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Appellants, Leland and Ilene Haugen and Haugen Nutrition and Equipment, defaulted on promissory notes held by respondent United Prairie Bank-Mountain Lake (UPB). The various loan agreements between the parties contained provisions in which Appellants agreed to pay UPB's reasonable costs and attorney fees associated with the protection of UPB's security interests and the enforcement of Appellants' obligation to repay the loans. The district court denied Appellants' motion to submit the question of reasonable attorney fees to the jury and subsequently awarded UPB over $400,000 in attorney fees. The court of appeals affirmed, holding that UPB's claim for the recovery of attorney fees was equitable in nature and thus did not give rise to a jury trial right under the Minnesota Constitution. The Supreme Court reversed in part, holding that Appellants were constitutionally entitled to a jury determination on UPB's claim for attorney fees because the nature of the claim was contractual and the remedy sought was legal.Receive FREE Daily Opinion Summaries by Email
STATE OF MINNESOTA
IN SUPREME COURT
Court of Appeals
Dissenting, Dietzen, J., Gildea, C.J.
United Prairie Bank-Mountain Lake,
Filed: March 14, 2012
Office of Appellate Courts
Haugen Nutrition & Equipment, LLC, et al.,
Samuel L. Hanson, Charles B. Rogers, Jason R. Asmus, Briggs and Morgan, P.A.,
Minneapolis, Minnesota, for respondent.
John E. Mack, Mack & Daby, P.A., New London, Minnesota, for appellants.
Under the Minnesota Constitution, appellants were entitled to a jury trial on
respondent’s claim for the recovery of attorney fees because the nature and character of
respondent’s claim was an action seeking monetary payment for indemnity based upon
the express provisions of a contract, which is a legal rather than an equitable claim.
Reversed in part and remanded.
The question presented by this case is whether the Minnesota Constitution
provides the right to a jury trial for a claim to recover attorney fees based on a contract.
In 2004, appellants Leland Haugen, Ilene Haugen, and Haugen Nutrition and Equipment,
LLC (“HNE”), defaulted on promissory notes held by respondent United Prairie BankMountain Lake (“UPB”). The various loan agreements between the parties contained
provisions in which appellants agreed to pay UPB’s reasonable costs and attorney fees
associated with the protection of UPB’s security interests and the enforcement of
appellants’ obligation to repay the loans. The district court denied appellants’ motion to
submit the question of reasonable attorney fees to the jury and subsequently awarded
UPB over $400,000 in attorney fees. The court of appeals affirmed, holding that UPB’s
claim for the recovery of attorney fees was equitable in nature and thus did not give rise
to a jury trial right under the Minnesota Constitution.
Because we conclude that
appellants are constitutionally entitled to a jury determination on UPB’s claim for
attorney fees, we reverse in part and remand for further proceedings.
Leland and Ilene Haugen owned two parcels of land in Cottonwood County,
Minnesota, on which they farmed and operated a feed mill business. In 2002, the
Haugens began to experience financial difficulties that affected their ability to make
timely payments on their loans. UPB agreed to refinance the Haugens’ debt and the
parties devised a plan that involved transferring the Haugens’ assets to an unrelated third
party, Mark Sahli, and then forming a new entity, HNE, to purchase the assets from Sahli
under a contract for deed.
The Haugens and HNE borrowed a total of $323,484.82 from UPB to complete
the various transactions. UPB secured the loans with a mortgage on the two parcels of
land in Cottonwood County, commercial security agreements, and personal guarantees
executed by the Haugens. The promissory notes accompanying each of the new loans
obligated the Haugens and HNE to “pay all costs of collection, replevin . . . or any other
or similar type of cost.” The notes further stated: “[I]f you hire an attorney to collect this
note, I will pay attorney’s fees plus court costs (except where prohibited by law).” The
mortgage required HNE to pay “attorneys’ fees, court costs, and other legal expenses”
that were “incurred by [UPB] in enforcing or protecting [UPB]’s rights and remedies
under this Mortgage.” The commercial security agreements provided that, in the event
UPB repossessed the secured property or took action to enforce the obligations of HNE,
UPB could apply any proceeds recovered to the “expenses of enforcement, which
includes reasonable attorneys’ fees and legal expenses.”
Finally, in the personal
guarantees, the Haugens agreed to pay “all costs and expenses (including reasonable
attorneys’ fees and legal expenses) incurred by [UPB] in connection with the protection,
defense or enforcement of [these guarantees] in any litigation or bankruptcy or
In December 2003, Meadowland Farmers Coop, which held a judgment against
Leland Haugen and another company owned by the Haugens, brought an action against,
among others, the Haugens, HNE, Sahli, and UPB challenging the transactions between
those parties as fraudulent transfers. UPB incurred $117,110.24 in legal fees defending
the action before the defendants settled with Meadowland.
On November 17, 2004, UPB notified HNE that it was in default on one of the
promissory notes, which resulted in HNE’s default under each of the notes. Neither HNE
nor the Haugens responded to UPB’s default notice. On May 2, 2005, UPB brought the
present action, asserting a number of claims, including the right to collect the amounts
due under the promissory notes. UPB’s amended complaint included two claims for
breach of contract, one against the Haugens and HNE as “borrowers” for breach of the
loan documents, and the other against the Haugens as “guarantors” for breach of their
personal guaranties. In the prayer for relief, UPB sought a number of remedies, including
a judgment “[a]warding damages, including all accrued interest, charges and reasonable
attorneys’ fees and costs . . . in an amount to be determined at trial.” Haugen and HNE
responded by asserting ten counterclaims, each of which the district court eventually
The district court denied appellants’ request for a jury determination regarding the
amount of attorney fees sought by UPB. Following a 2-day trial, the court entered
judgment against appellants and awarded UPB $403,821.82 in attorney fees. The court
awarded $286,711.58 to UPB for its attorney fees incurred in this case1 and another
$117,110.24 for attorney fees incurred by UPB in defending the Meadowland lawsuit.
UPB’s complaint in this case also alleged that the contract for deed between Sahli
and HNE on the two Cottonwood parcels constituted an equitable mortgage. The district
court did not award UPB attorney fees for litigating the equitable mortgage issue because
the court could not identify a contractual basis for doing so.
The court subsequently denied appellants’ post-trial motion for a new trial or amended
findings on attorney fees, concluding that appellants were not constitutionally entitled to
a jury determination on attorney fees because the calculation of such fees was “a question
of fact within the discretion of the district court.” The court of appeals affirmed. United
Prairie Bank-Mountain Lake v. Haugen Nutrition & Equip., LLC, 782 N.W.2d 263
(Minn. App. 2010). We granted appellants’ petition for review.
The question in this case is whether the Minnesota Constitution provides a right to
a jury trial for a claim to recover attorney fees based on a contract. The interpretation and
application of the Minnesota Constitution is a legal question that is reviewed de novo.
Olson v. Synergistic Techs. Bus. Sys., Inc., 628 N.W.2d 142, 148 (Minn. 2001).
Article I, Section 4 of the Minnesota Constitution states that “[t]he right of trial by
jury shall remain inviolate, and shall extend to all cases at law without regard to the
amount in controversy.” Minn. Const. art. I, § 4 (emphasis added). “This provision is
intended to continue, unimpaired and inviolate, the right to trial by jury as it existed in the
Territory of Minnesota when [the Minnesota Constitution] was adopted in 1857.”
