This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480A.08, subd. 3 (2004).

 

STATE OF MINNESOTA

IN COURT OF APPEALS

A04-2384

A05-312

 

Mortgage One, Inc.,

(Assignee of and Successor in Interest to Wells Fargo Home Mortgage, Inc.),

Appellant,

 

vs.

 

Michelle R. Newton, a/k/a Michelle R. Newton-Witkowski,

Respondent,

 

Theodore Witkowski,

Respondent,

 

John Doe, et al.,

Defendants.

 

Filed ­­­November 8, 2005

Affirmed in part, reversed in part, and remanded

Dietzen, Judge

 

Anoka County District Court

File No. C9-00-10025

 

Gary B. Bodelson, 247 Third Avenue South, Minneapolis, MN 55415 (for appellant)

 

Christopher E. Brevik, 1224 Irvine Drive, Hanover, MN 55341 (for respondent Theodore Witkowski)

 

Michelle R. Newton, 4641 Tyler Street Northeast, Unit 8, Columbia Heights, MN 55421 (pro se respondent)

 

           

Considered and decided by Dietzen, Presiding Judge; Klaphake, Judge; and Crippen, Judge.*

U N P U B L I S H E D   O P I N I O N

 

DIETZEN, Judge

 

            Appellant Mortgage One, Inc. challenges the district court’s order and judgment denying its motion for attorney fees, costs and disbursements, and late fees; and its order that appellant modify its notice of lis pendens and the record of the mortgage.  Appellant argues that the previous decisions of this court in this case entitle it to attorney fees, costs and disbursements, and late fees; and that the district court abused its discretion in requiring it to modify its notice of lis pendens and the record of the mortgage.  By notice of review, respondent Theodore Witkowski contends that the district court improperly calculated the principal amount of the mortgage, interest, and insurance premiums owed to appellant.  Because the district court did not abuse its discretion in denying late fees, and in concluding that the mortgage lien should include accrued interest and insurance premiums paid by appellant, we affirm those determinations.  Because the district court failed to follow our previous decision regarding attorney fees, costs and disbursements, and modification of the lis pendens and record of the mortgage, we reverse those determinations, and we remand for entry of judgment consistent with this opinion.

FACTS

The Parties   

 

Appellant Mortgage One, Inc. is the assignee of a promissory note and home mortgage executed by respondent Michelle Newton-Witkowski.  Respondent Newton-Witkowski is the former wife of respondent Theodore Witkowski.  Ms. Newton-Witkowski entered into a contract for deed to purchase a home prior to their marriage.  During the marriage, the couple lived together in the home.  The couple later separated, and during that time, Newton-Witkowski borrowed $116,600 and executed a promissory note and a mortgage for the home to secure the note, all without the knowledge of her husband.  Witkowski was later awarded the mortgaged home property in the divorce decree.  The mortgage payments went into default, and the predecessor in interest to appellant, Wells Fargo Home Mortgage, Inc. (Wells Fargo), brought a foreclosure by action against respondents under Minn. Stat. §§ 581.01–.12.  Appellant challenges the amount of a purchase-money mortgage and other add-on amounts. 

The Loan Documents

The loan documents include the mortgage and, inter alia, a promissory note.  The promissory note was in the principal amount of $116,600.  It sets forth a monthly payment amount based on a 30-year amortization schedule.  It reserves to the lender the right to change the monthly payment amount.  It also contains various remedies in favor of the lender upon default by the borrower, including recovery of attorney fees, costs and disbursements, and late fees.  In the event of default, the mortgage, among other things, secures the debt against the property, sets forth various remedies, and incorporates most of the terms and conditions of the promissory note.

Previous Litigation 

This dispute has been the subject of several appeals to this court.  Originally, Wells Fargo sought a declaration that the mortgage was a purchase-money mortgage, and that it had the right to its mortgage lien in the amount of $108,856.24.  On November 13, 2000, Wells Fargo filed a notice of lis pendens, which set forth the names of the parties and a legal description of the property, and stated that (1) the object of the action was to foreclose a mortgage by action together with other proposed relief; and (2) a personal judgment was sought only against Michele R. Newton. 

