Advanced Engineering and Environmental Services, LLC, et al., Plaintiff,

This opinion is nonprecedential except as provided by
Minn. R. Civ. App. P. 136.01, subd. 1(c).

STATE OF MINNESOTA
IN COURT OF APPEALS
A25-1734

Advanced Engineering and Environmental Services, LLC, et al.,
Plaintiff,

vs.

Gaughan Companies, et al.,
Appellants,

Frattalone Companies, Inc., et al.,
Defendants,

Greystone Construction Company,
Respondent.

Filed May 26, 2026
Affirmed in part, reversed in part, and remanded
Ross, Judge

Scott County District Court
File No. 70-CV-22-13545

John J. Steffenhagen, Anthony A. Remick, Brian W. Nelson, Hellmuth & Johnson, PLLC,
Edina, Minnesota (for appellants)

John G. Patterson, Aron J. Frakes, Fredrikson & Byron, P.A., Minneapolis, Minnesota (for
respondent)

Considered and decided by Ede, Presiding Judge; Ross, Judge; and Jesson, Judge.
∗

∗ Retired judge of the Minnesota Court of Appeals, serving by appointment pursuant to
Minn. Const. art. VI, § 10.
2
NONPRECEDENTIAL OPINION
ROSS, Judge
Shakopee Apartments LLC contracted with, but was accused of failing to pay,
Greystone Construction Company for the construction of an apartment building. The
allegations resulted in an arbitration award in Greystone’s favor, which the district court
confirmed in an order that also granted Greystone’s motion to set a schedule for statutory
costs, disbursements, and attorney fees. Shakopee Apartments challenges part of that
decision in this appeal, arguing that the district court should not have allowed Greystone
to proceed with its motion for statutory attorney fees and that the arbitrator exceeded the
scope of his authority in granting Greystone’s claim for pre-award interest. We affirm in
part and reverse in part because we conclude that, although the arbitrator acted within his
authority in awarding the interest, the arbitration award foreclosed Greystone from later
seeking attorney fees under the mechanic’s lien statute in the district court. We remand for
further proceedings for the district court to determine the appropriate amount of postaward,
uncontested attorney fees.
FACTS
Appellant Shakopee Apartments LLC contracted with respondent Greystone
Construction Company in 2020 to construct an apartment building. An engineering
company that also worked on the project brought a mechanic’s lien foreclosure action
naming both Shakopee Apartments and Greystone as defendants since Shakopee was the
property owner and Greystone held a mechanic’s lien on the property. Greystone filed a
cross-claim against Shakopee Apartments, alleging failure to pay under the contract terms,
3
seeking to foreclose its own mechanic’s lien. The district court stayed the action pending
completion of arbitration based on the arbitration clauses in the parties’ contracts.
During the arbitration administered by the American Arbitration Association
(AAA), Greystone sought an award of $1,413,027 for Shakopee Apartments’ alleged
nonpayment. Greystone’s arbitration demand specifically indicated that it also sought an
award for attorney fees, and its revised summary of its claims specifies “interest on delayed
payments and on its claims at the rate of 8% per annum as allowed by the Contract.”
Greystone’s prehearing arbitration memorandum stated that it “respectfully requests that it
be awarded its full compensatory damages, plus interest, Arbitrator fees, attorneys’ fees,
expert witness fees, disbursements, and costs,” adding that it intended to “submit a separate
fee petition and affidavit (including invoices) following the hearing.” After the hearing,
Greystone submitted its posthearing brief, requesting the following procedure as it relates
to its claim for damages, costs, and attorney fees: “that the Arbitrator issue a Partial Final
Award awarding [Greystone] the full amount of its compensatory damages. [Greystone]
then requests 21 days to file a fee petition and affidavit (including invoices) with respect
to its attorneys’ fees, expert fees, and disbursements.” Greystone did not specify that it
sought pre-award interest on its claims in addition to contractual interest on late payments
until its posthearing arbitration memorandum, in which it requested pre-award interest on
its additional claims under an AAA rule.
The arbitrator issued his final awar d, obligating Shakopee Apartments to pay
Greystone $562,269.94, which included pre -award interest and was followed by this
directive regarding the award’s completeness: “This Award is in full consideration of all
4
claims, counterclaims and third-party claims and motions presented. All other claims,
