Opinion
No. C6-97-1002.
Filed December 16, 1997.
Appeal from the District Court, Hennepin County, File No. 9614361.
David G. Hellmuth, Randall H. Steinmeyer, Hellmuth Johnson, (for respondent).
Daniel B. Johnson, Meyer Njus, P.A., (for appellant).
Considered and decided by Huspeni, Presiding Judge, Toussaint, Chief Judge, and Kalitowski, Judge.
This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (1996).
UNPUBLISHED OPINION
Appellants/vendees Silver Crest Partnership and Andrew Grossman challenge the district court's order granting summary judgment in favor of respondent/vendor Townridge Apartments, contending respondent is not entitled: (1) to recover rents collected by appellants; or (2) to receive an award of punitive damages as a result of appellants' late return of security deposits. We affirm in part and reverse in part.
DECISION
While in default on a contract for deed for rental property, appellants collected rents for the month of June 1996. Appellants' redemption period expired June 8, 1996, and respondent immediately took possession of the property. Respondent brought this action to recover the prorated June rents, and in response to cross-motions for summary judgment, the district court determined: (1) respondent was entitled to recover the rents collected by appellants from June 8 to June 30; and (2) respondent was entitled to punitive damages under Minn. Stat. § 504.20, subd. 7 (1996), because appellants were late in returning the tenants' security deposits.
In reviewing a grant of summary judgment, the appellate court must determine "(1) whether there are any genuine issues of material fact and (2) whether the trial court erred in its application of the law." Betlach v. Wayzata Condominium , 281 N.W.2d 328, 330 (Minn. 1979). The nonmoving party is to receive "`the benefit of that view of the evidence which is most favorable'" and is entitled to have "[a]ll doubts and factual inferences * * * resolved against the moving party." Nord v. Herreid , 305 N.W.2d 337, 339 (Minn. 1981) (quoting Sauter v. Sauter , 244 Minn. 482, 484-85, 70 N.W.2d 351, 353 (1955)). Because both parties stipulated to the district court's statement of the facts, this court need only determine whether the district court erred in its application of the law. Fingerhut Corp. v. Suburban Nat'l Bank , 460 N.W.2d 63, 65 (Minn.App. 1990).
I.
When a contract for deed vendee is in default, the vendor has several possible remedies under the common law. Robitshek v. Maetzold , 198 Minn. 586, 588, 270 N.W. 579, 580 (1936). In addition, the vendor may cancel the contract by initiating an action for judicial termination or by giving statutory notice of cancellation under Minn. Stat. § 559.21. Covington v. Pritchett , 428 N.W.2d 121, 124 (Minn.App. 1988). Once the remedy of cancellation is elected, it is the vendor's exclusive remedy. Wayzata Enters., Inc. v. Herman , 268 Minn. 117, 119, 128 N.W.2d 156, 158 (1964). Statutory exclusivity provisions are intended to prevent double recoveries by vendors suing for payments due while also canceling the contract. Covington , 428 N.W.2d at 124.
Appellants contend that because respondent elected to cancel the contract for deed, under Covington , respondent has elected its remedy and thus cannot recover the prorated June rents. We disagree. Covington involved an attempt to recover rents for a period prior to the cancellation of the contract. Covington , 428 N.W.2d at 125. Here, respondent is not seeking payments under the contract or damages for the loss of the contract. Rather, respondent is seeking rents appellants collected for the period after the cancellation of the contract. Therefore, we conclude the doctrine of election of remedies is not applicable.
Appellants have no claim of right to the rents from June 8 to June 30. After June 8 appellants had no interest in the property and did not provide services for that 23-day time period. Conversely, after June 8, respondent was the "owner of the property and entitled to all rents accruing on account of the use and occupancy thereof." Fisher v. Heller , 174 Minn. 233, 235, 219 N.W. 79, 80 (1928).
Appellants contend respondent would have been within its rights to evict the current tenants after resuming full ownership on June 8. While this may be correct, we reject appellants' argument that by allowing the tenants to remain, respondent forfeited its right to the June rents. We note that Minn. Stat. § 504.201 (1996) deals with "Restriction on lease terms for buildings in financial distress." Although this statute was not cited by either party in the district court or on appeal, subdivision 2 reads in relevant part:
Once an owner has received notice of a contract for deed cancellation under section 559.21 * * *, the owner may enter into a periodic lease agreement with a term of two months or less or a fixed term tenancy not extending beyond the cancellation period or owner's period of redemption until:
the contract for deed has been reinstated or paid in full; Minn. Stat. § 504.201, subd. 2 (1996). Thus, the legislature has expressed an intent that defaulting owners not receive rent proceeds beyond the period of their ownership. Appellants' failure to follow the statute should not result in a windfall. Therefore, we affirm the district court's determination that respondent, as a mater of law, is entitled to the undisputed amount of $15,563.39 for rents collected by appellants for the period from June 8 to June 30.
II.
Appellants retained security deposits from 58 tenants in the amount of $12,195. Although appellants did not dispute their responsibility to turn over those deposits with accrued interest, as provided by Minn. Stat. § 504.20, subd. 5 (1996), they did not return the deposits to either the tenants or to respondent within the statutory timeframe. Eventually, appellants did return the security deposits, and challenge the district court's award of punitive damages to respondent pursuant to Minn. Stat. § 504.20, subd. 7.
The construction of a statute is clearly a question of law and thus fully reviewable by an appellate court. Hibbing Educ. Ass'n v. Public Employment Relations Bd. , 369 N.W.2d 527, 529 (Minn. 1985). Minn. Stat. § 504.20, subd. 7, provides:
The bad faith retention by a landlord of a deposit, the interest thereon, or any portion thereof, in violation of this section shall subject the landlord to punitive damages not to exceed $200 for each deposit in addition to the damages provided in subdivision 4. If the landlord has failed to comply with the provisions of subdivisions 3 or 5, retention of a deposit shall be presumed to be in bad faith unless the landlord returns the deposit within two weeks after the commencement of any action for the recovery of the deposit.
A reading of the statute as a whole leads us to conclude that the provision allowing punitive damages was enacted to protect tenants rather than landlords who are their successors in interest. Minn. Stat. § 504.20, subd. 7, specifically refers to the punitive damages as being "in addition to the damages provided in subdivision 4." Under subdivision 4, a landlord is liable "to the tenant for damages." Minn. Stat. § 504.20, subd. 4 (1996).
Further, a basic presumption in ascertaining legislative intent leads us to conclude respondent is not entitled to an award of punitive damages. Because appellants violated the statute by returning the security deposits late, any aggrieved tenants could have sued for their deposits and included a request for punitive damages. Allowing respondent to recover punitive damages from appellants for the same deposits would be a result not reasonably intended by the legislature. Under Minn. Stat. § 645.17(1) (1996), courts are to presume the legislature does not intend an absurd or unreasonable result.
Because Minn. Stat. § 504.20 was enacted to protect tenants and punitive damages must be directed to the persons the statute was intended to protect, we reverse the district court's award of punitive damages to respondent under Minn. Stat. § 504.20, subd. 7.