CSM Equities, LLC v. Woodland Village Investments Limited Partnership ( 2016 )


Menu:
  •                         This opinion will be unpublished and
    may not be cited except as provided by
    Minn. Stat. § 480A.08, subd. 3 (2014).
    STATE OF MINNESOTA
    IN COURT OF APPEALS
    A15-0455
    CSM Equities, LLC,
    Appellant,
    vs.
    Woodland Village Investments Limited Partnership, et al.,
    Respondents.
    Filed January 25, 2016
    Affirmed as modified
    Hooten, Judge
    Hennepin County District Court
    File No. 27-CV-12-13846
    Richard T. Ostlund, Randy G. Gullickson, Steven C. Kerbaugh, Anthony Ostlund Baer &
    Louwagie P.A., Minneapolis, Minnesota (for appellant)
    Timothy D. Kelly, Dykema Gossett PLLC, Minneapolis, Minnesota; and
    Christopher R. Morris, Casey D. Marshall, Bassford Remele, PA, Minneapolis, Minnesota
    (for respondent)
    Considered and decided by Ross, Presiding Judge; Hooten, Judge; and Smith, Judge.
    UNPUBLISHED OPINION
    HOOTEN, Judge
    Appellant challenges the district court’s dismissal of its claims on summary
    judgment and the district court’s award of costs and disbursements to respondents. In a
    cross-appeal, respondents claim that the district court erred by rejecting their statute of
    limitations defense and denying their motion for attorney fees. We affirm as modified.
    FACTS
    Appellant CSM Equities, LLC (CSM) is a company in the business of acquiring,
    developing, and managing real estate.       Respondents Woodland Village Investments
    Limited Partnership (Woodland), ATEK Companies, Inc., and Acrometal Management
    Corporation (Acrometal) are part of a network of companies known as the ATEK Family
    of Companies. Respondent William Bieber and his two daughters have a sole ownership
    interest in the ATEK Family of Companies, and respondent Robert Levy is the former chief
    executive officer of Acrometal.
    In 1986, Bieber acquired a manufacturing facility in Plymouth, Minnesota, which
    he eventually conveyed to Woodland.         The Plymouth facility was equipped as a
    manufacturing facility for aluminum casting and included a foundry. Woodland leased the
    Plymouth facility to Progress Casting Group, Inc. (Progress), another company owned by
    Bieber. Progress was in the business of manufacturing and selling aluminum casting
    products, and it used the Plymouth facility to manufacture its products.
    In mid-2003, one of Progress’ customers, Harley-Davidson (Harley), notified
    Progress that it intended to find another supplier for certain parts manufactured at the
    Plymouth facility. Harley was Progress’ biggest customer, accounting for approximately
    half of its revenues, and the loss of Harley’s business would mean that Progress would lose
    approximately $19 million annually in sales. In an attempt to keep Harley’s business,
    Progress decided to lower costs by opening a facility in a non-union state.
    2
    In December 2003, Progress adopted a 2004 business plan, which addressed the
    impact of Harley’s planned change in suppliers and Progress’ plan to open a non-union
    facility outside of Minnesota. In February 2004, Progress met with its lender and provided
    it with the 2004 business plan. Progress eventually decided to build a new facility in Iowa,
    and in October 2004, it began applying for loans and engaging in workforce recruitment
    efforts.
    In early 2004, Woodland listed the Plymouth facility for sale subject to a six-year
    lease to Progress without informing its broker of Progress’ plans to build a manufacturing
    facility outside the state. In the fall of 2004, CSM expressed an interest in purchasing the
    Plymouth facility. During negotiations, CSM learned that Progress’ business was growing.
    CSM and Woodland executed a purchase agreement on December 23, 2004. The purchase
    agreement provided for a six-year lease term, but CSM requested before closing that the
    lease term be extended to seven years. Progress refused to extend the term of the lease, but
    compromised with CSM by ultimately agreeing to extend the lease to a seventh year, while
    retaining an option to reduce the space that it leased during the seventh year of the lease.
    The lease also included provisions for returning the facility to a certain condition and
    removing certain equipment when Progress vacated the premises. Progress and CSM
    entered into the lease on May 4, 2005, and CSM closed on the purchase of the facility for
    $8.1 million on May 12, 2005.
    From the date of closing to mid-2008, Progress paid the agreed rent to CSM. In the
    fall of 2008, however, because its business was damaged by the economic recession,
    Progress requested rent concessions.       During the negotiations regarding the rent
    3
    concessions, Progress informed CSM that it had opened a facility in Iowa. CSM granted
    Progress temporary rent relief in exchange for the discharge of the reduction option and an
    extension of the lease term from 2012 to January 31, 2017.
    In October 2009, Progress sold its business at the Plymouth facility to Wellman
    Dynamics Corporation (Wellman). CSM did not consent to the transfer as required under
    the lease, but Wellman began occupying the Plymouth facility in November 2009. CSM
    filed eviction papers against Wellman, Progress, and Acrometal in February 2010, and the
    district court granted summary judgment to CSM in the eviction action in January 2011.
