Jovani Nassar v. U.S. Home Corporation d/b/a Lennar Homes ( 2015 )

This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (2014).
STATE OF MINNESOTA
IN COURT OF APPEALS
A14-1108
Jovani Nassar, et al.,
Appellants,
vs.
U.S. Home Corporation d/b/a Lennar Homes,
Respondent.
Filed April 27, 2015
Affirmed
Hooten, Judge
Hennepin County District Court
File No. 27-CV-12-21299
David D. Hammargren, Hammargren & Meyer, P.A., Bloomington, Minnesota; and
Paul S. Almen, DeWitt Mackall Crounse & Moore S.C., Minneapolis, Minnesota (for
appellants)
Robert H. Torgerson, Stephen E. Schemenauer, Stinson Leonard Street, LLP,
Minneapolis, Minnesota (for respondent)
Considered and decided by Stauber, Presiding Judge; Connolly, Judge; and
Hooten, Judge.
UNPUBLISHED OPINION
HOOTEN, Judge
In this attorney-fee dispute, appellants argue that the district court (1) failed to
apply the correct statutory and caselaw standard for determining a fee award; and (2)
failed to consider all of the relevant circumstances in assessing the reasonableness of the
attorney fees requested by respondent. We affirm.
FACTS
This case has a long procedural history,1 which is summarized in our previous
decision involving these parties, Nassar v. U.S. Home Corp., No. A13-1137, 2014 WL
621700 (Minn. App. Feb. 18, 2014), review denied (Minn. Apr. 29, 2014). Appellants
Jovani Nassar and Sonia Morales purchased a home from respondent U.S. Home
Corporation d/b/a Lennar Homes, Inc. in 2009 and experienced problems with improper
drainage on the property. Id. at *1. Appellants claimed that, prior to their purchase,
respondent had failed to properly grade the property by installing drainage swales. Id. In
June 2012, the parties entered arbitration to resolve this dispute due to a clause in their
purchase agreement. Id.
The arbitrator ultimately found that respondent had failed to properly grade
appellants’ property with an adequate swale and that a repair plan submitted by
respondent would adequately address the drainage problem. Id. The arbitrator did not
allow appellants to rescind the purchase agreement, but required respondent to pay for
repair of the property in accordance with the repair plan. Id.
1
In addition to their arbitration dispute with respondent, appellants filed a separate suit
against their neighbors, alleging various tort claims and a breach-of-contract claim in
relation to their property’s drainage problems. After summary judgment and a partially
successful appeal that reinstated some of appellants’ claims, a jury found in favor of the
neighbors and we affirmed. Nassar v. Chamoun, No. A13-2097 (Minn. App. Sept. 22,
2014), review denied (Minn. Dec. 16, 2014); see also Nassar v. Chamoun, No. A11-0793
(Minn. App. Feb. 13, 2012).
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However, appellants claimed that the repair plan did not conform to the building
code, and when the arbitrator refused to modify his award, appellants moved the district
court to vacate the arbitration award under Minn. Stat. § 572B.23 (2012). Id. at *1–2.
Appellants essentially claimed that the remedy ordered by the arbitrator was “deeply
flawed,” raising seven different arguments in support of this proposition. The district
court found that some of these arguments “misidentif[ied] or conflate[d] grounds for
vacating an arbitration award” and were repetitious. The district court further noted that
“a number of other arguments . . . [did] not constitute recognized bases to vacate an
arbitration award under Minnesota law.” Addressing appellants’ “statutorily approved
arguments,” the district court ultimately denied the motion to vacate the award,
concluding that there was no prejudicial misconduct by the arbitrator and that the
arbitrator did not exceed his authority under the parties’ purchase agreement.
Appellants appealed to this court, and we affirmed in an unpublished opinion. Id.
at *1. We concluded that (1) the remedy created by the arbitrator was within his
authority, (2) appellants’ claim that the arbitrator denied them the opportunity to respond
to respondent’s proposed repair plan was unsubstantiated by the record, and (3) the
arbitrator did not exceed his authority by denying costs and disbursements to appellants
and ordering the parties to equally share arbitration costs. Id. at *3–5. Subsequently,
respondent filed a motion with this court for appellate attorney fees under Minn. Stat.
§ 572B.25(c) (2014). We denied respondent’s request, noting our disagreement with
respondent’s view that “fees should be awarded as a sanction or that the appeal should be
characterized as frivolous or completely without merit.” Nassar v. U.S. Home Corp., No.
