Court Opinion

ID: 3172012
Source: CourtListenerOpinion
Date Created: 2016-01-25 22:05:42.831264+00
Date Added: 2024-06-11T12:01:11.528829
License: Public Domain

This opinion will be unpublished and
                        may not be cited except as provided by
                        Minn. Stat. § 480A.08, subd. 3 (2014).

                             STATE OF MINNESOTA
                             IN COURT OF APPEALS
                                   A15-0455

                                 CSM Equities, LLC,
                                    Appellant,

                                          vs.

               Woodland Village Investments Limited Partnership, et al.,
                                   Respondents.

                               Filed January 25, 2016
                                Affirmed as modified
                                   Hooten, Judge

                           Hennepin County District Court
                             File No. 27-CV-12-13846

Richard T. Ostlund, Randy G. Gullickson, Steven C. Kerbaugh, Anthony Ostlund Baer &
Louwagie P.A., Minneapolis, Minnesota (for appellant)

Timothy D. Kelly, Dykema Gossett PLLC, Minneapolis, Minnesota; and

Christopher R. Morris, Casey D. Marshall, Bassford Remele, PA, Minneapolis, Minnesota
(for respondent)

      Considered and decided by Ross, Presiding Judge; Hooten, Judge; and Smith, Judge.

                       UNPUBLISHED OPINION

HOOTEN, Judge

      Appellant challenges the district court’s dismissal of its claims on summary

judgment and the district court’s award of costs and disbursements to respondents. In a
cross-appeal, respondents claim that the district court erred by rejecting their statute of

limitations defense and denying their motion for attorney fees. We affirm as modified.

                                         FACTS

       Appellant CSM Equities, LLC (CSM) is a company in the business of acquiring,

developing, and managing real estate.       Respondents Woodland Village Investments

Limited Partnership (Woodland), ATEK Companies, Inc., and Acrometal Management

Corporation (Acrometal) are part of a network of companies known as the ATEK Family

of Companies. Respondent William Bieber and his two daughters have a sole ownership

interest in the ATEK Family of Companies, and respondent Robert Levy is the former chief

executive officer of Acrometal.

       In 1986, Bieber acquired a manufacturing facility in Plymouth, Minnesota, which

he eventually conveyed to Woodland.         The Plymouth facility was equipped as a

manufacturing facility for aluminum casting and included a foundry. Woodland leased the

Plymouth facility to Progress Casting Group, Inc. (Progress), another company owned by

Bieber. Progress was in the business of manufacturing and selling aluminum casting

products, and it used the Plymouth facility to manufacture its products.

       In mid-2003, one of Progress’ customers, Harley-Davidson (Harley), notified

Progress that it intended to find another supplier for certain parts manufactured at the

Plymouth facility. Harley was Progress’ biggest customer, accounting for approximately

half of its revenues, and the loss of Harley’s business would mean that Progress would lose

approximately $19 million annually in sales. In an attempt to keep Harley’s business,

Progress decided to lower costs by opening a facility in a non-union state.

                                             2
       In December 2003, Progress adopted a 2004 business plan, which addressed the

impact of Harley’s planned change in suppliers and Progress’ plan to open a non-union

facility outside of Minnesota. In February 2004, Progress met with its lender and provided

it with the 2004 business plan. Progress eventually decided to build a new facility in Iowa,

and in October 2004, it began applying for loans and engaging in workforce recruitment

efforts.

       In early 2004, Woodland listed the Plymouth facility for sale subject to a six-year

lease to Progress without informing its broker of Progress’ plans to build a manufacturing

facility outside the state. In the fall of 2004, CSM expressed an interest in purchasing the

Plymouth facility. During negotiations, CSM learned that Progress’ business was growing.

CSM and Woodland executed a purchase agreement on December 23, 2004. The purchase

agreement provided for a six-year lease term, but CSM requested before closing that the

lease term be extended to seven years. Progress refused to extend the term of the lease, but

compromised with CSM by ultimately agreeing to extend the lease to a seventh year, while

retaining an option to reduce the space that it leased during the seventh year of the lease.

The lease also included provisions for returning the facility to a certain condition and

removing certain equipment when Progress vacated the premises. Progress and CSM

entered into the lease on May 4, 2005, and CSM closed on the purchase of the facility for

$8.1 million on May 12, 2005.

       From the date of closing to mid-2008, Progress paid the agreed rent to CSM. In the

fall of 2008, however, because its business was damaged by the economic recession,

Progress requested rent concessions.       During the negotiations regarding the rent

                                             3
concessions, Progress informed CSM that it had opened a facility in Iowa. CSM granted

Progress temporary rent relief in exchange for the discharge of the reduction option and an

extension of the lease term from 2012 to January 31, 2017.

