Morningstar Coffee, Inc., Respondent, vs. Mainstream Development, L.L.C., Appellant.

This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480 A. 08, subd. 3 (2002).

 

 

STATE OF MINNESOTA

IN COURT OF APPEALS

C4-03-151

 

 

Morningstar Coffee, Inc.,
Respondent,
 
vs.
 
Mainstream Development, L.L.C.,
Appellant.

 

 

Filed August 19, 2003

Affirmed

Parker, Judge*

 

 

Washington County District Court

File No. S0021105, C3013954

 

 

James M. Njus, Steven A. Linder, Stephen M. Harris, Meyer & Njus, P.A., 1100 Pillsbury Center, 200 South Sixth Street, Minneapolis, MN 55402 (for respondent)

 

Timothy M. Kelley, Eckberg, Lammers, Briggs, Wolff & Vierling, P.L.L.P., 1835 Northwestern Avenue, Stillwater, MN 55082 (for appellant)

 

            Considered and decided by Harten, Presiding Judge, Stoneburner, Judge, and Parker, Judge.

 

U N P U B L I S H E D  O P I N I O N

 

PARKER, Judge

On appeal in this contract dispute, appellant argues that it is entitled to judgment notwithstanding the verdict (JNOV) because the jury's damage award is improperly based on damages suffered by a nonparty and, alternatively, that it is entitled to a new trial because of evidentiary errors.  We affirm the district court's denial of a new trial and denial of JNOV.

FACTS

This lawsuit arises out of a commercial lease.  Appellant Mainstream Development, LLC is the landlord in this lawsuit; respondent Morningstar Coffee, Inc. (Morningstar) is the tenant.  Because the space was unfinished when the lease was signed, appellant was required to make certain improvements for the benefit of respondent.  Respondent sued appellant for breach of contract, alleging that appellant failed timely to complete those improvements.  After a trial, the jury found that appellant breached the lease by failing to make improvements timely and that respondent had damages in the amount of $68,314.62.  Appellant moved posttrial for JNOV, a new trial, and conditional remittitur.  The district court denied appellant's posttrial motions.  Appellant challenges the denial of JNOV and the denial of the new trial.  Appellant does not challenge the denial of the conditional remittitur.

D E C I S I O N

I.

We first address appellant's motion for JNOV.  We review de novo the denial of a motion for JNOV.  Pouliot v. Fitzsimmons, 582 N.W.2d 221, 224 (Minn. 1998).  JNOV is proper when the jury verdict has no reasonable support in fact or is contrary to the law.  Molenaar v. United Cattle Co., 553 N.W.2d 424 (Minn. App. 1996).  We consider the evidence in the light most favorable to the prevailing party and affirm the verdict "if it can be sustained on any reasonable theory of the evidence."  Pouliot, 582 N.W.2d at 224.     

Appellant argues that the jury's verdict is contrary to the law because the verdict is based on alleged losses to North End Coffee House, LLC (North End).  Jose Vido owns North End; he formed the corporation to own and manage the coffee shop that would operate out of the leased space.  Vido also owns Morningstar.  Appellant argues that the evidence on damages related only to North End and that there was no evidence presented to show that appellant's breach caused damage to respondent Morningstar.

Though appellant characterizes its argument as an argument relating to causation and damages, we conclude that appellant's argument is a real party in interest argument.  Rule 17.01 of the Minnesota Rules of Civil Procedure addresses real party in interest issues and mandates that "[e]very action shall be prosecuted in the name of the real party in interest."  Id.  When there is a real party in interest objection, rule 17.01 does not allow for dismissal of an action "until a reasonable time has been allowed after objection for ratification * * * by, joinder or substitution of, the real party in interest."  Id. 

In this case, appellant raised the real party in interest argument for the first time at trial.  It does not appear from the record that appellant made a formal objection under rule 17.01.  The rule requires that after an objection, the court allow a reasonable time for correction of the problem.  Id.  But because appellant did not make a formal objection,  respondent was not given an opportunity to correct any perceived problem by adding North End to the lawsuit.  Accordingly, we decline to set aside the jury's verdict on the grounds that there is a real party in interest problem under Minn. R. Civ. P. 17.01.

We note that even if appellant had followed the proper procedure for making a real party in interest challenge, the evidence supports a conclusion that Morningstar is a real party in interest.  There is ample evidence in the record that the damages caused by the breach were to Morningstar Coffee. 

Respondent introduced evidence that Morningstar incurred the damages alleged.  Vido testified that Morningstar paid the expenses of the coffee shop.  Vido testified that Morningstar was paying off the $60,000 bank loan that was initially made to North End.  Shawn Gardner, the commercial loan officer who worked on the $60,000 loan, testified that the loan was made to North End but that Morningstar assumed liability for the loan.  Thomas Halsall, who was to be Vido's partner in the coffee shop, testified that he understood that Morningstar would be financing the coffee shop.  Mark Rhode, the accountant for Morningstar, testified that Morningstar's loss "would be in the form of that they had advanced funds and would not be able to receive payback on those funds."  Rhode was asked, "So if Mr. Vido testified that all the money for the coffee shop in Stillwater was funded by Morningstar Coffee, would the loss equate to $89,150.22?"  Rhode's answer was yes.  On redirect examination, and after Gardner's testimony, Vido testified that Morningstar had in fact funded all of the expenses for North End.   

