A05-877 & A05-1116

Bellboy Corporation

d/b/a Bellboy Import Corporation,

Appellant,

vs.

Richmond Limited

d/b/a Richmond Meat Packers & Exporters Limited,

Respondent.

Filed February 7, 2006

Affirmed as modified; motion denied.

Worke, Judge

Hennepin County District Court

File No. 03-12335

Daniel J. Boivin, Meshbesher & Spence, Ltd., 1616 Park Avenue, Minneapolis, MN 55404 (for appellant)

Jeffrey C. Brown, Thomas R. Johnson, Merchant & Gould, P.C., 3200 IDS Center, 80 South Eighth Street, Minneapolis, MN 55402-4131 (for respondent)

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

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

WORKE, Judge

In these consolidated appeals, appellant challenges the award of summary judgment and costs and disbursements. Appellant argues that a genuine fact issue exists as to whether respondent failed to mitigate its damages. Appellant also argues that the district court erred and abused its discretion by awarding costs and disbursements (a) without taking oral testimony or making findings as to reasonableness and necessity; (b) without verifying disbursements; (c) determined prior to taxation by the court administrator; and (d) that include the costs of computerized research. We affirm on each issue except the award of costs of computerized research.

FACTS

This appeal involves two separate commercial transactions between appellant Bellboy Corporation, a Minnesota corporation that imports meat and meat products for resale, and respondent Richmond Limited, a New Zealand-based company that produces meat products.

In February 2000, appellant ordered cartons of bull testes valued at $39,600 from respondent. Appellant sued respondent alleging that the bull testes did not meet its specifications because respondent did not remove the bull testes’ epididymis or individually wrap them. Additionally, some cartons indicated that the bull testes came from animals slaughtered prior to November 1999, and appellant had specified that the bull testes not come from animals slaughtered prior to that date.

Around October 2000, the parties entered into a contract for the sale of boneless beef. The contract required respondent to transport the beef on the ship M. Moldovanov, which was estimated to arrive on November 28, 2000. At the time appellant placed the order, it was aware of the yearly import limit on beef from New Zealand. Anticipating an untimely arrival, appellant began negotiating a new price with respondent. The M. Moldovanov arrived in the United States on November 28, 2000, as scheduled. But appellant refused to pay and, instead, continued its attempt to renegotiate. One of the reasons appellant did not pay for the beef was because of the bull-testes dispute. In the meantime, the beef import quota for the calendar year was met, and the boneless beef did not clear customs. Because appellant refused to pay, respondent incurred demurrage[1] costs of $20,378 and was forced to resell the beef in mid-January 2001 at a loss of approximately $14,454. Respondent sued appellant for, among other things, breaching the contract.

The district court consolidated the two cases, and respondent moved for summary judgment. Following a hearing, the district court granted respondent’s motion and dismissed appellant’s claims. Specifically, the district court ruled that appellant did not specify in the contract that the epididymises were to be removed or that the bull testes were to be individually wrapped. But, because appellant specified that the bull testes not come from animals slaughtered prior to November 1999, and respondent conceded that 22 cartons did not conform, respondent breached the contract in that respect. The district court also ruled that respondent had fulfilled its obligation under the boneless-beef contract and that appellant’s breach, in not accepting the beef, caused respondent to incur expenses and a loss on resale—a total of $34,832 in damages, less $1,320—the cost of the cartons of non-conforming bull testes. The district court ordered that appellant pay respondent $33,512 in damages, plus costs and disbursements.

As the prevailing party, respondent moved for an award of costs and disbursements under Minn. Stat. §§ 549.02, .04 (2004) and the cost-shifting provisions of Minn. R. Civ. P. 68. The district court awarded costs and disbursements totaling $20,591. These consolidated appeals follow.

D E C I S I O N

Summary Judgment

In reviewing a summary judgment, this court asks whether there are any genuine issues of material fact and whether the district court erred in its application of the law. State by Cooper v. French,460 N.W.2d 2, 4 (Minn. 1990). Appellant argues that a genuine issue of material fact exists as to whether respondent failed to mitigate its damages of $20,378 in demurrage costs.

Appellant does not dispute that it breached the boneless-beef contract. While it is well established in Minnesota that the injured party in a breach-of-contract case must use reasonable diligence to minimize damages, the burden of proof is on the breaching party 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). Appellant contends that respondent had a duty to avoid the high cost of demurrage and could have placed the beef in less expensive bonded commercial cold storage pending the start of the new quota year or could have attempted to negotiate the cost of demurrage down. Appellant argues that the deposition testimony of Martin Bell, appellant’s president and chief executive officer, shows that respondent could have avoided the more expensive demurrage charges by placing the beef in storage. But, Bell’s testimony is not expert testimony; rather, it is a self-serving opinion from a litigant. Additionally, Bell’s testimony that “the commercial cost of holding it in a commercial freezer, which is normally done, is exactly the same except a [$]20 to a $50 bonding bill” does not establish that respondent unreasonably paid a higher fee for demurrage than it would have paid for storage. Moreover, “the party resisting summary judgment must do more than rest on mere averments,” and this is the only evidence in the record that appellant offers alluding to mitigation of damages. DLH, Inc. v. Russ, 566 N.W.2d 60, 71 (Minn. 1997). Therefore, appellant failed to meet its burden as the breaching party to show how damages could have been mitigated.

