Lienhard v. State

• Decision Date: 23 November 1988
• Docket Number: No. C8-87-1002,C8-87-1002
• Citation: 431 N.W.2d 861
• Parties: Douglas O. LIENHARD, Petitioner, Appellant, v. STATE of Minnesota, et al., Respondents.
• Court: Minnesota Supreme Court

Page 861

431 N.W.2d 861

Douglas O. LIENHARD, Petitioner, Appellant, v. STATE of Minnesota, et al., Respondents.

No. C8-87-1002.

Supreme Court of Minnesota.

Nov. 23, 1988.

Syllabus by the Court

1. Statutory costs awarded pursuant to Minn.Stat. Sec. 549.02 (1986) and reasonable disbursements pursuant to Minn.Stat. Sec. 549.04 (1986) are not subject to the limitation on tort claims in Minn.Stat. Sec. 3.736, subd. 4(a) (1978).

2. Pre-verdict interest awarded pursuant to Minn.Stat. Sec. 549.09 (Supp.1987) is an element of damages attached to the verdict as an additional compensatory sum subject to the limitation set by section Minn.Stat. Sec. 3.736, subd. 4(a) (1978). Post-verdict and post-judgment interest is compensation for the loss of use of money as a result of the nonpayment of a liquidated sum; it is not part of the tort claim and is not subject to the limitation provided by section 3.736.

3. The statutory classification contained in Minn.Stat. Sec. 3.736, subd. 4(a) (1978) is rationally related to a legitimate government objective and does not violate the equal protection clauses of the federal and Minnesota constitutions.

Fred H. Pritzker, Minneapolis, for appellant.

Mary Ann Bernard and Peter K. Halbach, Sp. Asst. Attys. Gen., St. Paul, for respondents.

Heard, considered, and decided by the court en banc.

COYNE, Justice.

Plaintiff Douglas O. Lienhard sued the State of Minnesota, Southfork Township, and Randolph Johnson to recover damages for injuries sustained when his motorcycle collided with defendant Johnson's automobile. A jury awarded Lienhard damages in the net amount of $200,000 and apportioned causal negligence among the defendants in these percentages:

State of Minnesota 50%

Southfork Township 45%

Randolph Johnson 5%

Following the denial of post-trial motions, the township and Johnson each paid Lienhard a proportionate share of the verdict, together with an additional sum which represented a portion of Lienhard's costs, disbursements, and interest. The State paid its share of the verdict--$100,000--but the parties reserved the question of the State's liability for costs, disbursements, and interest (including pre-verdict interest).

In response to Lienhard's motion to compel payment, the trial court ruled that the State was liable for its proportionate share of Lienhard's costs and disbursements but that, pursuant to the $100,000 limitation of liability provided by Minn.Stat. Sec. 3.736, subd. 4 (1978) ¹, the State was not liable for either pre-judgment or post-judgment interest. The court also declared the statute constitutional as applied in this situation.

The court of appeals ruled that the State was not bound by the provisions of chapter 549 and, therefore, was not liable for costs, disbursements, or interest. The court of appeals went on to declare that Minn.Stat. Sec. 3.736, subd. 4 (1978) does not violate the equal protection clause of either the state or federal constitutions, 417 N.W.2d 119. We affirm in part and reverse in part.

Since the constitutionality of section 3.736 is implicated only if liability for costs, disbursements, and interest is limited by subdivision 4, our initial inquiry is directed to the basic question of the State's liability for such items. There is in section 3.736 no specific reference to costs, disbursements, or interest. The general rule is set out at Minn.Stat. Sec. 3.736, subd. 1 (1978):

The state will pay compensation for injury to or loss of property or personal injury or death caused by an act or omission of any employee of the state while acting within the scope of his office or employment, under circumstances where the state, if a private person, would be liable to the claimant.

Minn.Stat. Sec. 3.736, subd. 2 (1978) establishes the procedures for consideration and payment of claims:

Claims of various kinds shall be considered and paid only in accordance with the statutory procedures provided. Where there is no other applicable statute, a claim shall be brought pursuant to this section as a civil action in the courts of the state.

Together, subdivisions 1 and 2 of section 3.736 subject the State to tort liability as if it were a private individual, and when, as in the present case, the cause of action is prosecuted as a common law civil action, there being no applicable statutory procedure, the State's liability is the same as that of any private tortfeasor adjudged liable in a civil action--subject, however, to the limitation set out at subdivision 4 of section 3.736:

The total liability of the state and its employees acting within the scope of their employment on any tort claim shall not exceed:

(a) $100,000 when the claim is one for death by wrongful act or omission and $100,000 to any claimant in any other case.

