State of Minnesota, Respondent, vs. Eric Joseph Houseman, 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This opinion will be unpublished and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

C0-99-2196

 

St. John's Episcopal Church,

Respondent,

 

vs.

 

Brewmatic Company, a California corporation,

Appellant.

 

Filed August 29, 2000

Affirmed as modified

Peterson, Judge

 

Hennepin County District Court

File No. 9816586

 

 

William M. Hart, Katherine A. McBride, Jeffry C. Schmidt, Meagher & Geer P.L.L.P., 4200 Multifoods Tower, 33 South Sixth Street, Minneapolis, MN  55402 (for respondent)

 

Richard G. Morgan, David Miller, Jennifer Huelskoetter, Bowman and Brooke LLP, Suite 2600, 150 South Fifth Street, Minneapolis, MN  55402-4244; and

 

Richard P. Mahoney, Victor E. Lund, Mahoney, Dougherty and Mahoney, 801 Park Avenue, Minneapolis, MN  55404-1189 (for appellant)

 

            Considered and decided by Davies, Presiding Judge, Peterson, Judge, and Shumaker, Judge.

U N P U B L I S H E D   O P I N I O N

PETERSON, Judge

            Respondent St. John's Episcopal Church brought this products liability action against appellant Brewmatic Company, alleging that a fire in St. John's church building was caused by a coffee maker negligently designed and manufactured by Brewmatic.  About 13 months after this action was commenced, after Brewmatic repeatedly failed to comply with discovery and contempt orders, the district court found Brewmatic in continuing contempt of court and granted a default judgment in favor of St. John's in the amount of $506,114.64 for actual damages plus $366,376.63 for costs and attorney fees.  We affirm as modified.

FACTS

            In August 1998, respondent St. John's Episcopal Church brought this products liability action against appellant Brewmatic Company, alleging that a fire in St. John's church building was caused by a coffee maker, the Diplomat II, that was designed and manufactured by Brewmatic.  St. John's initially asserted claims for negligence, strict liability, negligent failure to warn, and breach of implied warranty of merchantability.  The district court later granted St. John's leave to amend its complaint by adding claims for violation of the (1) Unlawful Trade Practices Act, Minn. Stat. § 325D.13 (1996) (misrepresenting safety of coffee maker); (2) Uniform Deceptive Trade Practices Act, Minn. Stat. § 325D.44 (1996) (misrepresentation causing likelihood of confusion or misunderstanding as to true nature of coffee maker's safety); (3) Consumer Protection Act, Minn. Stat. § 325 F. 67 (1996) (false statement in advertisement); and (4) Consumer Fraud Act, Minn. Stat. § 325 F. 69 (1996) (misrepresentation in connection with sale of coffee maker).  The district court denied St. John's leave to amend its complaint to include a punitive damages claim.

            Brewmatic's responses to St. John's first set of interrogatories and document requests were due in November 1998.  St. John's granted Brewmatic voluntary extensions of time to answer, the last one in January 1999 when Brewmatic substituted counsel.  In June 1999, St. John's brought a motion for an order compelling Brewmatic to answer discovery.  Before the hearing on the motion, Brewmatic provided incomplete responses.  By order dated June 24, 1999, the district court granted St. John's motion and ordered Brewmatic to respond to all discovery requests within ten days.  Within the ten-day period, Brewmatic provided St. John's with additional, but still incomplete, discovery responses.

            In mid-July 1999, St. John's filed a motion for an order compelling Brewmatic to comply with the June 24, 1999, order and striking Brewmatic's defenses as a sanction for Brewmatic's refusal to cooperate in discovery or comply with the June 24, 1999, order.  In response, Brewmatic requested relief from

the obligation to answer any of [St. John's] interrogatories or requests for production of documents that seek privileged information or documents, or work product information or documents, or expert conclusions other than as permitted by Rule 26.02(d).

 

            The parties were scheduled to attend a court-ordered mediation on August 3, 1999.  On July 26, Brewmatic's counsel notified St. John's that a claims examiner for Brewmatic's insurer would attend the mediation but no representative from Brewmatic would be present.  During a teleconference the following day, the district court ordered Brewmatic to have a representative present at the mediation.  The court also notified the parties that it was striking a hearing on St. John's discovery motion from the August 4 calendar and invited St. John's to submit a request for sanctions, including monetary penalties, striking defense witnesses, and jury instructions allowing an inference to be drawn from undisclosed information.

