John Thomas Dornick, Respondent, vs. Commissioner of Public Safety, Appellant.

This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. § 480 A. 08, subd. 3 (1998).

 

STATE OF MINNESOTA
IN COURT OF APPEALS
C1-99-568

Leon Kanner,
Appellant,

vs.

Fairmont Foods of Minnesota, Inc.,
Respondent.

 

Filed January 18, 2000
Affirmed
Toussaint, Chief Judge

Hennepin County District Court
File No. 9617634

Richard L. Pemberton, Jr., Meagher & Geer, P.L.L.P., 4200 Multifoods Tower, 33 South Sixth Street, Minneapolis, MN 55402 (for appellant)

Wallace Goodell Hilke, Lindquist & Vennum, P.L.L.P., 4200 IDS Center, 80 South Eighth Street, Minneapolis, MN 55402 (for respondent)

Considered and decided by Toussaint, Chief Judge, Anderson, Judge, and Mulally, Judge.[*]

U N P U B L I S H E D   O P I N I O N

TOUSSAINT,

Chief Judge

Appellant Leon Kanner, the prevailing party at trial, challenges the district court's posttrial order and judgment denying appellant's Minn. Stat. §§ 181.64-65 (1998) claims and relief for emotional distress and lost home equity as a result of respondent's intentional misrepresentation. Respondent, Fairmont Foods of Minnesota, Inc., seeks review of the district court's denial of its motion for new trial on the issue of liability and its motion for judgment notwithstanding the verdict. Because Minn. Stat. § 181.64 is not applicable and because damages for fraudulent misrepresentation do not include damages for emotional distress or home equity loss, we affirm the district court's posttrial order and denial of respondent's motion for new trial.

D E C I S I O N

I.

Appellant contends that the district court erred in concluding that respondent's misrepresentations regarding the existence of a Minneapolis office did not concern the "kind or character" of appellant's position as national sales manager with Fairmont Foods, Inc. In denying appellant posttrial relief, the district court explained that a change in the location of the work does not change the "kind or character" of the work within the meaning of Minn. Stat. §§ 181.64-.65. Minn. Stat. § 181.64 provides that:

It shall be unlawful for any * * * corporation * * * doing business in this state, * * * to induce, influence, persuade, or engage any person to * * * change from any place in any state * * * to any place in this state, to work * * * through or by means of knowingly false representations, * * * concerning the kind or character of such work * * *. Any such unlawful acts shall be deemed a false advertisement or misrepresentation for the purposes of this section and section 181.65.

An employee, relying on representations prohibited by § 181.64, is entitled to recover damages, including attorney fees, sustained as a result of the false representations. Minn. Stat. § 181.65.

Because appellant's challenge involves an issue of statutory construction and interpretation, this court's review is de novo. Boubelik v. Liberty State Bank, 553 N.W.2d 393, 402 (Minn. 1996). "In questions involving statutory construction, the function of this court is to ascertain and effectuate the intent of the legislature." Lyons v. Health & Human Servs. Dept., 413 N.W.2d 264, 265 (Minn. App. 1987) (citation omitted). In order to comport with the legislative intent of a statutory enactment, courts must read the statute as a whole to give effect to all its parts. State v. Northwestern States Portland Cement Co., 258 Minn. 162, 167, 103 N.W.2d 225, 228 (1960). "When the words of a law in their application to an existing situation are clear and free from ambiguity, the letter of the law shall not be disregarded under the pretext of pursuing the spirit." Lyons, 413 N.W.2d at 266 (citing Minn. Stat. § 645.16 (1986)).

Appellant attempts to deconstruct the phrase and argue that the location of a job is a central component in defining both the kind and character of a job. To that end, both parties offer competing dictionary definitions for the words "kind" and "character". The district court explained that the most natural, defensible, and ordinary usage of the phrase "kind or character" is that it describes the type of work to be performed, not the location where it is performed.

