Keith Burtch, et al., Appellants (A05-1585), James Retterath, et al., Appellants (A05-1587), vs. Oakland Park, Inc., Respondents, AND Oakland Park, Inc., et al., Respondents, vs. Keith Burtch, Appellant (A05-1588), Linnea Burtch, et al., Appellants (A05-1589). A05-1585, A05-1587, A05-1588, A05-1589, Court of Appeals Unpublished, July 3, 2006.

This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. ง 480A.08, subd. 3 (2004).

STATE OF MINNESOTA

IN COURT OF APPEALS

A05-1585

A05-1587

A05-1588

A05-1589

Keith Burtch, et al.,

Appellants (A05-1585),

James Retterath, et al.,

Appellants (A05-1587),

vs.

Oakland Park, Inc.,

Respondents,

AND

Oakland Park, Inc., et al.,

Respondents,

vs.

Keith Burtch,

Appellant (A05-1588),

Linnea Burtch, et al.,

Appellants (A05-1589).

Filed July 3, 2006

Affirmed

Shumaker, Judge

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, Suite 3000, Mankato, MN 56002-3304 (for amicus curiae)

Allen H. Gibas, Allen H. Gibas, P.A., 1422 West Lake Street, Suite 320, Minneapolis, MN 55408 (pro se amicus curiae)

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

SHUMAKER, Judge

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.

FACTS

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. งง 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 Oakland Park had violated various statutory provisions in its operation of the mobile-home park. There followed further motions, and the residents appealed and petitioned the court of appeals for discretionary review. The appeal was dismissed and the petition denied.

On July 10, 2003, the residents moved for leave to amend their complaints to add as defendants the officers, shareholders, and employees of Oakland Park and to assert against them claims of personal liability. Ruling that the motion was untimely, that the residents had not shown good cause for the untimely amendment, that Oakland Park would be prejudiced if the motion were granted, and that the proceedings would be significantly delayed if parties were added, the district court denied the motion on October 8, 2003.

By August 23, 2004, the residents had reached a settlement with Oakland Park. One group of residents settled in July 2003, and the court entered its judgment on July 19, 2004, dismissing the action in its entirety with prejudice and on the merits but “reserving claims for attorneys’ fees, costs, disbursements and sanctions as may be awarded by this Court.” On August 23, 2004, the court entered a similar order as to the remaining residents, except those who were deceased, with a similar reservation of fees, costs, disbursements, and sanctions.

After a hearing that began on April 25, 2005, the court awarded to the residents attorney fees, costs, and disbursements under Minn. Stat. งง 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, Oakland Park challenges that portion of the attorney-fees award relating to litigation that allegedly did not benefit the public.

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 (Minn. 1980). Similarly, the district court’s ruling on a request to modify a pretrial order, such as a scheduling order, is reviewed for an abuse of discretion. Cotroneo v. Pilney, 343 N.W.2d 645, 648 (Minn. 1984).

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. งง 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. ง 327C.02, et. seq., the district court denied the motion because it was untimely and to grant it would substantially prejudice Oakland Park.

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 Oakland Park would suffer prejudice not only from the substantial delay that would result but also from the “vacation of current judgments.” Finally, the court stated that the residents had not shown good cause for the amendment, considering that they had opportunities to make their motion when they filed other motions on July 14, 2000; January 10, 16, and 25, 2001; April 4, 2001; September 25, 2001; February 14, 2002; and May 1 and 9, 2002.

Appellate courts give considerable deference to the district court in determining case-calendar issues. Rice v. Perl, 320 N.W.2d 407, 412 (Minn. 1982). And although the district court ordinarily should be reasonably liberal about granting a motion to amend a pleading, the court may properly consider the stage of the proceeding at which the motion is made and whether there is good cause for leave to amend. See Tomlinson Lumber Sales v. J.P. Harrold Co., 263 Minn. 470, 474-75, 117 N.W.2d 203, 207 (1962) (holding that “the liberality to be shown in the allowance of amendments depends in part upon the stage of the action” (quotation omitted)); In re Milk Prods. Antitrust Litig., 195 F.3d 430, 437 (8th Cir. 1999) (applying the federal counterpart to Minn. R. Civ. P. 16 and holding that the district court “may properly require that good cause be shown for leave to file an amended pleading that is substantially out of time under that [court’s scheduling] order”).

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. Oakland Park does not dispute the award of reasonable attorney fees for the Burtch litigation but asserts that the court’s award exceeded that portion of the Burtch litigation that was maintained for the benefit of the public. Oakland Park seeks a remand for the district court’s determination of what fees related to a public benefit.

When a violation of Minn. Stat. ง 327C.15 (2004) is found, the district court may award reasonable attorney fees under Minn. Stat. ง 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 Minn. 371, 373, 188 N.W.2d 424, 426 (1971).

