A22-0724

STATE OF MINNESOTA
IN COURT OF APPEALS
A22-0723
A22-0724

Cambria Company, LLC,
Respondent,

vs.

M&M Creative Laminants, Inc.
dba M&M Creative Laminates, Inc.,
Defendant (A22-0723),
Appellant (A22-0724),

Leland P. Schermer,
Appellant (A22-0723).

Filed August 21, 2023
Affirmed
Bratvold, Judge

Le Sueur County District Court
File No. 40-CV-17-662

Bryan R. Freeman, James J. Long, Jevon C. Bindman, Maslon LLP, Minneapolis,
Minnesota (for respondent)

Matthew D. Swanson, Greenstein Sellers PLLC, Minneapolis, Minnesota; and

Leland P. Schermer (pro hac vice), Marcus & Shapira, LLP, Pittsburgh, Pennsylvania (for
appellants)

Considered and decided by Worke, Presiding Judge; Larkin, Judge; and Bratvold,
Judge.
SYLLABUS
1. For purposes of the Minnesota Franchise Act (MFA), Minn. Stat. §§ 80C.01-.22
(2022), a payment for a customized or fabricated good at a bona fide wholesale price is not
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a franchise fee under Minn. Stat. § 80C.01, subd. 9, when the predominant purpose of the
parties’ contracts is a finished product and not services.
2. Under Minn. R. Civ. P. 68.01, an unaccepted offer of zero dollars entitles the
offeror to recover costs and disbursements as provided in Minn. R. Civ. P. 68.03 if the
relief awarded is less favorable to the offeree than the unaccepted offer.
OPINION
BRATVOLD, Judge
These consolidated appeals are taken from judgments entered after a trial of claims
arising out of a business dispute. In 2008, appellant M&M Creative Laminants Inc. (M&M)
entered into a business relationship with respondent Cambria Company LLC, some of
which was governed by a series of written contracts. For eight years, Cambria cut quartz
slabs, finished or fabricated the slabs into countertops, and sold them to M&M, which
installed the countertops in homes and other settings. In 2017, Cambria notified M&M that
it was terminating the agreements. Cambria sued M&M for unpaid invoices for countertops
that had been delivered; M&M counterclaimed for damages caused by Cambria’s abrupt
termination of their business relationship, among other things.
On appeal, M&M asserts that the district court erred by (1) dismissing at summary
judgment M&M’s counterclaim that the parties’ relationship was a franchise and Cambria
violated the MFA, specifically, Minn. Stat. § 80C.14, subd. 3; (2) dismissing at summary
judgment M&M’s counterclaims for tortious interference with contractual relations and
unfair competition; (3 ) rejecting at summary judgment M&M’s defense that Cambria
breached their contracts first and thereby excused M&M’s performance; (4) awarding
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attorney fees to Cambria under one of the parties’ written contracts; (5) improperly
instructing the jury on recoupment damages and denying M&M’s motion for a new trial
on that ground; (6) failing to enter judgment for M&M on prejudgment interest;
(7) awarding costs and disbursements to Cambria based on an unaccepted offer of
judgment under Minn. R. Civ. P. 68.03; and (8) imposing sanctions against M&M’s
attorney, appellant Leland P. Schermer, for violating a protective order. Because we
conclude the district court did not err, we affirm.
FACTS
The relevant facts are viewed in the light most favorable to M&M and are taken
from the record at the time of the parties’ summary-judgment motions. 1 Cambria is a
Minnesota company that manufactures and sells quartz countertops. In 2008, Cambria
approached M&M, a Pennsylvania corporation, to enter into a business relationship in
which Cambria would fabricate and polish quartz countertops based on M&M’s purchase
orders and M&M would install countertops in homes and commercial buildings.
On May 15, 2009, the parties signed business-partner agreements (BPAs) that
Cambria drafted. The BPAs are seven written contracts including, among other things,
(1) an agreement on credit in which M&M promised that it would pay Cambria in the
timeframe provided on the invoice and that Cambria could recover attorney fees if an
account was “placed for collection,” (2) order terms and conditions that included a