Abraham v. Cnty. of Hennepin, 639 N.W.2d 342, 348 (Minn. 2002). A party is therefore
constitutionally entitled to a trial by jury “if a party raising that same theory for relief at
the time the Minnesota Constitution was adopted also would have been entitled to a jury
trial.” Olson, 628 N.W.2d at 149. Alternatively, “if that same type of action did not
entitle a party to a jury trial at the time the Minnesota Constitution was adopted,” then the
Minnesota Constitution does not recognize a right to a jury trial today. Id.
However, Article I, Section 4 does not freeze the right to a jury trial to only those
causes of action that existed in 1857. See Abraham, 639 N.W.2d at 349. Instead, our
case law requires us to analyze current causes of action and pleading practices in the
context of the theories of relief available in, and the jurisprudence of, the 1850s. See
Olson, 628 N.W.2d at 149. The focus of the inquiry therefore depends “on whether
Minnesota’s territorial courts guaranteed the right to a jury trial in the type of action” pled
in a complaint. Id. (emphasis added). The answer to that question depends, in turn, on
whether the claim in the complaint is an “action at law, for which the constitution
guarantees a right to jury trial, [or an] action in equity, for which there is no
constitutional right to jury trial.” Abraham, 639 N.W.2d at 349. If the action is one at
law, “either party may demand a jury trial.” Olson, 628 N.W.2d at 149 (quoting Morton
Brick & Tile Co. v. Sodergren, 130 Minn. 252, 254, 153 N.W. 527, 528 (1915)).
Two cases are illustrative of our approach in determining the nature and character
of a cause of action. In Olson, we considered whether a constitutional right to a jury trial
existed for a claim of promissory estoppel. 628 N.W.2d at 149-53. Although a separate,
independent claim for promissory estoppel did not exist in 1857, we traced the origins of
the doctrine to the English chancery courts. Id. at 149-50. After tracing its history, we
ultimately concluded that the “equitable cause of action based on good-faith reliance
forms the roots of our modern doctrine of promissory estoppel.”
Id. at 152.
concluding that a jury trial was not required, we examined the nature and character of the
cause of action by examining the pleadings and the elements of plaintiff’s promissory
estoppel claim. Id. at 152-53.
Abraham, decided less than a year after Olson, further described how to determine
the “nature and character of the controversy” for purposes of Article I, Section 4 of the
639 N.W.2d at 349.
Rather than focusing solely on the
elements necessary for proving violations of the Whistleblower Act and the Minnesota
Occupational Safety and Health Act—statutory actions that were unavailable in 1857—
we also examined the nature of the relief sought by the plaintiff. Id. Abraham therefore
engaged in a two-step inquiry to determine whether a jury trial right existed for the type
of action advanced by the plaintiff. First, Abraham discussed the historical origins of
wrongful discharge claims to as early as 1861, concluding that claims of retaliatory
discharge, a subcategory of wrongful discharge claims, sounded in tort. See id. at 35053. Second, Abraham investigated the nature of the relief sought by the plaintiff and held
that a tort action seeking only money damages is a legal claim with an attendant right to a
jury trial under the Minnesota Constitution. See id. at 353-54.
Under Olson and Abraham, the right to a jury trial depends on the “nature and
character of the controversy as determined from all the pleadings.”
N.W.2d at 353. In determining the nature and character of the controversy, we consider
the substance of the claim, based on the pleadings and the underlying elements of the
claim, and “the nature of the relief sought.” Id. If the nature and character of UPB’s
claim for the recovery of attorney fees is legal, then the appellants are entitled to a jury
trial. If not, then the district court was not required to grant the appellants’ demand for a
We first assess the substantive nature of UPB’s claim for attorney fees based on
the pleadings and the underlying elements of the cause of action. UPB alleged in its
amended complaint that the Haugens and HNE breached their contracts, and as a result,
UPB was entitled to recover the total indebtedness, “plus all additional accrued interest,
charges and reasonable attorneys’ fees and costs.”
UPB’s claim for attorney fees
therefore arises from the contracts between the parties, specifically the promissory notes,
the security agreements, the mortgage, and the personal guarantees (collectively, the
Although we have not identified any cases from the territorial period involving
claims for attorney fees arising under a contract, our early cases reveal that parties have
used contractual provisions like those at issue here since at least 1858. See Griswold v.
Taylor, 8 Minn. 342 (Gil. 301) (1863); see also Jones v. Radatz, 27 Minn. 240, 241-42, 6
N.W. 800, 800 (1880) (stating that a provision in a promissory note allowing the recovery
of attorney fees by the lender was “part of the contract and obligation of the maker, on
which the suit [was] brought”). In Griswold, a mortgage executed in 1858 provided for
the lender’s recovery of $50 as attorney fees in the event of foreclosure. 8 Minn. at 34244 (Gil. at 301-04). We upheld the attorney fees provision in the mortgage, describing it
as a “stipulation which will save the mortgagee harmless in the event of a forced
collection.” Id. at 344 (Gil. at 304) (emphasis added). In doing so, we relied on a
Wisconsin case that characterized a similar attorney fees provision as “ ‘an indemnity for
the necessary expenses of foreclosure.’ ” Id. at 345 (Gil. at 305) (emphasis added)
(quoting Tallman v. Truesdell, 3 Wis. 443, 454 (1854)).
Like the mortgage in Griswold, the Loan Documents in this case obligate
appellants to hold UPB harmless from the costs of enforcing appellants’ obligation to
repay the loans, as well as the costs of protecting the security underlying those loans. In
this case, UPB has brought an action to recover those costs, including its reasonable
attorney fees. As we implied in Griswold, the substantive nature of this type of claim is
one for contractual indemnity. See also 1 Dan B. Dobbs, Law of Remedies § 3.10(3), at
402 (2d ed. 1993) (stating that “[c]ontracting parties often provide that one of the parties
will protect the other from litigation costs” and identifying such agreements as
contractual indemnification provisions). Although Griswold did not address whether a
jury trial is required for claims of contractual indemnity, we have concluded in other
cases that an action for contractual indemnity is an action at law that gives rise to a jury
trial right. For instance, in New Amsterdam Casualty Co. v. Lundquist, we stated: “[a]n
action based on an indemnity agreement is for the recovery of money based upon the
promise to pay and is therefore triable by a jury. If fact issues exist with respect to the
indemnity agreement, they are for the jury.” 293 Minn. 274, 287, 198 N.W.2d 543, 551
Similarly, in Raymond Farmers Elevator Co. v. American Surety Co. of New York,
we differentiated between an action by an employer against a former employee who
embezzled funds and converted flour and grain and an action by the employer against a
surety that agreed to reimburse the employer under a surety bond for losses from the
fraudulent or dishonest actions of the employee. 207 Minn. 117, 118-19, 290 N.W. 231,
232-33 (1940). Midway through the trial of the case, the district court dismissed the jury.
Id. at 119, 290 N.W. at 233. On appeal, the question was whether the district court erred
in deciding the issues in the case without a jury. Id. at 119, 290 N.W. at 233. With
regard to the claim against the employee, the complaint sought a money judgment based
on an accounting. Id. at 119, 290 N.W. at 233. We held that such an action was
equitable, and the employee therefore had no right to a jury trial. Id. at 119, 290 N.W. at
233. In contrast, the suit against the surety on the contract was subject to trial by a jury
because it was “an action for the recovery of money based upon [a] promise to pay.2 Id.
