Opinion
No. A04-1332.
Filed May 3, 2005.
Appeal from the District Court, Hennepin County, File No. Ct 03-013463.
J. Patrick Plunkett, Martin D. Kappenman, Moore, Costello Hart, P.L.L.P., (for appellant).
William B. Butler, Biersdorf Associates, P.A., (for respondent).
Considered and decided by Lansing, Presiding Judge; Willis, Judge; and Huspeni, Judge.
This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (2004).
UNPUBLISHED OPINION
Appellant corporation appeals from the denial of its motion for judgment notwithstanding the verdict (JNOV) or a new trial, alleging that the evidence does not support the jury's determination that appellant breached its contract with respondent, a former employee, and the evidence does not support the trial court's award of damages. Respondent filed a notice of review, arguing that the trial court erred by failing to award him attorney fees and by remitting his award. Because the evidence in the record supports the jury's determination that appellant breached its contract with respondent, because the trial court did not abuse its discretion in denying an award of attorney fees, and because the trial court properly remitted the damages award to avoid a double recovery, we affirm.
FACTS
Appellant Outdoor Environments, Inc. (OEI), a company that provides landscaping and snow removal services, hired respondent, Theodore Maro, as an account executive and landscape designer in March 2001. The parties agreed to the terms of employment in a letter signed by the president of OEI and respondent. The letter specified that respondent would receive $55,000 of annual salary, "Incentive Compensation: $13,750 per Plan," a vehicle allowance, medical insurance, vacation, holidays, and a 401(k) if he signed and returned the letter, which he did on March 26, 2001. The letter sums up the terms into a dollar amount: "Your compensation package including Salary, Incentive Compensation and Benefits would (sic) $82,434." Respondent never received a copy of the Incentive Compensation Plan, and OEI's chief executive officer, Hugh Kramber, admitted that he had only shown the Plan to the president of the company.
Kramber explained that if the Plan had been fully funded, and respondent had achieved 100% of his sales goals, only then would respondent make $13,750 through the Plan. Kramber explained that to fully fund the Plan, the company must meet the profit goals, subtract the return on investment (ROI), and "hit" their budget.
Respondent testified that he had no idea until trial of the specifics of how the Plan worked and how profits were calculated. He did not know about the ROI reduction in Plan funding, or that the Plan needed to be funded at all, and he thought that the incentive compensation was based on his sales goals. This would result, for example, in respondent receiving 77% of $13,750 if he reached 77% of his sales goals in 2001.
Appellant decided to implement a new compensation package for 2003; the result for respondent was to be a pay cut, increased commissions, a change of benefits, and an addition of noncompete and nonsolicitation provisions in the employment contract. Respondent apparently thought, at least initially, that he would benefit under the new package if it was modified according to his suggestions, because he wrote to OEI in December 2002 regarding the package and he expressed his excitement at making more money. This letter also noted that OEI improperly calculated his sales for 2002 and he asked them to adjust the numbers.
In February 2003, respondent left employment with appellant and took a position with Landshapes, Inc., his present employer. Appellant initiated this lawsuit against respondent in the summer of 2003, alleging two counts of breach of the employment contract, misappropriation of trade secrets, intentional interference with contract, intentional interference with contract against the second defendant (Landshapes, Inc.), and unjust enrichment against both defendants. Respondent answered and counterclaimed that appellant breached the employment contract with respondent and failed to pay respondent approximately $10,000 in incentive compensation based on respondent's sales production in 2001, and $12,000 in 2002. Respondent also counterclaimed for negligent and intentional misrepresentation. Following a summary judgment motion by respondent, only appellant's trade secret claim and respondent's breach of contract and misrepresentation claims survived.
Defendant Landshapes, Inc. also answered and participated in the lawsuit, but is not participating in this appeal.
The parties agreed on the jury instructions and special verdict form to be used by the jury at trial. The jury found that appellant did not have a trade secret to be misappropriated, that appellant breached its March 26, 2001 letter agreement with respondent, and that $17,909 would fairly compensate respondent for appellant's breach. Additionally, the jury found appellant liable for intentional misrepresentation, and it found respondent should receive attorney fees in the amount of $10,800. Finally, the jury awarded $3,750 in lost income for negligent misrepresentation. Appellant moved for judgment notwithstanding the verdict, or alternatively, for a new trial on the breach of contract and misrepresentation claims. Appellant also sought a reduction in the amount of the award to respondent to prevent a double recovery and to prevent an improper award of attorney fees by the jury. Respondent moved for attorney fees.
The trial court adopted the special verdict form used by the jury as its findings of fact in its post-trial order. In its conclusions of law, the trial court awarded a total of $17,909 plus reasonable costs and disbursements, in favor of respondent. Additionally, the court found that respondent was not entitled to attorney fees and did not meet the requirements of Minn. Stat. § 181.14 (2004). The effect of the trial court's post-trial determinations was to eliminate the $3,750 and the $10,800 portions of the jury awards. Appellant now challenges the trial court's denial of the motion for judgment notwithstanding the verdict, or in the alternative a new trial. Respondent, by notice of review, challenges the denial of attorney fees and the remittitur of the damage award.