       In October 2009, Progress sold its business at the Plymouth facility to Wellman

Dynamics Corporation (Wellman). CSM did not consent to the transfer as required under

the lease, but Wellman began occupying the Plymouth facility in November 2009. CSM

filed eviction papers against Wellman, Progress, and Acrometal in February 2010, and the

district court granted summary judgment to CSM in the eviction action in January 2011.

Wellman operated the Plymouth facility and paid the rent due to CSM under the lease from

November 2009 until its eviction in January 2011.

       Because Progress was still liable under the lease for rent and operating expenses

until 2017, Progress entered into a “Mutual Release and Settlement Agreement” with CSM

on July 28, 2011. The agreement provided for entry of a consent judgment in the amount

of $2,837,500 in favor of CSM. Progress filed for bankruptcy on April 13, 2012, and CSM

filed a claim in the bankruptcy matter for $3,065,214 based on the consent judgment. CSM

eventually sold the Plymouth facility for $4.1 million in 2013.

       CSM commenced this action against respondents in June 2012, requesting that the

district court order an accounting and constructive trust and asserting claims of fraudulent

inducement, unjust enrichment, aiding and abetting, and civil conspiracy. In alleging

fraudulent inducement, CSM claimed that respondents represented to CSM that Progress

would be a long-term tenant at the Plymouth facility and failed to disclose the plans to open

a facility in Iowa and move a substantial part of Progress’ business there. Respondents

                                             4
moved to dismiss the complaint for failing to plead fraud with particularity and for failure

to state a claim upon which relief can be granted. In a December 17, 2012 order, the district

court, converting respondents’ motion for dismissal into a summary judgment motion,

granted summary judgment as to CSM’s unjust enrichment claim and request for an

accounting and constructive trust, but denied it as to the other claims. Respondents again

moved for summary judgment on the remaining claims, and the district court granted their

motion and dismissed CSM’s complaint on September 17, 2014. Respondents moved for

attorney fees, costs, and disbursements. In a February 6, 2015 order, the district court

denied respondents’ motion for attorney fees, but awarded respondents $141,778.66 in

costs and disbursements. Both CSM and respondents appeal.

                                      DECISION

                                             I.

       As a threshold matter, respondents argue in their cross-appeal that CSM’s claims

are time-barred as a matter of law because CSM failed to exercise reasonable diligence

and, as a result, did not timely discover the facts that allegedly support its claim of fraud.

In Minnesota, claims of fraud must be brought within six years. Minn. Stat. § 541.05, subd.

1(6) (Supp. 2015). “The 6-year period begins to run when the facts constituting fraud were

discovered or, by reasonable diligence, should have been discovered.” Toombs v. Daniels,

361 N.W.2d 801, 809 (Minn. 1985).

              [T]he facts constituting the fraud are deemed to have been
              discovered when, with reasonable diligence, they could and
              ought to have been discovered. The mere fact that the
              aggrieved party did not actually discover the fraud will not
              extend the statutory limitation, if it appears that the failure

                                              5
             sooner to discover it was the result of negligence, and
             inconsistent with reasonable diligence.

Bustad v. Bustad, 263 Minn. 238, 242, 116 N.W.2d 552, 555 (1962) (emphasis added)

(quotation omitted). When fraud should have reasonably been discovered is a question of

fact. Jane Doe 43C v. Diocese of New Ulm, 787 N.W.2d 680, 684 (Minn. App. 2010).

“Where the evidence leaves no room for reasonable minds to differ on the issue, however,

the court may properly resolve the issue as a matter of law.” Id. at 684–85 (quotation

omitted).

      The district court rejected respondents’ argument that CSM’s claims were time-

barred as a matter of law. The district court found that “reasonable minds could differ on

whether CSM should have discovered information on the Iowa [f]acility by reasonable

diligence before June 2006,” creating a question of fact as to when CSM should have

discovered the alleged fraud by reasonable diligence.

      Here, CSM alleges that respondents fraudulently induced it to purchase the

Plymouth facility. CSM claims that it did not learn of the Iowa facility until September

2008. The parties closed on the transaction in May 2005, and CSM sued respondents for

fraud in June 2012. Therefore, the question is whether CSM should have discovered

respondents’ alleged fraud before June 2006.

      Respondents argue that the knowledge CSM possessed at closing establishes that

CSM failed to exercise reasonable diligence. Specifically, respondents note that, at the

time of closing, CSM had negotiated the reduction option in the lease, had the right to

review Progress’ financial statements, and should have known about the Iowa plant. In

                                            6
regard to CSM’s knowledge of the Iowa plant, respondents point out that the construction

of the facility was covered in an industry magazine, as well as in an Iowa newspaper and

in a bulletin issued by the Associated Press.

