STATE OF MINNESOTA
IN COURT OF APPEALS
Lester's of Minnesota,
Randall Ober, et al.,
Wanda Ober, et al.,
Filed August 24, 1999
Affirmed in part, reversed in part, and remanded
McLeod County District Court
File No. C697811
Vincent J. Fahnlander, Moss & Barnett, P.A., 4800 Norwest Center, 90 South Seventh Street, Minneapolis, MN 55402-4129 (for respondent)
Steven C. Wang, Schneider Law Firm, 706 First Street South, Post Office Box 776, Willmar, MN 56201 (for appellants)
Considered and decided by Randall, Presiding Judge, Kalitowski, Judge, and Schumacher, Judge.
Appellants Randall and Debra Lynn Ober challenge the district court's grant of summary judgment in favor of respondent Lester's of Minnesota, Inc., arguing there are genuine issues of material fact in reference to respondent's alleged breach of a scheduling term in a construction contract. Appellants also contend that the district court's award of attorney fees was not authorized by the construction contract. We affirm in part, reverse in part, and remand for further proceedings.
Appellants failed to obtain financing until August 13, 1996, and did not have the site excavated until late September 1996. Construction began at that point and was completed around December 30, 1996.
Although respondent completed its portion of the construction, appellants' lender, Norwest Agricultural Credit, Inc., failed to make the final payment. To enforce the contract, respondent brought claims against appellants and Norwest. Appellants counterclaimed, alleging breach of contract. Before trial, Norwest agreed to make the $15,463.95 final payment plus interest of $2,319.59 and attorney fees and costs of $9,916.46. The settlement agreement also stated that "any claims for attorneys' fees by [respondent] in defense of the counterclaim" were not settled by the release agreement. Before the dispute was resolved, the parties stipulated that respondent incurred attorney fees of $40,450 and costs of $5,104.22.
The district court granted respondent's motion for summary judgment and dismissed appellants' counterclaim. Later, the district court granted respondent's motion for attorney fees and costs in the amount of $35,637.76. Appellants challenge the summary judgment and the award of attorney fees and costs.
Whether a contract is ambiguous is a legal determination, which this court reviews de novo. Frost-Benco Elec. Ass'n v. Minnesota Pub. Utilities Comm'n, 358 N.W.2d 639, 642 (Minn. 1984). "A writing is ambiguous if, judged by its language alone and without resort to parol evidence, it is reasonably susceptible of more than one meaning." Landwehr v. Landwehr, 380 N.W.2d 136, 138 (Minn. App. 1985) (citation omitted). When language of a contract is ambiguous, a court may examine extrinsic evidence, and construction of the contract becomes a question of fact. Trondson v. Janikula, 458 N.W.2d 679, 681-82 (Minn. 1990). A contractual term that is so vague, indefinite, and uncertain as to place the intent of the parties in the realm of speculation is void. King v. Dalton Motors, Inc., 260 Minn. 124, 126, 109 N.W.2d 51, 52 (1961).
Appellants contend that the contract's requirement that respondent's performance "Start By Mid July Completion ASAP" constituted a binding, ambiguous scheduling term. Further, appellants argue that the ambiguous scheduling term, when buttressed by the available extrinsic evidence, obligated respondent to complete construction within 30-45 days. In support of this argument, appellants assert that respondent informed them construction would take place in 30 to 45 days.
Appellants' argument is unpersuasive. Their failure to prepare the site and obtain financing clearly caused the construction of the barn to be delayed. The construction contract explicitly stated that any scheduling term was contingent upon both
timely action by the Owner to make the site available and accessible for work * * * [and] [t]he Owner furnishing evidence satisfactory to Lester's that Owner is continuously able to meet its financial obligations under this Contract.
Appellants were not given proof of financing until August 13, 1996. Additionally, appellants did not excavate the site until late September 1996 - two and one-half months after construction was scheduled to commence. Because of these delays, respondent was not able to start construction until late September 1996. See St. Paul Dredging Co. v. State, 259 Minn. 398, 406, 107 N.W.2d 717, 723 (1961) (holding that state assumed responsibility for loss caused by construction delay because state breached duty to prepare property for operations).
Even if appellants had not caused the delay, the scheduling term was unenforceable. Specifically, the portion of the contract that appellants rely on, the phrase "ASAP," is so vague that the intent of the parties cannot be determined. See Lake Minnetonka Homes, Inc. v. Sidwell, 412 N.W.2d 360, 362 (Minn. App. 1987) (stating that terms that are completely vague are unenforceable), review granted (Minn. Nov. 18, 1987) and appeal dismissed (Minn. Jan. 29, 1988).
Because the contractual term was not enforceable, the district court properly substituted the requirement that the contract be completed within a "reasonable time." Hill v. Okay Constr. Co., 312 Minn. 324, 333, 252 N.W.2d 107, 114 (1977). According to appellants, a "reasonable time" scheduling term also presents a triable issue of fact. Appellants did not argue in the district court, however, that respondent failed to complete construction in a "reasonable time." For that reason, the undisputed evidence shows that respondent's performance was completed in a reasonable time, and we affirm the district court's summary judgment dismissing appellants' counterclaim.
Because respondent was not responsible for the construction delays, we need not determine whether the damages alleged were waived by the construction contract.
2. Appellants also claim that the district court erroneously awarded respondent attorney fees and costs incurred in the defense of appellants' counterclaim. Generally, attorney fees are not recoverable absent authorization by contract or statute. Barr/Nelson, Inc. v. Tonto's, Inc., 336 N.W.2d 46, 53 (Minn. 1983). When a contract obligates a debtor to pay attorney fees incurred in an action to cure the debtor's default, and where a debtor brings a counterclaim that would reduce the amount due under the contract, the creditor is entitled to fees related to its action on the default as well as fees for defending the counterclaim. State Bank of Cokato v. Ziehwein, 510 N.W.2d 268, 270 (Minn. App. 1994), review denied (Minn. Mar. 15, 1994).
The record does not support the district court's conclusion that the entire amount of attorney fees incurred by respondent was associated with the collection of amounts due under the construction contract. After respondent completed construction, appellants authorized Norwest to make the final payment of $15,463.95. Appellants acknowledged that the final payment was due, and we therefore distinguish this case from Potter v. American Bean & Grain Corp., 388 N.W.2d 22 (Minn. App. 1986), review denied (Minn. Aug. 13, 1986). In Potter, the buyer refused to make an installment payment, alleged that the value of the purchased assets was misrepresented and claimed that it was entitled to indemnification. 388 N.W.2d at 23. If successful, appellants' counterclaim would not have reduced the amount owed under the contract. Moreover, respondent eventually collected from Norwest some of the fees incurred in its collection efforts. For that reason, we reverse the district court's award of attorney fees incurred in defense of the breach-of-contract counterclaim.
Additionally, we remand to the district court for further proceedings to determine whether respondent incurred any of the remaining attorney fees and costs totaling $35,637.76 in its original collection action. Pursuant to the construction contract, appellants are obligated to reimburse respondent for any fees incurred in its original collection action.
Because the construction contract did not authorize the award of attorney fees incurred in the defense of appellants' counterclaim, we need not determine whether the settlement agreement constituted full satisfaction of respondent's injury.
Affirmed in part, reversed in part, and remanded.