This opinion will be unpublished and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
Woodland Development Corporation,
City of Andover,
Filed June 13, 2006
Toussaint, Chief Judge
Anoka County District Court
File No. C4-01-8273
Gary A. Van Cleve,
Tamara O’Neill Moreland, Larkin Hoffman Daly & Lindgren Ltd., 1500 Wells
Fargo Plaza, 7900 Xerxes Avenue South, Minneapolis, MN 55431-1194 (for
Clifford M. Greene, John M. Baker, Kevin G. Ross,
Greene Espel, P.L.L.P., 200 South Sixth Street, Suite 12100, Minneapolis, MN
55402 (for respondent)
Considered and decided by Toussaint, Chief
Judge; Hudson, Judge;
and Crippen, Judge.
U N P U B L I S H E D O P I N I O N
TOUSSAINT, Chief Judge
On appeal in this dispute over
development contracts between appellant Woodland Development Corporation and
respondent City of Andover (the city), Woodland argues that the district court misapplied
the law, erred in its findings of fact, and misconstrued the parties’
agreements when it concluded that Woodland had not been overcharged and owed the
city attorney fees. Because we conclude
waived its assessment-based claims and that its other claims are not supported
by the law or the facts, we affirm.
Woodland executed eight development contracts
with the city between July 18, 1995 and March 6, 2001. Woodland
alleges breach of these contracts and statutory violations,
arguing that it was overcharged and overassessed by the city in the amount of $344,506.19. The city raised the affirmative defense of
waiver and counterclaimed for declaratory judgment and attorney fees.
Following a bench trial and a
hearing on attorney fees, the district court filed a January 14, 2005 order and
setting out the basis of its judgment against Woodland on its claims and for the city on its
counterclaim for attorney fees. The court awarded the city $450,671.53 for
attorney fees and costs, denied Woodland’s
post-decision motions, and amended its order.
D E C I S I O N
Of Woodland’s total claim of $344,506.19,
$260,862.34 was alleged to be unauthorized charges made through the assessment
process. Woodland challenges the district
court’s conclusion that Woodland’s sole means of challenging the assessments
was through the assessment-appeal statute, Minn. Stat. § 429.081 (2004),
which Woodland did not timely pursue.
Section 429.081 states:
Within 30 days after the adoption of the assessment, any
person aggrieved, who is not precluded by failure to object prior to or at the
assessment hearing, or whose failure to so object is due to a reasonable cause,
may appeal to the district court . . . The court shall either affirm the
assessment or set it aside and order a reassessment . . . All objections to the assessment shall
be deemed waived unless presented on such appeal. This section provides the exclusive method of
appeal from a special assessment levied pursuant to this chapter.
Minn. Stat. § 429.081 (2004). The final sentence of this section “clarified
legislative intent that there be no other avenue of contesting special
assessments.” Sievert v. City of Lakefield, 319
N.W.2d 43, 44 (Minn.
Whether section 429.081 is the
exclusive method to appeal the special assessments is a question of statutory
interpretation, which this court reviews de novo. See Brookfield Trade Ctr., Inc. v. County
of Ramsey, 584 N.W.2d 390, 393 (Minn. 1998). If the statute’s language, on its face, is
clear, this court need not interpret the statute. “A statute is only ambiguous when the
language therein is subject to more than one reasonable interpretation.” Am.
Family Ins. Group v. Schroedl, 616 N.W.2d 273, 277 (Minn. 2000) (quotation omitted).
Section 429.081 on its face is
unambiguous: it provides the “exclusive”
method of appeal from a special assessment levied pursuant to chapter 429 and
“[a]ll objections” to the assessment are deemed waived unless presented on
appeal. Woodland argues that the statute applies only
to certain types of objections to assessments.
But the legislature’s use of the term “all objections” suggests no
limitation on the types of permissible objections, and no statutory language precluded
Woodland from timely
objecting to the assessments. The cases that Woodland cites in support of its argument do
not expressly or implicitly create an exception to the statute’s clear mandate;
none of them concerns a legal, as opposed to a factual, basis for an assessment. Finally, Woodland does not allege fraud, which
arguably could toll the limitation period.