       “A plaintiff must exercise reasonable diligence when he or she has notice of a

possible cause of action for fraud.” Id. at 684 (quotations omitted). A fact question remains

in this case regarding whether CSM had notice of the facts underlying its fraud claim

against respondents before June 2006. While CSM could have known before June 2006

about Progress’ plan to move its manufacturing plant to Iowa, a question remains regarding

whether CSM ought to have known about the plan.

       Respondents argue that CSM’s claims are time-barred because CSM did not

exercise reasonable diligence, citing three cases where courts have held as a matter of law

that plaintiff had not exercised due diligence. But, those cases are distinguishable from the

present case. In Bustad, the Minnesota Supreme Court held as a matter of law that the

alleged fraud was discoverable more than six years before the commencement of the action

in 1960 where defendant allegedly incurred debts to plaintiff as early as 1930 and made no

payments after 1951, despite repeated requests for payment. 263 Minn. at 238–42, 116

N.W.2d at 553–55. In Veldhuizen v. A.O. Smith Corp., the court found that the plaintiffs

“knew almost from the start that the promised benefits which induced them to purchase the

[defendant’s] silos did not materialize” and that, therefore, a duty to investigate was

triggered when the problems plaintiffs experienced were attributed to the silos by the

plaintiffs’ veterinarians. 839 F. Supp. 669, 675–76 (D. Minn. 1993) (applying Minnesota

law). Bustad and Veldhuizen are distinguishable from the present case because CSM did

                                                7
not have actual knowledge of the alleged fraud until 2008. Furthermore, unlike in

Veldhuizen, CSM did not experience any adverse effects as a result of the relocation of the

plant that would have put it on notice of the alleged fraud before 2008.

       In the last case cited by respondent, Hope v. Klabal, the Eighth Circuit held that the

plaintiff failed to establish a genuine issue of material fact as to her diligence in discovering

the fraud where the plaintiff, a sophisticated businessperson, purchased $10 million of

artwork without independently confirming the value of the works and with notice of the

fact that the insurance valuations she was provided were not statements of the art’s fair

market value.    457 F.3d 784, 792 (8th Cir. 2006) (applying Minnesota law). Hope is

distinguishable because in this case there was an independent appraisal, which valued the

Plymouth facility at $8.9 million, and CSM representatives inquired into the value of the

facility by touring the facility and reviewing Progress’ financial records. Unlike the

plaintiff in Hope, CSM actively investigated the value of the investment and conducted an

independent inquiry into the facility’s value, and the inquiry created no reason to suspect

that respondents’ representations were false.

       Because reasonable minds could differ regarding when CSM, by reasonable

diligence, could and ought to have discovered the alleged fraud, the district court did not

err in holding that CSM’s claims are not time barred as a matter of law.

                                              II.

       CSM argues that the district court erred in granting summary judgment to

respondents on CSM’s fraudulent inducement claim. In its complaint, CSM alleged that

respondents fraudulently induced CSM to enter into the purchase agreement by

                                                8
representing to CSM that Progress was a stable, long-term tenant of the Plymouth facility

and not disclosing that Progress was in the process of opening a facility in Iowa and

transferring a significant portion of its production there.

Reliance on Respondents’ Representations

       CSM first alleges that the district court erred in granting summary judgment to

respondents on the fraudulent inducement claim because there are genuine issues of

material fact regarding whether its reliance on respondents’ representations was

reasonable.

       Appellate courts “review a district court’s grant of summary judgment de novo to

determine whether any genuine issue of material fact exists and whether the district court

erred in applying the law.” Larson v. Nw. Mut. Life Ins. Co., 855 N.W.2d 293, 299 (Minn.

2014). “[S]ummary judgment is inappropriate when reasonable persons might draw

different conclusions from the evidence presented.” DLH, Inc. v. Russ, 566 N.W.2d 60, 69

(Minn. 1997). But, “[a] defendant is entitled to judgment as a matter of law when the

record reflects a complete lack of proof on an essential element of the plaintiff’s claim.”

Lubbers v. Anderson, 539 N.W.2d 398, 401 (Minn. 1995). We review the evidence in the

light most favorable to the party against whom summary judgment was granted. McIntosh

Cty. Bank v. Dorsey & Whitney, LLP, 745 N.W.2d 538, 545 (Minn. 2008).

       A claim for fraudulent inducement requires: (1) a false representation of a past or

existing material fact susceptible of knowledge; (2) made with knowledge of its falsity or

without knowing whether it is true or false; (3) with the intent to induce another to act in

                                              9
reliance thereon; (4) actual reliance thereon; and (5) pecuniary damages caused by the

reliance. Valspar Refinish, Inc. v. Gaylord’s, Inc., 764 N.W.2d 359, 368 (Minn. 2009).

