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STATE OF MINNESOTA IN COURT OF APPEALS A09-879 Chad DeRosier, Respondent, vs. Utility Systems of America, Inc., Appellant. Filed March 2, 2010 Affirmed in part and reversed in part Minge, Judge St. Louis County District Court File No. 69DU-CV-07-1359 Sean M. Quinn, Falsani, Balmer, Peterson, Quinn & Beyer, Duluth, MN (for respondent) Robert H. Magie, III, Duluth, MN (for appellant) Considered and decided by Minge, Presiding Judge; Schellhas, Judge; and Stauber, Judge. SYLLABUS If the party breaching a contract demands new consideration to correct the breach, the nonbreaching party is generally not required to mitigate damages by hiring and paying the breaching party to undertake that task.

OPINION MINGE, Judge Appellant contractor challenges the district court award of actual and consequential damages for breach of an oral contract. We affirm in part and reverse in part. FACTS Respondent Chad DeRosier purchased undeveloped hillside property in Duluth with plans to construct a house. The property sloped steeply down from the street, requiring substantial fill. Because appellant Utility Systems of America, Inc. (USA) was excavating at a nearby road construction project, DeRosier approached USAs foreman in July 2004, explained his need for fill, and proposed that USA dump fill material on his property. The foreman agreed on condition that DeRosier obtain the proper permits. USA did not charge DeRosier because the arrangement allowed USA to avoid the cost of hauling and disposing of the excavated material at a more distant location. There was no written contract. In late August 2004, DeRosier obtained a city permit allowing for the deposit of 1,500 cubic yards of fill, gave the USA foreman a copy of the permit, and left for a tenday vacation. When DeRosier returned from vacation, his entire property was covered with fill. The estimated quantity was 6,500 cubic yards (or around 5,000 cubic yards above the permitted amount). The contractor who DeRosier originally retained to

construct his house determined that he could not build until the excess fill was removed, estimated that the cost of removal would be at least $20,000, and withdrew as builder. 2

DeRosier complained to USA that its mistake in dumping excess material delayed construction, explained that he faced substantial removal costs, and demanded corrective action. USA denied liability, claiming that DeRosier failed to (1) provide a copy of the city permit; (2) advise it of the limit on fill; or (3) perform city-required compaction. A letter from DeRosiers counsel repeated the complaints and demanded that USA remove the extra fill under threat of lawsuit. USA responded by again denying responsibility but offering to remove the excess fill for $9,500, which it claimed were its costs. DeRosier refused to pay USA and hired G & T Construction to remove the excess fill. DeRosier sued USA, requesting damages of $46,629 for the cost of removing the excess fill and for added expenses in constructing the foundation of the house. Following trial, the district court concluded that USA breached a contract to deposit 1,500 cubic yards of fill. It ordered USA to pay general damages of $22,8291 and consequential damages of $8,000. USA appeals. ISSUES 1. 2. $22,829? Did the district court err by awarding consequential damages of $8,000? Did the district court abuse its discretion by awarding general damages of

1

The district court appears to have under calculated the general damages by $30. The general-damage amount was based on $21,629 in removal costs (as testified by Johnson) plus $1,230 for the cost of trucks rented to haul excess fill. These amounts add up to $22,859, or $30 more than the $22,829 awarded as general damages. This miscalculation was first made by DeRosier in his proposed findings, was adopted by the district court, and is not challenged by DeRosier. We therefore accept the consequential damage award as specified in paragraph 20 of the district courts January 8, 2009 Findings of Fact, Conclusions of Law, Order for Judgment, and Judgment. 3

3.

Did DeRosier have an obligation to mitigate damages by accepting USAs

offer to remove the excess fill for $9,500, which was less than what DeRosier ultimately paid? ANALYSIS USA challenges the district courts damage award on several fronts. In reviewing a district courts award of damages, the court of appeals does not overturn findings unless the district court abused its discretion. In re Trusteeship of Trust of Williams, 631 N.W.2d 398, 407 (Minn. App. 2001), review denied (Minn. Sept. 25, 2001). Questions of law are reviewed de novo. Alpha Real Estate Co. v. Delta Dental Plan, 664 N.W.2d 303, 311 (Minn. 2003). I. The first issue raised by USA is whether the district court erred in awarding consequential damages to DeRosier for delayed construction. USA argues that

consequential damages were not alleged in the complaint, disclosed in discovery, or supported by any specific evidence presented at trial. Questions regarding what must be specifically pleaded are legal issues which we review de novo. See In re Milk Indirect Purchaser Antitrust Litigation, 588 N.W.2d 772, 774 (Minn. App. 1999) (noting that whether antitrust claims are subject to a heightened pleading standard is a legal issue reviewed de novo). Minnesota pleading rules generally require only "a short and plain statement of the claim" and "a demand for judgment for the relief sought." Minn. R. Civ. P. 8.01. The rules, however, specify that "special damage[s] . . . shall be specifically stated." Minn. R. 4

Civ. P. 9.07. In discussing damages incident to the Uniform Commercial Code, the supreme court stated: "[A]lthough remedies are to be liberally administered, the burden of pleading and proving consequential loss still remains on the buyer [alleging the damage]." Bemidji Sales Barn, Inc. v. Chatfield, 312 Minn. 11, 15, 250 N.W.2d 185, 188 (1977) (quotations and citations omitted) (emphasis added). To understand the phrase "consequential loss" or "consequential damages" and the issue before us, we must recognize the difference between general and special damages. Special damages require specific pleading but general damages do not. David F. Herr & Roger S. Haydock, 1 Minn. Practice 288-90 (5th ed. 2009). General damages, as opposed to special damages, "naturally and necessarily result from the act complained of." Indep. Brewing Ass'n v. Burt, 109 Minn. 323, 327, 123 N.W. 932, 934 (1909). Minnesota courts have stated, "[t]he term ,,consequential

damages usually . . . refers to those items of damages which, because of particular circumstances, are to be distinguished from ,,general damages." B.F. Goodrich Co. v. Mesabi Tire Co., 430 N.W.2d 180, 184 (Minn. 1988); see also Imdieke v. Blenda Life, Inc., 363 N.W.2d 121, 125 (Minn. App. 1985) (analyzing general damages separate from consequential damages), review denied (Minn. Apr. 26, 1985). Consequential damages are commonly called special damages. 22 Am. Jur. 2d Damages

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