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A13-1137 (Minn. App. June 19, 2014) (order). At the same time, we also rejected
appellants’ claim that attorney fees could be awarded only if there was a determination
that their claims were frivolous. Id.
After our opinion was filed, respondent moved the district court for attorney fees
in the amount of $39,637.69, which were incurred during the district court litigation prior
to appellants’ appeal. The district court granted the motion in part and awarded
respondent $9,852.13. The district court rejected appellants’ claim that it had to find
their underlying arguments frivolous in order to award attorney fees, and instead applied
the “lodestar” analysis from Green v. BMW of N. Am., LLC, 826 N.W.2d 530 (Minn.
2013). The district court concluded that the hours billed by respondent’s counsel were
reasonable, but only granted 25% of the fees requested because appellants’ litigation
conduct only “caused [respondent] to incur 25% more in attorneys’ fees than it
reasonably should have in responding to this matter.”
Appellants challenge the district court’s attorney-fee award, asking this court to
reverse the attorney-fee award and hold that respondent is not entitled to recover any
attorney fees. Respondent does not separately appeal from the district court’s decision to
award only 25% of its requested attorney fees.
DECISION
Appellants argue that the district court failed to correctly apply the statutory and
caselaw authority for an award of attorney fees, and that its findings as to the
reasonableness of respondent’s asserted fees and the impact of appellants’ litigation
conduct were erroneous. Under the Minnesota Uniform Arbitration Act (MUAA), the
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district court has discretion to award “attorney fees and other reasonable expenses of
litigation” to the prevailing party in an arbitration challenge. Minn. Stat. § 572B.25(c).2
We review a district court’s award of attorney fees for an abuse of discretion. Green, 826
N.W.2d at 534.
I.
In support of their claim that the district court failed to correctly apply the law for
an award of attorney fees, appellants first argue that the district court erred as a matter of
law by awarding attorney fees against them in the absence of a finding that their claims
were brought in bad faith or were frivolous. Second, appellants claim that the district
court erred by failing to apply caselaw-specific factors when awarding attorney fees
under Minn. Stat. § 572B.25. The district court abuses its discretion if it applies
improper standards when awarding fees. Id. at 534–35.
Appellants initially argue that, based on respondent’s assertion at the district court
level that the MUAA is intended to discourage overly litigious conduct, “it would follow
that an award of attorneys’ fees would be unreasonable unless a motion to vacate is
frivolous or brought in bad faith.” Using federal caselaw, appellants made similar
arguments that were rejected not only by the district court, but also by this court when
respondent previously moved for appellate attorney fees. Here, appellants again provide
no Minnesota precedent supporting this proposition, and the plain language of the statute
2
This provision has not yet been construed in any Minnesota appellate decision, as its
application to arbitration challenges became mandatory as of August 1, 2011. See Minn.
Stat. § 572B.03(b) (2014). Its predecessor statute only allowed for the taxation of costs
and disbursements and did not provide for an award of attorney fees by the district court.
Minn. Stat. § 572.21 (2010).
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does not indicate that the district court’s discretion to award fees is constrained to
frivolous or bad-faith arbitration award challenges. See Minn. Stat. § 572B.25(c) (“[T]he
court may add to a judgment confirming . . . an award, attorney fees and other reasonable
expenses of litigation incurred in a judicial proceeding after the award is made.”
(Emphasis added.)). Adopting appellants’ construction of the statute would also
contravene the presumption that “the legislature intends the entire statute to be effective
and certain,” Minn. Stat. § 645.17(2) (2014), as district courts are already empowered,
when civil actions are litigated in bad faith, to award fees as a sanction under Minn. Stat.
§ 549.211 (2014) and Minn. R. Civ. P. 11.03. We therefore decline appellants’ invitation
to so narrowly construe section 572B.25.
Alternatively, appellants claim that when statutes like section 572B.25 give district
courts discretion in awarding fees, “something other than the lodestar method of review is
required to determine whether an award of attorneys’ fees is warranted.” Appellants
appear to argue that, instead of the lodestar method, district courts should be required to
consider the circumstances set out in State by Head v. Paulson, 290 Minn. 371, 188
N.W.2d 424 (1971), and Jadwin v. Kasal, 318 N.W.2d 844 (Minn. 1982). Appellants
claim that the district court therefore abused its discretion by not considering either the
Paulson or the Jadwin circumstances in this case.