Indemnity can be equitable when the obligation of one party to indemnify the
other arises from principles of equity and fairness, rather than a contractual obligation.
See City of Willmar v. Short-Elliott-Hendrickson, Inc., 512 N.W.2d 872, 874 (Minn.
1994) (stating that indemnity may be available when “a party fails to discover or prevent
another’s fault and, consequently, pays damages for which the other party is primarily
liable”); Zontelli & Sons, Inc. v. City of Nashwauk, 373 N.W.2d 744, 755 (Minn. 1985)
(explaining that a party is entitled to indemnification for its liability “ ‘[w]here the one
seeking indemnity has incurred liability because of a breach of duty owed to him by the
one sought to be charged’ ” (quoting Tolbert v. Gerber Indus., Inc., 255 N.W.2d 362, 366
(Minn. 1977)); Hendrickson v. Minn. Power & Light Co., 258 Minn. 368, 371, 104
N.W.2d 843, 847 (1960) (stating that “indemnity is appropriate where one party has a
primary or greater liability or duty which justly requires him to bear the whole of the
burden as between the parties”), overruled on other grounds by Tolbert, 255 N.W.2d 362.
In the context of the Minnesota No-Fault Automobile Insurance Act, for example,
we have held that a statute permitting the recovery of economic loss benefits from
insurers of commercial vehicles in certain circumstances was a type of equitable
indemnification. See Nat’l Indem. Co. v. Mut. Serv. Cas. Co., 311 N.W.2d 856, 858
(Minn. 1981) (applying Minn. Stat. § 65B.53, subd. 1 (1978)). We need not and do not
address the question of whether other statutory indemnity claims, including those for
attorney fees, are subject to a jury trial under Article I, Section 4 of the Minnesota
Constitution, other than to note that, like National Indemnity, such claims can involve
different considerations than those present in this case. See also Blanchard v. Bergeron,
(Footnote continued on next page.)
at 119, 290 N.W. at 233; see also Dairy Queen, Inc. v. Wood, 369 U.S. 469, 477 (1962)
(“As an action on a debt allegedly due under a contract, it would be difficult to conceive
of an action of a more traditionally legal character.”).
Like the claims at issue in Raymond and New Amsterdam, the substantive nature
of UPB’s claim for the recovery of attorney fees is an action for contractual indemnity,
which we have traditionally classified as an action at law.
The second consideration in determining whether a jury trial is required under
Article I, Section 4 of the Minnesota Constitution is the nature of the remedy sought. See
Abraham, 639 N.W.2d at 353. As stated above, UPB seeks the recovery of attorney fees,
which is essentially a form of money damages for the appellants’ breach of the Loan
Indeed, the claim for contractual indemnification in New Amsterdam
included the recovery of attorney fees, and we did not distinguish between the claim for
attorney fees and other issues for the jury on retrial. 293 Minn. at 287, 198 N.W.2d at
551. The reason, we stated, is that an action for contractual indemnity “is for the
recovery of money.” Id. at 287, 198 N.W.2d at 551; see also Simler v. Conner, 372 U.S.
221, 223 (1963) (“The case was in its basic character a suit to determine and adjudicate
the amount of fees owing to a lawyer by a client under a contingent fee retainer contract,
a traditionally “legal” action. . . . The questions involved are traditional common-law
(Footnote continued from previous page.)
489 U.S. 87, 91 (1989) (noting that attorney fees under 42 U.S.C. § 1988 may be awarded
to a “prevailing party” as costs in the court’s discretion).
issues which can be and should have been submitted to a jury . . . .” (citations omitted));
Raymond, 207 Minn. at 119, 290 N.W. at 233 (“A suit against a surety on the contract is
an action for the recovery of money based upon the promise to pay.” (emphasis added)).
In other controversies involving a contractual obligation to pay, we have
concluded that a request for the recovery of money is a legal claim with an attendant right
to a jury trial. In Landgraf v. Ellsworth, for example, we considered whether a jury trial
was required for an action by a former employee to recover commissions under a written
agreement from his former employer. See 267 Minn. 323, 324-26, 126 N.W.2d 766, 76768 (1964). We held that a jury trial was required under Article I, Section 4 of the
Minnesota Constitution. See id. at 329, 126 N.W.2d at 770. In so holding, we stated that
a “suit on a contract for the recovery of money is a legal action triable to a jury,” even
though the plaintiff’s complaint cast his claim as one for an equitable accounting rather
than money damages.3 See id. at 327, 126 N.W.2d at 768; see also id. at 328, 126
The remedy of equitable accounting is available primarily in two circumstances
not applicable here: when a fiduciary owes an equitable duty to account and when the
accounts at issue are exceedingly complicated. See Dobbs, supra, § 2.6(3), at 158. No
fiduciary relationship exists in the typical contractual attorney fees claim, and the issues
concerning an award of attorney fees are not so complicated “ ‘that only a court of equity
can satisfactorily unravel them.’ ” Landgraf, 267 Minn. at 328, 126 N.W.2d at 769
(quoting Dairy Queen, 369 U.S. at 477); see also Dairy Queen, 369 U.S. at 477 (noting
that few accounts are so complex as to require an equitable accounting); Landgraf, 267
Minn. at 327, 126 N.W.2d at 768 (“A suit on a contract for the recovery of money is a
legal action triable to a jury, and the mere fact that there is an accounting incidental to the
main action does not destroy the nature of the action or deprive a party of a jury trial.”
Several of the cases cited by the dissent conclude that awards of attorney fees are
equivalent to an equitable accounting, but fail to explain or support such a conclusion.
(Footnote continued on next page.)
N.W.2d at 769 (“ ‘[W]e think it plain that their claim for a money judgment is a claim
wholly legal in its nature however the complaint is construed. As an action on a debt
allegedly due under a contract, it would be difficult to conceive of an action of a more
traditionally legal character.’ ” (quoting Dairy Queen, 369 U.S. at 477).
Similar to Landgraf, UPB’s complaint seeks the recovery of money based on a
contractual obligation to pay. Even though the plaintiff in Landgraf sought the recovery
of monetary commissions for sales rather than the recovery of attorney fees , we do not
believe such a distinction is significant, particularly when the contractual indemnification
claim eligible for a jury trial in New Amsterdam also included attorney fees.
Accordingly, we conclude that a claim for a monetary payment under a contractual
indemnity provision is a legal claim with an attendant right to a jury trial under Article I,
Section 4 of the Minnesota Constitution.
(Footnote continued from previous page.)
See McGuire v. Russell Miller, Inc., 1 F.3d 1306, 1314 (2d Cir. 1993) (“[W]e hold that an
action to recover attorneys’ fees pursuant to a contract presents traditional common-law
contract issues which should be submitted to a jury—and which were properly submitted
to the jury in this case—but that the subsequent determination of the amount of attorneys’
fees owed presents equitable issues of accounting which do not engage a Seventh
Amendment right to a jury trial.”); Paramount Commc’ns Inc. v. Horsehead Indus., Inc.,
731 N.Y.S.2d 433, 434 (N.Y. App. Div. 2001) (“The amount of, if not the right to,
attorneys’ fees raises post-judgment issues collateral to the merits in the nature of an
accounting that are essentially equitable in nature.”); Murphy v. Stowe Club Highlands,
761 A.2d 688, 701 (Vt. 2000) (holding that an award of attorney fees under a contract
involves an equitable accounting). We decline to conclude that an award of attorney fees
involves an equitable accounting when our review of the equitable principles and case
law underlying the remedy of equitable accounting indicates otherwise and none of the
cases identified by the dissent provides anything more than a bare, conclusory statement
to support such an analogy.