    Wellman operated the Plymouth facility and paid the rent due to CSM under the lease from
    November 2009 until its eviction in January 2011.
    Because Progress was still liable under the lease for rent and operating expenses
    until 2017, Progress entered into a “Mutual Release and Settlement Agreement” with CSM
    on July 28, 2011. The agreement provided for entry of a consent judgment in the amount
    of $2,837,500 in favor of CSM. Progress filed for bankruptcy on April 13, 2012, and CSM
    filed a claim in the bankruptcy matter for $3,065,214 based on the consent judgment. CSM
    eventually sold the Plymouth facility for $4.1 million in 2013.
    CSM commenced this action against respondents in June 2012, requesting that the
    district court order an accounting and constructive trust and asserting claims of fraudulent
    inducement, unjust enrichment, aiding and abetting, and civil conspiracy. In alleging
    fraudulent inducement, CSM claimed that respondents represented to CSM that Progress
    would be a long-term tenant at the Plymouth facility and failed to disclose the plans to open
    a facility in Iowa and move a substantial part of Progress’ business there. Respondents
    4
    moved to dismiss the complaint for failing to plead fraud with particularity and for failure
    to state a claim upon which relief can be granted. In a December 17, 2012 order, the district
    court, converting respondents’ motion for dismissal into a summary judgment motion,
    granted summary judgment as to CSM’s unjust enrichment claim and request for an
    accounting and constructive trust, but denied it as to the other claims. Respondents again
    moved for summary judgment on the remaining claims, and the district court granted their
    motion and dismissed CSM’s complaint on September 17, 2014. Respondents moved for
    attorney fees, costs, and disbursements. In a February 6, 2015 order, the district court
    denied respondents’ motion for attorney fees, but awarded respondents $141,778.66 in
    costs and disbursements. Both CSM and respondents appeal.
    DECISION
    I.
    As a threshold matter, respondents argue in their cross-appeal that CSM’s claims
    are time-barred as a matter of law because CSM failed to exercise reasonable diligence
    and, as a result, did not timely discover the facts that allegedly support its claim of fraud.
    In Minnesota, claims of fraud must be brought within six years. 
    Minn. Stat. § 541.05
    , subd.
    1(6) (Supp. 2015). “The 6-year period begins to run when the facts constituting fraud were
    discovered or, by reasonable diligence, should have been discovered.” Toombs v. Daniels,
    
    361 N.W.2d 801
    , 809 (Minn. 1985).
    [T]he facts constituting the fraud are deemed to have been
    discovered when, with reasonable diligence, they could and
    ought to have been discovered. The mere fact that the
    aggrieved party did not actually discover the fraud will not
    extend the statutory limitation, if it appears that the failure
    5
    sooner to discover it was the result of negligence, and
    inconsistent with reasonable diligence.
    Bustad v. Bustad, 
    263 Minn. 238
    , 242, 
    116 N.W.2d 552
    , 555 (1962) (emphasis added)
    (quotation omitted). When fraud should have reasonably been discovered is a question of
    fact. Jane Doe 43C v. Diocese of New Ulm, 
    787 N.W.2d 680
    , 684 (Minn. App. 2010).
    “Where the evidence leaves no room for reasonable minds to differ on the issue, however,
    the court may properly resolve the issue as a matter of law.” 
    Id.
     at 684–85 (quotation
    omitted).
    The district court rejected respondents’ argument that CSM’s claims were time-
    barred as a matter of law. The district court found that “reasonable minds could differ on
    whether CSM should have discovered information on the Iowa [f]acility by reasonable
    diligence before June 2006,” creating a question of fact as to when CSM should have
    discovered the alleged fraud by reasonable diligence.
    Here, CSM alleges that respondents fraudulently induced it to purchase the
    Plymouth facility. CSM claims that it did not learn of the Iowa facility until September
    2008. The parties closed on the transaction in May 2005, and CSM sued respondents for
    fraud in June 2012. Therefore, the question is whether CSM should have discovered
    respondents’ alleged fraud before June 2006.
    Respondents argue that the knowledge CSM possessed at closing establishes that
    CSM failed to exercise reasonable diligence. Specifically, respondents note that, at the
    time of closing, CSM had negotiated the reduction option in the lease, had the right to
    review Progress’ financial statements, and should have known about the Iowa plant. In
    6
    regard to CSM’s knowledge of the Iowa plant, respondents point out that the construction
    of the facility was covered in an industry magazine, as well as in an Iowa newspaper and
    in a bulletin issued by the Associated Press.
    “A plaintiff must exercise reasonable diligence when he or she has notice of a
    possible cause of action for fraud.” 
    Id. at 684
     (quotations omitted). A fact question remains
    in this case regarding whether CSM had notice of the facts underlying its fraud claim
    against respondents before June 2006. While CSM could have known before June 2006
    about Progress’ plan to move its manufacturing plant to Iowa, a question remains regarding
    whether CSM ought to have known about the plan.