       Because the parties’ agreement is governed by a written document, the parol

evidence rule applies. “The parol evidence rule excludes evidence outside a written

document which varies or contradicts the plain terms of the document.” Johnson Bldg. Co.

v. River Bluff Dev. Co., 374 N.W.2d 187, 193 (Minn. 1985). But, the parol evidence rule

does not exclude evidence of fraudulent oral representations by one party that induce

another party to enter into a written contract. Id. Whether reliance on an oral representation

is reasonable is a question of fact for the jury. Hoyt Props., Inc. v. Prod. Res. Grp., L.L.C.,

736 N.W.2d 313, 321 (Minn. 2007).            Courts may “find that reliance on an oral

representation was unjustifiable as a matter of law only if the written contract provision

explicitly stated a fact completely contradictory to the claimed misrepresentation.”

Johnson, 374 N.W.2d at 194. But if an oral representation is not directly contradictory to

the written contract, the trier of fact decides whether there was reasonable reliance. Id.

       David Carland, a CSM representative who toured the Plymouth facility, testified

that respondents made misrepresentations to him when he was exploring the possibility of

purchasing the CSM facility:

              I was approached to buy a building, and you know, I was
              convinced and enticed to buy the building based on a
              representation . . . that the business that was being conducted,
              the manufacturing that was being done in that building needed
              to be done specifically [in] that building, that they had to have
              that building, and that they were going to continue—that it was
              critical . . . to the success of that account that they manufacture
              within that building. That they were extremely entrenched
              within that building.

                                              10
Carland further testified that the real estate broker’s selling point on the Plymouth facility

was that the building was “an integral operation for Progress” and that CSM acquired the

Plymouth facility “in reliance and [based upon] assurances that the Harley production was

there for the foreseeable future.” CSM offered an expert report stating that plans to move

production to a new facility in Iowa because of the threatened loss of Harley’s business

would have been material for any purchaser of the Plymouth facility.

       In granting summary judgment on CSM’s fraudulent inducement claim, the district

court held that CSM’s reliance on respondents’ representations was unjustifiable as a

matter of law because such representations were directly contradictory to the terms of the

purchase agreement and the lease.

       We agree. The representations that respondents allegedly made were directly

contradictory to terms in the purchase agreement and the lease. The seven-year lease term

is directly contradictory to the representation that Progress would be a long-term tenant

because it explicitly limited the length of time that Progress was obligated to remain in the

building. The parties extensively discussed and negotiated the length of the lease. Indeed,

before closing, CSM asked for a longer lease term, and Progress only agreed to the seventh

year with a reduction option. The reduction option is also inconsistent with Progress being

a long-term tenant, as the provision gave Progress the option of reducing its use of the

Plymouth facility even during the lease term. Further, the provisions for restoring the

property to a certain condition and removing certain equipment when Progress vacated the

facility contradict the representation that Progress would be a long-term tenant because

                                             11
they provide conditions for exiting the building that could be exercised at the end of the

lease. Additionally, both parties had the right not to renew Progress’ tenancy at the end of

the lease term. Because the terms of the lease and the purchase agreement directly

contradict the representation that Progress would be a long-term tenant, the district court

did not err in holding that CSM’s fraudulent inducement claim fails as a matter of law.

Duty to Disclose

       CSM also argues that the district court erred in finding that respondents had no duty

to disclose their plans regarding the Plymouth facility, contending that it was denied the

opportunity to weigh the risk that Progress might leave the facility before the end of the

lease term. In a footnote, the district court concluded that although failure to disclose

material information may constitute fraud, there was no duty to disclose here because the

transaction at issue was an arm’s-length transaction between “sophisticated entities, owned

and operated by sophisticated businessmen, with sophisticated lawyers” and CSM had

sufficient time and opportunity to conduct due diligence.

       Failure to disclose material information may constitute fraud, but “[b]efore

nondisclosure may constitute fraud . . . , there must be a suppression of facts which one

party is under a legal or equitable obligation to communicate to the other, and which the

other party is entitled to have communicated to him.” Richfield Bank & Trust Co. v.

Sjogren, 309 Minn. 362, 365, 244 N.W.2d 648, 650 (Minn. 1976). One party generally has

no duty to disclose material facts to another party unless special circumstances exist.

Graphic Commc’ns Local 1B Health & Welfare Fund “A” v. CVS Caremark Corp., 850

N.W.2d 682, 695 (Minn. 2014). “[A] duty to disclose may arise if . . . one party has special

                                            12
knowledge of material facts to which the other party does not have access. If a party

conceals these facts, knowing that the other party acts on the presumption that no such facts

exist, nondisclosure may constitute fraud.” Driscoll v. Standard Hardware, Inc., 785

N.W.2d 805, 812 (Minn. App. 2010) (alteration omitted) (quotations and citation omitted),

review denied (Minn. Sept. 29, 2010).

