Cargill, Incorporated, a Delaware corporation, et al., Respondents, vs. Lone Star Technologies, Inc., a Delaware corporation, et al., Appellants.

Cargill, Incorporated, a Delaware corporation, et al., Respondents, vs. Lone Star Technologies, Inc., a Delaware corporation, et al., Appellants. A04-2137, Court of Appeals Unpublished, June 28, 2005.

This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480 A. 08, subd. 3 (2004).

 

STATE OF MINNESOTA

IN COURT OF APPEALS

A04-2137

 

 

Cargill, Incorporated,

a Delaware corporation, et al.,

Respondents,

 

vs.

 

Lone Star Technologies, Inc.,

a Delaware corporation, et al.,

Appellants.

 

 

Filed June 28, 2005

Affirmed

Huspeni, Judge*

 

 

Hennepin County District Court

File No. CT-01-18740

 

Thomas W. Tinkham, Daniel J. Brown, Dorsey & Whitney, LLP, 50 South Sixth Street, Suite 1500, Minneapolis, MN 55402 (for respondents)

 

Jeffrey J. Keyes, Robin Caneff Gipson, Briggs & Morgan, P.A., 80 South Eighth Street, Suite 2200, Minneapolis, MN 55402; and

 

David F. Herr, Maslon, Edelman, Borman & Brand, LLP, 3300 Wells Fargo Center, 90 South Seventh Street, Minneapolis, MN 55402-4140; and

 

George C. Lamb, III, Baker Botts, LLP, 2001 Ross Avenue, Suite 600, Dallas, Texas 75201 (pro hac vice) (for appellants)

 

            Considered and decided by Randall, Presiding Judge; Kalitowski, Judge; and Huspeni, Judge.

U N P U B L I S H E D   O P I N I O N

 

HUSPENI, Judge

 

Appellants challenge the awards of preverdict interest and costs to respondents.  Because we conclude that respondents are entitled to preverdict interest and see no abuse of discretion in the award of costs, we affirm.

FACTS

 

Respondents Cargill, Inc., North Star Steel Co., and Universal Tubular Services, Inc. brought this action for breach of an asset purchase agreement against appellants Lone Star Technologies, Inc. and Star Seamless, Inc.  Respondents claimed damages of approximately $50 million.  A jury awarded them $32 million; that award was appealed and affirmed.  Cargill, Inc. v. Lone Star Technologies, Inc., No. A03-1381 (Minn. App. June 1, 2004), review denied (Minn. Aug. 17, 2004). 

Before the decision of this court affirming the jury award was filed, the district court awarded respondents $993,933.08 in preverdict interest, with postverdict interest of $3,506.85 per diem, and $72,191.06 in costs.[1] Appellants now challenge the preverdict interest and costs awards on the grounds that respondents are not entitled to preverdict interest and that the district court abused its discretion in awarding as costs the travel expenses for depositions and one-half the mediator's fee. 

D E C I S I O N

1.         Preverdict Interest

            An award of interest pursuant to Minn. Stat. § 549.09, subd. 1 (2004), is reviewed de novo.  S.B. Foot Tanning Co. v. Piotrowski, 554 N.W.2d 413, 420 (Minn. App. 1996), review denied (Minn. Dec. 17, 1996).  Minn. Stat. § 549.09, subd. 1, provides that

            (a) [w]hen a judgment or award is for the recovery of money, including a judgment for the recovery of taxes, interest from the time of the verdict, award, or report until judgment is finally entered shall be computed by the court administrator or arbitrator as provided in clause (c) and added to the judgment or award.

 

            (b) . . . preverdict . . . interest on pecuniary damages shall be computed as provided in clause (c) from the time of the commencement of the action . . . .

 

The word "shall" is mandatory.  Minn. Stat. § 645.44, subd. 16 (2004).  Therefore, respondents had a statutory entitlement to the preverdict interest awarded by the district court.

            Appellants argue that respondents waived their entitlement to preverdict interest by not requesting it "in [their] initial pleadings, or anytime during trial."  We conclude, however, that respondents asserted their claim of preverdict interest sufficiently in an interrogatory answer approximately four months prior to trial.  Thus, the record does not support appellants' argument.

            Appellants argue in the alternative that respondents, in presenting to the jury evidence that they had suffered losses from "the delay in getting paid," sought from the jury "relief tantamount to pre[verdict] interest."  Therefore, argue appellants, an award of preverdict interest would give respondents "either . . . a double recovery . . . or a second chance at a claim the jury rejected."  We disagree.  The decision to award preverdict interest is not the jury's; preverdict interest is awarded pursuant to Minn. Stat. § 549.09 (2004).  Moreover, denying preverdict interest on the basis urged by appellants could result not in respondents receiving a double recovery but rather in respondents receiving no recovery at all for losses it incurred as a result of having, for a period of time, no use of funds ultimately awarded by the jury.  Appellants offer no support for the view that, by presenting evidence on its loss from the delay in getting paid, a party waives its right to preverdict interest.

