This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480A.08, subd. 3 (1998).

 

 

STATE OF MINNESOTA

IN COURT OF APPEALS

C5-00-886

 

 

Dennis Lewis, et al,

Appellants,

 

vs.

 

Black & Veatch Construction, Inc., et al.,

Defendants,

 

Symmes, Maini & McKee Associates, Inc.,

d/b/a SMMA,

Respondent,

 

AND

 

Black & Veatch Construction, Inc.,

Third-Party Plaintiff,

 

vs.

 

ProCom Towers, Inc., et al.,

Third-Party Defendants.

 

 

Filed December 5, 2000

Reversed

Mulally, Judge*

 

Dakota County District Court

File No. C19910400

 

Randal W. LeNeave, Richard L. Carlson, Hunegs, Stone, Koenig, LeNeave & Kvas, P.A., 1650 International Centre, 900 Second Avenue South, Minneapolis, MN 55402 (for appellants)

 

John M. Harens, Holly J. Newman, Moore, Costello & Hart, P.L.L.P., 701 Fourth Avenue South, Suite 1350, Minneapolis, MN 55415-1823 (for respondent)

 

            Considered and decided by Klaphake, Presiding Judge, Lansing, Judge, and Mulally, Judge.

U N P U B L I S H E D   O P I N I O N

MULALLY, Judge

Appellant Dennis Lewis sued respondent Symmes, Maini & McKee Associates, Inc., d/b/a/ SMMA, among others, in connection with injuries he received in a fall from a telecommunications tower.  The district court granted summary judgment for SMMA and awarded sanctions against Lewis.  Lewis appeals only the sanctions.  We reverse.

FACTS

On or about August 2, 1997, Lewis was injured in a fall from a telecommunications tower.  On July 30, 1999, just before the running of the two-year statute of limitations, Lewis served a summons and complaint on SMMA and several other parties in connection with the accident.  Before serving the complaint, Lewis’ attorneys found a building permit dated September 12, 1997 for the tower involved in the accident.  The permit listed SMMA as the architect/engineer for the project covered by the permit and described the work to be done as “additional ground equipment & antenna on permitted PCS monopole.”  Based on the permit and the imminent running of the statute of limitations, Lewis’ attorneys named SMMA as a defendant. 

On December 17, 1999, SMMA served a notice of motion and motion for summary judgment.  On January 21, 2000, SMMA served an amended notice of motion and motion for summary judgment; the only change between the original and amended notices is the date on which the motion was to be heard. 

Also on January 21, 2000, SMMA’s counsel sent Lewis’ counsel a letter informing Lewis that SMMA would seek sanctions unless Lewis dismissed his claims against SMMA before February 1, 2000.  Although the letter appears to base its demand largely on Lewis’ alleged failure to provide a proper affidavit of expert review as required by Minn. Stat. § 544.42 (1998) the letter did  “note that Plaintiff has failed to produce any evidence that SMMA had any involvement with the tower prior to Mr. Lewis’ fall.”  On February 11, 2000, SMMA’s counsel sent Lewis’ counsel another letter threatening to seek sanctions.  SMMA claimed that it had completed a thorough review of its corporate records, which failed to reveal any connection with the tower at issue. 

On March 20, 2000, the district court held a hearing on SMMA’s motion for summary judgment, but Lewis’ counsel did not appear.  The district court granted SMMA’s motion without argument, observing—apparently on the basis of Lewis’ counsel’s failure to appear—“We have victory, right?”  The court also awarded $500 in sanctions to each counsel for parties other than SMMA that had attended the hearing and stated that it would review SMMA’s request for sanctions. 

The same day, the court signed an order granting SMMA’s motion for summary judgment, dismissing all claims against SMMA, and awarding $4,467.37 in sanctions to SMMA, as well as the $500 to each of the other parties that had appeared at the hearing.[1]  The court made no specific findings in support of its award of sanctions, instead basing its decision on “Defendant’s (SMMA) motion, affidavits, pleadings herein, * * * arguments of counsel and * * * all of the records, files and proceedings herein, and in light of the non-appearance of plaintiff.”  (Emphasis in original.) 