1 The facts pertaining to the attorney -fee motion, rule 68 costs, interest on the judgment,
and sanctions for violating the protective order are detailed below with the corresponding
analysis of the legal issues.
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limitation of liability for Cambria, and (3) business-operating requirements in which M&M
agreed to use specific business equipment and that M&M’s employees would attend
training at “Cambria University” in Minnesota. The BPAs included no provisions about
their duration or how to terminate the relationship.
M&M bought countertops from Cambria for eight years. The parties appear to agree
that M&M regularly failed to pay Cambria in the timeframe provided on the invoices. On
May 2, 2017, Cambria sent representatives to M&M’s office in Pennsylvania who
informed M&M that Cambria was terminating the BPAs. Cambria claimed that M&M
owed over $150,000 for countertops that had been delivered. On May 10, 2017, M&M
emailed Cambria stating that it would not pay the amount outstanding on current invoices
until the parties agreed on how to terminate the relationship.
On June 20, 2017, Cambria sued M&M to recover the amount owed on invoices
already issued, along with attorney fees. M&M answered and asserted counterclaims for
(1) violations of the MFA under Minn. Stat. § 80C.14, subd. 3, which requires good cause
for terminating a franchise and 90 days’ notice of the reasons for termination; (2) breach
of contract; (3) unjust enrichment; (4) tortious interference with contract; and (5) unfair
competition.
In December 2017, Cambria moved under Minn. R. Civ. P. 12.02(e) to dismiss
M&M’s counterclaim for violating the MFA. Cambria contended that the parties’
relationship was not a “franchise” as defined in the MFA and, alternatively, that M&M was
not entitled to sue for damages under the MFA because M&M does not operate in
Minnesota. After a hearing, the district court determined that the counterclaim alleged
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sufficient facts to show a franchise relationship and denied Cambria’s motion to dismiss.
The district court also certified two questions as important and doubtful for appeal under
Minn. R. Civ. App. P. 103.03(i) : first, whether the MFA applies to non-Minnesota
franchisees, and second, whether the parties’ choice-of-law provision “change[s] the
answer to the first question.” In a nonprecedential opinion, we determined that the
“litigation w[ould] not end if we answer the questions certified and the answer will not
have statewide impact.” Cambria Co. v. M&M Creative Laminants Inc., No. A18-1978,
2019 WL 3543602, at *1 (Minn. App. Aug. 5, 2019). Because the certified questions were
not important and doubtful, we dismissed the appeal. Id. at *2-4.
On remand, the parties filed cross-motions for summary judgment. Cambria’s
motion raised four issues that are revisited in this appeal. First, Cambria sought dismissal
of M&M’s MFA counterclaim, arguing that the MFA did not apply to its business
relationship with M&M because M&M did not pay a franchise fee as the statutory
definition of “franchise” requires. Second, Cambria sought summary judgment on its
breach-of-contract claim. Third, Cambria sought dismissal of M&M’s tortious-interference
and unfair-competition counterclaims, arguing that the BPA s limited Cambria’s liability
and excluded the damages M&M sought. Fourth, Cambria argued that unjust enrichment
was unavailable to M&M because the BPAs governed the parties’ relationship. M&M
moved for summary judgment on its MFA counterclaim.
Following a hearing, the district court issued an order granting in part and denying
in part Cambria’s motion for summary judgment and denying M&M’s motion for summary
judgment. First, the district court determined that M&M did not pay Cambria a franchise
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fee and therefore granted summary judgment for Cambria on M&M’s MFA counterclaim.
Second, the district court granted partial summary judgment for Cambria on its
breach-of-contract claim. The district court concluded that “summary judgment is awarded
to [Cambria] in that there was formation of the contract, performance by [Cambria], and a
material breach by [M&M]. Yet to be determined by a jury is the amount of damages”
available to Cambria.
Third, the district court granted partial summary judgment for Cambria on M&M’s
counterclaims for tortious interference and unfair competition after determining that the
BPAs limited the damages available to M&M. But the district court also concluded that
M&M may be entitled to damages under an equitable theory of recoupment because M&M
was entitled to reasonable notice of termination and
Cambria, seemingly on a whim, showed up on the doorsteps of
M&M one day and ended an ongoing business relationship of
eight years. The absence of anything that resembles notice here
calls into question the basic fairness of terminating an
agreement which M&M relied upon and invested business
expenditures in reliance thereon.

Finally, the district court granted Cambria summary judgment on M&M’s
unjust-enrichment claim because the parties had valid written contracts.
M&M moved for clarification of the district court’s summary- judgment decision.
M&M argued that its damages were not limited to recoupment because its
tortious-interference and unfair-competition claims arose after Cambria terminated their
relationship and “d[id] not arise out of the BPA and therefore remain in the case unaffected
by the damage waiver/liability provision.” M&M also argued that it should be allowed to
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defend against Cambria’s breach-of-contract claim by arguing that Cambria breached the
contract before M&M breached the contract. The parties call this second argument M&M’s
prior-material-breach defense.
In response to M&M’s request, the district court issued an order stating that “no
damages for [tortious] interference with contractual relation or unfair competition are
found,” briefly restating its reasoning that the BPAs contained a liability-limitation
provision that was “enforceable upon M&M.” But the court noted that “M&M may,
however, measure alleged losses under the equitable theory of recoupment through any
alleged cancelled contracts, lost opportunities, or expenses spent in reliance of the
relationship.” The district court also determined that M&M was not entitled to a
prior-material-breach defense, first noting that “Cambria did not breach the contract” and
then stating that M&M materially breached the contract by not “pay[ing] for the
performance in a timely manner.”
From August 2 to 18, 2021, the parties presented the case to a jury. The jury awarded
Cambria $275,285.49 for breach of contract, which was offset by $12,279.15 in credits for
M&M. By special verdict, the jury found that Cambria did not have “just cause” to
terminate its relationship with M&M and that M&M did not have a “reasonable amount of
time to recoup its investments and expenditures before Cambria terminated the business
relationship.” The jury awarded M&M $44,023.68 in “investments, expenditures, and lost
profits” resulting from M&M’s “reliance on its business relationship with Cambria and
which have not been recouped and offset.”
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Following a November 1 and 2, 2021 bench trial on attorney fees under the BPAs,
the district court awarded Cambria $72,400 in attorney fees along with $77,661.76 in costs
and disbursements as a result of Cambria’s rule 68.01 offer of judgment, to which M&M
did not respond. The district court denied M&M’s motions for a new trial and for judgment
as a matter of law, among other posttrial motions, and directed entry of judgment.
M&M appeals.
ISSUES
I. Did the district court err by granting Cambria’s motion for summary judgment on
M&M’s MFA counterclaim?

II. Did the district court err by granting Cambria’s motion for summary judgment on
M&M’s tortious-interference-with-contract and unfair-competition counterclaims?

III. Did the district court err by granting partial summary judgment to Cambria on its
breach-of-contract claim and rejecting M&M’s prior-material-breach defense?

IV. Did the district court err by awarding Cambria attorney fees under the BPAs?

V. Did the district court err in instructing the jury on recoupment damages and denying
M&M’s motion for a new trial?

VI. Did the district court err by failing to enter prejudgment interest on the money
judgment entered for M&M’s recoupment damages?

VII. Did the district court err by awarding Cambria costs and disbursements under Minn.
R. Civ. P. 68.03?

VIII. Did the district court abuse its discretion by sanctioning M&M’s attorney for
violating a protective order?

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ANALYSIS
I. The district court did not err by granting Cambria’s motion for summary
judgment on M&M’s MFA counterclaim.