In reaching a contrary decision, the court of appeals articulated three reasons for
its conclusion that UPB’s claim for the recovery of attorney fees was equitable. First, the
court stated that the claim is “more like a claim for restitution than for compensation.”
UPB, 782 N.W.2d at 271. Second, the court stated that the claim is “akin to a request for
specific performance of a contract.” Id. Finally, the court concluded that the claim for
attorney fees is “collateral” to the merits of the action. Id. We disagree with each of the
grounds relied upon by the court of appeals.
First, the court of appeals analogized UPB’s claim for the recovery of attorney
fees to a restitutionary claim for reimbursement. Id. Although we agree that UPB seeks
reimbursement for its attorney fees, there are two problems with the court of appeals’
The most fundamental problem is that restitution is not the basis for the
reimbursement sought by UPB in this case. Restitution prevents the unjust enrichment of
the defendant at the plaintiff’s expense.
See Dobbs, supra, § 4.1(1), at 551-52
(“[R]estitution claims are bound by a major unifying thread. Their purpose is to prevent
the defendant’s unjust enrichment by recapturing the gains the defendant secured in a
transaction.” (footnote omitted)); see also Randall v. Constans, 33 Minn. 329, 337-38, 23
N.W. 530, 534 (1885) (holding that a plaintiff may seek restitution against a defendant
who was unjustly enriched). In general, therefore, restitution is based on a benefit that
has been conferred on the defendant, rather than a loss incurred by the plaintiff. See
Dobbs, supra, § 4.1(1), at 555 (“Restitution measures the remedy by the defendant’s gain
and seeks to force disgorgement of that gain. It differs in its goal or principle from
damages, which measures the remedy by the plaintiff’s loss and seeks to provide
compensation for that loss.” (footnote omitted)). In this case, an award of attorney fees
would not require the Haugens or HNE to divest themselves of a benefit they received,
but would instead compensate UPB for the loss it incurred—i.e., the attorney fees
expended as a result of appellants’ breach of the Loan Documents. Consequently, UPB’s
claim for the recovery of attorney fees cannot be characterized as restitution.
Another problem with identifying the remedy sought here as restitution, and
therefore equitable, is that restitution was not exclusively an equitable remedy. “In the
days of the divided bench, restitution was available in certain cases at law, and in certain
others in equity.” Great-West Life & Annuity Ins. Co. v. Knudson, 534 U.S. 204, 212
(2002). When a restitution claim sought a judgment imposing personal liability on the
defendant to pay a sum of money, it was considered legal, viewed essentially as an action
for breach of contract. Id. at 213. We therefore do not agree with the court of appeals
that the remedy sought by UPB in this case is a form of restitution, and even if it is a
form of restitution, it is not equitable in nature.
Second, we disagree with the court of appeals’ conclusion that UPB’s claim is
similar “to a request for specific performance of a contract, for which a jury trial is not
required.” UPB, 782 N.W.2d at 271 (citing Indianhead Truck Line, Inc. v. Hvidsten
Transp., Inc., 268 Minn. 176, 193, 128 N.W.2d 334, 346 (1964)). As an initial matter,
“an injunction to compel the payment of money past due under a contract, or specific
performance of a past due monetary obligation, was not typically available in equity.” 4
Great-West Life, 534 U.S. at 210-11. Additionally, our case law does not recognize the
form of relief sought by UPB in this case as specific performance. In Indianhead Truck
Line, we held that an award of interim money damages was a form of specific
performance only because the contract between the parties was ongoing and in full force.
See 268 Minn. at 192-93, 128 N.W.2d at 346 (“The award of interim damages . . . is not
to be classed as an award of damages for breach of contract. On the contrary, the basis of
Indianhead’s suit is that the contract remains in full force and effect and subject to
performance.” (emphasis added)).
In this case, however, UPB does not seek the
performance of an ongoing contract. Rather, UPB plainly and unambiguously alleged in
its amended complaint that the Haugens and HNE defaulted on their obligations under
the Loan Documents and therefore materially breached the contracts.
UPB’s claim for the recovery of attorney fees is not akin to a claim for specific
Third, in distinguishing a case relied on by appellants, Simplot v. Chevron Pipeline
Co., 563 F.3d 1102 (10th Cir. 2009), the court of appeals concluded that when “the
substance of the contract claim is nonpayment of a promissory note, the damages directly
caused by nonpayment is the balance due under the note: the issue of fees is collateral.”
UPB, 782 N.W.2d at 271 (emphasis added). Yet, even if we were to assume that the
Among the rare cases in which a court of equity would decree specific
performance to transfer funds were those in which the court was trying to prevent future
losses that were incalculable or would be greater than the sum awarded. See Great-West
Life, 534 U.S. at 211. UPB’s request for attorney fees does not fall into either category.
collateral nature of a claim is relevant to determining whether a jury trial is required
under the Minnesota Constitution (an assumption we are not prepared to make), the court
of appeals’ conclusion is contrary to basic contract law principles and the specific
allegations in UPB’s amended complaint. Here, the payment of attorney fees under the
circumstances delineated by the Loan Documents is a direct contractual obligation of the
appellants, no different from appellants’ obligation to pay accrued interest and principal
under the promissory notes and mortgage. See Am. Compl. 14 (seeking an award of
damages, “including all accrued interest, charges and reasonable attorneys’ fees and
costs”). When a party seeks attorney fees under the express provisions of a contract, the
fees are an agreed element of damages available under the contract and are not collateral.
See Dobbs, supra, § 3.10(3), at 402-03; cf. Jones, 27 Minn. at 242, 6 N.W. at 800
(rejecting the argument that a provision for recovery of attorney fees in a promissory note
related only to the remedy and holding that the promise to pay attorney fees was “part of
the contract and obligation of the maker”). And like other damages available for breach
of contract, payment of the plaintiff’s attorney fees reimburses the plaintiff for its loss
and serves the purpose of making the plaintiff whole. See Dobbs, supra, § 1.1, at 3 (“The
damages remedy is a money remedy aimed at making good the plaintiff’s losses.”
(footnote omitted)). Therefore, even if a claim’s collateral nature has constitutional
significance for purposes of the jury trial right in Article I, Section 4 of the Minnesota
Constitution, the court of appeals was wrong in concluding that UPB’s claim for the
recovery of attorney fees was collateral; UPB’s claim for attorney fees derived from
explicit obligations contained in the Loan Documents and was a direct consequence of
We also briefly address the court of appeals’ conclusion that practical
considerations—such as a court’s expertise in deciding issues relating to attorney fees
and the possible delay and inefficiencies of submitting the question of attorney fees to a
jury—favor resolution of an attorney fees request by the court. UPB, 782 N.W.2d at 271.
In considering the practical considerations of submitting an attorney fees claim to the
jury, the court of appeals relied on a number of federal decisions, including Ross v.
Bernhard, 396 U.S. 531 (1970). See UPB, 782 N.W.2d at 269-70. In Ross, the Supreme
Court stated: “our cases indicate, the ‘legal’ nature of an issue is determined by
considering, first, the pre-merger custom [prior to the consolidation of courts of law and
equity] with reference to such questions; second, the remedy sought; and, third, the
practical abilities and limitations of juries.” 396 U.S. at 538 n.10 (emphasis added).
