Morgan-Walg, LLC, 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This opinion will be unpublished and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
A17-1844

Morgan-Walg, LLC,
Respondent,

vs.

Nicollet Island Development Co., et al.,
Appellants

Filed August 6, 2018
Affirmed in part, reversed in part, and remanded
Reyes, Judge

Hennepin County District Court
File Nos. 27-CV-16-17847, 27-CV-15-17418

William G. Cottrell, Andrew A. Green, Cottrell Law Firm, PA, Mendota Heights,
Minnesota; and

Aaron C. Jackson, Polsinelli, PC, Kansas City, Missouri (for respondent)

Michael J. Orme, Dana K. Nyquist, Orme & Associates, Ltd., Eagan, Minnesota (for
appellants)

Considered and decided by Johnson, Presiding Judge; Wo rke, Judge; and Reyes,
Judge.
U N P U B L I S H E D O P I N I O N
REYES, Judge
Appellants Nicollet Island De velopment Co. (Nicollet), Semper Development, Ltd.
(Semper), and Howard Bergerud (collectively, the developers) challenge the district court’s

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grant of summary judgment in favor of re spondent Morgan-Walg, LLC (Morgan-Walg).
We affirm in part, reverse in part, and remand.
FACTS
In May 2009, Morgan-Walg and the devel opers agreed to part icipate in a joint
venture for the development, construction, sale, and lease of ten Walgreens stores
(development agreement). Pursuant to the development agreement, Morgan-Walg agreed
to advance a series of initial payments to the developers, each of which would be evidenced
and secured by a separate promissory note personally guaranteed by Bergerud, president
of both Nicollet and Semper.
In January 2011, Morgan-Walg and the developers restructured their business
relationship and executed a transfer “agreement for the purchase and sale of participation
rights under [the] master development agreement” (transfer agreement). Under the transfer
agreement, the developers agreed to purchase all of Morgan-Walg’s participation rights in
the Walgreens project and repay to Morgan-Walg all of its initial payments, equity capital,
and the agreed-upon amount for Morgan-Walg’ s return on investment. The developers
agreed to pay Morgan-Walg $23,717,818, to be evidenced by two promissory notes. One
note was for $16,155,500, due in installments through September 2011, and the other note
was for $7,562,318, due on November 15, 2011. Bergerud personally guaranteed payment
of the amounts owed under both promissory notes.
The notes matured, but the developers failed to pay in full. In March 2012, the
parties executed a forbearance agreement (first forbearance agreement). The parties agreed
that the unpaid balance due on the notes wa s $20,005,500, not including accrued interest

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and other expenses, fees, and costs. In ad dition, Morgan-Walg ag reed to forbear from
enforcing its rights and remedies under the promissory notes and guaranty until December
2013.
The developers defaulted on the first fo rbearance agreement, and in August 2013,
the parties executed another forbearance agreement (second forbearance agreement). The
parties agreed that, as of August 2013, the unpaid principal on the notes was $18,978,500,
not including accrued interest, expenses, fees , and costs. Under the second forbearance
agreement, Morgan-Walg agreed to forbear from enforcing its rights and remedies under
the promissory notes and guaranty until June 2016, when the full balance would be due.
In October 2015, Morgan-Walg brought su it against the developers and filed a
confession of judgment. The district court entered judgment against the developers for
$22,513,503.81. On January 13, 2016, the parties executed another forbearance agreement
(final forbearance agreement), in which the parties stipulated to the dismissal of Morgan-
Walg’s lawsuit and to vacating the $22 million judgment. That agreement also extended
the deadline for payment on the promissory notes and guaranty to February 2016.
In December 2016, Morgan-Walg filed th e present suit against the developers,
alleging breach of the promissory notes and guaranty. Morgan-Walg moved for summary
judgment and for an award of a ttorney fees and costs. In support of its motion, Morgan-
Walg filed an affidavit of its chief financia l officer (CFO affidavit). The CFO affidavit
listed specific amounts of unpaid principal and accrued interest owed under the promissory
notes. Morgan-Walg also filed two affidavits in support of its motion for attorney fees and
costs, including itemized lists describing the basis for the fees.

