Michelle Beeuwsaert, et al., Respondents,

This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (2018).

STATE OF MINNESOTA
IN COURT OF APPEALS
A18-0527

Michelle Beeuwsaert, et al.,
Respondents,

vs.

Shah & Co. Ltd.,
Appellant.

Filed March 4, 2019
Affirmed in part and reversed in part
Bjorkman, Judge

Ramsey County District Court
File No. 62-CV-17-221

Patrick B. Moore, Joslin & Moore Law Office s, P.A., Cambridge, Minnesota (for
respondents)

Brian N. Niemczyk, Jason S. Raether, Hellmuth & Johnson, PLLC, Edina, Minnesota (for
appellant)

Considered and decided by Connolly, Presiding Judge; Bjorkman, Judge; and
Florey, Judge.
U N P U B L I S H E D O P I N I O N
BJORKMAN, Judge
Appellant accounting firm challenges the district court’s denial of its breach -of-
contract claims related to accounting and tax -preparation services it provided for
respondents. Appellant also challenges the denial of its claim for attorney fees and the

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award of damages to respondent corporation based on an IRS penalty. We affirm the denial
of appellant’s claims but reverse the damages award.
FACTS
Appellant Shah & Co. Ltd. is a Minnesota accounting firm. In 2002, it began
providing accounting and tax-preparation services for respondents Robert Beeuwsaert and
Michelle Beeuwsaert and their company, respondent Thunder Blades, Inc. For the
Beeuwsaerts as a married couple, Shah & Co. provided tax -preparation services for tax
years 2002 -11, with written engagement letters for tax years 2008 through 2011. The
Beeuwsaerts divorced in 2011, and Shah & Co. provided tax-preparation services for each
of them individually for tax years 2012 and 2013, with written engagement letters for both
years.1 For Thunder Blades, Shah & Co. provided accounting and tax-preparation services
for tax years 2003-14, with engagement letters for tax years 2008-11, 2013, and 2014.
Shah & Co.’s engagement letters consistently state that fees would “be based on
standard hourly rates, for the actual time spent, plus out-of-pocket expenses,” or “upon the
amount of time required at standard billing rates plus out-of-pocket expenses”; none of the
letters indicate any particular rate. Over the years, the Beeuwsaerts frequently requested—
but never received—invoices for work performed on their behalf. Shah & Co.’s founding
partner simply told them they could pay “when the cash flow improves.” Nonetheless, the

1 Though not included in the district court’s findings, the record reflects that Shah & Co.
also performed tax -preparation services for Michelle Beeuwsaert for tax year 2014, but
without an engagement letter.

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Beeuwsaerts and Thunder Blades made good -faith payments totaling $15,700 between
2003 and 2015.
In April 2016, the Beeuwsaerts asked Shah & Co. to return their tax paperwork so
they could work with a different accountant. Shah & Co. refused to do so until they paid
all alleged balances due, but it did not issue any invoices. In July, the Beeuwsaerts repeated
their request and asked to be “reasonably” invoiced for any outstanding fees. Shah & Co.
again did not provide the paperwork and did not issue any invoices. The following month,
Shah & Co. wrote to the Beeuwsaerts, stating that it had returned the required paperwork
and would bill for services rendered “within the next few weeks.” But Shah & Co. did not
return the paperwork or send any invoices.
Lacking the necessary documents, Thunder Blades was unable to timely file its 2015
tax returns. The IRS subsequently assessed Thunder Blades a penalty of $2,730.
The Beeuwsaerts and Thunder Blades initiated an action in conciliation court,
seeking return of their tax paperwork. After an October 3 hearing, the conciliation court
ordered Shah & Co. to return the documents and bill the Beeuwsaerts and Thunder Blades
for any outstanding balances, and continued the matter to December 2. Three days before
the hearing, Shah & Co. sent invoices to the Beeuwsaerts and Thunder Blades demanding
$26,200 for services rendered to Thunder Blades for tax years 2003 -10; $12,600 f or
services rendered to Thunder Blades for tax years 2011 -14; $3,075 for services rendered
to the Beeuwsaerts for tax years 2002-11; $790 for services rendered to Robert Beeuwsaert
for tax years 2012 -13; and $1,620 for services rendered to Michelle Beeuwsa ert for tax
years 2012 -14. Shah & Co. credited the $15,700 previously paid against the Thunder