Respondent Theodore Witkowski contended that he had no obligation to Wells Fargo because he did not sign the loan documents.  The district court agreed.  On appeal, this court held that Wells Fargo had a valid purchase-money mortgage, but that Wells Fargo could only recover $55,034.74 under the mortgage, the portion of the funds secured by the mortgage that were used to pay off the contract for deed, because Witkowski did not sign the loan documentsWells Fargo Home Mortgage, Inc. v. Newton, 646 N.W.2d 888, 899–900 (Minn. App. 2002), review denied (Minn. Sept. 25, 2002).  Only the principal amount of the mortgage was at issue in that appeal, so this court’s decision did not address attorney fees or other add-on amounts.  See id.

 On remand, appellant Mortgage One, Inc., the successor in interest to Wells Fargo, sought recovery of the unpaid principal of the purchase-money mortgage, plus interest, attorney fees, costs, and late fees.  Respondent contended that only the unpaid principal amount could be collected by foreclosure on the mortgage.  The district court granted summary judgment to appellant on the mortgage lien, but limited the amount of the lien to $55,034.74.  On appeal, this court concluded that in addition to the principal due under the purchase-money mortgage, appellant was entitled to recover interest, attorney fees, and “other amounts compensable under the terms of the mortgage.”  Mortgage One, Inc. v. Newton, No. A03-966, 2004 WL 296992, at *1 (Minn. App. Feb. 17, 2004), review denied (Minn. May 18, 2004).  Consequently, this court remanded for determination of the amount owed.  Id. at *2.  In addition, this court held that the district court erred in directing appellant to discharge its notice of lis pendens while the action was still pending and directed the district court to clarify its order that appellant correct the “record of the mortgage.”  Id.

Current Dispute      

On remand, appellant again sought recovery of the unpaid principal of the purchase-money mortgage, plus interest, attorney fees, costs, and late fees.  Respondent countered that it did not owe anything beyond the principal amount.  The district court adjusted the mortgage lien to $84,439.27, concluding appellant was entitled to recover the unpaid principal, accrued interest, unpaid property taxes, and insurance premiums paid by appellant.  But the district court denied appellant’s claims for recovery of late fees, attorney fees, and costs and disbursements.  The district court also ordered appellant to modify its notice of lis pendens and the record of the mortgage to limit the amount of the mortgage lien to the principal amount of $55,034.74.  This appeal follows.         

D E C I S I O N

I.

Appellant raises two issues on appeal.  First, appellant contends that the district court erred by excluding attorney fees, costs, and late fees from the mortgage lien.  Respondent contends that he is not obligated to pay anything other than $55,034.74, which is the principal amount of the mortgage as previously determined by this court.

Attorney Fees

 

Appellant argues that the district court abused its discretion in denying it attorney fees because the last decision of this court resolved the issue in its favor.  “On review, this court will not reverse a trial court’s award or denial of attorney fees absent an abuse of discretion.”  Becker v. Alloy Hardfacing & Eng’g Co., 401 N.W.2d 655, 661 (Minn. 1987).  But when the question on appeal is “the legal standard to apply to calculate [] attorney fees, our review is de novo.”  In re L-tryptophan Cases, 518 N.W.2d 616, 619 (Minn. App. 1994).  The district court is bound by prior appellate decisions on the same issue, however.  Sigurdson v. Isanti County, 448 N.W.2d 62, 66 (Minn. 1989) (“Law of the case applies when the appellate court has ruled on a legal issue and remanded for further proceedings on other matters.  The issue decided becomes ‘law of the case’ and may not be relitigated in the trial court or reexamined in a second appeal.”). 

The district court awarded no attorney fees to appellant, reasoning that (1) appellant “blunder[ed]” in failing to investigate representations made by respondent Newton-Witkowski during the mortgage application process and is thus responsible for the excessive litigation in this case; (2) an award of any attorney fees would be excessive and inequitable in relation to the amount of the mortgage lien; and (3) respondent “is the prevailing party in this matter since less than one-half of the mortgage  amount originally claimed by [Wells Fargo] was determined to be valid.”

