may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (2002).
IN COURT OF APPEALS
David E. Albright,
Phenix Development, Inc., et al.,
Affirmed in part, reversed in part
Dakota County District Court
File No. C8026759
Garfield Smith, P.O. Box 308, Cottage Grove, MN 55016 (for appellant Joseph Meger)
David E. Albright, 7814 131st Street West, Apple Valley, MN 55124 (pro se appellant)
John W. Clinton, 7616 Currell Avenue, Suite 200, Woodbury, MN 55125; and
Jack D. Nelson, 1563 Portland Avenue, St. Paul, MN 55104 (for respondents)
Considered and decided by Peterson, Presiding Judge, Harten, Judge, and Halbrooks, Judge.
U N P U B L I S H E D O P I N I O N
In this real-estate dispute, appellants Joseph Meger and his former attorney, David Albright, argue that the district court (a) erred in rejecting a fraud-based attack on a judgment in a related proceeding; (b) failed to allow adequate discovery before granting summary judgment; (c) abused its discretion by imposing sanctions; and (d) denied Albright due process of law. We affirm in part and reverse in part.
A mortgage on property owned by the Walkers was foreclosed. Later, in a proceeding to foreclose mechanics’ liens on that property, the parties to the lien-foreclosure proceeding stipulated that the mechanics’ liens, including one held by Prosch, Dev., Inc., would be removed from the property in exchange for personal judgments against the Walkers. Prosch’s attorney was to draft a proposed order for judgment and present it to the court after he obtained the approval of counsel for the other parties to that proceeding.
After the personal judgments were entered against the Walkers, Meger acquired the sheriff’s certificate from the mortgage foreclosure, and respondent Phenix Development, Inc., as assignee of Prosch’s judgment, redeemed the property from foreclosure. Phenix then mortgaged the property to Assured Financial, LLC. The district court subsequently vacated the judgment Prosch had assigned to Phenix because Prosch’s attorney had failed to obtain the approval of counsel for the other parties to the lien-foreclosure proceeding before tendering the order for judgment to the court. The district court then entered a revised judgment in favor of Prosch, nunc pro tunc to the date the first judgment had been entered. The second judgment differed from the first only in ways not relevant to this proceeding. The Walkers then challenged Phenix’s redemption, and this court affirmed the district court’s determination that the Walkers lacked standing to challenge Phenix’s redemption. Prosch v. Walker, No. C2-01-1374 (Minn. App. Feb. 12, 2002).
Meger, represented by Albright (who had represented the Walkers), started this action by suing Phenix and Assured Financial. Meger alleged that he owned the property. During these proceedings, new counsel was substituted for Albright. In an order addressing Phenix’s and Assured Financial’s motion to dismiss the case for failure to state a claim upon which relief could be granted, the district court rejected Meger’s arguments, ruling, among other things, that he lacked standing to sue, and awarded Phenix and Assured Financial sanctions against Meger and Albright. Meger and Albright appeal.
1. Phenix and Assured Financial argue that many documents in the appendix to appellants’ brief, and the arguments based on the documents, must be stricken as beyond the record on appeal and that the appeal must be dismissed. The record on appeal is limited to what was presented to the district court. Minn. R. Civ. App. P. 110.01; see Kelly v. City of Minneapolis, 581 N.W.2d 372, 379 (Minn. App. 1998) (striking documents beyond record on appeal and references to them in party’s argument), rev’d on other grounds, 598 N.W.2d 657 (Minn. Aug. 5, 1999). The substance of each of the documents in question is in the district court file. We decline to strike them and will not dismiss the appeal.
2. When, as here, the district court considers materials outside the pleadings in addressing a motion to dismiss for failure to state a claim on which relief can be granted, the motion is treated as one for summary judgment. Minn. R. Civ. P. 12.02. On appeal from a summary judgment, appellate courts ask whether there are any genuine issues of material fact and whether the district court erred it its application of the law. State by Cooper v. French, 460 N.W.2d 2, 4 (Minn. 1990).
Meger challenges the determination that he lacks standing to pursue this matter. Where facts are undisputed, standing is a legal question reviewed de novo. Joel v. Wellman, 551 N.W.2d 729, 730 (Minn. App. 1996), review denied (Minn. Oct. 29, 1996). Here, the relevant facts are not disputed.