counterclaims, third-party claims, motions and requests for relief by any Party are denied
in their entirety.”
Greystone moved the district court to lift the stay, confirm the arbitration award,
and set a schedule for it to move for costs, disbursements, and attorney fees under the
mechanic’s lien statute. Shakopee Apartments moved to modify, correct, or partially vacate
the arbitration award and objected to Greystone’s request for costs and attorney fees. The
district court concluded that the arbitrator’s award did not preclude Greystone from moving
the district court for costs and attorney fees under the mechanic’s lien statute in addition to
postaward attorney fees and that the arbitrator did not exceed his authority in granting
Greystone pre-award interest. The district court confirmed the award and set a schedule for
Greystone to obtain statutory costs and attorney fees.
Shakopee Apartments appeals.
DECISION
Shakopee Apartments argues on appeal that the district court erroneously permitted
Greystone to move for attorney fees and erroneously concluded that the arbitrator acted
within his authority by granting pre-award interest. We address both arguments.
I
We address the attorney-fee issue by first resolving the threshold question of
whether the issue is properly before us, given that the district court entered judgment on its
order confirming the arbitration award and allowing Greystone to move for costs and
attorney fees before awarding any costs or fees. Because deciding the issue of costs and
5
fees now best serves the interests of justice, we have decided to address the district court’s
fee decision on the merits even though it is not independently appealable. A party may
appeal a final judgment. Minn. R. Civ. App. P. 103.03(a). “Entry of judgment shall not be
delayed for the taxation of costs, and the omission of costs shall not affect the finality of
the judgment.” Minn. R. Civ. P. 58.0 1. A pending determination of statutory costs and
disbursements—including attorney fees under the mechanic’s lien statute—does not affect
the finality of a judgment because those matters are “not a separate claim independent of
the merits of the action.” T.A. Schifsky & Sons, Inc. v. Bahr Constr., LLC, 773 N.W.2d 783,
789 (Minn. 2009). But “[t]here is no appeal from an order awarding attorney fees; instead,
the proper appeal lies from the judgment or amended judgment entered on the order.” Id.
at 789–90. A district court’s nonappealable ruling that a party is entitled to costs is not
rendered appealable by joining it with an appealable order. Spaeth v. City of Plymouth, 344
N.W.2d 815, 825–26 (Minn. 1984). The district court’s order allowing Greystone to move
for costs and attorney fees is therefore not appealable.
Although the order is not appealable because no final judgment has been rendered
awarding costs and fees, we will consider the issue under Minnesota Rule of Civil
Appellate Procedure 103.04, which allows us to “review any other matter as the interest of
justice may require.” We do so because the appeal is otherwise properly before us, the
parties have fully briefed the issues, and judicial economy is met by avoiding a piecemeal
approach. See Kuhn v. Dunn, 8 N.W.3d 633, 640 (Minn. 2024) (reviewing an adequately
briefed issue under rule 103.04 in the interest of judicial economy); Bush Terrace
Homeowners Ass’n, Inc. v. Ridgeway, 437 N.W.2d 765, 771–72 (Minn. App. 1989) (noting
6
that review of a nonappealable order awarding attorney fees under rule 103.04 was “proper
in the interests of justice by avoiding the time and expense of a subsequent appeal after the
order for attorney fees has been entered as a judgment”), rev. denied (Minn. June 9, 1989).
We turn to the merits of the issue.
Shakopee Apartments argues that the final arbitration award precluded Greystone
from seeking attorney fees in the district court under the mechanic’s lien statute. It also
contends that we review this issue de novo because we are addressing a matter of law
bearing on the district court’s confirmation of the arbitration award. See MedCenters
Health Care, Inc. v. Park Nicollet Med. Ctr., 430 N.W.2d 668, 672 (Minn. App. 1988),
rev. denied (Minn. Apr. 26, 1989). Greystone counters that we should review the decision
only for an abuse of discretion, because that is the standard that applies to reviewing
attorney-fee awards. See Andrew L. Youngquist, Inc. v. Cincinnati Ins. Co., 625 N.W.2d
178, 188 (Minn. App. 2001). We conclude that our review in this case is de novo. Greystone
argues that the district court correctly determined that the arbitrator never ruled on the costs
