Robb Gass Construction, Inc. v. Dropps, No. A03-88 (Minn. App. 12/9/2003)
| Decision Date | 09 December 2003 |
| Docket Number | No. A03-88.,A03-88. |
| Parties | Robb Gass Construction, Inc., et al., Respondents, v. Frank R. Dropps, et al., Appellants, and Saturn Electric, Inc., Plaintiff, v. Frank R. Dropps, et al., Appellants, Robb Gass Construction, Inc., et al., Respondents, F&S Ceramic Tile, et al., Defendants, B&K Decorating, et al., Defendants, Lawrence P. Marofsky, Respondent. |
| Court | Minnesota Court of Appeals |
Appeal from the District Court, Hennepin County, File No. CT 96-10411.
Lawrence P. Marofsky, (attorney pro se).
Susan F. K. Bieniek, (for appellants, Frank and Ann Dropps).
Robb Gass Construction, Inc., Robb Gass, (respondents).
Considered and decided by Schumacher, Presiding Judge, Lansing, Judge, and Poritsky, Judge.*
This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (2002).
UNPUBLISHED OPINION
In this second appeal in a residential construction dispute, the homeowners challenge the district court's order on prejudgment interest, costs and disbursements, attorneys' fees, and the enforcement of an attorneys' lien. We conclude that the homeowners are entitled to prejudgment interest against the construction company, costs and disbursements against a principal of the construction company, and a recalculation of attorneys' fees. We also reverse and remand the unqualified personal judgment enforcing the attorneys' lien but affirm the reasonable value of the properly attributed attorneys' fees.
Frank and Ann Dropps contracted with Robb Gass Construction Company (RGC) to build a house on their property in Maple Grove. Robb Gass is a principal of RGC. The construction was completed in February 1996, but not by the December 1995 contract deadline. The Dropps asserted defects in construction, and each party claimed breach of contract. The Dropps filed complaints with the Minnesota Department of Commerce (DOC), and the DOC held an investigative/settlement meeting that resolved some, but not all, of the outstanding claims from subcontractors.
RGC sued the Dropps for breach of contract, fraud, and slander; Robb Gass individually asserted a claim of slander for allegedly defamatory statements made by Ann Dropps. The Dropps answered and counterclaimed for breach of contract. The remaining lien claims were consolidated with this action. The district court conducted a twenty-four-day trial over a two-year period. The findings of fact, conclusions of law, and order for judgment, were twice amended. After the denial of posttrial motions the Dropps appealed, challenging the defamation damages, attorneys' fees and costs, out-of-pocket disbursements to RGC, the construction defect damages, RGC's costs and disbursements, and the subcontractors' liens.
On appeal, this court reversed the judgment for RGC on the defamation claim, affirmed the damages awarded the Dropps for construction defects, and reversed RGC's costs and disbursements because it was no longer the prevailing party. Robb Gass Constr., Inc. v. Dropps, No. C5-00-1570, 2001 WL 436182 (Minn. App. 2001). The appeal also decided most of the mechanic's lien claims, none of which are at issue in the current appeal.
On remand the district court ordered, relevant to this appeal, judgment for $18,756.93 against RGC for the construction defects "with interest to date hereof with costs." The Dropps were unable to collect on that judgment, but in accordance with a court order, recovered $19,156.93 from the Minnesota Contractor's Recovery Fund. As part of the recovery, the Dropps agreed that the Commissioner of Commerce was subrogated to their rights as judgment creditors to the extent of the amounts paid.
The Dropps requested review of the court administrator's allowance of costs and disbursements and moved for $5,220.69 in prejudgment interest. Following a hearing, the district court allowed an additional $7,778.35 in costs and disbursements against RGC, but denied the Dropps' request for prejudgment interest against both RGC and Robb Gass individually.
Attorney Lawrence Marofsky, who had represented the Dropps at trial but not on the first appeal or on remand, asserted an attorneys' lien in the amount of $25,052.25. The district court, after considering the Dropps' objections to the nature and amount of the lien, allowed the full amount and ordered personal judgment for the attorney against the Dropps for $ 25,052.25 plus interest.
The Dropps appeal (1) the denial of prejudgment interest, (2) the denial of costs and disbursements against Robb Gass, personally, (3) the amount of the attorneys' lien, and (4) the personal judgment entered against them on that lien.