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Blades invoices, but n one of the invoices stated an hourly rate or an accounting of time
spent. The Beeuwsaerts and Thunder Blades did not pay, and Shah & Co. asserted
counterclaims to recover the unpaid fees. The conciliation court ordered Shah & Co. to
return the requested documents but awarded it $1,000 as compensation for unpaid
accounting services.
Shah & Co. removed the case to district court. After a bench trial, the district court
determined that Shah & Co.’s breach -of-contract claims 2 fail for four reasons: (1) no
contracts existed for years without a signed engagement letter, (2) the statute of limitations
bars claims for fees incurred before 201 1 because Shah & Co. failed to provide invoices
within a reasonable time after services were performed, (3) the payments rendered and
accepted are deemed full payment for the services performed, and (4) Shah & Co. failed to
prove damages. The district cou rt also denied Shah & Co.’s contract -based claim for
attorney fees. And the court determined that Thunder Blades incurred damages as a result
of Shah & Co.’s failure to return the requested tax documents, as required under Minn.
Stat. § 326A.13(b) (2018), and entered judgment against Shah & Co. for $2,730. Shah &
Co. appeals.

2 Shah & Co. also claimed unjust enrichment and promissory estoppel. The district court
denied those claims, and Shah & Co. does not pursue them on appeal.

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D E C I S I O N
I. Shah & Co. ’s claims for services performed prior to 2011 are barred by the
statute of limitations.

A breach-of-contract claim is subject to a six-year statute of limitations. Minn. Stat.
§ 541.05(1) (2018). When a contract provides for payment upon demand, “the statute of
limitations does not begin to run until an actual demand for payment is made.” Bannitz v.
Hardware Mut. Cas. Co., 17 N.W.2d 372, 373 (Minn. 1945). But the demand “must be
made within a reasonable time.” Id. The amount of time reasonable for such a demand “is
ordinarily the period of the statute of limitations” but depends on the c ircumstances of the
case. Id. at 373-74. Whether a claimant demand ed payment under a contract within a
reasonable time is a “question for the trier of fact.” Id. at 374. We will not disturb a district
court’s finding on this question unless it is clearly erroneous. Minn. R. Civ. P. 52.01;
Rasmussen v. Two Harbors Fish Co., 832 N.W.2d 790, 797 (Minn. 2013).
Shah & Co. argues that the district court erred by finding that it failed to timely
demand payment for services performed prior to 2011. Citing Bannitz, Shah & Co. asserts
that its 2016 demand was timely because “ the relationship between the parties here
involved a level of trust and confidence that is . . . not typical in a creditor -debtor
relationship.” We are not persuaded. Bannitz involved a long-time employee who did not
seek to recover sales commissions that accrued early in his career until he separated from
the employer. 17 N.W.2d at 373 -74. Our supreme court held the delay was reasonable
because of the parties’ ongoing relationshi p, particularly the trust and confidence the
employer-debtor placed in the employee. Id. at 374. In contrast, this case does not involve

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an employment relationship; the Beeuwsaerts and their company retained Shah & Co. to
perform accounting services. Indeed, any trust relationship went the other direction, as the
Beeuwsaerts and their company placed their trust and confidence in Shah & Co. See
Vernon J. Rockler & Co. v. Glickman, Isenberg, Lurie & Co., 273 N.W.2d 647, 650 (Minn.
1978) (recognizing that accountants “owe their clients a duty of reasonable care” ). And
unlike the employer in Bannitz, which could have tendered the commissions to its
employee at any time, the Beeuwsaerts and their company were deprived of the ability to
pay for services as th ey were rendered because Shah & Co. unilaterally declined to issue
invoices despite the Beeuwsaerts’ repeated requests.
Overall, the record amply supports the district court’s finding that Shah & Co. “had
the ability to invoice after work was done” and unreasonably failed to do so. Accordingly,
the district court did not clearly err by determining that claims for work performed more
than six years before they were filed —those from before 2011 —are barred by the statute
of limitations.
II. Shah & Co. failed to establish damages resulting from its remaining contract
claims.