Appellant argues that the statutory phrase should be read expansively to allow recovery for representations that would otherwise support a common law fraud claim. This court has held that explicit enumeration of an item in a statutory list of items impliedly excludes those items not enumerated. Lyons, 413 N.W.2d at 265. The language of Minn. Stat. § 181.64 clearly limits recovery to situations involving knowingly false representations concerning the "kind or character," compensation, or sanitary conditions of employment or statements regarding the existence of labor disputes at the place of employment. If the legislature had intended the statute to permit recovery for any false representation sufficient to support a common law fraud claim, it would not have unambiguously limited recovery to the four representations explicitly enumerated in the statute. Instead, the legislature would presumably have used an expansive phrase covering all representations potentially inducing employment such as "any representation relating to the terms or conditions of employment."

Furthermore, in order to give meaning and effect to the language of the statute as a whole, the phrase "kind or character" must necessarily mean something less than any trait or condition of a job. The "kind or character" of the job cannot mean any representation relating to compensation, sanitary conditions, or labor disputes because such a broad statutory reading would negate the effect of the language of the rest of the statute. Therefore, the phrase "kind or character" of the employment cannot be read to include all traits or conditions of employment. See Northwestern States Portland Cement, 258 Minn. at 167, 103 N.W.2d at 228 (explaining that court must read statute as a whole to give effect to all its parts). Because we believe the phrase "kind or character" covers the work to be performed rather than the location of its performance and believe a more expansive reading of the phrase may negate the explicit limitations on recovery under the statute, we affirm the district court's denial of appellant's claims under Minn. Stat. §§ 181.64-.65.

II.

Appellant also contends that the district court erred in excluding evidence of appellant's emotional-distress damages and loss of home equity when it granted respondent's motion in limine and denied appellant's posttrial motions. The district court excluded the evidence because it was not disclosed in a timely manner and because Minnesota caselaw does not permit emotional-distress damages in employment fraudulent inducement cases. The district court's exclusion on nondisclosure grounds should not be disturbed unless it was based on an erroneous interpretation of law or constitutes an abuse of discretion. Uselman v. Uselman, 464 N.W.2d 130, 138 (Minn. 1990). The district court's exclusion on grounds that such damages are not recognized in Minnesota presents a legal question subject to de novo review. Boubelik, 553 N.W.2d at 402.

A. Untimely Disclosure

A district court may exclude evidence which is not disclosed in a timely manner. See Norwest Bank Midland v. Shinnick, 402 N.W.2d 818, 823 (Minn. App. 1987) (holding that testimony or evidence may be suppressed for failure to disclose where such failure is inexcusable and prejudices the opponent's case). A district court enjoys wide discretion for its evidentiary rulings, which will not be disturbed absent an abuse of that discretion. See Uselman, 464 N.W.2d at 138 (recognizing that evidentiary rulings are reviewed under an abuse of discretion standard). The district court excluded evidence of appellant's emotional distress and home-equity-loss damages because appellant failed to disclose either damage theory prior to trial.

Despite appellant's argument that respondent had adequate notice of the emotional-distress damages theory from the original complaint and appellant's responsive memorandum opposing summary judgment, appellant's pleadings, discovery requests, and deposition testimony did not sufficiently detail his emotional-distress damages. In addition, except for a statement that the Minnesota home "had not sold," appellant did not assert the lost-home-equity damage theory before the fourth day of trial despite respondent's numerous discovery requests for damages evidence and calculations. Although both parties engaged in extensive discovery, the record supports the district court's conclusions that appellant did not properly disclose or detail either of his damage theories in a timely manner before trial.

Furthermore, appellant's failure to disclose or explain either damage theory significantly prejudiced respondent. Respondent did not conduct discovery on or hire an expert to evaluate appellant's emotional distress. In fact, nearly two years of trial preparation had been completed before respondent became aware of appellant's emotional-distress claim. Because appellant's home-equity-loss claim is a novel damage theory, it required a more specific, detailed explanation to provide respondent adequate notice and an opportunity to prepare a meaningful response. Although respondent might have been expected to respond to appellant's claim for any loss resulting from appellant's sale of the Minnesota home, without a more detailed explanation of appellant's lost-home-equity damages, respondent cannot be expected to anticipate having to evaluate or respond to such claims. Since neither theory was properly disclosed or described before trial and respondent was thereby prejudiced, the district court did not abuse its discretion in excluding the evidence.

