Opinion
No. C8-02-501.
Filed November 26, 2002.
Appeal from the District Court, Hennepin County, File No. CJ01011489.
Scott R. Carlson, Benjamin R. Skjold, Duckson Carlson, LLC, (for appellant)
Richard M. Carlson, Morris, Carlson Hoelscher, P.A., (for respondent)
Considered and decided by Hudson, Presiding Judge, Peterson, Judge, and Anderson, Judge.
This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (2002).
UNPUBLISHED OPINION
A confession of judgment was triggered by respondent's violation of a non-compete agreement and judgment was entered. Respondent moved to vacate the judgment, and the district court granted the motion. Appellant contends the district court did not have subject-matter jurisdiction because Minn.R.Civ.P. 60 does not apply until a civil action has been commenced, and no action has been commenced when a judgment is filed pursuant to a confession of judgment. Appellant also contends the district court improperly vacated the judgment under Minn.R.Civ.P. 60.02(f) because it erroneously interpreted the provisions of the non-compete clause. We affirm.
FACTS
Appellant American Summit Lending Corporation (ASLC) appeals from the district court's vacation of a judgment that it obtained, pursuant to a confession of judgment, against respondent Burke Hennen (Hennen). When Hennen began employment with ASLC as a loan originator, he was required to sign an Agreement to Receive Loan Officer Training (training agreement). The training agreement contained a covenant not to compete. The confession of judgment was filed by ASLC based on Hennen's alleged breach of the covenant not to compete.
ASLC, a mortgage broker and banker, originally employed Hennen as a telemarketer in 1997. In 1998, Hennen was terminated from that job for cause, but ASLC rehired him as a telemarketer about a year later. In late May 2000, Hennen was interviewed for a promotion to become a loan originator. At about the time Hennen accepted this new position, which required additional training sessions, ASLC's attorney presented him with a training agreement and a confession of judgment, which he was required to sign. Hennen executed the training agreement and the confession of judgment on June 5, 2000. He also signed a Key Employee Agreement containing a covenant not to compete and an express liquidated-damages clause of $25,000.
After he began work as a loan originator, Hennen was placed on probation for tardiness and eventually terminated for cause. Hennen subsequently went to work for Charterwest Mortgage, a competitor of ASLC's. After ASLC discovered that Charterwest Mortgage employed Hennen, ASLC filed the confession of judgment based on breach of the training agreement, and the district court entered judgment accordingly.
On Hennen's motion the district court vacated the judgment. The district court first determined that it had subject-matter jurisdiction, and therefore had the power to vacate the judgment. The district court then found that the unambiguous language of the training agreement indicated that the $25,000 referenced in the confession did not apply to the non-compete provision of the training agreement, and that because the non-compete provision formed the basis for filing the confession of judgment, the judgment must be vacated. The district court noted that both the training agreement and the confession referenced the $25,000 sum in the context of the failure to fulfill the one-year employment agreement but that the non-compete provision of the training agreement did not expressly reference liquidated damages in the event of a breach. In contrast, two other provisions of the training agreement (those referring to voluntary termination of employment and disclosure of confidential information) specifically referenced the $25,000 training value. The district court did, however, observe that ASLC could bring a separate action for breach of contract based on breach of the non-compete clause. This appeal followed.
DECISION I.
ASLC first argues that because the rules of civil procedure apply only when an action has been commenced, and because the Minnesota confession of judgment statute states that a confession of judgment may be entered "without action," the district court was without jurisdiction to vacate the confession of judgment. The existence of subject matter jurisdiction is a question of law, which this court reviews de novo. Neighborhood Sch. Coalition v. Indep. Sch. Dist. No. 279, 484 N.W.2d 440, 441 (Minn.App. 1992), review denied (Minn. June 30, 1992).
Minn.R.Civ.P. 60.02 authorizes the district court, upon motion and on such terms as are just, to relieve a party from a "final judgment, * * * order, or proceeding." Minn. Stat. § 548.22 (2002), the confession of judgment statute, provides in part that
[a] judgment for money due or to become due, or to secure any person against a contingent liability on behalf of the defendant, or for both, may be entered in the district court by confession and without action, upon filing with the court administrator a statement, signed and verified by the defendant, authorizing the entry of judgment for a specified sum. * * * The judgment shall be final, and, unless special provision be made for a stay, execution may issue immediately.
(Emphasis added.)
ASLC argues that because the language of Minn. Stat. § 548.22 refers to the entry of a confession of judgment "without action," Minn.R.Civ.P. 60.02 does not apply, and the district court was without subject-matter jurisdiction to vacate the judgment. But the provisions of Minn.R.Civ.P. 60.02 allow relief from a "final judgment," and the express terms of Minn. Stat. § 548.22 describe a confession of judgment as a final judgment. Thus, the law permits relief under Rule 60.02 based on the existence of a final judgment, rather than on the procedure used to obtain the judgment.
Case law interpreting the rule comports with this analysis. In Banque Internationale Luxembourg v. Dacotah Cos., 413 N.W.2d 850, 854 (Minn.App. 1987), this court held that Minn.R.Civ.P. 60.02 granted the district court authority to condition the vacation of a judgment entered pursuant to a confession of judgment upon the posting of a security bond. In so doing, the court stated:
[W]e find no basis upon which to distinguish between imposition of a bond in a case involving a default judgment and in a case, such as here, where the court vacated a judgment entered under a confession of judgment.