However, the Supreme Court has subsequently limited the applicability of the third Ross
factor to a narrow set of circumstances that are inapplicable here. See Chauffeurs,
Teamsters & Helpers, Local No. 391 v. Terry, 494 U.S. 558, 565 n.4 (1990) (“We
recently noted that this consideration is relevant only to the determination ‘whether
Congress has permissibly entrusted the resolution of certain disputes to an administrative
agency or specialized court of equity, and whether jury trials would impair the
functioning of the legislative scheme.’ ” (quoting Granfinanciera, S.A. v. Nordberg, 492
U.S. 33, 42 n.4 (1989))). Some federal courts have inexplicably continued to rely on the
practical considerations mentioned in Ross in addressing the right to a jury trial under the
Seventh Amendment to the United States Constitution. But we have never adopted the
third factor of Ross in addressing the right to a jury trial under Article I, Section 4 of the
Minnesota Constitution and decline to do so now. The availability of a constitutionallyguaranteed right to trial by jury does not and should not turn on the practical difficulties
of its implementation. Cf. United States v. Booker, 543 U.S. 220, 243-44 (2005) (“We
recognize, as we did in Jones, Apprendi, and Blakely, that in some cases jury factfinding
may impair the most expedient and efficient sentencing of defendants. But the interest in
fairness and reliability protected by the right to a jury trial—a common-law right that
defendants enjoyed for centuries and that is now enshrined in the Sixth Amendment—has
always outweighed the interest in concluding trials swiftly.”).
The dissent does not adopt any of the grounds relied upon by the court of appeals.
Nor does the dissent call into doubt our application of the two factors for assessing jury
trial requests under Abraham and Olson. The dissent concedes that UPB bases its request
for attorney fees on the breach of several contracts. The dissent also does not dispute that
we have traditionally treated claims based on breach of contract as legal in nature and
character.5 And the dissent acknowledges that, under our case law, a request for the
The dissent nonetheless asserts that, “[w]hile traditionally indemnity has been
viewed as a right arising out of contract, we have clarified that the award of indemnity
should follow traditional concepts of equity.” To be sure, indemnity can be equitable if
the obligation to indemnify arises from principles of equity and fairness. Hendrickson,
258 Minn. at 370-71, 104 N.W.2d at 847. But, as we have held, “[a]n action based on an
(Footnote continued on next page.)
recovery of money is ordinarily a legal claim with an attendant right to a jury trial.
Nevertheless, the dissent states that “[t]he contractual nature of the obligation to pay
attorney fees is not determinative” and that “merely because an attorneys’ fees claim can
be quantified monetarily does not mean that it is ‘legal’ relief.” Neither statement,
standing alone, is incorrect. But considered together, the dissent’s reasoning is flawed.
To be sure, neither a claim’s substantive nature nor the type of relief sought may be
dispositive in any given case.
But those are the only two factors we consider in
evaluating a claim for a jury trial, see Abraham, 639 N.W.2d at 353, and both favor a trial
by jury in this case.6
The dissent would conclude otherwise based on its view that “the recovery of
attorney fees implicates traditional equitable principles.”
The dissent’s argument,
however, does not find support in our case law. We have stated that, in awarding
(Footnote continued from previous page.)
indemnity agreement is for the recovery of money based upon the promise to pay and is
therefore triable by a jury.” New Amsterdam, 293 Minn. at 287, 198 N.W.2d at 551; see
also Raymond, 207 Minn. at 119, 290 N.W. at 233 (characterizing a lawsuit against a
surety based on a contract as an action for the recovery of money subject to a trial by
jury). Far from introducing a “sea change” for Minnesota courts, as the dissent argues,
we are merely applying our longstanding precedent—including New Amsterdam and
Raymond—treating contractual indemnity claims as legal in nature and character.
The dissent is correct that we have denied a jury trial in two cases seeking the
recovery of money related to a contract: one requesting an equitable accounting, see
Swanson v. Alworth, 168 Minn. 84, 91, 209 N.W. 907, 909-10 (1926), and the other
seeking specific performance, see Indianhead Truck Line, 268 Minn. at 192-94, 128
N.W.2d at 346-47. Even so, the dissent’s observation is unhelpful because UPB is not
requesting either specific performance or an equitable accounting in this case. Put
another way, unlike Swanson and Indianhead Truck Line, this case simply does not
involve an equitable remedy.
attorney fees, courts should “arriv[e] at a fair and reasonable fee,” Agri Credit Corp. v.
Liedman, 337 N.W.2d 384, 386 (Minn. 1983) (internal quotation marks omitted), and
award a “reasonable and just” amount, Campbell v. Worman, 58 Minn. 561, 565, 60
N.W. 668, 669 (1894). But merely using words like “fair” and “just” in conjunction with
an award of attorney fees does not transmogrify every request for attorney fees into an
See Cornfeldt v. Tongen, 262 N.W.2d 684, 704 (Minn. 1977)
(concluding the district court erred when it “invaded the province of the jury under Minn.
St. 573.02 to determine a fair and just recovery” in a wrongful death action); Rector,
Wardens & Vestry of St. Christopher’s Episcopal Church v. C.S. McCrossan, Inc., 306
Minn. 143, 146, 235 N.W.2d 609, 611 (1975) (stating that it is “for the jury to balance
the elements of damages in arriving at a just and reasonable award” for the destruction
of ornamental and shade trees in a tort action). To the contrary, what was “fair” in
Liedman was the award of attorney fees paid or incurred—the amount promised by the
parties’ contract. See 337 N.W.2d at 385. Similarly, the “just” award in Campbell was
an amount based on the attorney fees proven and incurred—the maximum amount
permitted by law. See 58 Minn. at 564-65, 60 N.W. at 669. In neither case did we
suggest that district courts may apply broad-ranging notions of fairness in order to satisfy
the equities of the parties. Nor have we suggested that courts can decline to award
attorney fees to which a party is otherwise contractually entitled, based on equitable
considerations like the doctrine of unclean hands. Indeed, other than grasping at isolated
references in our case law to notions of fairness and justice, the dissent fails to classify
UPB’s request for attorney fees as akin to any particular equitable doctrine or remedy.
The dissent instead largely abandons our traditional framework under Abraham,
and argues that a contractual claim for attorney fees is a “sui generis” matter for the court
to decide, “akin to” a request for costs or disbursements. As a threshold matter, the
dissent’s reasoning is inconsistent with the plain language of Article I, Section 4 of the
Minnesota Constitution, which does not contain an exception for “sui generis” matters.
Rather, the language of Article I, Section 4 is categorical: “[t]he right of trial by jury shall
remain inviolate, and shall extend to all cases at law without regard to the amount in
controversy.” Minn. Const. art. I, § 4 (emphasis added). It is thus not surprising that, of
the two cases the dissent relies upon for treating attorney fees as sui generis, neither case
presented the question of a litigant’s constitutional right to a jury trial. Nor did either
case express a preference for having the court, rather than a jury, decide the question of
First State Bank of Grand Rapids v. Utman involved the question of whether a
dispute about the value of attorney fees sought by the plaintiff under the terms of two
promissory notes created a material dispute as to the validity of the defendant’s
underlying obligation to pay the notes. 136 Minn. 103, 105, 161 N.W. 398, 399 (1917).