            Appellants also challenge the preverdict interest award on a procedural basis, arguing that respondents could not seek preverdict interest when they appealed the court administrator's decision regarding their notice for "Taxation of Costs, Disbursements, and Interest" under Minn. R. Civ. P. 54.04.  Appellants argue that rule pertains only to awards of costs and disbursements, not interest, and respondents should have sought preverdict interest under Minn. R. Civ. P. 52.02, which pertains to amendment of judgments.[2] 

            Again, we disagree.  Minn. R. Civ. P. 54.04 refers implicitly, if not explicitly, to interest when it mentions costs.  See 2 David F. Herr & Roger S. Haydock, Minnesota Practice § 54.23 (2004) ("[Minn. Stat.] § 549.09 allows for interest taxable as a cost.").  Moreover, "in interpreting a statute, form should not be exalted over substance and literal constructions should not override the general policy and objectives of the law."  In re Brown's Creek Watershed Dist. in Washington County, 633 N.W.2d 76, 79 (Minn. App. 2001) (quoting Krumm v. R.A. Nadeau Co., 276 N.W.2d 641, 643 (Minn. 1979)).  The mandate of Minn. Stat. § 549.09 to award preverdict interest is clear.  Allowing that mandate to be overridden because a motion was labeled with one rule of civil procedure instead of another would indeed be allowing form to override substance.

            Appellants provide no basis for reversing the award of statutory preverdict interest.

2.         Costs

            We review a district court's award of costs and disbursements under an abuse-of-discretion standard.  Carlson v. Mut. Serv. Cas. Ins. Co., 527 N.W.2d 580, 584 (Minn. App. 1995).  Appellants claim the district court abused its discretion in allowing costs of $11,382.57 for travel deposition costs and $1,871.16 for one-half the fee of the court-appointed mediator.

            The district court found that "the $11,382.57 for travel expenses, while not itemized, seems reasonable for eleven out-of-state depositions in Texas, New York, and California."  Appellants claim that respondents' failure to itemize these expenses deprived the court of a means of telling whether they were "reasonable and necessary," and therefore, there was insufficient basis in the record to support the decision of the court.  It is undisputed, however, that the deponents were out of state and that travel expenses were necessarily incurred to take the depositions.  Expenses of about $1,000 per trip to distant states were reasonable, and the district court so found.  We see no abuse of discretion in the court's failure to make more specific findings on this issue.

The district court also awarded respondents one-half the cost of mediation in accord with Minn. Stat. § 549.04 (2004), providing that a "prevailing party . . . shall be allowed reasonable disbursements paid or incurred."[3]  Appellants appear to argue that any award of costs incurred for court-ordered mediation would be improper, but they cite no basis for such an argument, and we are disinclined to judicially engraft such an exclusion on to the statute.  See Ullom v. Indep. Sch. Dist. No. 112, 515 N.W.2d 615, 617 (Minn. App. 1994) (courts cannot add to a statute what the legislature either deliberately or inadvertently omitted).

But our affirmance of the award of half the mediation costs is not an endorsement of the district court's reason for the award.  See Katz v. Katz, 408 N.W.2d 835, 839 (Minn. 1987) (a district court will not be reversed where it has reached a sustainable result for the wrong reason).  The district court made the award "in light of [appellants'] unreasonable refusal to consider any settlement proposals greater than the $10 million termination fee [specified in the asset purchase agreement] amount."  But a party's conduct during settlement proceedings should have no bearing on an award of costs or disbursements.  See Minn. R. Evid. 408 ("Evidence of conduct or statements made in compromise negotiations is . . . not admissible.").[4] Considering the record as a whole and the authority of the court to make an award of such costs, we cannot conclude that the district court abused its discretion in requiring appellants to assume respondents' one-half share of the mediation cost.

Respondents were entitled to the awards of preverdict interest, the costs of deposition travel, and one-half the mediation fee.

            Affirmed.

* Retired judge of the Minnesota Court of Appeals, serving by appointment pursuant to Minn. Const. art. VI, § 10.

[1] While both parties refer in their briefs to prejudgment interest, i.e., interest from the time of the verdict until the entry of judgment, their dispute actually concerns preverdict interest, i.e., interest from the commencement of the action.

[2]  Arguably, this issue is not properly before us.  This court does not address issues not presented to the district court, Thiele v. Stich, 425 N.W.2d 580, 582 (Minn. 1988), and respondents contend that appellants raise the issue for the first time on appeal.  In their reply brief, appellants claim to have raised the issue in their memorandum opposing respondents' motion to amend the judgment, but that document includes only one reference to Minn. R. Civ. P. 54.04:  "[Respondents'] motion to add costs and disbursements to the Judgment is untimely as they did not [seek to] have them added to the original Judgment as contemplated by Minn. R. Civ. P. 54.04."  That reference does not encompass the precise issue raised on appeal.  Therefore, the record does not reflect that the issue was before the district court. 

[3] We note the de minimis nature of this award: $1,871.16 is approximately .2% of the award of preverdict interest.

[4] We note that, if such evidence were admissible, appellants' good faith in the settlement process could be inferred from presence of the $10 million termination fee clause in the parties' agreement.