DECISION I.
The foundational standard for granting a motion for JNOV is that the evidence must be so overwhelming in favor of a particular party that reasonable minds could not differ as to the proper outcome of the case. Lamb v. Jordan, 333 N.W.2d 852, 855 (Minn. 1983). In applying the JNOV standard, the court must (1) take into account all of the evidence in the case; (2) view that evidence in a light most favorable to the verdict; and (3) "may not weigh the evidence or judge the credibility of the witnesses." Id. Furthermore, all inferences must be drawn in favor of the prevailing party. Baker v. Amtrak Nat'l R.R. Passenger Corp., 588 N.W.2d 749, 752 (Minn.App. 1999). The JNOV standard is a stringent one, such that the motion will be granted only if the verdict of the jury is so unworthy of belief that it leaves "no room for an honest difference of opinion among reasonable [people]." Gum v. Medcalf Orthopaedic Appliance Co., 380 N.W.2d 916, 921 (Minn.App. 1986) (quoting Johnson v. Evanski, 221 Minn. 323, 327, 22 N.W.2d 213, 215 (1946)).
Appellant essentially argues that the terms of the agreement were clear and unambiguous. Appellant focuses on the "clear" terms of the Plan, seemingly assuming that the Plan is properly incorporated by reference into the contract, leading the jury to inexorably find in its favor. At the same time, appellant seeks to add additional terms to the agreement, urging that the letter agreement stated that respondent "could earn" as much as $13,750 in the Incentive Compensation Plan and that the letter agreement's terms stated that respondent was "eligible" to receive $13,750 per the Plan. But no portion of the agreement indicates that respondent was only "eligible" to receive $13,750 under the Plan. Respondent did admit at trial that under the application of the Plan, he was paid the proper amount of incentive compensation. However, although appellant insists that the terms of the Plan are extremely clear, there was conflicting testimony as to the formula for the Plan, and whether the ROI functioned as profit or not under the Plan.
Kramber testified that the ROI was always taken out before the Plan was funded, as the Plan was to be funded by profit, but then he testified that ROI was considered profit.
The jury instructions, including those addressing the definition of a contract, proof of an agreement, how a contract is made, the definition of an offer, acceptance, breach of contract, good faith, and how to decide damages for breach of contract, were all agreed upon by the parties. No objections were made either to the jury instructions or to the questions in the special verdict form. Among the special verdict questions were the following: "Did [appellant] breach its March 26, 2001 contract with [respondent]?" (Answer: Yes) and "What amount of money will fairly and adequately compensate [respondent] for [appellant's] breach of contract?" (Answer: $17,909).
Clearly, the parties never disputed the existence of a contract, nor did they dispute the submission to the jury of the question of whether the contract had been breached. "Generally, the existence of a contract, as well as the terms of that contract, are questions of fact to be determined by the fact-finder." TNT Props., Ltd. v. Tri-Star Developers LLC, 677 N.W.2d 94, 101 (Minn.App. 2004) (citing Bergstedt, Wahlberg, Berquist Assocs., Inc. v. Rothchild, 302 Minn. 476, 480, 225 N.W.2d 261, 263 (1975)).
While there is no specific conclusion by the judge that the contract was ambiguous, an inference of ambiguity is inescapable. "A contract is ambiguous if, based upon its language alone, it is reasonably susceptible of more than one interpretation." Art Goebel, Inc. v. N. Suburban Agencies, Inc., 567 N.W.2d 511, 515 (Minn. 1997). "[T]he interpretation of an ambiguous contract is a question of fact for the jury." Denelsbeck v. Wells Fargo Co., 666 N.W.2d 339, 346 (Minn. 2003).
The ambiguity of the parties' contract here is demonstrated by examination of the language in the March 26 letter stating that "[y]our compensation package including Salary, Incentive Compensation and Benefits would [sic] $82,434." Terms of eligibility were added by appellant to the Plan. The jury was permitted to find that respondent never saw those terms. The parties strongly dispute how amounts available to fund the Plan are calculated; especially disputed is the issue of whether the ROI is to be deducted before "profit" is calculated.
During trial, two different interpretations of the Plan under the March 26, 2001 agreement were submitted to the jury — one through Kramber's testimony that he was certain that respondent had discussed the plan "in detail" at the time the offer of employment was made to him, and through introduction of the Plan document itself; the other interpretation was submitted through respondent's testimony that he was unaware of the Plan's language during his employment with appellant. Even assuming the Plan was properly incorporated into the March 26, 2001 agreement, the disputed interpretation of the word "profit" was subject to jury determination.
The jury resolved the question of whether the parties' contract had been breached in respondent's favor. There is evidence in the record to support that resolution. The trial court did not err in denying appellant's motion for judgment notwithstanding the verdict, or in the alternative a new trial.
II.
