Opinion
No. C1-95-2683.
Filed May 21, 1996.
Appeal from the District Court, Hennepin County, File No. 949708.
Rebecca J. Heltzer, Bernick and Lifson, P.A., (for Respondent).
Wayne B. Holstad, Holstad Larson, P.L.C., (for Appellant).
Considered and decided by Huspeni, Presiding Judge, Crippen, Judge, and Schumacher, Judge.
This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (1994).
UNPUBLISHED OPINION
Everett Smith, in appealing the district court's summary judgment award to Swaden Law Office, argues that the court erred when it (1) determined that the parol evidence rule bars the admission of testimony regarding his understanding of the terms under which he agreed to act as a guarantor for legal fees associated with his daughter's divorce; (2) decided that there was not a material alteration of the agreement between his daughter and Swaden Law Offices that permitted his discharge as a guarantor; and (3) awarded attorney fees to Swaden Law Offices. We find no error in any of these challenged determinations by the district court and affirm.
FACTS
In February 1990, Jaclyn Onischuk, accompanied by her father Everett Smith, spoke with Linda Olup at the Swaden-Olup Law Offices regarding possible retention of her as legal counsel for Onischuk's divorce. As a condition of representation, Olup asked Smith to sign a guaranty agreement for legal fees and costs that would accrue. Smith agreed to serve as guarantor. The representation agreement provided that Onischuk would receive monthly statements of accrued fees and that she was hiring the entire firm as her legal counsel.
Billing records indicate that Olup did the majority of the work through April of 1990, when Barbara Halper, an associate at Swaden-Olup Law Offices, took over as lead attorney. In January 1991, Swaden-Olup Law Offices ceased operations and both Olup and Swaden formed their own firms. Prior to the firm's dissolution, each client of Swaden-Olup Law Offices was contacted to determine whether they wished to continue their relationship with Olup or Swaden. Onischuk agreed to continue working with Halper who remained with the new Swaden Law Offices. Halper continued to act as Onischuk's primary attorney until completion of the divorce. After the representation ceased, there was an outstanding balance of $9,512.11 owed to the firm.
The Swaden-Olup Law Offices were subsequently known as the Swaden Law Offices.
Following the divorce, Onischuk began to make payments of $50 per month on the outstanding balance of the attorney fees. On November 23, 1991, Halper sent Smith a letter indicating that $50 was not a reasonable monthly payment for a debt of almost $10,000 and asked him, as guarantor, to pay the outstanding fees or arrange a reasonable payment schedule. Smith did not respond. Swaden Law Offices then retained outside counsel in order to collect this debt. On July 15, 1992, Onischuk received a letter, on behalf of Swaden Law Offices, requesting payment of the legal fees and indicating that if no response was received within 10 days, collection procedures would be initiated. Once again, there was no response.
An action was initiated against Smith for payment of the outstanding debt. Swaden Law Offices moved for summary judgment for the unpaid fees and costs of collection. In opposition, Smith argued that the representation agreement was not followed and that he was released as guarantor due to material modifications made to the original agreement without his consent. The district court granted Swaden Law Offices' motion for summary judgment, and ordered Smith and Onischuk to pay $18,535.60 for attorney fees and collection costs.
DECISION
1. On an appeal from a grant of summary judgment, there are two questions that must be asked: (1) whether there are any genuine issues of material fact; and (2) whether the district court erred in its application of the law. State by Cooper v. French, 460 N.W.2d 2, 4 (Minn. 1990). "On appeal, the reviewing court must view 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) .
Parol evidence is usually inadmissible to vary, contradict or alter a written agreement. Hruska v. Chandler Assocs., Inc., 372 N.W.2d 709, 713 (Minn. 1985). According to general contract law, the terms of a final and integrated written expression may not be contradicted by parol evidence of previous "understandings and negotiations for the purpose of varying or contradicting the writing." Apple Valley Red-E-Mix v. Mills-Winfield, 436 N.W.2d 121, 123 (Minn.App. 1989) (quoting 3 A. Corbin, Corbin on Contracts § 573 (1960)), review denied (Minn. Apr. 26, 1989). Evidence that a party agreed in writing to one thing when they meant another is precisely the type of evidence intended to be excluded by the parol evidence rule. Klawitter v. Straumann, 255 N.W.2d 407, 411 (1977).
Smith claims that the district court erred when it determined that the parol evidence rule acts as a bar to receipt of any evidence outside the written fee agreement. His two basic assertions are: (1) he intended to hire Olup as an individual and not the entire firm of Swaden-Olup Law Offices to represent his daughter; and (2) he understood that Olup agreed to send him monthly statements which detailed the fees associated with his daughter's divorce. Neither of these arguments is persuasive.
First, the fee agreement specifically provides that Onischuk is hiring the entire firm of Swaden-Olup Law Offices as counsel in her divorce action. Indeed, the agreement gives the specific hourly rates that will be charged for work done by partners in the firm as well as any associates or support staff. Our review of this agreement fails to disclose any reasonable support for Smith's assertion that his daughter only hired Olup.
