. Data Prods. Corp., 271 Minn. 288, 291-92, 135 N.W.2d 681, 685 (1965) (in construing a written agreement, the district court's determination will be sustained if the interpretation is reasonable in light of the contract language, written or extrinsic evidence, and permissible inferences).
The district court's grant of summary judgment after Tandem's presentation of its entire case was comparable to a directed verdict in favor of A.B.S. on the issue of Tandem's lost profits. See Elias v. City of St. Paul, 350 N.W.2d 442 (Minn. App. 1984) (when plaintiff's evidence requires speculation as to causation, directed verdict is appropriate), review denied (Minn. Oct. 1, 1984).
Consequential damages are fully recoverable for breach of warranty. Bemidji Sales Barn, Inc. v. Chatfield, 312 Minn. 11, 15, 250 N.W.2d 185, 188 (1977). The general rule in Minnesota is that damages in the form of lost profits may be recovered when they are shown to be the natural and probable consequences of the act or omission complained of and their amount is shown with a reasonable degree of certainty and exactness. But to be recoverable, damages must not be speculative, remote, or conjectural. Cardinal Consulting Co. v. Circo Resorts, Inc., 297 N.W.2d 260, 266 (Minn. 1980); Duchene v. Wolstan, 258 N.W.2d 601, 605-06 (Minn. 1977). Proof of future loss must be established by a preponderance of evidence. Duchene, 258 N.W.2d at 605-06.
In Cardinal, the appellants demonstrated they were experienced in their industry, their market was fertile, and other actors in the same market in the same geographic area realized profits. 297 N.W.2d at 268. The evidence supported an inference that, but for the respondent's actions, the appellants would have realized a profit. Id. Tandem similarly demonstrated that its officers were experienced in real estate development. But Tandem did not submit evidence tending to show the performance of comparable real estate developments in the area, despite the existence of at least one equivalent development nearby. Tandem established that sales in the Big Woods Development fell far short of its projections. A.B.S., however, demonstrated that sales in the Big Woods Development were well below projected levels before the dead trees were even noticeable. Unlike the appellants in Cardinal, Tandem failed to demonstrate a causal link between A.B.S.'s failure to replace the trees and the slow sale of lots at the Big Woods Development. We agree with the district court's assessment that Tandem's claim is too speculative to support an award for consequential damages, and, on this record, the district court did not err in determining that the evidence was insufficient to create a factual issue for trial. See Murphy v. Country House, Inc., 307 Minn. 344, 351-52, 240 N.W.2d 507, 512 (1976) (genuine issue must be established by evidence sufficient to avoid directed verdict at trial).
[*] Retired judge of the Minnesota Court of Appeals, serving by appointment pursuant to Minn. Const. art. VI, § 10.