    Respondents argue that CSM’s claims are time-barred because CSM did not
    exercise reasonable diligence, citing three cases where courts have held as a matter of law
    that plaintiff had not exercised due diligence. But, those cases are distinguishable from the
    present case. In Bustad, the Minnesota Supreme Court held as a matter of law that the
    alleged fraud was discoverable more than six years before the commencement of the action
    in 1960 where defendant allegedly incurred debts to plaintiff as early as 1930 and made no
    payments after 1951, despite repeated requests for payment. 
    263 Minn. at
    238–42, 116
    N.W.2d at 553–55. In Veldhuizen v. A.O. Smith Corp., the court found that the plaintiffs
    “knew almost from the start that the promised benefits which induced them to purchase the
    [defendant’s] silos did not materialize” and that, therefore, a duty to investigate was
    triggered when the problems plaintiffs experienced were attributed to the silos by the
    plaintiffs’ veterinarians. 
    839 F. Supp. 669
    , 675–76 (D. Minn. 1993) (applying Minnesota
    law). Bustad and Veldhuizen are distinguishable from the present case because CSM did
    7
    not have actual knowledge of the alleged fraud until 2008. Furthermore, unlike in
    Veldhuizen, CSM did not experience any adverse effects as a result of the relocation of the
    plant that would have put it on notice of the alleged fraud before 2008.
    In the last case cited by respondent, Hope v. Klabal, the Eighth Circuit held that the
    plaintiff failed to establish a genuine issue of material fact as to her diligence in discovering
    the fraud where the plaintiff, a sophisticated businessperson, purchased $10 million of
    artwork without independently confirming the value of the works and with notice of the
    fact that the insurance valuations she was provided were not statements of the art’s fair
    market value.    
    457 F.3d 784
    , 792 (8th Cir. 2006) (applying Minnesota law). Hope is
    distinguishable because in this case there was an independent appraisal, which valued the
    Plymouth facility at $8.9 million, and CSM representatives inquired into the value of the
    facility by touring the facility and reviewing Progress’ financial records. Unlike the
    plaintiff in Hope, CSM actively investigated the value of the investment and conducted an
    independent inquiry into the facility’s value, and the inquiry created no reason to suspect
    that respondents’ representations were false.
    Because reasonable minds could differ regarding when CSM, by reasonable
    diligence, could and ought to have discovered the alleged fraud, the district court did not
    err in holding that CSM’s claims are not time barred as a matter of law.
    II.
    CSM argues that the district court erred in granting summary judgment to
    respondents on CSM’s fraudulent inducement claim. In its complaint, CSM alleged that
    respondents fraudulently induced CSM to enter into the purchase agreement by
    8
    representing to CSM that Progress was a stable, long-term tenant of the Plymouth facility
    and not disclosing that Progress was in the process of opening a facility in Iowa and
    transferring a significant portion of its production there.
    Reliance on Respondents’ Representations
    CSM first alleges that the district court erred in granting summary judgment to
    respondents on the fraudulent inducement claim because there are genuine issues of
    material fact regarding whether its reliance on respondents’ representations was
    reasonable.
    Appellate courts “review a district court’s grant of summary judgment de novo to
    determine whether any genuine issue of material fact exists and whether the district court
    erred in applying the law.” Larson v. Nw. Mut. Life Ins. Co., 
    855 N.W.2d 293
    , 299 (Minn.
    2014). “[S]ummary judgment is inappropriate when reasonable persons might draw
    different conclusions from the evidence presented.” DLH, Inc. v. Russ, 
    566 N.W.2d 60
    , 69
    (Minn. 1997). But, “[a] defendant is entitled to judgment as a matter of law when the
    record reflects a complete lack of proof on an essential element of the plaintiff’s claim.”
    Lubbers v. Anderson, 
    539 N.W.2d 398
    , 401 (Minn. 1995). We review the evidence in the
    light most favorable to the party against whom summary judgment was granted. McIntosh
    Cty. Bank v. Dorsey & Whitney, LLP, 
    745 N.W.2d 538
    , 545 (Minn. 2008).
    A claim for fraudulent inducement requires: (1) a false representation of a past or
    existing material fact susceptible of knowledge; (2) made with knowledge of its falsity or
    without knowing whether it is true or false; (3) with the intent to induce another to act in
    9
    reliance thereon; (4) actual reliance thereon; and (5) pecuniary damages caused by the
    reliance. Valspar Refinish, Inc. v. Gaylord’s, Inc., 
    764 N.W.2d 359
    , 368 (Minn. 2009).
    Because the parties’ agreement is governed by a written document, the parol
    evidence rule applies. “The parol evidence rule excludes evidence outside a written
    document which varies or contradicts the plain terms of the document.” Johnson Bldg. Co.
    v. River Bluff Dev. Co., 
    374 N.W.2d 187
    , 193 (Minn. 1985). But, the parol evidence rule
    does not exclude evidence of fraudulent oral representations by one party that induce
    another party to enter into a written contract. 
