In a June 2022 non precedential opinion, the Minnesota Court of Appeals upheld a jury’s decision in Goldmount Veterinary Center, P.A. v. Watonwan County and Animal Humane Society that an oral contract existed between the parties for a veterinarian’s care and boarding of horses.  As a result, the court let stand the jury’s verdict awarding respondent Goldmount Veterinary Center (“Goldmount”) $1,498,375 in contract damages against appellant Animal Humane Society (“AHC”) and Watonwan County (the “County”), which did not appeal. AHC argued that the verdict award was unsupported by the evidence presented at trial, or in the alternative, the district court erred by denying AHC’s posttrial motions to reduce the damage award or for a new trial.

Background

On June 21, 2018, the County asked AHS to assist with an investigation into a herd of 72 miniature horses owned by Michael Johnson. When an AHS agent arrived at Johnson’s farm, he observed terrible conditions and told Johnson that the horses were “thousands of dollars away from being sound.”

On the threat of the County and AHS obtaining a warrant to seize the horses, and Johnson having to bear the costs of rehabilitation per the statement of AHS’s agent, Johnson agreed to voluntarily surrender his horses. While Johnson was considering whether to voluntarily surrender his horses, the AHS agent told him that the care necessary to rehabilitate the horses would be very expensive and that AHS would pay for “the care and . . . keeping and maintaining” of the horses. This included paying for the costs of farrier services and “any veterinary treatment necessary to stabilize [the horses’] health and welfare.” AHS became the owner of the horses when Johnson surrendered them, and transported them to Goldmount on June 22, 2018.

When AHS delivered the horses to Goldmount, the AHS agent told Goldmount’s veterinarian-owner that AHS would provide payment for “general animal husbandry” and forensic reports of each horse to aid in the criminal prosecution against Johnson. The veterinarian understood “general animal husbandry” to mean the horses’ boarding costs, as well as the specialized care needed to stabilize the horses. The parties did not discuss the fee Goldmount would charge for the care of the horses, and Goldmount and AHS did not sign a written contract.

About a month after the horses were delivered to it by AHS, Goldmount sent the County an invoice for $43,037.20, consisting of fees for hospitalization and “veterinary care,” which included boarding costs of $25 per horse per day. Subsequently, representatives from AHS and the County visited Goldmount to contest the invoice and advise Goldmount that the boarding costs were outside the scope of their agreement. During the visit, the AHS agent stated that AHS would pay for “vet treatment, related medical costs, forensic reports and farrier care” but that any boarding costs “were to be worked out between her and Michael Johnson.” The parties did not agree on the boarding costs at that meeting.

Weeks later, the parties continued to dispute who was responsible for the boarding costs. Goldmount and its veterinarian, however, stated they would not release any reports, photos, documents, or horses until AHS paid the boarding costs.

Eventually, on September 17, 2018, the County attorney notified Goldmount that the horses were no longer evidence in the criminal case against the former owner, and that the veterinarian “may do with them what [she] see[s] fit.” Fifteen months later, in December 2019, Goldmount sued the County and AHS for breach of contract. From that time through the trial in October 2020, Goldmount continued to bill AHS $25 per horse per day for boarding.

After a trial, the jury decided that AHS and the County were responsible for the boarding and hospitalization costs for the horses, at the rate of $25 per day per horse, from June 22, 2018, to October 13, 2020. This resulted in an award of $1,498,375 to Goldmount.

Claims and Remedies Sought

AHS argued on appeal that the parties did not have a binding contract because two essential contract terms – (i) Goldmount’s boarding fee and (ii) the contract’s duration – were not sufficiently agreed upon by the parties. As a secondary matter, AHS argued that the district court had erred by denying its posttrial motion for a new trial or to reduce the damages award. AHS sought the Court of Appeals’ reversal of the jury verdict, or in the alterative, either an order for a new trial or for the district court to recalculate the damages award.

Courts of Appeals Decision

Boarding and the Cost of Boarding 

The Court of Appeals gave great weight to the conclusions of the jury, and deferred to it in concluding that its findings were reasonable based on the evidence at trial. Specifically, the court cited the AHS agent’s testimony that AHS would pay not only for forensic evaluation and veterinary treatment, but also for whatever care was necessary to stabilize the horses for their health and welfare. The AHS’s agent statement to Johnson that AHS would pay for the care and keeping of the horses if Johnson voluntarily released them was also noted by the court. The court found these statements permitted the jury to reasonably conclude there was mutual assent between the parties about the payment of boarding fees, notwithstanding that there was no written contract.

As to the lack of specific discussion or specific agreement on the cost of boarding the horses, the court noted that AHS had, through its agent, agreed to deliver the horses which AHS had taken custody of to Goldmount, and agreed to pay Goldmount’s fee, even though it did not know what that fee would be. Again deferring to the jury’s conclusion, the court found it was reasonable for the jury to find that AHS agreed to pay what Goldmount charged for similar work, which was the $25 per horse per day boarding fee.

Duration of Contract

The second essential contract term that AHS argued was absent from its arrangement with Goldmount was the duration of the contract. While AHS pointed to evidence that the parties understood the horses would be released after about six weeks, the court noted the parties’ oral contract was that the contract would last until the horses were stabilized, or about two months. Regardless, the court found it was reasonable for the jury to conclude there was indeed a contract between AHS and Goldmount.

Whether the contract term was six weeks or two months, the eventual verdict was for care that lasted more than two years. This came about because AHS and Goldmount were in dispute over which party owned the horses following AHS’s ultimatum in September 2018 that Goldmark could either (i) release the horses to AHS while the fee dispute continued or (ii) retain the horses and recover charges via sale and adoption fees. When Goldmark rejected both options, AHS took the position the horses were owned by Goldmount. Subsequently, again deferring to the jury’s wisdom, the court found the jury could reasonably conclude that AHS retained ownership of the horses and therefore Goldmark had to care for the horses, could continue charging the boarding fee, and had no reasonable option to mitigate damages.

Take-Aways for Contracting Parties

There are a number of important practice and counseling points that Goldmark provides.

First, certain types of contracts need not be in writing. An oral agreement that includes a meeting of the minds on its essential terms may well constitute an enforceable contract.

Second, notwithstanding the initial efficiency of an oral contract, a written contract is often preferable to memorialize an agreement’s essential terms and avoid disputes over them. It is hard to imagine the dispute in the Goldmount case escalating to the degree it did had the parties set out their agreement in a written document.

Third, not every essential terms of a contract need be determined with exact specificity. In Goldmount, the court deferred to the jury’s determination (and perhaps assumptions) about the nature of the contracted services, the price of the services, and the duration of the agreement. On appeal, the burden for AHS was high, as the court repeatedly noted the jury made reasonable determinations of facts based on the evidence.

Fourth, making an ultimatum to another party and then assuming inaction constitutes an election of an option, or waiver of a right, may be an expensive mistake.

If you have any questions about entering into, the defense of, or the analysis of business contracts, contact the business law attorneys at Trepanier MacGillis Battina P.A.

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About the Author:

Minnesota business and real estate attorney James C. MacGillis advises clients on a wide-range of business and commercial real estate issues in the Twin Cities, throughout Minnesota, and in western Wisconsin. Jim may be reached at 612.455.0503 or by e-mail at jmacgillis@trepanierlaw.com. Trepanier MacGillis Battina P.A. is a Minnesota business, real estate, litigation, and employment law firm located in Minneapolis, Minnesota.  Jim is licensed to practice law in Minnesota and Wisconsin.