STATE OF MINNESOTA

IN COURT OF APPEALS

A05-388

Thomas J. Archer, et al.,
Respondents,

vs.

All American Builders of Rice Lake, Inc.,
Appellant.

Filed January 10, 2006

Affirmed

Minge, Judge

St. Louis County District Court

File No. C3-03-601544

Robin C. Merritt, Hanft Fride, A Professional Association, 1000 U.S. Bank Place, 130 West Superior Street, Duluth, MN 55802-2094 (for respondents)

William D. Paul, 1217 East First Street, Duluth, MN 55805 (for appellant)

Considered and decided by Willis, Presiding Judge; Minge, Judge; and Worke, Judge.

U N P U B L I S H E D O P I N I O N

MINGE, Judge

Appellant challenges the judgment holding it liable for damages for breach of a construction contract and for slander of title and relieving respondents of liability for additional payments. Appellant claims that the special jury verdict determination of accord and satisfaction precludes its liability for damages, that the district court’s refusal to permit certain live testimony was an abuse of discretion, and that the record does not support the award of damages for slander of title. Respondent filed a notice of review, claiming that the damages for slander of title were inadequate. Because the accord and satisfaction did not extend to appellant’s obligations, because the court did not abuse its discretion in excluding certain live testimony, because appellant did not challenge the adequacy of evidence of damages for slander of title at the district court level, and because the district court’s calculation of attorney fees for the slander-of-title claim was not clearly erroneous, we affirm.

FACTS

Appellant All American Builders of Rice Lake, Inc. (“All American”) contracted to construct a building for respondents Thomas J. Archer and TJA, Inc. (“Archer”). Archer claims that All American did not complete the building in a workmanlike manner, citing problems such as inadequate drainage, lack of handicap access, lack of control joints in the concrete floor, and lack of dedicated computer outlets. After most of the work on the building was completed, a “punch list” meeting was held to discuss Archer’s contentions. Following the meeting, Archer sent a letter and a check for $10,000 to Lloyd Grindahl, as the then-president and owner of All American. The letter states,

Enclosed you will find a check in the amount of ten thousand dollars (10,000). Consider this payment in full. I will take care of Ken Johnston when he finishes the masonry work. Although there are issues with the building that remain unresolved and incomplete, you have told me that you are finished with the building. So, I’ll take your word for it, you are done!

As a matter of fact Lloyd, I do not want you on the property. You have clearly demonstrated a severe lack of professionalism and courtesy toward me, the customer. Your company’s ability to do this job was overrated. We will, for the rest of this buildings life, be under the curse of your mis-managed company.

. . . .

When I return to town on 3-13-02, I will begin to have estimates made for the repair work and the unfinished work needed to finish the building. When I have this information compiled, I will let your company know where I stand.

All American accepted and cashed the check. Archer testified that at the time he wrote the letter, he estimated that he still owed All American approximately $40,000, that he estimated what it would cost him to repair outstanding problems, and that he decided to pay All American $10,000. Archer further testified that the estimate of repairs did not take into account problems that he had not yet discovered and that although he did not believe he owed any additional amount to All American, he left open the possibility of All American owing him. He testified, “I had no idea at that time what I had when they got done. And that’s when I hired an architect.” Following the receipt of the letter, All American filed a mechanic’s lien.

Archer brought suit against All American for breach of the construction contract and, because of the mechanic’s lien, slander of title. All American brought a counterclaim for mechanic’s lien foreclosure, breach of contract, quantum meruit, account stated and unjust enrichment. The district court dismissed All American’s action to foreclose its mechanic’s lien.

On the first day of trial, the district court noted that Lloyd Grindahl was no longer an officer or owner of All American, was out of the state, and was unable to testify. After discussing the matter with the attorneys, the court ultimately allowed Grindahl’s deposition to be read to the jury under Minn. R. Civ. P. 32.01. When it later developed that Grindahl was in fact available to testify, the district court denied All American’s request to allow Grindahl to testify.

Based on the expected absence of another witness, Ken Johnston, his deposition was taken with the understanding that it would be read at trial. However, Johnston was available at trial, and All American requested to both read the deposition and also call him as a live witness. The district court informed the parties that Johnston could testify live or his deposition could be read, but not both. According to the district court, the litigants both agreed that Johnston’s deposition should be read to the jury.

At the close of testimony, the district court discussed the jury instructions and special verdict form with the parties. The special verdict form asked six questions: First, did All American breach its contract with Archer? If the jury answered “yes,” it was instructed to answer question two: what amount of money will compensate Archer? Question three asked if there was an accord and satisfaction between Archer and All American. If the jury answered “no,” it was instructed to answer question four: did Archer breach its contract with All American? The jury was instructed to answer question five, on the amount of money it would take to compensate All American, only if it answered “yes” to question four. Finally, question six asked if All American committed slander of title. In the court’s instruction on slander of title, the court described the elements of slander of title, including a false statement, publication, and intent, but it did not mention the requirement of special damages. On the issue of damages from slander of title, the court told the parties, “And if they do answer the question on slander of title yes, then it’s going to have to be the Court’s determination if there are any damages that flow from that.” The district court asked if the parties wanted anything changed on the special verdict form, and they indicated that they did not.