    Id.
     Whether reliance on an oral representation
    is reasonable is a question of fact for the jury. Hoyt Props., Inc. v. Prod. Res. Grp., L.L.C.,
    
    736 N.W.2d 313
    , 321 (Minn. 2007).            Courts may “find that reliance on an oral
    representation was unjustifiable as a matter of law only if the written contract provision
    explicitly stated a fact completely contradictory to the claimed misrepresentation.”
    Johnson, 
    374 N.W.2d at 194
    . But if an oral representation is not directly contradictory to
    the written contract, the trier of fact decides whether there was reasonable reliance. 
    Id.
    David Carland, a CSM representative who toured the Plymouth facility, testified
    that respondents made misrepresentations to him when he was exploring the possibility of
    purchasing the CSM facility:
    I was approached to buy a building, and you know, I was
    convinced and enticed to buy the building based on a
    representation . . . that the business that was being conducted,
    the manufacturing that was being done in that building needed
    to be done specifically [in] that building, that they had to have
    that building, and that they were going to continue—that it was
    critical . . . to the success of that account that they manufacture
    within that building. That they were extremely entrenched
    within that building.
    10
    Carland further testified that the real estate broker’s selling point on the Plymouth facility
    was that the building was “an integral operation for Progress” and that CSM acquired the
    Plymouth facility “in reliance and [based upon] assurances that the Harley production was
    there for the foreseeable future.” CSM offered an expert report stating that plans to move
    production to a new facility in Iowa because of the threatened loss of Harley’s business
    would have been material for any purchaser of the Plymouth facility.
    In granting summary judgment on CSM’s fraudulent inducement claim, the district
    court held that CSM’s reliance on respondents’ representations was unjustifiable as a
    matter of law because such representations were directly contradictory to the terms of the
    purchase agreement and the lease.
    We agree. The representations that respondents allegedly made were directly
    contradictory to terms in the purchase agreement and the lease. The seven-year lease term
    is directly contradictory to the representation that Progress would be a long-term tenant
    because it explicitly limited the length of time that Progress was obligated to remain in the
    building. The parties extensively discussed and negotiated the length of the lease. Indeed,
    before closing, CSM asked for a longer lease term, and Progress only agreed to the seventh
    year with a reduction option. The reduction option is also inconsistent with Progress being
    a long-term tenant, as the provision gave Progress the option of reducing its use of the
    Plymouth facility even during the lease term. Further, the provisions for restoring the
    property to a certain condition and removing certain equipment when Progress vacated the
    facility contradict the representation that Progress would be a long-term tenant because
    11
    they provide conditions for exiting the building that could be exercised at the end of the
    lease. Additionally, both parties had the right not to renew Progress’ tenancy at the end of
    the lease term. Because the terms of the lease and the purchase agreement directly
    contradict the representation that Progress would be a long-term tenant, the district court
    did not err in holding that CSM’s fraudulent inducement claim fails as a matter of law.
    Duty to Disclose
    CSM also argues that the district court erred in finding that respondents had no duty
    to disclose their plans regarding the Plymouth facility, contending that it was denied the
    opportunity to weigh the risk that Progress might leave the facility before the end of the
    lease term. In a footnote, the district court concluded that although failure to disclose
    material information may constitute fraud, there was no duty to disclose here because the
    transaction at issue was an arm’s-length transaction between “sophisticated entities, owned
    and operated by sophisticated businessmen, with sophisticated lawyers” and CSM had
    sufficient time and opportunity to conduct due diligence.
    Failure to disclose material information may constitute fraud, but “[b]efore
    nondisclosure may constitute fraud . . . , there must be a suppression of facts which one
    party is under a legal or equitable obligation to communicate to the other, and which the
    other party is entitled to have communicated to him.” Richfield Bank & Trust Co. v.
    Sjogren, 
    309 Minn. 362
    , 365, 
    244 N.W.2d 648
    , 650 (Minn. 1976). One party generally has
    no duty to disclose material facts to another party unless special circumstances exist.
    Graphic Commc’ns Local 1B Health & Welfare Fund “A” v. CVS Caremark Corp., 
    850 N.W.2d 682
    , 695 (Minn. 2014). “[A] duty to disclose may arise if . . . one party has special
    12
    knowledge of material facts to which the other party does not have access. If a party
    conceals these facts, knowing that the other party acts on the presumption that no such facts
    exist, nondisclosure may constitute fraud.” Driscoll v. Standard Hardware, Inc., 
    785 N.W.2d 805
    , 812 (Minn. App. 2010) (alteration omitted) (quotations and citation omitted),
    review denied (Minn. Sept. 29, 2010).
