Mohrman & Kaardal, P.A. v. Gene Rechtzigel ( 2015 )

This opinion will be unpublished and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
A14-1499
Mohrman & Kaardal, P.A.,
Respondent,
vs.
Gene Rechtzigel, et al.,
Appellants.
Filed August 10, 2015
Affirmed in part and reversed in part
Reyes, Judge
Dakota County District Court
File No. 19HACV134181
William F. Mohrman, James R. Magnuson, Mohrman, Kaardal & Erickson, P.A.,
Minneapolis, Minnesota; and
Paul C. Peterson, Eric J. Steinhoff, William L. Davidson, Lind, Jensen, Sullivan &
Peterson, Minneapolis, Minnesota (for respondent)
Mark A. Olson, Olson Law Office, Burnsville, Minnesota (for appellant)
Considered and decided by Schellhas, Presiding Judge; Reyes, Judge; and
Minge, Judge.

Retired judge of the Minnesota Court of Appeals, serving by appointment pursuant to
Minn. Const. art. VI, § 10.
UNPUBLISHED OPINION
REYES, Judge
Appellants challenge the district court’s grant of respondent’s summary judgment
motion on appellants’ account-stated and breach-of-contract claims and dismissal of
appellants’ legal malpractice counterclaims, arguing that (1) respondent’s motion for
summary judgment was untimely; (2) summary judgment is not appropriate because
genuine issues of material fact exist; (3) appellants established a prima facie case of
malpractice; (4) appellants’ request to amend the scheduling order should have been
granted; (5) the district court abused its discretion by assigning liability to entities or
individuals without a legal basis; (6) the district abused its discretion by awarding
respondent attorney liens; and (7) the district court abused its discretion by awarding to
respondent the cost of collections. We affirm in part and reverse in part.
FACTS
Appellant Gene Rechtzigel is the property owner and manager of appellant Rex
Rentals, F.R.R. (Rex Rentals) and the personal representative of the estate of Frank H.
Rechtzigel (the Frank Estate). Appellant Rechtzigel is also the named trustee of the
Evelyn I. Rechtzigel Trust (the Evelyn Trust), the Frank H. Rechtzigel Charitable Trust
Remainder Unitrust (the Charitable Trust), and of all trusts under the Frank Estate. All of
the trusts listed above (collectively, the Trust Estate), are the remaining appellants in this
action. From 2000 until 2013, respondent law firm Mohrman & Kaardal, P.A. provided
legal services to appellants in a range of matters. Erick Kaardal, one of respondent’s
2
attorneys, was the primary attorney representing appellants. The instant action was
brought in district court against appellants to collect unpaid legal fees.
I. Retainer and fee agreement
On or around May 7, 2002, appellant Rechtzigel and his father Frank Rechtzigel
retained respondent to represent the Evelyn Trust in an action against Fidelity National
Title and Pulte Title Insurance Agency LLC. Respondent provided an agreement entitled
Retainer and Fee Agreement to appellant Rechtzigel and Frank Rechtzigel. Per the
agreement, the services would be provided at a rate of $195 per hour and legal charges
were required to be paid within 30 days of receipt of the invoice. Additionally, the
agreement provided that the Evelyn Trust was responsible for payment of costs and
disbursements, and “in the event [respondent] must take legal action to collect from the
[Evelyn Trust] account, [the Evelyn Trust] expressly agree[s] to pay all collection costs,
including reasonable attorney’s fees.” A paragraph entitled, “Trustees, Heirs and
Successors” states: “[The Evelyn Trust] expressly binds all Co-Trustees, Successor
Trustees and other Trustees of the [Evelyn Trust] [a]greement to this [a]greement.
Further, [the Evelyn Trust] hereby binds [the Evelyn Trust’s] heirs, personal
representatives, and legal representatives to the terms and conditions set forth herein.” In
order to be enforceable, the agreement required signatures by all parties on or before May
7, 2002. It is undisputed that the agreement was never signed.
3
II. Legal representation
A. Paid legal fees
Despite the unsigned agreement, over the next decade respondent provided legal
services to appellants in: (1) a condemnation action in 2000 on behalf of appellant
Rechtzigel and Frank Rechtzigel; (2) an estate dispute in 2003 on behalf of appellant
Rechtzigel individually; (3) a criminal trespass matter in 2007 on behalf of appellant
Rechtzigel individually; and (4) an insurance-policy dispute in 2010 on behalf of the
Evelyn Trust. Appellant Rechtzigel paid for those legal services, consistent with the
terms of the agreement. Those payments exceeded $289,000 and were made either
through appellant Rechtzigel’s personal accounts or various bank accounts of the Trust
Estate.