With respect to questions one and two, the jury found that All American breached the contract and determined damages of $41,204.36. The jury answered question three “yes,” thus finding that there was an accord and satisfaction. Accordingly, it did not answer question four – whether Archer breached the contract. Even though it had not answered “yes” to question four, the jury gratuitously answered question five regarding the amount of money necessary to compensate All American by writing the figure “0.” On question six, the jury found that there was slander of title.

The district court ordered that judgment be entered for Archer, directed Archer to submit an affidavit detailing its claim for attorney fees as special damages for the slander-of-title claim, and stayed the entry of the judgment for 30 days. All American then brought a motion before the district court for entry of judgment in its favor based on the jury’s finding of accord and satisfaction, and for judgment notwithstanding the verdict and a new trial. The district court denied All American’s motion and found that Archer was entitled to construction damages of $41,204.36 and damages in the amount of $3,477.50 for attorney fees for his slander-of-title claim. Judgment was entered, and this appeal followed.

D E C I S I O N

The first issue is whether the jury’s special verdict determination that there was an accord and satisfaction precludes All American’s liability for damages. All American argues that the jury’s unqualified finding of an accord and satisfaction bars recovery for all claims between the parties and that the district court erred in making the factual finding that the accord and satisfaction did not include Archer’s claims against All American.[1] Questions of law are reviewed de novo. Modrow v. JP Foodservice, Inc., 656 N.W.2d 389, 393 (Minn. 2003). This court will not set aside the district court’s factual findings unless they are clearly erroneous. Minn. R. Civ. P. 52.01.

The theory of accord and satisfaction is that a debtor offers some performance in place of the original debt and the creditor accepts the performance. Webb Bus. Promotions, Inc. v. Am. Elecs. & Entm’t Corp., 617 N.W.2d 67, 72 (Minn. 2000); see Minn. Stat. § 336.3-311 (2004). The elements of an enforceable accord and satisfaction are that

(1) the party, in good faith, tendered an instrument to the claimant as full satisfaction of the claim; (2) the instrument or an accompanying written communication contained a conspicuous statement to the effect that the instrument was tendered as full satisfaction of the claim; (3) the amount of the claim was unliquidated or subject to a bona fide dispute; and (4) the claimant obtained payment of the instrument.

Webb, 617 N.W.2d at 73.

In Action Instruments Co. v. Hi-G, Inc., this court held “that an accord and satisfaction is only concluded as to those matters actually included therein.” 359 N.W.2d 664, 666 (Minn. App. 1984) (citing Held v. Keller, 135 Minn. 192, 160 N.W. 487 (1916)). This court went on to conclude that, based on the language in the parties’ document, there was an issue of material fact as to what was included in the accord and satisfaction. Id. Thus, Action stands for the rule that an accord and satisfaction does not necessarily include all claims between the parties. We conclude that the scope of the accord and satisfaction is a factual question. See id. (noting that certain testimony “raised[d] an issue of material fact as to what was included in the accord and satisfaction”).

Archer claimed that he reserved some claims from the accord and satisfaction by stating that he would investigate further into the problems with the building and then inform All American of his position. All American asserts that if the issue was factual, it should have been submitted to the jury on the special verdict form and that failure to do so was reversible error. Minn. R. Civ. P. 49.01(a) explains the procedure to be used when a factual issue is raised by the evidence but not submitted to the jury on the special verdict form:

If . . . the court omits any issue of fact raised by the pleadings or by the evidence, each party waives the right to a trial by jury of the issue so omitted unless before the jury retires the party demands its submission to the jury. As to an issue omitted without such demand, the court may make a finding; or, if it fails to do so, it shall be deemed to have made a finding in accord with the judgment on the special verdict.

See Cornfeldt v. Tongen, 295 N.W.2d 638, 640 (Minn. 1980); Murray v. Walter, 269 N.W.2d 47, 50-51 (Minn. 1978).

Here, both parties agreed to the special verdict form and All American did not question the failure of the district court to submit the scope of the accord and satisfaction to the jury until after the district court issued its first order for judgment. Because the issue of the scope of the accord and satisfaction was not submitted to the jury on the special verdict form, the district court was permitted to make a factual finding after the jury verdict. Minn. R. Civ. P. 49.01(a). While the district court did not explicitly find that the accord and satisfaction excluded Archer’s claims, such a finding is implicit in the court’s decision.[2] Under the rules, even if the district court did not explicitly make this factual finding, the district court is “deemed to have made a finding in accord with [its] judgment on the special verdict.” Id. The text of the letter and Archer’s testimony support this conclusion. We conclude that the district court’s deemed finding was not clearly erroneous.

II.