Later that same day, Lewis’ counsel spoke with counsel for one of the defendants and learned that the hearing on SMMA’s motion for summary judgment had been held earlier in the day.  The next day, March 21, Lewis served a motion to stay and reconsider entry of judgment, or in the alternative, to vacate judgment.  SMMA opposed the motion and moved for additional sanctions. 

The district court conducted a hearing on those motions on April 20.  The argument focused on the requirements for vacating the summary judgment; the parties did not directly address SMMA’s request for sanctions.  The same day, the district court issued its order denying Lewis’ motion to reconsider or vacate, affirming its March 21, 2000 order “in all respects,” denying SMMA’s motion for further sanctions, and denying “SMMA’s Motion for Plaintiffs’ Counsel to pay SMMA’s reasonable attorney’s fees and costs.” 

D E C I S I O N

The district court did not explain its reasons for awarding sanctions against Lewis; indeed, the district court did not even specifically address the justification for sanctions in either of its orders or at either of its hearings.  SMMA argues that the sanctions can be upheld on the basis of either Minn. Stat. § 549.211 (1998) or Minn. R. Civ. P. 11.  Under either the statute or the rule we review the district court’s decision to award sanctions using an abuse of discretion standard.  Leonard v. Northwest Airlines, Inc., 605 N.W.2d 425, 432, 433 (Minn. App. 2000), review denied (Minn. Apr. 18, 2000).

Minn. Stat. § 549.211 contains specific procedural requirements, including the requirement that “[a] motion for sanctions under this section must be made separately from other motions or requests.”  Minn. Stat. § 549.211, subd. 4(a).  But SMMA’s request for sanctions was included in its pleadings entitled “Symmes, Maini & McKee Associates, Inc., d/b/a SMMA’s Notice of Motion and Motion for Summary Judgment” and “Symmes, Maini & McKee Associates, Inc., d/b/a SMMA’s Amended Notice of Motion and Motion for Summary Judgment.”  Both of those documents included a section entitled “Motion,” which included SMMA’s request for sanctions as one of its four prayers for relief.

SMMA argues—without citation to authority—that the separate request for sanctions in the “Motion” section of the notice and the amended notice, as well as a separate section of argument in its memorandum of law, suffice to constitute a motion “made separately” for the purposes of Minn. Stat. § 549.211.  SMMA’s argument is contradicted by both logic and authority.

We construe statutes according to the ordinary meaning of their language.  Minn. Stat. § 645.08(1) (1998) (requiring construction of statutory words and phrases according to common usage); State v. Hannuksela, 452 N.W.2d 668, 677 n.12 (Minn. 1990) (attributing ordinary meaning to statutory terms).  As a matter of ordinary usage, a request for sanctions included in a motion that is titled a motion for summary judgment is not “made separately” from the motion for summary judgment. 

Furthermore, while no Minnesota case seems to have decided whether a request made within another motion is “made separately from other motions or requests,” authority from other jurisdictions indicates that it is not.  Minn. Stat. § 549.211 is substantially similar to the current version of Federal Rule of Civil Procedure 11.  Compare Minn. Stat. § 549.211, subd. 4(a) with Fed. R. Civ. P. 11.  Because the text of our statute so closely resembles the text of the federal rule, authority interpreting the federal rule is helpful in understanding our statute.  See Uselman v. Uselman, 464 N.W.2d 130, 142 (Minn. 1990) (cases interpreting then-applicable version of Fed. R. Civ. P. 11 are “valuable guidelines in understanding [the] purpose and application” of Minn. R. Civ. P. 11 because “there are only minor and insignificant differences between” the rules).

