Sela Roofing and Remodeling, Inc., d/b/a as Sela Gutter Connection, Respondent,

This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (2016).

STATE OF MINNESOTA
IN COURT OF APPEALS
A16-1862

Sela Roofing and Remodeling, Inc.,
d/b/a as Sela Gutter Connection,
Respondent,

vs.

Timothy Moot, et al.,
Appellants,

Associated Bank National Association, et al.,
Defendants.

Filed September 5, 2017
Affirmed in part, reversed in part, and remanded
Schellhas, Judge

Dakota County District Court
File No. 19HA-CV-14-3947

John J. Steffenhagen, Jason S. Raether, Hellmuth & Johnson, PLLC, Edina, Minnesota (for
respondent)

Dean B. Thomson, Colin M. Bruns, Fa byanske, Westra, Hart & Thomson, P.A.,
Minneapolis, Minnesota (for appellants)

Considered and decided by Bjorkman, Presiding Judge; Schellhas, Judge; and
Hooten, Judge.

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U N P U B L I S H E D O P I N I O N

SCHELLHAS, Judge
Appellants seek reversal of a judgment against them in a breach-of-contract and
mechanic’s lien foreclosure action, arguing th at the district court erred by denying their
claims for offsets to the balance due under their contracts with respondent and by awarding
excessive attorney fees to respondent. We affirm in part, reverse in part, and remand.
FACTS
Appellants Timothy and Dianna Moot cont racted with respondent Sela Roofing and
Remodeling d/b/a Sela Gutter Connection for the repair of storm damage to their home. A
contentious relationship developed during the course of Sela’s work for the Moots, and
Sela ultimately terminated its work before final inspection by a Ci ty of Eagan building
official.
Sela filed a mechanic’s lien against th e Moots’ property on September 30, 2014, 1
and initiated this action against the Moots and their mortgagee, defendant Associated Bank
National Association, seeking to recover the $43,217.93 un paid contract balance. The
Moots filed an answer, denying liability and asserting affirmat ive defenses of, inter alia,
offset, setoff, and/or recoupment, and counterc laiming for breach of contract, based on
alleged damage to their home by Sela’s failure to properly flash a skylight and failure to
complete or properly complete contract work.

1 The September 30 mechanic’s lien statement corrected and replaced a previously filed
mechanic’s lien statement that was filed on August 22, 2014.

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More than six months into the litigation, the parties stipulated to an order, as follows:
Sela completed the final items necessary fo r the home to pass insp ection with the city;
Associated released $23,840.95 in funds to Se la; and Sela filed a partial release of the
mechanic’s lien for the same amount. At some time before trial, the Moots themselves paid
Sela $13,091.60, which left $6,285.38 of the contract balance in dispute.
The district court conducted a bench trial over three days in March 2016. During the
trial, the Moots identified numerous alleged de ficiencies in Sela’s performance and/or
overcharges totaling about $6,00 0 and argued that Sela was not entitled to any recovery.
Sela disputed the alleged deficiencies and overcharges and asked for judgment for the full
remaining contract balance.
On May 2, 2016, the district court filed detailed findings of fact and an order for
judgment in favor of Sela. The district cour t made express factual findings regarding the
course of Sela’s contract work, including th at: the Moots turned away Sela’s crews from
their home on numerous occasions; Sela ceased work in July 2014, with a “small amount
of work remaining” and billed the Moots $43, 000 on July 25, 2014; an inspection by the
City of Eagan on July 28, 2014, found a few minor violations, but Sela was unaware of this
inspection and not present durin g the inspection; Sela was unable to set up another final
inspection because the Moots w ould not agree to a date; and a final inspection was not
completed until after the Moot s commenced litigation. The c ourt further found that the
doctrine of discharge by supervening frustrati on applied, and that Sela substantially
performed under the contract and “properly provided for an allowance for small items not
completed when it sent [the Mo ots] its final bill.” The dist rict court concluded that the

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Moots “should pay to [Sela] $6,285.38 for work performed within the scope of the
contract.” The district court denied the Moots’ counterclaim.
On September 27, 2016, the district cour t filed an order denying the Moots’ motion
for amended findings or a new trial, and awarding Sela $39,872 in attorney fees (less than
half the $83,584.25 that Sela sought) and costs of $402. The court acknowledged the goal
of proportionality and the modest resources of the Moots but balanced that against their
unreasonable actions in faili ng to pay undisputed contra ct amounts until May 26, 2015.
The court concluded that “a reasonable compro mise of competing interests is for [the
Moots] to pay reasonable fees and costs fro m October 14, 2014 (filing of the Complaint)
to May 26, 2015 (when Sela was made whole for all but $6,285.38).” For that time period,
the court reduced the attorney fees billed ($44,000) because of excessive attorney time and
insufficient time-record detail to reach the $39,872 attorney-fee award.2
On November 8, 2016, the district court f iled findings of fact, conclusions of law,
and an order for amended judgment in the am ount of $46,793.18, in cluding interest. The
court also made findings on Se la’s mechanic’s lien and orde red the sale of the Moots’
property to satisfy the lien.
The Moots filed this appeal, and the parties stipulated to a stay of judgment pending
appeal.