Appellant also argues that the district court erred by granting summary judgment without considering the issue of mitigation. Under Minn. Stat. § 336.2-703 (d) (2004), “[w]here the buyer wrongfully rejects or revokes acceptance of goods or fails to make a payment . . . the aggrieved seller may resell and recover damages[.]” Under Minn. Stat. § 336.2-706 (1) (2004),

the seller may resell the goods concerned or the undelivered balance thereof. Where the resale is made in good faith and in a commercially reasonable manner the seller may recover the difference between the resale price and the contract price together with any incidental damages allowed under the provisions of this article (section 336.2-710), but less expenses saved in consequence of the buyer’s breach.

Here, the district court in addressing respondent’s mitigation of damages noted that the beef arrived on November 28, 2000—the estimated time of arrival provided for in the contract, but found that appellant refused to accept or pay for the beef. The district court surmised that appellant attempted to renegotiate the price, in part because of the dispute over the bull testes, and continued to attempt renegotiating until nearly the end of December and after the import quota had been met. As a result, respondent resold the beef in mid-January 2001 at a loss of $14,454. The district court concluded that respondent mitigated its damages by reselling the beef in a commercially reasonable manner. Further, appellant did not provide any evidence as to the amount by which respondent could have mitigated its damages by storing the beef, or establish that Bell’s testimony was that of an expert in storage and storage costs. Because there is no genuine issue of material fact when the evidence merely creates a metaphysical doubt as to a factual issue, the district court did not err in granting summary judgment in favor of respondent. See DLH, 566 N.W.2d at 71.

Costs and Disbursements

The decision to allow costs and disbursements is discretionary with the district court and will not be reversed absent an abuse of discretion. Jonsson v. Ames Constr., Inc.,409 N.W.2d 560, 563 (Minn. App. 1987), review denied (Minn. Sept. 30, 1987). “Costs and disbursements shall be allowed as provided by statute.” Minn. R. Civ. P. 54.04. Respondent moved for costs and disbursements under Minn. Stat. §§ 549.02, .04 (2004) and Minn. R. Civ. P. 68.

“In actions commenced in the district court, costs shall be allowed . . . [t]o [the] defendant [] [u]pon discontinuance or dismissal or when judgment is rendered in the defendant’s favor on the merits, $200.” Minn. Stat. § 549.02, subd. 1. Appellant does not dispute that respondent is entitled as the prevailing party to this statutory allowance.

“[T]he prevailing party . . . shall be allowed reasonable disbursements paid or incurred[.]” Minn. Stat. § 549.04, subd. 1. “The standard by which the court’s discretion is measured is whether expenditures are reasonable. Therefore, absent a specific finding that the costs were unreasonable, the court shall approve recovery of disbursements.” Jonsson, 409 N.W.2d at 563. Here, respondent was the prevailing party and has a right to recover reasonable costs and disbursements paid or incurred.

As a separate basis, respondent sought recovery under Minn. R. Civ. P. 68. For parties that offer settlement, rule 68 provides that “[i]f the judgment finally entered is not more favorable to the offeree than the offer, the offeree must pay the offeror’s costs and disbursements.” “[A]n award of costs and disbursements under the rule is not discretionary.” Imperial Developers, Inc. v. Seaboard Sur. Co., 518 N.W.2d 623, 628 (Minn. App. 1994), review denied (Minn. Aug. 24, 1994). Appellant does not dispute that respondent made two settlement offers. On November 8, 2002, respondent offered appellant $15,000. Appellant rejected that offer, demanding $50,000. On February 23, 2004, respondent offered appellant $20,000. Appellant rejected that offer, demanding $80,000. Because appellant rejected respondent’s offers and the final judgment was favorable to respondent, appellant must pay respondent’s costs and disbursements.

Appellant argues, however, that the district court abused its discretion and erred by failing to take oral testimony and by failing to make findings on the reasonableness and necessity of the costs and disbursements. Relying on Buller v. A.O. Smith Harvestone Prods., Inc., 518 N.W.2d 537 (Minn. 1994), respondent contends that a hearing is not necessary. In Buller, the court held that Minn. R. Civ. P. 54.04, on its face, does not require the district court to conduct a hearing to determine the reasonableness of the alleged costs and the district court’s detailed findings of fact regarding claimed costs were sufficient. Buller, 518 N.W.2d at 543. Similarly, a hearing was not required here because the district court made sufficient findings of fact in its lengthy summary-judgment order and incorporated memorandum to support the award of costs and disbursements.