M&M argues that it should have been allowed to proceed with its MFA
counterclaim because the parties’ relationship was a franchise. “We review the grant of
summary judgment de novo to determine ‘whether there are genuine issues of material fact
and whether the district court erred in its application of the law.’” Montemayor v. Sebright
Prods., Inc., 898 N.W.2d 623, 628 (Minn. 2017) (quoting Stringer v. Minn. Vikings
Football Club, LLC, 705 N.W.2d 746, 754 (Minn. 2005)). “We view the evidence in the
light most favorable to the party against whom summary judgment was granted.” Cargill
Inc. v. Jorgenson Farms, 719 N.W.2d 226, 232 (Minn. App. 2006). Where, as in this
appeal, summary judgment involves the interpretation of a statute, we review the
interpretation de novo. Cocchiarella v. Driggs, 884 N.W.2d 621, 624 (Minn. 2016).
The MFA was “designed to protect potential franchisees within Minnesota from
unfair contracts and other prevalent and previously unregulated abuses in a growing
national franchise industry.” Martin Invs., Inc. v. Vander Bie, 269 N.W.2d 868, 872 (Minn.
1978). Under the MFA, “[n]o person may terminate or cancel a franchise unless . . . that
person has given written notice setting forth all the reasons for the termination or
cancellation at least 90 days in advance of termination” and “[n]o person may terminate or
cancel a franchise except for good cause.” Minn. Stat. § 80C.14, subd. 3(a), (b). A party
who violates “any provision of [the MFA] shall be liable to the franchisee or subfranchisor
who may sue for damages caused thereby.” Minn. Stat. § 80C.17, subd. 1. Recovery of
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actual damages also allows a plaintiff to seek “costs and disbursements plus reasonable
attorney’s fees.” Id., subd. 3.
The MFA defines “franchise” as an express or implied contract, “whether oral or
written, for a definite or indefinite period,” in which the parties agree that (1) a franchisee
is granted the right to offer or distribute goods or services using the franchisor’s “name,
trademark, service mark, logotype, advertising, or other commercial symbol,” (2) the
franchisor and franchisee have “a community of interest in the m arketing of goods or
services at wholesale, retail, by lease, agreement, or otherwise,” and (3) the franchisee pays
a franchise fee “directly or indirectly” to the franchisor. 2 Minn. Stat. § 80C.01,
subd. 4(a)(1).
The MFA defines a “franchise fee” as
any fee or charge that a franchisee or subfranchisor is required
to pay or agrees to pay for the r ight to enter into a business or
to continue a business under a franchise agreement, including,
but not limited to, the payment either in lump sum or by
installments of an initial capital investment fee, any fee or
charges based upon percentage of gross or net sales whether or
not referred to as royalty fees, any payment for goods or
services, or any training fees or training school fees or charges.

Id., subd. 9. “[T]he purchase of goods or agreement to purchase goods at a bona fide
wholesale price” is not “considered the payment of a franchise fee.” Id., subd. 9(a).
The parties dispute whether M&M paid Cambria a franchise fee. The district court
decided that M&M did not pay Cambria a franchise fee and, for that reason, the parties’