But this court previously decided that the promissory note and the mortgage instrument do provide for attorney fees with no prerequisite that Mortgage One demonstrate that is the “prevailing party.” See Mortgage One, Inc. v.  Newton, No. A03-966, 2004 WL 296992, at *1 (Minn. App. Feb. 17, 2004); see also Oleisky v. Midwest Fed. Sav. & Loan, 398 N.W.2d 627, 629 (Minn. App. 1986) (holding that issue of attorney fees is dictated by contract language in the note and is not on whether a mortgagee is the prevailing party), review denied (Minn. Feb. 18, 1987).  On remand, the only issue before the district court was the amount of attorney fees, not whether attorney fees were recoverable.  See Newton, 2004 WL 296992, at *1.  Consequently, the question of who was responsible for the litigation has no bearing on the contractual right to recover attorney fees.  See City of Minnetonka v. Carlson, 298 N.W.2d 763, 765 (Minn. 1980).

Here, the district court failed to consider the factors necessary to determine the reasonableness of attorney fees.  These factors include (1) time and labor required; (2) the nature and difficulty of the responsibility assumed; (3) the amount involved and the results obtained; (4) the fees customarily charged for similar legal services; (5) the experience, reputation, and ability of counsel; and (6) whether the fee arrangement existing between counsel and the client is fixed or contingent.  Id.  Because the district court failed to consider the Carlson factors, it abused its discretion.  See id

Although the district court did not award attorney fees, it did conclude that appellant had incurred $28,840.50 in attorney fees.  Appellant’s attorney, who had practiced law for 24 years, billed appellant at a rate of $75 per hour.  Because the amount of attorney fees has been the subject of a previous appeal, we see no useful purpose in remanding for the district court to apply the Carlson factors.  Applying the Carlson factors to the record, we conclude that appellant is entitled to attorney fees in the amount of $28,840.50.  See id.  Therefore, on remand the district court shall award appellant $28,840.50 in attorney fees.

Appellant also seeks attorney fees for the appeal. When district court fees are authorized, a party is also entitled to appellate fees to avoid dilution of the district court award.  Anderson v. Hunter, Keith, Marshall & Co., Inc., 401 N.W.2d 75, 83 (Minn. App. 1987), aff’d in part, rev’d in part on other grounds, 417 N.W.2d 619 (Minn. 1988).   Fees on appeal “shall” be sought by motion, and motions for fees on appeal are to be supported by sufficient documentation. Minn. R. Civ.App. P. 139.06, subd. 1.  No motion has been filed, but a motion may be brought up until 15 days after the filing of this court’s opinion.  Minn. R. Civ. App. P. 139.03.  Without a proper motion, an award of appellate fees is premature.  Koes v. Advanced Design, Inc., 636 N.W.2d 352, 363 (Minn. App. 2001), review denied (Minn. Feb. 19, 2002). 

Costs and Disbursements

 

Appellant also argues that it is entitled to its costs and disbursements for the foreclosure action.  Decisions regarding the amount of costs and disbursements are generally reviewed for abuse of discretion.  Kellar v. Von Holtum, 605 N.W.2d 696, 703 (Minn. 2000), as modified on rehearing (Feb. 29, 2000).  The district court awarded no costs and disbursements to appellant because it determined that appellant was not “the prevailing party in this matter since less than one-half of the mortgage amount originally claimed by [appellant] was determined to be valid.”[1]

Like attorney fees, costs and disbursements are recoverable under the terms of the mortgage instrument.  Paragraph 7(E) of the promissory note, which is incorporated into the mortgage instrument, provides that appellant shall be entitled to recover its costs and disbursements incurred in enforcing the note and the mortgage without regard to who is the prevailing party.  Consequently, appellant is entitled to costs and disbursements.  The district court found that appellant incurred $2,544.47 in costs and disbursements.  This amount is not in dispute.  On remand, the district court shall in its judgment award appellant $2,544.47 for costs and disbursements.

