General Mills Operations, LLC v. Five Star Custom Foods, Ltd.

845 F. Supp. 2d 975, 2012 WL 652795, 2012 U.S. Dist. LEXIS 37117
CourtDistrict Court, D. Minnesota
DecidedFebruary 24, 2012
DocketCiv. No. 10-15 (RHK/JJG)
StatusPublished
Cited by10 cases

This text of 845 F. Supp. 2d 975 (General Mills Operations, LLC v. Five Star Custom Foods, Ltd.) is published on Counsel Stack Legal Research, covering District Court, D. Minnesota primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
General Mills Operations, LLC v. Five Star Custom Foods, Ltd., 845 F. Supp. 2d 975, 2012 WL 652795, 2012 U.S. Dist. LEXIS 37117 (mnd 2012).

Opinion

MEMORANDUM OPINION AND ORDER

RICHARD H. KYLE, District Judge.

This matter is before the Court on the Motion of Plaintiff General Mills Operations, LLC (“General Mills”) for entry of Judgment against Defendant Five Star Custom Foods, Ltd. (“Five Star”). For the reasons that follow, the Motion will be granted.

[977]*977This is a breach-of-contract action in which General Mills sued Five Star, one of its meat suppliers, following a nationwide recall of certain Five Star beef products in February 2008. At summary judgment, the Court determined that Five Star breached a contract with General Mills and that General Mills was entitled to damages for that breach, including an award of reasonable attorneys’ fees. Gen. Mills Operations, LLC v. Five Star Custom Foods, Ltd., 789 F.Supp.2d 1148, 1155-60 (D.Minn.2011) (Kyle, J.). Familiarity with the factual and procedural background in this action is presumed.

Following summary judgment, the parties participated in a settlement conference before Magistrate Judge Graham. The conference proved largely successful; the parties stipulated to the damages General Mills had incurred as a result of the breach ($1,473,564), as well as the reasonable amount of attorneys’ fees it had incurred up to that point ($150,000). However, they could not agree on the amount of prejudgment interest to which General Mills was entitled, and they agreed to submit that issue to the Court for resolution.

The parties have now submitted memoranda on this issue. Notably, it is undisputed that General Mills may recover prejudgment interest from Five Star under Minnesota Statutes § 549.09. (See Mem. in Opp’n at 1 (“Five Star ... does not dispute that an award of prejudgment interest pursuant to Minn.Stat. § 549.09 is appropriate in this case.”).)1 Two items are in dispute, however: (1) the date on which pre-judgment interest began to accrue and (2) the appropriate interest rate. The Court addresses these issues in turn below.

Accrual. Under Section 549.09, a judgment creditor is entitled to prejudgment interest “from the time of the commencement of the action ... or the time of a written notice of claim, whichever occurs first.” Minn.Stat. § 549.09, subd. 1(b). General Mills argues that it provided a “written notice of claim” to Five Star by letter dated May 27, 2008. (Gilbertson Aff. Ex. 2.) That letter advised Five Star that General Mills had “experienced significant expenses in connection with [Five Star’s] contaminated beef products” and, as of the letter’s date, “estimate[d] the following damages resulting from Five Star’s contaminated product.” (Id.) The letter then listed several categories of expenses allegedly incurred by General Mills due to the recall, including “payments to customers for contaminated product,” “cost to destroy inventory on hand,” and “customer charges/reimbursed expenses,” which totaled $1,400,000. While the letter noted that certain costs might not be fully included in the $1.4 million and could “continue to accrue,” General Mills maintained that it was “willing to accept ... prompt payment of $1,400,000 ... in full settlement of this issue.” (Id.)

Five Star argues that this letter did not trigger the accrual of prejudgment interest under Section 549.09. It argues that a “written notice of claim ... is insufficient to start the clock on prejudgment interest unless it is specific enough to permit the [978]*978liable party to evaluate and quantify its liability, thereby encouraging early settlement.” (Mem. in Opp’n at 4.) Because the letter here merely provided an “estimate” of General Mills’ damages, and because it included no documentation to support that $1.4 million “estimate,” it contends the letter “was too speculative, vague, and unsubstantiated” to qualify as a “written notice of claim” under Section 549.09. (Id. at 5-6.) The Court disagrees.