Id. at 853. See also Majestic Inc. v. Berry, 593 N.W.2d 251, 256 (Minn.App. 1999) (discussing Rule 60.02 in context of confession of judgment); Fink v. Shutt, 445 N.W.2d 869 (Minn.App. 1989) (concluding that order denying motion for relief from judgment entered pursuant to confession of judgment is analogous to order denying motion to vacate default judgment). We also note that it is logically inconsistent for ASLC to invoke the jurisdiction of the court in obtaining the confession of judgment, but then to argue that the district court does not have jurisdiction to vacate its own prior action. Therefore, we hold that the district court had subject-matter jurisdiction to vacate the judgment arising from the confession of judgment.
II.
Because we have determined that the district court had subject-matter jurisdiction, we must consider whether the court properly vacated the judgment. Absent an abuse of discretion, a reviewing court will uphold a decision of the district court to vacate a judgment under Minn.R.Civ.P. 60.02. Galbreath v. Coleman, 596 N.W.2d 689, 691 (Minn.App. 1999). When a district court has decided a purely legal question, however, this court reviews that decision on a de novo basis. Frost-Benco Elec. Ass'n v. Minn. Pub. Utils. Comm'n, 358 N.W.2d 639, 642 (Minn. 1984).
The district court found that the terms of the contract were unambiguous, basing its order to vacate on that underlying finding. Whether a contract is ambiguous constitutes a legal question to be decided by the district court, and a reviewing court is not bound by the district court's determination. Lamb Plumbing Heating Co. v. Kraus-Anderson of Mpls., Inc. 296 N.W.2d 859, 862 (Minn. 1980) (citations omitted).
We next turn to the district court's interpretation of the relevant contractual language. Language in a contract should be given its "plain and ordinary meaning." Turner v. Alpha Phi Sorority House, 276 N.W.2d 63, 67 (Minn. 1979) (citations omitted). If the words of a contract are clear and unambiguous, this court cannot go beyond the language of the contract in interpreting it. See Telex Corp. v. Data Prods. Corp., 271 Minn. 288, 295, 135 N.W.2d 681, 686-87 (1965) (if a contract is clear, "it is neither necessary or proper in construing it to go beyond the wording of the instrument itself"). If a court determines a contract is ambiguous, however, its interpretation becomes a question of fact, and extrinsic evidence may then be considered. City of Virginia v. Northland Office Props. Ltd. P'ship, 465 N.W.2d 424, 427 (Minn.App. 1991) (citation omitted), review denied (Minn. Apr. 18, 1991). Courts interpret a contract as a whole and attempt to harmonize all of its provisions. Chergosky v. Crosstown Bell, Inc., 463 N.W.2d 522, 525 (Minn. 1990) (citation omitted).
The district court examined the provisions of the training agreement and the confession of judgment together, finding that the plain language of the contracts indicated that the confession of judgment was intended to apply only to the provisions in the contract concerning reimbursement for the alleged value of the training. We agree.
Several provisions of the training agreement explicitly referred to the sum of $25,000 as the value of the training that Hennen was about to receive. For example, provision 1 of the training agreement stated that if respondent left the employ of ASLC voluntarily, prior to completing twelve full consecutive months of service, Hennen would "immediately pay $25,000.00 to American Summit to compensate American Summit for the training [he] received." Likewise, provision 4 of the training agreement stated that if Hennen failed to return the training manual or disclosed confidential or trade secret information, he would "immediately reimburse American Summit $25,000.00 for the training." Provision 2, however, which contained the non-compete clause that ASLC is currently seeking to enforce, made no reference to the $25,000 or any other sum for liquidated damages. Furthermore, in the confession of judgment itself, the value of the training was acknowledged to be $25,000, but there was no express reference to the covenant not to compete.
This court has supported the "well-recognized rule of `expressio unius est exclusio alterius,' [which] provides that the expression of certain things in a contract implies the exclusion of all not expressed." Weber v. Sentry Ins., 442 N.W.2d 164, 167 (Minn.App. 1989) (quotation and citation omitted). Accordingly, we conclude that ASLC's failure to include a reference to the covenant not to compete in the confession of judgment, and the failure to mention the $25,000 liquidated damages in the non-compete clause of the training agreement, imply that the parties intended to exclude the covenant not to compete from the purview of the confession of judgment.
ASLC argues that the district court erred because its interpretation effectively read provision 10's "catch-all" damages provision out of the training agreement. Provision 10 provided that respondent agreed to sign the confession of judgment "to guaranty your obligations under this Agreement." ASLC contends that paragraph 10 applies to each and every provision of the training agreement; and because one of the obligations under the training agreement was to honor the non-compete provision, the trial court erred in vacating the confession of judgment. But provision 10 is consistent with the district court's overall interpretation, particularly when it is read in harmony with the other provisions, which refer only to the value of the training. Moreover, as the district court noted, its interpretation of provision 10 is supported by the fact that, unlike the non-compete provision in the training agreement, the Key Employee Agreement, which Hennen also signed, contained an express liquidated damages clause of $25,000. In addition, the Key Employee Agreement does not include a reference to the Confession and the Confession does not reference the Key Employee Agreement. Therefore, we agree with the district court that the training agreement excluded the covenant not to compete from the purview of the confession of judgment, and the district court did not err in vacating the judgment.