Opinion
No. C9-01-1209.
Filed April 23, 2002.
Appeal from the District Court, Polk County, File No. C000191.
Zenas Baer, (for respondents)
Patrick M. Krueger, Virginia J. Knudson, (for appellants)
Considered and decided by Anderson, Presiding Judge, Harten, Judge, and Stoneburner, Judge.
This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (2000).
UNPUBLISHED OPINION
Appellants Dale M. Jensen and Tilden Farms, Inc., challenge the district court's denial of their motion for judgment notwithstanding the verdict (JNOV), amended findings, or, in the alternative, a new trial. Appellants allege that the district court erred by submitting respondent PLM-MO's pre-closing damages claim to the jury on trespass and conversion theories; by not granting JNOV holding that appellants did not breach the purchase agreement; by awarding attorney fees to respondent for post-closing damages; and by failing to give a requested curative instruction following an objection to respondent's final argument. We affirm in part and reverse in part.
FACTS
Appellants sold respondent approximately 24,000 acres of land located in Polk County. Appellants used the land for cattle ranching. Tilden Farms managed the property. Dale M. Jensen, the fee owner of the property, wholly owned Tilden Farms.
The parties signed the purchase agreement on September 21, 1998. The agreement provided that until the December 17, 1998 closing date:
Tilden shall conduct its business in a prudent manner in which it has theretofore been conducted, shall use its best efforts to preserve Sellers' business organization intact, preserve for Purchaser the goodwill of its suppliers, customers, and others having business relations with it, shall maintain all present insurance policies in full force and effect, and shall promptly give Purchaser written or oral notice of any unusual events or operating problems which may occur with respect to the businesses and/or assets of Tilden.
* * * *
Purchaser shall take possession and control of the premises and the assets being purchased as of the time of closing on the date of closing.
Between the date the purchase agreement was signed and the date of closing, Rodney Rinderknecht, vice president and manager of Tilden Farms, authorized removal of pulp timber from the property. After closing, Tilden Farms continued to operate its businesses on the property pursuant to a lease with respondent and continued to remove pulp timber through March 1999.
Respondent sued appellants, alleging trespass, breach of contract, and negligence for removing the timber before and after the closing date. Appellants asserted, in their defense, that they had the right to remove the timber prior to closing but conceded that they wrongfully removed timber after closing. Respondent elected to submit both the pre- and post-closing claims to the jury on theories of conversion and trespass over appellants' objection that the pre-closing removal of timber should have been submitted on a breach-of-contract theory. Respondent asserted that the measure of damages was the value of timber removed. Appellants asserted that, for the pre-closing timber removal, the measure of damages was the diminution of value of the property caused by the removal.
Respondent successfully moved to exclude evidence of the amount for which it subsequently sold the property and did not introduce any evidence of diminution in the value of the property due to removal of timber. The jury determined that appellants breached the purchase and lease agreements, trespassed on respondent's property, and converted timber. The damages questions on the special verdict form asked only the value of the timber harvested pre- and post-closing. The jury found that value to be $60,000 pre-closing and $11,500 post-closing. The district court trebled the damages pursuant to statute. See Minn. Stat. § 561.04 (2000) (providing for treble damages for trespass and unlawful removal of trees). It also awarded attorney fees for damages incurred after closing based on a provision for attorney fees in the lease.
Appellants moved for JNOV, amended findings, or a new trial. The district court denied the motions, and this appeal followed.
DECISION
We review a district court's denial of a motion for JNOV de novo. Pouliot v. Fitzsimmons, 582 N.W.2d 221, 224 (Minn. 1998). Appellants contend that the district court erred as matter of law denying its request to submit respondent's pre-closing damages claim to the jury on a theory of breach of contract. Respondent asserts that appellants waived their right to appeal this issue by failing to object to submission of the claims on trespass and conversion theories. Appellants assert that they preserved their right to appeal by objecting to the proposed special-verdict form and that, even if they did not properly object, the error is one of fundamental law that can be raised in a post-trial motion pursuant to Minn.R.Civ.P. 51.
Pre-closing and post-closing claims
A party may not raise an objection to a jury instruction on appeal unless (1) the party specifically objects to the instruction at the district court prior to the jury retiring to deliberate or (2) the district court makes an error of fundamental law or controlling principle. Id. Error in a jury instruction may be fundamental if the instruction destroys the substantial correctness of the entire jury charge, results in a miscarriage of justice, or leads to substantial prejudice of a party. Lindstrom v. Yellow Taxi Co. of Minneapolis, 298 Minn. 224, 229, 214 N.W.2d 672, 676 (1974); Marshall v. Galvez, 480 N.W.2d 358, 362 (Minn.App. 1992).
At trial, appellants objected to both the instructions and the verdict form, arguing that respondent's measure of damages for the pre-closing removal of timber should be diminution in value of the property caused by timber removal, which is a breach-of-contract measure of damages.
Appellants acquiesced in submission of the conversion theory only for post-closing timber removal, conceding that the conversion claim was appropriate for post-closing timber removal. Appellants sufficiently objected to submission of the pre-closing claims on the theories of trespass and conversion to preserve their right to appeal the issue. And even if they did not, we conclude that the district court made a fundamental error of law by submitting the pre-closing claims to the jury on the theories of trespass and conversion because respondents had no possessory interest in the property or trees prior to closing.
Appellants contend that they are entitled to JNOV because, as a matter of law, prior to closing, they did not trespass or convert anything. We agree. A party successfully proves a trespass claim when it can demonstrate that (1) it owned or possessed the property at the time of the wrongful entry; (2) the other party entered wrongfully; and (3) damages resulted from the entry. H. Christiansen Sons, Inc. v. City of Duluth, 225 Minn. 475, 482, 31 N.W.2d 270, 274 (1948). Conversion includes "an act of willful interference with personal property, done without lawful justification by which any person entitled thereto is deprived of use and possession." DLH, Inc. v. Russ, 566 N.W.2d 60, 71 (Minn. 1997) (quotation omitted).