       We agree with the district court that no duty to disclose existed between CSM and

respondents.   The present case involves sophisticated businesspeople conducting an

adversarial, arm’s-length transaction, and “[c]ourts applying Minnesota law have been

reluctant to impose a duty to disclose material facts in arm’s-length business transactions

between commercial entities.” Id. at 813; see, e.g., Taylor Inv. Corp. v. Weil, 169 F. Supp.

2d 1046, 1065 (D. Minn. 2001) (applying Minnesota law and granting summary judgment

to defendant on plaintiff’s fraud claims, concluding that when parties were engaged in “an

arms length business transaction” there was no duty to disclose omitted information).

       CSM argues that respondents “made representations regarding [Progress] remaining

a long-term, stable tenant of the Plymouth [f]acility without qualifying those statements or

disclosing . . . the material facts that [respondents] intended to open a new Iowa [f]acility

and transfer the business of [Progress’] most valuable customer to that [f]acility.” But,

respondents specifically listed the Plymouth facility for sale subject to a six-year lease to

Progress, negating any reasonable expectation that Progress would lease the building

beyond that term. Furthermore, the parties actively negotiated the length of the lease term

before closing on the facility and entering into the lease. CSM toured the building and had

the right under the purchase agreement to inspect the building for its acceptability “in its

                                             13
sole and absolute discretion,” including “economic feasibility of development [and] market

feasibility.” Moreover, it is not clear that respondents’ alleged representation that Progress

would be a “long-term, stable tenant” is inconsistent with the seven-year lease term. And,

despite CSM’s arguments that it was denied the opportunity to weigh the risk that Progress

would leave before the end of the lease term, Progress could have moved all production

out of the Plymouth facility immediately after closing and still have complied with the

terms of the lease as long as it continued to pay rent and fulfill its other obligations. Under

these circumstances, we agree with the district court that respondents did not have a duty

to disclose their plans to open a facility in Iowa and transfer the Harley business to the

facility.

                                             III.

        CSM claims that the district court erred in granting summary judgment to

respondents on its unjust enrichment claim. Unjust enrichment is an equitable doctrine.

Southtown Plumbing, Inc. v. Har-Ned Lumber Co., 493 N.W.2d 137, 140 (Minn. App.

1992). “In order to establish a claim for unjust enrichment, the claimant must show that

another party knowingly received something of value to which he was not entitled, and that

the circumstances are such that it would be unjust for that person to retain the benefit.”

Schumacher v. Schumacher, 627 N.W.2d 725, 729 (Minn. App. 2001).

        CSM argues that the district court erred in granting summary judgment to

respondents on its unjust enrichment claim because it conferred a benefit on respondents,

namely “an exorbitant purchase price,” and that it would be unjust to allow respondents to

retain the benefit.   But, “equitable relief,” such as recovery on a theory of unjust

                                              14
enrichment, “cannot be granted where the rights of the parties are governed by a valid

contract.” U.S. Fire Ins. Co. v. Minn. State Zoological Bd., 307 N.W.2d 490, 497 (Minn.

1981). Because the parties’ rights were governed by a contract here, the district court

properly granted respondents’ motion for summary judgment on the unjust enrichment

claim.

                                              IV.

         CSM challenges the district court’s grant of summary judgment to respondents on

CSM’s request for an accounting and constructive trust. An equitable accounting is

primarily available only “when a fiduciary owes an equitable duty to account and when the

accounts at issue are exceedingly complicated.” United Prairie Bank-Mountain Lake v.

Haugen Nutrition & Equip., LLC, 813 N.W.2d 49, 57 n.3 (Minn. 2012).

         The district court found that neither of the circumstances outlined in United Prairie

Bank were present in this matter. CSM does not challenge the district court’s conclusion

that the present case does not fall into either of the United Prairie Bank circumstances, but

argues that those circumstances are not exclusive. CSM cites Keough v. St. Paul Milk Co.,

205 Minn. 96, 103, 285 N.W. 809, 815 (1939), for the proposition that “an accounting

generally will be given where [fraud] is charged.” But here, although CSM presented a

fraud claim, the claim fails as a matter of law. Because CSM has failed to show that a

genuine issue of material fact exists regarding its fraud claim and has failed to show that

its claim fits within the circumstances outlined in United Prairie Bank, the district court

did not err in granting summary judgment to respondents on CSM’s request for an

accounting.

