This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (2004).
IN COURT OF APPEALS
Robert I. Levorsen, et al.,
John Fletcher Freeman, et al.,
Alan James Freeman, et al.,
Affirmed in part, reversed in part, and remanded
St. Louis County District Court
File No. C1-02-101288
Patrick J. Roche, Paul D. Cerkvenik, Trenti Law Firm, 1000 Lincoln Building, 225 North First Street, P.O. Box 958, Virginia, MN 55792 (for respondents Levorsen, et al.)
Laurence J. Klun, Klun Law Firm, One East Chapman Street, P.O. Box 240, Ely, MN 55731 (for appellants)
William E. Defenbaugh, Jr., 107 East Camp Street, P.O. Box 630, Ely, MN 55731 (for respondents Freeman, et al.)
Considered and decided by Kalitowski, Presiding Judge; Shumaker, Judge; and Minge, Judge.
Appellants challenge the district court’s determinations in a partition proceeding. Because the district court’s application of a discount to appellants’ interest, use of different comparables for small and large tracts of land, adoption of the referees’ report, and order requiring appellants to pay half the costs of the partition proceeding and to pay their traditional portion of maintenance costs were not clearly erroneous or an abuse of discretion, and because the district court’s refusal to remove one of the referees is not prejudicial error, we affirm in part. Because the district court erred by not awarding appellants a proper financial adjustment, we reverse in part and remand for modification of this adjustment.
The parties are
owners of fractional interests in 161.144 acres known as Twinflower, located on
Because appellants John and Pamela Freeman wished to have a personal lake home, they identified a 2.8 acre tract on the northern edge of Twinflower, known as lot A, upon which they built a garage and began construction of a home. Appellants Richard and Monica Freeman also wished to have a personal home and identified an adjacent 3.3 acre tract, known as lot B. They have not started any construction. Several of the respondents (Robert and Arabella Levorsen, Robert and Arabella Levorsen as Trustees, David and Daphne Rippon, Mark and Laura Levorsen, and Kenton and Anne Hammer), commenced an action in June 2002, seeking a temporary restraining order against appellants to enjoin them from further building. Respondents also named the other co-owners of Twinflower, who are siblings of appellants, as additional defendants to ensure that they were included in the proceedings.
In August 2002, respondents filed an amended complaint requesting, in the alternative, that the court order a partition of Twinflower pursuant to Minn. Stat. ch. 558 (2004). The district court granted respondents’ motion for injunction and issued an order temporarily restraining appellants from further construction. Subsequently, appellants filed a motion for partition. The district court ordered mediation. When mediation failed, the parties stipulated that partition should proceed.
Pursuant to the
parties’ stipulation, the district court found that partition-in-kind could be made
without great prejudice to the parties; awarded appellants lots A and B, which they
had previously selected; ordered that appellants receive additional land, if
necessary based on valuation; and entered judgment that partition be made. Pursuant to
The referees inspected the property, reviewed two appraisals submitted by the parties, requested additional appraisals, held a hearing at which the parties presented arguments regarding property valuation, and filed their report to the district court. Appellants moved to set aside the referees’ report and requested appointment of new referees. Appellants’ siblings supported appellants’ request that the report be rejected. After a hearing on the referees’ report, the district court ordered a supplemental report to clarify certain boundaries and access matters. Following receipt of the supplemental report, the district court adopted the reports, made findings of fact, and ordered physical division of the property.
The district court’s partition of the property was based on a monetary division, in which the value of the entire property was determined and appellants were allotted their monetary proportion. The district court found that: (1) the total value of Twinflower was $3.9 million as of October 2002; (2) after a 15% discount for their fractional ownership of Twinflower, appellants’ respective 1/12 interests each equaled $276,250; (3) lots A and B (which the parties agreed should be owned by appellants respectively as two couples) were each worth $272,000; and (4) because the difference between the value of these parcels and appellants’ interest was so small, appellants should receive cash from respondents to equalize the difference. The district court also ordered that the costs associated with the appointment of the referees be divided equally between appellants and respondents, and ordered appellants to pay their share of the expenses of operating and maintaining Twinflower that were incurred prior to the date of the final partition, according to the families’ customary procedure. This appeal followed. Respondents who are siblings of appellants have not made an appearance in this appeal.
After the district court proceedings were complete, appellants noted that in an unrelated matter before this court, attorney Defenbaugh was listed as counsel for referee Weir in Roth v. Weir, 690 N.W.2d 410 (Minn. App. 2005). Appellants raise that relationship as additional grounds for their claim that Weir should have been removed as referee and the matter reversed.
