Arthur Allen Hogenson v. Michael W. Hogenson
852 N.W.2d 266
Minn. Ct. App.2014Background
- Brothers Arthur (respondent) and Michael (appellant) split control of two businesses; later disputes led to litigation over conversion of stock, conversion of personal property, and trespass.
- A default judgment against Arthur in Fallon v. Hogenson was later vacated; Michael purchased the Fallon judgment and actions during the pendency resulted in transfer/control of company stock to Michael and his entities.
- Arthur sued Michael and related entities for conversion and trespass; jury awarded damages for conversion of Hogenson Properties stock and for conversion/trespass to personal property and homestead.
- District court awarded preverdict interest at 10% (Minn. Stat. § 549.09) on conversion and trespass claims and postverdict interest on the total (jury award + preverdict interest).
- Michael appealed the interest calculations; Arthur appealed the denial of motions to amend his complaint to seek punitive damages and a constructive trust.
Issues
| Issue | Plaintiff's Argument (Arthur) | Defendant's Argument (Michael) | Held |
|---|---|---|---|
| I. Proper method & rate for preverdict interest | Preverdict interest for conversion should accrue from date of conversion and calculable at §334.01 6% or under §549.09 10% but start at conversion because common law allows it | §549.09 governs and, where common law permits interest, the 6% rate should apply; otherwise §549.09 applies | Where common law allowed preverdict interest, compute under common-law principles (6% §334.01) from date claim arose only if damages were liquidated; otherwise use §549.09 exclusively. Here conversion damages were unliquidated — remand to apply §549.09. |
| II. Postverdict interest base | Preverdict interest is part of compensatory damages, so postverdict interest should accrue on total award (damages + preverdict interest) | Postverdict interest should accrue only on jury-awarded damages, not on added preverdict interest | Postverdict interest properly calculated on the total (jury award + preverdict interest). |
| III. Motion to amend to seek constructive trust | A constructive trust should be allowed postverdict to prevent unjust enrichment tied to diverted funds/debt between companies | District court properly denied because constructive-trust theory was inconsistent with pleaded/theory tried to the jury | Denial affirmed: constructive-trust claim was inconsistent with theory presented at trial. |
| IV. Motion to amend to seek punitive damages | Evidence of deliberate disregard (conversion/trespass during appeal, repeated conduct) justified permission to amend | Conduct did not meet "deliberate disregard" standard; district court correctly required prima facie proof | Denial affirmed: Arthur failed to show prima facie evidence of willful, deliberate disregard required for punitive damages. |
Key Cases Cited
- Trapp v. Hancuh, 587 N.W.2d 61 (Minn. App. 1998) (common-law prejudgment-interest principles; liquidated claims accrue interest from claim date)
- Lienhard v. State, 431 N.W.2d 861 (Minn. 1988) (preverdict interest not allowed on unliquidated claims dependent on contingencies or jury discretion)
- Seaway Port Auth. of Duluth v. Midland Ins. Co., 430 N.W.2d 242 (Minn. App. 1988) (§549.09 supplements but does not displace existing prejudgment-interest law)
- L.P. Medical Specialists, Ltd. v. St. Louis Cty., 379 N.W.2d 104 (Minn. App. 1985) (early interpretation of amended §549.09; transitional interest calculation)
- Hodder v. Goodyear Tire & Rubber Co., 426 N.W.2d 826 (Minn. 1988) (requirements for valid written offers/counteroffers under §549.09)
- Dairy Farm Leasing Co. v. Haas Livestock Selling Agency, Inc., 458 N.W.2d 417 (Minn. App. 1990) (application of common-law interest rules to ascertainable claims)