                                              15
         Likewise, the district court properly granted summary judgment to respondents on

CSM’s request for a constructive trust. A constructive trust is “purely a creation of equity

designed to provide a remedy for the prevention of unjust enrichment where a person

holding property is under a duty to convey it to another to whom it justly belongs.” Knox

v. Knox, 222 Minn. 477, 481, 25 N.W.2d 225, 228 (1946). Fraud does not need to be

present in order to impose a constructive trust, but there must be clear and convincing

evidence that a constructive trust is necessary to prevent unjust enrichment. In re Estate

of Eriksen, 337 N.W.2d 671, 674 (Minn. 1983). Both CSM’s unjust enrichment claim and

its fraud claim fail as a matter of law. Because there is no valid fraud or unjust enrichment

claim, the district court did not err in holding that CSM was not entitled to a constructive

trust.

                                                  V.

         CSM argues that the district court erred in granting summary judgment on its civil

conspiracy and aiding and abetting claims. In order to state a claim for aiding and abetting

the tortious conduct of another, the plaintiff must show that the primary tort-feasor

committed a tort that injured the plaintiff. Witzman v. Lehrman, Lehrman & Flom, 601

N.W.2d 179, 187 (Minn. 1999). Similarly, an underlying tort is required for a civil

conspiracy claim. D.A.B. v. Brown, 570 N.W.2d 168, 172 (Minn. App. 1997). Despite

CSM’s allegation that respondents Bieber, Levy, and ATEK Companies “actively

encouraged, commanded, directed, advised, and/or participated in the fraud by [Woodland]

and Acrometal,” no tort was committed here, as the district court properly granted summary

judgment to respondents on the fraud claim. Because there is no underlying tort, the district

                                             16
court did not err in granting summary judgment to respondents on the civil conspiracy and

aiding and abetting claims.1

                                            VI.

       CSM contends that the district court erred in failing to address its punitive damages

claim. “Punitive damages shall be allowed in civil actions only upon clear and convincing

evidence that the acts of the defendant show deliberate disregard for the rights or safety of

others.” Minn. Stat. § 549.20, subd. 1(a) (2014). This court reviews the district court’s

decision to deny a motion to add a claim for punitive damages for an abuse of discretion.

J.W. ex rel. B.R.W. v. 287 Intermediate Dist., 761 N.W.2d 896, 904 (Minn. App. 2009).

       The district court declined to address CSM’s motion to amend the complaint to add

a claim for punitive damages because it was granting respondents’ motion for summary

judgment and dismissing the complaint. While CSM argues that punitive damages are

appropriate because respondents “conducted a nuanced and professional fraud,” CSM’s

fraud claim fails as a matter of law due to a lack of reasonable reliance. Therefore, the

district court did not abuse its discretion by declining to address CSM’s motion to amend

its complaint to assert a claim for punitive damages.

                                            VII.

1
  CSM also challenges the district court’s conclusion that CSM had released its claims
against respondents by means of a settlement agreement between CSM and Progress.
Furthermore, both CSM and respondents challenge the district court’s determination of
what type of damages would be recoverable if CSM were to succeed on the fraudulent
inducement claim. Because we are affirming the district court’s grant of summary
judgment to respondents on each of CSM’s claims, we need not address these issues.

                                             17
       CSM challenges the district court’s award to respondents of expert witness fees,

deposition costs, photocopy costs, and witness mileage and fees. Here, the district court

awarded respondents a total of $141,778.66 in costs and disbursements, including

$114,306 in expert witness fees, $1,892.25 in deposition costs, $1,000 in photocopying

costs, $877.09 in attorney travel expenses, and $4,393.27 in witness mileage and fees.

       The prevailing party in a civil matter is entitled to recover costs and reasonable

disbursements. Minn. Stat. § 549.02, subd. 1 (costs), .04, subd. 1 (disbursements) (2014).

This court reviews an award of costs and disbursements for an abuse of discretion. Lake

Superior Ctr. Auth. v. Hammel, Green & Abrahamson, Inc., 715 N.W.2d 458, 482 (Minn.

App. 2006).

Expert Witness Fees

       CSM argues that the district court erred in awarding expert witness fees because the

experts did not testify and the district court did not rely on their opinions. The district court

may award “just and reasonable” fees or compensation for witnesses “summoned or sworn

and examined as an expert.” Minn. Stat. § 357.25 (2014). It may be appropriate for a

district court to award expert witness fees when a matter is disposed of by summary

judgment. See Buscher v. Montag Dev., Inc., 770 N.W.2d 199, 209–10 (Minn. App. 2009)

(affirming the district court’s award of expert witness fees even though there was no trial

because “respondents were required to do investigative trial preparation in order to make

dispositive motions”).     Drawing upon Buscher, the district court noted that “it was

necessary for [respondents] to retain experts to defend this matter” and that “the experts

were necessary and [their costs were] reasonable to defend the claims.”

                                               18
       CSM argues that Buscher is distinguishable because respondents’ experts did not

have to do any investigative trial preparation in order for respondents to make dispositive

motions. This argument is not persuasive. Although respondents’ experts were not

deposed and did not testify, they provided appraisals, legal opinions, and evaluations of

CSM’s damages. As was the case in Buscher, denying these costs simply because the

matter was resolved by summary judgment would be misplaced, as the experts were

necessary to defend CSM’s claims.

