This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (2002).
STATE OF MINNESOTA
IN COURT OF APPEALS
DaimlerChrysler Services North America, L.L.C.,
a Michigan limited liability company,
f/k/a Chrysler Financial Company L.L.C.,
a Michigan limited liability company,
f/k/a Chrysler Financial Corporation,
a Michigan corporation and its successors in interests,
Ramsey County Sheriff,
Filed September 23, 2003
Ramsey County District Court
File No. C2-02012445
Larry Alexander, 875 Laurel Avenue, St. Paul, MN 55104 (pro se appellant)
William J. Fisher, Brian L. McMahon, Gray, Plant, Mooty, Mooty & Bennett, P.A., 3400 City Center, 33 South Sixth Street, Minneapolis, MN 55402 (for respondent DaimlerChrysler North America, L.L.C.)
Considered and decided by Lansing, Presiding Judge, Schumacher, Judge, and Minge, Judge.
U N P U B L I S H E D O P I N I O N
Larry Alexander sued DaimlerChrysler Services (DCS) seeking to establish an interest in real property that DCS had purchased following a successful foreclosure action against Alexander’s former spouse. After denying Alexander’s motion to amend his complaint, the district court dismissed the suit, granted DCS’s motion for sanctions, and dismissed Alexander’s notice of lis pendens. Because Alexander failed to assert his claim through intervention in the foreclosure action, he is now equitably estopped from challenging DCS’s rights to the property. And because the district court did not abuse its discretion in denying the motion to amend, discharging the lis pendens, or granting DCS’s sanctions motion, we affirm.
F A C T S
This action, and several previous actions brought by appellant Larry Alexander, is a collateral attack on a 1996 foreclosure-by-action and subsequent sheriff’s sale of real property located on Lexington Avenue in St. Paul. Alexander’s former wife, Georgina Stephens, was the sole defendant in the foreclosure action. This current action is based on Alexander’s assertion that he held a one-half undivided interest in the Lexington property at the time of the foreclosure and that his interest survived the foreclosure and subsequent sale.
Alexander’s claim to the property traces back to a series of transactions in 1989. The district court that presided over the foreclosure action found that in April 1989 Alexander submitted an application to a predecessor of DCS for a $50,000 loan to be secured by the Lexington property. The property was at that time owned by a corporation of which Alexander was the sole shareholder. After a credit report revealed that Alexander was a credit risk, he withdrew his application on May 18, 1989.
On that same day, Stephens submitted an application to DCS seeking the same financing arrangement. Stephens advised DCS she would purchase the property from Alexander’s corporation. It was understood by DCS that a standard purchase agreement would be drawn, and that at closing Alexander’s corporation would execute a warranty deed to Stephens, who would execute a mortgage and note giving DCS a first mortgage on the property. On May 23 Stephens submitted a purchase agreement and warranty deed to DCS and executed a mortgage and note in the amount of $50,000.
In February 1990, after defaulting on the loan, Stephens sued DCS seeking to rescind the loan under the federal Truth in Lending Act. The district court determined that the Act was inapplicable and granted DCS’s counterclaim for foreclosure. This court affirmed that decision, Stephens v. Chrysler First Financial Services Corp. of Am., No. C0-97-153 (Minn. App. Aug. 12, 1997), and the supreme court denied review on Sept. 12, 1997. The property was sold to DCS at auction, and the district court issued an order confirming that sale. Stephens did not appeal.
In October 1997 Alexander sought an order setting aside the court’s orders in Stephens v. Chrysler. The district court granted DCS’s motion to dismiss Alexander’s claims because he had failed to intervene in the initial suit. Finding Alexander’s suit “completely frivolous,” the district court ordered Alexander to pay DCS $11,567.27 in attorneys’ fees. After Alexander was evicted from the Lexington property, he brought several further motions in district court. Each of these motions was rejected and Alexander was again ordered to pay DCS’s attorneys’ fees. Alexander also sued in federal district court, attempting to assert an interest in the property. This suit was dismissed with prejudice.
In this action, Alexander claims that his company deeded the property to Stephens by unrecorded warranty deed on May 22, 1989, and that Stephens, on that same day, deeded a “50% joint tenancy interest” back to Alexander, again by unrecorded warranty deed, thereby allowing Alexander to retain a superior interest in the Lexington property that was unaffected by the foreclosure action against Stephens. After concluding that Alexander’s claims were barred under the doctrines of collateral and equitable estoppel and merger and bar, the district court granted summary judgment in favor of DCS, discharged a notice lis pendens that Alexander had filed, and granted DCS $24,403.55 in attorneys’ fees. This appeal followed.
D E C I S I O N
Alexander contends that the district court erred in concluding his claims against DCS were barred under several estoppel principles. Whether a party is estopped from litigating an issue is a question of law subject to de novo review. Hennepin County v. Hanneman, 472 N.W.2d 149, 152 (Minn. App. 1991), review denied (Minn. Aug. 29, 1991).
Each of Alexander’s claims in this suit presumes that at the time of the foreclosure action he held a one-half undivided interest in the property, as he now asserts. This assertion finds no support in the record beyond an unrecorded warranty deed he presented to the district court.
Even assuming the validity of his claimed interest in the property, however, Alexander’s failure to assert that interest and intervene in the original foreclosure action estops his current claims. Equitable estoppel arises when “one by his . . . silence when he ought to speak, intentionally or through culpable negligence, induces another to believe certain facts to exist, and such other rightfully acts on the belief so induced and in such a matter that if the former is permitted to deny the existence of the facts it will prejudice the latter.” Gresser v. Hotzler, 604 N.W.2d 379, 385 (Minn. App. 2000) (quoting Transamerica Ins. Group v. Paul, 267 N.W.2d 180, 183 (Minn. 1978)).