But, the district court did not indicate that it was refusing to consider the
circumstances provided in Paulson and Jadwin. In fact, at a hearing, it noted that it
“intend[ed] to consider all of the relevant factors because that’s what the courts tell us to
do. Whether it’s the Jadwin case or the Green . . . case, the courts urge a fulsome
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consideration.” In its order, the district court provided that it was following the lodestar
method for awarding attorney fees as provided in Green. The supreme court, in adopting
the lodestar method in Green, explicitly directed district courts to consider “all relevant
circumstances” when determining the reasonable value of legal services, including the six
factors originally set forth in the Paulson decision. Id. (emphasis added) (quoting
Paulson, 290 Minn. at 373, 188 N.W.2d at 426). In considering all relevant
circumstances, district courts are not precluded from also considering the additional
circumstances provided in Jadwin that go beyond those explicitly delineated in Paulson
and Green, such as the taxed party’s ability to pay. See Jadwin, 318 N.W.2d at 848.
Because utilization of the lodestar method under Green includes consideration of all
relevant circumstances, including those set forth in Paulson and Jadwin, the district court
did not abuse its discretion by choosing to apply this standard.
II.
Appellants next argue that the district court improperly applied the lodestar
method by failing to adequately consider the reasonableness of respondent’s requested
attorney fees and the circumstances of the case. The lodestar method requires district
courts to consider the reasonableness of the number of hours billed and the fee rate.
Green, 826 N.W.2d at 536. In addition, district courts “should consider all relevant
circumstances” in setting the amount of recoverable attorney fees, including: (1) the time
and labor required; (2) the nature and difficulty of the responsibility assumed; (3) the
amount involved and the results obtained; (4) the fees customarily charged for similar
legal services; (5) the experience, reputation, and ability of counsel; and (6) the fee
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arrangement existing between counsel and the client. Id. (quoting Paulson, 290 Minn. at
373, 188 N.W.2d at 426). “The reasonableness of [the] hours expended and the fees
imposed raise questions of fact,” and we reverse findings of fact only if they are clearly
erroneous. City of Maple Grove v. Marketline Constr. Capital, LLC, 802 N.W.2d 809,
819–20 (Minn. App. 2011).
The district court found that in light of the district court’s familiarity with the case
and its review of the billings, the 112.6 hours billed by respondent’s counsel were
reasonable. It did not analyze the hourly rate because appellants did not dispute the
reasonableness of the rate. The district court then proceeded to reduce respondent’s
requested award by 75%. It reasoned that appellants’ conduct in the litigation, while not
frivolous, “unnecessarily complicated the proceedings” by presenting several arguments
that were either repetitive or invalid reasons under MUAA to vacate an arbitration award.
The district court found that this litigation conduct caused respondent to incur 25% more
attorney fees than it otherwise would have and accordingly awarded $9,852.13 to
respondent, about one-quarter of the nearly $40,000 requested.
Appellants first challenge the district court’s failure to assess the reasonableness of
the fee rate. Respondent’s affidavit provided that its attorneys charged around $275 per
hour for roughly 43 hours of associate work, and around $400 per hour for about 69
hours of shareholder work. But, appellants did not dispute the reasonableness of these
rates before the district court. Therefore, the question is not properly before this court.
See Thiele v. Stitch, 425 N.W.2d 580, 582 (Minn. 1988) (stating that, generally, appellate
courts address only those questions presented to and considered by the district court).
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Further, appellants provide no indication on appeal why the rates should have been
considered unreasonable by the district court. See In re Estate of Rutt, 824 N.W.2d 641,
648 (Minn. App. 2012) (providing that a party who inadequately briefs an argument
forfeits that argument), review denied (Minn. Jan. 29, 2013). Because this record
otherwise indicates the district court’s familiarity with this case, any error by the district
court in foregoing a reasonableness analysis in light of appellants’ apparent concession of
this issue is harmless. See Minn. R. Civ. P. 61 (requiring harmless error to be ignored).
