may not be cited except as provided by
Minn. Stat.§ 480A.08, subd. 3 (1998).
STATE OF MINNESOTA
IN COURT OF APPEALS
Eleanor V. Ring,
William H. Henney,
Paul W. Lark, et al.,
Filed March 9, 1999
Hennepin County District Court
File No. MC 9722571
Eleanor V. Ring, 8440 Pennsylvania Road, Bloomington, MN 55438 (appellant pro se)
William H. Henney, 5101 Thimsen Avenue, Suite 200, Minnetonka, MN 55345 (attorney pro se)
Kurt M. Anderson, 4700 Norwest Center, 90 South Seventh Street, Minneapolis, MN 55402-2228 (for respondent)
Considered and decided by Harten, Presiding Judge, Schumacher, Judge, and Peterson, Judge.
In these consolidated appeals, appellant Eleanor V. Ring challenges a judgment dismissing her claim against respondent Paul W. Lark. Appellant William H. Henney, Ring's attorney in the district court, challenges an award of attorney fees and costs. We affirm.
Also on June 23, 1997, the sheriff sent Ring and her husband a check for Lark's redemption from the foreclosure sale. The Rings returned the check. On July 10, 1997, Ring exercised her right as a junior lienholder to redeem the property from the foreclosure sale. Upon redemption, she complied with the filing requirement of Minn. Stat. § 580.25.
Nearly five months after Lark's redemption, Ring filed a complaint alleging that Lark's redemption was defective because he failed to comply with the filing requirement of Minn. Stat. § 580.25. Ring requested that the district court set aside Lark's redemption and rule that her redemption was valid and that she is the fee owner of the property.
Respondents' attorney contacted Ring's attorney and notified him that he believed that the filing requirement of Minn. Stat. § 580.25 was not applicable to this case and that he would seek a dismissal and sanctions if Ring did not withdraw her claim. When Ring did not withdraw her claim, respondents moved for dismissal and for an award of sanctions pursuant to Minn. Stat. § 549.211 and Minn. R. Civ. P. 11. The district court dismissed Ring's claims for failure to state a claim upon which relief could be granted and awarded respondents $6,000 in attorney fees and costs to be paid by Ring's attorney.
Ring contends that the district court erred in dismissing her complaint and concluding that an owner or mortgagor of property is not subject to the filing requirement of Minn. Stat. § 580.25 (1998). Ring argues that Minn. Stat. § 580.25 is clearly and unambiguously applicable to redemptions by owners, and the filing requirement is for the benefit and protection of junior lienholders.
Minn. Stat. § 580.25 provides in part:
Within 24 hours after such redemption is made, the person redeeming shall cause the documents so required to be produced to be filed with the county recorder, or register of titles, who shall be entitled to receive fees as prescribed in section 357.18 or 508.82.
Ring's complaint alleged that Lark's redemption was defective because Lark failed to file documents within 24 hours after the redemption as required by Minn. Stat. § 580.25.
Provisions of statutes that confer the right to redeem from a foreclosure are remedial and should receive such liberal construction as would advance the remedy, rather than restrict the right of redemption. Lightbody v. Lammers, 98 Minn. 203, 204, 108 N.W. 846, 847 (1906).
Minn. Stat. § 580.25 does not state that it does not apply to property owners and mortgagors. But case law supports the district court's conclusion that with respect to the holder of the certificate of sale, the validity of a mortgagor or owner's redemption is not affected by a failure to follow the filing requirements of section 580.25. In Sardeson v. Menage, 41 Minn. 314, 316, 43 N.W. 66, 66 (1889), which was relied upon by the district court, the supreme court stated:
[U]pon a redemption by the mortgagor or owner of the land, the production of the original documents showing his right to redeem, and the due payment of the required sum, are all that is essential to protect the rights of the purchaser, or to enable the officer to act advisedly and intelligently in the premises; and the filing of the documents with the register would not determine the action of the holder of the certificate, whether to accept the money, or decline it, and contest the party's right to redeem.
Also, in Lightbody, which involved a redemption by heirs of the mortgagor, the supreme court stated:
The purpose of the production of the instruments required as evidence of right to redeem is a temporary one of satisfying the sheriff of the existence of that right. They need not be recorded and are not muniments of title.
98 Minn. at 204, 108 N.W. at 847.
Henney contends that under Hall v. Swenson, 65 Minn. 391, 67 N.W. 1024 (1896), the 24-hour filing requirement applies to owners who redeem their property following a foreclosure sale. That case, however, involved construction of a statute of limitations for bringing an action against a sheriff for failing to perform an official duty. The underlying facts in Hall involved a mortgagor's redemption following a mortgage foreclosure. But the validity of the redemption was not in issue, and any statements the court made about the redemption statute were dicta.
Because Lark was the owner and mortgagor of the property, he was not required by Minn. Stat. § 580.25 to file documents within 24 hours after the redemption, and his redemption is valid. The district court did not err in dismissing Ring's complaint because it failed to set forth a legally sufficient claim for relief.