Second, our review of the fee agreement does not support Smith's claim that he is entitled to receive monthly statements detailing his daughter's legal fees. The agreement specifically provides that a breakdown of the legal fees incurred each month will be sent to Onischuk, the firm's client. Nowhere does the agreement mention that Smith is entitled to receive a copy of the fees associated with his daughter's divorce.
Finally, Smith asserts that, due to the fiduciary nature of the attorney-client relationship, the parol evidence rule should not act as a bar to the admission of outside evidence where there is a dispute regarding the terms and conditions of their relationship. We cannot agree. We note initially that the attorney-client relationship was between the Swaden-Olup Law Offices and Onischuk. The relationship between Swaden-Olup Law Offices and Smith was one under which Smith was guarantor. Further, Smith cites us to no authority under which we would be permitted or required to apply rules other than the general rules of contract construction to representation agreements between attorneys and their clients. The district court properly applied the parol evidence rule in this case.
The entire agreement between Everett Smith and Swaden-Olup Law Offices recited only: I, the undersigned, agree as a condition of Swaden-Olup Law Offices representing the above-named party, to personally guarantee and be responsible for all attorney's fees and costs incurred under the above agreement.
2. "A material alteration in the principal contract, after execution of the guaranty contract and without the guarantor's consent, discharges the guarantor if the guarantor is prejudiced by the alteration." Estate of Frantz v. Page, 426 N.W.2d 894, 898 (Minn.App. 1988), review denied (Minn. Sept. 16, 1988). However, the modification of a written contract must be shown by clear and convincing evidence. Reliable Metal v. Shakopee Valley Printing, Inc., 407 N.W.2d 684, 687 (Minn.App. 1987). The party claiming modification bears the burden of proving that such a modification has indeed taken place. Merickel v. Erickson, 255 Minn. 12, 15, 95 N.W.2d 303, 305 (1959).
Smith argues that the district court erred when it determined that there was no modification of the contract and held that his obligation as a guarantor is not discharged. As support, he cites: (1) permitting Halper to work on his daughter's divorce; (2) the breakup of Swaden-Olup Law Offices; and (3) the agreement between Swaden Law Offices and his daughter permitting her to make $50 monthly payments on her attorney fees. Smith claims that each of these occurrences constituted a material alteration of the representation agreement that increased his risk of loss, and, therefore, he should be discharged from any liability based upon his status as a guarantor. We find no merit in Smith's arguments.
First, as already noted, the fee agreement specifically provides that Onischuk is hiring the entire firm to work on her case. Therefore, the fact that Halper became the primary attorney on the Onischuk divorce case does not represent any alteration of the agreement. Second, while the breakup of Swaden-Olup Law Offices and the assumption of representation by Swaden Law Offices does constitute a modification of the parties to the original agreement, this modification was not sufficient to release Smith as guarantor. Halper was the primary attorney on this case for more than nine months prior to the breakup and Onischuk's informed decision to permit Halper to continue her representation merely completed the task contemplated by the original agreement. Overall, Smith has failed to show how this modification prejudiced him in any manner. See Frantz, 426 N.W.2d at 898 (guarantor is released when modification of contract increases the risk beyond that to which he or she originally agreed).
Smith also claims that the alleged agreement of Swaden Law Offices that permitted his daughter to make monthly payments of $50 on her legal bills was a material breach of the original agreement, and he should be discharged as guarantor. Again, as already noted, there is nothing in the record to support the claim that Swaden Law Offices agreed to these monthly payments, or that modification was ever made in the payment terms of the original contract. The only evidence in the record regarding this subject is the two letters which indicate that the $50 monthly payments are insufficient. Smith has failed to establish that a modification of this agreement took place. See Wertheimer v. Byrd, 278 Minn. 150, 152, 153 N.W.2d 252, 253 (Minn. 1967) (the terms of a written instrument are binding on the parties and cannot be altered or varied by parol evidence which is not clear and convincing).
3. Since it is fundamental that the reasonable value of attorney fees is a question of fact, the findings of the district court must be upheld by a reviewing court unless clearly erroneous. Amerman v. Lakeland Dev. Corp., 295 Minn. 536, 537, 203 N.W.2d 400, 400-01 (Minn. 1973).
To the extent Smith argues that the award of attorney fees as a cost of collection in this case was inappropriate because of Onischuk's uncontroverted assertion that there was a modification in the initial agreement allowing her to make $50 monthly payments on her outstanding debt, we have previously rejected that claim. Smith also asserts that the agreement between Onischuk and Swaden Law Offices was later breached when the attorneys retained by Swaden Law Offices sent his daughter a letter in July 1992 which indicated that $50 per month was not a reasonable sum. We also find no merit in this argument. A letter written to Smith by Halper in November 1991 had communicated exactly the same message to Smith.
The fee agreement specifically provides that Onischuk must pay all costs of collection that might result from the firm's representation. These costs explicitly included reasonable attorney fees incurred as a result of submitting her case for collection. Therefore, the district court had a specific contractual provision upon which to base its decision to award attorney fees, and the award of those fees was proper.
Affirmed.