Appellants also argue that the district court failed to provide any analysis of the
reasonableness of the hours expended by respondent. “[W]hen the reasonableness of the
‘hours expended’ component of the fee claim is challenged, the [district] court should
scrutinize it, and either make findings or otherwise concisely explain why it felt the hours
claimed are reasonable or unreasonable.” Anderson v. Hunter, Keith, Marshall & Co.,
417 N.W.2d 619, 630 (Minn. 1988). While perhaps lacking in explicit detail, the district
court made clear that it had reviewed the detailed billings provided by respondent and
found them reasonable in light of its familiarity with the case and knowledge of the work
required for this litigation. We decline to second-guess this determination, as the district
court adjudicated the underlying claims and therefore was in a “much better position”
than an appellate court to assess the reasonableness of those billings. Id. at 629; see also
Jadwin, 318 N.W.2d at 848 (noting the district court’s “superior vantage point for
observing many of the relevant factors”).
Appellants further contend that the district court failed to make any findings
regarding the Paulson factors, including the amount of money involved in the dispute and
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the results obtained in the litigation. While the district court promised “fulsome
consideration” of relevant circumstances at oral argument, its order did not explicitly set
forth and make findings regarding any of the Paulson or Jadwin factors. But, caselaw
does not dictate that failure to explicitly note and examine every relevant circumstance is
reversible error. We have affirmed attorney-fee awards lacking “specific findings
relating to the award” when the district court has considered the factors and the record
contains support in the form of detailed time records and an explanatory affidavit.
Automated Bldg. Components, Inc. v. New Horizon Homes, Inc., 514 N.W.2d 826, 831
(Minn. App. 1994), review denied (Minn. June 15, 1994); see also Geske v. Marcolina,
624 N.W.2d 813, 817 (Minn. App. 2001) (noting that lack of findings for need-based fee
awards in dissolution proceedings is “not fatal to an award where review of the order
reasonably implies that the district court considered the relevant factors” and was familiar
with the case history (quotation omitted)).
Here, the same district court judge adjudicated the merits of the underlying
arbitration challenge and was provided detailed time records and an explanatory affidavit
by respondent. The district court further conducted an extensive review of the underlying
proceeding in determining the proper fee award, which effectively was an analysis of the
time required and the difficulty of the litigation for respondent, two of the circumstances
noted in both Jadwin and Paulson. See Jadwin, 318 N.W.2d at 848; Paulson, 290 Minn.
at 373, 188 N.W.2d at 426. And, the $9,852.13 in attorney fees awarded by the district
court here is significantly less than the approximately $13,000 of damages at stake—in
stark contrast to a case like Green, in which the attorney-fee award was nearly ten times
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the amount in dispute. See 826 N.W.2d at 533 (noting that the district court awarded
plaintiff $221,499 in attorney fees after plaintiff received a $25,157 damages judgment).
Appellants finally argue that the district court abused its discretion by finding that
appellants’ litigation conduct caused respondent to incur 25% more attorney fees than it
otherwise would have. Appellants claim that finding is without support in the record,
pointing to the fact that this court decided that their arbitration challenge was not
frivolous or wholly without merit when respondent had earlier requested appellate
attorney fees.
However, our earlier denial of respondent’s request for its attorney fees incurred in
the prior appeal has no bearing on what findings of fact may be made by the district court
in considering the course of district court litigation, as opposed to the course of appellate
litigation that was before this court. Before respondent moved for attorney fees in either
court, the district court had already found that some of appellants’ arguments at the
district court level were repetitive, “misidentif[ied] and conflate[d] grounds for vacating
an arbitration award,” and were not recognized bases to vacate under Minnesota law. In
awarding attorney fees, the district court further analyzed how these arguments
repetitively challenged the arbitrator’s choice of remedy. Moreover, the district court’s
decision to make this finding and then limit its attorney-fee award to those fees that were
incurred by respondent due to appellants’ “unnecessar[y] complicat[ion]” of the
proceedings, after already determining that the number of hours spent by respondent in
litigating the district court action was reasonable, actually reduced appellants’ fee-award
liability to respondents. To the extent there was any error here, it did not prejudice
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appellants. See Midway Ctr. Assocs. v. Midway Ctr., Inc., 306 Minn. 352, 356, 237
N.W.2d 76, 78 (1975) (“[W]e do not reverse unless there is error causing harm to the
appealing party.” (quotation and emphasis omitted)). Considering the record before us
and the arguments made by appellants, we conclude that this finding is not clearly
erroneous.
Therefore, we conclude that the district court did not abuse its discretion in its
award of attorney fees against appellants.
Affirmed.
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