Minnesota courts have long recognized that to protect an interest in property, the holder of the interest must assert that interest in litigation over the estate. In 1910 the Minnesota Supreme Court explained that
[i]f one has a claim against an estate, and does not disclose it, but stands by and suffers the estate sold and improved, with knowledge that the title has been mistaken, he will not afterwards be allowed to assert his claim against the purchaser. And justly so, because the effect of his silence has actually misled and worked harm to the purchaser.
Macomber v. Kinney, 114 Minn. 146, 156-57, 128 N.W. 1001, 1004 (1910).
In this case Alexander does not deny contemporaneous knowledge of the foreclosure action against the property. His contemporaneous assertion of a “spousal inchoate interest” in the property did not put DCS on notice that he claimed to hold a vested, enforceable right to the property. Because it is abundantly clear that DCS proceeded against Alexander’s former wife in the initial action on the assumption that she was the fee owner of the property, DCS would be prejudiced were Alexander now permitted to claim to have held a contemporaneous one-half interest in the property. We therefore conclude that the district court did not err by adopting the reasoning of the court in one of the earlier collateral actions and holding that Alexander’s claims relating to the property were equitably estopped.
Because we affirm the district court’s decision on the basis of equitable estoppel, we need not consider Alexander’s challenge to the district court’s determination that the claims are also collaterally estopped and precluded under merger and bar.
Alexander argues that the district court erred in denying his motion to amend his complaint to include claims relating to personal property that DCS sold during the pendency of this action. The district court has broad discretion to grant or deny leave to amend a complaint, and this court does not reverse its decision absent an abuse of discretion. Fabio v. Bellomo, 504 N.W.2d 758, 761 (Minn. 1993). Whether the district court has abused its discretion in ruling on a motion to amend may turn on whether it was correct in the underlying legal ruling. Id. at 761-62.
The district court denied Alexander’s motion because it did not state a viable claim for relief, citing Anderson v. Minn. Ins. Guar. Assoc., 520 N.W.2d 155, 159 (Minn. App. 1994) (holding that a proposed amendment must be denied if it does not state a viable claim), rev’d on other grounds, 534 N.W.2d 706 (Minn. 1995). Among its observations of multiple flaws that would preclude relief, the district court concluded that Alexander’s personal property claims in the amendment failed because Alexander had legally abandoned the property.
The disposition of a tenant’s
personal property is governed by Minn. Stat.
§ 504B.271 (2002), which establishes that a landlord may sell a former tenant’s personal property after sixty days, so long as the tenant receives notice of the sale at least fourteen days in advance. Minn. Stat. § 504B.271, subd. 1. In denying Alexander’s motion, the district court found that DCS had provided the requisite notice of the sale and had informed Alexander that he could at any time prior to the sale enter the Lexington property and remove the personal property. Because Alexander does not challenge these findings, we conclude that the district court did not abuse its discretion in denying the motion to amend the pleadings.
Alexander contends the district court erred in discharging the notice of lis pendens he filed on the disputed property. The lis pendens statute, Minn. Stat. § 557.02, establishes that
[i]n all actions in which the title to, or any interest in or lien upon, real property is involved or affected, or is brought in question by either party, any party thereto, at the time of filing the complaint, or at any time thereafter during the pendency may file for record with the county recorder * * * a notice of the pendency of the action[.]
Minn. Stat. § 557.02 (2002). In general, the lis pendens continues until final judgment is entered on appeal. See Aldrich v. Chase, 70 Minn. 243, 73 N.W.2d 161, 162 (1897). But only a party having a “proprietary right or interest in the land” may file a notice of lis pendens. Painter v. Gunderson, 123 Minn. 342, 343, 143 N.W. 911, 912 (1913). Because Alexander is estopped from claiming any right to the property, he lacks the necessary interest in the property to invoke the protection of the lis pendens statute.
Alexander contends the district court improperly granted DCS’s motion for sanctions. Allowing sanctions under Minn. Stat. § 549.211 (2002) requires a finding that an attorney or party acted in bad faith. Uselman v. Uselman, 464 N.W.2d 130, 140 (Minn. 1990) (interpreting predecessor statute). Bad faith has been defined as “a frivolous claim which increases the opponent’s costs, an unfounded position taken to delay the action or harass the opponent, or fraud upon the Court.” Radloff v. First Am. Nat’l Bank, 470 N.W.2d 154, 156 (Minn. App. 1991), review denied (Minn. July 24, 1991). A district court’s decision to order fees and costs is reviewed for abuse of discretion. Whalen v. Whalen, 594 N.W.2d 277, 281-82 (Minn. App. 1999).
Alexander contends sanctions were inappropriate because his latest lawsuit was a “good faith effort to protect his property rights.” But that argument assumes Alexander had property rights to protect—a proposition unsupported by any credible evidence and one which we reject. While the sanctions in this case are severe, the district court imposed them only after Alexander received a warning in a previous collateral action that additional suits against DCS over the Lexington property would result in sanctions. In these circumstances we cannot conclude that the district court abused its discretion.
Alexander’s procedural arguments against the attorneys’ fees are without merit. The district court determined that DCS fully complied with Minn. Stat. § 549.211 and General Practice Rule 119.02 in its application for its attorneys’ fees. Despite that finding, and despite record evidence showing service of DCS’s motion for sanctions on February 10, 2002, Alexander asserts on appeal that service took place on March 7, 2002 and was therefore untimely. The claim has no basis in fact and is therefore rejected. We also reject his argument that Minn. Gen. R. Pract. 9.01 requires a motion for sanctions to be scheduled and heard separately. Rule 9.01 governs district court orders to require furnishing of security for frivolous lawsuits or to impose preconditions on a frivolous litigant’s filing new claims.