            The mediation was unsuccessful, and the district court reinstated the August 4 discovery hearing.  St. John's states that the main issue was Brewmatic's refusal to produce documents related to previous claims regarding defective or malfunctioning Diplomat II coffee makers, including pleadings, depositions, answers to interrogatories, and documents produced by Brewmatic in any other cases involving fires allegedly caused by Diplomat II coffee makers.  Brewmatic claimed that those documents had been prepared in anticipation of litigation or trial and were, therefore, protected from discovery under Minn. R. Civ. P. 26.02(c) (trial preparation materials).

            The district court disagreed and stated:

[W]hat I'm trying to say, Mr. Mahoney [Brewmatic's attorney], is that I'm going to order that it all be produced.  If there are any type of logs that you want to come up with, a privilege log or anything like that, you certainly may do that with your client, but I want it done within two weeks.  And I want then everything disclosed or produced, and if there are any documents that are requested to be submitted under privilege or confidentiality or any other type of protective order that we have a Master who will look at those and that you'll agree upon someone.  And that if it is found that any of this was done in either bad faith or frivolous or to in some way make this more complex than it should be, then I will again entertain costs, especially as recommended by the Special Master for this discovery motion and the costs of the Special Master.

 

            * * * *

 

            So I just want Mr. Mahoney to understand that my earlier order was my order, and I think we've all been pretty patient here.  And now that we have a little more time, I'll give your client that little bit of time to comply and decide to comply in good faith or be subject to possible sanctions and shifting of costs if that's necessary.

 

By order dated August 6, 1999, the district court directed Brewmatic to respond completely to all outstanding discovery by August 25 and to prepare a privilege log for discovery requests Brewmatic believed were objectionable, "specifically identifying each and every document for which it claims privilege as well as the basis for said claimed privilege."

            On August 25, Brewmatic's counsel contacted the district court and requested an extension of the August 25 deadline.  Brewmatic represented that it would produce some of the documents by the end of the day and the remainder by August 30.  The court granted the extension but also found:

            1.  [Brewmatic] has failed to comply with Orders of this Court dated January 26, 1999, June 24, 1999 and August 11, 1999 setting discovery deadlines and ordering [Brewmatic] to answer and comply with all outstanding discovery requests.

 

            2.  [Brewmatic] has continuously failed to produce documents and/or provide answers to all types of proper discovery requests timely made by [St. John's].  Several of [Brewmatic's] responses have been evasive or incomplete so as to be treated as failures to answer, disclose or respond.

 

            3.  [Brewmatic] has failed to properly move for limitation of discovery pursuant to Mn. R. Civ. P. 26.02.

 

            4.  Discovery issues have consumed many hours, and have resulted in several telephone conferences and have burdened the Court and [St. John's].

 

            5.  Due to [Brewmatic's] non compliance with the Orders of this Court and the orderly process of discovery pursuant to the Minnesota Rules of Civil Procedure, the Court shall proceed pursuant to Mn. R. Civ. P. 37 and pursuant to the Court's inherent contempt powers.

 

            6.  [Brewmatic] is in contempt.  The Court will not punish past contempt; however, to vindicate its authority and duty to ensure the orderly administration of justice, the Court will, from the date of its oral ruling of August 26, 1999, exercise its contempt powers prospectively * * *[.]

 

The court issued the following contempt order:

1.  [Brewmatic] shall prospectively comply with all pending discovery requests, and Orders of this Court and produce and deliver all documents and other discovery responses to [St. John's] counsel on or before Monday, August 30, 1999 at 4:30 p.m.

 

            2.  Objections, other than the privilege log, are untimely and all documents or responses shall be produced without objection.

 

            3.  If [Brewmatic] fails to comply; and/or fails to deliver and produce the requested discovery; and/or submits objections, [Brewmatic] shall be in contempt and shall pay the sum of $25,000.00 to [St. John's] counsel, by certified check, on or before Tuesday August 31, 1999 at 4:30 p.m.

 

            4.  If any requested discovery has not been delivered and produced on or before Monday August 30, 1999 at 4:30 p.m., [Brewmatic] shall purge its contempt by producing such requested discovery by Friday, September 3, 1999 at 9:00 a.m.  If [Brewmatic] fails to do so, [Brewmatic] shall be in contempt and [Brewmatic] shall pay the sum of $50,000.00 to [St. John's] counsel, by certified check, on or before Tuesday, September 7, 1999 at 4:30 p.m.