2 The district court also awarded significantly reduced costs and no disbursements, which
are not at issue on appeal.

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D E C I S I O N
“On appeal from judgment fo llowing a court trial, this court reviews whether the
district court’s findings were clearly erroneou s and whether the district court erred as a
matter of law.” In re Distrib. of Attorney’s Fees, 855 N.W.2d 760, 761 (Minn. App. 2014),
aff’d, 870 N.W.2d 755 (Minn. 2 015). “Findings of fact, wh ether based on oral or
documentary evidence, shall not be set aside unless clearly erroneous, and due regard shall
be given to the opportunity of the [district] court to judge the credibility of the witnesses.”
Minn. R. Civ. P. 52.01.
I.
The Moots challenge the district court’s fi nding that Sela substantially performed
the contract and argue that the district court erred by denying their claims for offsets. The
Moots also challenge the district court’s finding that the doctrine of supervening frustration
applies. Because the district court’s finding of substantial performance is sufficient to
support the judgment, we do not reach the issu e of whether the district court erred by
finding supervening frustration.
Regarding substantial performance, we initially note that, although the Moots claim
to challenge the district court’s substantial-performance finding, their payment of the bulk
of the contract price and request for rec overy based on incomplete or not properly
completed items is consistent with a finding of substantial performance. Moreover, the
district court does not appear to have clearly erred in determ ining that Sela substantially
performed the contract. See Ylijarvi v. Brockphaler , 213 Minn. 385, 392, 7 N.W.2d 314,

6
319 (1942) (holding that whether a party has substantially performed under a contract is a
question of fact).
Substantial performance is
performance of all the essent ials necessary to the full
accomplishment of the purposes for which the thing contracted
for has been constructed, ex cept for some slight and
unintentional defects which can be readily remedied or for
which an allowance covering the cost of remedying the same
can be made from the contract pr ice. Deviations or lack of
performance which are either intentional or so material that the
owner does not get substantially that for which he bargained
are not permissible.

Material Movers, Inc. v. Hill, 316 N.W.2d 13, 18 (Minn. 1982) (quoting Ylijarvi, 213 Minn.
at 390, 7 N.W.2d at 318). The Moots assert th at the essential purpose of the contract was
that Sela “complete its work to an extent that it complied wi th Code so the [city building
official] could issue a report stating that Sela ’s work passed the City’s final inspection”
and that Sela did not substan tially perform until May 2015. We conclude that the district
court did not clearly err by rejecting the Moot s’ assertion and concluding that the minor
items that the city identified for correction actually support the finding that the contract
was substantially performed when Sela left the project in July 2014.
The Moots’ challenges to the district court’ s denial of their requested offsets fall
into two categories: (A) their attempt to r ecover the amount deducted as depreciation by
Sela’s insurer on the claim for damage to property caused by Sela’s failure to properly flash
the skylight; and (B) their attempt to reduce the amount of Sela’s judgment for work not
performed or not properly performed. We address these two categories in turn.

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A. Depreciation deduction fr om skylight-related damages
As a threshold matter, we address Sela’s argument that the Moots waived this claim
by failing to assert it in their answer or discovery answers. Sela brought a motion in limine
on this basis, and the district court might have acted within its discretion to preclude this
claim. See, e.g., Minn. R. Civ. P. 8.01 (requiring pleading to state amount of relief sought
for unliquidated claims of less than $50,0 00); 26.01(a)(1)(c) (requi ring disclosure of
computation of each category of damages sought); 37.03(a) (g enerally precluding use of
evidence not disclosed ). But the district court implicitly denied the motion in limine by
addressing and denying the Moot s’ counterclaim in its April 29 order. Accordingly, we
review this issue on the merits.
“In a breach of contract action, the damage award is the monetary amount sufficient
to place the plaintiff in the same situation as if the contract ha d been performed.”
Christenson v. Milde, 402 N.W.2d 610, 613 (Minn. App. 1987). Specifically with respect
to construction contracts, the supreme court has defined damages as:
Either the cost of reconstr uction in accordance with the
contract, if this is possible without unreasonable economic
waste, or the difference in the value of the building as
contracted for and the value as actually built, if reconstruction
would constitute unreasonable waste.