While a hearing is not required, costs and disbursements must be reasonable and necessary. Stinson v. Clark Equip. Co.,473 N.W.2d 333, 338 (Minn. App. 1991), review denied (Minn. Sept. 13, 1991). When a party has challenged the reasonableness or necessity of an award, we have remanded to the district court for findings on that issue. See Illinois Farmers Ins. Co. v. Brekke Fireplace Shoppe, Inc., 495 N.W.2d 216, 222 (Minn. App. 1993). But there is no affirmative duty placed on the district court to make such findings. We, therefore, will affirm the award absent a specific finding of unreasonableness. See Jonsson, 409 N.W.2d at 563 (stating that the court shall approve the recovery of disbursements absent a specific finding that the costs were unreasonable).

Appellant argues that the district court failed to make findings on the reasonableness and necessity of travel expenses. Appellant argues that travel costs should be limited to 28 cents per mile. See Minn. Stat. § 357.22 (2) (2004). But the district court has discretion to award costs for travel and did not abuse its discretion. This is especially true in light of the fact that some travel expenses were incurred as a result of travel necessitated by virtue of an order obtained by appellant to compel discovery. Therefore, the district court did not abuse its discretion in awarding costs and disbursements for travel expenses.

Appellant also challenges the award of costs and disbursements for deposition costs because the depositions were not necessary to the outcome. The award of deposition costs to the prevailing party is within the discretion of the district court. Larson v. Hill’s Heating & Refrigeration of Bemidji, Inc., 400 N.W.2d 777, 783 (Minn. App. 1987), review denied (Minn. Apr. 17, 1987). Further, “[t]he fact that a deposition was not used at trial does not bar deposition costs.” Johnson v. S. Minn. Mach. Sales, Inc., 460 N.W.2d 68, 73 (Minn. App. 1990). The district court did not find that deposition costs were unreasonable. Therefore, the district court did not abuse its discretion in awarding costs and disbursements for deposition costs.

Appellant also challenges the award that appellant refers to as “miscellaneous unexplained costs.” The district court has discretion to award miscellaneous costs and disbursements, such as costs of photocopying, long-distance phone calls, FAX charges, parking, and courier services. Stinson, 473 N.W.2d at 338. Respondent submitted a detailed statement of all miscellaneous costs, and appellant failed to present any evidence to refute the reasonableness and necessity of those costs. The district court did not find that miscellaneous costs were unreasonable. Therefore, the district court did not abuse its discretion in awarding costs and disbursements for miscellaneous costs.

Appellant next argues that the district court erred in awarding costs and disbursements because the disbursements were unverified. “[D]isbursements shall be stated in detail and verified by affidavit[.]” Minn. R. Civ. P. 54.04. Respondent verified all costs and disbursements in an affidavit identified in respondent’s motion as “a true and correct copy of Merchant & Gould’s Recap of Cost Detail billed to [respondent].” Because this is all the rule requires, appellant’s argument fails.

Appellant also argues that there was an irregularity in the proceedings. Appellant argues that costs and disbursements may be taxed, in the first instance, by the court administrator, and only by the court on an aggrieved party’s appeal from the determination of the administrator. Minn. R. Civ. P. 54.04. Appellant claims that a deviation from this rule compelled appellant had to appeal directly to this court. But appellant offers no authority to support its contention that a prevailing party’s failure to first have costs and disbursements taxed by the court administrator is grounds for this court to reverse the award. Therefore, appellant’s argument fails.

Finally, appellant argues that the district court erred in awarding costs for computerized research. Respondent claimed costs of $2,659.44 in computerized research. “It is well settled that computer-aided research, ‘like any other form of legal research, is a component of attorneys’ fees and cannot be independently taxed as an item of cost.’” Ryther v. KARE 11, 864 F. Supp. 1525, 1534 (D. Minn. 1994) (quoting Leftwich v. Harris-Stowe State Coll., 702 F. 2d 686, 695 (8th Cir. 1983)). Costs under rule 68 do not include attorney fees. Bucko v. First Minn. Sav. Bank, F.B.S.,471 N.W.2d 95, 98 (Minn. 1991). Therefore, the district court erred in awarding costs for computerized legal research and the sum of $2,659.44, as depicted in respondent’s cost detail, is deducted from the district court’s award.

Finally, respondent moved this court to impose sanctions on appellant and/or its attorneys pursuant to Minn. Stat. § 549.211 (2004); that motion is denied.

Affirmed as modified; motion denied.

[1] “Demurrage” is the detention of a ship or other cargo conveyance during loading and unloading beyond the scheduled time of departure. The American Heritage College Dictionary 370 (3d ed. 2000).