Deposition Costs

       CSM next challenges the district court’s award of deposition costs, arguing that they

may not be awarded because respondents did not use them in connection with their motion

for summary judgment. “The legal fees paid for certified copies of the depositions of

witnesses . . . necessarily used on trial of a cause or on the assessment of damages, shall be

allowed in the taxation of costs.” Minn. Stat. § 357.31 (2014). Because the district court

awarded respondents only the cost of copies of deposition transcripts used in opposition to

CSM’s motion for punitive damages, the district court did not abuse its discretion in

awarding deposition costs.

Photocopy Costs

       CSM also contends that the district court erred in awarding $1,000 in photocopy

costs. “The cost of obtaining medical records used to prepare a claim, whether or not

offered at trial, and the reasonable cost of exhibits shall be allowed in the taxation of costs.”

                                               19
Minn. Stat. § 357.315 (2014). The district court relied on this provision in awarding $1,000

in photocopying costs to respondents. But, in the statute the modifier “whether or not

offered at trial” applies only to medical records, rather than to all exhibits. Because there

was no trial in this case, the district court erred in awarding photocopy costs to respondents.

Accordingly, we reduce the costs and disbursements awarded to respondents by $1,000.

Witness Mileage and Fees

       CSM contends that the district court erred in awarding $4,393.27 in witness mileage

and fees, alleging that witness fees “are limited to $20 per day plus mileage for attending

an action for the purpose of testifying in court.” But, the statute is not so limited and

provides that fees may be paid for witnesses “for attending in any action or proceeding in

any court or before any officer, person, or board authorized to take the examination of

witnesses” and that mileage may be paid to witnesses “for travel to and from the place of

attendance.” Minn. Stat. § 357.22 (2014). In this case, witnesses called by respondents

were deposed. Because the attendance of witnesses at depositions fits within the statute,

the district court did not abuse its discretion in awarding witness fees and mileage.

Attorney Travel Expenses

       Finally, CSM argues that the district court erred in awarding $877.09 in attorney

travel expenses. The district court noted that the attorney travel expenses “were for

depositions noticed by CSM and submitted for consideration with the punitive damages

motion.” In Benson v. Nw. Airlines, Inc., this court affirmed the district court’s award of

attorney travel expenses incurred in taking a deposition. 561 N.W.2d 530, 541 (Minn. App.

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1997), review denied (Minn. June 11, 1997). We conclude that the district court did not

abuse its discretion in awarding certain attorney travel expenses.

                                           VIII.

       In their cross-appeal, respondents challenge the district court’s denial of their

motion for attorney fees. After prevailing on their second motion for summary judgment,

respondents moved for $813,381.51 in attorney fees. Paragraph 18.J of the purchase

agreement provided that the prevailing party in any court action between Woodland and

CSM would be entitled to attorney fees. However, the district court held that this clause

was limited by a no-survival clause in paragraph 18.K of the purchase agreement. The

district court determined that the attorney fee provision terminated upon closing because it

fell within the scope of the no-survival clause. The district court concluded that the merger

doctrine also prohibited respondents from recovering attorney fees.             On appeal,

respondents argue that neither the no-survival clause nor the merger doctrine precludes

them from recovering attorney fees. We disagree.

       In Minnesota, attorney fees generally are not recoverable unless a specific contract

or a statute authorizes such recovery. Dunn v. Nat’l Beverage Corp., 745 N.W.2d 549, 554

(Minn. 2008). Contract interpretation is a question of law that this court reviews de novo.

Valspar, 764 N.W.2d at 364. The purpose “of contract interpretation is to ascertain and

enforce the intent of the parties.” Id. “If a contract is unambiguous, the contract language

must be given its plain and ordinary meaning . . . .” Denelsbeck v. Wells Fargo & Co., 666

N.W.2d 339, 346–47 (Minn. 2003) (quotation omitted). Courts “will not rewrite, modify,

or limit the effect of a contract provision by a strained construction when the contractual

                                             21
provision is clear and unambiguous.” Dorsey & Whitney LLP v. Grossman, 749 N.W.2d

409, 418 (Minn. App. 2008).

       First, respondents argue that because the parties could anticipate a dispute arising

after closing, the parties intended that the attorney fee clause would survive closing. But,

in section 18, entitled “Miscellaneous,” the unambiguous language of the no-survival

clause, which immediately follows the attorney fee clause, specifically provides that “no

warranties, covenants, or representations made herein by either [Woodland] or [CSM] shall

survive [c]losing,” subject to a few exceptions. In reading these two clauses together, the

attorney fee clause would not survive the closing, but would apply to disputes that arose

after the parties had executed the purchase agreement but before closing. If the parties

wanted the attorney fee provision to apply to disputes after closing, they could have

included it within the listed exceptions to the no-survival clause, but they failed to do so.

