This opinion will be unpublished and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
Robert W. Nicholson, Jr. Trust, et al.,
Sawmill Golf Club, Inc., et al.,
Filed December 12, 2006
Affirmed in part and remanded
Washington County District Court
File No. C6-03-2799
Kenneth Hertz, Hertz Law Offices, P.A., 3853 Central Avenue N.E., Columbia Heights, MN 55421 (for appellants)
Mark Vyvyan, Todd Wind, Theresa
M. Weber, Fredrickson & Byron,
Considered and decided by Shumaker, Presiding Judge; Hudson, Judge; and Crippen, Judge.*
U N P U B L I S H E D O P I N I O N
In this action for damages and other relief relating to the alleged breach of a golf-course lease, appellant trustee challenges various findings and conclusions and the district court’s award of attorney fees. Because the court’s findings of fact as stated are not clearly erroneous, we affirm those findings. But because the court failed to make findings as to certain claimed additional rent and the basis for its award of attorney fees, we remand as to those issues for findings.
Robert W. Nicholson, Jr. owned 140
acres of land in the
When Nicholson died, his interest passed to the Robert W. Nicolson, Jr. Trust, of which appellant Marian L. Nicholson is trustee.
Claiming various breaches of the lease, the trustee sued Sawmill in 2003. The relief she sought included money damages for rent allegedly due, an accounting, and ejectment. After a bench trial, the district court ordered judgment in favor of Sawmill and respondent Dan Pohl, Sawmill’s chief executive officer, and awarded to both respondents their reasonable attorney fees and costs, which ultimately the court determined to be $104,639.69.
The principal provisions of the lease at issue during the trial, and on appeal, concern rent payments over and above the base rent, alteration of the golf course, and notice of default.
The lease provides a schedule of escalating annual base rents payable from inception through maturity. It also provides for an annual Consumer Price Index adjustment in the base rent and certain additional rent. The additional rent consists of 10% of the annual dues collected from members of the golf club. The “dues” exclude initiation fees, stock-purchase fees, special assessments, use and transfer fees, and “greens fees (if and only if the Golf Club remains a private golf club).” If the club does not remain private, additional rent includes 10% “of all greens fees collected as well as ten percent (10%) of the annual dues collected from members . . . .”
From the inception of the lease, Sawmill operated the golf course as semi-private. That meant that members who pay annual dues do not also pay greens fees, but nonmembers may play on the course only if they pay greens fees. Furthermore, Sawmill offers full membership, requiring dues but no greens fees, and associate membership, requiring both dues and greens fees. Persons desiring golf club membership are required to pay a one-time up-front fee by purchasing a Heritage Certificate. Sawmill sometimes issues VIP passes for free golf and offers gift certificates. It also hosts league play and various events, and it barters rounds of golf for vendor services. Finally, Sawmill waives dues for stock purchasers and defers dues payments for prepaying members.
The trustee contends that these various non-cash items have monetary value and are required to be included in the calculation of the additional rent paid to the trust. She also contends that the trust is entitled to an accounting to determine the value of the items, and she argues that the court erred in ruling that she waived her right to certain rents because she accepted rents calculated under a CPI formula different from that called for by the lease.
At the outset of the lease, the golf course was a 9-hole course in poor condition. Sawmill decided to expand the course to 18 holes and to make various improvements. The lease requires Sawmill to maintain the course, and it permits Sawmill to alter and improve the course but requires the “Lessor’s written approval of plans and specifications therefor.” The court found that Sawmill gave the lessor the plans for improving the course but the lessor “refused to provide written consent. Instead [the lessor] gave oral permission for the work and observed it on a daily basis.”
The trustee argues that Sawmill impermissibly removed valuable, healthy trees from the land for which compensation is required. She disputes the court’s rulings that removal of the trees were part of necessary course maintenance, that the statute of limitations barred most of the claims, and that, in any event, Sawmill had permission for the tree removal.
