Opinion
No. C2-97-381.
Filed September 30, 1997.
Appeal from the District Court, Dakota County, File No. C1-96-7997.
Michael J. Weidner, Holper, Welsh Joanis, Ltd., (for appellant).
Samuel C. Tripp, Attorney at Law, (for respondent McCalvy).
Eric W. Forsberg, (for respondent Dohm).
Considered and decided by Harten, Presiding Judge, Lansing, Judge, and Randall, Judge.
This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (1996).
UNPUBLISHED OPINION
Appellant Home Lumber Company, Inc., seeks review of adverse summary judgment granted by the district court on three grounds: (1) statute of limitations, (2) res judicata, and (3) Minn.R.Civ.P. 41.01(a)(2). Home Lumber also argues that respondents were not entitled to bad faith attorney fees. Because we find that Home Lumber's claim is precluded by the statute of limitations, we affirm on that basis, and do not consider the other judgment grounds.
FACTS
Home Lumber is a supplier of building materials. It brought this action in the Fall of 1995 to recover on a debt that became past due in July 1989. Between 1985 and 1989 Home Lumber sold materials to Metro Build-Tech, Inc. (Metro), a corporation owned by respondents Michael McCalvy and Richard Dohm. Home Lumber and Metro eventually agreed to settle the debt at issue. Metro signed a $46,000 confession of judgment for money owing on a project entitled "Fieldstone." At the same time, Home Lumber dismissed McCalvy and Dohm from the Fieldstone litigation. As part of the $46,000 confession of judgment, Metro agreed to make payments of $150 per month on that judgment. In January 1995, Metro defaulted on its payments. Home Lumber asserts that McCalvy and Dohm are individually liable on the judgment because on February 1, 1985, they signed a commercial and builder credit application on behalf of Metro. The credit application states:
In consideration of credit being extended by [Home] Lumber Company to me/us/it, I and/or we certify the truthfulness and veracity of the statement appearing above, and I and/or we guarantee and bind ourselves to the faithful payment of all amounts purchased or now owing, by us or either of us, or any other person, firm, or corporation for our benefit. If credit is extended to a corporation in which we, or either of us, or I am an officer, or in which an interest exists I and/or we will personally faithfully guarantee the payment of all credit extended to said corporation.
Home Lumber's complaint dated September 15, 1995, did not name Metro as a defendant; it named only Dohm and McCalvy individually.
DECISION
On an appeal from summary judgment, we ask two questions: (1) whether there are any genuine issues of material fact and (2) whether the lower court erred in its application of the law. Offerdahl v. University of Minn. Hosps. Clinics , 426 N.W.2d 425, 427 (Minn. 1988). The reviewing court views "the evidence in the light most favorable to the party against whom judgment was granted." Fabio v. Bellomo , 504 N.W.2d 758, 761 (Minn. 1993). The construction of a statute, including a statute of limitations, is a question of law and is subject to de novo review on appeal. Ryan v. ITT Life Ins. Corp. , 450 N.W.2d 126, 128 (Minn. 1990).
As a result of Metro's February 1, 1985, credit application, respondents became individual guarantors of Metro's debt. Accordingly, this action is governed by the contractual statute of limitations. See Minn. Stat. § 541.05, subd. 1(1) (1996) (a contract or other obligation, express or implied, shall be commenced within six years). The statute of limitations on a guaranty begins to run when the debt is due and payable. Nelson v. Hacking , 225 Minn. 125, 128, 29 N.W.2d 888, 890 (1947).
On July 3, 1989, Home Lumber wrote to McCalvy stating that approximately $68,000 was past due. The letter referred to several accounts by specific job locations, including approximately $46,000 due on the Fieldstone account. Home Lumber's letter declared that the $46,000 became past due on July 3, 1989. Thus, to satisfy the six-year statute of limitations, any action must have been commenced before July 3, 1995. Home Lumber's complaint was dated September 15, 1995, and it is untimely.
Home Lumber contends that the statute of limitations was tolled by the partial payments made by Metro on the $46,000 debt. Partial payment on a debt may toll the running of the statute of limitations. Bernloehr v. Fredrickson , 213 Minn. 505, 507-08, 7 N.W.2d 328, 329 (1942). But McCalvy and Dohm made no partial payments.
Part payment before the statute of limitations has run tolls the running of the statute, upon the theory that it amounts to a voluntary acknowledgment of the existence of the debt from which a promise to pay the balance is implied. A part payment, to be the basis for such a promise, must be made by the debtor himself, or by his authority, or, if not made by him personally or by his authority, it must be ratified by him. Consequently, a part payment upon a promissory note by one of two joint makers before the statute of limitations has run will not prevent the running of the statute of limitations as to the other maker, except where the part payment is made pursuant to the latter's authority, or where, if he did not authorize such payment, he subsequently ratified it.
Id. We see no reason why the rule articulated in Bernloehr for co-obligors should not apply also to guarantors. There is nothing in the record, or in Home Lumber's brief, that could be construed as a voluntary acknowledgment of the debt coupled with a promise of future payment by either McCalvy or Dohm. Metro's payments were not made by the guarantors or ratified by them, and any implied promise by Metro does not prevent the running of the statute of limitations as to McCalvy and Dohm. The district court concluded properly that Bernloehr precludes the tolling of the statute of limitations as to Metro's guarantors.
Finally, applying Minn. Stat. § 549.21 (1996), the district court ordered Home Lumber to pay attorney fees. We review the award of attorney fees under an abuse of discretion standard. Radloff v. First Am. Nat'l Bank , 470 N.W.2d 154, 156 (Minn.App. 1991), review denied (Minn. July 24, 1991). Attorney fees may be awarded against a party who brings a claim that is barred by the statute of limitations. See Kassan v. Kassan , 400 N.W.2d 346, 350 (Minn.App. 1987) (affirming award of attorney fees in action brought 20 years after claim accrued), review denied (Minn. April 23, 1987). We conclude that the district court did not abuse its discretion in awarding attorney fees. We decline, however, to award additional attorney fees on appeal.