IN COURT OF APPEALS
Annette M. Gibson, et al.,
Trustees of the Minnesota State Basic Building
Trades Fringe Benefits Funds,
Pine County District Court
File No. C7-04-39
Matthew H. Beaumier, Gerlach Beaumier, 227 West First Street, Suite 500, Missabe Building, Duluth, MN 55802 (for respondents)
Stephen C. Kelly, Rosene, Haugrud & Staab, Chartered,
Considered and decided by Minge, Presiding Judge; Lansing, Judge; and Halbrooks, Judge.
When real estate held in joint tenancy is subject to a judgment lien against the interest of one joint tenant and that real estate is sold, the judgment creditor may recover from only the fractional share of the proceeds of the real estate attributable to the joint tenant who is the judgment debtor.
Appellant judgment creditor challenges the grant of summary judgment limiting its recovery to the fractional share of the proceeds of certain real property formerly owned by the judgment debtor as a joint tenant. Appellant also challenges the district court’s award of sanctions. Because appellant can recover only the proceeds attributable to the interest held by its debtor, and because the district court did not abuse its discretion in awarding sanctions, we affirm.
On May 13, 2003, judgment was entered against Elaine Gibson, one of the respondents, in favor of appellant Trustees of the Minnesota State Basic Building Trades Fringe Benefit Funds (“Trustees”) in the amount of $90,948.84. This judgment was filed in Pine County District Court on July 9, 2003.
Gibson and the three other respondents in this action owned non-homestead real property
Respondents sued for a judgment declaring that Elaine Gibson was entitled only to a one-fourth interest in the real estate, that appellant was entitled only to Elaine Gibson’s one-fourth interest in the proceeds, and that the escrow agent should release the remainder of the funds to the other three respondents. Appellant filed an answer and counterclaim, requesting judgment declaring that appellant could recover the judgment against Elaine Gibson from the entire amount held in escrow, not just one-fourth of the proceeds from the sale. On May 27, 2004, respondents served appellant with a summary judgment motion, a motion for Rule 11 sanctions, and a notice that a hearing would be held on June 28, 2004. These motions were filed with the court on June 17, 2004. Appellant filed a cross-motion for summary judgment.
After a June 28, 2004, hearing, the district court granted respondents’ motions for summary judgment and sanctions. Appellant moved for reconsideration of the grant of sanctions. The district court filed a supplemental order for fees, costs, and disbursements, requiring appellant to pay respondents more than $10,000 in attorney fees, disbursements and costs. This appeal follows.
I. May a judgment creditor of one joint tenant recover from the entire amount of the proceeds of the sale of property owned by four joint tenants?
II. Did the district court abuse its discretion in awarding sanctions?
first issue is whether the district court erred by denying appellant’s claim
that its docketed judgment against respondent Elaine Gibson constituted such a lien
on real property in which she held a joint tenancy interest as to enable appellant
to recover its debt from the entire proceeds of the sale of such property. When reviewing a summary judgment, an
appellate court asks two questions: (1) are there any genuine issues of
material fact; and (2) did the district court err in its application of the
by Cooper v. French, 460 N.W.2d 2, 4 (
argument that all of the proceeds of the property may be used to satisfy
Gibson’s debt “because [appellant’s] judgment lien attached to the entire
subject property” misstates the law.
When a judgment is docketed, it becomes a lien for the unpaid judgment
amount on “all real property in the county then or thereafter owned by the judgment debtor.” Minn. Stat. § 548.09, subd. 1 (2004)
(emphasis added). Here, it is undisputed
that Gibson, as a joint tenant, did not own the entire property. Therefore, appellants’ lien could not and did
not attach to the entire property; it attached to Gibson’s interest only. While the parties cite no Minnesota case
limiting a judgment creditor’s ability to recover to only that portion of the
proceeds of a property representing a joint-tenant judgment-debtor’s interest
in the property, several cases state that a judgment creditor can recover only
from the interest held by the joint-tenant debtor and indicate that, for
collection purposes, the debtor’s interest excludes the interests of other co-owners. Kipp v.
Sweno, 683 N.W.2d 259, 266 (
Kipp, the supreme court considered
whether a judgment against a husband could be executed against a homestead that
he owned in joint tenancy with his wife.
