958 N.W.2d 480
N.D.2021Background
- In 2011 Biron D. Baker Family Medicine, PC (Baker Medicine) leased commercial premises and Baker personally signed a guaranty promising to pay expenses, costs and fees incurred in "attempting to realize upon this guaranty." Phoenix M.D., LLC later sold the building to Big Pines, which received an assignment of the lease.
- Baker Medicine vacated the premises early and left damages; Big Pines sued Baker Medicine (tenant) and Baker (guarantor) for breach of lease and guaranty.
- A jury in May 2019 awarded Big Pines $18,750. Big Pines then sought attorney’s fees under the guaranty; the district court initially denied fees on assignment grounds, and this Court reversed and remanded for fees.
- On remand Big Pines sought $108,567.50 (plus future fees); after an evidentiary hearing the district court awarded $103,138.00. Baker and Baker Medicine appealed that award.
- Issues on appeal: whether the guaranty is an absolute guaranty and whether the phrase "to realize upon this guaranty" permits recovery of pre-judgment litigation fees; and whether the district court adequately assessed the reasonableness of requested fees (lodestar). Big Pines cross-appealed seeking fees on appeal.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the guaranty is a guaranty of payment or of collection | Guaranty is absolute; Baker is immediately liable on tenant default, so plaintiff may recover under guaranty | Guaranty should be read as conditioned on collection efforts against tenant first | Held: Guaranty is a guaranty of payment (absolute); no condition precedent to suing guarantor |
| Whether "costs and fees incurred in attempting to realize upon this guaranty" includes litigation to obtain judgment and convert that judgment to cash | "Realize upon" includes legal steps to convert the claim into a judgment and then into cash; litigation costs qualify | "Realize upon" means converting noncash assets to cash; fees are not recoverable until after collection attempts on judgment or assets | Held: "To realize upon" reasonably includes costs of litigating to obtain a judgment and subsequent efforts to convert that judgment to cash; fees recoverable |
| Whether the district court abused discretion by failing to perform a lodestar breakdown or detailed findings on fee reasonableness | District court considered detailed billing, testimony, reasonableness and defense conduct; its discretion sufficed without itemized lodestar math | Court should have applied lodestar or made more detailed findings to justify the award | Held: No abuse of discretion; district court relied on itemized bill, testimony, and applicable factors and the record shows a discernible basis for the award |
| Whether Big Pines is entitled to attorney’s fees on appeal | Big Pines requests appellate fees under the guaranty | Baker opposes | Held: Remanded to district court to determine appellate attorney’s fees (trial court should make initial determination) |
Key Cases Cited
- Gen. Elec. Credit Corp. of Tenn. v. Larson, 387 N.W.2d 734 (N.D. 1986) (contract language controls guarantor liability)
- Bank of Kirkwood Plaza v. Mueller, 294 N.W.2d 640 (N.D. 1980) (distinguishes guaranty of payment from guaranty of collection)
- Wallwork Lease & Rental Co. v. Decker, 336 N.W.2d 356 (N.D. 1983) (language can make guaranty absolute, fixing liability on debtor default)
- Greenwood, Greenwood & Greenwood, P.C. v. Klem, 450 N.W.2d 745 (N.D. 1990) (trial court need not detail every calculation if appellate court can discern basis for fee award)
- Thompson v. Schmitz, 795 N.W.2d 913 (N.D. 2011) (lodestar presumption: reasonable hours times reasonable rate)
- Riemers v. State, 750 N.W.2d 407 (N.D. 2008) (itemized bill may be used to establish attorney’s fees)