Woodland argues that the costs of aerial mapping,
the drainage plan, and administration should not have been assessed because these
improvements were not among those expressly authorized by the legislature. But chapter 429 identifies a municipality’s
power to make improvements and enables it to assess benefited properties with
the “cost of any improvement.” Minn. Stat. §§ 429.021,
.051 (2004). Woodland argues that the cost of any item not
expressly included in the Minn. Stat. § 428.021 list of permissible
improvements is not assessable. But Minn.
Stat. § 429.021 authorizes the city to assess for “the cost of” any improvements. Aerial mapping, drainage plans, and
administration are among the costs of constructing, reconstructing, and
maintaining the permitted improvements, and this court presumes the validity of
the municipality’s judgment on them. Cf. Bisbee
v. City of Fairmont,
593 N.W.2d 714 (Minn. App. 1999) (finding
error in assessment method that “was completely unrelated to the costs of
construction of a particular improvement in a particular year”).
Woodland also argues that assessments for
sealcoating of the streets, to be applied as construction of homes was nearing
illegal. The parties’ development
contracts provided that the final sealcoating fell within the improvement
designated “permanent street surfacing.” Nevertheless, Woodland claims that the sealcoating was too
distant in time to be included in the assessment.
We conclude that
there is no basis to overturn the city’s single assessment for the complete street-improvement
process. First, street improvements are
expressly governed by chapter 429, and the objection should have been raised as
a chapter 429 special-assessment appeal.
Second, neither the statute nor the caselaw precludes assessment of the
final stage of an improvement at the same time as its earlier stages. Cf.
Quality Homes, Inc. v. Village of New
Brighton, 289 Minn. 274, 286, 183 N.W.2d 555, 562-63 (1971) (noting that
single assessment was inappropriate for separate projects, in separate years,
with separate feasibility reports, resolutions, and construction contracts). Therefore, the district court did not err in
its conclusion that section 429.081 was the exclusive method of appeal for Woodland’s
argues that the district court erred in its determination that Woodland had contractually
waived any right to challenge the assessments.
Each of the parties’ urban-development
contracts called for the city’s construction and installation of improvements,
listed the improvements, and set the terms governing construction and financing
by levying an assessment. The contracts
The Developer waives any and all procedural and
substantive objections to the installation of the public improvements and the
special assessments, including but not limited to hearing requirements and any
claim that the assessments exceed the benefit to the property. In the event the total of all City Installed
Improvements is less than originally estimated by the City Engineer in his
feasibility report, Developer waives all rights they have by virtue of
Minnesota Statute 429.081 or otherwise to challenge the amount or validity of
amounts, or the procedure used by the City in levying the assessments and
hereby releases the City, its officers, agents, and employees from any and all
liability related to or arising out of the levy of the assessments.
Whether a contract is ambiguous
(reasonably susceptible to more than one construction) is a question of law, on
which the reviewing court owes no deference to the district court’s
determination. Blackburn, Nickels & Smith, Inc. v. Erickson, 366 N.W.2d 640,
643 (Minn. App. 1985), review denied
(Minn. June 24, 1985). We see no
ambiguity in the express terms of the parties’ waiver clause. The contract extends the waiver beyond Woodland’s rights under
chapter 429 and unambiguously waives any right to challenge the amount or
validity of the assessment.
Woodland also argues that the city did not
plead waiver as an affirmative defense because it did not reassert that defense
in an amended answer. We agree with the district
court that the city was not required to reassert a defense already pleaded in
its original answer after Woodland
filed an amended complaint. It “is
generally recognized that the right [to respond to an amended pleading under
Minn. R. Civ. P. 15.01] is limited to the right to respond to the new allegations and to meet any new theory contained in the amended
pleading.” Nw. Nat’l Bank of Minneapolis v.
Shuster, 388 N.W.2d 370, 372 (Minn.
1986) (emphasis added). Requiring an
amended answer to be filed after an amended complaint when the city had no new
or changed affirmative defenses, would be contrary to the liberal practice of
encouraging the resolution of disputes on the merits rather than upon the
formalities of pleadings. See generally 1 David F. Herr & Roger
S. Haydock, Minnesota Practice § 15.3 (3rd
Woodland also argues that the parties’
contractual waiver provision is contrary to public policy and therefore
unenforceable. Exculpatory clauses have
been upheld based on the public interest in freedom of contract. Schlobohm
v. Spa Petite, Inc., 326 N.W.2d 920, 923 (Minn. 1982).
