This opinion will be unpublished and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
Keith Burtch, et al.,
James Retterath, et al.,
Oakland Park, Inc.,
Oakland Park, Inc., et al.,
Linnea Burtch, et al.,
Filed July 3, 2006
Mower County District Court
File Nos. C6-99-1550, C8-00-1041, C8-02-1920, CX-00-490
Donaldson V. Lawhead, Brandon V. Lawhead, Lawhead Law Offices, 301 South Main Street, Austin, MN 55912 (for appellants)
L. J. Rotman, Thomas P. Kane, Mark T. Berhow, Hinshaw & Culbertson, L.L.P., 222 South Ninth Street, Suite 3100, Minneapolis, MN 55402 (for respondents)
Charles H. Thomas, Law Offices of Southern
Minnesota Regional Legal Services, Inc., 12 Civic Center Plaza,
Allen H. Gibas, Allen H. Gibas, P.A.,
Considered and decided by Shumaker, Presiding Judge; Klaphake, Judge; and Ross, Judge.
U N P U B L I S H E D O P I N I O N
Mobile-home park residents challenge the amount of the district court’s award of attorney fees under the private-attorney-general statute as having been improperly calculated. The park owner contends that the court improperly awarded fees for aspects of the litigation that conferred no public benefit. Because the district court neither abused its discretion nor committed clear error in its attorney-fee award, we affirm.
These are consolidated appeals from four related district-court actions by residents of a mobile-home park against the owner of the park, Oakland Park, Inc., a closely held corporation whose sole shareholders and officers are Michael Myers and Michael Pagliai.
The initial lawsuit, known
as the Burtch Litigation, was started on November 5, 1999, and alleged
violations of Minn. Stat. §§ 327C.02 to .15 (1998), governing manufactured-home-park
lot rentals. After ruling on various
motions, the district court bifurcated the trial, tried one count in the
action, and found that
On July 10, 2003, the
residents moved for leave to amend their complaints to add as defendants the
officers, shareholders, and employees of
By August 23, 2004, the
residents had reached a settlement with
After a hearing that began on April 25, 2005, the court awarded to the residents attorney fees, costs, and disbursements under Minn. Stat. §§ 327C.15, 8.31, subd. 3(a) (2004), the so-called “private attorney general” statute, as follows: $298,775 as attorney fees, $13,000 as paralegal fees, and $30,334.56 as costs and disbursements.
On appeal, the residents
challenge the district court’s denial of their motion to amend their complaints
to add individual defendants and challenge the amount of the fee award. By notice of review,
D E C I S I O N
Motion to Amend
Rulings on motions to amend pleadings rest within the
discretion of the district court and will not be reversed absent a showing of a
clear abuse of that discretion. Warrick v. Giron, 290 N.W.2d 166, 169 (
The residents urge that amendments of pleadings are to be liberally allowed and that a pleading can be amended during or even after a trial. Their amended complaints would assert individual liability on the part of the Oakland Park officers, shareholders, and employees for corporate violations of Minn. Stat. §§ 327C.02 to .15 (1998). The residents acknowledge that the manufactured-home-park statutes do not provide a cause of action against individuals, but they analogize to other corporate litigation in which corporate officers and managing agents have been held personally liable for corporate obligations.
Although it is doubtful that individual liability can be
predicated on corporate violations of Minn. Stat. § 327C.02, et. seq., the
district court denied the motion because it was untimely and to grant it would
The court noted that the motion, heard on July 10, 2003,
was brought in contravention of the scheduling order of February 5, 2001, and
that several dispositive motions had been decided, the first part of the
bifurcated trial had been completed, several amendments to the complaints had
already been made, and the court was ready to move to the jury-trial stage of
the litigation. The court explained that
if the amendment were allowed, four new parties would be added, discovery
deadlines would be extended, the scheduling order would be altered, and the
next stage of trial would not occur until late 2005 or 2006. This would be approximately a two-year delay
in a matter already four years old. The
court also indicated that
Appellate courts give considerable deference to the
district court in determining case-calendar issues. Rice v.
Perl, 320 N.W.2d 407, 412 (
The residents argue that the two corporate officers who would be added to the lawsuit, Myers and Pagliai, “not only had notice of this lawsuit, but also actually participated in it over its six-year duration.” Thus, adding them would not be a surprise. But because the residents knew the identities and involvement of these parties from the outset of the litigation six years earlier, and because claims against them would implicate the very same statute as the claims against the corporation, it is difficult to understand why a motion to join these individuals could not have been made in a timely manner. The residents offer no explanation for their failure to make their motion earlier, concentrating instead on demonstrating why they believe the statute allows claims against individuals.
The principle regarding the liberal grant of leave to amend pleadings should not be interpreted to override the authority of the district court to manage its caseload in a reasonable manner, the need for orderly case processing, the obviation of additional litigation burdens to the current parties, and the right of the current parties to have the issues determined with reasonable despatch. The propriety of a refusal to grant leave to add parties is especially compelling when, as here, the residents could have made their motions within the period allotted for such motions and have given no reason for their failure to do so. The district court did not abuse its discretion in denying the residents’ motion for leave to amend their complaints.