B. Fraud Damages

Appellant also argues that the district court erred in excluding evidence of his emotional-distress damages and home-equity-loss because Minnesota courts have created an exception to the general rule limiting fraud damages to out-of-pocket losses. Specifically, appellant contends that Minnesota courts have held that strict out-of-pocket recovery will not fully compensate a plaintiff where the defendant's misrepresentations have caused the loss of property the plaintiff already owned. See Brooks v. Doherty, Rumble & Butler, 481 N.W.2d 120, 128-29 (Minn. App. 1992) (allowing expanded recovery in order to restore the plaintiff to his or her previous status in life, citing B.F. Goodrich Co. v. Mesabi Tire Co., 430 N.W.2d 180, 182-83 (Minn. 1988)), review denied (Minn. April 29, 1992); Hanks v. Hubbard Broadcasting, Inc., 493 N.W.2d 302, 310 (Minn. App. 1992) (noting that where the out-of-pocket rule does not apply, the plaintiff may recover for any injury that is the direct and natural consequence of acting on the faith of defendant's representations), review denied (Minn. Feb. 12, 1993). Moreover, appellant argues that the Eighth Circuit has also expanded recovery in fraudulent inducement cases beyond out-of-pocket losses. See Keenan v. Computer Assocs., Int'l, Inc., 13 F.3d 1266, 1275 (8th Cir. 1994) (applying Minnesota law, finding Brooks persuasive, and allowing expanded recovery where the misrepresentation caused plaintiff to enter a situation that "ultimately" damaged his business reputation and caused lost wages). We find appellant's reliance on Goodrich, Brooks, Hanks, and Keenan misguided.

Recognizing the injustice of limiting all fraud damages to out-of-pocket loss, the Minnesota Supreme Court created an exception to the out-of-pocket limit, but restricted the expanded recovery to damages for economic loss. See Goodrich, 430 N.W.2d at 183 (reasoning that the recovery of out-of-pocket losses was an inadequate remedy where the fraud caused plaintiff to lose his business). In each of the cases cited by appellant, the recoverable damages under the limited exception to the out-of-pocket rule were similarly limited to economic loss, either for destruction of business or diminished career value. For instance, in Brooks, this court allowed the plaintiff to recover his economic loss from the destruction of his business. See Brooks, 481 N.W.2d at 129 (measuring the diminished value of plaintiff's career as an attorney by computing the difference between the value of his career before and after defendant's misrepresentations). While appellant argues that Goodrich and Brooks created a sweeping new rule that fraud damages are no longer limited to out-of-pocket loss and plaintiffs are entitled to all damages necessary to place them in the same position as before, the exception to the out-of-pocket rule is simply not that broad.

In addition, although Hanks suggests that the exception permits recovery of any injury directly and naturally resulting from reliance on a defendant's representations, that case still limited recovery under the exception to "business" loss. Drawing an analogy to Brooks' career as an attorney, this court upheld the jury's compensatory damage award, but limited damages to the plaintiff's career as a news anchor. See Hanks, 493 N.W.2d at 310-11 (limiting recovery for loss of "business" as a news anchor, measured by assessing the plaintiff's diminished career value and difficulty in obtaining another job). Similarly, although the Eighth Circuit has awarded expanded damages in employment fraud cases, recovery under the exception was still limited to the economic loss to plaintiff's "business" and diminished career value. Keenan, 13 F.2d at 1275.

Despite appellant's attempts to expand the breadth of the exception to include any damages directly and naturally resulting from reliance on respondent's representations, Goodrich, Brooks, Hanks, and Keenan each limited recovery to economic loss for destruction of a person's business and diminished career value. Because Minnesota courts have never extended the exception to the out-of-pocket rule to include damages for emotional distress or home-equity loss, we affirm the district court's exclusion of evidence of such damages. In summary, the district court properly excluded appellant's evidence of emotional-distress and home-equity-loss damages because neither damage theory was disclosed in a timely manner or is recognized under existing Minnesota law.

III.

