Opinion
No. A05-181.
Filed January 17, 2006.
Appeal from the District Court, Ramsey County, File No. C2-04-87.
Robert A. Awsumb, Deborah J. Bohmann, R.A. Awsumb Associates, (for appellant).
Phaedra J. Howard, Standke, Greene Greenstein, Ltd, (for respondent).
Considered and decided by Peterson, Presiding Judge; Stoneburner, Judge; and Huspeni, Judge.
This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (2004).
UNPUBLISHED OPINION
On appeal from summary judgment in this foreclosure matter, appellant argues (a) an action against him in conciliation court should have precluded respondent-landlord's attempt to foreclose by advertisement; (b) the prior conciliation court judgment and satisfaction of that judgment should have invoked the doctrine of res judicata to preclude respondent's foreclosure of appellant's interest in a condominium based on the debt that was the subject of the conciliation court action; and (c) the district court's award of $15,411.75 in attorney fees to respondent was an abuse of discretion. We affirm in part, reverse in part, and remand.
FACTS
In February 2000, appellant Jason Balyk purchased a condominium (the property) in respondent Linden Place Villas Condominium Association. As owner of the property, appellant was bound by respondent association's articles of incorporation, declaration of condominium ownership, by-laws, rules, and regulations of the association. The declaration and by-laws provide that assessments for common expenses shall be levied annually among condominium unit owners, and that the annual assessment is payable in equal monthly installments. An owner's failure to pay the monthly assessments on or before the due date, results in an obligation to pay interest charges from the date when due and "all expenses, including reasonable attorney's fees incurred by the Board in any proceeding to collect" the unpaid assessment. The declarations and by-laws further provide that a default may also result in acceleration of all unpaid portions of the annual assessment.
On May 21, 2002, respondent brought an action in conciliation court to recover on an assessment lien for unpaid association fees owed by appellant. Appellant did not appear for the hearing, and on October 15, 2002, respondent obtained a $1,684.18 default judgment against appellant. This judgment was never docketed in district court.
Appellant failed to pay any part of the judgment. On December 12, 2002, however, respondent entered a satisfaction of judgment. Respondent then elected to pursue an alternative remedy and commenced proceedings to foreclose by advertisement. A notice of pendency and power of attorney to foreclose respondent's lien against the property was filed with the Ramsey County Recorder. Notice of the foreclosure proceeding was served on appellant, and beginning December 26, 2002, the notice of assessment lien foreclosure sale was published in the St. Paul Ledger for six consecutive weeks. The foreclosure sale took place on February 18, 2003, and the property was sold to respondent for $4,065.19. This amount consisted of the total sum obtained in the conciliation court judgment, plus attorney fees, costs, and additional unpaid assessments incurred after the conciliation court judgment was entered.
On August 15, 2003, before the expiration of the redemption period, appellant redeemed the property from foreclosure. He also served respondent with a summons and complaint seeking a declaratory judgment pursuant to Minn. Stat. § 580.28 (2004), to invalidate respondent's foreclosure sale. Respondent counterclaimed for a new foreclosure of its statutory lien against appellant's property for all unpaid assessments, fees, and other charges levied by respondent against the property. The amount of the lien claimed by respondent in its counterclaim included all assessments, charges, and fees levied against the property from and after November 1, 2001, through the date of district court judgment.
Respondent moved for summary judgment (1) dismissing appellant's claims; (2) declaring that the February 18, 2003 foreclosure sale was valid; (3) directing the sheriff to turn over to respondent the redemption monies paid by appellant; and (4) awarding respondent a judgment of foreclosure of its lien for all amounts remaining due after application of the redemption monies to the total lien amount. On August 2, 2004, the district court granted respondent's motion, awarding it a lien in the principal amount of $6,551.69. The order also provided that the association was entitled to attorney fees, costs, and disbursements, and directed respondent to submit an affidavit of its fees, costs, and disbursements. Respondent subsequently submitted an affidavit requesting $15,845 in attorney fees and $1,049.54 in costs and disbursements. Appellant objected to respondent's requested attorney fees, but the district court awarded attorney fees in the amount of $15,411.75, and costs and disbursements in the amount of $807.50 to respondent.
