Court Opinion

ID: 8246164
Source: CourtListenerOpinion
Date Created: 2022-10-16 09:34:15.780909+00
Date Added: 2024-06-11T16:42:44.347907
License: Public Domain

DIETZEN, Justice
(dissenting).
I respectfully dissent. I disagree with the court’s conclusion that Haugen Nutrition & Equipment, LLC and Leland and llene Haugen (collectively, HNE) are constitutionally entitled to a jury trial on the attorney fees claim of United Prairie Bank. The majority’s decision represents a dramatic sea change for Minnesota courts and casts Minnesota as an outlier among jurisdictions that have considered this issue. Relying on our prior treatment of attorney fees, I conclude that the bank’s claim for attorney fees is most closely analogous to a claim for costs or disburse*64ments, which does not implicate the right to a jury trial under the Minnesota Constitution. To explain my dissent, I examine the constitutional right to a jury trial, the nature of the bank’s claim for attorney fees, and our relevant case law, and then apply those principles to the claim here.
I.
The Minnesota Constitution provides that the right to a jury trial “shall extend to all cases at law.” Minn. Const. art. I, § 4. This provision preserves the right to a jury trial “as it existed in the Territory of Minnesota when our constitution was adopted in 1857.” Abraham v. Cnty. of Hennepin, 639 N.W.2d 342, 348 (Minn.2002). In deciding which claims are entitled to a jury trial, we have distinguished between legal and equitable claims; the right to a jury trial attaches to an action at law, but not an action in equity. Olson v. Synergistic Techs. Bus. Sys., Inc., 628 N.W.2d 142, 150 (Minn.2001).
The complaint here alleges that as a result of HNE’s breaches of the loan agreements, the bank is entitled to recover reasonable attorney fees. The majority concludes that HNE is entitled to a jury trial because the bank is seeking the recovery of money based on a contractual obligation, analogizing the attorney fees claim to contractual indemnity.
Although we have viewed many types of contract claims as legal claims, the contractual nature of the obligation to pay attorney fees is not determinative as to the right to a jury trial. Rather, we look at “the nature of the relief sought.” Abraham, 639 N.W.2d at 353. Some contract remedies — for example, reformation, rescission, and specific performance—are equitable. SCI Minn. Funeral Servs., Inc. v. Washburn-McReavy Funeral Corp., 795 N.W.2d 855, 859 (Minn.2011) (describing reformation and rescission as equitable relief); Rognrud v. Zubert, 282 Minn. 430, 434, 165 N.W.2d 244, 247-48 (1969) (stating that specific performance “has long been regarded as entirely equitable”). And “[mjerely because an attorneys’ fees claim can be quantified monetarily does not mean that it is ‘legal’ relief.” Redshaw Credit Corp. v. Diamond, 686 F.Supp. 674, 676 (E.D.Tenn.1988). We have recognized that “[t]he recovery of money alone may be sought in an equitable action.” Swanson v. Alworth, 168 Minn. 84, 90, 209 N.W. 907, 909 (1926). We also have decided cases involving both contract claims and requests for monetary damages where we have rejected the right to a jury trial. See id. at 91, 209 N.W. at 909-10; Indianhead Truck Line, Inc. v. Hvidsten Transp., Inc., 268 Minn. 176, 192-94, 128 N.W.2d 334, 346-47 (1964).
II.
Therefore, the court must examine the specific nature of the relief sought in determining whether the claim for attorney fees in this case gives rise to a constitutional right to a jury trial. The bank’s right to recover attorney fees arises from specific provisions in the loan documents, which allow the bank to recover fees and costs associated with collecting amounts owed under the agreements. Among other relief, the complaint seeks recovery of the total indebtedness, “plus all additional accrued interest, charges and reasonable attorneys’ fees and costs.” After careful consideration of our. relevant case law, I conclude that the bank’s claim for attorney fees is akin to a claim for costs or disbursements, which does not implicate the right to a jury trial under the Minnesota Constitution.