and attorney-fee request. Addressing that argument requires us to determine whether the
district court correctly interpreted the arbitrator’s decision, a task that involves our de novo
consideration. See In re Pamela Andreas Stisser Grantor Tr., 818 N.W.2d 495, 502 (Minn.
2012) (“We also review de novo a district court’s interpretation of a written document.”).
Our de novo review leads us to reverse for the following reasons.
We are convinced that the arbitration award precluded Greystone from seeking
attorney fees under the mechanic’s lien statute in the district court. An arbitration award
has preclusive effect. See Aufderhar v. Data Dispatch, Inc., 452 N.W.2d 648, 651 –52
7
(Minn. 1990) (applying collateral estoppel to an attempt to relitigate issues decided in
arbitration); Quam v. United Fire & Cas. Co., 440 N.W.2d 131, 132 (Minn. App. 1989)
(district court did not err in giving res judicata effect to arbitrator’s determination), rev.
denied (Minn. July 12, 1989). At all key stages of the arbitration, Greystone specifically
requested an award that included costs and attorney fees. The arbitrator’s final decision,
which awarded no costs or attorney fees, expressly declared it self to be “in full
consideration of all claims, counterclaims and third-party claims and motions presented”
and established that “[a]ll other claims, counterclaims, third-party claims, motions and
requests for relief by any Party are denied in their entirety.” The arbitrator’s decision
therefore unambiguously denied Greystone’s request for costs and fees.
We are not persuaded otherwise by Greystone’s assertion that it never intended to
submit the issue of costs and attorney fees to the arbitrator. Greystone supports this
assertion primarily based on Stiglich Construction, Inc. v. Larson, 621 N.W.2d 801 (Minn.
App. 2001), rev. denied (Minn. Mar. 27, 2001). Greystone’s reliance on Stiglich is
misplaced. In that case, we held that a litigant was not precluded from seeking attorney
fees in district court under the mechanic’s lien statute after having failed to raise the issue
in arbitration. Stiglich, 621 N.W.2d at 803. It is true that, like the Stiglich parties, the parties
here were litigating a dispute over a contract that included not only an arbitration clause
but also a provision that reserve d the litigants’ right to pursue purely statutory claims in
district court. But unlike Greystone, the Stiglich appellant never requested costs and an
attorney-fee award from the arbitrator, and there was no question that the arbitrator never
considered it. Id. at 802. The issue in Stiglich was only whether the arbitration clause
8
prevented the appellant from seeking relief for statutory claims not pursued in arbitration.
Id. at 803. Stiglich therefore offers Greystone no support.
And the record also leads us to reject Greystone’s factual assertion that it intended
to reserve its right to pursue its claim for costs and attorney fees in the district court rather
than seek them in the arbitration itself. Greystone made its claim for costs and fees both at
the beginning and end of the arbitration hearing. It first included a claim for attorney fees
in its arbitration demand. And then its posthearing arbitration brief specified that it was
asking the arbitrator to issue “a Partial Final Award awarding [Greystone] the full amount
of its compensatory damages” and “then” asked for “21 days to file a fee petition and
affidavit (including invoices) with respect to its attorneys’ fees, expert fees, and
disbursements.” That Greystone asked the arbitrator to first determine its compensatory
damages and then follow a process to determine costs and attorney fees belies its after-the-
fact assertion that it was reserving the issue for the district court, rather than presenting it
to the arbitrator. We acknowledge that Greystone never presented to the arbitrator evidence
detailing the amount of costs and attorney fees it was seeking, but the record conclusively
shows that it unsuccessfully asked the arbitrator for the opportunity to do so.
We are unconvinced by Greystone’s contention that the arbitrator never ruled on its
request for costs and fees, highlighting the lack of any reference to that issue in the final
arbitration award and accompanying memorandum. “Arbitrators are not required to give
reasons for their decisions.” W. Nat’l Ins. Co. v. Thompson, 797 N.W.2d 201, 208 n.3
(Minn. 2011) . We will not speculate as to the arbitrator’s reason for his silence on the
plainly stated request. We conclude that the final arbitration award precluded Greystone
9
from seeking attorney fees in the district court because Greystone presented the claim to