A claim for breach of contract “fails as a matter of law if the plaintiff cannot
establish that he or she has been damaged by the alleged breach.” Jensen v. Duluth Area
YMCA, 688 N.W.2d 574, 578-79 (Minn. App. 2004). Damages “need not be proved with
certainty” but cannot be “remote, conjectural, or speculative.” Id. at 579. Shah & Co.’s
engagement letters uniformly state an agreement to charge the Beeuwsaerts and Thunder
Blades “based on standard hourly rates , for the actual time spent, plus out-of-pocket

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expenses.” But its contract claim is premised on November 2016 invoices that reflect
annual flat fee s. The district court discredited Shah & Co.’s contention that the
Beeuwsaerts agreed to pay a flat fee. And Shah & Co. presented no evidence of the actual
time it spent providing services to Thunder Blades and the Beeuwsaerts, the reasonable
value of that time, or the expenses it incurred. On this record, we discern no error by the
district court in denying Shah & Co.’s breach-of-contract claims for 2011 and beyond.3
III. The district court did not abuse its discretion by denying attorney fees.
“Attorney fees are not recoverable unless authorized by statute or contract .”
Bolander v. Bolander, 703 N.W.2d 529, 548 (Minn. App. 2005), review dismissed (Minn.
Nov. 15, 2005). We review a district court’s decision regarding an award of attorney fees
for an abuse of discretion. Id.
Shah & Co. contends it is entitled to attorne y fees based on provisions in its 2013
and 2014 engagement letters that if “any collection action is required to collect unpaid
balances due to [Shah & Co.],” the Beeuwsaerts and Thunder Blades agree to reimburse
“all costs associated with collection activities, including, but not limited to attorney fees.”
But Shah & Co. acknowledges that its attorney -fee claim is contingent on the success of
its contract claims. Because the district court did not err by denying Shah & Co.’s breach-
of-contract claims, it did not abuse its discretion by declining to award attorney fees.

3 Shah & Co. also challenges the district court’s finding that its contract claims are barred
by an accord and satisfaction between the partie s. Because we affirm the district court’s
denial of the contract claims on the merits, we decline to address this alternative argument.

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IV. The district court erred by awarding damages to Thunder Blades.

Minnesota law requires an accountant to “ furnish to a client or former client, upon
request and reasonable notice ,” a copy of the accountant’s working papers and any
accounting or other records that the client provided the accountant. Minn. Stat.
§ 326A.13(b). Shah & Co. argues that the district court erred by awarding Thunder Blades
$2,730 as damages for violation of this statute because Thunder Blades failed to prove that
it actually paid, or will be required to pay, the IRS penalty. We agree.
An award of a ctual damages “repay[s] actual losses.” Poehler v. Cincinnati Ins.
Co., 899 N.W.2d 135, 141 (Minn. 2017 ). Damages cannot be “ remote, conjectural, or
speculative.” Jensen, 688 N.W.2d at 579.
On the record before us, Thunder Blades’ obligation to pay the $2,730 penalty is
speculative. The IRS notice directs Thunder Blades to pay the penalty but also invites the
company to “provide a signed detailed letter of explanation” indicating its “acceptable
reason for filing [the] return late,” which, if the IRS accepts the explanation, may result in
the penalty being removed or reduced. Thunder Blades presented no evidence that it paid
the penalty or that the IRS rejected its explanation and demanded payment. Accordingly,
the district court erred by awarding unproven damages.
Affirmed in part and reversed in part.