 

            5.  All further delays, partial productions or non compliance shall be measured in five (5) day sequences and the amount to be paid to purge the contempt shall be doubled.

 

The district court continued the discovery matters related to the privilege log until September 3 and directed the parties to agree on a special master by that date.  The court warned Brewmatic that if the court or the special master determined that any objections had been made in bad faith, Brewmatic would be required to pay $5,000 "for each improper, unsubstantiated objection."

            On August 30, Brewmatic delivered discovery responses and an incomplete privilege log to St. John's.  On August 31, Brewmatic delivered additional documents, which it stated had been inadvertently omitted from the delivery the day before, to St. John's.  St. John's counsel submitted an affidavit stating that the discovery was incomplete in the following respects:  in reviewing the 101 claims files provided by Brewmatic, St. John's learned about an additional 62 claims brought against Brewmatic that had not been provided to St. John's or claimed as privileged; Brewmatic failed to produce all documents pertaining to Consumer Safety Protection Commission (CSPC) investigations; and Brewmatic failed to produce UL files.

            On September 2, Brewmatic delivered privilege logs for its engineering and claims files to St. John's.  The privilege logs totaled 228 pages, and the claims privilege log covered about 3,000 documents.  St. John's asserts that the privilege logs failed to adequately describe documents, fully identify the author and recipients, or state the applicable privilege.

            For each document, the claims privilege log identified the file that the document came from and described the document (e.g. "Claim issues and status info and notes").  St. John's counsel stated in an affidavit that most of the documents in the claims files were date-stamped and that if Brewmatic had identified the documents by date in the privilege log, St. John's could have determined whether documents omitted from the claims files provided to St. John's had been omitted inadvertently or because a privilege was claimed.  For many of the documents, the claims privilege log did not identify a privilege.  Otherwise, the claims privilege log identified the privilege as attorney-client communication; trial preparation material, either attorney's mental impression or work product; and/or expert conclusion.  St. John's counsel also stated that the descriptions in the engineering privilege log were inadequate.  For example, from the description "memo dated 7/17/92 authored by Warrand Kirsch and Allan Li, ‘RE Coffee Machine Diplomat II Three Station Brewer,'" it was not possible to determine whether the document was an engineering analysis performed as an expert disclosure or an internal document prepared by Brewmatic employees in the ordinary course of business.

            Following a hearing, on September 3, 1999, the district court issued an order finding Brewmatic in contempt and directing Brewmatic to pay St. John's $25,000 plus $2,000 in attorney fees.  The court also appointed a special master and ordered Brewmatic to pay the costs.

            The special master conducted a hearing on September 17, 1999, and issued an order finding:  Brewmatic failed to produce a sufficiently specific privilege log; Traian Zaionciuc, Brewmatic's employee, was not an expert entitled to the protection of Minn. R. Civ. P. 26.02(d) and could be deposed by St. John's at a time and place chosen by St. John's with any costs borne by Brewmatic; and Brewmatic failed to disclose the opinion of its expert, Robert A. Schroeder, and photographs by him as required by court order.  The special master ordered Brewmatic to provide St. John's with the discovery pertaining to Schroeder and a revised privilege log specifically identifying the date, subject matter and nature of each document, the identity and status of each person involved in the communication, and the precise grounds on which the privilege is claimed and the manner in which the communication meets those grounds.

            After reviewing its privilege logs, Brewmatic agreed to produce 441 of the documents listed in them, leaving 2,052 claimed to be privileged.  Brewmatic agreed to produce the documents still claimed to be privileged if the court issued a protective order making the documents confidential and placing them under seal, subject to use only for this case, and prohibiting disclosure to anyone not involved in this litigation.  The special master ruled that Brewmatic had presented insufficient grounds to support its request for a protective order.  At a hearing before the special master on September 27, Brewmatic's counsel stated that St. John's had requested discovery only regarding claims made against Brewmatic and, therefore, Brewmatic was not required to provide discovery on Brewmatic's claim against Ranco, the supplier of a thermostat used in the Diplomat II.  However, a request for production of documents served on Brewmatic in November 1998 requested documents regarding claims of injury or property damage allegedly caused by the Diplomat II, documents generated by Brewmatic relating to flammability properties or hazards of the coffee maker, and documents produced by Brewmatic in any other case involving a fire allegedly caused by the coffee maker.  Brewmatic agreed to produce the documents related to the Ranco litigation but failed to do so.