the arbitrator and the arbitrator expressly denied all claims excluded from the award. And
when an arbitration award denies a request for attorney fees, the issue is not later “open for
judicial determination” even if we “might have ruled differently.” Morrison v. N. States
Power Co., 491 N.W.2d 675, 677, 678 (Minn. App. 1992), rev. denied (Minn. Jan. 15,
1993). We therefore reverse the district court on this issue.
II
We next address Shakopee Apartments’ argument that the arbitrator exceeded the
scope of his authority under the parties’ contract. We review de novo whether an arbitrator
exceeded the scope of his authority. Seagate Tech., LLC v. W. Digit . Corp., 854 N.W.2d
750, 760 (Minn. 2014). Shakopee Apartments argues that the arbitrator exceeded the scope
of his authority by granting Greystone’s request for pre-award interest because the parties’
contract provided only for contractual interest on late payments in the amount of 8%, not
pre-award interest on other claims. It similarly contends that the contract’s arbitration
clause limits the scope of arbitration only to demanded claims. The contention relies on the
contract language, “The party filing a notice of demand for arbitration must assert in the
demand all Claims then known to that party on which the arbitration is permitted to be
demanded.” Shakopee Apartments argues that because Greystone demanded only
contractual interest initially, and only later added a claim for pre- award interest in its
posthearing brief, the arbitrator should not have considered the later -added claim. For the
following reasons, we hold that the arbitrator acted within his authority in awarding
Greystone pre-award interest.
10
We begin with a heavy presumption against Shakopee Apartments’ argument.
“[E]very reasonable presumption is to be exercised in favor of the finality and validity of
the arbitration award.” Peggy Rose Revocable Tr. v. Eppich, 640 N.W.2d 601, 606 (Minn.
2002). An arbitration award will be set aside only when the party seeking to vacate it proves
that the arbitrator “clearly exceeded” his authority. Seagate, 854 N.W.2d at 760 –61. We
look to the parties’ arbitration agreement to determine the scope of the arbitrator’s
authority. State, Off. of State Auditor v. Minn. Ass’n of Pro. Emps., 504 N.W.2d 751, 755
(Minn. 1993). The parties’ contract authorizes the arbitrator to determine pre-award interest
because its arbitration clause expressly incorporates the AAA rules, stating that arbitration
“shall be in accordance with its Construction Industry Arbitration Rules of the American
Arbitration Association.” And AAA rule R -48(d) provides that “[t]he award of the
arbitrator may include . . . interest at such rate and from such date as the arbitrator may
deem appropriate.” When an arbitration clause incorporates a particular set of rules, the
arbitrator does not exceed the scope of his powers by granting relief provided for in those
rules. See Seagate, 854 N.W.2d at 763 (upholding an arbitrator’s imposition of sanctions
under the AAA rules because they were incorporated into the contract); Kilcher v. Dale ,
784 N.W.2d 866, 870 (Minn. App. 2010) (“The arbitration agreements here state that
‘disputes will be settled by arbitration in accordance with the rules, then established, of
[FINRA]’ . . . . [T]he agreements incorporate the provisions of the FINRA rules.”).
We add that Shakopee Apartments’ assertion that Greystone demanded contractual
interest only on late payments is incorrect. Greystone’s arbitration demand indicated
generally that it sought “[i]nterest.” And it requested “interest on delayed payments and on
11
its claims at the rate of 8% per annum as allowed by the Contract” in its summary of claims.
(Emphasis added.) We construe this to indicate that Greystone was demanding interest on
all its claims, not merely the contractually agreed-upon interest specific to delayed
payments. Its usage of the phrase “as allowed by the Contract” implies only that the interest
demanded be permitted under the contract’s terms, not that it specifically referr ed to
contractual interest and excluded pre-award interest. The arbitrator did not exceed his
power in granting Greystone’s request for pre-award interest, and the district court did not
erroneously deny Shakopee Apartments’ motion to vacate on that basis.
On remand, the district court shall determine only the appropriate amount of
uncontested postaward attorney fees, but, consistent with this opinion, may not award
Greystone attorney fees under the mechanic’s lien statute.
Affirmed in part, reversed in part, and remanded.