(b) $500,000 for any number of claims arising out of a single occurrence.

* * *

* * *

To put it concretely, if the State were determined to be liable in tort for damages in an amount which did not implicate the $100,000 limitation--for example, $25,000--then the State, like any private person, would be liable for statutory costs pursuant to Minn.Stat. Sec. 549.02 (1986), for reasonable disbursements pursuant to Minn.Stat Sec. 549.04 (1986) ², and interest pursuant to Minn.Stat. Sec. 549.09 (Supp.1987). ³

Moreover, even before the abolition of common law sovereign immunity from tort liability, it was generally recognized that in its proprietary capacity the State was bound by the statute on costs and disbursements (now sections 549.02 and 549.04). See Bingenheimer v. Diamond Iron Mining Co., 237 Minn. 332, 356-57, 54 N.W.2d 912, 925 (1952); State ex rel. Smiley v. Holm, 186 Minn. 331, 332, 243 N.W. 133, 133-34 (1932). But cf. State v. Bentley, 224 Minn. 244, 247, 28 N.W.2d 770, 771 (1947) (State not bound by general law governing costs on appeal). Similarly, when the State waived sovereign immunity a prevailing party could be awarded interest. Otto B. Ashbach & Sons, Inc. v. State, 247 Minn. 573, 579, 78 N.W.2d 446, 450 (1956). Since the rationale for the rule of construction that the State is not bound by a statute unless named therein, Minn.Stat. Sec. 645.27 (1986), lies in the doctrine of sovereign immunity, there is little reason to extend its application to the construction of a statute subjecting the State to liability for tort claims as if it were a private person. ⁴

In this case, however, the State's proportionate share of liability for damages is $100,000, and the precise question before us is whether the $100,000 limitation on the "total liability of the State * * * on any tort claim" pursuant to section 3.736, subdivision 4, limits the State's liability for statutory costs, disbursements, and interest as well as its liability for traditional common law compensatory damages. Section 3.736 does not contain any specific reference to costs, disbursements, or interest. Neither does it contain any definition of the term "tort claim." The tenor of section 3.736 is that a "tort claim" is the claimant's demand for compensation due because of personal injury or property loss resulting from the tortious conduct of a State employee.

Statutory costs and disbursements, though includible in a judgment entered in a civil action, are "add-ons" rather than part of the cause of action itself. Costs and disbursements were unknown to the common law; they are creatures of statute. Bayard v. Klinge, 16 Minn. 221, 232-33 (1870). Costs and disbursements are unrelated to the magnitude of the claimant's injury. The amount of costs which may be taxed by the prevailing party is fixed by statute at $5 or $10. Minn.Stat. Sec. 549.02 (1986). The reasonableness of the disbursements, including fees and mileage paid for service of process, to be allowed the prevailing party depends not so much on the size of the plaintiff's claim as on the complexity of proving the claim or of defending against it. Minn.Stat. Sec. 549.04 (1986). In short, costs and disbursements are not part of the claim for compensation for personal injury; they are reimbursement of the expense of litigating the claim. We hold, therefore, that statutory costs pursuant to section 549.02 and reasonable disbursements pursuant to section 549.04 are not subject to the limitation on tort claims provided by section 3.736. ⁵

Interest, however, poses a quite different problem. Interest is directly proportional to the magnitude of the damages sustained by the claimant. Traditionally, pre-verdict interest was not allowed on an unliquidated claim such as a claim for personal injuries where the amount of damages depended upon contingencies or jury discretion. Potter v. Hartzell Propellor, Inc., 291 Minn. 513, 518, 189 N.W.2d 499, 504 (1971). The long accepted principle underlying the disallowance of interest was that while one who owed a liquidated sum could avoid interest by tendering payment, "one who cannot ascertain the amount of damages for which he might be held liable cannot be expected to tender payment and thereby stop the running of interest." Id. When, however, "damages were readily ascertainable by computation or reference to generally recognized standards," such as market value, interest from the date of loss was awarded "as damages" to compensate the plaintiff for the loss occasioned by the defendant's tort. Id. See also Swanson v. Andrus, 83 Minn. 505, 510, 86 N.W. 465, 467 (1901); Varco v. Chicago, M. & St. P. Ry. Co., 30 Minn. 18, 22, 13 N.W. 921, 922 (1882).

In 1984, eight years after enactment of the state tort claims act, section 549.09 was amended to allow pre-verdict interest irrespective of a defendant's ability to ascertain the amount of damages for which he might be held liable or to stop the running of interest. Since such "interest" cannot be calculated until the amount on which interest is allowed has been fixed by verdict, it is apparent that pre-verdict interest is not conventional interest on a sum of money. Rather, it is an element of damages...