In deciding that the value of attorney fees was a distinct issue, we noted that attorney fees
“do not accrue until the services are performed,” and that at that point, “upon application
to the court, their value may be determined.” Id. at 105, 161 N.W. at 399. However, we
did not decide in Utman whether the plaintiff was constitutionally entitled to a jury trial
on his claim for attorney fees, nor did we mean to express a requirement that the court,
and not a jury, must set their value. Similarly, Campbell addressed an issue other than
the right to a jury trial: the right to the payment of attorney fees in the absence of proof of
the value of the services rendered. 58 Minn. at 564-65, 60 N.W. at 668-69. Although we
stated that recovery of attorney fees “can only be had upon application to the court, and
upon proof of the reasonableness and value of the attorneys’ fees,” it was the failure of
proof that was the focus of that case, not the identity of the fact-finder. Id. at 565, 60
N.W. at 669.
Moreover, in treating attorney fees as “akin to” costs and disbursements, the
dissent’s approach treats all requests for attorney fees identically, ignoring important
distinctions between fee requests based on a statute and those based on a contract.8
Statutory attorney fees often involve matters of public policy or equitable considerations
that are not present in cases involving contractual indemnity provisions. See, e.g., Minn.
Stat. § 302A.473, subd. 8(b) (2010) (allowing, in actions to determine the rights of
dissenting shareholders, the award of “all fees and expenses of any experts or attorneys as
the court deems equitable”); Ly v. Nystrom, 615 N.W.2d 302, 314 (Minn. 2000) (holding
that the court must consider whether the cause of action benefits the public in awarding
attorney fees under the private attorney general statute). That distinction is significant
because, under our framework for deciding the right to a jury trial under Article I, Section
4, the nature and character of the claim is dispositive. See Abraham, 639 N.W.2d at 349
(“The nature and character of the controversy, as determined from all the pleadings and
The dissent’s conclusion that contractual attorney fees are equivalent to “costs and
disbursements” is undermined by our decision in Schwickert, Inc. v. Winnebago Seniors,
Ltd., 680 N.W.2d 79, 87-88 (Minn. 2004), in which we concluded that contractual
attorney fees should not be treated as “costs and disbursements” for purposes of
interpreting an offer of settlement under Minn. R. Civ. P. 68. See Minn. R. Civ. P. 68
(2008) (amended Feb. 29, 2008) (“At any time prior to 10 days before the trial begins,
any party may serve upon an adverse party an offer . . . to pay or accept a specified sum
of money, with costs and disbursements then accrued, . . . .” (emphasis added)). In
deciding whether to interpret the plaintiff’s Rule 68 offer as including attorney fees, we
drew a distinction between the contractual attorney fees at issue in that case and statutory
attorney fees, which were included as costs and disbursements in a prior case. See
Schwickert, 680 N.W.2d at 87 (citing Collins v. Minn. Sch. of Bus., Inc., 655 N.W.2d 320,
329 (Minn. 2003)). We then held that contractual attorney fees did not come within the
“costs and disbursements” that the plaintiff was presumed to have offered in addition to
the lump sum amount. Id. at 88.
by the relief sought, determines whether the cause of action is one at law . . . and thus
carries an attendant constitutional right to jury trial.”). Here, UPB’s claim, as determined
from all the pleadings, is one for contractual indemnity, and UPB requests money
damages in the form of attorney fees as relief. Under our precedent, we cannot disregard
the clear import of those conclusions: UPB’s request for attorney fees is a legal claim
with an attendant right to a jury trial under Article I, Section 4 of the Minnesota
For the foregoing reasons, we conclude that UPB’s claim for the recovery of
attorney fees is legal rather than equitable because it is an action seeking a monetary
payment for contractual indemnity. Because the nature of the claim is contractual and the
remedy sought is legal, we hold that appellants are entitled to a jury trial on attorney fees
under Article I, Section 4 of the Minnesota Constitution.9 We therefore reverse the court
In reaching the conclusion that a jury trial is required for UPB’s claim for the
recovery of attorney fees, we do not distinguish between the predicate determination of
appellants’ liability for attorney fees and the amount of the fees awarded as damages. As
with any other legal claim subject to a jury trial, a jury determines both the liability for a
breach of contract and the amount of damages to award for the breach, if any, assuming
genuine issues of material fact exist with respect to both questions that warrant
submission to a jury.
We express no opinion, however, about the specific procedural or timing
requirements for submission of a contractual attorney fees claim to a jury. In this case,
the parties have asked us to decide only whether the Minnesota Constitution provides a
jury trial right for a claim involving a contractual right to attorney fees. We therefore
decline to speculate about issues beyond those presented for our review.
of appeals and remand to the district court for redetermination of UPB’s attorney fees
claim consistent with appellants’ right to a jury trial.10
Reversed in part and remanded.
Because we remand for redetermination of UPB’s claim for the recovery of
attorney fees, we need not address any of the other arguments raised by appellants with
respect to the reasonableness of the initial award of attorney fees by the district court.
However, we note that the court of appeals’ resolution of issues unrelated to UPB’s claim
for the recovery of attorney fees, such as the dismissal of appellants’ counterclaims and
the affirmance of the award of funds deposited with the district court to UPB, are not
affected by this remand because they were not raised in appellants’ petition for review.
See State v. Koppi, 798 N.W.2d 358, 366 (Minn. 2011) (declining to address an issue that
was not raised in the petition for review).
DIETZEN, Justice (dissenting).
I respectfully dissent. I disagree with the court’s conclusion that Haugen Nutrition
& Equipment, LLC and Leland and Ilene Haugen (collectively, HNE) are constitutionally
entitled to a jury trial on the attorney fees claim of United Prairie Bank. The majority’s
decision represents a dramatic sea change for Minnesota courts and casts Minnesota as an
outlier among jurisdictions that have considered this issue.
Relying on our prior
treatment of attorney fees, I conclude that the bank’s claim for attorney fees is most
closely analogous to a claim for costs or disbursements, which does not implicate the
right to a jury trial under the Minnesota Constitution. To explain my dissent, I examine
the constitutional right to a jury trial, the nature of the bank’s claim for attorney fees, and
our relevant case law, and then apply those principles to the claim here.
The Minnesota Constitution provides that the right to a jury trial “shall extend to all
cases at law.” Minn. Const. art. I, § 4. This provision preserves the right to a jury trial “as it
existed in the Territory of Minnesota when our constitution was adopted in 1857.”
Abraham v. Cnty. of Hennepin, 639 N.W.2d 342, 348 (Minn. 2002). In deciding which
claims are entitled to a jury trial, we have distinguished between legal and equitable claims;
the right to a jury trial attaches to an action at law, but not an action in equity. Olson v.
Synergistic Techs. Bus. Sys., Inc., 628 N.W.2d 142, 150 (Minn. 2001).
The complaint here alleges that as a result of HNE’s breaches of the loan
agreements, the bank is entitled to recover reasonable attorney fees.
concludes that HNE is entitled to a jury trial because the bank is seeking the recovery of
money based on a contractual obligation, analogizing the attorney fees claim to
Although we have viewed many types of contract claims as legal claims, the
contractual nature of the obligation to pay attorney fees is not determinative as to the right to
a jury trial. Rather, we look at “the nature of the relief sought.” Abraham, 639 N.W.2d at
Some contract remedies—for example, reformation, rescission, and specific
SCI Minn. Funeral Servs., Inc. v. Washburn-McReavy
Funeral Corp., 795 N.W.2d 855, 859 (Minn. 2011) (describing reformation and rescission
as equitable relief); Rognrud v. Zubert, 282 Minn. 430, 434, 165 N.W.2d 244, 247-48
(1969) (stating that specific performance “has long been regarded as entirely equitable”).