Attorney Fees in General
The district court labeled the four actions by the
residents as the Burtch Litigation, the Retterath Litigation, the Defamation
Litigation, and the Eviction Litigation.
The residents sought attorney fees in all of the actions. The court awarded fees only for the Burtch
litigation. The residents do not
challenge that award per se but dispute the amount of the award, contending
that the court should have applied the current hourly rate and a multiplier in
computing the fees. The residents also
contend that the court erred as a matter of law by not awarding fees for the
other three cases, which the residents call collectively the “Retaliatory
Litigation,” arguing that those cases were intertwined with the Burtch case and
that all matters arose out of common facts.
When a violation of Minn. Stat. § 327C.15 (2004) is found, the district court may award reasonable attorney fees under Minn. Stat. § 8.31, subd. 3a (2004), the “private attorney general” statute. In determining an award of attorney fees, the court must consider both general and special factors.
The general factors include “the time and labor required;
the nature and difficulty of the responsibility assumed; the amount involved
and the results obtained; the fees customarily charged for similar legal
services; the experience, reputation, and ability of counsel; and the fee
arrangement existing between counsel and the client.” State by
Head v. Paulson, 290
The special factors to be considered in determining a fee
award under section 8.31, subd. 3a, are the need to provide incentive to
counsel to act as a private attorney general so as to eliminate financial
barriers to the vindication of citizens’ rights, and “the degree to which the
public interest is advanced by the suit.”
Liess v. Lindemyer, 354 N.W.2d
556, 558 (
An award of attorney fees under the private-attorney-general
statute is reviewed on appeal for an abuse of discretion. State by
Humphrey v. Alpine Air Prods., Inc., 490 N.W.2d 888, 896 (Minn. App. 1992),
aff’d, 500 N.W.2d 788 (
Attorney Fees and Costs for Appeal
In its “Verdict” filed on August 20, 2001, the district
court held that new lease provisions requiring residents to be responsible for
their own sewer and water utilities were substantial modifications of a
Relying on advice in 2 David F. Herr & Roger S. Haydock, Minnesota Practice § 54.17 (2004); the district court’s statement that it would be best to resolve the liability issues, including appellate review, before trying the damages issues; and on the district court’s order that judgment be entered immediately “so as to begin tolling the parties’ right to perfect an appeal,” the residents appealed from the judgment entered on the Amended Verdict.
Upon receipt of the appeal, this court questioned jurisdiction and ordered the parties to submit informal memoranda addressing the jurisdictional issue. In that order, this court cited Minn. R. Civ. P. 54.02 and In re Commodore Hotel Fire & Explosion Case, 318 N.W.2d 244, 246-47 (Minn. 1982). Only the residents submitted a memorandum, and they acknowledged that the partial judgment was not appealable as of right. But they requested discretionary review. This court held that the residents failed to show “a compelling reason for discretionary review,” and denied the request and dismissed the appeal.
The residents argue that, despite the dismissal of the appeal, they should be awarded attorney fees and costs for the appeal, for had they not made the challenge the court would have lost jurisdiction. They requested an award of attorney fees for approximately 79 hours of legal services. Because the appeal was dismissed, the district court found that none of the expenditures related to the appeal were reasonable and awarded neither fees nor costs as to that matter.
Attorney fees for time not reasonably expended should not
be included in a fee award. Specialized Tours, Inc. v.
Attorney Fees for Retterath, Eviction, and Defamation Actions
The district court denied all attorney fees related to the Retterath, Eviction, and Defamation litigation because it found that none of those actions conferred a public benefit, as required under the private-attorney-general statute.
The residents argue that those actions were aimed at
preventing Oakland Park’s retaliatory conduct and that they were intertwined
with a common core of facts in the Burtch litigation, which the court found to
have conferred a substantial public benefit.
The court acknowledged a similarity among the four cases but noted that
they differed in legal theories and that it was easy to separate the work and
time attributable to each case. The court also found that the residents alleged
As previously noted, attorney fees are available only for actions that demonstrably benefit the public. Ly, 615 N.W.2d at 314. In exercising its discretion to award attorney fees, the district court must determine “the degree to which the public interest is advanced by the suit.” Lies, 354 N.W.2d at 558. We recognize that lawsuits brought solely to redress private injuries might have an abstract public benefit, insofar as they serve as a warning to others not to engage in similarly injurious conduct. So, a lawsuit for damages for a dog bite against an owner who has failed to restrain his dog might “warn” others of the consequences of that conduct, but the public benefit is tangential to the principal purpose of the action, namely, the redress of a private wrong. Attorney fees would not be recoverable in that case because the public benefit is only incidental.
The residents argue that Minn. Stat. § 327C.12
The Retteraths complained about
The defamation action presents a closer question because
it involved Linnea Burtch and an association consisting of the individual
residents in the Burtch action.
