Lisa Olson, et al., Appellants, vs. First Church of the Nazarene, et al., Respondents, Mervin Leroy Kelley, Respondent.

Lisa Olson, et al., Appellants, vs. First Church of the Nazarene, et al., Respondents, Mervin Leroy Kelley, Respondent. A05-898, Court of Appeals Unpublished, May 16, 2006.

This opinion will be unpublished and

may not be cited except as provided by

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

 

STATE OF MINNESOTA

IN COURT OF APPEALS

A05-898

 

Lisa Olson, et al.,

Appellants,

 

vs.

 

First Church of the Nazarene, et al.,

Respondents,

 

Mervin Leroy Kelley,

Respondent.

 

Filed May 16, 2006

Reversed and remanded

Halbrooks, Judge

 

 

Hennepin County District Court

File No. PI 01-14591

 

 

Jeffrey R. Anderson, Kathleen O'Connor, Jeff Anderson & Associates, P.A., E-1000 First National Bank Building, 332 Minnesota Street, St. Paul, MN 55101 (for appellants)

 

Thomas E. McEllistrem, Garth G. Gavenda, Collins, Buckley, Sauntry & Haugh, P.L.L.P., W-1100 First National Bank Building, 332 Minnesota Street, St. Paul, MN 55101 (for respondents First Church of the Nazarene, et al.)

 

Mervin Leroy Kelley, 1115 14th Street North, Fargo, ND 58702 (pro se respondent)

 

 

 

            Considered and decided by Lansing, Presiding Judge; Kalitowski, Judge; and Halbrooks, Judge.

U N P U B L I S H E D   O P I N I O N

HALBROOKS, Judge

            Appellants challenge the district court's order granting respondents' costs and disbursements.  Appellants allege that the district court abused its discretion by granting the bill of costs without conducting an evidentiary hearing, making reasonableness determinations, or issuing detailed findings.  We reverse and remand.

FACTS

            Appellants Jay and Lisa Olson sued respondents First Church of the Nazarene (Church), Minnesota District Church of the Nazarene (District Church), Board of General Superintendents of the Church of the Nazarene (Board), and Mervin Kelley for, among other things, sexual battery, negligent supervision, and negligent retention.  Prior to trial, appellants entered into a Pierringer settlement with the Board and the Church.  Following trial, a jury reached a verdict in favor of respondents Mervin Kelley and District Church against appellants and a verdict in favor of appellants against the Church and the Board. 

            Respondents filed their bill of costs and disbursements, and appellants objected.  Replying to appellants' objections, respondents filed an amended bill of costs.  Appellants objected to the amended bill of costs and filed a motion for a judgment notwithstanding the verdict or a new trial. 

            Respondents' amended bill of costs sought, among other things, reimbursement for filing fees, meals and lodging for Samuel Pickenpaugh, lodging for William Colbeck, deposition and transcript costs, expert-witness fees, and costs associated with respondents' attorneys' representation.  Appellants objected to the expert-witness fees, the meals and lodging of witnesses Samuel Pickenpaugh and William Colbeck, the deposition fees, and the fees associated with respondents' attorneys' representation. 

            Respondents contend that the district court heard arguments regarding their bill of costs at the hearing on appellants' posttrial motion.  The district court denied appellants' posttrial motion and granted respondents' bill of costs without specifying the amount of costs granted.  Soon thereafter, the district court issued an amended order and memorandum, granting the full amount of respondents' requested costs.  While the district court stated that respondents' "Amended Bill of Costs is allowed for a total of $16,711.88 plus interest," the district court did not address the merits of the claim.  This appeal follows.

D E C I S I O N

            "Costs and disbursements shall be allowed as provided by statute."  Minn. R. Civ. P. 54.04.  Respondent moved for costs and disbursements under Minn. Stat. § 549.04 (2004), which states: "[T]he prevailing party . . . shall be allowed reasonable disbursements paid or incurred."  The district court shall allow reasonable costs to a prevailing party in a district court action.  Benigni v. County of St. Louis, 585 N.W.2d 51, 54 (Minn. 1998) (citing Minn. Stat. § 549.04).  Because the award of costs and disbursements is within the sound discretion of the district court, "we review for an abuse of that discretion."  Kellar v. Von Holtum, 605 N.W.2d 696, 703 (Minn. 2000).  "The standard by which the court's discretion is measured is whether expenditures are reasonable.  Therefore, absent a specific finding that the costs were unreasonable, the court shall approve recovery of disbursements."  Jonsson v. Ames Constr., Inc., 409 N.W.2d 560, 563 (Minn. App. 1987) (emphasis omitted), review denied (Minn. Sept. 30, 1987). 

I.

