The Minnesota Supreme Court, in a 5-2 decision, has held that the Minnesota State Constitution provides a right to a jury trial on a claim for the recovery of attorney fees under a contract. United Prairie Bank-Mountain Lake v. Haugen Nutrition & Equip., LLC, 813 N.W.2d 49, 63 (Minn. 2012). This decision makes Minnesota the only state to find a constitutional right to a jury trial arising from a contractual attorney fees clause. Until this decision, claims to recover attorney fees based on a contractual attorney fees clause were decided by judges, not juries.

United Prairie Bank-Mountain Lake has broad implications for lenders and creditors who have agreements that include attorney fees clauses. Now, borrowers and guarantors may be able to force lenders and creditors to establish their right to attorney fees (including the reasonableness of the amounts being sought and the amount of fees to be awarded) before a jury. Lenders and creditors should analyze their existing jury trial waiver clauses to determine if these clauses are broad enough to foreclose any viable arguments that the jury trial waivers in the existing agreements do not include a waiver of the right to a jury trial on attorney fees.

We welcome the opportunity to discuss strategies and options that you can use to account for this change in Minnesota law, and will examine this decision further in the December 15, 2012 issue of the Bank & Finance Newsletter.