2 The MFA provides for four types of franchises. See Minn. Stat. § 80C.01, subd.
4(a)(1)-(4). Here, the parties agree that the type of franchise described above is at issue in
this case.
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relationship was not a franchise. The district court first determined that “[i]t is undisputed
by the parties that an identifiable franchise fee was not required or paid by M&M at the
start of their relationship.” The district court then rejected M&M’s argument that “a service
fee was paid every time a finished quartz countertop was purchased from Cambria and that
the fee qualifies as a franchise fee.” The district court reasoned that “[w]hen reviewing the
role of services for custom products,” some amount of service is always required but the
added service does not make a contract for goods into a contract for services. The district
court concluded that “M&M did not pay a fee that qualifies under the MFA as a franchise
fee.”
On appeal, M&M does not contend that Cambria or the BPAs required M&M to
pay any lump sum or other easily recognizable franchise fee. Instead, M&M argues that
the district court erred for two reasons. First, M&M argues that the district court erred in
granting summary judgment because the district court previously determined that M&M
paid a franchise fee when it denied Cambria’s rule 12 motion to dismiss. We are not
persuaded. Even assuming that the district court decided this issue on the merits under rule
12, the district court may revise its ruling “at any time before entry of judgment.” Minn. R.
Civ. P. 54.02 (stating that a ruling on “fewer than all the claims . . . is subject to revision at
any time before the entry of judgment adjudicating all the claim s”). The district court was
therefore free to revisit its rule 12 ruling during summary-judgment proceedings.
Moreover, our review of the district court’s rule 12 ruling indicates that the district court
did not decide the franchise-fee issue on the merits. Instead, the district court addressed
whether M&M’s allegations sufficiently stated a claim for relief under the MFA. Also, the
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amount and nature of M&M’s payments to Cambria involved facts on which the parties
offered evidence at summary judgment. The district court cannot resolve mixed questions
of law and fact on a motion to dismiss “without a developed factual foundation.” Hebert v.
City of Fifty Lakes, 744 N.W.2d 226, 235- 36 (Minn. 2008). Thus, whether M&M’s
payments to Cambria were a franchise fee involved a mixed question of law and fact that
could not be resolved until the factual foundation was laid during summary-judgment
proceedings.
Second, M&M contends in its brief to this court that “[t]he most easily understood
franchise fee is based on the undisputed fact that Cambria provided very substantial
fabrication services to M&M as a required part of the parties’ contractual relationship.”
Cambria disagrees, relying mainly on the MFA’s provision that “the purchase of goods or
agreement to purchase goods at a bona fide wholesale price” is not considered a franchise
fee. Minn. Stat. § 80C.01, subd. 9(a).
We agree with Cambria that the summary-judgment record supports the district
court’s determination that M&M paid Cambria a bona fide wholesale price for finished
countertops. The deposition of Derik Morrow, owner of M&M, established that after M&M
bought countertops from Cambria, it would resell the countertops at “double” the price
M&M paid to Cambria. M&M produced no evidence to rebut Cambria’s claim that M&M
paid a bona fide wholesale price.
Still, M&M emphasizes that the statutory definition of “franchise fee” includes “any
payment for goods or services.” Id., subd. 9 (emphasis added). From this definition, M&M
argues that when it bought finished countertops, it paid Cambria for “fabrication services”
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and reasons that means it paid a franchise fee for each countertop . M&M points out that
Cambria’s fabrication services included cutting slabs, cutting holes for sinks, and polishing
and edging countertops.
The district court rejected this argument, determining that paying for a product with
some added service “does not transform a contract of sale into a contract for services.” The
district court cited the Minnesota Supreme Court’s decision in Valley Farmers’ Elevator
v. Lindsay Bros. that “[s]ervices are always required to convert raw materials into a useful
product.” 398 N.W.2d 553, 556 (Minn. 1987). M&M argues that the district court’s
reasoning was “legal error” because Valley Farmers’ Elevator resolved an issue under the
Uniform Commercial Code (UCC), not the MFA.
Minnesota has some c aselaw on what types of payments may be considered a
franchise fee under the MFA, but no precedent squarely addresses M&M’s argument about
paying for fabrication services. We summarize existing caselaw because it helps our
analysis. In Martin Investors, the supreme court determined that the following were
franchise fees: a $30,000 advance payment and performance guarantee from the franchisee
to the franchisor, a $400 payment to the franchisor per service used by the franchisee, and
a one-percent share of loan profits. 269 N.W.2d at 875. In OT Industries, Inc. v. OT-tehdas
Oy Santasalo-So hlberg Ab, we determined that sales under contracts that included a
“minimum volume requirement, even at bona fide factory prices, may . . . be a franchise
fee.” 346 N.W.2d 162, 166 (Minn. App. 1984). In Unlimited Horizon Marketing, Inc. v.
Precision Hub, Inc., we held that an upfront payment of $15,000 from the franchisee to the
franchisor for marketing was a franchise fee. 533 N.W.2d 63, 66-67 (Minn. App. 1995).
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Given the limited caselaw on franchise fees, the district court’s reasoning by
analogy to UCC caselaw was appropriate. The district court determined that the
predominant purpose of the contract between M&M and Cambria was finished countertops
rather than fabrication services. See Vermillion State Bank v. Tennis Sanitation, LLC¸
969 N.W.2d 610, 620 (Minn. 2022) (explaining that appellate courts “adopted the
predominant purpose test to determine whether hybrid contracts involving goods and
services are governed by the UCC or the common law. . . . Under the predominant purpose
test, a hybrid transaction is classified according to its dominant characteristic.” (quotation
omitted)).
While M&M is correct that the BPAs required M&M to buy “fabrication services”
when it placed purchase orders with Cambria, we agree with the district court that the
“dominant characteristic” of the BPAs was for Cambria to sell M&M finished countertops.
In other words, the BPAs were predominantly a contract for a specific type of finished
goods and not a contract for services.
Moreover, as discussed above, the record established that M&M paid a bona fide
wholesale price, which is not considered a franchise fee. See Minn. Stat. § 80C.01,
subd. 9(a). M&M’s brief to this court does not discuss or dispute that it paid a bona fide
wholesale price. 3 If this court were to recognize payments for fabricated or finished

3 M&M also asserts that the district court erred by not considering the expert testimony it
offered on franchise fees. M&M’s brief to this court, however, provides no citation to the
record indicating the relevant portion of the expert testimony. Inadequately briefed issues
are waived on appeal. Melina v. Chaplin, 327 N.W.2d 19, 20 (Minn. 1982); see McKenzie
v. State, 583 N.W.2d 744, 746 n.1 (Minn. 1998) (applying the rul e that arguments not
briefed are waived where the appellant “allude[d] to” issues but “fail[ed] to address them
15
products as franchise fees, it would significantly diminish the effect of the unambiguous
language in the MFA that provides the purchase of goods at a bona fide wholesale price
“shall not be considered the payment of a franchise fee.” Id. For these reasons, we conclude
that the district court did not err by determining that M&M’s payments to Cambria for
fabricated countertops were not a franchise fee. Thus, Cambria was entitled to summary
judgment on M&M’s MFA counterclaim because the parties’ business relationship was not
a “franchise” as defined in the MFA.4

in the argument portion of his brief”). We therefore need not discuss M&M’s argument
about its expert testimony. We note, however, that although the district court excluded
M&M’s expert testimony on the MFA, the district court’s analysis of the franchise-fee
issue considered the expert’s affidavit along with the other evidence that M&M submitted
on summary judgment. The district court determined t hat M&M’s evidence merely
established that M&M bought equipment that was “not specific to Cambria operations.”
The district court also reasoned that while M&M proved that Cambria required M&M
employees to attend Cambria University, the evidence showed that Cambria paid for the
training and M&M paid for travel expenses. Based on this record, the district court
concluded that the equipment bought and the travel expenses paid were “regular business
expenses” and not a franchise fee. See OT Indus., 346 N.W.2d at 167 (rejecting claim that
amounts paid to suppliers were franchise fees under the MFA); see also Schultz v. Onan
Corp., 737 F.2d 339, 345 (3d Cir. 1984) (applying Minnesota law and holding that
payments to third parties do not qualify as franchise fees under the MFA).