The Advisory Committee Notes to the 1993 amendment of Fed. R. Civ. P. 11, the version of the rule that introduced the language that is also now found in Minn. Stat. § 549.211, specifically rejected SMMA’s interpretation.  The advisory committee observed that “[t]he rule provides that requests for sanctions must be made as a separate motion, i.e., not simply included as a prayer for relief contained in another motion.”  Fed. R. Civ. P. 11 (1993 advisory comm. note) (emphasis added). 

In addition, the Vermont Supreme Court, interpreting its “identical” version of rule 11, has recently held that a request for sanctions made within a summary judgment motion was not “made * * * separately” as the rule required, citing Wright & Miller’s well-known treatise on federal procedure as authority.  Bennington Realty, LLC v. Jard Co., 726 A.2d 56, 58 (Vt. 1999) (citing 5A C. Wright & A. Miller, Federal Practice & Procedure § 1337 (2d ed. Supp. 1998)).  Thus, both the plain language of the statute and the interpretation of that language by other authorities support the conclusion that SMMA’s motion was not “made separately from other motions or requests.”

Because SMMA did not comply with the statute’s procedural requirements, we cannot uphold the district court’s award of sanctions on the basis of Minn. Stat. § 549.211.  See Lucio v. School Bd. of Indep. Sch. Dist. No. 625, 574 N.W.2d 737, 743 (Minn. App. 1998), review denied (Minn. Apr. 30, 1998).  If the court imposed sanctions under Minn. Stat. § 549.211, it abused its discretion.

We next consider whether we can affirm the sanctions based on Minn. R. Civ. P. 11.  Rule 11 does not contain the sorts of detailed procedural requirements found in Minn. Stat. § 549.211.  Instead, it merely requires attorneys to make a “reasonable inquiry” before certifying that a pleading is “well grounded” in fact and law and to refrain from any “improper purpose.”  Minn. R. Civ. P. 11.  Furthermore, unlike an award of statutory sanctions, which requires a finding of subjective bad faith, Uselman, 464 N.W.2d at 140, the standard for awarding sanctions under rule 11 is an objective standard of reasonableness under the circumstances.  Id. at 142-43. 

Lewis, however, argues that it cannot be liable for rule 11 sanctions because “[i]n order to impose sanctions under rule 11, the Court must make a finding that the act constituting the violation was made in bad faith,” citing Whalen ex rel. Whalen v. Whalen, 594 N.W.2d 277, 282 (Minn. App. 1999).  To support the proposition, the Whalen court cited page 140 of the Uselman decision.  That page of the decision, however, does not discuss rule 11.  Instead, it discusses Minn. Stat. § 549.21 (now § 549.211), under which the court did need to make a finding of subjective bad faith.  Uselman, 464 N.W.2d at 140 (“Requisite to an award of statutory sanctions is that counsel proceeded in bad faith.” (emphasis added)). 

The Uselman court did not begin its discussion of rule 11 until page 141 of the opinion.  Id. at 141 (“We then consider the propriety of the sanctions imposed on the basis of Minn. R. Civ. P. 11.”).  The court first noted that under the former version of rule 11, “[a]s with Minn. Stat. § 549.21 (1982), a finding of subjective bad faith was a prerequisite to the imposition of sanctions.”  Id.  But the court went on to explain that the current version of rule 11 eliminates the requirement of subjective bad faith and replaces it with an objective standard of reasonableness under the circumstances.  Id. at 142-43.  Under the supreme court’s decision in Uselman, a finding of bad faith is not necessary to the imposition of Rule 11 sanctions.

Lewis’ counsel explained that the reasons for naming SMMA as a defendant were the building permit that implied SMMA had worked on the project and the imminent running of the statute of limitations.  In considering whether to impose sanctions, a court may consider the time available to the attorney to file the pleading.  Thomas v. Capital Sec. Servs., 836 F.2d 866, 875 (5th Cir. 1988) (factors a trial court may consider when deciding whether reasonable inquiry was undertaken include time that was available to the attorney signing the pleading); Miller v. Badgley, 753 P.2d 530, 539 (Wash. Ct. App. 1988) (same).  In fact, in its comments at the second hearing (on Lewis’ motion to reconsider or vacate the summary judgment) the district court appeared to recognize that the imminent running of the statute of limitations was a relevant factor by stating, “I realize you have to sue everybody if the statute is running.”