“If the clause is either ambiguous in scope or purports to release the
benefited party from liability for intentional, willful or wanton acts,
[however,] it will not be enforced.” Id. Here, the parties’ waiver provision is
unambiguous and does not expressly waive rights as to intentional or wanton
acts. Even if it did purport to release
the city from liability for such acts, however, the district court correctly determined
made no claim of intentional, willful, or wanton acts. Furthermore, we agree with the district court
that Woodland did
not establish that the contract was one of adhesion, requiring more scrutiny.
The district court correctly
determined that the waiver clause was enforceable and it was not against public
for Woodland to
waive its assessment claims. Therefore,
the contractual waiver clause was an alternative basis for the court’s denial
The district court determined that Woodland failed to prove any overcharges, duplicative
charges, or damages and that Woodland “passed
on” assessment-based fees and direct-billed charges. Woodland
argues that the district court disregarded evidence and relied on
after-the-fact, self-serving testimony to reach its erroneous conclusions.
Findings of fact, whether based on
oral or documentary evidence, shall not be set aside unless clearly erroneous,
and due regard shall be given to the opportunity of the district court to judge
the credibility of the witnesses. Minn. R. Civ. P.
52.01. “Findings of fact are clearly
erroneous only if the reviewing court is left with the definite and firm
conviction that a mistake has been made.”
Fletcher v. St.
Paul Pioneer Press, 589 N.W.2d 96, 101 (Minn. 1999) (quotation omitted). This court will not reverse the district
court’s judgment merely because we view the evidence differently. Rogers v. Moore, 603 N.W.2d 650, 656 (Minn. 1999).
The general rule in breach-of-contract
cases is that damages are limited to out-of-pocket damages. Woodland
argues that it should not be limited to out-of-pocket damages, citing Whitney v. Buttrick, 376 N.W.2d 274 (Minn. App. 1985), review
denied (Minn. Jan. 23, 1986). Unlike
Whitney, however, there is no
allegation of negligent misrepresentation here.
In any event, Woodland
simply seeks recovery of “overcharges,” amounts in excess of the amounts it
agreed to pay, and we see no clear error in the district court’s findings on these
Woodland agreed to fully reimburse
the city “for all costs incurred by the city including, but not limited to the
actual costs of construction of said improvements, engineering fees . . . and
any other costs incurred by the city relating to” the development contracts and
the installation and financing of the improvements. No contract provisions obliged the city to
prove its costs before obtaining reimbursement.
Woodland argues that it was contractually
obligated to pay only “actual costs.”
This argument ignores the unambiguous contract language, which is much
broader and which governs Woodland’s
claims. See City of Virginia v. Northland Office Props. Ltd.
P’ship, 465 N.W.2d 424, 427 (Minn. App.
1991) (stating that, if no ambiguity exists, interpretation of contract is
question of law), review denied
(Minn. Apr. 18, 1991). Moreover, a plaintiff
must show damages caused by the breach to prevail in a breach-of-contract
action. Nguyen v. Control Data Corp., 401 N.W.2d 101, 105 (Minn. App. 1987).
On Woodland’s claim of duplicative charges, various
employees of the city testified that there were none. Woodland
argues that the city’s evidence to support its charges was not credible
documentation or was “conclusory testimony.”
But though Woodland
found the proffered evidence unsatisfactory, the court was not required to see
the evidence in the same light. The
court laboriously reviewed the evidence and testimony and found that the city
had supported its charges.
Woodland argues that the multiplier used by
the city to recoup the actual costs of employees’ time was too high to reflect
the cost of the labor. But this was a
question for the accounting experts. The
court thoroughly considered the parties’ experts’ testimony and gave more
weight to the city’s expert. “A district
court is given wide latitude in determining whether there is sufficient
foundation upon which an expert may state an opinion.” Benson
v. N. Gopher Enters., Inc., 455 N.W.2d 444, 446 (Minn. 1990).
Appellate courts defer to the district court’s credibility
determinations. Sefkow v. Sefkow, 427 N.W.2d 203, 210 (Minn. 1988).
We see no error in the district court’s careful consideration of the
strengths and weaknesses of both experts’ testimony.
To claim excessive charges, Woodland primarily relies
on its position that the city failed to establish that the service was provided
or the expense was incurred. The city
addressed each alleged overcharge and supported its charges. The district court determined that Woodland’s claims of
excessive charges were speculative, subjective, and not factually
substantiated. Again, we see no clear error in the district
court’s consideration of the evidence offered by the parties on each claimed
overcharge and conclude that Woodland
did not meet its burden of proof.