The issue here is a matter of first impression. There is no case law directly on point, even though attorney fees provisions have been present in Minnesota contracts *65for over 150 years. See, e.g., Griswold v. Taylor, 8 Minn. 342 (Gil. 301) (1863) (upholding attorney fees provision in 1858 mortgage). Nonetheless, we have consistently treated a contractual claim for attorney fees as sui generis and a matter for the court to decide. We have explained that attorney fees due under a note are not “part of the original debt” and are “not really due when suit is brought, for the services of the attorney are not then fully performed.” Campbell v. Worman, 58 Minn. 561, 564-65, 60 N.W. 668, 669 (1894). Consequently, a claim for attorney fees arising from the nonpayment of promissory notes is not “part of the cause of action alleged.” First State Bank of Grand Rapids v. Utman, 136 Minn. 103, 105, 161 N.W. 398, 399 (1917). Further, the claim “is not a distinct cause of action.” Id. at 105, 161 N.W. at 399. Recognizing the unique procedural aspects of an attorney fees claim in this situation, we have described a claim for attorney fees as a collateral claim that “is not to be submitted with the issues upon which the liability of a defendant depends.” Id. at 105, 161 N.W. at 399. Instead, we have concluded that the value of attorney fees should be determined “upon application to the court,” after the underlying contract claim has been resolved. Id. at 105, 161 N.W. at 399; accord Campbell, 58 Minn, at 565, 60 N.W. at 669.
In our previous cases, we have treated a request for attorney fees due under a contract like a request for costs or disburse-merits, directing district courts to include the attorney fees “in the judgment, the same as any other disbursement.” Campbell, 58 Minn, at 565, 60 N.W. at 669 (emphasis added); see also Johnson v. Nw. Loan & Bldg. Ass’n, 60 Minn. 393, 396, 62 N.W. 381, 382-83 (1895) (treating attorney fees as disbursements under foreclosure-by-advertisement statute, notwithstanding that “the right of a mortgagee to attorney’s fees is a contract right”). In Smith v. Chaffee, we articulated the “general rule” that a party who succeeds in a lawsuit and is awarded costs and disbursements “has no further claim against his adversary for attorney’s fees or expenses incurred in the suit,” regardless of “[w]hether the action sounds in contract or in tort.” 181 Minn. 322, 324, 232 N.W. 515, 516 (1930).
Analogizing a contractual attorney fees claim to a request for costs or disbursements is consistent with our treatment of statutory attorney fees. We have recognized that “a number of statutes ... specifically allow prevailing parties attorney fees as part of ‘costs and disbursements.’ ” Collins v. Minn. Sch. of Bus., Inc., 655 N.W.2d 320, 327 (Minn.2003) (concluding that statutory attorney fees were recoverable as “costs and disbursements”); see, e.g., T.A. Schifsky & Sons, Inc. v. Bahr Constr., LLC, 773 N.W.2d 783, 789 (Minn.2009) (explaining that “attorney fees in mechanics’ lien cases are, pursuant to statute and our case law, costs that may be awarded by the court”).1 In addition, *66“costs” in English common law courts included attorney fees, “within certain limits.” Charles T. McCormick, Counsel Fees and Other Expenses of Litigation as an Element of Damages, 15 Minn. L.Rev. 619, 619-20 (1931).
Based on our past treatment of attorney fees claims, I conclude that a claim for attorney fees arising under a contract is in the nature of a request for costs or disbursements. In fact, this is precisely how the loan agreements in this case describe the attorney fees. The various loan documents describe the attorney fees as “costs and expenses,” “legal expenses,” and “expenses of enforcement.” See Woolsey v. O’Brien, 23 Minn. 71, 72 (1876) (explaining that costs and disbursements encompass “all allowances which may be made to a party to reimburse him for expenses and trouble in an action”).
HNE is not entitled to a jury trial on the attorney fees claim if that same type of claim did not entitle a party to a jury trial at the time the Minnesota Constitution was adopted. See Olson v. Synergistic Techs. Bus. Sys., Inc., 628 N.W.2d 142, 149 (Minn.2001). There is no evidence of a right to a jury trial on costs or disbursements at the time our constitution was adopted. See AG. Becker-Kipnis & Co. v. Letterman Commodities, Inc., 553 F.Supp. 118, 123 (N.D.Ill.1982) (“[W]hat little evidence of the pre-merger custom exists suggests that attorneys’ fees and costs have traditionally been viewed as a determination to be made by the court rather than by a jury.”).