The lease provides that Sawmill “shall not be deemed to be in default” unless “the Lessor shall first give” to Sawmill notice of the default. The notice period varies depending on the nature of the default as does the time allowed for curing the default.
The court found that the trustee had not given a notice of default and had not allowed Sawmill an opportunity to cure any alleged default and, therefore, the trustee is barred from claiming additional rent. The trustee disputes this ruling.
Sawmill moved for an attorney fees award under the lease. The district court granted Sawmill’s motion in an amount less than requested and made no findings in support of the award or the amount of the award. Sawmill and the trustee challenge this award.
D E C I S I O N
district court’s 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 trial court to judge the credibility of the
While the district court’s
findings of fact are reviewed under the deferential “clearly erroneous”
standard, this court reviews questions of law de novo. AFSCME,
Council No. 14 v. City of
As with any other contract, the cardinal purpose of
interpreting a lease is to give effect to the intention of the parties as expressed
by the terms of the lease. See Art Goebel, Inc. v. N. Suburban
Agencies, Inc., 567 N.W.2d 511, 515 (Minn. 1997) (constructing contract’s
indemnity provision); Pettit Grain &
Potato Co. v. N. Pac. Ry. Co., 227 Minn. 225, 229, 35 N.W.2d 127, 130 (1948)
(construing lease). This court
“construe[s] a contract as a whole and attempt[s] to harmonize all clauses of
the contract.” Chergosky v. Crosstown Bell, Inc., 463 N.W.2d 522, 525 (
The trustee asserts that she is entitled to an “accounting” of all items of value, such as VIP passes, bartered golf rounds, and free passes, that could reasonably be included in the calculation of additional rent under the lease. The court did not expressly rule on this claim.
We note first that the
lease itself does not provide the remedy of a compelled accounting to resolve
issues as to what rent is due. However,
there exists an equitable remedy known as an accounting that compels the disclosure
of money or property held or obtained by a particular party but which belongs
to another. See Keough v. St. Paul Milk Co., 205
Thus, the predicate issue is disclosure. The trustee conducted pretrial discovery and then extensively litigated the issue of what rents are due under the lease. Both sides produced documentary and testimonial evidence of precisely what Sawmill obtained through cash and through non-cash items of ostensible value. We address more fully below the question of what may reasonably be considered additional rent under the lease. But we conclude that, on the record created during the trial, as well as through pretrial discovery, the trustee received a de facto accounting of all cash and noncash receipts obtained by Sawmill during its operation at the golf course.
The trustee has not shown
that any particular form of accounting is required or that the disclosure she
received through discovery and trial was inadequate to satisfy the requirements
of an accounting. It was the trustee’s
burden to show deficiencies in the disclosure and that there is a balance due
from Sawmill for additional rent. Oskaloosa
Sav. Bank v. Mahaska County State Bank, 219 N.W. 530, 534 (
2. Additional Rent
a. VIP Passes, Free Memberships, and Bartered Golf Rounds
Sawmill’s rent obligations are fixed by the terms of the lease: “In addition to the annual base rent, [Sawmill] shall pay as additional rent . . . ten percent (10%) of the annual dues collected from members of the Golf Club.” That is the only “additional rent” the parties to the lease agreed upon. They then defined the term “annual dues.” According to the lease, these are annual base amounts that golf club members are required to pay. “Annual dues” do not include greens fees unless Sawmill ceases to operate as a private golf course. In that case, “annual dues” also includes greens fees.
Sawmill did not operate as an entirely private golf course. Thus, under the unambiguous terms of the lease, Sawmill was obligated to pay to the trustee 10% of annual dues collected, which includes 10% of all greens fees collected. Obviously, the additional rent provision contemplates cash receipts. Under no reasonable interpretation can it be said that VIP passes, free memberships, and bartered golf rounds produce any cash receipts or constitute either dues paid by members or greens fees collected. Nor did the evidence at trial show that any of these items was converted into a cash collection.