The district court denied the Dropps' motion for prejudgment interest against RGC. Under Minn. Stat. § 549.09, subd. 1 (2002), the district court is directed to allow prejudgment interest to a prevailing party. See id., subd. 1(b) (); see also Minn. Stat. § 645.44, subd. 16 (2002) ().
Prejudgment interest has been characterized as "an element of damages" that will "provide full compensation by converting time-of-demand (either by written settlement offer or commencement of action) damages into time-of-verdict damages." Lienhard v. State, 431 N.W.2d 861, 865 (Minn. 1988) (citation omitted). Prejudgment interest compensates the prevailing party for the true cost of money damages that are incurred; it also promotes settlements when the amounts of damages and liability are fairly certain. Casey v. State Farm Mut. Auto. Ins. Co., 464 N.W.2d 736, 739 (Minn. App. 1991), review denied (Minn. Apr. 5, 1991).
The district court initially ordered $18,756.93 in damages for the Dropps, with prejudgment interest. More than a year later the court issued another order that denied prejudgment interest. Because the statute contains the word "shall" and because the damages were certain, we conclude that the district court was correct in its initial order that determined that the Dropps were entitled to prejudgment interest. A party is generally entitled to interest from the time the lawsuit was commenced until the time of judgment. Minn. Stat. § 549.09, subd. 1(b). Therefore, the Dropps are entitled to prejudgment interest from the time the complaint was filed in 1996 to the judgment in 2001. Their counsel calculated the sum of interest due under the statute, using the interest rates listed in Minn. Stat. § 549.09 for the years 1996-2001. This calculation results in a proposed amount of $5,220.69, which should be reduced only by an amount, if any, properly attributable to prejudgment interest included in the Dropps' award from the contractors' recovery fund. We remand to the district court for final determination and entry of prejudgment interest.
Minnesota statutory law provides that the prevailing party in a district court action shall be allowed costs and reasonable disbursements. Minn. Stat. §§ 549.02, .04 (2002). The district court is required to order costs for a prevailing party and has discretion to determine which party, if any, qualifies as a prevailing party. Benigni v. County of St. Louis, 585 N.W.2d 51, 54-55 (Minn. 1998) (citation omitted). "The prevailing party in any action is one in whose favor the decision or verdict is rendered and judgment entered." Borchert v. Maloney, 581 N.W.2d 838, 840 (Minn. 1998). The prevailing party may, under the statute, proceed for its costs and disbursements against any or all of the opposing parties. Vill. of Edina v. Joseph, 264 Minn. 84, 103, 119 N.W.2d 809, 821 (1962).
In the first appeal this court reversed the district court's defamation judgment against the Dropps and concluded that because RGC was no longer the prevailing party, it was not entitled to costs and disbursements. See Robb Gass Constr., Inc. v. Dropps, No. C5-00-1570, 2001 WL 436182 (Minn. App. 2001), at *7-*8. On remand, the district court ordered judgment, costs, and interest against RGC but not against Robb Gass individually. The Dropps requested costs and disbursements against both. At the hearing, Robb Gass disclaimed any personal responsibility for costs. The district court then ordered more than $7,000 in additional costs against RGC but declined to order costs against Robb Gass, noting that judgment had been entered against RGC and not Robb Gass individually.
Minnesota law does not require that a judgment be docketed against a losing party for the district court to order costs and disbursements for the prevailing party. See, e.g., Nieszner v. St. Paul Sch. Dist. No. 625, 643 N.W.2d 645, 650 (Minn. App. 2002) (). As the prevailing parties, the Dropps were entitled to recover their costs and disbursements against any or all of the opposing parties. Robb Gass individually as well as RGC brought the initial defamation claim against the Dropps; he was not dismissed from the lawsuit and thus became a losing party when the defamation judgment was overturned. As a losing party, Robb Gass individually must be included in the order for costs and disbursements, and we remand to the district court for the appropriate order.
Minn. Stat. § 481.13 (2000), the version of the attorneys' lien statute in effect at the time attorney Marofsky filed his lien, authorizes the establishment of an attorneys' lien for compensation on the cause of action, on the client's interest in property relating to any action in which the attorney may have been employed, and on the judgment. The lien "may be established, and the amount thereof determined, by the court, summarily, in the action or proceeding, on the application of the lien claimant or of any such person or party interested in the property...
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