Opinion
No. A04-738.
Filed December 7, 2004.
Appeal from the District Court, Freeborn County, File No. C2-02-409.
Don A. Johnson, Phillip A. Kohl III, Christian Peterson, P.A., (for respondent)
David F. Frundt, Frundt Johnson, Ltd., (for appellant)
Considered and decided by Klaphake, Presiding Judge, Harten, Judge, and Stoneburner, Judge.
This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (2002).
UNPUBLISHED OPINION
Pursuant to a district court order, appellant Kinseth Hospitality Companies served as receiver of a motel that was subsequently purchased at a foreclosure sale by respondent Donald Mehring. Following redemption of the property, Kinseth was compensated according to the terms of the receiver-appointment order, but the district court denied in its entirety Kinseth's claim for out-of-pocket expenses. Kinseth appeals from the district court's judgment.
Because the district court did not abuse its discretion in denying Kinseth's claim for out-of-pocket expenses, we affirm.
DECISION
The appointment of a receiver is an equitable remedy, and the district court exercises its discretion in receivership proceedings. Minn. Hotel Co., Inc. v. ROSA Dev. Co., 495 N.W.2d 888, 893 (Minn.App. 1993) (citing Asleson v. Allison, 188 Minn. 496, 500, 247 N.W. 579, 580 (1933)). We will reverse a district court's grant of equitable relief only when it has clearly abused its discretion. Nadeau v. County of Ramsey, 277 N.W.2d 520, 524 (Minn. 1979). "Equity follows the law, and a court of equity will not disregard statutory law or grant relief prohibited thereby." Kingery v. Kingery, 185 Minn. 467, 470, 241 N.W. 583, 584 (1932). At the termination of a receivership, Minnesota law requires that the receiver submit an account with the court for approval and that the funds shall be disposed of "in accordance with the order of the court." Minn. Stat. § 582.09 (2002).
Pursuant to the district court's receiver-appointment order, Kinseth was "entitled to payment of a management fee of 2½% per month of gross collected income and 8% of net operating income" and "related out-of-pocket expenses." After Kinseth's submission of its accounting and a subsequent hearing, the district court entered its judgment including the following relevant findings of fact: (1) Kinseth claimed $25,653.55 in out-of-pocket expenses representing support services; (2) these support services were performed by Kinseth employees; and (3) Kinseth received $30,534 in management and incentive fees pursuant to the provisions of the receiver-appointment order. The district court concluded that Kinseth's purported out-of-pocket expenses were not "cash outlays for cost[s] and expenses that would not have otherwise been made," but were for services included in the management fee, and disallowed that part of the claim in its entirety.
The accounting submitted to the district court by Kinseth to obtain compensation for its receivership duties included a one-page ledger describing its out-of-pocket expenses, which it stated did "not represent fees for managing the property." The entries on the ledger consist of five distinct categories of support services: accounts payable, information technology, human resources, general ledger, and operational. Each is accompanied by a value of hours worked and a dollar value for those services totaling $25,653.55. Kinseth did not quantify any other out-of-pocket expenses.
The district court's receivership order expressly defined the compensation due to Kinseth based on a percentage of the motel's operating income as a "management fee." The court order provided for out-of-pocket expenses as separate and distinct from compensation for management services. See Coons v. Lemieu, 58 Minn. 99, 104, 59 N.W. 977, 978 (1894) (stating that "a judgment is to be read as a whole, in order to ascertain its force and effect"). We agree with the district court that the costs claimed by Kinseth as out-of-pocket expenses were attributable to services incident to the management of the motel.
Finally, we note that the district court itself issued the order providing for Kinseth's compensation for its receiver duties, and thus was in the best position to interpret that order. "Generally, a trial court's construction of its own decree is accorded great weight on appeal." Auer v. Scott, 494 N.W.2d 54, 58 (Minn.App. 1992); see also Stieler v. Stieler, 244 Minn. 312, 319, 70 N.W.2d 127, 131 (1955) (citing various cases for the proposition that a judgment "open to diverse constructions . . . may be clarified by the tribunal which ordered it"). We conclude that the district court did not abuse its discretion by determining that the purported out-of-pocket expenses submitted by Kinseth were not compensable under the receiver-appointment order.