Respondent seeks review of the district court's refusal to grant judgment notwithstanding the verdict or to order a new trial on the issue of proximate cause. When reviewing the denial of a motion for judgment notwithstanding the verdict, evidence must be viewed in the light most favorable to the verdict and reversal is only appropriate where the evidence does not reasonably support the verdict. Flom v. Flom, 291 N.W.2d 914, 916 (Minn. 1980); see also Keenan, 13 F.3d at 1274 (applying Minnesota law). Respondent contends that, although the jury was properly instructed on the issue of proximate cause, there was no evidence establishing the necessary causal nexus between respondent's representations regarding the existence of a Minneapolis office and appellant's damages. See Rognlien v. Carter, 443 N.W.2d 217, 221 (Minn. App. 1989) (dismissing an employer fraud claim where employee failed to make requisite causal nexus between losses and the falsity of the misrepresentation), review denied (Minn. Sept. 21, 1989).

In denying respondent's motion for judgment notwithstanding the verdict, the district court stated that there was credible testimony that appellant would not have accepted the position if respondent had not promised the existence of a downtown Minneapolis office and that the record supported the jury's finding of proximate cause. Respondent argues the district court's statement is flawed in the following respects: (1) it blurs the distinction between proximate and "but for" causation; (2) the record contains no evidence establishing the requisite nexus between respondent's representations regarding the Minneapolis office and appellant's damages; and (3) the credibility of appellant's testimony is only relevant to its admissibility at trial and is irrelevant to the district court's denial of its JNOV motion. Because Fairmont Foods' CEO testified that appellant was demoted and terminated because of concerns regarding his honesty, attitude, and follow-through and because the district court did not cite any evidence to support its proximate cause finding, respondent contends that the evidence illustrates that appellant's damages were unrelated to the location of his office. Respondent argues that Minnesota courts require plaintiffs in fraudulent misrepresentation and employer fraud cases to prove that the misrepresentation is false, that the plaintiff justifiably relied on that misrepresentation, and that the falsity of the misrepresentation caused plaintiff's damages. See Rognlien, 443 N.W.2d at 220-21 (holding that an employer's misrepresentation regarding stock ownership inducing the employee to accept the position did not proximately cause employee's termination for inadequate performance).

A jury's verdict as to causation must be affirmed if it can be reconciled in any reasonable manner consistent with the evidence and its fair inferences. Savage v. K-Mart Corp., 393 N.W.2d 25, 27 (Minn. App. 1986); see Belden Porter Co. v. Kimball Co., 303 Minn. 98, 99, 226 N.W.2d 310, 310 (1975) (suggesting an appellate court may only overturn a jury verdict upon the conclusion that no reasonable mind could find as the jury had). It is within the province of the jury to determine whether the misrepresentation was the proximate cause of the appellant's damages. Keenan, 13 F.3d at 1275. Moreover, evidence that an employer's fraud induced the plaintiff to enter a situation ultimately causing the plaintiff damage is sufficient to sustain the jury's conclusion that the employer's representations proximately caused the plaintiff's damages. Brooks, 481 N.W.2d at 128.

At trial, appellant offered evidence that the absence of a downtown Minneapolis office contributed to the failure of the product line, his demotion, and subsequent termination. James Zimmerman testified that a Minneapolis office was essential to the success of the new product line and appellant's job performance because it allowed access to a metropolitan employment pool, permitted appellant to work closely with the Zimmerman group to launch the new product line, and permitted easier travel and meeting access. In addition, Robert Tenner, who was originally offered the national sales manager position, testified that he turned down the position because he was informed it would be in Fairmont and knew that lack of a Minneapolis office would seriously hinder job performance.

Despite evidence of alternative reasons for appellant's termination, appellate courts will not disturb a verdict unless the evidence, viewed in a light most favorable to the verdict, could not reasonably support the jury conclusion. Savage 393 N.W.2d at 27; see Belden Porter Co. 303 Minn. at 99, 226 N.W.2d at 310. The evidence suggests respondent's misrepresentations regarding the Minneapolis office induced appellant to accept the job and the absence of the office hindered his job performance and led to his demotion and, ultimately, to his termination. Moreover, appellate courts will uphold a jury's finding of proximate cause where the evidence, even if not closely related to the actual damage suffered, proves that the misrepresentations ultimately caused the damages. Brooks, 481 N.W.2d at 128; Keenan, 13 F.3d at 1275. Because the evidence and the reasonable inferences drawn therefrom support the jury's proximate cause finding, we affirm the district court's denial of respondent's motion for judgment notwithstanding the verdict.

Affirmed.

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