Sheehy Construction Company v. City of Centerville ( 2016 )

This opinion will be unpublished and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
A15-1392
A15-1882
Sheehy Construction Company,
Respondent,
vs.
City of Centerville,
Appellant.
Filed July 25, 2016
Affirmed; motion granted
Halbrooks, Judge
Anoka County District Court
File No. 02-CV-09-5300
Kristine Kroenke, Julia J. Douglass, Fabyanske, Westra, Hart & Thomson P.A.,
Minneapolis, Minnesota (for respondent)
Kurt Glaser, Smith & Glaser, LLC, Minneapolis, Minnesota (for appellant)
Considered and decided by Halbrooks, Presiding Judge; Bjorkman, Judge; and
Jesson, Judge.
UNPUBLISHED OPINION
HALBROOKS, Judge
Appellant challenges the district court’s grant of summary judgment to
respondent, arguing that (1) the district court erred by concluding that collateral estoppel
bars appellant from collecting interest from respondent, (2) appellant is authorized to
correct the district court record through the legislative process, (3) the district court
lacked subject-matter jurisdiction, and (4) the district court abused its discretion by
sanctioning appellant’s attorney. Respondent filed a notice of related appeal, asserting
that the district court abused its discretion by limiting the sanction against appellant’s
attorney and his law firm to $2,000. We affirm.
FACTS
Respondent Sheehy Construction Company owns a parcel of real property located
in appellant City of Centerville. In 2009, the city imposed a special assessment of
$379,000 on a five-acre parcel of property owned by Sheehy. Sheehy appealed the
special assessment to the district court, arguing that the assessment amounted to an
unconstitutional taking because the amount of the assessment exceeded the benefit to the
property. The district court set aside the city’s assessment and directed the city to
reassess the special benefit in an amount not exceeding $241,000. The city appealed, and
this court affirmed the district court but modified the maximum amount to $249,000.
Sheehy Constr. Co. v. City of Centerville, No. A11-0827 (Minn. App. May 14, 2012).
On January 9, 2013, the city adopted resolution 13-005, which amended the 2009
special assessment to $249,000 to reflect the $249,000 cap set by this court. The city
attempted to include repayment terms based on the 2009 assessment, asserting that
Sheehy owed accumulating interest. On or around February 7, 2013, Sheehy served the
city with a letter detailing its objections to the reassessment outlined in resolution 13-005.
Sheehy did not contest the $249,000 reassessment amount but objected to the city’s
proposed repayment terms as an improper attempt to circumvent the statutory
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requirement in Minn. Stat. § 429.081 (2014) that interest on a special assessment begins
to accrue from the date of the resolution adopting the assessment.
On February 13, 2013, the city council voted to adopt resolution 13-009 and
presented it to the mayor for signature. The resolution reads in part:
NOW THEREFORE, BE IT RESOLVED BY THE CITY
COUNCIL OF CENTERVILLE, MINNESOTA,
1. Such proposed assessment, a copy of which is
attached hereto and made a part hereof, is hereby adopted and
shall constitute the special assessment against the lands
named therein, and each tract of land therein included is
hereby found to be benefited by the improvement in the
amount of the assessment levied against it.
2. Such assessment shall be payable in annual
installments extending over a period of 15 years, the first
installment to be payable on or before the first Monday in
January, 2014 and shall bear interest at the rate of 5.75
percent per annum from the date of the adoption of this
assessment resolution. Each installment shall include interest
to December 31, of the year of collection.
3. The owner of any property so assessed may, at any
time prior to certification of the assessment to the county
auditor, pay the whole or part of the assessment on such
property with interest accrued to the date of payment to the
City Administrator, except that no interest shall be charged
on any amount paid within 30 days of the adoption of this
resolution; and he may at any time thereafter, pay to the
administrator the entire amount of the assessment remaining
unpaid, with interest accrued to December 31 of the year in
which such payment is made. Such payment must be made
before November 15 or interest will be charged to December
31 of the next succeeding year.
(Emphasis added.) The assessment roll attached to resolution 13-009 assessed Sheehy’s
property in the amount of $249,000. The mayor signed the resolution on February 13,
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2013. The city advised Sheehy that it intended to assess interest of $35,517.70 as of
March 11, 2013 based on the vacated June 2009 assessment.
Sheehy paid $85,000 to the city on March 11, 2013, which fulfilled its payment
obligation of $249,000.1 It is undisputed that Sheehy’s final payment was made within
30 days of the February 13, 2013 reassessment. Sheehy appealed the special assessment
to the district court, arguing that the city had improperly attempted to collect interest
through its adoption of resolution 13-005. And both parties brought summary-judgment
motions before the district court.