B. Unpaid legal fees
Respondent alleges that there remains an outstanding balance on appellants’
account. In 2010, respondent represented the Evelyn Trust in a dispute with Regatta
Clubhouse Association, Inc. regarding payment of association dues. Respondent alleges
that it incurred $8,735.22 in attorney fees, costs, and expenses that have not been paid. In
2011, respondent represented the Trust Estate in a matter to obtain title to certain land
against Fischer Market Place, LLC. Respondent alleges that the amount of attorney fees
incurred in that matter, including costs and expenses, totaled $132,094.85. In 2012,
respondent represented appellant Rechtzigel and appellant Rex Rentals in a bankruptcy
matter and asserts that $9,049.72 in attorney fees, costs, and expenses have not yet been
paid. Later that year, respondent also represented appellant Rechtzigel in a harassment-
4
restraining-order matter, billing $20,847.76 in attorney fees, costs, and expenses that
remain unpaid. Finally, in 2013 respondent represented appellant Rechtzigel as trustee of
the Evelyn Trust in a dispute involving the City of Apple Valley and the Apple Valley
Police Department in Dakota County. The amount of unpaid legal fees, costs, and
expenses incurred by respondent in that matter totaled $14,163.44.
III. Unpaid balances and termination of representation
Due to large outstanding balances, respondent requested appellant Rechtzigel
make payments in 2012. Appellant Rechtzigel assured respondent that he would bring
the balance current the following year. The balance remained unpaid in 2013. In August
2013, respondent informed appellant Rechtzigel that it would not provide any additional
legal services until appellant Rechtzigel agreed to make payments. Appellant Rechtzigel
stated he would not agree to a payment plan and instead terminated respondent’s
representation in a letter dated August 13, 2013.
IV. Procedural background
On October 7, 2013, respondent brought an action in district court alleging claims
of breach of contract (count I), unjust enrichment (count II), account stated (count III),
and attorney lien for compensation (count IV). Respondent also requested judgment
against appellants, jointly and severally, for the payment of “reasonable attorney fees,
costs, and expenses to be determined related to the commencement of the instant action
to collect the attorney fees, costs, and expenses entitled to [respondent].” An affidavit of
service indicated that a copy of the complaint was served to appellants the following day.
5
Appellants, pro se, filed an answer denying the allegations in respondent’s
complaint. Specifically, appellants denied that there was a fee agreement between the
parties and asserted that respondent had “waiv[ed] all of [its] alleged charges in exchange
for a gift to [attorney Erick Kaardal’s] Church.” Appellant Rechtzigel claimed that he
had never seen the agreement before. Appellants asserted a counterclaim seeking
$300,000 in damages for “loss of property, injury, harm, loss of work, loss of money, loss
of enjoyment due to [respondent’s] behavior of malpractice, gross negligence,
incompetence, misrepresentation, failing to protect, failing to represent, failing to provide
representation, failing to be [g]ood faith, and confidentiality, and failing to expose fraud.”
It is undisputed that appellants did not serve an affidavit of expert review with their
counterclaim as required under Minn. Stat. § 544.42, subd. 2(1) (2014), or seek a waiver
to the affidavit requirement as set out in Minn. Stat. § 544.42, subd. 3(c) (2014).
V. Removal to federal court and scheduling order
On November 6, 2013, appellant filed a motion to remove the case to federal court
alleging that there was a “strong appearance of [b]ias against [appellants] in Dakota
County.” The motion was denied for lack of jurisdiction, and the case was remanded
back to Dakota County by order on January 14, 2014. On January 27, respondent sent a
letter to appellants suggesting that the parties meet for a scheduling conference, with a
letter of demand for appellants’ affidavit of expert review. Appellants did not respond.1
1
Appellant retained counsel and a certificate of representation was filed with the district
court on February 28, 2014. Appellants’ counsel informed the district court that he had
been retained the previous day and that the parties had communicated about setting up a
6
The district court issued a scheduling order on March 24, 2014, and set May 1, 2014, as
the deadline for hearings on dispositive motions.