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In response to Morgan-W alg’s summary-judgment motio n, the developers filed
Bergerud’s declaration, in which he admitted that the developers owed money to Morgan-
Walg but asserted that the am ount was “millions of dollar s less than what Morgan-Walg
seeks in its motion.” Bergerud asserted that, because no discovery had been conducted,
“the exact amount due and owing cannot be determined at this time.”
The district court ultimately contin ued Morgan-Walg’s summary-judgment motion
to allow for discovery. The order set a di scovery deadline of Au gust 11, 2017. The
developers’ counsel withdrew approximately one week after the distri ct court issued its
order, and the parties conducted no discover y. The district court ultimately granted
Morgan-Walg’s motions for summary judgment and attorney fees, awarding Morgan-Walg
the amounts listed in the CFO affidavit and the amounts of fees and costs listed in Morgan-
Walg’s other affidavits.
In October 2017, the developers filed an additional affidavit asserting that it was
common for one of the princi pals at Morgan-Walg to ch ange the terms of written
agreements “through oral agre ements and handshake deals.” The affiant also stated that
he “personally witnessed [the principal] maki ng threats to Bergerud.” Later in October,
the developers requested rec onsideration of the order gr anting summary judgment and
attorney fees. In support of that request, they filed a new Bergerud affidavit dated October
27, 2017. The district court denied the request for reconsideration. This appeal follows.

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D E C I S I O N
I. The district court did not err by dec lining to consider evidence filed after the
court entered judgment against the developers.

The developers argue that the district court erred by declining to consider evidence
submitted after the court ruled on the summary-judgment motion. We disagree.
The record does not remain open for the submission of new evidence after the
district court grants summary judgment. Wall v. Fairview Hosp. & Healthcare Servs., 584
N.W.2d 395, 404 (Minn. 1998). “If the re cord were to remain open after summary
judgment, a ruling on a pretrial summary judgment motion would be subject to continued
changes throughout the course of litigati on as new evidence was discovered and
submitted.” Id.
Here, the developers twice submitted new ev idence after the district court entered
judgment in favor of Morgan-Walg. The district court did not err by declining to consider
that evidence for purposes of summary judgment. Furthermore, because that evidence was
not part of the summary-judgment record, we decline to consider it in determining whether
the district court erred by granting summary judgment.
II. The district court erred by granting summary judgment in favor of Morgan-
Walg.

The developers argue that the district court erroneously granted summary judgment
in favor of Morgan-Walg. We agree.
We review a district court’s grant of summary judgment de novo. Riverview Muir
Doran, LLC v. JADT Dev. Grp., LLC , 790 N.W.2d 167, 170 (Mi nn. 2010). This court
“review[s] the record to determine whether there is any genuine issue of material fact and

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whether the district court erred in its application of the law.” Dahlin v. Kroening , 796
N.W.2d 503, 504 (Minn. 2011). We view the evidence in th e light most favorable to the
nonmoving party and do not make factual determinations or weigh the evidence. McIntosh
Cty. Bank v. Dorsey & Whitney, LLP, 745 N.W.2d 538, 545 (Minn. 2008). A genuine issue
of material fact exists “when the nonmoving party presents evidence that is sufficiently
probative with respect to an essential element of the no nmoving party’s case to permit
reasonable persons to draw different conclusions.” Id. (quotation omitted).
A. A genuine issue of material fact exists as to the amount of damages
Morgan-Walg is owed under the promissory notes and guaranty.

The developers argue that a genuine issue of material fact exists as to the amounts
owed to Morgan-Walg under the promissory notes and guaranty. We agree.
The second forbearance agreement and the CFO affidavit identify different amounts
of unpaid principal. The second forbeara nce agreement, execut ed in August 2013,
indicated that the amount of unpaid principal was $18,978,500. 1 Conversely, the CFO
affidavit, executed in December 2016, lists the amount of unpaid principal as $20,717,818.
The CFO affidavit does not explain the discrepancy betw een these two numbers, and
Morgan-Walg offers no explanat ion for the discrepancy other than its assertion, without
citation to the record, that “[t]he loan balance changed over time and the

1 The district court awarded Morgan-Walg $22,513,503.81 in 2015, but the record does not
contain underlying documentation explaining how that figure was generated. It is not clear
how much of the $22 million judgment was com posed of unpaid principal as opposed to
interest and other fees and costs. Theref ore, we do not rely on the 2015 judgment for
purposes of this analysis.

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forbearance/modification documents were executed at various points during the life of the
loan, reflecting the different balances owed at different times.”
Additionally, in his declaration filed in opposition to Morgan-Walg’s motion,
Bergerud asserted that, between Novermber 28, 2010 and July 8, 2011, Morgan-Walg was
paid $5,010,000 and that he “d[id] not se e how those payments were accounted for in
Morgan-Walg’s motion for summary judgment.” A party cannot defeat summary
judgment “by relying upon unverified and c onclusory allegations, or postulated evidence
that might be developed at trial, or metaphysical doubt about the facts.” Dyrdal v. Golden
Nuggets, Inc. , 689 N.W.2d 779, 783 (Minn. 2004). However, the developers provide
particular dates of specific payments paid th at were not accounted for. Taken along with
the conflicting amounts of unpaid principal and the lack of any documentation supporting
the accuracy of the numbers list ed in the CFO affidavit, th e developers’ assertion goes
beyond raising a “metaphysical doubt” as to the CFO affidavit’s accuracy. See id.
Viewing this evidence in the light most favorable to the developers, see McIntosh,
745 N.W.2d at 545, we conclude that a genuine issue of material fact exists as to the amount
owed under the promissory notes and personal guaranty. As a result, the district court erred
by granting Morgan-Walg’s motion for summary judgment. 2 We therefore reverse and
remand for proceedings consistent with this opinion.

