Update (July 14, 2017): The Minnesota Supreme Court has granted plaintiff Staffing Specifix’s petition for review, in part (in connection with the case discussed previously (below)). (Linked here is the petition and linked here is the order granting it in part.)
The only issue to be addressed by the Minnesota Supreme Court (in the words of Staffing Specifix appellate lawyers):
After the trial court concludes a contract is ambiguous and if it is not one of adhesion, must the jury be instructed as to which term or terms are ambiguous and the jury is to construe ambiguous terms against the drafter only as a last resort if the parties’ mutual intent cannot be determined from the evidence and does the failure to so instruct constitute prejudicial error?
This must be one of the least comprehensible sentences we’ve read in a while.
The basic question is this: in a dispute over an arm’s length negotiated contract (a.k.a. “a non-adhesion contract”), in which the trial judge concludes that a contract term is ambiguous, is the following jury instruction is appropriate?
If you find the contract is ambiguous, you should determine the intent of the parties.
When contract language is reasonably susceptible to more than one interpretation, the ambiguous contract terms are to be construed against the drafter.
The Court of Appeals held that this instruction was reversible error “because it allowed the jury to construe the contract against the drafter, despite evidence of the parties’ intent.” It seems to us that the Court of Appeals got this one wrong and, presumably, at least someone on the Minnesota Supreme Court seems to agree.
Update (April 17, 2017)(Pigs Get Fat, Hogs Get Slaughtered. Vol. 2): The original post, below, covered a decision in which a plaintiff overreached and paid dearly.
This might have happened more recently in Staffing Specifix v. TempWorks Management Services, Inc. d/b/a TMS Staffing. Plaintiff won a jury verdict of $481,000+ along with costs and (presumably) interest. Rather than stopping there, Plaintiff appealed decisions by the Hennepin County District Court (Judge Regina M. Chu), faulting her denial of plaintiff’s motion to amend to add a claim for punitive damages (and raising other issues as well). This triggered a cross-appeal by the counter-party on three issues.
The end result is that the Minnesota Court of Appeals threw out the jury verdict for Staffing Specifix, the Plaintiff.
There are some counter-intuitive and noteworthy aspects of the decision. For example, Plaintiff brought claims of defamation against several parties and won the claim against two of the parties (TPM and Dourgarian). May the defendants who were not found liable for defamation recover their costs (over $23,000) as “prevailing parties” against Plaintiff Specifix Staffing even if, as a practical matter, the costs were paid by TPM and Dourgarian (who were found liable for defamation)? (Answer: Yes, this is within the trial court’s sound discretion. (see here at pp. 18-19)).
Also, many lawyers take the position that a contract, if it is ambiguous, should be construed against the drafter. The Minnesota Court of Appeals, however, ruled that this is only a “last resort.” Of greater importance is whether the fact-finder (in this case, the jury) could determine mutual intent. See here at pp. 24-28. The jury might not have considered that in this case because the judge instructed the jury to construe the ambiguity against Tempworks, the drafter.
And, finally, Tempworks objected to evidence that Plaintiff elicited on examination of Defendant Dourgarian. Plaintiff’s counsel asked Mr. Dourgarian whether another judge had found Mr. Dourgarian “not credible” as a witness. Defense counsel objected. The objection was overruled. Mr. Dourgarian answered the question, “Yes.” The Minnesota Court of Appeals held:
A determination that a person’s testimony is not credible is not necessarily probative of that person’s character for truthfulness or untruthfulness. A judge may find a witness not credible for any number of reasons, such as a lack of knowledge, or a poor vantage point for witnessing an event.
(A lot of evidence is “not necessarily probative” of the fact sought to be proven. A judge’s statement that a witness is “not credible” does not mean the judge thinks the witness is an intentional liar but is it really much of a stretch?)
The Court of Appeals went on: “even if another judge’s determination that Dourgarian provided testimony that was not credible is somehow probative of Dourgarian’s character for truthfulness or untruthfulness, its probative value in this case was substantially outweighed by the danger of unfair prejudice.”
(So much for deference to the trial court’s discretion…)
We are not in a position to know whether Plaintiff had a chance to walk away with the jury verdict award or, getting greedy, sought a bigger payout, or whether Plaintiff’s appeal was compelled by the other side’s cross-appeal. If the Plaintiff’s appeal came first (which appears to have been the case) then, with the benefit of 20/20 hindsight, it is clear that the decision to appeal was disastrous.
Congratulations, incidentally, to defense counsel Dan Cragg of Eckland & Blando for snatching victory from the jaws of defeat.
Original post (July 3, 2012) (under the headline: Snatching Rotten Defeat From the Jaws of Veggie Victory…): You sold produce to a buyer who went belly up after receiving your veggies but before giving you any greenbacks for your cabbage. A bank snatched the cabbage from its debtor-customer, failing to return it to you and failing to pay you for it. You find yourself with a nice “PACA claim” (Perishable Agricultural Commodities Act) – a special federal law to protect producers of short shelf-life product. You hire nationally renowned PACA professionals to sue the bank.
You win! But then you lose big time. The trial judge, Sr. U.S. District Court Judge Paul A. Magnuson (D. Minn.) found the lawyering of Wescott Agri-Products, the winning party, to have been “less than exemplary,” “excessively zealous,” and “evasive” in the discovery phase of the litigation and Judge Magnuson denied the request for attorneys’ fees (which exceeded the amount at stake in the lawsuit). The Court rejected the claim for attorneys’ fees under the PACA, rejected a request to reconsider its rejection, and the U.S. Court of Appeals for the 8th Circuit affirmed Judge Magnuson’s ruling last week.
Continuing with the posts agricultural theme, a lawyer cautioned me recently, “Pigs get fat, hogs get slaughtered.” Since I am suburban, born and bred, cradle to grave, I have no idea what that is supposed to mean. I thought pigs were hogs, hogs were pigs, both get fat, both get slaughtered, both are adorable and delicious.
But the point of the idiom and this cautionary tale for civil litigators is that courts very often are very reluctant to award attorneys’ fees and, in particular, if the lawyers seeking them are not seen as pristine, pure, and righteous, if they are seen as greedy, aggressive, and over-reaching, they will end up with scraps not much else.