 

Appellants allege that the district court abused its discretion by (1) failing to grant appellants an evidentiary hearing regarding their objections to respondents' amended bill of costs; (2) awarding costs for respondents' expert witness; (3) awarding costs for respondents' witnesses' lodging and meals during the trial; (4) awarding costs of depositions that respondents did not use at trial; and (5) awarding costs for respondents' attorneys' travel, mileage, and meals.

A.        Evidentiary Hearing

Appellants argue that the district court abused its discretion by failing to take oral testimony and by failing to make findings on the reasonableness and necessity of respondents' costs and disbursements.  Relying on Buller v. A.O. Smith Harvestore Prods., Inc., 518 N.W.2d 537 (Minn. 1994), respondents contend that a hearing is not necessary.  In Buller, the supreme court held that "[o]n its face, [Minn. R. Civ. P. 54.04] does not require the district court to conduct a hearing to determine the reasonableness of the alleged costs."  518 N.W.2d at 543.  The supreme court concluded that no hearing was necessary in the matter because the district court's detailed findings of fact regarding claimed costs were sufficient.  Id.

While a hearing may not be required, costs and disbursements must be reasonable and necessary.  Stinson v. Clark Equip. Co., 473 N.W.2d 333, 338 (Minn. App. 1991), review denied (Minn. Sept. 13, 1991).  When a party has challenged the reasonableness or necessity of an award, and the district court has neither conducted a hearing nor made findings, we have remanded to the district court for appropriate findings on that issue.  See Ill. Farmers Ins. Co. v. Brekke Fireplace Shoppe, Inc., 495 N.W.2d 216, 222 (Minn. App. 1993). 

Here, respondents contend that the district court heard argument on their bill of costs at the hearing on appellants' posttrial motion.  Appellants disagree.  There is no transcript of that proceeding in the record.  As a result, we have no way to determine whether the district court heard argument on the bill of costs and, if so, to what extent the parties were allowed to state their positions.  Because there is no transcript of the hearing in the record and because the district court did not make findings regarding the reasonableness of respondents' costs, we reverse and remand for a hearing on the disputed portions of respondents' submitted costs.

B.        Expert Witness

We will reverse an award of expert-witness fees only when an abuse of discretion is apparent.  Carpenter v. Mattison, 300 Minn. 273, 280, 219 N.W.2d 625, 631 (1974).  Minn. R. Gen. Pract. 127 states:

On affidavit showing that a fee equalling or exceeding $300.00 per day has been billed, the court administrator may tax $300.00 per day for an expert witness fee as a disbursement in a civil case, subject to increase or decrease by a judge.  The amount allowed shall be in such amount as is deemed reasonable for such services in the community where the trial occurred and in the field of endeavor in which the witness has qualified as an expert.  No allowance shall be made for preparation . . . outside the courtroom by an expert.

 

            Appellant asserts that the district court abused its discretion by awarding expert-witness fees that are in excess of the $300 per day limit, by awarding costs for the expert's out-of-court preparation, and by not making a finding of what a reasonable fee would be within the field of psychology in the Minneapolis community.

            The rule does not provide "an inflexible $300 per day limit on expert fees," Mohwinkel v. City of N. St. Paul, 357 N.W.2d 174, 176 (Minn. App. 1984) (interpreting a similar, previous rule), review denied (Minn. Feb. 19, 1985),but expressly allows the district court to "increase or decrease" the amount of expert-witness fees awarded.  Minn. R. Gen. Pract. 127.  In Quade & Sons Refrigeration, Inc. v. Minn. Mining & Mfg. Co., we held that where the prevailing party provided a detailed bill of the expert's time and total costs in the party's affidavit, and where the district court learned the expert's qualifications from the expert's testimony, the district court did not abuse its discretion in determining that the expert's fees were reasonable.  510 N.W.2d 256, 261 (Minn. App. 1994), review denied (Minn. Mar. 15, 1994). 

            Regarding fees for an expert's out-of-court preparation time, this court has stated that the rule does not "disallow compensation for all preparations outside the courtroom."  Mohwinkel, 357 N.W.2d at 177 (emphasis added).  The out-of-court preparation fee allowed is such that is necessary for the expert's trial testimony.  Id.  The district court "may disallow fees for outside preparations which are merely convenient, but it does not disallow those necessary for testimony."  Id.; see also Quade, 510 N.W.2d at 260-61 (interpreting rule 127).  Because it is not clear from the record that the district court made a determination whether the expert's out-of-court preparation fees were necessary for her trial testimony, we ask the district court to address this on remand.

C.        Witnesses' Lodging and Meals

Minn. R. Civ. P. 45.06 (2004) provides the standard for compensating witnesses for their time and expenses relating to testifying at trial.  That rule provides, in pertinent part:

[A] witness who is not a party to the action or an employee of a party . . . and who is required to give testimony . . . relating to knowledge, information, or facts obtained as a result of activities in such profession, business, or trade, is entitled to reasonable compensation for the time and expense involved in preparing for and giving such testimony.