The trustee argues that these items have value and constitute reportable, and perhaps taxable, income to Sawmill under the Internal Revenue Code. She argues that the value of these items should be considered additional rent and that she is entitled to 10% of that value. But the lease does not require Sawmill to pay to the trustee a portion of its golf-course income, and it nowhere prohibits Sawmill from deriving value from non-cash sources relating to the golf course and its related uses. It would be contrary to the express intentions of the parties to expand the clear and precise definition of additional rent to encompass anything other than cash dues collections and cash greens fees collections. There was no error in the court’s determination that the trustee is not entitled to a percentage of these items.
b. Associate Memberships
The trustee claims that Sawmill failed to pay 10% of the dues it collected from associate members. Sawmill responds that the trustee offered no evidence that any dues remain unpaid and that to require the payment of a percentage of associate-members’ dues would result in a double payment because those members also pay greens fees, a percentage of which Sawmill paid as additional rent.
The district court did not specifically rule on the issue of associate memberships but rather held generally that all dues had been paid. Inferentially, that holding would suggest that the court considered all dues, including associate-members’ dues. On the other hand, the court might have been persuaded by Sawmill’s argument that it was not required to pay a percentage of those dues because it was already paying a percentage of greens fees for associate members.
As we have discussed above, the lease requires as additional rent “10% of the annual dues collected from members of the Golf Club.” The lease does not distinguish full memberships from associate memberships, nor does it relieve Sawmill from paying a percentage of dues collected from members who also have paid greens fees. Thus, the “double-counting” argument appears to be without merit given the clear lease terms.
Furthermore, as the trustee explains in her brief on appeal, she did present evidence pertaining to associate-members’ dues. We agree that there is in the trial record evidence relating to these dues, although the significance of that evidence is properly determinable by the district court through additional factual findings.
Thus, we remand for findings on the issue of associate membership dues. Because this issue was litigated, there is no need to reopen the record or to supplement the record with any further evidence.
c. Deferred Memberships
The lease requires Sawmill to pay to the trustee 10% of collected dues and greens fees “on the first day of November following the close” of the lease year in which the sums have been collected. The court found that “Sawmill offers incentives for members to prepay membership dues.” The court found that dues collected in the fall of a particular year are listed in the books as dues for the next season under Sawmill’s accrual accounting method, and that this is a proper accounting procedure. The court found that the issue is only a matter of the timing of the payment of the additional rent to the trustee and that the trustee “has received its full 10% of deferred memberships.”
However proper Sawmill’s own internal accounting practices might be, the timing of additional rent payments to the trustee is controlled entirely by the lease terms. Thus, if Sawmill actually collected dues in a given lease year, whether or not for deferred memberships, it was obligated to pay to the trustee 10% of those collections on November 1 following the close of the lease year in which the sums were collected. To the extent that the district court found otherwise, it was in error.
However, the court also found that, as of the time of trial, Sawmill had paid all additional rent it was required to pay. The evidence supports this finding as to full memberships, but, as we have noted above, the omission of findings regarding associate membership dues raises the question of whether or not the requisite percentage of those dues had been paid as well. In other words, did the deferred memberships include associate memberships?
This issue must be remanded for clarification or further factual determination as we have explained in the remand instructions for the category of associate memberships.
d. Tournaments and Events
The evidence shows that Sawmill hosted league play, tournaments, and other golf events that generated greens fees. As discussed above, the trustee was entitled to 10% of all greens fees collected for any reason because that is what the lease expressly provides.
The court found that Sawmill collected greens fees from such activities and documented these collections. Sawmill introduced into evidence its general ledgers showing the pertinent greens fees collections. And Sawmill offered evidence that it paid to the trustee 10% of those greens fees. The court’s findings that Sawmill paid all amounts required in his category are supported by the evidence.
e. Heritage Certificates
The court found that Sawmill charged a one-time initial fee for each golf club membership by requiring the prospective member to purchase a Heritage Certificate and that this was an initiation fee rather than a dues payment. The trustee disputes the court’s characterization.