4 Alternatively, we may affirm summary judgment on grounds raised before but not
decided by the district court. See Doe 76C v. Archdiocese of Saint Paul & Minneapolis,
817 N.W.2d 150, 163 (Minn. 2012) (stating that appellate courts may affirm a grant of
summary judgment if it can be sustained on any grounds presented to the district court). At
summary judgment, Cambria argued that M&M was not entitled to sue for damages under
the MFA because M&M does not operate in Minnesota and the MFA does not “protect a
Pennsylvania company operating entirely outside of Minnesota.” The district court did not
rule on the issue. On appeal, Cambria argues, in the alternative, that the MFA does not
apply to M&M because M&M does not operate within Minnesota. This argument has some
force under Minnesota caselaw. In Martin Investors, the supreme court determined that the
MFA “was adopted in 1973 as remedial legislation designed to protect potential franchisees
within Minnesota from unfair contracts and other prevalent and previously unregulated
abuses in a growing national franchise industry.” 269 N.W.2d at 872 (emphasis added).
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II. The district court did not err by granting Cambria’s motion for summary
judgment on M&M’s counterclaims for tortious interference with contract and
unfair competition.

M&M’s counterclaims for tortious interference with contract and unfair competition
alleged that Cambria was liable for lost profits because M&M lost customer contracts after
Cambria abruptly terminated their relationship and Cambria unfairly used M&M’s
customer information to secure sales post -termination. In its motion for summary
judgment, Cambria argued that the damages M&M sought in these two counterclaims were
barred by the “liability limitation provisions in the BPA.” The district court determined
that “[t]his portion of the BPA is not unconscionable” and is, therefore, enforceable. As a
result, the district court concluded that M&M was entitled to “no damages for [tortious]
interference with contractual relation[s] or unfair competition.” The district court added
that M&M could seek lost-profit “damages by way of recoupment.”5
On appeal, M&M makes two arguments. First, it contends that the district court
acted sua sponte in granting summary judgment on these two claims because Cambria did

While not binding precedent for this court, the federal district court’s opinion in Johnson
Bros. Liquor Co. v. Bacardi U.S.A., Inc. , reasoned persuasively that a contract “is not
within the purview of the MFA if the franchisee is not located in and does not operate in
Minnesota.” 830 F. Supp. 2d 697, 703 (D. Minn. 2011). Here, it is undisputed that M&M
is located in Pennsylvania and does not operate in Minnesota. We alternatively conclude
that M&M is not “within Minnesota” and therefore is not afforded the protections given to
franchisees under the MFA. See Martin Investors, 269 N.W.2d at 872.

5 Cambria objected to M&M recovering lost profits as recoupment damages, arguing that
it contradicted caselaw holding that damages in an equitable recoupment claim are limited
and lost profits are not recoverable. Cambria did not file a notice of related appeal or
otherwise raise this issue before this court, so for this appeal, we assume without deciding
that lost profits are recoverable on a recoupment theory.
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not seek summary judgment on either claim. We disagree. Cambria’s issue statement in its
summary-judgment memorandum specifically identified M&M’s counterclaims for
tortious interference and unfair competition. Cambria’s argument in the same
memorandum contended that the liability-limitation provision in the BPAs barred the
damages sought by M&M in its counterclaims. Thus, M&M had notice of Cambria’s
request for summary judgment on these two claims.
Second, M&M argues that its claims for tortious interference and unfair competition
did not arise out of the BPA s because “the acts alleged” in support of those claims “all
occurred after Cambria terminated the relationship.” M&M raised this argument for the
first time in its motion for clarification after the district court granted summary judgment
on the claims. The district court rejected this argument, reasoning, based on the language
of the liability-limitation provision, that M&M was not entitled to damages for lost profits.
We agree with the district court’s reasoning. The liability-limitation provision in the BPAs
states that Cambria is not liable to M&M for “lost profits . . . however caused and on any
theory of liability arising out of this agreement, or this termination,” whether based in
contract or tort. Because the liability-limitation provision excludes Cambria’s liability for
lost profits arising from “termination,” the district court did not err by granting summary
judgment for Cambria on M&M’s counterclaims for tortious interference and unfair
competition.
Even if we assume that the district court erred by granting summary judgment based
on the language of the BPAs, any error was harmless. If an appellant shows that the district
court erred, the mere existence of that error is, by itself, insufficient to require a grant of
18
relief; the appellant must also show the district court’s error prejudiced them. See Minn. R.
Civ. P. 61 (requiring that harmless error be ignored); see also Goldman v. Greenwood,
748 N.W.2d 279, 285 (Minn. 2008) (citing this aspect of Minn. R. Civ. P. 61).
Here, M&M’s damages for recoupment are the same damages it sought for its
tortious-interference and unfair-competition claims—lost profits from customer contracts
that were pending at termination and from Cambria’s use of M&M’s customer information.
In fact, the district court instructed the jury to consider evidence of “the profits from the
disclosure of M&M confidential customer information to its competitors and profits arising
from contracts pending between M&M and its customers redirected [to] others by
Cambria.” Moreover, after considering M&M’s evidence of lost customer contracts, the
jury awarded M&M “lost profits” damages of $44,023.68.
In sum, the district court did not err by granting Cambria summary judgment on
M&M’s counterclaims for intentional interference and unfair competition. Alternatively,
any error was harmless.
III. The district court did not err by granting summary judgment on M&M’s
prior-material-breach defense.