The city opposed Sheehy’s assessment appeal, arguing that it had not included any
interest as part of the February 13, 2013 reassessment. The city provided the district
court with a copy of resolution 13-009 that had been signed by the mayor. The district
court granted summary judgment to the city and affirmed the reassessment as provided in
resolution 13-009, concluding that the city’s assessment against Sheehy did not include
any interest between June 10, 2009 and February 13, 2013. Sheehy’s motion for
declaratory judgment was denied on the ground that it had not been pleaded and was
beyond the scope of relief of Minn. Stat. § 429.081.
After the district court granted summary judgment in favor of the city, the city
claimed that the version of the resolution in the district court record upon which the case
had been decided did not match the language in the resolution passed by the city council.
The city council then reconvened and passed a “corrected” resolution, 13-009A, that the
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Sheehy paid the city $164,000 on December 7, 2010.
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mayor signed and backdated to February 13, 2013. On October 9, 2013, the city council
voted to replace resolution 13-009 with resolution 13-009A.
On April 9, 2014, the city council adopted another resolution, 14-020, that
reiterated the city’s intent to collect interest from Sheehy based on the amount of the
February 2013 reassessment but dating back to the June 2009 assessment. Sheehy again
appealed the assessment to the district court, arguing that because the district court had
already determined in the second assessment appeal that Sheehy paid the amount in full
within 30 days of the adoption of the February 2013 reassessment, the city was estopped
from imposing interest on Sheehy. Sheehy also moved for reasonable expenses and
attorney fees under Minn. R. Civ. P. 11.02 and 11.03 and Minn. Stat. § 549.211 (2014).
The district court granted Sheehy’s motion for summary judgment, denied the
city’s motion for summary judgment, and granted Sheehy’s motion for sanctions. The
order directed Sheehy to file, within 14 days, affidavits in support of its reasonable
attorney fees. Both parties were provided an opportunity to file documents in support of
their position on sanctions.
Instead of complying with the district court’s request for documents, the city
moved for reconsideration, a new trial, and for relief under Minn. R. Civ. P. 60.02. At
the motion hearing, the district court granted Sheehy’s motion to strike the city’s request
for a new trial. On June 9, 2015, the district court denied the city’s motion for relief
under Minn. R. Civ. P. 60.02. The district court also issued a separate order imposing a
$2,000 personal sanction against the city’s attorney, Kurt B. Glaser, and his law firm,
Smith & Glaser, L.L.C., under Minn. R. Civ. P. 11. This appeal follows.
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DECISION
I.
The city argues that it should not be collaterally estopped from taking further
action to collect unpaid interest from Sheehy dating back to 2009 because (1) the issues
decided by the district court in the second assessment appeal are different than those in
the third assessment appeal and (2) the September 6, 2013 order rendered summary
judgment in favor of the city.
Under Minnesota law, collateral estoppel bars relitigation of an issue when:
(1) the issue [is] identical to one in a prior adjudication;
(2) there was a final judgment on the merits; (3) the estopped
party was a party or in privity with a party to the prior
adjudication; and (4) the estopped party was given a full and
fair opportunity to be heard on the adjudicated issue.
Ill. Farmers Ins. Co. v. Reed, 662 N.W.2d 529, 531 (Minn. 2003) (quotation omitted).
“Whether collateral estoppel precludes litigation of an issue is a mixed question of
law and fact that we review de novo.” Hauschildt v. Beckingham, 686 N.W.2d 829, 837
(Minn. 2004). “Once it is determined that collateral estoppel is available, the decision to
apply the doctrine is left to the [district] court’s discretion.” In re Trusts Created by
Hormel, 504 N.W.2d 505, 509 (Minn. App. 1993), review denied (Minn. Oct. 19, 1993).
We will not reverse a district court’s decision to apply collateral estoppel absent an abuse
of discretion. Pope Cty. Bd. of Comm’rs v. Pryzmus, 682 N.W.2d 666, 669 (Minn. App.
2004), review denied (Minn. Sept. 29, 2004).