    We agree with the district court that no duty to disclose existed between CSM and
    respondents.   The present case involves sophisticated businesspeople conducting an
    adversarial, arm’s-length transaction, and “[c]ourts applying Minnesota law have been
    reluctant to impose a duty to disclose material facts in arm’s-length business transactions
    between commercial entities.” 
    Id. at 813
    ; see, e.g., Taylor Inv. Corp. v. Weil, 
    169 F. Supp. 2d 1046
    , 1065 (D. Minn. 2001) (applying Minnesota law and granting summary judgment
    to defendant on plaintiff’s fraud claims, concluding that when parties were engaged in “an
    arms length business transaction” there was no duty to disclose omitted information).
    CSM argues that respondents “made representations regarding [Progress] remaining
    a long-term, stable tenant of the Plymouth [f]acility without qualifying those statements or
    disclosing . . . the material facts that [respondents] intended to open a new Iowa [f]acility
    and transfer the business of [Progress’] most valuable customer to that [f]acility.” But,
    respondents specifically listed the Plymouth facility for sale subject to a six-year lease to
    Progress, negating any reasonable expectation that Progress would lease the building
    beyond that term. Furthermore, the parties actively negotiated the length of the lease term
    before closing on the facility and entering into the lease. CSM toured the building and had
    the right under the purchase agreement to inspect the building for its acceptability “in its
    13
    sole and absolute discretion,” including “economic feasibility of development [and] market
    feasibility.” Moreover, it is not clear that respondents’ alleged representation that Progress
    would be a “long-term, stable tenant” is inconsistent with the seven-year lease term. And,
    despite CSM’s arguments that it was denied the opportunity to weigh the risk that Progress
    would leave before the end of the lease term, Progress could have moved all production
    out of the Plymouth facility immediately after closing and still have complied with the
    terms of the lease as long as it continued to pay rent and fulfill its other obligations. Under
    these circumstances, we agree with the district court that respondents did not have a duty
    to disclose their plans to open a facility in Iowa and transfer the Harley business to the
    facility.
    III.
    CSM claims that the district court erred in granting summary judgment to
    respondents on its unjust enrichment claim. Unjust enrichment is an equitable doctrine.
    Southtown Plumbing, Inc. v. Har-Ned Lumber Co., 
    493 N.W.2d 137
    , 140 (Minn. App.
    1992). “In order to establish a claim for unjust enrichment, the claimant must show that
    another party knowingly received something of value to which he was not entitled, and that
    the circumstances are such that it would be unjust for that person to retain the benefit.”
    Schumacher v. Schumacher, 
    627 N.W.2d 725
    , 729 (Minn. App. 2001).
    CSM argues that the district court erred in granting summary judgment to
    respondents on its unjust enrichment claim because it conferred a benefit on respondents,
    namely “an exorbitant purchase price,” and that it would be unjust to allow respondents to
    retain the benefit.   But, “equitable relief,” such as recovery on a theory of unjust
    14
    enrichment, “cannot be granted where the rights of the parties are governed by a valid
    contract.” U.S. Fire Ins. Co. v. Minn. State Zoological Bd., 
    307 N.W.2d 490
    , 497 (Minn.
    1981). Because the parties’ rights were governed by a contract here, the district court
    properly granted respondents’ motion for summary judgment on the unjust enrichment
    claim.
    IV.
    CSM challenges the district court’s grant of summary judgment to respondents on
    CSM’s request for an accounting and constructive trust. An equitable accounting is
    primarily available only “when a fiduciary owes an equitable duty to account and when the
    accounts at issue are exceedingly complicated.” United Prairie Bank-Mountain Lake v.
    Haugen Nutrition & Equip., LLC, 
    813 N.W.2d 49
    , 57 n.3 (Minn. 2012).
    The district court found that neither of the circumstances outlined in United Prairie
    Bank were present in this matter. CSM does not challenge the district court’s conclusion
    that the present case does not fall into either of the United Prairie Bank circumstances, but
    argues that those circumstances are not exclusive. CSM cites Keough v. St. Paul Milk Co.,
    
    205 Minn. 96
    , 103, 
    285 N.W. 809
    , 815 (1939), for the proposition that “an accounting
    generally will be given where [fraud] is charged.” But here, although CSM presented a
    fraud claim, the claim fails as a matter of law. Because CSM has failed to show that a
    genuine issue of material fact exists regarding its fraud claim and has failed to show that
    its claim fits within the circumstances outlined in United Prairie Bank, the district court
    did not err in granting summary judgment to respondents on CSM’s request for an
    accounting.
    15
    Likewise, the district court properly granted summary judgment to respondents on
    CSM’s request for a constructive trust. A constructive trust is “purely a creation of equity
    designed to provide a remedy for the prevention of unjust enrichment where a person
    holding property is under a duty to convey it to another to whom it justly belongs.” Knox
    v. Knox, 
    222 Minn. 477
    , 481, 
    25 N.W.2d 225
    , 228 (1946). Fraud does not need to be
    present in order to impose a constructive trust, but there must be clear and convincing
    evidence that a constructive trust is necessary to prevent unjust enrichment. In re Estate
    of Eriksen, 
    337 N.W.2d 671
    , 674 (Minn. 1983). Both CSM’s unjust enrichment claim and
    its fraud claim fail as a matter of law. Because there is no valid fraud or unjust enrichment
    claim, the district court did not err in holding that CSM was not entitled to a constructive
    trust.