            As a matter of trial strategy, Brewmatic stated that it would refuse to produce any documents remaining on the privilege log that the special master or court found were not privileged, await a contempt ruling, and file an interlocutory appeal from the contempt order.  After conducting four days of hearings on the privilege logs and studying the documents listed therein, by order dated October 13, 1999, the special master sustained Brewmatic's privilege claims as to 40 documents and found that 140 documents were not privileged and ordered Brewmatic to produce them.  The special master's order indicates that as to the remaining 1,872 documents Brewmatic's privilege claims were either unchallenged or withdrawn.  The order further states:

            1.  Counsel for both sides have fully complied with the Orders of this Court and the Orders of the Special Master and have conducted themselves in an exemplary manner as officers of the Court, except that [Brewmatic's] counsel has refused to turn-over those documents on the Privilege Logs which the Special Master ordered to be turned-over, and has promised to, but not yet produced, the file of Traian Zaionciuc and certain exhibits from Farmer Brothers versus Ranco.

 

            2.  This refusal was not [Brewmatic's] counsel's decision, but was dictated by [Brewmatic], itself, which repeatedly ordered [its] counsel to refuse to turn over the documents ordered to be discovered, even if that refusal would result in a finding of contempt.

 

            3.  [Brewmatic] also ordered [its] counsel to appeal the discovery orders of the Court and of the Special Master.

 

            4.  With the possible exception of a small number of documents legitimately falling within categories 1 and 2 [past and present Brewmatic employees as experts], the refusal to disclose the ordered documents is not based on any sustainable claim of privilege.

 

            5.  The few documents legitimately falling within categories 1 and 2 would have negligible impact on this lawsuit.

 

            6.  [Brewmatic] is in contempt of court for failing to transmit to [St. John's] the documents which the Special Master ordered to be disclosed.

 

The order allowed Brewmatic to purge its contempt by fully complying with the special master's orders by 5:00 p.m. on October 15, 1999.

            On October 15, 1999, Brewmatic produced documents from Zaionciuc and Schroeder's files and a privilege log listing documents from their files, Kirsch's files, and related to the Ranco litigation.  Brewmatic previously had represented that it produced the complete files of Zaionciuc and Schroeder.

            St. John's also cites additional wrongful conduct by Brewmatic besides its refusal to comply with discovery requests and orders.  On June 3, 1999, St. John's noticed Kirsch's deposition scheduled for June 29, 1999.  At Brewmatic's request, St. John's rescheduled Kirsch's deposition to July 19, 1999.  Brewmatic then informed St. John's counsel that because Kirsch had retired from Brewmatic effective July 1, 1999, Brewmatic no longer had any control over him, so St. John's would have to locate and subpoena him for deposition.  After St. John's complained, Brewmatic agreed to produce Kirsch for his deposition.

            Kirsch's deposition was taken in California.  At the deposition, Brewmatic provided St. John's with supplemental answers to expert interrogatories stating that Traian Zaionciuc, a Brewmatic employee, would testify as an expert.  St. John's counsel asked to depose Zaionciuc, who was present at Kirsch's deposition.  Brewmatic refused, asserting that St. John's could not depose him because he had been designated as an expert witness.

            St. John's filed a motion seeking a default judgment against Brewmatic and a finding that Brewmatic was collaterally estopped from denying its negligence in designing or manufacturing the Diplomat II.  St. John's also requested that the district court strike Brewmatic's defenses as a sanction for its discovery violations and award it attorney fees.  The district court found Brewmatic in continuing contempt and granted St. John's motion in its entirety.  The district court awarded St. John's $506,114.64 for actual damages plus $366,376.63 for attorney fees and costs, which made the total judgment amount $872,491.27.  This appeal is from the judgment.