M&M argues that the district court “found clearly erroneous facts in granting
Cambria summary judgment on M&M’s prior material breach defense.” In its
summary-judgment order, the district court stated it was undisputed that M&M would often
“r[un] late” on payments to Cambria and determined that “[a] material breach is found in
that [M&M] continuously did not pay for the performance in a timely manner.” The district
court expanded its reasoning in its order on M&M’s motion to clarify: “In deciding that
19
M&M breached the contract terms, the Court found that M&M cannot use a prior material
breach defense to any action moving forward.”
M&M argues on appeal , first, that its failure to timely pay Cambria occurred
throughout the parties’ relationship and that Cambria “did not seek summary judgment on
these grounds, . . . as it knew the parties’ course of dealing over eight years where Cambria
always accepted late payments.” We agree with Cambria that M&M’s “course of dealing”
theory is raised for the first time on appeal. It is therefore forfeited, and we do not consider
it. See Thiele v. Stich, 425 N.W.2d 580, 582 (Minn. 1988) (stating that appellate courts
need not consider arguments raised for the first time on appeal). Also, M&M is incorrect
that Cambria did not seek summary judgment based on M&M’s failure to pay. Indeed,
Cambria contended in its submissions to the district court that M&M breached the BPAs
by failing to pay “80 invoices for finished quartz surface products that M&M ordered and
received.”

Second, M&M argues that Cambria’s breach predated M&M’s breach and excused
M&M’s performance. M&M first contends that Cambria materially breached the BPAs on
May 2, 2017, by terminating the relationship “without any reasonable advance notice.”
M&M also argues that any breach of the BPAs by M&M occurred on May 10-11, 2017,
when M&M emailed Cambria stating that it would not pay its outstanding obligation to
Cambria until they agreed on damages for termination.
We reject this argument because M&M did not raise the May 10-11 emails when
opposing Cambria’s motion for summary judgment. Indeed, neither M&M’s legal
memorandum nor the district court’s order mentions the May 10 -11 emails from M&M.
20
See id. (stating that appellate courts need not consider arguments raised for the first time
on appeal). And even if we assume that Cambria breached the BPAs by failing to give
reasonable notice of termination, this breach did not occur until after M&M had breached
the BPAs by failing to make timely payments for many outstanding Cambria invoices. See
Schwickert, Inc. v. Winnebago Seniors, Ltd., 680 N.W.2d 79, 84 (Minn. 2004) (describing
prior material breach as the principle that “the remaining duties of one party to a contract
are conditioned on there being no previous uncured material failure by the other party”
(quotation omitted)). Thus, the district court did not err by rejecting M&M’s
prior-material-breach defense.
IV. The district court did not err by awarding Cambria attorney fees under the
BPAs.

During the bench trial, M&M moved under Minn. R. Civ. P. 50 for judgment as a
matter of law, contending that Cambria was not entitled to attorney fees because the
relevant provision in the BPAs was ambiguous. The BPAs state that “[i]f the account is
placed for collection, [M&M] agrees to pay all costs and expenses of collection, including
attorney’s fees, court costs and expenses.” The district court found the language
unambiguous and denied the motion, determining that “placing for collection includes
placing with [an] attorney and law firms that need to try [to] enforce their client’s right.”
The district court awarded Cambria $72,400 in attorney fees.
M&M argues on appeal that the relevant provision in the BPAs is ambiguous and
therefore “should be construed against Cambria, the undisputed drafter.” “We review de
novo a district court’s decision to deny a motion for judgment as a matter of law, applying
21
the same standard used by the district court and viewing the evidence in the light most
favorable to [the nonmoving party].” Christie v. Est. of Christie, 911 N.W.2d 833, 838 n.5
(Minn. 2018) (quotation omitted). “Whether a contract is ambiguous is a question of law
that we review de novo.” Dykes v. Sukup Mfg. Co., 781 N.W.2d 578, 582 (Minn. 2010).
“The language of a contract is ambiguous if it is susceptible to two or more reasonable
interpretations.” Id.
M&M argues that the BPAs’ provision could reasonably mean either that (1) M&M
agrees to pay for attorney fees if the account is sent to a collection agency, or (2) M&M
agrees to pay for attorney fees resulting from a lawsuit for collection. Cambria argues that
the provision is unambiguous and that “there is no reasonable interpretation of ‘placed for
collection’ that would exclude using attorneys to bring a lawsuit to collect the past- due
amount.”
We agree with the district court that the BPAs’ language is unambiguous and
provides that M&M agrees to pay for attorney fees if the “account is placed for collection,”
and an account is “placed for collection” when an attorney files suit to collect on
outstanding invoices. The district court therefore did not err by awarding Cambria attorney
fees.
V. The district court did not err in instructing the jury on recoupment damages.

Following trial, M&M moved for a new trial under Minn. R. Civ. P. 59, arguing that
the district court’s jury instructions were improper. The district court denied M&M’s
motion. M&M renews its argument on appeal. To obtain a new trial based on erroneous
jury instructions, the appellant must establish, first, that “when read as a whole, the
22
instruction materially misstates the law,” Domagala v. Rolland, 805 N.W.2d 14, 29 (Minn.
2011), and second, that the error “had a reasonable likelihood of affecting the jury’s
verdict,” Poppler v. Wright Hennepin Coop. Elec. Ass’n, 834 N.W.2d 527, 537 (Minn.
App. 2013) (quotation omitted), aff’d, 845 N.W.2d 168 (Minn. 2014). “The district court
has broad discretion in determining jury instructions and [appellate courts] will not reverse
in the absence of abuse of discretion.” Hilligoss v. Cargill, Inc., 649 N.W.2d 142, 147
(Minn. 2002).
The district court instructed the jury that M&M was allowed to recover “damages
for recoupment,” including lost profits resulting from the termination of the parties’
agreement.
6 The jury instructions also stated that the amounts awarded as damages must
be proved with “reasonable certainty.” See Pietrzak v. Eggen, 295 N.W.2d 504, 507 (Minn.
1980) (“In a civil action the plaintiff has the burden of proving future damages to a
reasonable certainty.”).
M&M argues that the district court “legally erred in its jury instructions on M&M’s
damages” and that M&M is entitled to a new trial. First, M&M contends that the district
court erred by instructing the jury that damages include only “profits arising from contracts
pending between M&M and its customers redirected by Cambria to others for a reasonable
time following the termination of the parties’ relationship.” M&M asserts that the “jury did
not understand how to calculate” damages because “[t]he incorrect jury instruction