Even if Lark were required to file documents within 24 hours after his redemption, Ring may not take advantage of the failure to file because the failure did not cause her any harm. In Rambeck v. LaBree, 156 Minn. 310, 311-13, 194 N.W. 643, 643-44 (1923), the holder of a third mortgage attempted to redeem after the holder of a second mortgage had redeemed following foreclosure of a first mortgage. The third-mortgage holder argued that the second-mortgage holder's redemption was invalid because the second-mortgage holder had not filed the redemption documents within 24 hours after the redemption. Id. at 313, 194 N.W. at 644. The documents were, however, filed before the third-mortgage holder attempted to redeem. Id. at 314, 194 N.W. at 645. The supreme court held that the second-mortgage holder's redemption was valid, and stated:
If the papers are on file when a junior creditor exercises his right of redemption, the essential purpose of the statute is served. If the junior redemptioner may close his eyes because the papers were not filed within 24 hours, and, by redeeming, cut out a prior lien, leaving the debtor liable for its payment, the letter of the law prevails over the spirit. In the instant case the necessary papers were filed on June 19th, nearly 24 hours before [the third mortgage holder] attempted to redeem. He was not injured by [the second mortgage holder's] failure to file them in time.
Id. at 314, 194 N.W. at 645.
Lark filed his certificate of redemption on June 23, and Ring did not exercise her right to redeem until July 10. Furthermore, as the holder of the certificate of sale, Ring received payment from the sheriff for Lark's redemption of the property. Ring was fully aware that Lark had redeemed the property from the foreclosure sale and was not injured by Lark's failure to file documents within 24 hours.
If, on a motion asserting the defense that the pleading fails to state a claim upon which relief can be granted, matters outside the pleadings are presented to and not excluded by the court, the motion shall be treated as one for summary judgment and disposed of as provided in Rule 56, and all parties shall be given reasonable opportunity to present all material made pertinent to such a motion by Rule 56.
Minn. R. Civ. P. 12.02.
In a memorandum attached to its order, the district court referred to the affidavits of Grant A. Ring and Beverly Lowe. However, these references occurred in a section of the memorandum dealing with an issue that ultimately was not decided by the court because Ring failed to frame the issue in her pleadings. The trial court even noted in its memorandum that if it were to consider the affidavits in resolving whether or not Ring had stated a claim upon which relief could be granted, the motion to dismiss by necessity would have been converted to a motion for summary judgment. Because the district court did not consider the affidavits in reaching its conclusion that Ring's complaint failed to state a claim upon which relief could be granted, the court properly treated the respondents' motion as a motion to dismiss, rather than a motion for summary judgment.
By presenting to the court, whether by signing, filing, submitting, or later advocating, a pleading, * * * an attorney or unrepresented party is certifying that to the best of the person's knowledge, information, and belief, formed after an inquiry reasonable under the circumstances:
* * * *
(2) the claims, defenses, and other legal contentions are warranted by existing law or by a nonfrivolous argument for the extension, modification, or reversal of existing law or the establishment of new law[.]
Minn. Stat. § 549.211, subd. 3 (1998), provides:
If, after notice and a reasonable opportunity to respond, the court determines that subdivision 2 has been violated, the court may * * * impose an appropriate sanction upon the attorneys, law firms, or parties that have violated subdivision 2 or are responsible for the violation.
The district court concluded that appellants did not present any nonfrivolous argument for the extension, modification, or reversal of existing law or the establishment of new law and awarded sanctions pursuant to Minn. Stat. § 549.211, subd. 2(2). Appellants argue that the district court abused its discretion because (1) Ring's case was well-founded on established law and the plain language of the redemption statute; and (2) the district court failed to follow the procedural requirement of providing Henney with clear notice of his sanctionable behavior such that he could modify it.
As we have already discussed above, we agree with the district court's conclusion that appellants' basis for filing this action is not supported by any nonfrivolous argument for the extension, modification, or reversal of existing law or the establishment of new law. We also conclude that appellants were afforded notice and a reasonable opportunity to respond to respondents' request for sanctions.
Upon receiving Ring's complaint, respondents' attorney mailed Henney a letter informing him that respondents' attorney did not believe that the 24-hour filing requirement applied to Lark's redemption. Copies of Sardeson v. Menage and Lightbody v. Lammers were attached to the letter. Copies of digest pages that cited Rambeck v. LaBree were also attached. These attachments informed Henney that the 24-hour filing requirement did not apply to Lark's redemption or that, if it did apply, a failure to file that did not harm Ring provided no basis for invalidating Lark's redemption. Thus, even before an answer to their complaint was due, appellants were informed that there was no basis for their action.
Lark moved to dismiss for failure to state a claim upon which relief can be granted and for sanctions soon after the complaint was filed and before significant activity occurred in the action. A hearing on the motion was scheduled, but Ring continued to pursue her action before the motion could be heard. When Lark's motions were heard, the district court dismissed the action and awarded sanctions.
A trial court's decision regarding sanctions will only be reversed for an abuse of discretion. State Bank of Young America v. Fabel, 530 N.W. 2d 858, 863 (Minn. App. 1995), review denied (Minn. June 29, 1995).
The purpose of sanctions is to deter baseless litigation, frivolous claims and defenses, harassment and other "unnecessary delay or needless increase in the costs of litigation."
Spicer, Watson & Carp v. Minnesota Lawyers Mut. Ins. Co., 502 N.W.2d 400, 405 (Minn. App. 1993) (citing Minn. Stat. § 549.21, subd. 2 (1992)), review denied (Minn. Sept. 30, 1993).
Ring's claim was based on a strict construction of statutory language that is to be construed liberally to advance the right to redeem from foreclosure, rather than to restrict it. The language in the redemption statute had also been construed by the supreme court in a manner inconsistent with Ring's claim. Nevertheless, after this rule of construction and the cases that construed the statute contrary to Ring's position were brought to Henney's attention, he continued to pursue the claim. Lark's attorney's letter to Henney and the materials attached to it provided notice of the basis for sanctions and the hearing on the motion provided a reasonable opportunity to respond to the request for sanctions. The district court did not abuse its discretion by awarding sanctions.