The first issue is whether the district court’s valuation and division of the property was clearly erroneous. Appellants claim that the district court erred in adopting the referees’ report because the report contained the following deficiencies: (1) an improper 15% discount; (2) separate valuation comparables for large parcels and small parcels; (3) an improper valuation date; and (4) manifest inequities. These are sub-issues in the valuation and division question.
A. 15% Discount
The initial sub-issue is whether the district court erred in accepting the referees’ report with respect to the discount. The referees determined that the value of the entire property is $3,900,000 and that a 1/12 share of that is $325,000. The referees reduced the value of appellants’ interest by 15% because the property was owned by numerous parties. The district court adopted this portion of the referees’ report and, after applying the recommended discount, valued appellants’ 1/12 monetary interests at $276,250. The parties are part of an extended family who have owned and transferred this property to succeeding generations for 75 years. Contrary to appellants, respondents wish to maintain, use, and preserve the property in its current form of ownership. There is no evidence that respondents have denied appellants reasonable use of the common property, exploited appellants as minority owners, or engaged in overreaching or oppressive conduct toward or discriminated against appellants. On the contrary, appellants took the initiative in seeking separate tracts for their own use. Respondents have accommodated appellants by agreeing to the partition and the designation by appellants of their tracts.
compare this discount to a minority discount for valuing dissenting shareholder
interests in a corporation, which was rejected by this court in MT Props., Inc. v. CMC Real Estate Corp.,
481 N.W.2d 383, 388 (Minn. App. 1992) (finding that dissenting shareholders’
shares may not be discounted for their minority status when determining fair
value). This prohibition arose largely
from the legislative aim to protect shareholders from being penalized for
It is commonplace observation that group ownership of an asset results in inherent tension with optimum personal use and enjoyment of the asset, that the marketplace considers individual ownership as advantageous, and that discounts are used in valuing fractional interests. The referees found that fractional interests are plagued with disagreement, that fractional owners lack control, and that fractional interests are not easily sold. The report concluded that this analysis applied to Twinflower, and made the 15% discount as an appropriate adjustment. Based on the record in this proceeding, we conclude that the district court’s conclusion accepting the referees’ decision to discount appellants’ interest by 15% was not clearly erroneous.
B. Different Comparables
The next sub-issue is whether the district court erred in adopting the referees’ report with respect to the different comparables used. The referees used small-parcel comparables in determining the value of lots A and B and large-parcel comparables in determining the value of the remainder of the property. This resulted in a higher value for appellants’ lots as compared to the value of the larger Twinflower property. The district court found that the higher valuation for lots A and B was appropriate because of the nature, character, and quality of the property, the availability of utilities to the lots, and the higher square-foot market price for smaller tracts. The valuation of the property is a finding of fact, which we review for clear error. Beebout, 447 N.W.2d at 467.
that the use of different comparables was contrary to law and facts but cite no
authority for their contentions. This
court will not consider assignments of error based on mere assertion and
unsupported by argument or authority. State v. Modern Recycling, Inc., 558
N.W.2d 770, 772 (
C. Valuation Date
The third sub-issue is whether the district court erred in adopting the referees’ report, which established value of the property as of October 23, 2002. The district court rejected appellants’ argument that the referees should have used the current market value and found that the referees needed a point of reference for the valuations, that no changes were made to the property after October 23, 2002, and that any appreciation in appellants’ portion of the property would parallel appreciation to the entire Twinflower property.
Appellants claim that the referees should have obtained the current market value of the entire property and that failure to do so undervalued appellants’ interests. The district court is correct that because the valuation date affected all of Twinflower equally, the portion of Twinflower property allotted to appellants is not undervalued vis-à-vis respondents. But in addition to lots A and B, appellants each received cash payments of $4,250 as part of the judgment because lots and A and B were each worth $272,000 and appellants’ interests equaled $276,250. The caselaw recognizes that when a “partition cannot be made equal between the owners without prejudice to the rights or interests of some, the court may require compensation to be made (owelty) to equalize partition.” Anderson v. Anderson, 560 N.W.2d 729, 731 (Minn. App. 1997) (upholding partition in kind with owelty when equal division cannot be made without great prejudice to owners but a sale is likewise disadvantageous), review dismissed (Minn. May 28, 1997).