Because appellant did not make a timely objection to North End's absence from this lawsuit, appellant cannot argue on appeal that the claim against it is defective because North End is a real party in interest.  Additionally, the jury had ample evidence that losses to North End were essentially losses to Morningstar.  Appellant was not entitled to JNOV.

II.

Next we address appellant's argument that it is entitled to a new trial based on evidentiary errors made by the district court.  Because the district court has the discretion to grant a new trial, we will not disturb the decision absent a clear abuse of that discretion.  Halla Nursery, Inc. v. Baumann-Furrie & Co., 454 N.W.2d 905, 910 (Minn. 1990).  We uphold the denial of a motion for a new trial unless the verdict "is manifestly and palpably contrary to the evidence, viewed in a light most favorable to the verdict."  ZumBerge v. N. States Power Co., 481 N.W.2d 103, 110 (Minn. App. 1992) (citation omitted), review denied (Minn. Apr. 29, 1992).      

During the trial, respondent attempted to introduce into evidence exhibit 3, which consisted of various checks, invoices, and other financial documents relating to the coffee shop.  Appellant objected to exhibit 3 for lack of foundation.  The district court commented that respondent would have to lay foundation for each document in exhibit 3.  Respondent withdrew exhibit 3 and submitted exhibit 77, a summary of financial information in exhibit 3.  Appellant's only objection to exhibit 77 was a relevancy objection.  The district court overruled the objection.  Appellant now argues that the admission of exhibit 77 into evidence was improper on two grounds, and that as a result, appellant is entitled to a new trial.

Appellant first argues that exhibit 77 was improperly admitted into evidence because two lines of the exhibit are irrelevant and prejudicial.  The two lines to which appellant objects represent the amount of rent that respondent paid during 2000 and 2001.  Before trial, the district court ruled that respondent could not recover rent paid.  Appellant argues that because respondent could not recover rent paid, the presence of the rent paid information on exhibit 77 was "irrelevant and incompetent evidence." 

"Evidentiary rulings concerning materiality, foundation, remoteness, relevancy, or the cumulative nature of the evidence are within the trial court's sound discretion and will only be reversed when that discretion has been clearly abused."  Johnson v. Washington County, 518 N.W.2d 594, 601 (Minn. 1994) (quotation omitted).  Before the complaining party can show it is entitled to a new trial based on improper admissions, it must "demonstrate prejudicial error." Uselman v. Uselman, 464 N.W.2d 130, 138 (Minn. 1990) (citation omitted).

Here, appellant claims that the court has no way of knowing whether the jury award was based on rent paid by respondent and that accordingly, appellant is entitled to a new trial.  For support, appellant cites Pete v. Lampi, 150 Minn. 423, 185 N.W. 653 (1921), and Doll v. Scandrett, 201 Minn. 316, 276 N.W. 281 (1937).  Both cases are factually distinguishable, and more importantly, neither case absolves appellant of its duty to demonstrate prejudice from the admission of the evidence.  In fact, the court in Doll noted that error in the admission of evidence is grounds for a new trial only if "it is obvious from a consideration of the whole case that substantial prejudice resulted to the adverse party."  201 Minn. at 319, 276 N.W. at 282 (citation omitted).   

In this case, appellant claims that the rent-paid information on exhibit 77 substantially prejudiced appellant.  But an examination of the record does not support appellant's claim.  Exhibit 77 is a list of several figures; toward the bottom of the page, it says that the net loss is $89,150.22.  There is a bold line under the net-loss figure, and it is underneath that line where the rent-paid information is located.  The format of the exhibit makes it clear that the rent-paid information is not a part of the $89,150.22 net-loss figure.  The jury instructions given by the trial court provide:

[A] Tenant's covenant to pay rent is independent of a Landlord's covenant to repair and maintain the premises.  Therefore, a Landlord's breach of his covenants does not relieve a Tenant of his obligations under the lease.  The payment of rent is a prerequisite to continuing in possession regardless of the failure of the Landlord to fulfill his obligations to repair and maintain.   

 

The jury instruction makes it clear that respondent could not recover for rent paid.  Finally, at the end of his closing argument, counsel for respondent asked the jury for an award "between $45,000 and $89,000."  The $89,000 figure is approximately the same amount as the net loss, which does not include rent paid, noted on exhibit 77.  In addition, appellant agreed to put the same rent-paid figure on the special verdict form.  Thus, even if the rent-paid figure had not been on exhibit 77, the jurors would have seen the rent-paid figure when they read the special verdict form. 