Although the phrase “written notice of claim” is not defined in Section 549.09, it is both clear and unambiguous. “Claim” means “[t]o demand as one’s own or as one’s right; to assert; to urge; to insist.” Black’s Law Dictionary 247 (6th ed. 1990); accord, e.g., The American Heritage Dictionary 277 (2d coll. ed. 1985) (defining “claim” as “[t]o demand or ask for as one’s own or one’s due; assert one’s right to”). The phrase “written notice of claim,” therefore, simply means a demand for payment (or other similar assertion) contained in a writing. Accordingly, “Minnesota courts have frequently described the required notice under Minn. Stat. § 549.09 as a demand for payment.” Flint Hills Res. LP v. Lovegreen Turbine Servs., Inc., Civ. No. 04-4699, 2008 WL 4527816, at *9 (D.Minn. Sept. 29, 2008) (Tunheim, J.) (collecting cases).

Here, General Mills’ May 27, 2008 letter, fairly construed, was a demand for payment. It provided Five Star with a rough calculation (by category) of General Mills’ damages and, despite the fact that those damages could potentially increase, indicated that General Mills was “willing to accept ... prompt payment of $1,400,000” in “full settlement of this issue.” General Mills further reserved the right to seek additional damages in the event the parties were “unable to promptly resolve” the dispute. Because the letter sufficiently advised Five Star of the nature of General Mills’ damages, see Indep. Sch. Dist. 441 v. Bunn-O-Matic Corp., No. C0-96-594, 1996 WL 689768, at *10 (Minn.Ct.App. Dec. 3, 1996), and because it demanded “prompt payment” to resolve the issue with finality, it was a written demand and, accordingly, constituted a “written notice of claim” under Section 549.09. See Flint Hills, 2008 WL 4527816, at *9.

Five Star contends, however, that Minnesota courts have “decline[d] to award prejudgment interest on claims for unliquidated damages where the liable party cannot determine his liability in advance.” (Def. Mem. at 4-5.) Yet, Section 549.09 does not require that damages be calculable at the time a written demand is made. See, e.g., Schwickert, Inc. v. Winnebago Seniors, Ltd., 680 N.W.2d 79, 88 (Minn.2004); Skifstrom v. City of Coon Rapids, 524 N.W.2d 294, 295-97 (Minn.Ct.App.1994) (pre-judgment interest available for pain and suffering and emotional distress); see also Tri State Grease & Tallow Co. v. BJB, LLC, No. A10-1560, 2011 WL 2518954, at *7-8 (Minn.Ct.App. June 27, 2011) (prejudgment interest “is mandatory,” even for damages not yet incurred at time action is commenced). This is because prior to 1984, Section 549.09 permitted prejudgment interest only where damages were “readily ascertainable,” but the Minnesota legislature amended the statute that year to provide for prejudgment interest “on any judgment or award.” Simeone v. First Bank Nat’l Ass’n, 73 F.3d 184, 191 (8th Cir.1996) (emphasis added). As a result, courts repeatedly have held that prejudgment interest under Section 549.09 is available “irrespective of a defendant’s ability to ascertain the amount of damages for which he might be liable.” Id. (quoting Lienhard v. State, 431 N.W.2d 861, 865 (Minn.1988)); accord, e.g., Children’s Broad., 357 F.3d at 869-70; Archer Daniels Midland Co. v. Aon Risk Servs., [979]*979Inc. of Minn., Civ. No.

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845 F. Supp. 2d 975, 2012 WL 652795, 2012 U.S. Dist. LEXIS 37117, Counsel Stack Legal Research, https://law.counselstack.com/opinion/general-mills-operations-llc-v-five-star-custom-foods-ltd-mnd-2012.