Late Fees      

Appellant argues that it is entitled to late fees.  The issue of whether to award late fees is governed by the unambiguous terms of the mortgage and is, therefore, reviewed de novo by this court.  See Trondson v. Janikula, 458 N.W.2d 679, 681 (Minn. 1990). In the previous appeal, appellant argued that it was entitled to late fees.  See Newton, 2004 WL 296992, at *1.  This court determined that appellant is entitled to “other amounts compensable under the terms of the mortgage,” without specifically mentioning late fees.  See id.  On remand, the district court held that appellant is not entitled to late fees because (1) respondent Witkowski should not be “responsible for [late fees accruing under] a mortgage he never signed”; (2) appellant “fail[ed] to contact [respondent Theodore Witkowski’s] counsel and provide him with the monthly payment information” based on the revised mortgage principal of $55,034.74; and (3) appellant “never requested nor demanded any payment based on the adjusted mortgage amount despite [the district court’s] repeated urging.” 

Appellant failed to recalculate a new monthly payment amount after this court determined that appellant had a reduced mortgage lien in the principal amount of $55,034.74.  Respondent argued, and the district court agreed, that absent a recalculation of the monthly payment amount and a demand for payment, appellant is not entitled to recover late fees under the loan documents.  We agree.

Although the mortgage does provide for late fees, paragraph 7(C) of the promissory note, which is incorporated into the mortgage, provides that respondent must give notice of changes in monthly payment amounts to appellant.  Here, the district court found that after the first remand, appellant failed to notify respondent of the new monthly payment amount and failed to demand payment of late fees.  Appellant does not challenge these findings.  

Although the record before us is sparse, we conclude that the district court did not abuse its discretion.  The loan documents placed the obligation on appellant to provide the new monthly payment amount.  Without a new monthly payment amount, it is impossible to calculate late fees.  And appellant’s failure to give notice of late fees precludes it from recovering such fees.

            Appellant contends it is owed late fees because the mortgage lien is on the property and, therefore, it was not required to give notice of the revised payment schedule or of late fees.  But appellant sought to enforce the terms of the mortgage by a foreclosure action in the previous litigation, and this court held there was a valid purchase-money mortgage based on the terms of the loan documents.  Newton, 646 N.W.2d at 899; Newton, 2004 WL 296992, at *1.  Because appellant did not comply with the terms of the applicable loan documents, the district court did not err in denying appellant late fees.

II.

 

The second issue raised by appellant relates to the district court’s order that appellant modify the notice of lis pendens and the record of the mortgage.  The procedures governing a notice of lis pendens are set forth in Minn. Stat. § 557.02 (2004).  Interpretation of the meaning of a statute is a question of law which this court reviews de novo.  See Brookfield Trade Ctr., Inc. v. County of Ramsey, 609 N.W.2d 868, 874 (Minn. 2000).  If the district court has the statutory authority to order a modification in the lis pendens or the mortgage, we review the modification for an abuse of discretion.  See Construction Gen., Inc. v. Richard Schwarz/Neil Weber, Inc., 354 N.W.2d 877, 880 (Minn. App, 1984).

The district court order stated that “[t]he Notice of Lis Pendens shall be modified to reflect that there exists a mortgage lien against the subject property in the amount of $89,439.27.”  This amount includes $55,034.74 for principal, plus interest and insurance premiums that the district court concluded were recoverable under the mortgage.  The district court order also instructed appellant to “modify the record of the mortgage” to reflect the new mortgage lien amount.  The district court did not explain the basis for its modification orders.

Lis Pendens

 

Appellant contends that the district court’s order to modify the notice of lis pendens was inconsistent with this court’s February 2004 decision and otherwise lacked legal basis.  Respondent states that while there is no statutory requirement that the amount at issue be indicated on the notice of lis pendens, this court remanded the issue to the district court to make a determination as to how the record should be corrected.