VI. Affidavit of expert review
On March 28, 2014, appellants filed a pro se motion with the district court
contending that Minn. Stat. § 544.42 (2014) did not apply. Alternatively, appellants
requested that the district court waive the requirement of an affidavit of expert review for
good cause. Appellant Rechtzigel alleged that he was unable to timely file an affidavit of
expert review because his attorney abruptly withdrew representation. Despite making
efforts to contact approximately 34 attorneys in two days, appellant Rechtzigel asserts he
was unable to secure an affidavit.
VII. Summary judgment
Respondent filed a motion for summary judgment on April 3, 2014—28 days
before the May 1 deadline—and completed service to appellants by U.S. mail. On April
21, appellants retained legal counsel and filed an ex parte motion with the district court
requesting “postponement of [respondent’s] summary judgment motion and modification
of [the] scheduling order.” Appellants argued that a postponement and modification of
the scheduling order was necessary because (1) respondents motion for summary
judgment was untimely; (2) the case was “not ripe for trial;” and (3) there was a case
pending at the Minnesota Court of Appeals which appellants alleged could impact
appellants’ malpractice claim against respondent.
scheduling conference. On March 20, 2014, appellants’ counsel filed a notice that he was
withdrawing as counsel on behalf of appellants.
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The district court issued an order granting respondent’s motion for summary
judgment as to the account-stated and breach-of-contract claims.2 The district court also
granted respondent’s motion to dismiss appellants’ counterclaim and denied all of
appellants’ motions. Respondent’s request for an attorney lien was granted and judgment
was entered against appellants Rechtzigel individually, Rechtzigel as trustee for the
Evelyn Trust and the Charitable Trust, and Rex Rentals, jointly and severally. On July 7,
2014, the district court issued an order and amended judgment, awarding respondent
$57,417 in attorney fees and $5,012.50 in costs.3 This appeal followed.
DECISION
I. Timeliness of respondent’s motion for summary judgment
Appellant argues that the district court erred in considering respondent’s motion
for summary judgment because the motion was untimely served. While we agree that
respondent’s motion was untimely, we conclude that the district court did not abuse its
discretion in considering the motion.
Interpretation of the Minnesota Rules of Civil Procedure presents a question of
law which we review de novo. Madson v. Minn. Mining & Mfg. Co., 612 N.W.2d 168,
170 (Minn. 2000). Minn. R. Civ. P. 56.03 provides that summary-judgment motions are
governed by Minn. R. Gen. Pract. 115.03. Rule 115.03(a) sets the notice requirement for
2
The district court’s decision did not address the claim alleging unjust enrichment (count
II).
3
The district court noted that it “[did] not include[] ‘Gene Rechtzigel as Personal
Representative for the [Estate of Frank] and as Trustee of any Trust thereunder’ in [the]
judgment because no judgment against that [d]efendant was requested or entered at the
time of summary judgment.”
8
dispositive motions and requires a moving party to serve proper notice and the specified
documents on an opposing party and the court administrator at least 28 days prior to the
scheduled hearing or else the motion will not be heard. Minn. R. Gen. Pract. 115.03(a).
“Service by mail is complete upon mailing.” Minn. R. Civ. P. 5.02(c). However, when a
rule requires
documents to be filed with the court administrator within a
prescribed period of time before a specific event, filing may
be accomplished by mail, subject to the following: (1) [three]
days shall be added to the prescribed period; and (2) filing
shall not be considered timely unless the documents are
deposited in the mail within the prescribed period.
Minn. R. Gen. Pract. 115.01(b).
The district court did not err in considering respondent’s motion for summary
judgment. While appellants were served by U.S. mail with the summary judgment
motion 28 days prior to the scheduled motion hearing, the prescribed period was 31 days.
See id. But a district court can in its discretion modify the time limits. Brault v.
Acceptance Indem. Ins. Co., 538 N.W.2d 144, 149 (Minn. App. 1995), review denied
(Minn. Nov. 21, 1995). However, “in no event shall the motion [for summary judgment]
be served less than ten days before the time fixed for the hearing.” Minn. R. Civ. P.
