This opinion will be unpublished and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
Headwaters Rural Utility Association, Inc., et al.,
Hennepin County District Court
File No. 03-017022
Jeffrey A. Carson, Carson, Clelland & Schreder, 6300 Shingle Creek Parkway, Suite 305, Minneapolis, MN 55430 (for respondent)
Considered and decided by Toussaint, Chief Judge; Stoneburner, Judge; and Huspeni, Judge.*
U N P U B L I S H E D O P I N I O N
TOUSSAINT, Chief Judge
Appellants, landowners and a utility association, challenge the denial of their motion for summary judgment and the summary judgment granted to respondent, a city. Because we see no genuine issue of material fact and no error of law, we affirm.
Respondent City of Corcoran cited the individual septic tank systems (ISTS) on the properties owned by appellants Georgia Wigen and Steven Schmid (the landowners) as “imminent public health threats” (IPHT). In 2001, after the citations, the landowners contracted with appellant Headwaters Rural Utility Association, Inc. (HRUA), a utility cooperative, to replace their ISTS.
At the time it performed the work for the landowners, HRUA had a State Disposal System (SDS) permit granted by the Minnesota Pollution Control Agency (MPCA) but did not obtain the permit required by Corcoran’s ordinance. By January 2002, HRUA had completed the installation of in-ground ISTS on the landowners’ properties. After learning from the MPCA in April 2002 that its SDS permit “[did] not and was not intended to exempt the permitee (i.e., HRUA) from local regulations,” HRUA, through its agent Ingleside Engineering, applied for after-the-fact city permits for the two ISTS it had already installed.
In December 2002, Corcoran denied the permits because Corcoran’s building official, the MPCA, the Minnesota Board of Water and Soil, and the Minnesota Onsite Treatment Contractors’ Association concurred that in-ground trench systems were not appropriate for the sites. In February 2003, Ingleside Engineering told the landowners they were not in compliance and would have to apply for permits and install mound systems.
By April 2003, no action had been taken. Corcoran adopted Findings of Fact that the landowners’ systems were failing and issued an order requiring the landowners to submit designs for new systems, to obtain permits before having any work done, and to repair or replace the existing systems by August 1 (the April 2003 order). Appellants challenged the order by bringing an action against Corcoran in district court. Corcoran moved for summary judgment; its motion was granted and appellants’ suit was dismissed (the October 2004 order).
Corcoran then sued appellants in an enforcement action. Appellants raised several defenses, arguing, inter alia, that the April 2003 order was not the result of quasi-judicial action and was subject to collateral attack and that Corcoran had acted in bad faith. Both parties moved for summary judgment. In February 2005, the district court granted Corcoran’s motion and denied appellants’ motion, finding that Corcoran’s April 2003 order had resulted from a quasi-judicial act and could be challenged only by certiorari review in the court of appeals, that the April 2003 order was not subject to collateral attack because appellants had not exhausted their administrative remedies, that Corcoran had subject matter jurisdiction over ISTS, that Corcoran had adequately explained its denial of the permits, and that there was no evidence of Corcoran’s bad faith (the February 2005 order).
Appellants challenge both the October 2004 order denying their motion for summary judgment and the February 2005 order granting summary judgment to Corcoran and requiring appellants to comply with Corcoran’s April 2003 order. They argue that the April 2003 order was not enacted under Corcoran’s quasi-judicial authority, that the district court had subject-matter jurisdiction to review the April 2003 order, that state law preempts Corcoran’s right to regulate ISTS, that Corcoran did not adequately explain its denial of the permits, and that the district court abused its discretion in denying appellants’ motion for attorney fees.
D E C I S I O N
1. Quasi-Judicial Authority
for summary judgment was denied on the ground that the district court lacked
subject-matter jurisdiction. Questions
of subject-matter jurisdiction are reviewed de novo. Johnson
To determine whether an act was
quasi-judicial, this court considers whether it involved “(1) investigation
into a disputed claim and weighing of evidentiary facts; (2) application of
those facts to a prescribed standard; and (3) a binding decision regarding the
2. Subject-Matter Jurisdiction
Appellants argue that, even if Corcoran’s April 2003 order was quasi-judicial, they were entitled to challenge its validity by bringing an action in district court. The district court found that it lacked subject-matter jurisdiction. Subject-matter jurisdiction is reviewed de novo. Johnson, 648 N.W. 2d at 670.
Minn. Stat. § 115.05, subd. 11
(2004), provides that judicial review of a final decision of an agency or the
commissioner is available pursuant to the statutes on judicial review of
contested cases, and those statutes provide for certiorari review by this
Appellants rely on Carlson v. Chermak, 639 N.W.2d 886, 889-90, n.1 (Minn. App. 2002) (“In the distinct procedural posture of a county’s action to enforce an ordinance against landowners, aggrieved parties may raise constitutional, equitable, and other defenses to enforcement whether or not they appealed denial of a variance within the statutory appeal period.”). But the footnote does not reference situations in which the legislature has explicitly provided for certiorari review, and the one Minnesota case on which the footnote relies, Freeborn County v. Claussen, 295 Minn. 96, 98, 203 N.W. 2d 323, 325 (1972), predated the existence of the court of appeals and did not involve such a provision. In light of the legislature’s provision of certiorari review, appellants’ reliance on Carlson is misplaced.