The purpose of a notice of lis pendens[2] is to protect the litigating party (here, Mortgage One, Inc.) from having a third party take an interest in the property without necessarily being subject to the result of the litigation.  Chaney v. Minneapolis Cmty. Dev. Agency, 641 N.W.2d 328, 333 (Minn. App. 2002), review denied (Minn. May 28, 2002).  The right to file, modify, or discharge a notice of lis pendens is a statutory right granted by Minn. Stat. § 557.02.  Id.  This statute gives permissive authority to the party that filed the lis pendens to alter or discharge it:

When any pleading is amended in such action, so as to alter the description of, or to extend the claim against, the premises affected, a new notice may be filed, . . . and may be discharged by an entry to that effect in the margin of the record by the party filing the [lis pendens].

 

Minn. Stat. § 557.02 (emphasis added); see also Minn. Stat. § 645.44, subd. 15 (defining “may” as permissive) (2004).  The statute provides that the filer may file a new notice of lis pendens for certain reasons and discharge the notice for other reasons.  But it contains no provision to amend the notice.  See Minn. Stat. § 557.02.

            The district court ordered that the notice of lis pendens be amended to reflect the new principal amount of the mortgage lien.  Implicit in the district court order is its conclusion that the present lis pendens was in need of correction or clarification.  But the lis pendens is not in need of correction.  The lis pendens simply states the parties’ names, a legal description of the property, and that its object is foreclosure by action.  Each of those statements is accurate.  The lis pendens, as written, does not include the original amount of the mortgage.  Consequently, it is not necessary to amend the lis pendens, and the district court abused its discretion in ordering that appellant modify the notice of lis pendens.

Record of the Mortgage

 

            Appellant also argues that the district court erred in ordering it to “modify the record of the mortgage” to reflect the revised lien amount of $89,439.27.  Further, appellant contends that it does not know what the district court means by “modify the record of the mortgage.”  Respondent counters that the order was necessary to allow respondent to refinance the mortgage and to specify the revised amount for the purposes of a foreclosure decree.  In the last appeal, this court directed the district court on remand to “clarify the manner in which it contemplated that the record be corrected and, if appropriate, designate the appropriate party to make the correction.”  Newton, 2004 WL 296992, at *2.   But the district court did not do so. 

The record reflects that the original mortgage was recorded against the property, and that there were no subsequent recordings against the property that are relevant to this issue.  Although the district court ordered appellant to modify the mortgage, its reasons for requiring appellant to do so are not apparent from the record.  If the purpose of doing so is to amend the mortgage to reflect a reduced lien amount, that same purpose can be accomplished by recording a certified copy of the final judgment with the reduced lien amount.  But the district court failed to articulate a legal basis for its order to modify the mortgage record.  Consequently, the order lacks any legal basis and constitutes an abuse of discretion.

III.

By notice of review, respondent argues that the district court improperly calculated the principal amount of the mortgage lien, accrued interest, and insurance premiums to be included in the mortgage lien.  This court will review the district court’s interpretation of the terms of the mortgage de novo. See Trondson, 458 N.W.2d at 681. The findings of fact underlying the calculation of amounts owed will be upheld unless clearly erroneous.  See Minn. R. Civ. P. 52.01. 

Principal Balance

 

            Respondent first argues that the district court incorrectly failed to subtract the proper portion of payments totaling $6,709.46 toward the original debt of $116,600. These payments were made from December 1999 through April 2000, before this court’s July 2002 decision holding that there was an enforceable purchase-money mortgage in the amount of $55,034.74.  See Newton, 646 N.W.2d at 891, 899.  The district court credited 47% of these payments to the principal of the purchase-money mortgage, based on the 47% reduction of the original mortgage principal (from $116,600 to the $55,034.74 amount determined to be enforceable as a purchase money mortgage).

Respondent argues that the full amount of payments attributable to principal should be applied to reduce the principal of the $55,034.74 mortgage, rather than a proportional share of those payments.  The district court observed, “a mortgage only acts as security for the debt evidenced in a promissory note” and the payments apply first toward “the promissory note with a corresponding reduction in the amount secured by the mortgage.”  See, e.g., First Nat’l Bank of Shakopee v. Halo Inv., 394 N.W.2d 158, 160–61 (Minn. App. 1986) (distinguishing a promissory note from a mortgage because the latter is a security interest and evidence of the former).