Here, the district court barred the city from taking any action in 2014 related to the
collection of unpaid interest from Sheehy, citing its decision in the second assessment
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appeal. In that appeal, the district court found that “[t]he sole action presently before the
court is an appeal of the City’s February 13, 2013, reassessment of the Sheehy Property
in the amount of $249,000 brought pursuant to Minnesota Statutes section 429.081.” In
the third assessment appeal, the district court stated that “the dispositive issue in the
Second Appeal was whether the City had, in fact, assessed Sheehy interest commencing
on June 10, 2009, through the adoption of Resolution 13-009.” The city argues that
collateral estoppel does not apply because the issues in the second and third reassessment
appeals are distinctly different. We disagree. The issue of interest is a fundamental
component of the district court’s decision in the second assessment appeal and, thus, is
dispositive in the third.
In the second assessment appeal, the district court explicitly addressed whether
Sheehy owed backdated interest:
14. Sheehy also initially contended that the City
assessed it interest on the special assessment on February 13,
2013. This position is not tenable based on the plain
language of Resolution 13-009.
15. First, the plain language of Resolution 13-009
provides that the reassessment amount is in the attached
assessment roll, which indicates that the Sheehy Property was
reassessed in the amount of $249,000.
16. Second, Resolution 13-009 specifically addresses
the issues of interest and repayment. The adopted Resolution
plainly provides (1) that interest of 5.75 percent on the
repayment would begin to accrue from the date of the
February 13, 2013, assessment resolution, and (2) that “no
interest will be charged on any amount paid within 30 days of
the adoption of this [February 13, 2013] assessment
resolution.”
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17. The court therefore finds that, based on the
undisputed facts of this case, the City reassessed the Sheehy
Property in the amount of $249,000 on February 13, 2013,
and did not include any assessment for interest between June
10, 2009, and February 13, 2013.
18. Sheehy has paid the February 13, 2013,
reassessment amount, as adopted in Resolution 13-009, in
full.
The issue of interest was clearly and unambiguously decided in the second assessment
appeal. The district court engaged in a plain reading of the resolution provided to it by
the city, concluding that Sheehy’s obligation was satisfied because it paid its $249,000
assessment within 30 days of the date that resolution 13-009 was signed. Thus, Sheehy
does not, according to the city’s own terms, owe interest.
The city cites several other arguments in support of its position that collateral
estoppel is inapplicable in this case, namely that “[f]airness now dictates that this prior
decision should not be used to collaterally estop the City from collecting over $40,000 in
unpaid interest from Sheehy.”2 These ancillary arguments are without merit as they are
2
The district court correctly found that all elements of a collateral-estoppel claim had
been satisfied, and it was undisputed that both parties were afforded a full and fair
opportunity to be heard.
Both parties extensively briefed their cross-motions for
summary judgment in the Second Appeal, and both had a full
opportunity to seek to vacate, appeal, or amend the September
6, 2013, summary judgment order. Both parties were notified
by the court that the September 6, 2013, summary judgment
had been decided on the basis of the record provided to the
court, including the copy of Resolution 13-009 provided by
the City as Exhibit 18, and that any party that sought to
correct the factual record would need to file a formal motion
with the court.
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all premised on the belief that Sheehy owes interest, which the district court correctly
determined that it does not. The district court did not abuse its discretion by determining
that the city is collaterally estopped from taking action against Sheehy to collect interest
from the 2009 assessment that was set aside by the district court.
II.
In support of its attempt to substitute resolution 13-009A, which provides for
interest, for resolution 13-009, the city argues that it is authorized through the separation-
of-powers doctrine to legislatively amend the version of the resolution that formed the
basis of the district court’s ruling against the city. “The levying of a special assessment is
a legislative act.” Metro. Airports Comm’ns v. Bearman, 716 N.W.2d 403, 405 (Minn.
App. 2006) (quotation omitted), review denied (Minn. Sept. 19, 2006). So long as the
special assessment does not exceed the benefits to the property, the assessment is a
legislative function on the part of the city council and will not be overturned absent clear
error. Anderson v. City of Bemidji, 295 N.W.2d 555, 560-61 (Minn. 1980).
While assessments are a legislative function, they are subject to judicial review.
See Minn. Stat. § 429.081 (“Within 30 days after the adoption of the assessment, any
person aggrieved, who is not precluded by failure to object prior to or at the assessment
hearing, or whose failure to so object is due to a reasonable cause, may appeal to the
district court . . . .”). The district court properly recognized the limited scope of judicial
review and adhered to the separation-of-powers doctrine when it concluded that “[i]f a
city council takes an action that is clearly erroneous, it must be set aside by the court.”
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The city’s position that it was permitted to draft a replacement resolution with a
significant substantive revision after the district court decided the matter is untenable.