Moreover, the recovery of attorney fees implicates traditional equitable principles. The recovery of attorney fees is not like “other damages available for breach of contract,” as the majority contends. In a breach of contract case, the general measure of damages is the amount that will place the nonbreaching party in the same position as if the contract had been fully performed. E.g., Paine v. Sherwood, 21 Minn. 225, 232 (1875). But when courts resolve attorney fees claims, they follow rules of equity. For example, in a case involving attorney fees arising from the costs of collection of a note, we directed the district court to arrive at an amount “as it shall deem reasonable and just.” Campbell, 58 Minn, at 564-65, 60 N.W. at 668-69 (upholding the right to recover stipulated attorney fees “only to the extent of the reasonable value of the attorneys’ services actually performed or to be performed”). Although the majority attempts to distinguish contractual attorney fees claims from statutory attorney fees claims, we have instructed courts to consider the same factors in resolving both kinds of claims. In a case involving unpaid amounts on promissory notes, we explained that courts should “ ‘arriv[e] at a fair and reasonable fee’” by examining factors that include the services performed, the ability and experience of the attorneys, the time and amount of money involved, and the results obtained. Agri Credit Corp. v. Liedman, 337 N.W.2d 384, 386 (Minn.1983) (quoting Obraske v. Woody, 294 Minn. 105, 109-10, 199 N.W.2d 429, 432 (1972) (setting forth factors to determine an award of attorney fees in a statutory mechanic’s lien case)). This focus on fairness and flexibility is the hallmark of equity. See, e.g., Beliveau v. Beli*67veau, 217 Minn. 235, 245, 14 N.W.2d 360, 366 (1944) (explaining that equity “possesses the flexibility and expansiveness” to adapt to the circumstances “of each particular case so as to accomplish justice”).2
Finally, the majority’s rigid, wooden approach — treating attorney fees claims like claims for contractual indemnity without considering the unique nature of attorney fees claims — would extend the constitutional jury trial right to any claim for costs or expenses that springs from a contractual obligation. For example, the loan documents here allow for the recovery of all costs of collection and other legal expenses. Under the majority’s rationale, because the bank is seeking “the recovery of money based on a contractual obligation to pay,” HNE would have a constitutional right to have a jury decide expert witness fees, deposition costs, and even photocopying expenses.
The majority’s decision represents a historic change in practice for Minnesota courts, which have decided attorney fees claims for the last century and a half. I cannot subscribe to this new rule. Rather, consistent with our prior treatment of attorney fees claims and the equitable nature of such claims, I conclude that when a party seeks attorney fees as legal expenses or costs of collection under an agreement, there is no right under the Minnesota Constitution to have a jury determine the amount of attorney fees.3
III.
The majority’s decision in this case also casts Minnesota as an outlier among jurisdictions that have considered the issue. Our court is the only court in the country that recognizes a constitutional right to a jury trial under these circumstances.
Essentially, the Minnesota Constitution protects the same jury trial rights as those protected under the United States Constitution. Onvoy, Inc. v. ALLETE, Inc., 736 N.W.2d 611, 617 (Minn.2007). The majority, however, reaches a different result on this issue under the Minnesota Constitution than courts have reached under the United States Constitution. Specifically, courts deciding the right to a jury trial on an attorney fees claim under the United States Constitution have universally concluded that there is no right to a jury trial. For example, the Second Circuit has concluded that the “collateral” issue of the amount of reasonable attorney fees due under a contract does “not present the kind of common-law questions for which the Seventh Amendment preserves a jury trial right.” McGuire v. Russell Miller, Inc., 1 F.3d 1306, 1315 (2d Cir.1993). Other circuit courts of appeal have reached similar conclusions. E.g., E. Trading Co. v. Refco, Inc., 229 F.3d 617, 627 (7th Cir.2000) (concluding that “[t]he issue of attorneys’ fees (including amount)” due under a contract constitutes “an issue to be resolved after the trial on the basis of the *68judgment entered at the trial,” just as in cases involving statutory entitlements to attorney fees); Ideal Elec. Sec. Co. v. Int’l Fid. Ins. Co., 129 F.3d 143, 150 (D.C.Cir.1997) (“Where a claim for attorney’s fees arises from a private contract provision, such a claim does not embody a right to trial by jury.”); Resolution Trust Corp. v. Marshall, 939 F.2d 274, 279 (5th Cir.1991) (holding that the Seventh Amendment does not guarantee a jury trial to determine the amount of reasonable attorney fees, as no common law right exists to recover attorney fees awarded pursuant to a contract).