Woodland argues that “percentage fees, the
multiplier, sealcoating and administrative sign fees were all illegal because
the city violated the statutory requirement that municipal fees be adopted by
ordinance” under Minn. Stat. § 462.353, subd. 4 (2000).
The city argues that Woodland did not properly
plead this claim and did not raise it in the district court until after written
closing argument, when the city timely objected. The city urges this court to treat this issue
as waived by Woodland. Alternatively, the city notes that Woodland briefed only two of the five reasons given by the
district court to conclude that Woodland
cannot prevail under this statute.
Despite the alleged procedural irregularities, the district court
considered and decided the issue, and we conclude that the statute does not
Stat. § 462.353, subd. 4, provides that a city “may prescribe fees
sufficient to defray the costs incurred by it in reviewing, investigating, and
administering an application.” It further
states: “Fees as prescribed shall be by ordinance.” Id. The “fees
. . . must be fair, reasonable, and proportionate to the actual cost of
the service for which the fee is imposed.”
Laws ch. 207, § 11.
The only relevant ordinance in place
at the time of the development contracts stated that developers shall pay “all
costs” associated with their development projects. Woodland
does not analyze the statute or provide authority to reach its conclusion that
this ordinance was inadequate,
but it argues that the ordinance did not meet the statutory requirements and
the city instead should have adopted ordinances setting fee schedules for its
construction is a legal question, which we review de novo. Brookfield Trade Ctr., 584 N.W.2d at 393. We need not address the adequacy of the specific
content of the ordinance because we conclude that the city’s fees satisfied the
statute’s fair-reasonable-and-proportionate requirement. Woodland
did not show that the city’s fees were excessive, duplicative, or unrelated to
actual costs. Therefore, even if the
ordinance lacked the required specificity, Woodland nevertheless was not entitled to
relief under Minn. Stat. § 462.353, subd. 4, and the district court
correctly denied its claim.
Woodland argues that the district court
erroneously awarded the city $450,671.53 for attorney fees and costs. It argues that the city was not entitled to
fees under the contracts.
Whether a contract
is ambiguous and reasonably susceptible to more than one construction is a
question of law, which we review de novo.
Blackburn, 366 N.W.2d at 643.
The contract stated: “The Developer agrees to reimburse the city
for all costs incurred by the city in defense of enforcement of this contract,
or any portion thereof, including court costs and reasonable engineering and
attorneys’ fees.” Here, the city had a covenant
with the League of Minnesota Cities through which it and other Minnesota cities
self-insure. Under the city’s covenant
with the League, the League “will pay on behalf of [the city] all sums which
[the city] shall become legally obligated to pay.”
Woodland argues that the city did not “incur”
legal fees and costs because the city’s insurer, not the city, actually paid
the claimed fees and costs. The parties’ contract, however, does not use the
language “actually paid”; it uses the word “incur,” and the city’s agreement
with the League preconditioned payment of the fees on the city’s legal
obligation to pay the fees. In the context of an attorney-fee award, “fees are
incurred when there is a legal obligation to pay them.” Sec.
& Exch. Comm’n v. Comserv. Corp., 908 F.2d 1407, 1414 (8th Cir. 1990)
(determining employee did not have fee arrangement because employer had
undertaken provision and payment of attorney for employee in securities
litigation); U.S. v. 122 Acres of Land,
856 F.2d 56, 58 (8thCir. 1988) (construing contingent contract with
attorney in which plaintiff was not obligated to pay fees unless plaintiff
prevailed in condemnation action). The
Minnesota Supreme Court has defined “incur” as “to become liable for” rather
than “to pay for.” Collins v. Farmers Ins. Exch., 271 Minn. 239, 244, 135 N.W.2d 503, 507
(1965). Thus, Woodland’s argument has no support in the
contract language or case law.
Woodland also argues
that the attorney fees were not “in defense of the enforcement of the contract”
as required by the contracts. Woodland focuses on
“enforcement” and argues that this was not an action brought by the city to
enforce performance. In light of the
entire provision, the contract unambiguously covers this litigation in which the
city was required to defend its contractual rights. Therefore, the district court did not err in deciding
agreed to reimburse the city for its attorney fees.