D E C I S I O N

            1.  Relying on Minnesota State Bar Ass'n v. Divorce Assistance Ass'n, Inc., 311 Minn. 276, 248 N.W.2d 733 (1976), Brewmatic argues that its refusal to comply with the district court's discovery orders did not justify a contempt finding.  The Divorce Assistance court stated:

It is well established that an order directing a witness to answer [deposition] questions must be obeyed, and a failure to obey such order subjects the witness to a contempt citation, even if the order was erroneous or improvident.  The principle that a witness cannot be cited for contempt for refusing to answer questions on the basis of a valid assertion of the Fifth Amendment privilege is one of the few exceptions to the foregoing general rule.

 

Id. at 283, 248 N.W.2d at 740 (citations omitted).

            Brewmatic's argument that its privilege claims were analogous to the Divorce Assistance defendant's assertion of his Fifth Amendment privilege is not persuasive.  Instead of inviting a contempt finding, Brewmatic should have obtained a district court ruling on privileged documents and then petitioned this court for a writ of prohibition if it believed that the district court had erroneously required the disclosure of any privileged documents.  See Mampel v. Eastern Heights State Bank, 254 N.W.2d 375, 377 (Minn. 1977) ("a writ of prohibition is an appropriate means to obtain review of a pretrial discovery order where the trial court orders discovery of information clearly not discoverable").

            Brewmatic argues that it otherwise acted in good faith in attempting to comply with the district court's discovery orders and deadlines.  We disagree.  The findings in the district court's discovery orders show that Brewmatic repeatedly and willfully failed to comply with discovery orders, and the record supports those findings.  Brewmatic argues that the special master found it acted in good faith.  The special master found that Brewmatic's attorney acted in good faith but not that Brewmatic acted in good faith.  On the contrary, after noting the cooperative effort between counsel, the special master stated, "Not between the client."  The special master also found that Brewmatic promised, but failed, to produce Zaionciuc's file and certain exhibits from the Ranco file.

            Brewmatic next contends that the district court exceeded its civil contempt authority when it ordered a $25,000 contempt penalty subject to doubling every five days.  See Westgor v. Grimm, 381 N.W.2d 877, 880 (Minn. App. 1986) (civil contempt penalty limited to damages incurred as a result of contempt).  Brewmatic cites no evidence showing that it paid any contempt penalties; therefore, the issue is moot.  Moreover, the contempt order provided for any penalties to be applied to whatever amount St. John's ultimately recovered.

            2.  Having determined that the evidence supports the contempt finding, the next question is whether Brewmatic's conduct warranted the contempt sanctions imposed by the district court.  "A court is vested with authority to render a judgment by default against a disobedient party who fails to comply or respond to discovery orders or requests."  State by Humphrey v. Ri-Mel, Inc., 417 N.W.2d 102, 108 (Minn. App. 1987) (citing Minn. R. Civ. P. 37.02(2)(c) and 37.04), review denied (Minn. Feb. 17, 1988).

Although a judgment by default runs contrary to the primary objective of the law to dispose of claims on their merits, courts must be provided broad discretion to enforce calendar rules and prevent unnecessary and inexcusable delays.  A party who willfully and without justification or excuse fails to comply with discovery orders with an intent to delay trial and continues to refuse to cooperate with the court forfeits the right to a trial on the merits.

 

Id. at 108-09; see also Deutz & Crow Co., Inc.  v. Anderson, 354 N.W.2d 482, 491-92 (Minn. App. 1984) (upholding order striking defendant's answer and counterclaim as a contempt sanction).  The district court's imposition of sanctions will not be overturned absent a clear abuse of discretion.  State v. Widell, 530 N.W.2d 566, 570 (Minn. App. 1995), review denied (Minn. May 31, 1995).

            In Ri-Mel, this court upheld the entry of a $581,000 default judgment as a sanction for violating discovery orders.  417 N.W.2d at 110.  In Ri-Mel, in February, the district court ordered appellants to produce certain documents within four days.  Id. at 109.  Three days after the deadline expired, appellants produced an incomplete set of documents.  Id.  The Ri-Mel appellants also failed to cooperate with respondent's efforts to depose them.  Id.  Appellants' scheduled depositions had been cancelled several times due to appellants' false assurances that they would cooperate and settle the case.  Id.  In March, appellants disobeyed a court order to appear for a deposition and produce certain documents.  Id.  In response to a second court order to the same effect, appellants appeared for the depositions without counsel, invoked the Fifth Amendment, and failed to produce all of the documents required by discovery orders.  Id.  On April 9, respondent's counsel wrote a letter to appellants describing the documents appellants had failed to produce in violation of the court's most recent discovery order and requesting that appellants comply with the discovery order by April 21.  Id.  Appellants failed to produce any of the documents.  Id.  Respondents wrote a second letter on April 29.  Id.  After appellants again failed to respond, the district court issued an order requiring appellants to personally appear on May 29 to show cause why they should not be held in contempt and why a default judgment should not be entered against them pursuant to Minn. R. Civ. P. 37.02.  Id.  Appellants failed to personally appear on May 29, although their attorney did appear and produced some of the documents required by the court's discovery order.  The court continued the hearing for one day.  Id.  When appellants again failed to appear, the court adjudicated appellants in default and in contempt.  Id.