2 We also note that the promissory notes and guaranty contain choice-of-law clauses
indicating that they should be construed under Kansas law. The district court applied only
Minnesota law in its order.

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B. There is no genuine issue of material fact as to whether the developers
signed the first forbearance agreement under duress.

The developers claim that they execut ed the first forbearance agreement under
duress. We are not persuaded. Minnesota law recognizes duress as a defense to a contract
“when there is coercion by me ans of physical force or unlaw ful threats, which destroys
one’s free will and compels compliance with the demands of th e party exerting the
coercion.” St. Louis Park Inv. Co. v. R.L. Johnson Inv. Co., 411 N.W.2d 288, 291 (Minn.
App. 1987), review denied (Minn. Oct. 30, 1987).
Even if we were to assume that Bergerud executed the first forbearance agreement
under duress, that fact is not material to Morgan-Walg’s motion fo r summary judgment.
The promissory notes, not th e forbearance agreements, cons titute the basis for Morgan-
Walg’s claims. The summary -judgment record contains no evidence suggesting that the
developers executed the promissory notes or guaranty under duress. The district court did
not err by rejecting the developers’ duress argument.
C. The developers’ unconscionability argument fails as a matter of law.

The developers argue that the transfer agreement and corresponding promissory
notes and guaranty are unconsc ionable and unenforceable. We disagree. This court
reviews de novo whether a contract provision is unconscionable. Osgood v. Medical, Inc.,
415 N.W.2d 896, 901 (Minn. App. 1987), review denied (Minn. Feb. 12, 1988). “A
contract is unconscionable if it is such as no man in his senses and not under delusion
would make on the one hand, a nd as no honest and fair man would accept on the other.”

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Kauffman, Stewart, Inc. v. Weinbrenner Shoe Co., 589 N.W.2d 499, 502 (Minn. App. 1999)
(quotation omitted).
Here, the developers argue that the tran sfer agreement, promissory notes, and
guaranty are “outrageous and unfair, and shoc k[] the conscious [sic].” But Bergerud
asserted in his February 2017 declaration that the developers signed the promissory notes
“for purposes of restructuring the busine ss relationship.” Furthermore, the second
forbearance agreement acknowl edged that both parties we re “sophisticated commercial
part[ies] experienced in transactions” and were represented by counsel. On this record, we
conclude that the transfer agreement and corresponding promissory notes and guaranty
were not unconscionable.
II. The district court did not abuse its di scretion by awarding attorney fees and
costs to Morgan-Walg.

The developers argue that the district court improperly awarded attorney fees and
costs to Morgan-Walg. We disagree.
This court reviews an award of attorney-fees and costs for an abuse of discretion.
Brickner v. One Land Dev. Co. , 742 N.W.2d 706, 711 (Minn. App. 2007), review denied
(Minn. Mar. 18, 2008). “Because the district court is the most familiar with all aspects of
the action from its inception through post-trial motions, it is in the best position to evaluate
the reasonableness of reque sted attorney fees.” 650 N. Main Ass’n v. Frauenshuh, Inc. ,
885 N.W.2d 478, 494 (Minn. App. 2016) (quotation omitted), review denied (Minn. Nov.
23, 2016). “The reasonable value of an attorney’s work is a question of fact, and the district
court’s findings will be upheld unless they are clearly erroneous.” Id. Generally, attorney

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fees are only recoverable under a specific contract or a statute permitting recovery. Midway
Nat. Bank v. Gustafson, 282 Minn. 73, 82, 165 N.W.2d 218, 224 (1968).
Here, the promissory notes state that, in the event Morgan-Walg becomes a plaintiff
or defendant in a legal proceed ing relating to the promissory notes, the developers “shall
repay to [Morgan-Walg] on demand, all cost s and expenses so incurred, including
reasonable attorneys’ fees.” The guaranty also contained language entitling Morgan-Walg
to “reasonable attorneys’ fees, expenses an d costs incurred . . . in the collection and
enforcement of the . . . [g]uaranty.”
First, the developers argue that Morgan-W alg’s attorney fees relating to the filing
of a confession of judgment in 2015 and a mo tion to impose a temporary receiver are not
reasonable. In particular, the developers ar gue that Morgan-Walg filed the confession of
judgment outside of the statute of limitations.
Morgan-Walg’s request for attorney fees is based on the contractual language in the
promissory notes, which broadly allows Morgan-Walg to collect reasonable attorney fees
incurred “in attempting to collect the amounts due.” Even if we assume that the confession
of judgment was filed beyond that statute of limitations, that filing exists in the context of
a years-long effort to collect millions of dollars from the developers. The developers
moved to vacate the 2015 judgm ent, but the district cour t never ruled on their motion
because the parties stipulated to vacate the judgment. The final forbearance agreement,
which extended the payment deadline to February 29, 2016, was executed one day before
the parties executed the stipulation to vacate the 2015 judgment. As part of that forbearance
agreement, the parties agreed to file the st ipulation to vacate the 2015 judgment, and