    V.
    CSM argues that the district court erred in granting summary judgment on its civil
    conspiracy and aiding and abetting claims. In order to state a claim for aiding and abetting
    the tortious conduct of another, the plaintiff must show that the primary tort-feasor
    committed a tort that injured the plaintiff. Witzman v. Lehrman, Lehrman & Flom, 
    601 N.W.2d 179
    , 187 (Minn. 1999). Similarly, an underlying tort is required for a civil
    conspiracy claim. D.A.B. v. Brown, 
    570 N.W.2d 168
    , 172 (Minn. App. 1997). Despite
    CSM’s allegation that respondents Bieber, Levy, and ATEK Companies “actively
    encouraged, commanded, directed, advised, and/or participated in the fraud by [Woodland]
    and Acrometal,” no tort was committed here, as the district court properly granted summary
    judgment to respondents on the fraud claim. Because there is no underlying tort, the district
    16
    court did not err in granting summary judgment to respondents on the civil conspiracy and
    aiding and abetting claims.1
    VI.
    CSM contends that the district court erred in failing to address its punitive damages
    claim. “Punitive damages shall be allowed in civil actions only upon clear and convincing
    evidence that the acts of the defendant show deliberate disregard for the rights or safety of
    others.” 
    Minn. Stat. § 549.20
    , subd. 1(a) (2014). This court reviews the district court’s
    decision to deny a motion to add a claim for punitive damages for an abuse of discretion.
    J.W. ex rel. B.R.W. v. 287 Intermediate Dist., 
    761 N.W.2d 896
    , 904 (Minn. App. 2009).
    The district court declined to address CSM’s motion to amend the complaint to add
    a claim for punitive damages because it was granting respondents’ motion for summary
    judgment and dismissing the complaint. While CSM argues that punitive damages are
    appropriate because respondents “conducted a nuanced and professional fraud,” CSM’s
    fraud claim fails as a matter of law due to a lack of reasonable reliance. Therefore, the
    district court did not abuse its discretion by declining to address CSM’s motion to amend
    its complaint to assert a claim for punitive damages.
    VII.
    1
    CSM also challenges the district court’s conclusion that CSM had released its claims
    against respondents by means of a settlement agreement between CSM and Progress.
    Furthermore, both CSM and respondents challenge the district court’s determination of
    what type of damages would be recoverable if CSM were to succeed on the fraudulent
    inducement claim. Because we are affirming the district court’s grant of summary
    judgment to respondents on each of CSM’s claims, we need not address these issues.
    17
    CSM challenges the district court’s award to respondents of expert witness fees,
    deposition costs, photocopy costs, and witness mileage and fees. Here, the district court
    awarded respondents a total of $141,778.66 in costs and disbursements, including
    $114,306 in expert witness fees, $1,892.25 in deposition costs, $1,000 in photocopying
    costs, $877.09 in attorney travel expenses, and $4,393.27 in witness mileage and fees.
    The prevailing party in a civil matter is entitled to recover costs and reasonable
    disbursements. 
    Minn. Stat. § 549.02
    , subd. 1 (costs), .04, subd. 1 (disbursements) (2014).
    This court reviews an award of costs and disbursements for an abuse of discretion. Lake
    Superior Ctr. Auth. v. Hammel, Green & Abrahamson, Inc., 
    715 N.W.2d 458
    , 482 (Minn.
    App. 2006).
    Expert Witness Fees
    CSM argues that the district court erred in awarding expert witness fees because the
    experts did not testify and the district court did not rely on their opinions. The district court
    may award “just and reasonable” fees or compensation for witnesses “summoned or sworn
    and examined as an expert.” 
    Minn. Stat. § 357.25
     (2014). It may be appropriate for a
    district court to award expert witness fees when a matter is disposed of by summary
    judgment. See Buscher v. Montag Dev., Inc., 
    770 N.W.2d 199
    , 209–10 (Minn. App. 2009)
    (affirming the district court’s award of expert witness fees even though there was no trial
    because “respondents were required to do investigative trial preparation in order to make
    dispositive motions”).     Drawing upon Buscher, the district court noted that “it was
    necessary for [respondents] to retain experts to defend this matter” and that “the experts
    were necessary and [their costs were] reasonable to defend the claims.”
    18
    CSM argues that Buscher is distinguishable because respondents’ experts did not
    have to do any investigative trial preparation in order for respondents to make dispositive
    motions. This argument is not persuasive. Although respondents’ experts were not
    deposed and did not testify, they provided appraisals, legal opinions, and evaluations of
    CSM’s damages. As was the case in Buscher, denying these costs simply because the
    matter was resolved by summary judgment would be misplaced, as the experts were
    necessary to defend CSM’s claims.