Because the district court's order did not address respondent's request for (1) an order directing the Ramsey County Sheriff to turn over the redemption monies to respondent and (2) an order directing the Sheriff to sell appellant's property to satisfy the lien judgment, respondent submitted a proposed supplemental order clarifying these issues. Appellant objected to the proposed order, and, before a hearing was set on that matter, appellant filed this appeal from the district court's grant of summary judgment, thereby divesting the district court of jurisdiction to act.
DECISION I.
Summary-judgment motions are granted when the pleadings, depositions, answers to interrogatories, and admissions, together with any affidavits, show that there is no genuine issue of material fact and a party is entitled to judgment as a matter of law. Fabio v. Bellomo, 504 N.W.2d 758, 761 (Minn. 1993). On a motion for summary judgment, "a court may not weigh the evidence or make factual determinations." State ex rel. Hatch v. Allina Health Sys., 679 N.W.2d 400, 406 (Minn.App. 2004) (quoting Fairview Hosp. Health Care Servs. v. St. Paul Fire Marine Ins. Co., 535 N.W.2d 337, 341 (Minn. 1995)). "The reviewing court must view the evidence in the light most favorable to the party against whom judgment was granted." Fabio, 504 N.W.2d at 761. A reviewing court need not defer to a trial court's decision on a pure question of law. Frost-Benco Elec. Ass'n v. Minn. Pub. Utils. Comm'n, 358 N.W.2d 639, 642 (Minn. 1984). "[S]ummary judgment cannot be defeated with unverified and conclusory allegations or by postulating evidence that might be developed at trial." N. States Power Co. v. Minn. Metro. Council, 684 N.W.2d 485, 491 (Minn. 2004) (quotation omitted).
Minn. Stat. § 515B.3-116(h)(1) (2004), states that
[t]he association's lien may be foreclosed as provided in this subsection.
(1) In a condominium or planned community, the association's lien may be foreclosed in a like manner as a mortgage containing a power of sale pursuant to chapter 580, or by action pursuant to chapter 581. The association shall have a power of sale to foreclose the lien pursuant to chapter 580.
In order to foreclose by advertisement under chapter 580, it is requisite
that no action or proceeding has been instituted at law to recover the debt then remaining secured by such mortgage, or any part thereof, or, if the action or proceeding has been instituted, that the same has been discontinued, or that an execution upon the judgment rendered therein has been returned unsatisfied, in whole or in part.
Minn. Stat. § 580.02(2) (2004) (emphasis added).
Appellant argues that the foreclosure action was invalid because respondent failed to meet the requisites of section 580.02(2). We agree. It is undisputed that the conciliation court judgment was never docketed in district court, and, therefore, a writ of execution could not possibly have been issued, let alone returned unsatisfied. Accordingly, the only way for respondent to meet the requisites of section 580.02(2) was to "discontinue" that action.
Respondent argues that the requisites of Minn. Stat. § 580.02(2) were satisfied because after it obtained the judgment in conciliation court, respondent filed a satisfaction of that judgment, which effectively "discontinued" the action to recover the debt. But Minnesota law unambiguously states that "[o]nce a satisfaction of judgment is filed with the district court, that judgment `ceases to have any existence.'" Herbin v. Finn, 603 N.W.2d 133, 137 (Minn.App. 1999) (quoting Dorso Trailer Sales, Inc. v. Am. Body Trailer, Inc., 482 N.W.2d 771, 773 (Minn. 1992)). Thus, by filing the satisfaction of the conciliation court judgment, respondent effectively discharged the debt rather than "discontinuing" the action as required by Minn. Stat. § 580.02(2).
Essentially, in attempting to foreclose on its lien under section 580.02, respondent neglected to follow the proper procedure. Minn. R. Civ. P. 60.02 provides in relevant part:
On motion and upon such terms as are just, the court may relieve a party or the party's legal representatives from a final judgment . . ., order, or proceeding and may order a new trial or grant such other relief as may be just for the following reasons:
(a) Mistake, inadvertence, surprise, or excusable neglect;
. . . .
(f) Any other reason justifying relief from the operation of the judgment.
