Grossman v. Grossman Investments, No. A03-859 (Minn. App. 2/3/2004)
| Decision Date | 03 February 2004 |
| Docket Number | No. A03-859.,A03-859. |
| Parties | Thomas Grossman, et al., Appellants, v. Grossman Investments, et al., Respondents. |
| Court | Minnesota Court of Appeals |
Appeal from the District Court, Hennepin County, File No. CT98809.
Jerome B. Simon, Mark W. Lee, Maslon, Edelman, Borman & Brand, LLP, 3300 Wells Fargo Center, 90 South Seventh Street, Minneapolis, MN 55402 (for appellants).
Paul J. Robbennolt, Dorsey & Whitney, LLP, Suite 1500, 50 South Sixth Street, Minneapolis, MN 55402-1498 (for respondents).
Considered and decided by Halbrooks, Presiding Judge, Kalitowski, Judge, and Stoneburner, Judge.
UNPUBLISHED OPINION
Appellants Thomas Grossman, et al., challenge the district court's resolution of a motion to enforce the parties' settlement agreement. Appellants contend that the district court erred by (1) ordering appellants to provide a schedule listing the expected dates and amounts of all payments to be made pursuant to the settlement agreement; (2) denying reimbursement for certain expenses, including all attorney fees, that appellants claim to have incurred in audits provided for in the settlement agreement; and (3) requiring appellants to pay interest on a delayed payment to respondents. We reverse the requirement that appellants provide a schedule of dates and expected amounts of payments but otherwise affirm.
Appellant Thomas Grossman and his brothers have been involved in lengthy litigation involving several businesses in which the siblings participated. They finally entered into a comprehensive settlement agreement (CSA) intended to sever their business relationships to the greatest extent possible. The CSA provided for, among other things, immediate redemption by appellants of respondents' interest in two limited partnerships, and the liquidation of three insurance companies over a period of time under the supervision of an appointed independent party.
Thomas Grossman represented in the CSA that no monies had been paid out to the partners of the limited partnerships or the shareholders of the insurance companies, other than in the ordinary course of business or on a pro rata basis. The CSA provided that any limited partner of the limited partnerships and any shareholder of the insurance companies, at his own expense, could retain an auditor to verify Thomas Grossman's representation "and if such representation is found to be materially incorrect, Thomas shall both reimburse the [business] . . . and pay for the audit." The CSA provided that, except as otherwise specifically provided, "each of the parties hereto shall be responsible for all attorneys' fees and expenses incurred by such party." The CSA also provided that all of its provisions "may be enforced by an order of mandatory specific performance by the District Court of Hennepin County in the Option Case."
Respondents demanded audits of the limited partnerships and the insurance companies. Appellants demanded that respondents reimburse them for expenses related to complying with the audits. In a June 12, 2000 letter to respondents' counsel, appellants' counsel specified the following expenses for reimbursement "promptly upon receipt of monthly bills": (1) the time of Thomas Grossman and David Norton, Metropolitan Corporation's chief financial officer, at $200 per hour; (2) the time of Metropolitan Corporation's assistant comptroller at $100 per hour; (3) other staff time at $25 per hour; (4) "[c]opy costs at the rate of $0.10 per copy in addition to the staff time"; (5) applicable long-distance telephone and travel costs; and (6) "charges made by any third party vendors with respect to the audit process."
Respondents initially refused appellants' request for reimbursement and moved for an order enforcing the settlement agreement, but prior to the hearing on the motion, the parties reached an agreement. In a November 21, 2000 letter to appellants' counsel memorializing the agreement, counsel for respondents wrote "we have agreed in principle to pay the reasonable expenses incurred by your clients in connection with the audit." The auditing process began with accusations from both parties about insufficient cooperation. In March 2001, respondents' counsel requested that certain documents be forwarded to a copy service. Appellants' counsel replied that the documents would not be provided until "we receive the written agreement for payment of expenses . . . as set forth in" the June 12, 2000 letter. On April 4, 2001, appellants' counsel wrote to respondents' counsel requesting, in paragraph three of the letter, "unequivocal agreement to the terms specified" in the June 12, 2000 letter and stating that "[w]e have agreed that your clients will be entitled to a refund of any overstatement of time charges or for any third party charges (including attorneys' fees) which are not reasonable." In a letter dated April 19, 2001, respondents' counsel stated that respondents accepted "the terms stated in the third paragraph of" the April 4, 2001 letter.
In July 2001, respondents again moved for an order enforcing the settlement agreement, asserting that appellants refused to provide documents necessary to complete the audits. Respondents asserted that they had been trying to conduct the audits for more than one year, but not a single document had been produced by appellants, nor had auditors had any communication of any kind with the audited companies' personnel. Respondents conceded that they had agreed to pay appellants' audit expenses, but complained that appellants had billed substantial expenses, including attorney fees, even though the audit had not begun. Respondents specifically denied that they had agreed to reimburse attorneys fees or other third-party expenses of Metropolitan Corporation or Thomas Grossman. Appellants argued that the exchange of letters established an agreement between the parties for respondents to pay Thomas Grossman's and Metropolitan's direct expenses, as well as third-party expenses, including attorney fees.
After hearing the motion, the district court ordered appellants to give the auditors immediate and unfettered access to all documents requested. The order also provided that appellants "shall not further delay this audit based upon any future requests for reimbursement of expenses" and provided that, at the end of the audit, appellants "shall submit a claim for reimbursement of expenses." The order further provided that if the parties could not resolve any disputes over requested reimbursements, they
The audits were eventually completed and supported Thomas Grossman's representations in the CSA. Appellants billed respondents $ 51,877.16, including $29,192.14 in attorney fees. Respondents rejected the claim as unreasonable and the parties filed cross-motions for resolution of the issue. Appellants again argued that respondents had agreed to pay attorney fees. Respondents argued that they never agreed to pay attorney fees and that all of the amounts requested by appellants were unreasonable, noting that much of the time billed for Thomas Grossman was for his discussions with his attorney. Respondents submitted an affidavit of one of the auditors who opined that, in his experience, the audits undertaken would have required about 28 hours of employee time. Respondents also requested enforcement of the insurance company liquidation provisions of the CSA and requested that the court order Thomas Grossman to provide a schedule of the dates and amounts of future payments under the liquidation provisions. Respondents also requested interest on a payment of $38,963.95 per shareholder that was approved by the liquidation-plan supervisor on August 2, 2002, but was withheld by Thomas Grossman until January 15, 2003.
After hearing the motions, the district court ordered reimbursement for appellants' audit expenses in the amount of $3,000, ordered Thomas Grossman to provide the payment schedule requested by respondents, and awarded interest to respondents on the delayed payment. The district court found...
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