Respondents concede that if the Twinflower property value increased by 20% between October 2002, the valuation date, and December 2004, the date that the district court ordered partition, the $4,250 equalizing cash payments awarded to appellants undervalued the aggregate appreciation during that time by $850. The district court did not adjust the ultimate award for the added incremental value due appellants in that cash award and we conclude that appellants are entitled to an increase in the financial compensation. Since the cash award reflects the difference in real estate values, the adjustment should reflect the increase in property values. Therefore, we reverse and remand to the district court to modify the order to grant appellants their appropriate additional compensation from the date of valuation until final partition.
D. Manifestly Inequitable
sub-issue is whether the partition results are manifestly unfair. Appellants argue that the district court
should have set aside the referees’ report because the relative land areas and
lake frontage awarded to them are not proportional; that unorthodox, distorting
methods of valuation were used; and that as a result the partition is grossly
inequitable and unfair. Pursuant to the
partition statute, referees “shall divide the property, and allot the several
portions thereof to the respective parties, quantity and quality relatively
considered, according to their respective rights.”
The court should
set aside the report if there is “gross inequality of partition or where the
partition appears to have been made upon wrong principles.” 59A Am. Jur. 2d, Partition § 128; see also
Sandoval v. Sandoval, 294 P.2d 278, 279-80 (N.M. 1956); Forest Park Props., Inc. v. Pine, 224
N.E.2d 763, 768 (Ohio Ct. App. 1966); Cooper
v. Long, 244 P. 167, 169 (
out that for their combined 1/6 interest they received approximately 6.1 acres
of Twinflowers’ total land area of 161 acres and approximately 400 feet of
shoreline of Twinflowers’ total shoreline of 16,515 feet. The partition law does not require numerical
proportionality. See id. The partition
statute only requires that the value
of the parcels assigned to the parties and any compensation reflect the
fractional interest of the parties. See Minn. Stat. § 558.06 (“[T]he
referees shall divide the property, and allot the several portions thereof to
the respective parties, quantity and quality relatively considered[.]”); see also La Motte v. Mohr, 78
next issue is whether the district court erred in failing to remove a referee
and, if so, whether this constitutes reversible error. According to the partition statute, the
district court “shall appoint three disinterested and judicious citizens of the
county as referees to make partition.”
The district court appointed three referees to determine partition. One referee requested removal, and the district court appointed attorney Mark Weir as the replacement. Appellants had requested that only appraisers, not attorneys, be appointed. After his appointment, appellants objected to Weir apparently as a matter of right. After that objection was rejected, appellants asked the court to reconsider on the grounds that appellants’ counsel and Weir were opposing counsel in a strongly contested case and that Weir is a former partner of William Defenbaugh – the attorney for neutral respondents.
rely on Minn. Stat. § 484.70 (2004) to argue that the district court should
have automatically removed Weir. That
statute does give an objecting party the right to prohibit a referee from
hearing “a contested trial.”
also point out that litigants have a right to remove a judge without cause. See
Next we consider whether the district court abused its discretion by not removing Weir. Since we are reviewing a completed district court proceeding, we determine that an abuse of discretion and actual bias or fraud must be established before this court will reverse and remand for the appointment of new partition referees. See Matson v. Matson, 638 N.W.2d 462, 465, 469 (Minn. App. 2002) (“The district court has broad discretion . . . in deciding whether to grant recusal motions.”). Appellants argue that Weir should have been removed because of his prior adversarial relationship between Weir and appellants’ counsel. Although a contentious adversarial relationship between attorneys may be troublesome, we recognize that it is commonplace in litigation and that removal for that reason is within the discretion of the district court. There is no showing this was an abuse of discretion in this case.
Appellants also claim that the district court abused its discretion in failing to remove Weir because Weir had a past partnership and contemporaneous relationship in an unrelated matter with Defenbaugh, the attorney for the neutral respondents. The past partnership does not require removal; it is within the discretion of the district court. However, the contemporaneous relationship in which Defenbaugh represented Weir is troublesome. This was not disclosed to the district court by Weir but only discovered by appellants in reviewing case titles from appellate decisions of this court. Weir should have disclosed this representational work by Defenbaugh to the district court, and Weir should have either withdrawn as a referee or the district court should have removed Weir as a referee. Nonetheless, this disclosure and withdrawal/removal did not occur. In this situation we carefully scrutinize the record to determine whether there is any evidence of prejudice or actual bias. We conclude that the Weir/Defenbaugh relationship does not warrant reversal at this stage of this case because Defenbaugh’s clients ultimately supported appellants’ objection to the referees’ report by submitting a motion to set aside that report. The Defenbaugh/Weir relationship was not adverse to appellants.