Minn. R. Civ. P. 60.02(a), (f). This rule was mentioned in Mattsen v. Packman, 358 N.W.2d 48 (Minn. 1984), as a possible solution to a problem similar to the situation in the present case. In Mattsen, a driver, whose automobile had been rear-ended, secured a judgment in conciliation court. 358 N.W.2d at 49. Sometime later, the driver brought an action in district court to recover damages for personal injuries and property damage sustained in the same accident. Id. Although on appeal the supreme court held that res judicata extinguished the subsequent claim for damages, the court noted:
This is not to say that a party who is excusably ignorant of the effect of a judgment should have no remedy. Relief may be had for cause; the judgment may be re-opened through proceedings to vacate pursuant to Rule 60.02, Minn. R. Civ. P., or, when appropriate, by an independent action to set aside the judgment.
Id. at 50. Therefore, a proper procedure for respondent to follow in attempting to "discontinue" the action would have been to bring a motion under rule 60.02 seeking to vacate the conciliation court judgment. No motion was brought.
Respondent also might have followed the requisites of section 580.02(2) by docketing the judgment in district court, and then waiting for the writ of execution to be returned unsatisfied. See Minn. Stat. § 580.02(2). Although this may not be the most time- or cost-efficient procedure, it would have at least enabled respondent to properly proceed with its foreclosure action under section 580.02(2). But respondent chose to file a satisfaction of the judgment, which caused the judgment to be extinguished. Consequently, the subsequent foreclosure action to recover the portion of the debt that the conciliation court judgment sought to satisfy was invalid.
Respondent argues that even if there was some kind of irregularity in the foreclosure of the association's lien by advertisement, appellant's act of redeeming the property from the sale by paying the redemption amount to the Ramsey County Sheriff and recording the certificate of redemption annulled the sale and renders moot any claim that the sale should be invalid. There is merit in respondent's argument. Minn. Stat. § 580.27 (2004), states in relevant part that "[i]f redemption is made by the owner of the property sold . . ., such redemption annuls the sale." If the owner wishes to challenge the validity of the foreclosure, Minn. Stat. § 580.28 (2004) sets forth the proper procedure to be followed. This statute provides:
When action is brought wherein it is claimed that any mortgage as to the plaintiff or person for whose benefit the action is brought is fraudulent or void, or has been paid or discharged, in whole or in part, if such mortgage has been foreclosed by advertisement, and the time for redemption from the foreclosure will expire before final judgment in such action, the plaintiff or beneficiary having the right to redeem, for the purpose of saving such right in case the action fails, may deposit with the sheriff before the time of redemption expires the amount for which the mortgaged premises were sold, with interest thereon to the time of deposit, together with a bond to the holder of the sheriff's certificate of sale, in an amount and with sureties to be approved by the sheriff, conditioned to pay all interest that may accrue or be allowed on such deposit if the action fail. The person shall, in writing, notify such sheriff that the person claims the mortgage to be fraudulent or void, or to have been paid or discharged, in whole or in part, as the case may be, and that such action is pending, and direct the sheriff to retain such money and bond until final judgment. In case such action fails, such deposit shall operate as a redemption of the premises from such foreclosure sale, and entitle the plaintiff to a certificate thereof. Such foreclosure, deposit, bond, and notice shall be brought to the attention of the court by supplemental complaint in the action, and the judgment shall determine the validity of the foreclosure sale, and the rights of the parties to the moneys and bond so deposited, which shall be paid and delivered by the sheriff as directed by such judgment upon delivery to the sheriff of a certified copy thereof. The remedy herein provided shall be in addition to other remedies now existing.
Here, appellant redeemed the property by depositing the claimed amount with the Ramsey County Sheriff. But appellant failed to meet the requirements of section 580.28. Although appellant brought this declaratory judgment action seeking to have the foreclosure invalidated, there is nothing in the record indicating that appellant notified the sheriff that appellant claimed the mortgage to be invalid. See id. There is also nothing in the record indicating that appellant notified the sheriff that an action was pending, and directing the sheriff to retain such money and bond until there is a final judgment. See id. The record reveals that a certificate of redemption was issued by the sheriff to appellant, who then recorded it with the Ramsey County Recorder. Because appellant failed to satisfy the requirements of section 580.28, he effectively restored respondent to the position respondent would have been in financially had appellant paid association fees in a timely manner. We affirm, albeit on an alternative basis, the conclusion of the district court that appellant was not entitled to a refund of any redemption monies.