The second issue is whether All American should have been permitted to present the live testimony of Lloyd Grindahl and Ken Johnston. Minn. R. Evid. 403 permits the exclusion of relevant evidence when “its probative value is substantially outweighed by the danger of unfair prejudice, confusion of the issues, or misleading the jury, or by considerations of undue delay, waste of time, or needless presentation of cumulative evidence.” A district court’s decision under this rule will only be reversed for a clear abuse of discretion. Myers v. Hearth Techs., Inc., 621 N.W.2d 787, 791 (Minn. App. 2001), review denied (Minn. Mar. 13, 2001). Also, even if the district court’s decision was an abuse of discretion, a new trial is warranted only if All American can demonstrate it was prejudiced by the decision. Green v. City of Coon Rapids, 485 N.W.2d 712, 717 (Minn. App. 1992), review denied (Minn. June 30, 1992).

Here, both witnesses’ depositions were read to the jury, and the district court did not permit their live testimony, reasoning that allowing live testimony would give the witnesses an unfair opportunity to respond to their deposition testimony and give undue weight to the witnesses’ testimony. Further, the district court indicated that it would permit Johnston’s live or deposition testimony, but not both, and All American then agreed to the use of the deposition testimony. We conclude that the exclusion of live testimony from Grindahl and Johnston was not an abuse of discretion. Further, All American has not demonstrated prejudice from the decision. Thus, a new trial on the basis of these evidentiary rulings is not warranted.

III.

The third issue addresses Archer’s slander-of-title claim. All American claims that no damages should have been awarded because Archer did not prove special damages at trial and because the jury did not determine the damages. The district court denied All American’s motion for judgment notwithstanding the verdict, noting that the parties agreed to let the district court determine the amount of attorney fees at a later date. This court reviews a district court’s denial of a motion for judgment notwithstanding the verdict de novo, but will affirm if the jury’s verdict can be sustained by a reasonable theory based on the evidence. Thompson v. Hughart, 664 N.W.2d 372, 376 (Minn. App. 2003), review denied (Minn. Sept. 16, 2003).

To prevail on a claim for slander of title, a party has to show “pecuniary loss in the form of special damages.” Paidar v. Hughes, 615 N.W.2d 276, 280 (Minn. 2000). Attorney fees can fulfill this requirement. Id. at 280-81. Because attorney fees are recoverable special damages, we reject All American’s contention that no special damages existed.

With respect to the role of the jury, Archer argued in his trial brief that the jury should determine the elements of slander of title, but that the district court should determine the amount of attorney fee damages. All American and the district court apparently agreed, because the issue of damages on the slander-of-title claim was not submitted to the jury. The district court indicated to both of the attorneys during the trial and in its first order for judgment that the court would decide the amount of attorney fees later. Because All American did not object to this procedure at the district court level, this court will not consider All American’s argument. See Thiele v. Stich, 425 N.W.2d 580, 582 (Minn. 1988).

The other slander-of-title issue is whether the amount of damages is adequate. Archer claims in his appeal that the amount of attorney fees determined by the district court was inadequate. “[T]he reasonable value of attorneys’ fees is a question of fact,” and will not be disturbed unless clearly erroneous. Amerman v. Lakeland Dev. Corp., 295 Minn. 536, 537, 203 N.W.2d 400, 400-01 (1973).

In Paidar, the court held “that reasonable attorney fees that are a direct consequence of an action to quiet title that results from slander of title constitute special damages.” 615 N.W.2d at 278. This court has recognized that when the claims in a suit “involve a common core of facts or will be based on related legal theories,” the district court should not attempt to distinguish between the claims when awarding attorney fees because “[m]uch of counsel’s time will be devoted generally to the litigation as a whole.” Musicland Group, Inc. v. Ceridian Corp., 508 N.W.2d 524, 535 (Minn. App. 1993) (quoting Hensley v. Eckerhart, 461 U.S. 424, 435, 103 S. Ct. 1933, 1940 (1983)), review denied (Minn. Jan. 27, 1994). On the other hand, we have recognized that when litigation includes several claims, the district court may divide total time spent by counsel and allocate a portion of the fees to a single successful claim. Scott v. Forest Lake Chrysler-Plymouth-Dodge, 668 N.W.2d 45, 50 (Minn. App. 2003).

Here, the district court determined that the attorney fees caused by All American’s slander of title included those incurred in bringing the summary judgment motion on All American’s foreclosure-of-mechanic’s-lien claim and those incurred during the trial testimony showing the mechanic’s lien was wrongfully asserted. The district court did not include discovery, drafting pleadings, and other pretrial preparation in its calculation of attorney fees. It concluded that the mechanic’s-lien/slander-of-title claims were self-contained and incidental to the rest of the litigation. The record supports the district court’s calculation of attorney fees. The mechanic’s lien foreclosure was dismissed early in the proceeding by summary judgment. Neither the foreclosure nor the slander-of-title claim was at issue in the trial. We conclude that, because the district court could distinguish the slander-of-title claim from Archer’s other claims, its calculation of attorney fees was not clearly erroneous.

Affirmed.

[1] At oral argument before this court All American agreed that an accord and satisfaction can be partial.

[2] The fact that the district court adhered to its judgment after All American’s post trial motion is strong evidence that the district court found that the accord and satisfaction did exclude Archer’s claims.