Opinion
No. C0-01-2216
Filed June 18, 2002.
Appeal from the District Court, Goodhue County, File No. C100650.
Gregory M. Bistram, Matthew A. Slaven, and Thomas E. Gorman, (for appellant)
Donald W. Savelkoul, for respondents)
This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (2000).
UNPUBLISHED OPINION
Appellant Citation Homes, Inc. appeals from the imposition of a sanction for submitting a false affidavit on summary judgment in violation of Minn.R.Civ.P. 56.07. We affirm the imposition of the sanction but reverse and remand for a redetermination of the amount of the sanction.
FACTS
Citation sued respondents Douglas A. Felton, et al. (Felton) to enjoin Felton from interfering with access across Felton's property to Citation's adjoining property and to establish a permanent easement over Felton's property under theories of prescriptive or implied easement.
Citation alleged in its complaint that "[i]t is necessary to cross a portion of [Felton's] Property to gain access to [Citation's] Property from County Road 24." Citation asserted that it and its predecessors have used the driveway and dirt road across Felton's property to gain access to their property for at least 15 years in a manner that entitled Citation to an easement by prescription. Citation also asserted entitlement to an implied easement.
At the time it initiated suit, Citation submitted affidavits to support a motion for a temporary restraining order. The affidavit of Steve Grodahl, Citation's vice president, states that:
[I]n order to access [Citation's] property from County Road 24, it is necessary to cross a portion of [Felton's] property.
* * * *
Because [Felton has] blocked [Citation's] access, [Citation] cannot get to its property.
The affidavits of Lawrence and Virginia Coss, Citation's predecessors, state that "[i]n addition, there was no other access to the property except using this [proposed easement]." (emphasis added). The district court granted a temporary restraining order.
Subsequently, Douglas Felton submitted an affidavit challenging Citation's claim that it lacked other access to its property. Felton asserted that Citation has 1,000 feet of frontage adjacent to County Road 24 and additional access from 330th Street, which abuts Citation's property on the north, where there is a field road from the street onto the property.
After the parties stipulated to a resolution of Citation's request for injunctive relief pending litigation, Felton, without engaging in discovery, moved for summary judgment, arguing that Citation and its predecessor's use of Felton's property was permissive and that Citation has other access to the property. Citation relied, in part, on the previously filed affidavits, stating that there was no other access, to oppose Felton's summary judgment motion. Citation argued that (1) whether the use of the road over Felton's property is "necessary" was one of the genuine issues of material fact making summary judgment inappropriate; (2) in the context of an implied easement, "necessary" means reasonably necessary or convenient to the beneficial use of the property, not "indispensable;" and (3) although its property is adjacent to public roads, the majority of the property is not accessible from those public roads because of the topography of the property.
On January 5, 2001, Felton moved for recovery of attorney fees, costs, and disbursements pursuant to Minn. Stat. §§ 549.09 and .21 (2000) and Minn.R.Civ.P. 11 and 56.07 for Citation's failure to disclose a specific agreement between Citation's predecessors and the Goodhue County Highway Department for access to the property from County Road 24.
On January 9, 2001, the district court granted Felton's motion for summary judgment, stating that Citation had failed to establish any genuine issue of material fact, undisputed alternative access to Citation's property is available, and there is no evidence that the convenience of the proposed easement outweighs the Felton's property interests.
After the April 20, 2001 hearing, the district court found that Citation had misrepresented to the court that there was "no other access" to its property and had failed to disclose the access specifically granted to Citation's predecessors by the Goodhue County Highway Department on November 24, 1997.
[Citation], through its designated agent * * * and its owners and officers, had knowledge of the feasibility of alternate road access that was not disclosed in the affidavits submitted to the Court.
[Citation] acted in bad faith through omission, by its failure to disclose any aspect of the separate road access negotiations and agreement, and the feasibility of such access based upon the 1997 negotiations.
In the memorandum accompanying the order granting Felton's motion, the district court stated:
There is no serious doubt that honest disclosure of the separate road access negotiations and agreement * * * would have been relevant for the Court's consideration. A critical witness omission, by its nature seldom detectable, is quite possibly the most menacing form of lie.
Whether [Citation] elected to "use" the separate road access * * * is not the issue. The decision of the owners to withhold evidence of the alternate road access * * * with road access the central dispute, was a blatant falsehood calculated to mislead the Court.
Rule 56.07 provides that the Court "shall" award reasonable expenses and attorney fees based upon [Citation's] bad faith in this case.
The district court granted Felton's motion for sanctions under Minn.R.Civ.P. 56.07 and denied Felton's motions for sanctions under Minn.R.Civ.P. 11 and Minn. Stat. § 549.211, subd. 5.
Felton was required to submit an affidavit pursuant to Minn. Gen. R. Prac. 119.02 describing information required to be provided with a motion for attorney fees. The affidavit submitted itemized fees, costs, and disbursements for the entire lawsuit and did not specify which, if any, of the expenses were due to the use of the objectionable affidavits in the summary judgment proceeding. Counsel for Felton stated in the affidavit:
It is my belief that none of the * * * fees or costs * ** would have been incurred had [Citation] properly disclosed the existence of the "alternate access route" when this lawsuit was first commenced.