We note first that the mere fact that this action
involves all of the residents in the Burtch action does not support the
conclusion that the litigation was for the benefit of the public. See Ly,
615 N.W.2d at 314 (holding that matters involving a finite group of
shareholders did not extend benefit to the general public). The defamation action involved a claim that
specific individuals made defamatory statements about
Rate of Awarded Attorney Fees
The residents in the Burtch litigation moved for an award of attorney fees and costs. The court awarded reduced amounts. The residents do not challenge the reductions per se but contend that the court abused its discretion in improperly calculating the amount of attorney fees to which the residents are entitled, given the purposes of the private-attorney-general statute.
The district court acknowledged the dual purpose of the
private-attorney-general statute to eliminate financial barriers for plaintiffs
seeking to vindicate their rights and to give incentive to legal counsel to act
as a private attorney general. The court
then concluded that an award of attorney fees must be based both on the
policies underlying the private-attorney-general statute and the factors in Paulson,290
Considering the Paulson factors, the court found that the reasonable amount of time the residents’ attorneys spent was 471.6 hours by Donaldson Lawhead and 1,926.65 hours by Brandon Lawhead; that the residents prevailed in the lawsuit; that the residents, primarily elderly, low-income people, would not have the financial ability to pursue their claims without an award of attorney fees; that an award of fees is necessary to give incentive to legal counsel to take such a case; that the litigation conferred a significant public benefit; that the payment of fees had been delayed; that there were considerable risks for the residents’ attorneys in accepting this litigation; that the attorneys had “average” reputations in the legal community; that the case was not complex but was time-consuming; that counsel billed at conservative rates for the region; and that the “results of the Burtch litigation were positive, but not exceptional.” The court’s findings and conclusions clearly demonstrate that it considered both the purposes of the private-attorney-general statute and the Paulson factors in determining whether any award was appropriate and what that award should be.
The court then calculated the award by applying the “lodestar” method set forth in Hensley v. Eckerhart, 461 U.S. 424, 434, 103 S. Ct. 1933, 1940 (1983). Doing so, the court multiplied Donaldson Lawhead’s hourly rate of $225 by 471.6 hours and awarded fees of $106,110. The court found that Brandon Lawhead’s hourly rate increased from $95 an hour at the outset of the litigation to $150 an hour at the time of the award. The court found that, for Brandon Lawhead’s legal services, “$100 per hour is reasonable and appropriate within the prevailing market rates” in the region for lawyers of comparable experience. The court multiplied $100 by 1,926.65 hours and awarded a fee of $192,665. The combined fee award for the Burtch litigation was $298,775. The court also determined that a 1.0 multiplier was warranted.
The residents contend that, even though the court found that the payment of attorney fees was delayed, it did not apply any enhancement factor to compensate for the delay. They also argue that the court should have used current, rather than historical, fee rates. They further urge that inflation eroded the fee recovery and that the court should have applied at least a 1.3 multiplier.
The record shows that the Burtch case was aggressively
litigated on both sides. That approach
in and of itself appears to have accounted for some delay.
Nor did the court abuse its discretion in awarding fees based on a rate of $100 an hour for Brandon Lawhead, despite his rate of $150 an hour during the last two and one-half years of the litigation. The residents cite Lightfoot v. Walker, 826 F.2d 516 (7th Cir. 1987), and Standley v. Chilhowee R-IV Sch. Dist., 5 F.3d 319 (8th Cir. 1993), for the proposition that current fee rates must be used to account for payment delays, or, if historical rates are used, an adjustment must be made. But those cases are not authority that current rates or adjusted historical rates are required in attorney-fee awards. The Paulson factors create a broad perspective against which to test the reasonableness of fees. The district court applied the Paulson factors and explained their application. The ultimate question is, “What fee is reasonable when all factors are applied?” Delay in the fee payment is a consideration but it is not an especially strong consideration when the delay has been contributed to by the prevailing parties. The residents do not acknowledge on appeal their role or that of their counsel in the delay that occurred.
The court found that average attorneys did accept risks, litigated a not particularly complex case to a positive but not exceptional conclusion, and received a fee award based on a rate that was conservative but yet within the prevailing range in the community. Although the court could have calculated fees at a higher rate, we are unable to conclude that it abused its discretion in declining to do so, considering all of the Paulson factors.
The residents argue that inadequate fee awards, such as that here, will give no incentive to lawyers to take risky cases under the private-attorney-general statute. As we have indicated, the award was not inadequate when all appropriate factors are considered, and a legal fee of nearly $300,000 is by no means so small that other lawyers would be unwilling to accept a similar case in the current highly competitive attorney-business market, or in the future.
A “public benefit” should be viewed not only as a
determination of liability but also as a determination of the consequences of
that liability. The most significant
aspect of the Burtch litigation was its deterrent effect on mobile-park owners
from future similar violations of residents’ rights. That effect is not complete merely upon a
resolution of liability. Rather,
potential future violators must be shown that the consequence of a violation
could be a significant monetary award. This
effect did not come about until the Burtch litigation was completed. The mere fact that individuals might also
obtain personal damages awards does not detract from the overall public benefit
of the completed litigation. Thus, we
find no merit in