And “[m]erely because an attorneys’ fees claim can be quantified monetarily does not mean
that it is ‘legal’ relief.” Redshaw Credit Corp. v. Diamond, 686 F. Supp. 674, 676 (E.D.
Tenn. 1988). We have recognized that “[t]he recovery of money alone may be sought in an
equitable action.” Swanson v. Alworth, 168 Minn. 84, 90, 209 N.W. 907, 909 (1926). We
also have decided cases involving both contract claims and requests for monetary damages
where we have rejected the right to a jury trial. See id. at 91, 209 N.W. at 909-10;
Indianhead Truck Line, Inc. v. Hvidsten Transp. Inc., 268 Minn. 176, 192-94, 128 N.W.2d
334, 346-47 (1964).
Therefore, the court must examine the specific nature of the relief sought in
determining whether the claim for attorney fees in this case gives rise to a constitutional
right to a jury trial. The bank’s right to recover attorney fees arises from specific provisions
in the loan documents, which allow the bank to recover fees and costs associated with
collecting amounts owed under the agreements. Among other relief, the complaint seeks
recovery of the total indebtedness, “plus all additional accrued interest, charges and
reasonable attorneys’ fees and costs.” After careful consideration of our relevant case law, I
conclude that the bank’s claim for attorney fees is akin to a claim for costs or disbursements,
which does not implicate the right to a jury trial under the Minnesota Constitution.
The issue here is a matter of first impression. There is no case law directly on point,
even though attorney fees provisions have been present in Minnesota contracts for over 150
years. See, e.g., Griswold v. Taylor, 8 Minn. 342 (Gil. 301) (1863) (upholding attorney fees
provision in 1858 mortgage). Nonetheless, we have consistently treated a contractual claim
for attorney fees as sui generis and a matter for the court to decide. We have explained that
attorney fees due under a note are not “part of the original debt” and are “not really due
when suit is brought, for the services of the attorney are not then fully performed.”
Campbell v. Worman, 58 Minn. 561, 564-65, 60 N.W. 668, 669 (1894). Consequently, a
claim for attorney fees arising from the nonpayment of promissory notes is not “part of the
cause of action alleged.” First State Bank of Grand Rapids v. Utman, 136 Minn. 103, 105,
161 N.W. 398, 399 (1917). Further, the claim “is not a distinct cause of action.” Id. at 105,
161 N.W. at 399. Recognizing the unique procedural aspects of an attorney fees claim in
this situation, we have described a claim for attorney fees as a collateral claim that “is not to
be submitted with the issues upon which the liability of a defendant depends.” Id. at 105,
161 N.W. at 399. Instead, we have concluded that the value of attorney fees should be
determined “upon application to the court,” after the underlying contract claim has been
resolved. Id. at 105, 161 N.W. at 399; accord Campbell, 58 Minn. at 565, 60 N.W. at 669.
In our previous cases, we have treated a request for attorney fees due under a
contract like a request for costs or disbursements, directing district courts to include the
attorney fees “in the judgment, the same as any other disbursement.” Campbell, 58
Minn. at 565, 60 N.W. at 669 (emphasis added); see also Johnson v. Nw. Loan & Bldg.
Ass’n, 60 Minn. 393, 396, 62 N.W. 381, 382-83 (1895) (treating attorney fees as
disbursements under foreclosure-by-advertisement statute, notwithstanding that “the right
of a mortgagee to attorney’s fees is a contract right”). In Smith v. Chaffee, we articulated
the “general rule” that a party who succeeds in a lawsuit and is awarded costs and
disbursements “has no further claim against his adversary for attorney’s fees or expenses
incurred in the suit,” regardless of “[w]hether the action sounds in contract or in tort.”
181 Minn. 322, 324, 232 N.W. 515, 516 (1930).
Analogizing a contractual attorney fees claim to a request for costs or
disbursements is consistent with our treatment of statutory attorney fees.
recognized that “a number of statutes . . . specifically allow prevailing parties attorney
fees as part of ‘costs and disbursements.’ ” Collins v. Minn. Sch. of Bus., Inc., 655
N.W.2d 320, 327 (Minn. 2003) (concluding that statutory attorney fees were recoverable
as “costs and disbursements”); see, e.g., T.A. Schifsky & Sons, Inc. v. Bahr Constr., LLC,
773 N.W.2d 783, 789 (Minn. 2009) (explaining that “attorney fees in mechanics’ lien
cases are, pursuant to statute and our case law, costs that may be awarded by the court”).1
In addition, “costs” in English common law courts included attorney fees, “within certain
limits.” Charles T. McCormick, Counsel Fees and Other Expenses of Litigation as an
Element of Damages, 15 Minn. L. Rev. 619, 619-20 (1931).
Based on our past treatment of attorney fees claims, I conclude that a claim for
attorney fees arising under a contract is in the nature of a request for costs or
disbursements. In fact, this is precisely how the loan agreements in this case describe the
attorney fees. The various loan documents describe the attorney fees as “costs and
expenses,” “legal expenses,” and “expenses of enforcement.” See Woolsey v. O’Brien,
23 Minn. 71, 72 (1876) (explaining that costs and disbursements encompass “all
allowances which may be made to a party to reimburse him for expenses and trouble in
Our decision in Schwickert, Inc. v. Winnebago Seniors, Ltd., 680 N.W.2d 79
(Minn. 2004), does not undermine my conclusion that contractual attorney fees are
analogous to costs or disbursements. In Schwickert, we simply interpreted a party’s offer
of judgment, which did not explicitly offer to add costs and disbursements to the lump
sum amount, as resolving all claims under the contract, including contract-based attorney
fees. Id. at 88. At the same time, we urged parties to avoid these types of disputes by
specifically stating whether an offer includes or excludes attorney fees. Id. Our case law
did make a distinction between contractual attorney fees and statutory attorney fees with
respect to offers of judgment under the former Minn. R. Civ. P. 68, but that distinction
was based on the “language of the rule,” which we interpreted as suggesting that costs
and disbursements for purposes of an “offer of judgment are defined by the underlying
statute.” Collins, 655 N.W.2d at 326 (emphasis added). I note that our rules now reflect
a broader understanding of “costs and disbursements.” Compare Minn. R. Civ. P. 54.04
(2010) (amended May 3, 2010) (“Costs and disbursements shall be allowed as provided
by statute.”), with Minn. R. Civ. P. 54.04 (2011) (“Costs and disbursements shall be
allowed as provided by law.”).
HNE is not entitled to a jury trial on the attorney fees claim if that same type of
claim did not entitle a party to a jury trial at the time the Minnesota Constitution was
adopted. See Olson v. Synergistic Techs. Bus. Sys., Inc., 628 N.W.2d 142, 149 (Minn.
2001). There is no evidence of a right to a jury trial on costs or disbursements at the time
our constitution was adopted. See A.G. Becker-Kipnis & Co. v. Letterman Commodities,
Inc., 553 F. Supp. 118, 123 (N.D. Ill. 1982) (“[W]hat little evidence of the pre-merger
custom exists suggests that attorneys’ fees and costs have traditionally been viewed as a
determination to be made by the court rather than by a jury.”).