    Deposition Costs
    CSM next challenges the district court’s award of deposition costs, arguing that they
    may not be awarded because respondents did not use them in connection with their motion
    for summary judgment. “The legal fees paid for certified copies of the depositions of
    witnesses . . . necessarily used on trial of a cause or on the assessment of damages, shall be
    allowed in the taxation of costs.” 
    Minn. Stat. § 357.31
     (2014). Because the district court
    awarded respondents only the cost of copies of deposition transcripts used in opposition to
    CSM’s motion for punitive damages, the district court did not abuse its discretion in
    awarding deposition costs.
    Photocopy Costs
    CSM also contends that the district court erred in awarding $1,000 in photocopy
    costs. “The cost of obtaining medical records used to prepare a claim, whether or not
    offered at trial, and the reasonable cost of exhibits shall be allowed in the taxation of costs.”
    19
    
    Minn. Stat. § 357.315
     (2014). The district court relied on this provision in awarding $1,000
    in photocopying costs to respondents. But, in the statute the modifier “whether or not
    offered at trial” applies only to medical records, rather than to all exhibits. Because there
    was no trial in this case, the district court erred in awarding photocopy costs to respondents.
    Accordingly, we reduce the costs and disbursements awarded to respondents by $1,000.
    Witness Mileage and Fees
    CSM contends that the district court erred in awarding $4,393.27 in witness mileage
    and fees, alleging that witness fees “are limited to $20 per day plus mileage for attending
    an action for the purpose of testifying in court.” But, the statute is not so limited and
    provides that fees may be paid for witnesses “for attending in any action or proceeding in
    any court or before any officer, person, or board authorized to take the examination of
    witnesses” and that mileage may be paid to witnesses “for travel to and from the place of
    attendance.” 
    Minn. Stat. § 357.22
     (2014). In this case, witnesses called by respondents
    were deposed. Because the attendance of witnesses at depositions fits within the statute,
    the district court did not abuse its discretion in awarding witness fees and mileage.
    Attorney Travel Expenses
    Finally, CSM argues that the district court erred in awarding $877.09 in attorney
    travel expenses. The district court noted that the attorney travel expenses “were for
    depositions noticed by CSM and submitted for consideration with the punitive damages
    motion.” In Benson v. Nw. Airlines, Inc., this court affirmed the district court’s award of
    attorney travel expenses incurred in taking a deposition. 
    561 N.W.2d 530
    , 541 (Minn. App.
    20
    1997), review denied (Minn. June 11, 1997). We conclude that the district court did not
    abuse its discretion in awarding certain attorney travel expenses.
    VIII.
    In their cross-appeal, respondents challenge the district court’s denial of their
    motion for attorney fees. After prevailing on their second motion for summary judgment,
    respondents moved for $813,381.51 in attorney fees. Paragraph 18.J of the purchase
    agreement provided that the prevailing party in any court action between Woodland and
    CSM would be entitled to attorney fees. However, the district court held that this clause
    was limited by a no-survival clause in paragraph 18.K of the purchase agreement. The
    district court determined that the attorney fee provision terminated upon closing because it
    fell within the scope of the no-survival clause. The district court concluded that the merger
    doctrine also prohibited respondents from recovering attorney fees.             On appeal,
    respondents argue that neither the no-survival clause nor the merger doctrine precludes
    them from recovering attorney fees. We disagree.
    In Minnesota, attorney fees generally are not recoverable unless a specific contract
    or a statute authorizes such recovery. Dunn v. Nat’l Beverage Corp., 
    745 N.W.2d 549
    , 554
    (Minn. 2008). Contract interpretation is a question of law that this court reviews de novo.
    Valspar, 764 N.W.2d at 364. The purpose “of contract interpretation is to ascertain and
    enforce the intent of the parties.” Id. “If a contract is unambiguous, the contract language
    must be given its plain and ordinary meaning . . . .” Denelsbeck v. Wells Fargo & Co., 
    666 N.W.2d 339
    , 346–47 (Minn. 2003) (quotation omitted). Courts “will not rewrite, modify,
    or limit the effect of a contract provision by a strained construction when the contractual
    21
    provision is clear and unambiguous.” Dorsey & Whitney LLP v. Grossman, 
    749 N.W.2d 409
    , 418 (Minn. App. 2008).
    First, respondents argue that because the parties could anticipate a dispute arising
    after closing, the parties intended that the attorney fee clause would survive closing. But,
    in section 18, entitled “Miscellaneous,” the unambiguous language of the no-survival
    clause, which immediately follows the attorney fee clause, specifically provides that “no
    warranties, covenants, or representations made herein by either [Woodland] or [CSM] shall
    survive [c]losing,” subject to a few exceptions. In reading these two clauses together, the
    attorney fee clause would not survive the closing, but would apply to disputes that arose
    after the parties had executed the purchase agreement but before closing. If the parties
    wanted the attorney fee provision to apply to disputes after closing, they could have
    included it within the listed exceptions to the no-survival clause, but they failed to do so.