The lease excludes from the definition of “annual dues” “any initiation fees.” According to the lease, dues are an “annual” requirement. The reasonable implication is that “dues” are an ongoing obligation of membership. The Heritage Certificate is a one-time payment, is not periodic, is not ongoing, and is paid before membership can begin. It does not reasonably fit the definition of “annual dues” but rather, because it is a prerequisite to becoming a dues-paying member of the golf club, it is fairly and reasonably characterized as an “initiation fee” and no portion of it is required by the lease to be paid to the trustee. The court did not err in so finding.
3. Tree Removal
The trustee contends that Sawmill impermissibly removed trees from the golf course. The court found that some trees were removed with the lessor’s consent as part of the expansion and improvement of the course, and that some trees were removed as part of necessary course maintenance. The court also applied six-year statutes of limitations for both breach of the lease and trespass claims and ruled that any tree removal during the limitations period was for maintenance of the course.
There are two provisions in the lease that apply to tree removal. Under the first, Sawmill is required to maintain the premises in “good, sanitary, lawful and neat order, condition and repair . . . .” The second provision gives Sawmill “the right to make such alterations, improvements, additions and changes to the premises as [Sawmill] may deem necessary . . .” provided that Sawmill obtains “the Lessor’s written approval of plans and specifications therefor.” The lease also provides that the lessor “shall not unreasonably withhold or delay such approval . . . ,” and that alterations may not decrease the value of the golf course.
The court was presented with evidence that several hundred trees were removed between 1984 and 2004. The great majority of those trees were removed as part of the improvement of the golf course and its expansion to an 18-hole course. The evidence showed that Sawmill presented the lessor with its expansion plans and specifications but the lessor refused to give written approval. The lessor followed a pattern of giving oral approval to the renovation or simply acquiescing in it by watching the daily process and never objecting. Although the lease requires written approval of alternations, it also confers on Sawmill the right to make such alterations as Sawmill deemed necessary and it prohibits the lessor from unreasonably withholding or delaying approval. Because the lessor did not object to the alteration or give a valid reason for refusing to comply with the lease, the lessor waived the requirement of written approval. See Trovatten v. Minea, 213 Minn. 544, 549, 7 N.W.2d 390, 392 (1942) (stating that parties to a written contract may impliedly or expressly ignore terms of their contract in dealing with each other).
Sawmill presented firsthand evidence that only a limited number of trees were removed after July 1997. The court determined that July 4, 1997 was the triggering date for the statute of limitations under Minn. Stat. § 541.05, subds. 1, 2 (2004) (establishing six-year limitation periods for contract and trespass claims). Sawmill also presented firsthand evidence that tree removals after the triggering date were for necessary course maintenance in that the removals involved dead, dying, or diseased trees. The court found Sawmill’s evidence credible.
The trustee offered expert opinion on the tree-removal issue. The expert derived his opinion from an inspection of aerial photographs of the golf course. Although he was able to quantify the removals since 1985 as 975 trees, he was not able to tell how many trees were removed from and after 1997. Furthermore, he was not able to tell from aerial photographs which trees were removed because they were dead or dying.
As discussed below, the credibility and weight of evidence are matters uniquely relegated to the fact-finder’s determination and discretion. The district court credited Sawmill’s evidence as to tree removals. This was not error.
With respect to the court’s application of the statute of
limitations, the trustee argues that the tree removal constituted a continuous
trespass and that her claim is not barred by the statute.