 

Minn. R. Civ. P. 45.06.  The purpose of this rule is to "balance the burden imposed on non-parties who have no personal interest in a lawsuit with the interests of the litigants in obtaining testimony and documentary information from non-parties."  1A David F. Herr & Roger S. Haydock, Minnesota Practice § 45.14, at 427 (2003).

            Respondents are seeking compensation for two witnesses: Dr. Samuel Pickenpaugh and William Colbeck.  The compensation sought for Dr. Pickenpaugh is $1,501.35 for meals and lodging.  Dr. Pickenpaugh lives in Virginia, Minnesota.  The compensation sought for William Colbeck is $176.70 for lodging.

            Appellants argue that this rule does not allow for reimbursement of trial witnesses' meals and lodging.  In addition, appellants assert that Dr. Pickenpaugh's expenses should not be reimbursed under this rule because he is or was an employee of respondent District Church.  The determination of whether an individual is a party or a non-party should be made at the time of the service of the subpoena." Herr & Haydock, supra, § 45.14, at 427.

Appellants cite to the transcript and to a trial exhibit to support their argument that Dr. Pickenpaugh was an employee of District Church.  But the transcripts are incomplete and do not contain Dr. Pickenpaugh's testimony, and the exhibit relied upon is not in the record.  Nevertheless, respondents conceded at oral argument that Dr. Pickenpaugh was an employee of District Church at the time of the alleged sexual assault.  The specific question as to whether Dr. Pickenpaugh was an employee at the time he was subpoenaed to testify in this matter was not addressed and should be determined on remand. 

With respect to the reimbursement claim for William Colbeck's expenses, it is not clear from the record whether the lodging expense is reasonable, and the district court did not make a reasonableness determination.  Due to the incomplete record on this issue and the lack of findings on the reasonableness of the claim, we ask the district court to address this issue on remand as well. 

D.        Depositions

Appellants also challenge the district court's award of respondents' deposition costs on the grounds that the depositions were not used during trial and the award is cumulative and duplicative because it allows reimbursement for both regular and condensed copies.    

The award of deposition costs to the prevailing party is within the sound discretion of the district court.  Larson v. Hill's Heating & Refrigeration of Bemidji, Inc., 400 N.W.2d 777, 783 (Minn. App. 1987), review denied (Minn. Apr. 17, 1987).  Further, "[t]he fact that a deposition was not used at trial does not bar deposition costs."  Johnson v. S. Minn. Mach. Sales, Inc., 460 N.W.2d 68, 73 (Minn. App. 1990).  But "[t]he burden is on the prevailing party to show both that the depositions and copies were necessary to the conduct of the litigation and that they were effectively and pertinently used by the prevailing party."  Dahlbeck v. DICO Co., Inc., 355 N.W.2d 157, 166 (Minn. App. 1984) (quotation omitted), review denied (Minn. Feb. 6, 1985).  "The [district court] should . . . take a hard look at costs claimed.  The judge is familiar with the needs of the case, its importance and the strategies involved and is in the best position to judge what is truly necessary and what is only useful."  Romain v. Pebble Creek Partners, 310 N.W.2d 118, 124 (Minn. 1981).

While the costs of the depositions and the copies may generally be included in the award of costs, the district court here did not issue findings regarding whether these particular depositions were necessary, whether respondents used the depositions effectively, and whether the costs were reasonable, particularly in light of the allegation that respondents are seeking to recover for multiple copies of the depositions.  On remand, we ask the district court to address this issue.

E.        Attorneys' Travel, Mileage, and Meals

Appellants further challenge the award of respondents' attorneys' travel, mileage, and meals.  The rule of procedure governing costs and disbursements states that they "shall be allowed as provided by statute."  Minn. R. Civ. P. 54.04.  Respondents have not cited any authority to support this claim, nor are we aware of any.  As a result, the district court abused its discretion by awarding these costs and there is no basis for reconsideration on remand.

II.

 

Finally, appellants contend that the district court should have taken into account equitable considerations, such as appellants' ability to pay and the chilling effect that requiring the losing party to pay costs may have on future plaintiffs in sexual-battery claims.  Appellants state that there is no Minnesota law on point and instead cite federal law in support of this argument.   

But the statute in Minnesota contains mandatory language:  "In every action in a district court, the prevailing party . . . shall be allowed reasonable disbursements paid or incurred."  Minn. Stat. § 549.04, subd. 1 (emphasis added).  In addition, cases have held that "‘absent a specific finding that the costs were unreasonable, the court shall approve recovery of disbursements.'"  Quade, 510 N.W.2d at 260 (quoting Jonsson, 409 N.W.2d at 563).  Thus, the district court does not have the discretion to refuse to award a prevailing party its reasonable costs and disbursements. 

            Reversed and remanded.