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Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 

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*

The HONORABLE RICHARD E. DORR, United States District Judge for the

Western District of Missouri, sitting by designation.

1

The HONORABLE DONOVAN W. FRANK, United States District Judge for

the District of Minnesota.

United States Court of Appeals

FOR THE EIGHTH CIRCUIT

___________

No. 03-3260

___________

Enervations, Inc., *

*

Plaintiff - Appellant, *

* Appeal from the United States

v. * District Court for the

* District of Minnesota.

Minnesota Mining and Manufacturing *

Company, *

*

Defendant - Appellee. *

___________

Submitted: May 12, 2004

Filed: August 23, 2004

___________

Before LOKEN, Chief Judge, BRIGHT, Circuit Judge, and DORR,*

 District Judge.

___________

LOKEN, Chief Judge.

Enervations, Inc. commenced this action against Minnesota Mining &

Manufacturing Co. (3M) alleging breach of an Authorized Distributor Agreement (the

Agreement) that granted Enervations the exclusive right to distribute 3M window

film products in a designated territory. The district court1

 granted 3M’s motion to

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dismiss all claims as time-barred. Enervations appeals, arguing only that the court

abused its discretion in denying Enervations’ oral motion to amend its complaint to

cure the timeliness defect in one of its five breach of contract claims. We affirm.

Count II of the complaint alleged that, “on January 1, 2002, 3M improperly and

unlawfully terminated” the Agreement. Counts I, III, IV, and V accused 3M of

violating Enervations’ rights as an exclusive distributor between 1999 and 2001.

Enervations filed this diversity action on December 30, 2002, and served 3M on

March 17, 2003. The Agreement provided that any action for its breach “must be

commenced within one (1) year after the later to occur of (i) the date on which the

breach occurs, or (ii) the date on which the other party either obtains knowledge of

or should have known of the breach.”

In a diversity suit, state law governs whether the applicable statute of

limitations is tolled by the filing or by the service of a complaint. Walker v. Armco

Steel Corp., 446 U.S. 740, 751-53 (1980). The parties agree that Minnesota law

governs this dispute. Under Minnesota law, the parties to a contract may reduce the

statute of limitations on actions for its breach “to not less than one year.” MINN.

STAT. ANN. § 336.2-725(1). An action is commenced “when the summons is served

upon [the] defendant.” MINN. R. CIV. P. 3.01(a); see Larsen v. Mayo Med. Ctr., 218

F.3d 863, 867 (8th Cir.), cert. denied, 531 U.S. 1036 (2000). Thus, this action was

commenced for statute of limitations purposes on March 17, 2003, when Enervations

served the complaint on 3M. The district court therefore concluded that all five

counts of the original complaint are time-barred by the one-year limitations period in

the Agreement. Enervations does not challenge that ruling on appeal.

In support of its motion to dismiss Count II, the claim of wrongful termination,

3M relied on the allegation in the complaint that 3M terminated the Agreement by

letter dated January 1, 2002, more than fourteen months before the action was

commenced. In opposition, to support its argument that the Agreement remained in

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effect until 3M ended the relationship in April, Enervations submitted 3M’s January

1 termination letter and a January 25, 2002, document entitled “Memorandum of

Understanding -- Distributor Transition Agreement.” 

At the hearing on 3M’s motion, counsel for Enervations argued that the

Agreement continued in effect until April 23, that Count II was “inartfully drafted,”

and that the defect would be cured if the complaint was amended to allege that the

Agreement “was terminated on January 1, effective April 23 of 2002.” When the

district court observed that no motion to amend had been filed prior to the hearing,

counsel urged the court to grant leave to amend. Over two weeks later, with no

motion to amend filed in the interim, the court granted 3M’s motion to dismiss. In

its Memorandum Opinion and Order, the court did not refer to Enervations’ oral

motion to amend. However, the court stated that the termination letter and the

Memorandum of Understanding do not support Enervations’ position because both

“are explicit that the Agreement had been terminated.” This appeal followed. 

We review the district court’s denial of a motion for leave to amend for abuse

of discretion. See Wiles v. Capitol Indem. Corp., 280 F.3d 868, 871 (8th Cir. 2002).

Rule 15.1 of the District of Minnesota Local Rules requires a party moving to amend

to “file such motion and . . . attach a copy of the amended pleading to the motion.”