Standing is the requirement that a party has a sufficient stake in a justiciable controversy to seek relief from a court. If a plaintiff lacks standing to bring a suit, the attempt to do so fails. Standing is acquired in two ways: either the plaintiff has suffered some “injury-in-fact” or the plaintiff is the beneficiary of some legislative enactment granting standing. The goal of the standing requirement is to ensure that issues before the courts will be “vigorously and adequately presented.”
State by Humphrey v. Philip Morris, Inc., 551 N.W.2d 490, 493 (Minn. 1996) (citations omitted).
Meger appears to argue that he has legislatively granted standing to challenge Prosch’s judgment because (a) Phenix participated in the fraud that produced Prosch’s judgment against the Walkers; (b) Minn. Stat. § 548.14 (2002) allows challenges to fraudulently obtained judgments; and (c) redemption cannot occur based on a fraudulently obtained judgment. Under Minn. Stat. § 548.14, “[a]ny judgment” obtained by fraud “of the prevailing party, may be set aside * * * by the aggrieved party[,]” but the interests of third parties “acquired under such judgment in good faith and without knowledge of the wrong complained of” are not affected.
In the Walker proceeding, Prosch (not Phenix) “prevailed” by obtaining a judgment via misrepresentations of its counsel, and neither Phenix nor its counsel is mentioned in the Walker district court’s description of the events producing the first judgment or the reasons for vacating that judgment. Also, Meger was not a party to the Walker proceeding. Therefore, Meger is not a party to the Walker proceeding who was aggrieved by the first judgment in that proceeding. Under these circumstances, Meger cannot seek to set aside the (already vacated) first judgment.
The second judgment in the Walker proceeding was entered nunc pro tunc to the date the first judgment had been entered. Therefore, the fact that the second judgment came into existence after Phenix redeemed the property did not impact Phenix’s ability to redeem the property. Moreover, not only does Meger not specifically allege any defect in the second judgment, but (a) his complaint in this action admits that the second judgment was properly entered; and (b) any rights that Meger, as the holder of the sheriff’s certificate, had in the property were rights that were subject to divestiture if a creditor redeemed. See Minn. Stat. § 580.12 (2002) (stating that holder of sheriff’s certificate obtains mortgagor’s interest upon expiration of the redemption period). Finally, to the extent that Meger argues that Phenix knew, or should have known, about Prosch’s fraud in procuring the first judgment, (a) that judgment was vacated; (b) it was replaced with a second judgment that Meger admits was properly entered; and (c) if Meger is alleging that there was some fraud in the procurement of the first judgment that was not remedied by its vacation and the entry of the second judgment, that assertion is far from clear and was not pleaded with anything remotely resembling the particularity required by Minn. R. Civ. P. 9.02. Thus, Meger was not a party to the Walker proceeding, was not aggrieved by the first (vacated) judgment, admits that the second judgment was entered properly, and failed to allege that there was some fraud in the procurement of the first judgment that was not cured by the entry of the second judgment. The district court did not err in ruling that Meger lacks standing to pursue this action under Minn. Stat. § 548.14.
3. Meger argues that the district court should not have granted summary judgment without allowing discovery.
To survive summary judgment, the nonmoving party generally has the burden to show that a genuine issue of fact exists. But when the nonmoving party has been allowed only minimal discovery and the information that party needs to survive summary judgment is in the moving party’s sole possession, summary judgment may be premature. The “[r]elative availability of evidence to the parties is a circumstance to be considered in determining what should be required for making a submissible case.”
U.S. Bank Nat’l Ass’n v. Angeion Corp., 615 N.W.2d 425, 433-34 (Minn. App. 2000) (citations & quotation omitted), review denied (Minn. Oct. 25, 2000). Meger alleges that he needed to determine whether Phenix participated in, or was aware of, the alleged fraud that produced the judgment in the Walker matter. Because such information was in Phenix’s possession, it arguably satisfied the Angeion profile of information for which a continuance could have been granted. But even if Phenix had known about, or participated in, the fraud that produced the first judgment, that knowledge or participation was irrelevant because the first judgment was vacated, the second judgment was entered nunc pro tunc to the date the first judgment had been entered, and Meger has not identified any fraud or other defect in the procurement of the first judgment that was not remedied by its vacation and the entry of the second judgment. Thus, Meger’s lack of discovery did not render the summary judgment premature. See McCormick v. Custom Pools, Inc., 376 N.W.2d 471, 477 (Minn. App. 1985) (stating summary judgment granted before completion of discovery not premature where additional discovery would not have aided in determining whether material fact issues existed or changed result of summary judgment motion).