    Next, respondents argue that because the attorney fee clause is not specifically
    described as a “covenant” under the purchase agreement, it is not subject to the no-survival
    clause and is a continuing promise that survives closing. But, this argument ignores the
    common legal definition of “covenant” as a “formal agreement or promise.” Black’s Law
    Dictionary 391 (8th ed. 2004). It is evident that it is this common legal usage of the word
    “covenant” that is utilized in the purchase agreement. For example, section 6 of the
    purchase agreement, entitled “Representations, Warranties and Covenants of Seller,” the
    first clause states: “In order to induce [CSM] to enter into this [a]greement and purchase
    the [p]remises, [Woodland] hereby represents, warrants and covenants to [CSM] . . . .”
    The no-survival clause applies to all covenants or promises “[e]xcept as provided in
    22
    [s]ections 4, 6, and 13.” Section 6 contains a provision that requires Woodland to
    indemnify CSM for attorney fees and court costs in the event CSM had to bring a claim or
    action because of Woodland’s breach of any of the listed representations, warranties, or
    covenants.   The provision, however, specifically provides that the buyer’s right of
    indemnification only survives closing for a period of nine months. If a party’s right to
    attorney fees as set forth in the “Miscellaneous” section, as claimed by respondents, was a
    continuing obligation that was exempted from the no-survival clause, there would have
    been no need for the section 6 exception to the no-survival clause. And, even that time-
    limited exception only allowed an attorney fee claim to be brought within nine months of
    closing by CSM, not Woodland.
    Finally, respondents argue that the no-survival clause cannot apply to the attorney
    fee clause because the “Miscellaneous” section in which both provisions are found contains
    promises that were certainly intended to survive closing. Respondents point to paragraph
    18.D, which provides addresses, telephone numbers, and other information for the delivery
    of notices and demands, and paragraph 18.L, which provides for the effectuation of a
    section 1031 tax deferred exchange, as clauses in the “Miscellaneous” section that must
    have been intended to survive closing. But, there is nothing in these clauses indicating that
    the parties intended these provisions to survive closing. If the parties had intended the
    attorney fee clause, or paragraphs 18.D and 18.L, to survive closing, they could have
    identified them as exceptions to the no-survival clause or included them in the deed.
    The merger doctrine also precludes respondents from being awarded attorney fees.
    “The merger doctrine generally precludes parties from asserting their rights under a
    23
    purchase agreement after the deed has been executed and delivered.” Bruggeman v. Jerry’s
    Enters., Inc., 
    591 N.W.2d 705
    , 708 (Minn. 1999). When the merger rule applies, “[t]he
    deed is conclusively presumed to express the final agreement of the parties in the absence
    of fraud or mistake, and any contractual provisions omitted from the deed are waived.” B-
    E Constr., Inc. v. Hustad Dev. Corp., 
    415 N.W.2d 330
    , 331 (Minn. App. 1987), review
    denied (Minn. Jan. 20, 1988). There is an exception to the merger rule for acts that are
    conditions subsequent to closing. Bruggeman, 591 N.W.2d at 710.
    Respondents argue that because the attorney fee clause could be performed both
    before and after closing, it falls within the condition subsequent exception to the merger
    doctrine. But, such an interpretation improperly expands the definition of a condition
    subsequent. In creating the condition subsequent exception, the Minnesota Supreme Court
    stated that “there is no reason to presume that a party has waived its right to performance
    of a contractual obligation that cannot be performed until sometime after the closing simply
    by accepting a deed that does not contain a reference to that prior agreement.” Id.
    (emphasis added). Accordingly, the supreme court created an exception only for those
    obligations that cannot be performed until after closing, not for those obligations that can
    be performed before or after closing. Because the attorney fee clause does not fit within
    the condition subsequent exception, the merger doctrine also precludes respondents from
    recovering attorney fees.
    We conclude that, under the plain language of the purchase agreement and under
    the merger doctrine, there is no merit to respondents’ claim that they are entitled to post-
    24
    closing attorney fees under the purchase agreement. The district court did not err in
    refusing to award attorney fees to respondents.
    In summary, we affirm the district court’s grant of summary judgment to
    respondents on CSM’s request for an accounting and constructive trust and its claims of
    fraudulent inducement, unjust enrichment, aiding and abetting, and civil conspiracy. We
    also conclude that the district court did not err in declining to address CSM’s punitive
    damages claim. Because the district court abused its discretion in awarding photocopy
    costs to respondents, we reduce the costs and disbursements awarded to respondents by
    $1,000, but we affirm the remainder of the costs and disbursements award. Finally, we
    hold that the district court did not err in denying respondents’ motion for attorney fees.
    Affirmed as modified.
    25