Lesmeister v. Dilly, 330 N.W.2d 95, 102 (Mi nn. 1983) (quotation om itted). “In addition,
non-breaching parties should re cover damages sustained by r eason of the breach which
arose naturally from the breach or could reasonably be supposed to have been contemplated
by the parties when making the contract as the probable result of the breach.” Id. at 103
(citing Hadley v. Baxendale , 9 Ex. 341, 156 Eng. Rep. 145 (1854)); see also Imdieke v.

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Blenda-Life, Inc., 363 N.W.2d 121, 125 (Minn. App. 1985) (“Consequential damages are
the damages which naturally fl ow from the breach of a cont ract, or may reasonably be
contemplated by the parties as a probable result of a breach of the contract.”).
Here, the damages that the Moots sought to recover—for the cost to repair property
that was not within the scope of Sela’s contract but was damaged as a natural and probable
result of Sela’s failure to properly perform the contract—are in the nature of consequential
damages for breach of a construction contract. The Moots offered evidence in the form of
an insurance adjustment from Se la’s insurer reflecting the antic ipated cost to repair the
damage caused by the faulty installation of the skylight. The insurance company specified
that it would deduct $2,879.52 of the dama ge amount from Sela’s insurance claim for
depreciation. The district court found that Sela was entitled to collect its full contract price
without any offset for this por tion of the repair cost that was not covered by Sela’s
insurance company—the amount reflecting depreciation of $2,879.52. We can discern no
basis for deducting this depreciation amount from the amount of damages that the Moots
were entitled to recover from Sela. See Lesmeister, 330 N.W.2d at 102–03. Accordingly,
we conclude that the district court clearly erred by finding that the Moots were not entitled
to the full cost of repairs.
B. Incomplete work under the contract
The balance of the Moots’ requests for o ffsets are fact-intensive, and the district
court did not make specific fi ndings regarding them. But the court noted in its order
denying amended findings th at “many of its findin gs depended on credibility
determinations.” Although the better practice is for the district court to provide more

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detailed findings, the court’s order clearly refl ects its rejection of all of the Moots’
allegations regarding incomplete work under the contract. Sela rebutted most of the Moots’
claims of incomplete work. For instance, the Moots sought recovery for allegedly
incomplete contract work that Sela maintained is not within the scope of the contract; Sela
disputed the Moots’ claim that Sela overbille d them; and Sela maintained that it had no
knowledge of products that the Moots claimed were missing. Moreover, to the extent that
any of the Moots’ testimony was uncontradicted, the district court, as finder of fact, was
free to discredit that testimony. See Costello v. Johnson, 265 Minn. 204, 211, 121 N.W.2d
70, 76 (1963) (holding that “uncontradict ed testimony does not compel a finding in
accordance therewith” and that fact-finder “is not compelled to believe any witness merely
because his testimony is uncontradicted”). Ac cordingly, we cannot conclude that the
district court clearly erred in rejecting the Moots’ claim for offsets based on incomplete
contract work.
II.
Under Minnesota law, attorney fees are recoverable if allowed by contract. Kelbro
Co. v. Vinny’s on the River, LLC, 893 N.W.2d 390, 399 (Minn. App. 2017). Fees also may
be awarded in the discretion of the distri ct court in a mechan ic’s lien action. Automated
Bldg. Components, Inc. v. New Horizon Homes, Inc. , 514 N.W.2d 826, 831 (Minn. App.
1994), review denied (Minn. June 15, 1994). This court “will not interfere with a district
court’s award of attorney fees absent an abuse of discretion,” a nd “will not set aside a
district court’s factual findings underlying an award of attorney fees unless they are clearly

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erroneous.” Kelbro, 893 N.W.2d at 399 (quotations omitted); see also Automated Bldg. ,
514 N.W.2d at 831.
The Moots assert that the attorney-fee award in this case is unreasonable because it
is more than six times greater than the amount of the $6,285 judgment ultimately awarded
to Sela. The district court considered proportionality concerns, as expressed in the caselaw
on mechanic’s lien attorney fees and in Minn. R. Civ. P. 1. But the court found that the
attorney fees awarded were ju stified by the Moots’ conduct in refusing to pay any of the
$43,217.93 due on a contract on which 85% of the work was completed before this
litigation was initiated. The Moots challenge the district court’ s findings that they were
responsible for the contract not getting paid, but the district court’s findings in this regard
are supported by trial testimony and not clearly erroneous. The Moots do not otherwise
challenge the district court’s computation of th e fee award. On this record, we conclude
that the district court did not abuse its discretion by awarding $39,872 in attorney fees.
In sum, we affirm the district court’s de nial of the Moots’ claim for offsets for
incomplete contract work and the attorney-fee award. But we reverse the district court’s
denial of the Moots’ claim for an offset for the $2,879.52 deducted by Sela’s insurer from
the skylight repair costs. We therefore reve rse the entry of judgme nt in the amount of
$46,793.18 and remand for entry of judgment in the amount of $43,913.66.
Affirmed in part, reversed in part, and remanded.