Also, appellants have failed to submit any evidence of prejudice aside from the unfavorable decision. They have not pointed to any incident in the record that indicates actual manifestation of bias in the proceeding. Although it is difficult to scrutinize the proceedings after the fact, we note that the partition report was recommended by all three referees and reviewed by the district court, and that following this review, the district court adopted the report. Although it would have been prudent to remove the referee under the circumstances, we find that based on all the facts, the situation does not indicate prejudice or actual bias or otherwise justify reversal of the ultimate partition decision and judgment.
raise an issue of whether the district court abused its discretion in ordering
appellants to pay half of the costs associated with the partition proceeding. According to
Minn. Stat. § 558.06 states that “expenses and fees of the referees . . . shall be paid by the plaintiff, and may be allowed as part of the charges.” Although respondents are the nominal plaintiffs in this case, it is not clear who is primarily responsible for the partition action. Respondents Robert and Arabella Levorsen, Robert and Arabella Levorsen as Trustee, David and Daphne Rippon, Mark and Laura Levorsen, Kenton and Anne Hammer commenced an action to stop appellants’ construction activities and, in an amended complaint, requested partition in the alternative. Once the district court temporarily enjoined appellants from further construction, the partition part of the proceeding was not pursued until a year later when appellants filed a motion requesting partition. In fact, all parties requested and ultimately stipulated to partition. Therefore, Minn. Stat. § 558.06 is not decisive of this issue. Because the statute is not applicable and appellants, as well as respondents, sought partition, the district court did not abuse its discretion in ordering appellants to pay half of the costs associated with the appointment of the referees.
The last issue is whether the district court abused its discretion in charging appellants with their traditional portion of costs for maintaining the property. The district court order stated “[t]hat the expenses associated with the upkeep of the Twinflower estate incurred prior to the date of this order are split according to the customary procedure the families always followed.”
is a general rule that a tenant in common is entitled to reimbursement from
cotenants for their share of expenses paid for the care, repair, protection,
and preservation of the common property.
Darling v. Harmon, 47
Appellants argue that they did not authorize these expenses, some costs were for improvements, and the costs constituted a “spending spree.” The district court did not explicitly determine whether the expenses were associated with the upkeep or constituted improvements. The district court implicitly found that the expenses were for upkeep, and the evidence in the record indicates that the expenses for 2002 and 2003 were for upkeep and repairs. Therefore, the district court did not abuse its discretion in ordering appellants to pay their portion of expenses for the Twinflower property.
Appellants argue in their reply brief that they paid their respective shares of the common expenses, and because the district court failed to make specific findings and did not hold a hearing specifically on this issue, we should remand. Appellants do not cite any facts in the record that support their claims that they paid their fair share; on the contrary the record indicates that appellants have refused to pay their portion of operating expenses from 2002 to 2003. Therefore, the district court did not err in ordering appellants to pay their traditional portion of operating expenses for the property.
Affirmed in part, reversed in part, and remanded.
This type of reduction is not uncommon in appraisals in which multiple owners
hold undivided partial minority interests.
See Appraisal Institute, The Appraisal of Real Estate at 68-69
(12th ed. 2001). In those instances, a
20% share of property worth $100,000 would be worth something less than
 We note that the referees’ report states that the valuation date is October 2003, but that the referees in their instructions to the respective parties’ appraisers stated that the appraisers should calculate the value of the property as of 2002. The district court appears to agree that the referees valued the property from October 2002.
 Appellant also asserts that Minn. R. Gen. Pract. 107 governs the removal of referees. Although that rule is intended to provide the procedure for objecting to attorney referees appointed by the chief judge under section 484.70, it is not so limited by its terms and is helpful, if not controlling, in at least setting a procedure for objections to the appointment of referees generally. However, this rule does not establish a right to automatically remove partition referees.
Appellants do not claim that there is any “bending over backwards” or reverse
bias due to Weir’s relationship with the attorney for appellants’ siblings who
joined appellants in opposing the referees’ report. Such an inverted bias claim has been
rejected. See State v. Moore, 481 N.W.2d 355, 362 (
note that appellants also complained that they did not have an evidentiary
hearing before the district court judge.
However, appellants’ due-process rights were not limited because
appellants met with and presented their appraisal evidence to the referees and
had a hearing before the district court at which they argued the merits of the
referees’ report. Following careful and
extensive review, the district court adopted the report. See Fuentes
v. Shevin, 407