The trustee’s expert testified that “there probably was cutting between ’85 and ’91 . . . and ’96 and 2000.” This vague testimony fails to account for maintenance tree removal, which does not violate the lease, and fails to suggest any truly ongoing removals of healthy trees. Sawmill’s evidence showed tree cutting in “different windows,” or segments, for particular purposes serving either course expansion or course maintenance. But those cuttings were separate and discrete activities that had clear beginnings and endings. We recognize that the harvesting of trees one after the other until an area has been cleared could be a “continuing” activity. This was not the case here, and no evidence supports a finding of a continuous trespass. The court did not err in its application of the statute of limitations to tree removals.
4. Fieldstone Removal
The trustee presented evidence that a golf-course employee took fieldstone from the property without permission and that the fieldstone was valuable. The district court did not make a finding on this issue and the trustee alleges that the omission was error.
Assuming that it was error
for the court to fail to address this issue, the record shows that the trustee
presented no evidence as to the amount of fieldstone allegedly taken or as to
its value. Therefore, any error that may
have occurred was harmless because damages, if any, could not have been
ascertained from the evidence offered. See Cool v. Hubbard, 293
5. Default Notice
The lease requires notice of default and an opportunity to cure before Sawmill can be deemed to be in default as to rent or other lease obligations. The district court ruled that the trustee failed to comply with the notice provisions of the lease and, as such, she is barred from claiming additional rent.
Although the district court is correct that there was no default notice and that without such a notice there can be no default, we have held above that, with the exception of the possibility of the trustee’s entitlement to 10% of associate-membership dues, no additional rent remained unpaid at the time of the trial. Thus, we need not address this issue further.
6. Writ of Recovery
The trustee also challenges
the district court’s failure to grant a writ of recovery of the premises. She argues that she was entitled to a writ of
recovery because Sawmill posted rent late twice during the litigation. But there is nothing in the record suggesting
that she objected to any late rent postings or argued that a writ of recovery
should be issued as a result. See Thiele v. Stich, 425 N.W.2d 580, 582 (
7. Witness Credibility
The trustee contends that
the evidence shows that Sawmill’s witnesses lacked credibility and that the
district court erred by relying on their testimony. We disagree.
It is well settled that judging the credibility of witnesses and the
weight given to their testimony rests within the province of the finder of
fact. Minn. R. Civ. P. 52.01 (“[D]ue
regard shall be given to the opportunity of the trial court to judge the
credibility of the witnesses.”); General
v. General, 409 N.W.2d 511, 513 (
The record does not support the trustee’s contention. The witnesses’ testimony on direct and cross-examination, as well as other evidence submitted during the five-day trial, provided the district court with a sufficient basis to judge the credibility of the witnesses. Nor do the district court’s findings suggest an improper reliance on any evidence. Therefore the record does not show that the district court erred in judging the credibility of the witnesses.
8. Attorney Fees
The lease provides that in any action to recover rent, to enforce or interpret the lease, or to recover for a breach, “the prevailing party shall be entitled to recover from the other party as part of the prevailing party’s costs, reasonable attorneys’ fees, the amount of which shall be fixed by the court . . . .”
After the court ordered judgment in favor of Sawmill and Pohl, they moved for an award of attorney fees under the lease, seeking the combined sum of $208,279.38. The trustee objected. Without explanation or findings, the court awarded to Sawmill and Pohl the combined sum of $104,639.69. Sawmill and Pohl filed a proper and timely notice of review as to the attorney-fee award. They argue that the court should have awarded the entire fee. Conversely, the trustee argues that because the court erred in several of its essential findings she in fact should be considered the prevailing party who is entitled to her attorney fees.
district court has discretion to determine the prevailing party in a
lawsuit. Benigni v.
Regardless of how the district court resolves the prevailing-party
question, the parties are entitled to findings on an attorney-fee motion
specifying the bases of the award. See Becker v. Alloy Hardfacing & Eng’g
Co., 401 N.W.2d 655, 661 (
Affirmed in part and remanded.
* Retired judge of the Minnesota Court of Appeals, serving by appointment pursuant to Minn. Const. art. VI, § 10.