In addition, no other state court has concluded that a party has a constitutional right to a jury trial on a contractual attorney fees claim of this kind. Although state courts have relied on different rationales, they all have reached the same conclusion — there is no constitutional right to a jury trial on a claim for attorney fees based on a contract. See, e.g., Cheek v. McGowan Elec. Supply Co., 511 So.2d 977, 979 (Fla.1987) (explaining that “the recovery of attorney’s fees is ancillary to the claim for damages”); Hudson v. Abercrombie, 258 Ga. 729, 374 S.E.2d 83, 85 (1988) (reasoning that “attorney fees were not allowable at common law”); Missala Marine Servs., Inc. v. Odom, 861 So.2d 290, 296 (Miss.2003) (concluding that trial court properly “h[e]ld a hearing after the trial of the case to hear evidence on the issue of attorney’s fees”); State ex rel. Chase Resorts, Inc. v. Campbell, 913 S.W.2d 832, 836 (Mo.Ct.App.1995) (noting the “absence of any authority that Missouri has recognized a common law right to a jury trial to determine reasonable attorney’s fees once liability has been established”); Paramount Commc’ns Inc. v. Horsehead Indus., Inc., 287 A.D.2d 345, 731 N.Y.S.2d 433, 434 (N.Y.App.Div.2001) (“The amount of, if not the right to, attorneys’ fees raises post-judgment issues collateral to the merits in the nature of an accounting that are essentially equitable in nature.”); Murphy v. Stowe Club Highlands, 171 Vt. 144, 761 A.2d 688, 701 (2000) (holding that determining the amount of attorney fees due under a contract involves equitable accounting).
IV.
For these reasons, I conclude that the bank’s claim for the recovery of attorney fees in this case did not give rise to the right to a jury trial under the Minnesota Constitution. I would affirm the decision of the court of appeals on this issue.

. Our decision in Schwickert, Inc. v. Winnebago Seniors, Ltd., 680 N.W.2d 79 (Minn.2004), does not undermine my conclusion that contractual attorney fees are analogous to costs or disbursements. In Schwickert, we simply interpreted a party’s offer of judgment, which did not explicitly offer to add costs and disbursements to the lump sum amount, as resolving all claims under the contract, including contract-based attorney fees. Id. at 88. At the same time, we urged parties to avoid these types of disputes by specifically stating whether an offer includes or excludes attorney fees. Id. Our case law did make a distinction between contractual attorney fees and statutory attorney fees with respect to offers of judgment under the former Minn. R. Civ. P. 68, but that distinction was based on the “language of the rule,” which we interpreted as suggesting that costs and disburse*66ments for purposes of an "offer of judgment are defined by the underlying statute." Collins, 655 N.W.2d at 326 (emphasis added). I note that our rules now reflect a broader understanding of "costs and disbursements.” Compare Minn. R. Civ. P. 54.04 (2010) (amended May 3, 2010) ("Costs and disbursements shall be allowed as provided by statute.”), with Minn. R. Civ. P. 54.04 (2011) ("Costs and disbursements shall be allowed as provided by law.”).

. The majority concludes that the substantive nature of an attorney fees claim is "an action for contractual indemnity,” which the majority classifies as a traditional legal claim. "While traditionally indemnity has been viewed as a right arising out of contract,” we have clarified that "the award of indemnity should follow traditional concepts of equity." Hill v. Okay Constr. Co., 312 Minn. 324, 345, 252 N.W.2d 107, 120(1977).

. I would limit the reach of my holding to the circumstances presented by this case — where the attorney fees sought are in the nature of costs of collection or expenses of enforcement in connection with a breach of contract claim in the same action, in contrast to cases where the claim for attorney fees arises from an attorney-client relationship. See Simler v. Conner, 372 U.S. 221, 223, 83 S.Ct. 609, 9 L.Ed.2d 691 (1963) (holding that a claim for attorney fees in attorney-client lawsuit is a matter for the jury).