The payments by respondent Newton-Witkowski were made under the original note (toward the $116,600), and respondent offers no authority for treating them as though they were made after this court determined that the mortgage is enforceable only up to $55,034.74.  See Ganguli v. Univ. of Minn., 512 N.W.2d 918, 919 n.1 (Minn. App. 1994) (stating that generally we may decline to address allegations unsupported by legal analysis or citation).  Because respondent has failed to support his allegations by legal analysis and citations, we decline to address them.

Interest

 

Respondent asserts that the district court erred by calculating interest for May 2000 because the trial court indicated that the mortgage payments were current through May 2000.  Respondent would have this court further reduce accrued interest, so that it begins in October 2002, shortly after this court held that a valid purchase-money mortgage existed in the amount of $55,034.74, rather than in June 2000, when respondent Newton-Witkowski went into default. 

The district court’s finding of when respondent was last current on her mortgage payments will only be disturbed if clearly erroneous.  See Minn. R. Civ. P. 52.01.   Here, respondent misstates the district court’s finding of when payments were current. The district court found that respondent “was current on the mortgage payments through May 1, 2000.”  In other words, the district court found that respondent had paid through the first day of May, not the entire month of May.  We find no indication in the record that payments were made through the month of May 2000 rather than up to May 1, 2000, so the district court’s finding that the accrual of interest owed includes interest for May 2000 was not clearly erroneous. 

The issue of what interest is owed is governed by the terms of the mortgage and is therefore reviewed de novo by this court.  See Trondson, 458 N.W.2d at 681. Paragraph 7(C) of the promissory note, incorporated into the mortgage, provides that in the event of default, the noteholder may require the borrower to pay “the full amount of principal which has not been paid and all the interest that [the borrower owes] on that amount.”  Therefore, the district court did not err in determining that respondent owes interest from May 2000, when respondent Newton-Witkowski went into default.

Property Insurance

           

Respondent argues that the district court erred by allowing appellant to recover for insurance premiums it paid after respondent failed to provide proof of insurance.  This court will review the district court’s interpretation of the mortgage de novo.  See Trondson, 458 N.W.2d at 681.  The district court determined that the mortgage provides that if the borrower fails to provide proof of insurance coverage, appellant was permitted to obtain insurance coverage and charge the cost to the borrower.  The district court found that respondent Witkowski failed to inform appellant that respondent had obtained insurance coverage for the second half of 2002.  Accordingly, the district court held that respondent defaulted under the mortgage, and that appellant was entitled to recover $2,626 in insurance premiums it paid to insure the property.

Paragraphs 5 and 7 of the mortgage provide that appellant has the right to obtain insurance coverage absent demonstrable proof that the home was insured.  Therefore, the district court did not err as a matter of law in concluding that the mortgage entitled appellant to pass on the cost of insurance after respondent failed to provide proof of insurance.  The district court therefore properly held that the revised mortgage includes $2,626 in insurance premiums paid by Mortgage One, Inc.

IV.

Based on the foregoing reasons, we affirm in part, reverse in part, and remand.  On remand, the district court shall (a) award appellant attorney fees in the amount of $28,840.50 to be added to the mortgage lien; (b) award appellant costs and disbursements in the amount of $2,544.47 to be added to the mortgage lien; and (c) rescind its order that appellant modify the notice of lis pendens and the record of the mortgage.

Affirmed in part, reversed in part, and remanded.



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

[1] Mortgage One originally sought to enforce a mortgage lien in the amount of $108,856.24.  This court limited the amount of the lien to $55,034.74.  Newton, 646 N.W.2d at 899.

[2] A lis pendens is “[a] notice, recorded in the chain of title to real property . . . to warn all persons that certain property is the subject matter of litigation, and that any interests acquired during the pendency of the suit are subject to its outcome.”  Black’s Law Dictionary 950 (8th ed. 2004).