Here, Enervations failed to file a motion to amend or an amended pleading. A district

court rarely abuses its discretion in denying a motion to amend for failure to comply

with such a local rule. See Prof’l Mgmt. Assocs. v. KPMG LLP, 335 F.3d 800, 804

(8th Cir. 2003), cert. denied, 124 S. Ct. 1176 (2004); Dudek v. Prudential Sec., Inc.,

295 F.3d 875, 880 (8th Cir. 2002). However, the district court did not deny the

motion for this reason.

“Leave to amend will be denied if the proposed amended pleading would be

futile.” Grandson v. Univ. of Minn., 272 F.3d 568, 575 (8th Cir. 2001), cert. denied,

535 U.S. 1054 (2002); see also Foman v. Davis, 371 U.S. 178, 182 (1962); Wiles, 280

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F.3d at 871. The issue here is whether an amendment alleging that the Agreement

was terminated “effective April 23, 2002" would be futile. Though “matters outside

the pleading” may not be considered in deciding a Rule 12 motion to dismiss,

documents “necessarily embraced by the complaint” are not matters outside the

pleading. See BJC Health Sys. v. Columbia Cas. Co., 348 F.3d 685, 687 (8th Cir.

2003); GFF Corp. v. Associated Wholesale Grocers, Inc., 130 F.3d 1381, 1384-85

(10th Cir. 1997), and cases cited. 3M’s termination letter clearly was “necessarily

embraced by the pleadings.” See Piper Jaffray Cos. v. Nat’l Union Fire Ins. Co., 967

F. Supp. 1148, 1152 (D. Minn. 1997). Because Enervations construes the

Memorandum of Understanding as amending the Agreement, rather than constituting

a new contract, the Memorandum of Understanding is also a document embraced by

the amended complaint that Enervations seeks leave to file. Thus, both documents

are properly part of the Rule 12 record.

Under Minnesota law, the interpretation of an unambiguous contract “is a

question of law and is reviewed de novo” on appeal. Winthrop Res. Corp. v. Eaton

Hydraulics, Inc., 361 F.3d 465, 470 (8th Cir. 2004). After reciting that Paragraph 9C

of the Agreement gave 3M the right to terminate immediately, 3M’s January 1, 2002

letter unambiguously stated: “Such notice of immediate termination of [the

Agreement] is hereby given . . . .” Likewise, after reciting that 3M had terminated the

Agreement effective January 1, 2002, paragraph 1 of the Memorandum of

Understanding unambiguously provided:

This MOU and the terms and conditions herein, and the rights and

privileges conferred hereby, shall be without prejudice to the Parties’

respective rights under [the Agreement] or otherwise, including but not

limited to 3M’s claim that it has terminated [the Agreement] and

Enervations’ claim that 3M does not have the right to terminate [the

Agreement] . . . .

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At oral argument, Enervations argued for the first time that its wrongful

termination cause of action did not accrue until April 2002 because Enervations

incurred no termination damages until the relationship ended. This contention goes

to the merits of the district court’s dismissal of the original complaint, which

Enervations did not appeal. In any event, the contention is without merit. “It is wellsettled that a cause of action for breach of contract accrues immediately on a breach,

though actual damages resulting therefrom do not occur until afterwards.” Cargill,

Inc. v. Prods. Eng’g Co., 627 F. Supp. 1492, 1498 (D. Minn. 1986) (applying

Minnesota law; internal quotation marks omitted).

-5-

Like the district court, we conclude that these contract documents

unambiguously support 3M’s contention that it terminated the Agreement on January

1, 2002, and therefore that Enervations’ claim for wrongful termination accrued on

that date. By its express terms, the Memorandum of Understanding was a new

interim agreement. The fact that the termination letter and the Memorandum of

Understanding stated 3M’s willingness to negotiate a new contractual relationship,

and the fact that Enervations continued to function as an authorized 3M distributor

during the subsequent negotiations, do not negate the unambiguous January 1 notice

of immediate termination.2

 Thus, Enervations’ oral motion for leave to amend was

properly denied. The proposed amendment was futile because, even if so amended,

Count II would still be time-barred.

The judgment of the district court is affirmed.

______________________________

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