* * * *
[I]t is my request that [Felton] be awarded recovery of all of their attorney fees and costs * * * in this case, specifically, $16,895.98 paid to date, plus $405.00, pending for a total of $17,300.98.
The district court awarded $16,895.98 as "reasonable and recoverable pursuant to Minn.R.Civ.P. 56.07." The district court denied Citation's request for leave to file a motion to reconsider and denied Citation's post-order motions. This appeal followed.
DECISION
I. What is the appropriate standard of review?
Rule 56.07, by permitting a district court to award a party reasonable expenses incurred as the result of another party's submission of false affidavits in connection with a summary judgment motion, "delineates the inherent power of the court to preserve the integrity of summary judgment procedures." 2 David F. Herr Roger S. Haydock, Minnesota Practice § 56.41 (3rd ed. 1998). We have not previously addressed the specific question of the appropriate standard of review for a determination that affidavits were submitted in bad faith, triggering sanctions under rule 56.07. We hold that the appropriate standard is abuse of discretion, consistent with the standard of review applicable to other sanction cases. See Pratt Inv. Co. v. Kennedy, 636 N.W.2d 844, 851 (Minn.App. 2001) (stating that a district court's award of a rule 11 sanction is reviewed for an abuse of discretion); Cole v. Star Tribune, 581 N.W.2d 364, 370 (Minn.App. 1998) ("holding that [a]n abuse of discretion standard is applied to a district court's decision on sanctions under Minn. Stat. § 549.21 or Minn.R.Civ.P. 11" (citation omitted)).
II. Did the district court abuse its discretion by concluding that the affidavits were submitted in bad faith?
Citation argues that because Felton did not conduct discovery, Citation was not obligated to disclose the agreement between its predecessors and the highway department for access to the property. Citation also argues that, because its easement theories do not depend on there being no other access to the property, the district court erred by finding that the existence of alternative access was legally relevant. But the district court has broad discretion to determine what evidence is relevant. Johnson v. Washington County, 518 N.W.2d 594, 601 (Minn. 1994) (stating that evidentiary rulings concerning relevancy are within the district court's sound discretion and will only be reversed when that discretion has been clearly abused). Citation itself argued to the district court that "necessity" had to be considered under its theories, making the existence of alternative access relevant. The record supports the district court's determination that Citation intended to mislead the court regarding access to the Citation property. The fact that Felton did not engage in discovery may excuse Citation's failure to disclose information to Felton, but does not excuse Citation's provision of misleading information to the district court.
Citation argued for a de novo standard of review, asserting that the district court's decision is based on an erroneous view of the law.
Rule 56.07 provides:
Should it appear to the satisfaction of the court at any time that any of the affidavits presented pursuant to this rule are presented in bad faith * * * the court shall forthwith order the party submitting them to pay to the other party the amount of the reasonable expenses which the filing of the affidavits causes the other party to incur, including reasonable attorney fees.
Minn.R.Civ.P. 56.07.
Citation contends that even if evidence of the undisclosed access points to the
Citation property was relevant, the district court abused its discretion by finding that it submitted affidavits in bad faith. Citation also contends that Felton was not prejudiced by the affidavits. Felton argues that Citation submitted the affidavits in bad faith and that prejudice is not required.
Bad faith is not easily defined but includes "the commission of a malicious, willful wrong" and requires "fraudulent intent." Mjolsness v. Riley, 524 N.W.2d 528, 530 (Minn.App. 1994); Prichard Brothers, Inc. v. Grady Co., 436 N.W.2d 460, 466 (Minn.App. 1989), review denied (Minn. May 2, 1989). We conclude that bad faith, as the term is used in Rule 56.07, includes affidavits that make intentional and false statements or intentional omissions. We will not interfere with the determination of the district court that the omissions in this case were intentional, a determination based primarily on credibility left to the sound discretion of the district court. The rule does not require a showing of prejudice.
III. Did the district court abuse its discretion in determining the amount of sanctions?
Citation argues that the district court's award of attorney fees and expenses for the entire lawsuit is inappropriate because rule 56.07 permits only the recovery of fees incurred as a result of defending against false affidavits. Felton argues that the district court did not err by awarding fees incurred during the entire course of the litigation because all expenses in the lawsuit were incurred as a result of the false affidavits, which were submitted at the time Citation sought a temporary restraining order, not only in connection with Felton's motion for summary judgment.
Rule 56.07 sanctions are limited to the recovery of expenses and fees caused by the filing of false affidavits "presented pursuant to this Rule" in bad faith or solely for the purpose of delay. Minn.R.Civ.P. 56.07. Although an award for all fees and expenses incurred in the lawsuit may have been appropriate had the district court sanctioned Citation under Minn. Stat. § 549.211 or Minn.R.Civ.P. 11, we hold that the award is not appropriate for a sanction imposed pursuant to rule 56.07. A rule 56.07 sanction is plainly limited to expenses incurred in the context of the summary-judgment motion.
We reverse the amount of the sanctions and remand for a redetermination of fees and expenses incurred by Felton as a result of the use of the affidavits in opposition to the summary-judgment motion.