6 See supra note 5.
23
essentially told the Jury to limit any award to M&M to just the amount of money that M&M
would have made on the pending jobs at termination.”
We are not persuaded because M&M is viewing the challenged jury instruction in
isolation. The jury instructions, read as a whole, cure the deficiency argued by M&M. The
district court instructed the jury that damages “may also include the profits from the
disclosure of M&M’s confidential customer information to its competitors.” The language
allowed t he jury to consider M&M’s theory that it was entitled to recover “lost future
profits even for contracts not pending at termination.”
Second, M&M argues that the district court erred by rejecting M&M’s proposed
jury instruction allowing it to recover “[e]xpenses in the form of capital investments.”
M&M explains that it was prejudiced by this error because the parties “essentially
stipulated [to the] amount of investment by M&M” as “$4 million on unrecouped
expenses.” We disagree. The district court instructed the jury: “[I]f you find that M&M
made continuing investments in direct reliance on its business relationship with Cambria,
for which it did not have a reasonable amount of time to recoup, those unrecouped
expenditures, investments, and profit[s] may be recovered.” Because the jury instruction
allowed the jury to determine whether M&M was damaged by “unrecouped expenditures,
investments, and profit[s],” we conclude that the jury was properly instructed on the
evidence submitted.
Alternatively, Cambria argues that any error in the instructions was harmless. We
agree that the record includes evidence that M&M recouped much of its expenditures based
on its “net profits . . . on the sale of Cambria products.” Cambria’s damages expert testified
24
that M&M’s unrecouped expenditures were operating expenses rather than capital
expenditures or investments. In striking contrast, M&M’s damages expert testified that she
did not have an opinion whether M&M’s investments or capital expenditures were
recouped.
In sum, the district court did not abuse its discretion by instructing the jury on
recoupment damages because M&M failed to establish that the district court materially
misstated the law or that M&M was prejudiced by any error.
VI. M&M may yet seek prejudgment interest.

M&M’s brief to this court contends that the district court erred by not awarding it
prejudgment interest allowed by statute. This is incorrect. In its amended order for entry of
judgment, the district court determined that M&M was entitled to “prejudgment interest
calculated from October 13, 2017, and the Court Administrator shall enter judgment
accordingly.” A party may apply for preaward or prejudgment interest under Minn. Stat.
§ 549.09, subd. 1(b) (2022), from the date of written notice of claim. M&M filed its answer
and counterclaim on October 13, 2017, giving Cambria written notice of its claims.
Cambria has not challenged the prejudgment-interest award on appeal.
Despite the district court’s finding and order on prejudgment interest, the court
administrator did not include an amount of prejudgment interest when it entered judgment.
On appeal, M&M contends that we must reverse. We disagree because M&M may yet seek
prejudgment interest. “Clerical mistakes in judgments . . . arising from oversight or
omission may be corrected by the court at any time upon its own initiative or on the motion
of any party and after such notice, if any, as the court orders.” Minn. R. Civ. P. 60.01
25
(emphasis added). Further, “[d]uring the pendency of an appeal, such mistakes may be so
corrected with leave of the appellate court.” Id. Because M&M is entitled to the
prejudgment interest awarded by the district court and M&M can move to correct a clerical
mistake “at any time,” we need not reverse.
VII. The district court did not err by awarding Cambria costs and disbursements
based on its unaccepted offer of judgment under Minn. R. Civ. P. 68.03.

In its order for entry of judgment, the district court awarded Cambria $77,661.76
for costs and disbursements under Minn. R. Civ. P. 68.03. On appeal, M&M argues that
the district court erred in awarding this sum because “M&M is aware of no case that has
awarded costs under Rule 68 where the offer itself contained no dollar figure.” Appellate
courts “review legal determination s regarding Minn. R. Civ. P. 68 offers of judgment de
novo.” Collins v. Minn. Sch. of Bus., Inc., 655 N.W.2d 320, 324 (Minn. 2003).
On June 22, 2018, Cambria served a total-obligation offer of judgment on M&M
under Minn. R. Civ. P. 68.01(d). Among other things, Cambria’s offer of judgment
proposed to settle and dismiss all claims with prejudice if M&M dismissed all
counterclaims with prejudice. M&M did not accept the offer. Minn. R. Civ. P. 68.03(b)(2)
provides that if “the relief awarded is less favorable to the defendant-offeree than the
[unaccepted rule 68.01] offer, the defendant-offeree must pay . . . an amount equal to the
plaintiff-offeror’s costs and disbursements incurred after service of the offer.” “The
purpose of Minn. R. Civ. P. 68.01-.03 is to encourage settlement.” Althaus v. Krueger,
929 N.W.2d 907, 910 n.1 (Minn. App. 2019).
26
An offer of judgment for the mutual dismissal of claims and counterclaims is a
zero-dollar offer. The money judgment that Cambria ultimately obtained is less favorable
to M&M than the zero dollars that M&M would have paid had it accepted Cambria’s offer
of judgment. Because Cambria’s rule 68.01 offer to M&M was a zero -dollar offer and
Cambria was awarded more than $250,000 in damages plus attorney fees after trial, the
district court did not err in awarding Cambria costs and disbursements under rule 68.03.
VIII. The district court did not abuse its discretion by sanctioning M&M’s attorney.