       Next, respondents argue that because the attorney fee clause is not specifically

described as a “covenant” under the purchase agreement, it is not subject to the no-survival

clause and is a continuing promise that survives closing. But, this argument ignores the

common legal definition of “covenant” as a “formal agreement or promise.” Black’s Law

Dictionary 391 (8th ed. 2004). It is evident that it is this common legal usage of the word

“covenant” that is utilized in the purchase agreement. For example, section 6 of the

purchase agreement, entitled “Representations, Warranties and Covenants of Seller,” the

first clause states: “In order to induce [CSM] to enter into this [a]greement and purchase

the [p]remises, [Woodland] hereby represents, warrants and covenants to [CSM] . . . .”

The no-survival clause applies to all covenants or promises “[e]xcept as provided in

                                             22
[s]ections 4, 6, and 13.” Section 6 contains a provision that requires Woodland to

indemnify CSM for attorney fees and court costs in the event CSM had to bring a claim or

action because of Woodland’s breach of any of the listed representations, warranties, or

covenants.   The provision, however, specifically provides that the buyer’s right of

indemnification only survives closing for a period of nine months. If a party’s right to

attorney fees as set forth in the “Miscellaneous” section, as claimed by respondents, was a

continuing obligation that was exempted from the no-survival clause, there would have

been no need for the section 6 exception to the no-survival clause. And, even that time-

limited exception only allowed an attorney fee claim to be brought within nine months of

closing by CSM, not Woodland.

       Finally, respondents argue that the no-survival clause cannot apply to the attorney

fee clause because the “Miscellaneous” section in which both provisions are found contains

promises that were certainly intended to survive closing. Respondents point to paragraph

18.D, which provides addresses, telephone numbers, and other information for the delivery

of notices and demands, and paragraph 18.L, which provides for the effectuation of a

section 1031 tax deferred exchange, as clauses in the “Miscellaneous” section that must

have been intended to survive closing. But, there is nothing in these clauses indicating that

the parties intended these provisions to survive closing. If the parties had intended the

attorney fee clause, or paragraphs 18.D and 18.L, to survive closing, they could have

identified them as exceptions to the no-survival clause or included them in the deed.

       The merger doctrine also precludes respondents from being awarded attorney fees.

“The merger doctrine generally precludes parties from asserting their rights under a

                                             23
purchase agreement after the deed has been executed and delivered.” Bruggeman v. Jerry’s

Enters., Inc., 591 N.W.2d 705, 708 (Minn. 1999). When the merger rule applies, “[t]he

deed is conclusively presumed to express the final agreement of the parties in the absence

of fraud or mistake, and any contractual provisions omitted from the deed are waived.” B-

E Constr., Inc. v. Hustad Dev. Corp., 415 N.W.2d 330, 331 (Minn. App. 1987), review

denied (Minn. Jan. 20, 1988). There is an exception to the merger rule for acts that are

conditions subsequent to closing. Bruggeman, 591 N.W.2d at 710.

       Respondents argue that because the attorney fee clause could be performed both

before and after closing, it falls within the condition subsequent exception to the merger

doctrine. But, such an interpretation improperly expands the definition of a condition

subsequent. In creating the condition subsequent exception, the Minnesota Supreme Court

stated that “there is no reason to presume that a party has waived its right to performance

of a contractual obligation that cannot be performed until sometime after the closing simply

by accepting a deed that does not contain a reference to that prior agreement.” Id.

(emphasis added). Accordingly, the supreme court created an exception only for those

obligations that cannot be performed until after closing, not for those obligations that can

be performed before or after closing. Because the attorney fee clause does not fit within

the condition subsequent exception, the merger doctrine also precludes respondents from

recovering attorney fees.

       We conclude that, under the plain language of the purchase agreement and under

the merger doctrine, there is no merit to respondents’ claim that they are entitled to post-

                                            24
closing attorney fees under the purchase agreement. The district court did not err in

refusing to award attorney fees to respondents.

       In summary, we affirm the district court’s grant of summary judgment to

respondents on CSM’s request for an accounting and constructive trust and its claims of

fraudulent inducement, unjust enrichment, aiding and abetting, and civil conspiracy. We

also conclude that the district court did not err in declining to address CSM’s punitive

damages claim. Because the district court abused its discretion in awarding photocopy

costs to respondents, we reduce the costs and disbursements awarded to respondents by

$1,000, but we affirm the remainder of the costs and disbursements award. Finally, we

hold that the district court did not err in denying respondents’ motion for attorney fees.

       Affirmed as modified.

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