56.03. Although respondent’s motion was not served before the prescribed period, it was
served well before the mandatory ten-day requirement. Moreover, it appears that the
district court relaxed the timeliness rules and allowed appellants’ responsive motion even
though it was also untimely. See Minn. R. Gen. Pract. 115.03(b) (requiring that
responsive documents be served on opposing counsel and filed with the court
9
administrator at least nine days prior to the hearing). Appellants did not face any
prejudice as a result. Accordingly, we conclude that the district court did not err in
considering the motion. See Brault, 538 N.W.2d at 149 (“Where a court in its discretion
relaxes the timeliness rules, there is no jurisdictional defect if there is no prejudice to the
parties.”).
II. Motion for summary judgment
Appellants argue that the district court erred in granting summary judgment to
respondent because there are genuine issues of material fact. Summary judgment is
proper “if the pleadings, depositions, answers to interrogatories, and admissions on file,
together with the affidavits . . . show that there is no genuine issue as to any material fact
and that either party is entitled to a judgment as a matter of law.” Minn. R. Civ. P. 56.03.
[T]here is no genuine issue of material fact for trial when the
nonmoving party presents evidence which merely creates a
metaphysical doubt as to a factual issue and which is not
sufficiently probative with respect to an essential element of
the nonmoving party’s case to permit reasonable persons to
draw different conclusions.
DLH, Inc. v. Russ, 566 N.W.2d 60, 71 (Minn. 1997). “[T]he party resisting summary
judgment must do more than rest on mere averments.” Id. On appeal from summary
judgment, this court reviews the evidence de novo but in a light most favorable to the
nonmoving party. Valspar Refinish, Inc. v. Gaylord’s Inc., 764 N.W.2d 359, 364 (Minn.
2009).
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A. Account-stated claim
With respect to the account-stated claim, appellants argue that summary judgment
is improper because an issue of material fact exists on whether appellants disputed the
amounts allegedly owed to respondent.
The account-stated doctrine is an alternative means of establishing liability for a
debt other than recovery pursuant to a contract claim. Am. Druggists Ins. v. Thompson
Lumber Co., 349 N.W.2d 569, 573 (Minn. App. 1984). An account stated is a
manifestation of assent by a debtor and creditor to a stated amount as an accurate
calculation of an amount due to the creditor. Cherne Contracting Corp. v. Wausau Ins.
Cos., 572 N.W.2d 339, 345 (Minn. App. 1997), review denied (Minn. Feb. 19, 1998). An
account stated constitutes prima facie evidence of the debtor’s liability. Erickson v. Gen.
United Life Ins. Co., 256 N.W.2d 255, 259 (Minn. 1977). “A party’s retention without
objection for an unreasonably long time of a statement of account rendered by the other
party is a manifestation of assent.” Lampert Lumber Co. v. Ram Constr., 413 N.W.2d
878, 883 (Minn. App. 1987) (quotation omitted).
Appellant Rechtzigel asserts that he disputed “any fees charged” when he stopped
making payments to respondent. However, nonpayment does not constitute objection if
the refusal to pay “is based solely on the ground of inability to pay.” 1A C.J.S. Account
Stated § 19 (2005); see Kenyon Co. v. Johnson, 144 Minn. 48, 50-51, 174 N.W. 436, 437
(1919) (concluding that defendants did not object to invoices by telling plaintiff that
“they did not have the money to pay for the [goods]”). Here, respondent offered
unrebutted testimony that on at least two occasions, appellant Rechtzigel explained that
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he did not make payments on the balance because he was in a “cash crunch” and was
waiting for resolution of an IRS matter.
Appellant Rechtizgel points to his “laundry list of complaints” as evidence of his
dissatisfaction with respondent’s service. But general complaints about billing do not
constitute an objection; instead, a debtor must specifically object to the correctness of the
account. See Kenyon Co., 144 Minn. at 51, 174 N.W. at 437 (concluding that defendants
failed to object because they did not timely “challenge the correctness of the account”);
see also Lampert Lumber Co., 413 N.W.2d at 883 (concluding that appellants failed to
object to the interest rate on a debt by making “complain[ts] about the billing generally”).
Appellants do not assert facts demonstrating that they objected to any specific amount,
hourly rate, or invoice. Thus, even assuming appellants made general complaints about
billing, those complaints do not constitute an objection.
Appellant Rechtzigel contends that he “often and repeatedly disputed the fees that
were being run up on [him].” However, again, this is insufficient to survive summary
judgment as appellants have not put forth any specific facts to indicate when or with
which invoice he took issue. See Erickson, 256 N.W.2d at 258 (concluding that
plaintiff’s averment that he “continuously objected to the statements and accountings of
defendant” was “general in nature” and “insufficient to oppose a motion for summary
judgment”).