683 N.W.2d at 261. Not only does Kipp state that “a judgment creditor
cannot acquire more property rights in a property than those already held by
the [debtor,]” it also states that “a judgment debtor . . . may not increase
the reach of the judgment lien beyond the property owned by the judgment
Gau, the court considered whether the
state could recover a debt based on an old age assistance lien granted by the
recipient of assistance. 230
a charge only upon whatever interest in real property the [old age assistance] recipient owns and, where there are several interests owned by several parties, as in cases of joint tenancy . . . [the lien is] a charge only upon the interest owned by the [recipient], and not upon the interests owned by others.
in Steele, the supreme court
considered the purchase of real property at an execution sale, stating that a
judgment lien can only attach to the interest of the debtor, and therefore that
the purchaser cannot take a greater estate than that held by the debtor. 1
the case before us, we note both that (a) if Gibson had severed the joint
tenancy, she would have held a tenancy in common with an interest in the
property equal to her percentage ownership share, see Johnson v. Gray, 533 N.W.2d 57, 62 (
These authorities consistently limit a judgment creditor’s ability to recover to the interest held by the judgment debtor and indicate that the debtor’s interest, at least for collection purposes, is exclusive of interests held by other joint tenants. Also, appellant cites no caselaw and gives no convincing reason why it should be able to collect a larger share of the property’s proceeds than Gibson could have claimed. Allowing appellant to do so would ignore and severely impair the interests of the other joint tenants based on actions taken by one joint tenant in matters unrelated to the property. Therefore, we conclude that appellant cannot obtain a greater interest in the proceeds of the property than that attributable to Gibson and affirm the district court’s summary judgment that appellant may collect from only Gibson’s interest in the sale proceeds.
second issue is whether the district court erred in imposing sanctions on
appellant under Minn. Stat. § 549.211 (2004) and Minn. R. Civ. P. 11. Appellants allege that the award is
substantively and procedurally defective and that the amount is unreasonable. A party and its counsel may be sanctioned if
counsel violates his or her duty to ensure that “the claims, defenses, and
other legal contentions are warranted by existing law or by a nonfrivolous
argument for the extension, modification, or reversal of existing law or the
establishment of new law.”
A. Substantive Basis for Sanctions
Sanctions should not be imposed where the law is unsettled and a party makes an argument that is not a frivolous application of the law. Leonard, 605 N.W.2d at 433. If, however, a party brings an action based on a theory that does not exist and does not make a credible argument to support a modification of existing law, sanctions can be awarded. Radloff, 470 N.W.2d at 158.
B. Procedural Basis for Sanctions
argues that the sanctions award is procedurally defective because respondents
did not, as required by Minn. Stat. § 549.211, subd. 4 and
As a result of that hearing, the district court both ruled that it would award sanctions, and directed respondents to submit a detailed billing statement and a calculation of costs and fees. In response to respondents’ financial submissions, appellant sought reconsideration of the award of sanctions, but for reasons other than respondents’ alleged failure to satisfy the 21-day requirement. Almost four months later, and after an abortive appeal, appellant first argued that respondents failed to satisfy the 21-day requirement in a spontaneous memorandum of law to the district court that again requested that the district court “reconsider” the award of sanctions.
argued to the district court that this second request for reconsideration was,
among other things, improper both because appellant failed to obtain permission
to make it, and because it did not address the question then at issue: the
amount of sanctions to be awarded. See Minn. R. Gen. Pract. 115.11 (stating
“[m]otions to reconsider are prohibited except by express permission of the
court” and that “[r]equests to make such a motion . . . shall be made only by
letter to the court”); cf.
also argues that the attorney fees actually awarded by the district court were
unreasonable because the district court awarded fees based on services relating
to this action beginning in August 2003, even though the complaint was not
filed until January 9, 2004. The
district court has “wide discretion to award the type of sanctions it deems
necessary.” Kellar v. Von Holtum, 605
N.W.2d 696, 702 (
D E C I S I O N
Appellant, as a judgment creditor, is able to recover only against the proceeds of the interest held by Elaine Gibson, who was one of four people who owned real property as joint tenants. Because she was entitled only to one-fourth of the proceeds from the sale of the property, appellant can only recover that amount. Because appellant was essentially asserting that it was entitled to recover from the ownership interests of parties who were not debtors without providing adequate legal support for this conclusion, it was within the district court’s discretion to award sanctions against appellant for costs, fees, and disbursements related to respondents having to litigate to obtain the release of their funds.
 The parties did not litigate the status of the judgment lien with respect to the property that was sold after the judgment was docketed. However, it appears that the lien was transferred to the escrowed proceeds and that the property itself was sold free and clear of the judgment.
Appellant argues that if Elaine Gibson were the joint owner of a bank account,
it could recover against the total value of that account. Appellant fails to provide any authority that
this is a common-law rule, as opposed to a consequence that results from the
contractual terms of such a bank account or statutory definition of rights of
joint holders in bank accounts. See
Although the supreme court decision in Kipp
was contemporaneous with the summary judgment motion in this proceeding, the
case recognizes the issue in this case as settled law. Cf.
Kipp v. Sweno, 629 N.W.2d 468, 471-73