Moreover, the recovery of attorney fees implicates traditional equitable principles.
The recovery of attorney fees is not like “other damages available for breach of contract,”
as the majority contends. In a breach of contract case, the general measure of damages is
the amount that will place the nonbreaching party in the same position as if the contract
had been fully performed. E.g., Paine v. Sherwood, 21 Minn. 225, 232 (1875). But when
courts resolve attorney fees claims, they follow rules of equity. For example, in a case
involving attorney fees arising from the costs of collection of a note, we directed the
district court to arrive at an amount “as it shall deem reasonable and just.” Campbell, 58
Minn. at 564-65, 60 N.W. at 668-69 (upholding the right to recover stipulated attorney
fees “only to the extent of the reasonable value of the attorneys’ services actually
performed or to be performed”).
Although the majority attempts to distinguish
contractual attorney fees claims from statutory attorney fees claims, we have instructed
courts to consider the same factors in resolving both kinds of claims. In a case involving
unpaid amounts on promissory notes, we explained that courts should “ ‘arriv[e] at a fair
and reasonable fee’ ” by examining factors that include the services performed, the ability
and experience of the attorneys, the time and amount of money involved, and the results
obtained. Agri Credit Corp. v. Liedman, 337 N.W.2d 384, 386 (Minn. 1983) (quoting
Obraske v. Woody, 294 Minn. 105, 109-10, 199 N.W.2d 429, 432 (1972) (setting forth
factors to determine an award of attorney fees in a statutory mechanic’s lien case)). This
focus on fairness and flexibility is the hallmark of equity. See, e.g., Beliveau v. Beliveau,
217 Minn. 235, 245, 14 N.W.2d 360, 366 (1944) (explaining that equity “possesses the
flexibility and expansiveness” to adapt to the circumstances “of each particular case so as
to accomplish justice”).2
Finally, the majority’s rigid, wooden approach—treating attorney fees claims like
claims for contractual indemnity without considering the unique nature of attorney fees
claims—would extend the constitutional jury trial right to any claim for costs or expenses
that springs from a contractual obligation. For example, the loan documents here allow
for the recovery of all costs of collection and other legal expenses. Under the majority’s
rationale, because the bank is seeking “the recovery of money based on a contractual
obligation to pay,” HNE would have a constitutional right to have a jury decide expert
witness fees, deposition costs, and even photocopying expenses.
The majority concludes that the substantive nature of an attorney fees claim is “an
action for contractual indemnity,” which the majority classifies as a traditional legal
claim. “While traditionally indemnity has been viewed as a right arising out of contract,”
we have clarified that “the award of indemnity should follow traditional concepts of
equity.” Hill v. Okay Constr. Co., 312 Minn. 324, 345, 252 N.W.2d 107, 120 (1977).
The majority’s decision represents a historic change in practice for Minnesota
courts, which have decided attorney fees claims for the last century and a half. I cannot
subscribe to this new rule. Rather, consistent with our prior treatment of attorney fees
claims and the equitable nature of such claims, I conclude that when a party seeks
attorney fees as legal expenses or costs of collection under an agreement, there is no right
under the Minnesota Constitution to have a jury determine the amount of attorney fees.3
The majority’s decision in this case also casts Minnesota as an outlier among
jurisdictions that have considered the issue. Our court is the only court in the country that
recognizes a constitutional right to a jury trial under these circumstances.
Essentially, the Minnesota Constitution protects the same jury trial rights as those
protected under the United States Constitution. Onvoy, Inc. v. ALLETE, Inc., 736 N.W.2d
611, 617 (Minn. 2007). The majority, however, reaches a different result on this issue under
the Minnesota Constitution than courts have reached under the United States Constitution.
Specifically, courts deciding the right to a jury trial on an attorney fees claim under the
United States Constitution have universally concluded that there is no right to a jury trial.
For example, the Second Circuit has concluded that the “collateral” issue of the amount of
I would limit the reach of my holding to the circumstances presented by this
case—where the attorney fees sought are in the nature of costs of collection or expenses
of enforcement in connection with a breach of contract claim in the same action, in
contrast to cases where the claim for attorney fees arises from an attorney-client
relationship. See Simler v. Conner, 372 U.S. 221, 223 (1963) (holding that a claim for
attorney fees in attorney-client lawsuit is a matter for the jury).
reasonable attorney fees due under a contract does “not present the kind of common-law
questions for which the Seventh Amendment preserves a jury trial right.” McGuire v.
Russell Miller, Inc., 1 F.3d 1306, 1315 (2d Cir. 1993). Other circuit courts of appeal have
reached similar conclusions. E.g., E. Trading Co. v. Refco, Inc., 229 F.3d 617, 627 (7th Cir.
2000) (concluding that “[t]he issue of attorneys’ fees (including amount)” due under a
contract constitutes “an issue to be resolved after the trial on the basis of the judgment
entered at the trial,” just as in cases involving statutory entitlements to attorney fees); Ideal
Elec. Sec. Co. v. Int’l Fid. Ins. Co., 129 F.3d 143, 150 (D.C. Cir. 1997) (“Where a claim for
attorney’s fees arises from a private contract provision, such a claim does not embody a
right to trial by jury.”); Resolution Trust Corp. v. Marshall, 939 F.2d 274, 279 (5th Cir.
1991) (holding that the Seventh Amendment does not guarantee a jury trial to determine the
amount of reasonable attorney fees, as no common law right exists to recover attorney fees
awarded pursuant to a contract).
In addition, no other state court has concluded that a party has a constitutional right
to a jury trial on a contractual attorney fees claim of this kind. Although state courts have
relied on different rationales, they all have reached the same conclusion—there is no
constitutional right to a jury trial on a claim for attorney fees based on a contract. See, e.g.,
Cheek v. McGowan Elec. Supply Co., 511 So. 2d 977, 979 (Fla. 1987) (explaining that “the
recovery of attorney’s fees is ancillary to the claim for damages”); Hudson v. Abercrombie,
374 S.E.2d 83, 85 (Ga. 1988) (reasoning that “attorney fees were not allowable at common
law”); Missala Marine Servs. Inc. v. Odom, 861 So. 2d 290, 296 (Miss. 2003) (concluding
that trial court properly “h[e]ld a hearing after the trial of the case to hear evidence on the
issue of attorney’s fees”); State ex rel. Chase Resorts, Inc. v. Campbell, 913 S.W.2d 832,
836 (Mo. Ct. App. 1995) (noting the “absence of any authority that Missouri has recognized
a common law right to a jury trial to determine reasonable attorney’s fees once liability has
been established”); Paramount Commc’ns Inc. v. Horsehead Indus., Inc., 731 N.Y.S.2d
433, 434 (N.Y. App. Div. 2001) (“The amount of, if not the right to, attorneys’ fees raises
post-judgment issues collateral to the merits in the nature of an accounting that are
essentially equitable in nature.”); Murphy v. Stowe Club Highlands, 761 A.2d 688, 701 (Vt.
2000) (holding that determining the amount of attorney fees due under a contract involves
For these reasons, I conclude that the bank’s claim for the recovery of attorney
fees in this case did not give rise to the right to a jury trial under the Minnesota
Constitution. I would affirm the decision of the court of appeals on this issue.
GILDEA, Chief Justice (dissenting).
I join in the dissent of Justice Dietzen.