Finally, appellant Rechtzigel argues that the district court improperly dismissed
his assertion that he was pressured into donating $50,000 to Kaardal’s church in
exchange for the promise that $50,000 would be deducted from amounts appellants owed.
12
This argument is unpersuasive. Again, general averments are insufficient as a matter of
law to overcome summary judgment. DLH, 566 N.W.2d at 71. The record shows that
respondent continued to provide legal services to appellants without giving appellants the
$50,000 credit and appellants continued to make payments on those invoices.
Respondent submitted affidavits and exhibits that include itemized billing
statements setting forth the date, number of hours, name of attorney, hourly rate, 4 and
description of the work performed. Each of the invoices that were billed was sent to
appellants on or around the date of that specific invoice. Appellants have not
demonstrated that there exists a genuine issue of material fact. Because there is
undisputed evidence that (1) respondent sent invoices to appellants; (2) appellants made
partial payments on some of them; and (3) appellants never made any specific objections
to any of particular invoices, we conclude that the district court did not err in granting
summary judgment in favor of respondent on its account-stated claim.
B. Breach-of-contract claim
Appellants argue that the district court erred by granting summary judgment on
respondent’s breach-of-contract claim. Specifically, appellants assert that there is a
genuine issue of material fact as to the existence of a fee agreement.
“[A] party has an unrestricted right to contract with his attorney as to
compensation for services and the measure and mode thereof, and . . . the contract may be
either express or implied.” Holt v. Swenson, 252 Minn. 510, 514, 90 N.W.2d 724, 727
4
According to the invoices dating from as early as 2010, the rate fees for Kaardal’s
services increased to an hourly rate of $300.
13
(1958). “The essentials of such contracts . . . are the same as any other contracts.”
Kittler & Hedelson v. Sheehan Props., Inc., 295 Minn. 232, 235, 203 N.W.2d 835, 838
(1973). “The elements of a breach of contract claim are (1) formation of a contract;
(2) performance by plaintiff of any conditions precedent to his right to demand
performance by the defendant; and (3) breach of the contract by defendant.” Lyon Fin.
Servs., Inc. v. Ill. Paper & Copier Co., 848 N.W.2d 539, 543 (Minn. 2014) (quotation
omitted).
The district court acknowledged that the parties did not execute the agreement, but
concluded that a contract was formed based on the parties’ course of performance. We
agree.
“A signed agreement is not required for formation of a contract.” Powell v. MVE
Holdings, Inc., 626 N.W.2d 451, 462 (Minn. App. 2001), review denied (Minn. July 24,
2001). Indeed, “[a] party may manifest acceptance of an agreement by written or spoken
words, or by conduct and actions.” Gorham v. Benson Optical, 539 N.W.2d 798, 800
(Minn. App. 1995). Moreover, “where the relation between the parties is such that the
offeror is justified in expecting a reply, or where the offeree is under a duty to reply, the
latter’s silence will be regarded as an acceptance.” Holt, 252 Minn. at 516, 90 N.W.2d at
728.
It is undisputed that respondent offered its legal services to appellants. And the
evidence, taken in the light most favorable to appellants, sustains the district court’s
finding that appellants accepted respondent’s offer through their conduct. Here,
appellants allowed respondent to represent them in numerous litigations spanning more
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than a decade. Indeed, there is undisputed evidence that appellants made partial
payments to respondent for legal services and encouraged respondent to continue
representing them in other matters. Appellants even provided a letter terminating
respondent’s services. This course of performance established both acceptance of an
agreement for legal services and consideration by the parties. See id. at 515-16, 90
N.W.2d 728-29 (finding acceptance by conduct when one party allowed other party to
perform contract without objection). For these reasons, we conclude that the district
court did not err in granting summary judgment on respondent’s breach-of-contract claim
based on the parties’ course of performance.5
III. Appellants’ counterclaim of legal malpractice
Appellants argue that the district court erred in its determination that an affidavit
of expert review was required to establish a prima facie case of malpractice. The district
court determined that appellants’ malpractice counterclaim was “incredibly vague” and
thus an affidavit of expert review was required.