The city provided resolution 13-009 to the district court and defended it during the entire
time it litigated the second assessment appeal. It only took issue with the resolution after
it realized that it was foreclosed from collecting interest from Sheehy because Sheehy
had paid the $249,000 in full within 30 days. The city opted not to follow the district
court’s instruction to file a formal motion, challenging the summary-judgment order. The
city’s solution was, in essence, to avoid complying with the district court’s order by
“legislatively” replacing one version of a signed resolution with another one that allowed
it to collect interest. Now, on appeal to this court, the city alleges that the district court
violated the separation-of-powers doctrine by not agreeing to informally allow the city to
correct a “mistake” in the language of its special-assessment resolution after the district
court ruled.
It appears that the city is arguing that any action taken in a special-assessment
proceeding is protected from judicial review. This position is inherently flawed. As
Sheehy asserts, “if the City’s argument is correct, it is saying that the City’s legislative
authority is superior to judicial authority because if the City does not like a judicial
decision, all it has to do is take legislative action.”
The city also contends that the district court erred by not setting aside the second
reassessment when it informally provided the “corrected” version to the district court. In
an assessment appeal, “[t]he court shall either affirm the assessment or set it aside and
order a reassessment . . . .” Minn. Stat. § 429.081. Not only was the district court not
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required to review an amendment provided by the city through informal communication,
but the district court correctly observed that nothing further was owed by Sheehy with
regard to the $249,000 assessment. And absent a finding that Sheehy owed any special-
assessment debt, the district court was not required to set aside the assessment and order a
new one. See In re Vill. of Burnsville Assessments for Improvement No. 70TS-8 for
Sanitary Sewer, 287 N.W.2d 375, 377 (Minn. 1979) (“Here, the trial court, in finding that
there were no special benefits, impliedly set the permissible ceiling at zero. This being
the case, any remand to the city of Burnsville for reassessment would have been
pointless.”).
For these reasons, the district court correctly determined that “the City’s attempt to
amend the reassessment to include amounts that Sheehy did not owe was an unreasonable
exercise of its legislative authority and clear error.”
III.
The city argues that the district court did not have subject-matter jurisdiction over
the third assessment appeal because both prior appeals were filed in the district court
under the same file number. Subject-matter jurisdiction involves a court’s authority to
decide a particular class of actions and its authority to decide the particular questions
before it. Cochrane v. Tudor Oaks Condo. Project, 529 N.W.2d 429, 432 (Minn. App.
1995), review denied (Minn. May 31, 1995). “Whenever it appears by suggestion of the
parties or otherwise that the court lacks jurisdiction of the subject matter, the court shall
dismiss the action.” Minn. R. Civ. P. 12.08(c). “Because subject-matter jurisdiction goes
to the authority of the court to hear a particular class of actions, lack of subject-matter
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jurisdiction may be raised at any time.” Irwin v. Goodno, 686 N.W.2d 878, 880 (Minn.
App. 2004) (quotation omitted).
The city cites no authority for the proposition that the use of the same file number
deprives a district court of subject-matter jurisdiction. An assignment of error in a brief
based on “mere assertion” and not supported by argument or authority is waived unless
prejudicial error is obvious on mere inspection. State v. Modern Recycling, Inc., 558
N.W.2d 770, 772 (Minn. App. 1997). This court may decline to reach an issue in absence
of adequate briefing. State Dep’t of Labor & Indus. v. Wintz Parcel Drivers, Inc., 558
N.W.2d 480, 480 (Minn. 1997).
Other than a general claim that the use of the same district court file number is
inappropriate, the city fails to illustrate how it was prejudiced by this. It is not obvious
on mere inspection how the use of the same file number for continuing matters between
the same litigants deprived the district court of subject-matter jurisdiction. This issue is
waived.
IV.
Both parties argue that the district court abused its discretion by sanctioning
Glaser, the city’s attorney, and his law firm in the amount of $2,000. Glaser and the city
assert that Glaser’s actions were objectively reasonable. Sheehy maintains that the
$2,000 sanction is insufficient because it only reflects Sheehy’s costs to defend against
the city’s motion to dismiss.
We review the district court’s award of sanctions under Minn. Stat. § 549.211(2014) and Minn. R. Civ. P. 11.03 under an abuse-of-discretion standard. Collins v.
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Waconia Dodge, Inc., 793 N.W.2d 142, 145 (Minn. App. 2011), review denied (Minn.