The district court sanctioned M&M’s attorney, Leland P. Schermer, for violation of
a protective order. Schermer challenges that determination. The facts of this portion of the
consolidated appeals are taken from the record underlying the district court’s October 21,
2019 order from an appeal of a special master’s determination that M&M’s counsel
violated an order protecting confidential information.
On March 2, 2018, the parties agreed to a protective order that included specific
provisions prohibiting the disclosure of confidential documents and information. The
agreement stated that “[a]ll confidential documents, along with information contained in
the documents, shall be used solely for the purpose of this action, and no person receiving
such documents shall, directly or indirectly, . . . communicate in any way the documents
or their contents to any person other than” the parties, the representing attorneys, or court
staff. (Emphasis added.)
On April 23, 2019, M&M’s attorneys deposed Cambria’s chief financial officer
(CFO). Cambria designated this testimony as confidential, as provided in the protective
order. In the following days, the special master conducted an informal telephone
27
conference and ruled on a discovery issue. This oral ruling described the CFO’s testimony
and was later transcribed. After receiving the transcript of the special master’s ruling and
waiting 14 days, Schermer disclosed the transcribed ruling, including the special master’s
description of the CFO’s testimony, to “another law firm who published the protected
information . . . to staff of the International Trade Commission.”
Cambria moved to sanction Schermer, and in a June 17, 2019 order , the special
master determined that Schermer violated the protective order. Schermer appealed to the
district court, which held an evidentiary hearing. In an October 21, 2019 order, the district
court denied M&M’s appeal of the special master’s determination but reduced the
attorney-fee award from $40,546.00 to $26,801.50.
On appeal, Schermer argues that the district court abused its discretion. “The district
court’s discovery-related orders will not be disturbed absent an abuse of discretion.”
Frontier Ins. Co. v. Frontline Processing Corp., 788 N.W.2d 917, 922 (Minn. App. 2010),
rev. denied (Minn. Dec. 14, 2010); see also Carlson v. SALA Architects, Inc., 732 N.W.2d
324, 331 (Minn. App. 2007) (“We will not reverse the district court’s decision on attorney
fees absent an abuse of discretion.”), rev. denied (Minn. Aug. 21, 2007).
Schermer contends that the transcript of the special master’s ruling was not
confidential because he waited 14 days and Cambria did not designate the transcript in the
special master’s ruling as confidential. 7 Cambria argues that the CFO’s testimony was

7 We are not persuaded that Schermer’s 14-day wait to disclose the special master’s ruling
is relevant to the district court’s decision to award sanctions. The protective order includes
a 14-day provision, which states that documents produced by third parties may be
designated confidential and “shall be treated as confidential for a period of 14 days from
28
designated as confidential and that, based on the terms of the protective order, the
information in the CFO’s testimony was therefore confidential. We agree that the
protective order prohibits the disclosure of confidential documents, such as deposition
transcripts, and the confidential information contained in a deposition, such as a deponent’s
testimony. The protective order states that “[a]ll confidential documents, along with the
information contained in the documents, shall be used solely for the purpose of this action.”
By its terms, the protective order precluded Schermer’s disclosure to an outside law firm
of confidential information drawn from the deposition designated as confidential, the
description of that testimony by the special master, and the resulting transcript of
confidential information discussed during the discovery conference with the special
master.
8
As the district court stated, Schermer
took the very narrow view that absent a specific designation of
the hearing [in front of the special master] , he could disclose
the hearing transcript to another law firm for use against
Cambria in a hearing before the International Trade
Commission. Defense counsel risked—perhaps better stated
gambled— that he could disclose the information for whatever
benefit he could get for his client.

the date o f their production, and during that period any Party may designate such
documents as confidential.” Neither the CFO’s deposition nor the transcript of the special
master’s ruling is a document produced by a third party.

8 We observe that, on appeal, no one has raised a challenge to the protective order itself
and that Schermer’s arguments focus on the interpretation of that order.
29
Because the district court’s decision was supported by the record and the terms of the
protective order to which the parties agreed, the district court did not abuse its discretion
by determining that Schermer violated the protective order.
DECISION
We resolve eight issues in this hard-fought business dispute. First, we conclude that
under the MFA, a franchise fee does not include an agreement to purchase goods at a “bona
fide wholesale price,” even if the contract between the parties sold fabricated or
custom-made goods, when, as here, the predominant purpose of the parties’ contract was
for a finished product and not services. Thus, M&M’s payments to Cambria for fabricated
quartz countertops were not a franchise fee under the MFA, and the district court did not
err in granting summary judgment to Cambria on M&M’s MFA counterclaim.
Second, we determine that the district court did not err by granting summary
judgment to Cambria on M&M’s counterclaims for tortious interference and unfair
competition. Third, we conclude that the district court did not err by granting Cambria
partial summary judgment on its breach-of -contract claims and rejecting M&M’s
prior-material-breach defens e. Fourth, the district court did not err by denying M&M’s
motion for judgment as a matter of law and awarding Cambria attorney fees under the
BPAs. Fifth, the district court did not abuse its discretion in instructing the jury on M&M’s
recoupment damages.
Sixth, we agree with M&M that it is entitled to the prejudgment interest awarded by
the district court. We also conclude that M&M may seek to correct a clerical error in the
judgment at any time as provided in Minn. R. Civ. P. 60.01.
30
Seventh, the district court did not err by awarding Cambria costs and disbursements
based on Cambria’s unaccepted offer under Minn. R. Civ. P. 68.01 to mutually dismiss all
claims. Cambria’s offer of judgment was to settle for zero dollars . Because the relief
awarded against M&M is less favorable to it than Cambria’s zero-dollar offer, Cambria
may recover costs and disbursements under Minn. R. Civ. P. 68.03 . Finally, the district
court did not abuse its discretion by sanctioning Schermer for violating the protective order.
Affirmed.