This opinion will be unpublished and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
Duluth Superior Erection, Inc.,
Concrete Restorers, Inc., et al.,
Filed April 11, 2006
St. Louis County District Court
File No. 69-C1-02-601094
Michael E. Orman, Orman, Nord & Spott Law Office, 1301 Miller Truck Highway, Suite 400, Duluth, MN 55811 (for appellants)
Considered and decided by Peterson, Presiding Judge, Klaphake, Judge, and Hudson, Judge.
Appellants challenge an order issued by the district court following this court’s remand in Duluth Superior Erection, Inc. v. Concrete Restorers, Inc., 665 N.W.2d 528 (Minn. App. 2003) (Duluth Superior I) (affirming grant of summary judgment in favor of respondent subcontractor under Minn. Stat. § 514.02 (2002), which provides civil penalties and remedies for nonpayment for improvements to real property, but reversing joint-and-several judgment award and remanding matter for liability determination of each agent of appellant contractor). Because (1) the district court properly executed this court’s directives on remand; (2) appellants failed to meet their burden under the statute to prove that respondent was actually paid or that a bond was given; and (3) the district court did not abuse its discretion in awarding reasonable attorney fees under the statute, we affirm.
Appellants argue that it was an abuse of discretion for the district court to act as the finder of fact on remand. Appellants insist that the proper “further proceedings” required by this court “are a dispositive motion (summary judgment) or a trial.” Respondent presented the matter to the district court on remand in the form of a “motion for supplemental findings.”
courts are given broad discretion to determine how to proceed on remand, as
they may act in any way not inconsistent with the remand instructions
provided.” Janssen v. Best & Flanagan, LLP, 704 N.W.2d 759, 763 (
In Duluth Superior I, 665 N.W.2d at 537, this court did not offer specific directions to the district court other than to “reverse the judgment entered by the district court, and remand to enable the district court to determine the extent to which each appellant is liable based upon the amount of proceeds each knowingly received.” As such, the district court was not required to hold any particular proceedings and was free to reconsider the issue based on the record.
Moreover, while respondent
characterized its motion as one for “supplemental findings,” the motion could be
viewed as one for summary judgment.
Reconsideration of a case on remand is a continuation of the original
proceeding. See Maher v. Maher, 393 N.W.2d 190, 193 n.2 (Minn. App. 1986). Here, in that original proceeding, the
district court granted summary judgment to respondent, and this court concluded
that there were no genuine issues of material fact and affirmed the grant of
Appellants argue that the district court erred because it failed to require respondent to establish a “nexus” or to trace the contributions made by respondent to payments knowingly received by appellants. Appellants insist that the “element of ‘knowingly receives proceeds as payments’ requires some connection between the proceeds and payments to establish that the payment[s] are drawn from the proceeds and, if so, to give the agent reason to know the source of the payments.”
of whether appellants “knowingly” received proceeds of payments was addressed
and decided in Duluth Superior I.
In particular, this court concluded that (1) Minn. Stat. § 514.02,
subd. 3, created a presumption that appellants knowingly received proceeds of
payments and appellants failed to rebut that presumption; (2) appellants
could have rebutted the presumption “by producing their financial records and
by providing for an accounting of the proceeds received”; and (3) the district
court “established knowledge on the part of all appellants, and correctly
applied a presumption of liability and shifted the burden of proof to
In Duluth Superior I, this court further concluded that no genuine issues of material
fact exist regarding the total amount owed to respondent, thus affirming the
district court’s conclusion that a total of $33,950 was owed on the two
remand, respondent requested additional discovery from appellants and obtained some
bank account records. These records
revealed that a total of $88,270 was deposited into this bank account. Of this figure, less the one $10,000 payment
that was made to respondent, appellants paid to themselves and their family
members a total of $57,832.13. Of the
While the district court’s method of apportioning damages between appellants may not be exact, it is fair based on the evidence that the court had before it; the amounts owed by each appellant are less than the amounts received by each out of the bank account in question. As respondent notes, appellants had a statutory duty to hold the proceeds they received in trust for the benefit of respondent. While the statute does not require that the proceeds be segregated into a separate account and specifically allows commingling of funds, the burden was on appellants to prove that respondent was actually paid or that a bond was obtained. See Minn. Stat. § 514.02, subd. 3. By failing to properly attribute payments and their sources, appellants themselves rendered the proceeds of payment fungible. We conclude that the district court did not misapply the statute or otherwise abuse its discretion.
Appellants challenge the district court’s award of $21,756 in attorney fees, which represents the amount of fees incurred by respondent since the beginning of this action. In Duluth Superior I, this court rejected appellants’ challenge to the initial award of attorney fees, as follows:
Finally, appellants argue that the
district court abused its discretion by awarding attorney fees to [respondent]
without making a finding that the fees were reasonable, and by not
independently evaluating the evidence.
“On review, this court will not reverse a trial court’s award or denial
of attorney fees absent an abuse of discretion.” Becker
Alloy Hardfacing & Eng’g Co., 401 N.W.2d 655, 661 (
Since then, respondent incurred additional fees, which the district court awarded as follows:
[Respondent has] accrued considerable additional attorney fees. They now tally in attorney fees, costs and disbursements since the beginning of the case, $21,756. [Appellants] question whether that [amount] is ‘reasonable,’ or if the Court examined the case to make that determination. The Court notes that there is no issue as to whether the work was done or whether [respondent] was ever paid. . . . [Respondent] has accrued fees in an attempt to collect, and still has not collected. It is also noted that these fees are awarded under the civil theft part of the mechanic’s lien statute that is more punitive in nature and specifically refers to attorney fees.
argue that the district court improperly characterized the award of attorney
fees as punitive and that the total amount awarded is unreasonable because it
represents 64% of the principal amount recovered, without going to trial. Appellants further argue that the district
court failed to consider the appropriate factors, including the “time and
effort required, novelty and difficulty of the issues, skill and standing of
the attorney, value of the interest involved, results secured at trial, loss of
opportunity for other employment, taxed party’s ability to pay, customary
charges for similar services, and certainty of payments.” See Richard
Knutson, Inc. v. Westchester, Inc., 374 N.W.2d 485, 490 (
While a large fee is not necessarily
an unreasonable fee, the amount of the award should be in reasonable relation
to the amount of the judgment secured. C. Kowalski, Inc. v. Davis, 472 N.W.2d
872, 878 (Minn. App. 1991) (concluding that award of attorney fees in amount of
$14,000 was not excessive to enforce $15,000 mechanics’ lien, when 168 hours of
services were provided), review denied
cannot conclude that the district court failed to consider the appropriate factors or that the award of fees was unreasonable.