Appellant also contends that the foreclosure action was invalid because when respondent obtained the conciliation court judgment, the principles of res judicata precluded respondent's subsequent foreclosure action. But Minn. Stat. § 580.02(2) provides that a party may bring a foreclosure action even if a prior action or proceeding has been instituted as long as the prior action has been discontinued. Because respondent failed to meet the requisites of section 580.02(2), the issue of whether res judicata precluded respondent's foreclosure action need not be addressed. Although not dispositive to our holding, we note that the district court's conclusion that "there is no bar to the foreclosure under Res Judicata because the Conciliation Court ruling, having never been entered in District Court, never constituted a final judgment," was in error. Minn. R. Gen. Pract. 515 provides:
The court administrator shall promptly enter judgment as ordered by the judge. The judgment shall be dated as of the date notice is sent to the parties. The judgment so entered becomes finally effective twenty days after mailing of the notice, unless:
(a) payment has been made in full, or
(b) removal to the district court has been perfected, or
(c) an order vacating the prior order for judgment has been filed, or
(d) ordered by a judge.
Therefore, the conciliation court judgment here became final for purposes of res judicata 20 days after mailing of the notice of judgment.
II.
Appellant also contends that the district court's award of $15,411.75 in attorney fees to respondent was an abuse of discretion. The reasonable value of counsel's work is a question of fact and must be upheld unless that fact is clearly erroneous. Amerman v. Lakeland Dev. Corp., 295 Minn. 536, 537, 203 N.W.2d 400, 400-01 (1973). The factors to be considered in determining the reasonableness of attorney fees include: (1) time and labor required; (2) the nature and difficulty of the responsibility assumed; (3) the amount involved and the results obtained; (4) fees customarily charged for similar legal services; (5) the experience, reputation, and ability of counsel; and (6) whether the fee arrangement existing between counsel and the client is fixed or contingent. City of Minnetonka v. Carlson, 298 N.W.2d 763, 765 (Minn. 1980). On appeal, this court will not reverse the district court's determination of attorney fees absent an abuse of discretion. Becker v. Alloy Hardfacing Eng'g Co., 401 N.W.2d 655, 661 (Minn. 1987).
Minn. Stat. § 515B.3-115(4) (2004) states that "reasonable attorneys fees and costs incurred by the association in connection with (i) the collection of assessments and, (ii) the enforcement of this chapter, the articles, bylaws, declaration, or rules and regulations, against a unit owner, may be assessed against the unit owner's unit." Generally, attorney fee awards should be in proportion to the judgment lien. Asp v. O'Brien, 277 N.W.2d 382, 385 (Minn. 1979). But fees are not disproportionate merely because they exceed the amount of the lien. Kirkwold Constr. Co. v. M.G.A. Constr., Inc., 498 N.W.2d 465, 470 (Minn.App. 1993), aff'd, 513 N.W.2d 241 (Minn. Mar. 11, 1994).
Here, appellant objected to respondent's requested attorney fees; the district court nevertheless awarded respondent attorney fees in the amount of $15,411.75, and costs and disbursements in the amount of $807.50. The attorney fees are nearly two and one-half times the amount of the judgment. While such disproportion may not be intolerable under the facts of some foreclosures, here it is troubling. The facts of this case are at least unusual and perhaps unique. Respondent failed to adhere to the requisites of Minn. Stat. § 580.02(2), making the foreclosure action invalid. Appellant subsequently redeemed the property without following the requirements of Minn. Stat. § 580.28. It seems to us that invocation of our powers of equity is appropriate. While both parties neglected to follow applicable statutory procedures, respondent has been compensated disproportionately, we believe, by the award of substantial attorney fees. Respondent should not be awarded attorney fees for legal services that failed to follow proper legal procedures. We conclude that, in equity, given the circumstances of this case, attorney fees are unreasonable as a matter of law, and we vacate that portion of the district court's award to respondent. Respondent is entitled, however, to an order directing the sheriff to turn over to respondent the redemption monies. We remand for the purpose of enabling the district court to enter an appropriate order nunc pro tunc.
Further, certain matters were pending before the district court when this appeal was perfected. On remand, the court shall permit the parties to address any of those matters that have not been resolved by this opinion. The district court on remand may also, in its discretion, reopen the record to receive evidence it deems appropriate in order to fully resolve the controversy between these parties.