In sum, even though exhibit 77 contained information on rent paid, the record indicates that it was clear to the jurors that they could not award damages for rent paid.  The verdict reached by the jury was within the range of testimony and was within the range of the damages requested by respondent.  Appellant has presented no evidence to indicate that the jury disregarded the court's clear instructions and awarded damages based on rent paid.  Appellant is not entitled to a new trial on this ground. 

The second ground on which appellant challenges exhibit 77 is foundation.  Specifically, appellant argues that respondent did not lay proper foundation to demonstrate that exhibit 77 was either a summary or a business record under the Minnesota Rules of Evidence.  Respondent argues that appellant waived its objection by not making it when respondent sought to introduce exhibit 77.

If a party fails to object to evidence at trial, that party has generally waived the objection.  Steiner v. Beaudry Oil & Serv., Inc., 545 N.W.2d 39 (Minn. App. 1996), review denied (Minn. May 21, 1996); see also Minn. R. Evid. 103(a)(1) (requiring "a timely objection or motion to strike" to claim erroneous admission of evidence).  The objection at trial must state the specific ground for the objection if the ground is not apparent from the context.  Minn. R. Evid. 103(a)(1); Kenney v. Chicago Great W. Ry. Co., 245 Minn. 284, 289, 71 N.W.2d 669, 673 (Minn. 1955).  But where a party fails to object to an evidentiary error at trial, this court may take notice of the error if it is an error of fundamental law or a plain error affecting substantial rights.  Minn. R. Evid. 103(d). 

            Here appellant did object to exhibit 77 at trial; but appellant's only objection at trial was a relevancy objection.  When respondent offered exhibit 77 into evidence, the following exchange took place:

Mr. Harris:  I will offer Exhibit 77.

Mr. Snyder:  May I inquire ever so briefly, Judge?

The Court:  Yes.

By Mr. Snyder: 

Q. What is this document?

A. What is it?  It's a financial statement on a cash basis, with a compilation letter for North End Coffee House, LLC.

Q.  Not Morningstar Coffee Company, Incorporated?

A.  No, it's not.

Mr. Snyder:  Just an objection as to relevance, Judge.

The Court:  Overruled.  Exhibit 77 will be received. 

 

Appellant's trial counsel stated relevance as the specific ground for the objection.  Because of that specific relevance objection, appellant's foundation objection was not clear from the context of the objection.  See Kenney, 245 Minn. at 289, 71 N.W.2d at 673 (finding "the ground now asserted by defendant was not raised by its objections at the trial and [defendant] is therefore precluded from raising the question on appeal").  Accordingly, unless appellant can show plain error, appellant waived its foundation objection.

Under rule 103(d), appellant must show both that the district court made an error and that the error affects substantial rights.  Minn. R. Evid. 103(d).  Appellant argues that the district court erred by admitting exhibit 77 because the exhibit is not a proper summary under Minn. R. Evid. 1006.  Rule 1006 provides:

The contents of voluminous writings, recordings, or photographs which cannot conveniently be examined in court may be presented in the form of a chart, summary, or calculation.  The originals, or duplicates, shall be made available for examination or copying, or both, by other parties at a reasonable time and place.  The court may order that they be produced in court.

 

Minn. R. Evid. 1006.  The contents of exhibit 3 were summarized in exhibit 77 after the district court told respondent that respondent would need to go through exhibit 3, page by page, and lay foundation for each page.  Exhibit 3 was a voluminous writing that could not be conveniently examined in court.  But exhibit 3 was in the courtroom and available for examination or copying by appellant.  The elements of rule 1006 were complied with, and the district court did not err by allowing exhibit 77 in as a summary.  Because the exhibit was properly introduced as a summary, we need not determine whether the exhibit qualifies as a business record under the Minnesota Rules of Evidence.   

            Even if the district court had erred, appellant would still have to show that there was a reasonable likelihood that the error substantially affected the verdict.  See Van Buren v. State, 556 N.W.2d 548, 551 (Minn. 1996).  Appellant argues that any error did substantially affect the verdict because exhibit 77 was the only evidence of damages.  But the record reflects that there was other testimony from which the jurors could infer damages.  Vido testified that during the months of operation, the coffee shop was losing about $2,000 per month.  Vido testified that he had taken out a loan to get the coffee shop up and running and that the balance owed on the loan was about $60,000.  Vido testified that he finally put in the floor drain that appellant was supposed to have put in and that the floor drain cost somewhere between $2,300 and $3,000.  Mark Landgraf, the project manager for the build-out of the coffee shop, testified that the final contract price was about $34,500.  Because there is evidence aside from exhibit 77 from which the jury could infer damages, appellant cannot show that any error substantially affected the verdict.       

            Appellant is not entitled to a new trial for evidentiary errors.  The district court did not err by allowing exhibit 77 into evidence, and even if the district court did err, appellant cannot show that any error affected the verdict. 

            Affirmed.

 

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