SMMA’s basic contention in seeking sanctions is that Lewis’ counsel failed to perform a “reasonable inquiry” before filing the suit, entitling SMMA to an award of sanctions in the full amount of the reasonable attorney fees and costs it expended in defending the suit.  But given the building permit and the law that makes the imminent running of the statute of limitations a factor in considering the reasonableness of Lewis’ counsel’s investigation, we do not believe Lewis’ counsel’s decision to sign a complaint naming SMMA as a defendant was sanctionable under Rule 11.  Cf. Teamsters Local 282 Pension Trust Fund v. Angelos, 624 F. Supp. 959, 964 n.9 (N.D. Ill. 1985) (stating in dicta, “If * * * Rule 11’s ‘reasonable inquiry’ * * * left counsel faced with a choice between turning over the last few investigative stones and letting a statute of limitations run, no court would consider sanctions for filing suit without having completed all the spadework.”), aff’d, 815 F.2d 452 (7th Cir. 1987). 

The court’s statement at the second hearing—”I realize you have to sue everybody if the statute is running”—suggests that the district court agreed with this analysis and did not consider the initial naming of SMMA as a defendant to be sanctionable.  Indeed, the district court did not grant SMMA’s request to receive as sanctions all its attorney fees and costs incurred in defending the action.  In a supplemental affidavit, SMMA requested that the court award it $7,189.00 in fees and $1,376.56 in costs as sanctions against Lewis.  The court, however, did not award the full amount, instead awarding SMMA $4,467.37.  Because the court did not explain its award, we cannot be sure, but this lesser amount may reflect the court’s belief that Lewis maintained the action past the point of reasonableness in the absence of evidence of SMMA’s involvement:

Once you realize they don’t have an interest or prove to you they don’t have an interest in Minnesota, we say good-bye to you.  Otherwise, they want sanctions and they want attorney fees and all the stuff that I’ve partially granted.

 

If this is the theory on which the district court awarded sanctions, however, the court again failed to provide Lewis with the required procedural safeguards.  Under Uselman, before a court may impose rule 11 sanctions, “the attorney or party must have fair notice of both the possibility of a sanction and the reason for its proposed imposition.”  Uselman, 464 N.W.2d at 143 (emphasis added). 

SMMA’s justification for sanctions has consistently been that Lewis failed to perform a reasonable inquiry before naming SMMA as a defendant.  Because rule 11 imposes sanctions on an attorney only when a “pleading, motion or other paper is signed in violation of [the] rule,” SMMA essentially contends that Lewis’ counsel violated Rule 11 by signing the complaint.  But the district court appeared to reject that contention, judging from its statements at the second hearing and its refusal to award the entire amount of attorney fees and costs SMMA requested as sanctions.  

If the district court believed that Lewis was liable for rule 11 sanctions for a different reason—because Lewis’ counsel signed some later pleading, motion or other paper that maintained the action past the point of reasonableness in light of the absence of evidence of SMMA’s involvement—it was required to give notice to Lewis that it was considering imposing sanctions for that reason.  No such notice appears anywhere in this record.  Uselman requires that the party must have notice of “both the possibility of a sanction and the reason for its proposed imposition,” Uselman, 464 N.W.2d at 143. 

Thus, whether the district court imposed sanctions under Minn. Stat. § 549.211 or under Minn. R. Civ. P. 11, it abused its discretion.

Reversed.



* Retired judge of the district court, serving as judge of the Minnesota Court of Appeals by appointment pursuant to Minn. Const. art. VI, § 10.

[1] Although the court’s order ostensibly grants SMMA over four million dollars (“$4,467.37”), this is obviously a typographical error; SMMA itself refers to a figure of $4,467.37 in a March 22, 2000 letter to Lewis.