4. The judgment imposes sanctions on Meger and Albright “pursuant to Minn. Stat. § 549.211 and Rule 11[.]” Meger and Albright argue that this record does not support an award of fees under Rule 11, but they do not challenge the use of Minn. Stat. § 549.211 as a basis for the award. The bases for awarding attorney fees under Rule 11 and Minn. Stat. § 549.211 are similar. Compare Minn. R. Civ. P. 11.02 (a)-(d) with Minn. Stat. § 549.211, subd. 2; see also Minn. R. Civ. P. 11 2000 adv. comm. cmt. (noting Rule 11 was amended to conform to the federal rule and that Minn. Stat. § 549.211 “follows federal practice”). Because the bases for awarding sanctions under Minn. Stat. § 549.211 and Rule 11 are similar, we construe appellants’ challenge to the use of Rule 11 as a basis for awarding sanctions to include a challenge to the use of Minn. Stat. § 549.211.
Whether to award fees and costs under Minn. Stat. § 549.211 and Rule 11 is discretionary with the district court. See Radloff v. First Am. Nat’l Bank, 470 N.W.2d 154, 156 (Minn. App. 1991), review denied (Minn. July 24, 1991). Here, while the district court did not identify which of several reasons for sanctions listed in these provisions was the basis (or bases) for the award, its conclusions of law state:
3. Because [Meger] and [Albright] knowingly brought unwarranted claims against [Phenix and Assured Financial], the Court concludes that [Phenix and Assured Financial] are entitled to attorney’s fees and costs pursuant to Minn. Stat. § 549.211 and Rule 11 of the Rules of Civil Procedure.
(Emphasis added). This conclusion indicates a violation of the provisions of Minn. Stat. § 549.211, subd. 2(2) and Minn. R. Civ. P. 11.02(b), both of which require that claims be “warranted by existing law or a nonfrivolous argument” to extend existing law. Under both Rule 11 and Minn. Stat. § 549.211, monetary sanctions may not be awarded against a represented party for making unsupported legal arguments. Minn. Stat. § 549.211, subd. 5(b), Minn. R. Civ. P. 11.03(b)(1). Therefore, we reverse the portion of the fee award made against Meger.
The crux of the challenge to the fee award is that, under Uselman v. Uselman, 464 N.W.2d 130, 142-43 (Minn. 1990) the question is whether the claims were reasonable under the circumstances, and here, Albright (a) alleges that he sought the advice of a title insurance lawyer and three other competent attorneys, and each viewed the relevant law as unsettled; (b) alleges that he conducted nationwide legal research and that this case appeared to be one of first impression nationally as well as in Minnesota; and (c) noted that even the district court viewed the issues as complicated. But a significant part of this argument is based on Albright’s second affidavit. Because that affidavit was not accepted by the district court, it is not properly before this court. See Minn. R. Civ. P. 110.01 (defining record on appeal). Therefore, we cannot consider it. Thiele v. Stich, 425 N.W.2d 580, 582-83 (Minn. 1988). Absent a record that supports Albright’s argument, the argument is not viable, and we must affirm the fee award.
5. Albright alleges he was denied due process of law because he was not allowed to make an argument on his own behalf before sanctions were imposed. To prevail on appeal, a party must show both error and that the error caused prejudice. Midway Ctr. Assocs. v. Midway Ctr., Inc., 306 Minn. 352, 356, 237 N.W.2d 76, 78 (1975). Albright does not explain what argument he would have made to the district court, and the arguments made on appeal are insufficient to require that the sanctions award be altered. Therefore, Albright has not shown that any error by the district court in not allowing him an opportunity to be heard was prejudicial, and we do not reverse the portion of the sanctions award against Albright. See Minn. R. Civ. P. 61 (requiring harmless error to be ignored).
Affirmed in part; reversed in part.
 Meger argues that the district court failed to address a major issue he sought to raise in district court: whether a junior creditor may successfully redeem property under a fraudulently obtained judgment that is subsequently vacated. This argument ignores the facts that the June 15 judgment was entered nunc pro tunc to before the redemption and that there is no indication that Phenix participated in the misrepresentations of Prosch’s counsel.