Mar. 15, 2011). If a party’s claims are not warranted by existing law or a nonfrivolous
argument for extension of existing or new law, the district court may grant the opposing
party sanctions. Minn. R. Civ. P. 11.02(b), 11.03. But “[a] [r]ule 11 sanction should not
be imposed when counsel has an objectively reasonable basis for pursuing a factual or
legal claim or when a competent attorney could form a reasonable belief a pleading is
well-grounded in fact and law.” Bergmann v. Lee Data Corp., 467 N.W.2d 636, 641
(Minn. App. 1991) (quotation omitted), review denied (Minn. May 23, 1991).
The district court ordered sanctions in the amount of $2,000 against Glaser and his
law firm on the grounds that
the City’s Motion to Dismiss makes claims about the factual
and procedural history of this matter that the court finds
objectively unreasonable and unjustifiable. In particular, the
City fundamentally mischaracterizes the basis for the court’s
September 6, 2013, summary judgment order. Sheehy notes
that the City incorrectly asserts that the question of the City’s
authority to accrue interest to the date of the vacated
assessment was decided by the court. The court finds that
this interpretation of the September 6, 2013, order is plainly
contradicted by the language of the court’s order.
The crux of the city’s argument is that the city council was legislatively authorized
to fundamentally alter the terms of a resolution so that it is entitled to collect interest from
Sheehy dating back to an assessment that had been set aside by the district court. The
city has consistently refused to accept the district court’s authority to rule on the plain
language in resolution 13-009 that it provided to the district court. The city attempted to
circumvent the district court’s decision by backdating an amended version of the
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resolution to replace the resolution that it claimed to have mistakenly supplied to the
district court. When the district court imposed sanctions and directed the city to file a
response to the reasonableness of Sheehy’s requested fees, the city instead filed “a
barrage of paperwork challenging the summary judgment.”3
Glaser has repeatedly attempted to deflect his own errors onto the district court by
blaming the sanctions on the fact that the 2013 and 2014 assessment appeals share the
same court file number, insinuating that “confusion with the City’s arguments related to
this procedural irregularity ultimately led the court to sanction the City attorney” and
suggesting that the district court misunderstood his legal argument. These claims are
baseless. A thorough review of the record reveals that the district court patiently and
exhaustively addressed the concerns of both parties throughout the entirety of this
litigation. The record amply supports the district court’s finding that “any competent
attorney reading the order in full and completing a reasonable investigation would
conclude that the September 6, 2013 order critically depended on the court’s construction
of the specific interest provisions of Resolution 13-009.” The district court did not abuse
its discretion by sanctioning Glaser and his law firm.
Sheehy contends that the district court abused its discretion by only awarding
$2,000 based on the legal fees related to the city’s motion to dismiss. Sheehy maintains
that the city and Glaser never availed themselves of the opportunity to correct their
actions or to respond appropriately during the litigation but instead “continued to file
3
The district court limited its sanctions to Glaser, finding “no basis for attributing any of
the alleged violations of Rule 11 in the City’s motion to dismiss to the City itself.”
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motion after motion forcing Sheehy to incur more and more legal fees to defend against
each motion.” Sheehy argues that the district court erred by limiting sanctions solely to
costs incurred as a result of the motion to dismiss as opposed to the costs associated with
all of the motions that Sheehy was forced to respond to after the September 2013 order.
We recognize that the record in this matter could justify a higher sanctions award,
but we will not substitute our judgment for that of the district court absent a clear abuse
of discretion. Arundel v. Arundel, 281 N.W.2d 663, 667 (Minn. 1979). A district court
has “wide discretion in determining the type of sanctions it deems necessary.” Peterson
v. Hinz, 605 N.W.2d 414, 417 (Minn. App. 2000), review denied (Minn. Apr. 18, 2000).
The district court provided a thorough rationale of its decision to limit sanctions to any
expenditures taken in response to the city’s motion to dismiss. And the district court’s
sanction is not against the facts in the record. See City of N. Oaks v. Sarpal, 797 N.W.2d
18, 24 (Minn. 2011) (“[A] district court abuses its discretion when its decision is against
the facts in the record.”). We therefore decline to interfere with the amount of the district
court’s sanction.
V.
An appellant must prepare an addendum to the principal brief that includes “a
copy of any order, judgment, findings, or trial court memorandum in the action directly
relating to or affecting the issues on appeal.” Minn. R. Civ. App. P. 130.02. During oral
argument, Glaser became aware that the addendum to the city’s brief improperly included
resolution 13-009A and subsequently moved this court to amend his addendum to include
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resolution 13-009. We grant the city’s motion to amend its addendum to align with the
requirements of the rules.
Affirmed; motion granted.
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