To bring a successful claim of legal malpractice, a plaintiff
traditionally must show four elements: (1) the existence of an
attorney-client relationship; (2) acts constituting negligence
or breach of contract; (3) that such acts were the proximate
cause of the plaintiff’s damages; and (4) that but for
defendant’s conduct, the plaintiff would have been successful
in the prosecution or defense of the action.
Jerry’s Enters., Inc. v. Larkin, Hoffman, Daly & Lindgren, Ltd., 711 N.W.2d 811, 816
(Minn. 2006) (quotation omitted). Conclusory statements are insufficient to establish a
5
We note that, on appeal, appellants only challenge the district court’s determination as
to the existence of a contract, the first element in a breach-of-contract claim. Therefore,
we decline to address the remaining elements.
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prima facie case. Schmitz v. Rinke, Noonan, Smoley, Deter, Colombo, Wiant, Von Korff
& Hobbs, Ltd., 783 N.W.2d 733, 746 (Minn. App. 2010), review denied (Minn. Sept. 21,
2010). Generally, expert testimony is required to establish the standard of conduct, its
breach, and proximate causation. See Jerry’s Enters., Inc., 711 N.W.2d at 817.
Here, appellants failed to allege anything in either the answer or affidavits to
establish a standard of conduct or a breach of that conduct. Appellants have only asserted
generalized and conclusory statements. For these reasons, the district court did not err in
determining that an affidavit of expert review was required to establish a prima facie case
of malpractice. See id.
Alternatively, appellants argue that the district court abused its discretion by
dismissing appellants’ malpractice claim for noncompliance with statutory requirements.
Minn. Stat. § 544.42, subd. 2 requires that in cases “where expert testimony is to be
used . . . to establish a prima facie case,” a plaintiff must serve two expert-witness
disclosure affidavits on an adverse party. The first, an affidavit of expert review, must
establish that an expert reviewed the case and reached the opinion that the defendant
deviated from the applicable standard of care and caused the plaintiff’s injury. Minn.
Stat. § 544.42, subds. 2(1), 3(a)(1). The affidavit of expert review must generally be
served with the pleadings. Id., subd. 2(1). The second, an expert-identification affidavit,
must identify the expert witnesses and provide the substance of the experts’ opinions and
the basis for those opinions. Id., subds. 2(2), 4(a). Failure to supply the required
affidavits “results, upon motion, in mandatory dismissal.” Id., subd. 6(a), (c).
16
However, the statute provides that the party bringing the action may apply for a
waiver or modification of the affidavit-of-expert-review requirement at the time the
action is commenced. Id., subd. 3(c). The district court then determines whether “good
cause exists for not requiring the certification.” Id. If the request for a waiver is denied,
the plaintiff must serve on the defendant the affidavit of expert review within 60 days.
Id. It is undisputed that appellants did not serve an affidavit of expert review with their
initial pleading. It is also undisputed that appellants did not serve an application at the
commencement of the action, requesting a waiver or modification to the affidavit
requirements. Likewise, there is uncontroverted evidence that appellants did not serve an
affidavit within 60 days of respondent’s formal demand. For these reasons, appellants’
counterclaim for malpractice is subject to mandatory dismissal.
Nevertheless, the time limits may be extended upon a showing of excusable
neglect. Lake Superior Ctr. Auth. v. Hammel, Green & Abrahamson, Inc., 715 N.W.2d
458, 471 (Minn. App. 2006), review denied (Minn. Aug. 23, 2006). “Excusable neglect
is found when (1) there is a reasonable defense on the merits; (2) there is a reasonable
excuse for the failure to answer; (3) the party acted with due diligence . . . ; and (4) no
substantial prejudice results to other parties.” Id.As indicated above, appellants did not have a reasonable claim of malpractice on
the merits. Appellants did not allege anything specific, nor did appellants identify the
breached standard of conduct. Moreover, despite receiving a letter formally demanding
an affidavit, appellants did not obtain one. Instead, appellants waited until two days
before the 60-day deadline to attempt to fulfill the requirements. Appellants failed to
17
show a reasonable excuse for their failure to act or show that they acted with due
diligence. The district court did not abuse its discretion in dismissing appellants’
counterclaim of malpractice.
IV. Appellants’ request to modify the scheduling order
Appellants argue that the district court’s refusal to modify the scheduling order
violates appellants’ right to due process. Specifically, appellants argue that “[n]o time
was afforded to conduct discovery.” We are not persuaded. A “district court has broad
discretion to amend scheduling-order deadlines, and we review its decision for an abuse
of discretion.” Mercer v. Andersen, 715 N.W.2d 114, 123 (Minn. App. 2006).