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Morgan-Walg agreed to release all claims arising out of the 2012 confession of judgment.
In the context of Mo rgan-Walg’s years-long effort to collect from the developers, we
cannot say, in isolation, that the district co urt abused its discretion by determining that
attorney fees stemming from the 2015 lawsuit were reasonable.
Second, the developers argue that Morgan -Walg did not fully comply with Minn.
R. Gen. Pract. 119.3 Morgan-Walg does not dispute that its affidavits did not fully comply
with rule 119, but argues instead that any problems with its affidavits were “de minimus.”
In any action in which an attorney seeks attorney fees of $1,000 or more, application
for approval of fees must be made by motion and supported by an affidavit. Minn. R. Gen.
Pract. 119.01-.02. The affidavit must descri be the work performed, hourly rate, and a
detailed itemization of the specific work perf ormed. Minn. R. Gen. Pract. 119.02. “A
district court has discretion to strictly enfo rce or to waive the requirements of rule 119
when considering a motion for attorney fees.” Rooney v. Rooney, 782 N.W.2d 572, 577
(Minn. App. 2010). Furthermor e, “when . . . the court is fa miliar with the history of the
case and has access to the parties’ financial information, it may waive the requirements of
[r]ule 119.” Gully v. Gully, 599 N.W.2d 814, 826 (Minn. 1999).

3 The developers also argue th at Morgan-Walg is not entitled to attorney fees for work
described in Aaron Jackson’s affidavit because he “is not an attorney of record.” Jackson
is an attorney licensed to practice in Kans as, and Morgan-Walg moved to admit Jackson
pro hac vice along with its other motions. A lthough the district court never explicitly
granted the motion to admit, the district court permitted J ackson to argue the summary-
judgment motion, and the developers did not ob ject. We conclude that the district court
granted Morgan-Walg’s motion to admit Jackson.

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Here, Morgan-Walg presented the district court with extensive records detailing all
work performed by its attorneys from May 2013 to the present. Based on this record, the
district court did not abuse its discretion by waiving the requirements of rule 119.
Finally, the developers argue that the district court improperly awarded certain costs
to Morgan-Walg, including costs for computer-a ided legal research and travel expenses.
No binding Minnesota authority resolves this question.
Morgan-Walg was awarded $7,717 for Wes tlaw computer resear ch and $207 for
Lexis computer research. The developers rely on Eighth Circ uit caselaw for the
proposition that computer-assisted legal resear ch is a component of attorney fees and
cannot be collected as an independent item of cost. See Leftwich v. Harris-Stowe State
College, 702 F.2d 686, 695 (8th Ci r. 1983) (“[C]omputer-aided research, like any other
form of legal research, is a component of attorneys’ fees and cannot be independently taxed
as an item of cost in addition to the attorneys’ fee award.”).
In 2011, however, the Eighth Circuit noted that Leftwich was limited to the
reimbursement of costs under fee-shifting statutes and declined to extend Leftwich to cases
in which “expenses are bei ng reimbursed pursuant to a negotiated settlement.” In re
UnitedHealth Grp. Inc. Shareholder Derivative Litig., 631 F.3d 913, 918 (8th Cir. 2011).
The Eighth Circuit also recogni zed that “[t]he prevailing view among other circuits is to
permit awards to reimburse counsel for the reasonable costs of online legal research.” Id.
at 918-19. The court explained that online research is typically billed as a cost separately
from the attorneys’ hourly rates and concluded that the federal district court did not abuse
its discretion by awarding costs for computer-assisted legal research. Id. Considering the

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Eighth Circuit’s more recent an alysis, which we deem persua sive, we conclude that the
district court did not abuse its discretion by awarding Morgan-Walg costs for computer-
assisted legal research.
With regard to travel expenses, neither party cites any caselaw relating to the
recovery of costs for travel e xpenses. In the absence of any authority to the contrary, we
conclude that the district court did not abuse its discretion by awarding costs for travel.
Affirmed in part, reversed in part, and remanded.