In any event, Carlson does not support appellants’ view that the district court had subject-matter jurisdiction.
[Q]uasi-judicial decisions, like variances and special use permits, are appropriately subject to direct judicial review, whereas legislative decisions, like rezoning decisions, are properly reviewed by a declaratory-judgment action. Deference to the authorizing statute that specifically provides for direct appeal of this variance decision, therefore, is appropriate. Because it is undisputed that Carlson failed to appeal within the statutory period, the district court could exercise subject-matter jurisdiction over only those claims in the declaratory-judgment action that were independent of the denial of the variance.
We see no distinction between the issues raised in Carlson’s declaratory-judgment action and those that could have been brought on appeal from the . . . action denying the variance. . . . Therefore, we conclude the district court did not have subject-matter jurisdiction over the declaratory-judgment action.
Appellants argue that Corcoran
lacked authority to bring an action to compel appellants to obtain a local
permit because HRUA had already obtained an SDS permit from the MPCA pursuant
to chapter 115 of the Minnesota Statutes.
“On appeal, when there are no disputed facts, the issue of whether a
state statute renders a local law unenforceable is a question of law, which we
review de novo.” In re Appeal of Rocheleau, 686 N.W. 2d 882, 890 (
addressed the same issue, i.e., whether chapter 115 makes local ordinances
unenforceable. The landowners in that
case argued that a county board lacked jurisdiction over inspection of their
sewage treatment system because the county ordinance was preempted by Minn.
Stat. § 115.55, subds. 5, 5a (2002).
Appellants argue that Rocheleau is not dispositive because it
concerns preemption of the ordinance by the statute and they are arguing not
preemption but rather a conflict between the ordinance and the statute. They cite Canadian
Connection v. New Prairie Twp., 581 N.W.2d 391 (Minn. App. 1998), review denied (Minn. Sept. 30, 1998),
for the proposition that preemption and conflict are governed by different
principles. This is true, but it does
not support appellants’ argument.
Moreover, Canadian Connection found
that “the township ordinance was not preempted by or in conflict with state law because: (1) the ordinance was a valid exercise of the
township’s land use authority . . . ;
and (2) the ordinance did not conflict with or intrude upon the state’s
pollution control efforts.”
4. Adequate Explanation
Appellants argue that
Corcoran did not comply with the regulatory requirements for issuing a notice
of their noncompliance. The construction
of a rule is a question of law subject to de novo review. Kastner
v. Star Trails Ass’n, 646 N.W.2d 235, 238 (
Your application is being denied for a standard system. It does not meet the requirements of M.P.C.A. Rule 7080. Soil borings were done at both sites by the undersigned and two other inspectors. . . . [A] second set of borings was completed . . . . All licensed and/or certified individuals that were in attendance agreed that the designed and installed system would not meet Rule 7080 for a standard system design or installation.
Please redesign to meet the requirements for a standard system for both sites.
Corcoran’s letter meets the statutory requirement of stating the reason for the denial of a permit. Because Corcoran was not conducting a compliance inspection, it did not need to meet the requirements for issuing a notice of noncompliance.
5. Evidence of Bad Faith
This court does not reverse a
district 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 (
Appellants’ claim is based on their views that (1) Corcoran’s April 2003 order was not based on the exercise of its quasi-judicial powers and (2) various representatives of Corcoran planned to deny the permit before the investigation was conducted. The first is without merit; as the district court correctly found, Corcoran’s order was an exercise of its quasi-judicial powers. The second, even if true, would not be the basis for an award of attorney fees under Minn. Stat. § 549.211 (2004), which requires bad faith on the part of counsel, not of a party.
* Retired judge of the Minnesota Court of Appeals, serving by appointment pursuant to Minn. Const. art. VI § 10.
 See City of Corcoran Code of Ordinances, Title V, § 50.05 (“No person, firm, or corporation shall install, alter, repair or extend any individual sewage disposal system in the city without first applying for obtaining [sic] a permit therefore from the Building Official for the specific installation, alteration or extension.”) (repealing but not changing substance of Corcoran City Ordinance §156)
 This district court judge was not the same judge who had issued the October 2004 order dismissing appellants’ suit.
 The other cases on which appellants rely predate the establishment of the court of appeals.
 Appellants also rely on
State by Spannaus v. Lloyd A. Fry Roofing
Co., 310 Minn. 528, 531, 246 N.W.2d 696, 698 (1976) (concluding that party’s
“collateral attack on the [M]PCA order in the present enforcement proceedings
is not barred by [the party’s] failure to challenge the order through some
direct appeal procedure”). But Fry predates the existence of the court
of appeals. Moreover, Fry explicitly held that Minn. Stat. § 115.05,
subd. 10, (1976) (predecessor to Minn. Stat. § 115.05, subd. 11, providing
that, if no appeal was taken from an agency action, the action was deemed
conclusive and could not be attacked in “any other action or proceeding”) did
not apply because “[chapter] 115 deals with water pollution whereas all air
pollution matters, such as the instant one, are governed by [chapter] 116” and
chapter 116 “contains no provision comparable to § 115.05, subd. 10,
prohibiting collateral attacks . . . .”