The action was commenced in district court in October 2013. Despite
respondent’s efforts by letter in late January 2014 to meet for a scheduling conference,
appellants elected not to respond. Additionally, from the time the district court issued its
scheduling order in March 2014 until appellants filed a motion requesting modification of
the deadlines, appellants did not make any attempt to conduct any form of discovery.
Appellants have not made a showing of good cause to support their motion. See Minn. R.
Civ. P. 16.02 (“A schedule shall not be modified except by leave of court upon a showing
of good cause.”). The district court did not abuse its discretion in denying appellants’
request.
Appellants also argue that the district court erred by failing to stay the action
pending the resolution of three cases in which respondent represented appellants that
were pending appeal. Appellants cite to Minn. R. Civ. App. P. 108.01, which provides
that “the filing of a timely and proper appeal suspends the [district] court's authority to
18
make any order that affects the order or judgment appealed from, although the trial court
retains jurisdiction as to matters independent of, supplemental to, or collateral to the
order or judgment appealed from.” See Minn. R. Civ. App. P. 108.01, subd. 2.
Appellants misinterpret the rule. The cases that are pending on appeal are unrelated to
the instant case. In fact, respondent is not a party in those cases. Appellants’ reliance on
rule 108.01 is mistaken and the district court did not err in denying appellants’ request to
stay the action.
V. Joint and several liability
On appeal, appellants argue that the district court abused its discretion by
improperly “assigning liability jointly and severally to entities or individuals without any
legal basis.” But appellants did not raise this argument to the district court, and we do
not consider arguments presented for the first time on appeal. See Thiele v. Stich, 425
N.W.2d 580, 582 (Minn. 1988).
VI. Attorney liens
Appellants also challenge the district court’s award of attorney liens. Because the
issue is raised for the first time on appeal, this argument is waived. See id.VII. Attorney fees
Finally, appellants contend that the district court erred by awarding respondent
cost of collections. We agree. On review, this court will not reverse an award of attorney
fees absent an abuse of discretion. Becker v. Alloy Hardfacing & Eng’g Co., 401 N.W.2d
655, 661 (Minn. 1987).
19
In Minnesota, the recovery of attorney fees is governed by the American rule,
which “is that attorney fees are not recoverable in litigation unless there is a specific
contract permitting or a statute authorizing such recovery.” Dunn v. Nat’l Beverage
Corp., 745 N.W.2d 549, 554 (Minn. 2008) (quotation omitted); see Kallok v. Medtronic,
Inc., 573 N.W.2d 356, 363 (Minn. 1998) (referring to this rule as “[t]he American rule”).
Appellate courts are “exceedingly cautious when awarding attorney fees as damages.”
Osborne v. Chapman, 574 N.W.2d 64, 68 (Minn. 1998) (quotation omitted). Therefore,
absent an express contract or statute authorizing attorney fees, respondent is not
authorized to recover attorney fees.6
Based on the record before us, we conclude that respondent is not entitled to
recover its attorney fees. Respondent argues that the terms of the parties’ contract, based
on their course of performance, allows it to recover the cost of collections. However,
respondent has not pointed to any caselaw or legal authority to support its argument.
Indeed, we have not been able to find any authority that allows for a party to recover
attorney fees absent a specific, written contract for legal services. Because the parties’
contract was based on their course of performance, the terms of that agreement are
limited to those that can be ascertained by the parties’ conduct. Here, appellants accepted
respondent’s offer for legal services by requesting such services on an ongoing basis.
Respondent performed the legal services and appellants accepted the services and
partially paid for them. But there is no indication from their conduct that the parties
6
We note that Minn. R. Civ. P. 11 permits an award of reasonable attorney fees and
expenses as an appropriate sanction. However, that is not at issue here as respondent did
not seek an award of attorney fees pursuant to a rule 11 motion for sanctions.
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agreed to a provision that allows recovery for cost of collections. For these reasons, we
hold that the district court abused its discretion by awarding respondent its cost of
collections.7 Accordingly, we reverse on this issue.
Affirmed in part and reversed in part.
7
Appellants also assert three additional arguments with respect to the award of attorney
fees. Because we conclude that respondent is not entitled to attorney fees, we need not
address those issues.
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