            Brewmatic's conduct in this case was at least as egregious as that of the Ri-Mel appellants.  From the outset, Brewmatic refused to cooperate or comply with discovery requests and orders.  Brewmatic's first discovery responses were due in November 1998.  St. John's granted voluntary extensions of time to answer until January 1999.  Five months later, Brewmatic still had not provided its first discovery responses, so St. John's brought a motion to compel.  The district court granted St. John's motion, but Brewmatic provided only incomplete responses.  St. John's brought another motion to compel.  In August, the district court issued an order directing Brewmatic to completely respond to discovery and to prepare a privilege log for discovery requests that it believed were objectionable.  Brewmatic requested an extension of the deadline set by the August order.  The district court granted the extension but also made specific findings regarding Brewmatic's continuous failure to provide discovery and the extreme amount of time spent on discovery issues.  The court found Brewmatic in contempt and warned that the court would impose sanctions under Minn. R. Civ. P. 37 if Brewmatic did not comply with all pending discovery requests and court orders.  On September 3, the district court found Brewmatic in contempt for failing to comply with discovery requests and orders.  The court also appointed a special master to address Brewmatic's privilege claims.  Following a hearing, the special master found that the privilege log was not sufficiently specific and directed Brewmatic to prepare a revised privilege log.  After conducting four days of hearings on the revised privilege log, the special master found that 140 documents were not privileged and directed Brewmatic to produce them.  Brewmatic refused to do so.  The special master found that Brewmatic's refusal was due to Brewmatic's conduct, not that of its counsel.  In addition, Brewmatic was uncooperative with efforts to depose its employees, Kirsch and Zaionciuc; failed to produce documents from Zaionciuc and Schroeder's files but represented that it had produced their complete files; and falsely claimed that St. John's discovery requests pertained only to claims against Brewmatic and not to Brewmatic's claim against Ranco.  Under Ri-Mel, the district court did not abuse its discretion by granting default judgment in favor of St. John's as a sanction for Brewmatic's contempt.  See also O'Neil v. Corrick, 307 Minn. 497, 239 N.W.2d 230 (1976) (when plaintiff failed to comply with order to provide full and complete answers to written interrogatories within 30 days or have his action dismissed, dismissal or default judgment was justified under Minn. R. Civ. P. 37.02(2)(c)).

            Brewmatic argues that the district court erred in granting default judgment because St. John's failed to establish that it was prejudiced by Brewmatic's conduct.  In Firoved v. General Motors Corp., 277 Minn. 278, 282-83, 152 N.W.2d 364, 368 (1967), the supreme court reversed the district court's dismissal with prejudice of an action for failure to prosecute.  The supreme court stated that when determining whether to grant a dismissal, prejudice is the primary factor to be considered.  Id. at 283, 152 N.W.2d at 368.  The court further stated that the prejudice must be of a character that cannot be adequately compensated by the allowance of costs, attorney fees or the imposition of other reasonable conditions. Id.  In Firoved, the dismissal resulted after plaintiff's local counsel died, and his out-of-state attorney encountered difficulties finding substitute local counsel to associate with him.  Plaintiff had no personal fault in the matter.  Id. at 285, 152 N.W.2d at 369.  The supreme court acknowledged that the district court had been faced with a difficult and close decision but concluded that the facts did not warrant as severe a sanction as dismissal with prejudice.  Id. at 284-85, 152 N.W.2d at 369.  The opinion indicates that Firoved was a fact-specific decision.  Later cases have focussed on the willfulness of defendant's conduct without even addressing the prejudice factor.  See, e.g., Breza v. Schmitz, 311 Minn. 236, 237, 248 N.W.2d 921, 922 (1976); Ri-Mel, 417 N.W.2d 102.