By notice of review, respondent challenges the trial court's denial of attorney fees and argues that Minn. Stat. § 181.171 (2004) applies. The trial court's decision to deny attorney fees is reviewed for an abuse of discretion. Auto-Owners Ins. Co. v. NewMech Cos., 678 N.W.2d 477, 485 (Minn.App. 2004). Minn. Stat. § 181.14 (2004) provides that an employer must pay wages or commissions earned by the employee who resigns or quits by the next regularly scheduled payday (or the subsequent payday if less than five days remain in the pay period), and if the employee is not paid, the wages are immediately payable at the demand of the employee. Minn. Stat. § 181.14, subds. 1, 2. In an action under Minn. Stat. § 181.14, the trial court "shall order an employer who is found to have committed a violation to pay the aggrieved party reasonable costs, disbursements, witness fees and attorney fees." Minn. Stat. § 181.171, subd. 3. This penalty statute is to be strictly construed. Chatfield v. Henderson, 252 Minn. 404, 411, 90 N.W.2d 227, 232 (1958). Without testimony of a demand after resignation, there is clearly no compliance with the statute. Id.
Respondent does not appear to appeal the trial court's denial of attorney fees under Minn. Stat. § 549.211 (2004), perhaps due to the trial court's conclusion that appellant did not proceed in bad faith.
A trial court's determination of the reasonableness and amount of attorney fees is a question of fact and should not be reversed unless clearly erroneous. Amerman v. Lakeland Dev. Corp., 295 Minn. 536, 537, 203 N.W.2d 400, 400-01 (1973). Although the trial court did not include a specific finding of fact in denying attorney fees other than to state that section 181.171 did not apply and Chatfield governed its decision, the court's reasoning is supported by the evidence, and is consistent with Chatfield. Respondent did not make a demand following resignation until he answered appellant's complaint. Although he argues that he pointed out in his December 2002 letter to appellant that miscalculations in his sales numbers for 2002 had been made, in that same letter he expressed excitement about earning "a lot more money." This letter does not contemplate resignation and clearly does not meet the requirements for a demand after resignation pursuant to Minn. Stat. § 181.14. The trial court did not abuse its discretion by denying respondent's post-trial motion for attorney fees.
III.
Respondent also claims that the trial court erred in remitting the damages award in response to appellant's post-trial motion seeking to reduce the award to avoid a double or triple recovery for respondent, and to prevent an award of attorney fees as damages. We see no error in the trial court's remittitur.
Because the trial court has the significant advantage of viewing the entire proceeding, some of which is not apparent on the record, an appellate court should not interfere with the court's decision regarding remittitur unless there is a clear abuse of discretion. Sorenson v. Kruse, 293 N.W.2d 56, 62 (Minn. 1980). Where the trial court grants remittitur, noting its reasons for doing so, the appellate courts are not likely to tamper with that determination. Sorenson, 293 N.W.2d at 63; see also Westbrook State Bank v. Johnson, 407 N.W.2d 688, 690 (Minn.App. 1987) (noting that great deference is given to trial court when it explains its decision for remittitur).
Here, it is evident that the trial court remitted the "damages" classified by the jury as attorney fees on the same basis that it denied respondent's post-trial motion for attorney fees. As appellant points out, attorney fees are not damages. St. Paul Prof'l Employees Assoc. v. City of St. Paul, 303 Minn. 106, 109, 226 N.W.2d 311, 313 (1975). Under Chatfield, penalties for failure to pay wages attach after an employee who quits makes the demand, and without a demand, it is error to "permit the jury to include the penalty provided thereby as part of its verdict." 252 Minn. at 411, 90 N.W.2d at 232. Therefore, the remittance of attorney fees awarded by the jury as "damages" was within the discretion of the trial court.
The trial court also remitted amounts awarded by the jury as damages resulting from negligent misrepresentation by appellant. Citing Wirig v. Kinney Shoe Corp, 461 N.W.2d 374, 379 (Minn. 1990), appellant urges the appropriateness of that remittitur because double recovery for damages (such as breach of contract and misrepresentation) is not allowed for a single act of conduct, even if that conduct gives rise to multiple claims. There is an exception to this rule, however, when "a plaintiff seeks to recover damages for an alleged breach of contract he is limited to damages flowing only from such breach except in exceptional cases where the defendant's breach of contract constitutes or is accompanied by an independent tort." Wild v. Rarig, 302 Minn. 419, 440, 234 N.W.2d 775, 789 (1975). Importantly, if a party attempts to recover under theories of both contract and tort, the party seeking damages for both claims has "the burden of proving separate damages for fraud and for breach, lest the damage award be duplicative." Brooks v. Doherty, Rumble Butler, 481 N.W.2d 120, 128 (Minn.App. 1992), review denied (Minn. Apr. 29, 1992). Here, respondent provided no evidence of distinct misrepresentation damages. The evidence presented at trial supported only the breach of contract claim and the award for respondent's lost incentive compensation. Remittitur of the misrepresentation damages was proper.
The trial court did not err in denying appellant's motion for judgment notwithstanding the verdict or in the alternative a new trial, nor in ordering remittitur of respondent's damage award, nor in denying respondent's motion for attorney fees.