The purchase agreement in this case specifically provided that respondent would not possess the property until the date of closing. The district court disregarded the clear and unambiguous language in the contract to accept respondent's proposition that it had a possessory interest sufficient to support claims of trespass and conversion prior to the date of closing. Under the purchase agreement, appellants retained possession until closing.
Respondent asserts that, prior to the date of closing, it was the equitable owner of the property, giving it an interest in all appurtenances, including timber, sufficient to satisfy the ownership requirement of a conversion claim. We disagree. The cases relied on by respondent involve contract-for-deed sales where the purchaser has possession of the land pursuant to the purchase agreement and the seller retains legal title as security. See, e.g., Petition of S.R.A., Inc., 219 Minn. 493, 505-07, 18 N.W.2d 442, 450 (1945). Possession in this case did not pass to respondent until closing. As a matter of law, appellants could not trespass or convert property it lawfully possessed. Appellants correctly assert that respondent's claim for timber harvested prior to closing could only be pursued under a breach-of-contract theory. See Vallentyne v. Immigration Land Co., 95 Minn. 195, 196-97, 103 N.W. 1028, 1028-29 (1905) (confirming that breach of contract is the appropriate action for removal of timber after purchase agreement is signed but before warranty deed is delivered).
Although respondent submitted the pre-closing claim on trespass and conversion theories, the special-verdict form asked: "Did the [appellants] breach the purchase agreement * * * by harvesting timber?" The jury affirmatively answered this question. Appellants argue that no competent evidence supports the jury's finding that they breached the purchase agreement by harvesting timber prior to closing. We disagree. Evidence was presented that the purchase agreement did not specifically authorize appellants to harvest timber and that timber harvesting was not part of appellants' regularly conducted business prior to sale of the land. The parties did not list timber harvesting in the purchase agreement but listed crop growing in the agreement. Respondent also presented evidence that the amount and manner of any pre-sale timber harvesting was substantially different from the harvesting that took place after the parties signed the purchase agreement. We conclude that there is sufficient evidence in the record to support the jury's determination that appellants breached the purchase agreement.
Appellants argue that, even if there is evidence to support the finding that they breached the purchase agreement, there is no evidence to support a damage award for such breach. Respondent only submitted evidence on the value of the timber removed, which is the measure of damages for trespass and conversion. Appellants requested a jury instruction and a special-verdict question on diminution in value of the land to determine breach-of-contract damages for pre-closing timber removal. The district court denied their request, instructed the jury on damages under trespass and conversion theories, and asked the jury to find the reasonable value of the timber harvested. The district court has broad discretion in determining jury instructions. State Farm Fire Cas. Co. v. Short, 459 N.W.2d 111, 113 (Minn. 1990). Nonetheless, if the instructions do not fairly and correctly state the applicable law, the district court abused its discretion. Alevizos v. Metro. Airports Comm'n of Minneapolis St. Paul, 452 N.W.2d 492, 501 (Minn.App. 1990) (stating that court is within its latitude where instructions fairly and accurately state the law), review denied (Minn. May 11, 1990).
If timber on real property is destroyed, the measure of damages is "the difference between the value of the land before and after the damage has been inflicted." Ballion v. Carl Bolander Sons Co., 306 Minn. 155, 157, 235 N.W.2d 613, 614 (1975) (citing Reynolds v. Great N. R.R. Co., 119 Minn. 251, 255, 138 N.W. 30, 32 (1912)). Courts have also recognized that the reasonable cost of replacing trees that have an "aesthetic value to the owner as ornamental and shade trees for purposes of screening sound and providing privacy" may be considered. Rector, Wardens and Vestry of St. Christopher's Episcopal Church v. C. S. McCrossan, Inc., 306 Minn. 143, 146, 235 N.W.2d 609, 611 (1975). But respondent elected not to present evidence of contract damages. Under these circumstances, we cannot affirm the damages awarded by the jury for pre-closing timber because it is an inappropriate measure of damages. The award is reversed.
Attorney fees
We will not reverse a district court's award of attorney fees unless the district court abused its discretion by making the award. Becker v. Alloy Hardfacing Eng'g Co., 401 N.W.2d 655, 661 (Minn. 1987). Here, the post-closing timber removal claim was, as appellants concede, properly submitted under trespass and conversion theories and damages were trebled pursuant to Minn. Stat. § 561.04. Although submitted over appellants' objection, the special-verdict form asked: "Did the [appellants] breach the lease agreement with [respondent]?" and the jury answered: yes.
Respondent sought, and the district court awarded, attorney fees for the post-closing claims pursuant to a provision for attorney fees contained in the parties' post-closing lease. The lease provides for an award of attorney fees if:
[e]ither party hereto be made or becomes a party to any litigation commenced by or against the other party involving the enforcement of any of the rights and remedies of such party, or arising on account of the default of the other in the performance of such party's obligations hereunder * * *.
Given the broad coverage for attorney fees contained in the lease, we cannot conclude that the district court abused its discretion by allowing an award of attorney fees for respondent's trespass and conversion litigation. Appellants argue that because damages for the value of timber removed were trebled pursuant to statute, the award of attorney fees represents a double recovery. We disagree. There is no recovery of attorney fees authorized by Minn. Stat. § 561.04. An award of attorney fees under the lease does not constitute a double recovery.
Because we reverse the award of damages for pre-closing timber removal, we do not address appellants' claim that they are entitled to a new trial because of misstatements by respondent's counsel.