            The district court found Brewmatic in contempt by order dated August 25, 1999, and warned Brewmatic that it would proceed with sanctions under Minn. R. Civ. P. 37 if Brewmatic continued its noncompliance with discovery.  The default judgment was not granted until two and a half months later.  During those two and a half months, Brewmatic had many opportunities to comply with discovery but continued its noncompliance despite repeated warnings and contempt findings.  Adopting Brewmatic's position would give the party in contempt a great degree of control over contempt proceedings and significantly undercut the district court's contempt authority.  As long as no incurable prejudice resulted to the other party, the party in contempt could wait until the court imposed a sanction and then decide whether to abide by the sanction or invalidate it by agreeing to comply with the court's earlier order.  We decline to extend the party in contempt such power.  Brewmatic's opportunity to cure its contempt ended when the court granted default judgment in favor of St. John's.

Having determined that Brewmatic's conduct warranted the sanction of a default judgment, the issue remains whether the complaint and the facts alleged by St. John's support the entry of default judgment.  See Mesenbourg v. Mesenbourg, 538 N.W.2d 489, 493 (Minn. App. 1995) (issues that can be raised on direct appeal from a default judgment include whether the complaint states a cause of action and whether the complaint justifies the relief granted); Nazar v. Nazar, 505 N.W.2d 628, 633 (Minn. App. 1993) (appellate court reviews a default judgment to determine whether the evidence on record supports the findings of fact and whether the findings support the conclusions of law).  The complaint and additional facts alleged by St. John's show that Brewmatic was negligent in designing and manufacturing the Diplomat II; Brewmatic's negligence caused the fire in St. John's church building; and St. John's suffered $506,114.64 in damages as a result of the fire.[1]

            In addition to actual damages, the district court awarded St. John's $366,376.63 in attorney fees and costs.[2]  The district court may order the party in contempt to pay the aggrieved party "a sum of money sufficient to indemnify him and satisfy his costs and expenses, including a reasonable attorney's fee incurred in the prosecution of such contempt."  Minn. Stat. § 588.11 (1998); see also Minn. Stat. § 549.211 (1998) (allowing attorney fee award against a party that acts in bad faith).

            St. John's incurred costs of $23,076.13 and claimed attorney fees of $343,300.50, $90,143.50 of which was attributable solely to discovery motions.  Regarding the remaining attorney fees, the district court's findings indicate that Brewmatic's misconduct hindered St. John's preparation of its case throughout the course of litigation.  The evidence supports the district court's findings that the attorney fees and costs incurred by St. John's were reasonable.  The district court did not abuse its discretion in awarding St. John's attorney fees and costs.  St. John's concedes that an affidavit on which the district court relied in determining attorney fees contains an accounting error and that the total amount of nondiscovery fees was $229,707, not $253,157, a difference of $23,450.  We, therefore, modify the final judgment amount from $872,491.27 to $849,041.27, plus prejudgment interest.[3] 

            We do not reach the issues regarding whether the facts alleged by St. John's support its statutory claims and whether the district court erred in applying collateral estoppel.

            Affirmed as modified.

[1] Finding of fact number four in the district court's November 17, 1999, order states that St. John's incurred damages in the amount of $506,114.65.  The parties agree that this is a typographical error and that the correct amount is $506,114.64.  The order for judgment awards St. John's $506,114.64 in actual damages, so it does not appear that the error affected calculation of the final judgment amount.

 

[2] Conclusion of law number eight in the district court's November 17, 1999, order directs Brewmatic to pay St. John's $336,376.63 for attorney fees and costs.  The parties agree that this is a typographical error and that the correct amount is $366,376.63.  The order for judgment awards St. John's $366,376.63 for attorney fees and costs, so it does not appear that the error affected calculation of the final judgment amount.

 

[3] The district court adopted St. John's proposed findings of fact and conclusions of law verbatim, a practice this court has disapproved.  See Bliss v. Bliss, 493 N.W.2d 583, 590 (Minn. App. 1992) (although the verbatim adoption of a party's proposed findings and conclusions of law is not reversible error per se, this practice raises the question of whether the trial court independently evaluated each party's testimony and evidence).  In this case, in light of the detailed findings regarding Brewmatic's misconduct in discovery orders and statements in the record by the district court and the special master, we decline to remand for further findings.