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 (Minn. App. 1984). The supreme court has held that the private-attorney-general statute under which the residents seek the fee awards “applies only to those claimants who demonstrate that their cause of action benefits the public.” Ly v. Nystrom, 615 N.W.2d 302, 314 (Minn. 2000). Only matters of public interest are within the scope and intent of Minn. Stat. ง 8.31, subd. 3a, and when the conduct complained of, no matter how reprehensible, affects only individuals, an award of fees under that statute is not permitted. Id.

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 (Minn. 1993). An appellate court will not reverse the district court’s award of attorney fees unless its findings of fact were clearly erroneous or there was an “abuse as to the discretional margin involved in its allowance.” Reome v. Gottlieb, 361 N.W.2d 75, 77 (Minn. App. 1985).

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 preexisting rule. Oakland Park thereafter argued in its motion for a new trial that the lease provisions were not a “rule” as defined by statute. In its “Amended Verdict” filed February 1, 2001, the court reversed its earlier determination and held that the lease provisions were not a “rule” and thus were not subject to the statutory requirements for rules.

Relying on advice in 2 David F. Herr & Roger S. Haydock, Minnesota Practice ง 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. Hagen, 392 N.W.2d 520, 542 (Minn. 1986). Although we understand the residents’ claim that they relied on a secondary authority in a practice manual and on language in the district court’s order, caselaw research would readily have demonstrated that what existed was a partial adjudication of a claim and not a partial judgment disposing of an entire claim, and that Minn. R. Civ. P. 54.02, cited by the district court, does not apply to a partial adjudication of a single claim. See In re Commodore Hotel Fire & Explosion Case, 318 N.W.2d at 246-247. It is not reasonable to require Oakland Park to pay for legal work performed unnecessarily and as a result of a misunderstanding of the law. Thus, the district court did not abuse its discretion in denying fees and costs related to the attempted appeal of the utilities issue.

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 that Oakland Park retaliated because of the Burtch litigation and that the benefits of the other actions extended only to the involved residents.

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. ง 327C.12 (2004) prohibits Oakland Park from engaging in retaliatory conduct, and they argue that the deterrence against retaliation confers a public benefit. But the alleged retaliation pertained to certain individuals and to particular matters relating to the unique circumstances of those individuals, rather than to the residents as a whole or to the general public.

The Retteraths complained about Oakland Park’s misrepresentations and interference with their attempts to sell their mobile home. The defamation litigation involved allegedly defamatory statements by certain residents regarding Oakland Park. And the eviction action involved an effort by Oakland Park to evict Linnea Burtch for failure to pay for utilities. The district court ruled that the benefits of these respective actions extended only to the parties involved. The Retterath and the eviction lawsuits were focused principally on the particular circumstances of the individual parties and those parties sought redress of their specific injuries. Although it could be argued that success by the residents who were parties to those actions might serve to teach Oakland Park that it could not violate residents’ rights with impunity, the principal purpose of each matter was to deal with particular problems encountered by particular individuals rather than a general “public” issue. The court did not abuse its discretion in declining to award attorney fees for the Retterath and eviction litigations and did not commit clear error by concluding that those actions did not confer the type of public benefit contemplated by applicable statues and caselaw.

The defamation action presents a closer question because it involved Linnea Burtch and an association consisting of the individual residents in the Burtch action. Oakland Park commenced this action, alleging that Linea Burtch and the association of residents made false statements about Oakland Park to the department of commerce. In their counterclaim, the residents alleged that the lawsuit was retaliatory because of the Burtch litigation.

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 Oakland Park. The resident-defendants contended that the lawsuit was brought as a retaliation against them for having sued Oakland Park. Except in a tangential sense, there seems to be no demonstrable public benefit from the residents’ counterclaim in this litigation. Neither the lawsuit nor its outcome would affect anyone except the parties, except in the broad, incidental way explained above. This action is similar to Heaven & Earth, Inc. v. Wyman Props. Ltd. P’ship, 2003 WL 22680935 (D. Minn. Oct. 21, 2003), in that the mere fact that certain misrepresentations would affect a finite group of tenants was not enough from which to infer that the general public would be benefited by the action. The residents here have not demonstrated the essential analytical link between an alleged retaliation and general public benefit. Thus, the district court did not err in concluding that attorney fees for this litigation were not appropriate.

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 Minn. at 373, 188 N.W.2d at 426. The residents do not appear to challenge this conclusion.

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. Oakland Park’s defensive tactics contributed to delays to some degree, but not more so than the residents’ approach that entailed untimely submissions; continuances; the removal of the assigned judge; and a failed, improvident appeal. Furthermore, the acrimony of the respective parties appears to have fueled tactics that otherwise likely would not have been employed in a case involving straightforward issues. This is not a case in which it is reasonably clear that the residents’ best efforts to prosecute their claims expeditiously were thwarted by the conduct of Oakland Park and its attorneys. Rather, there was complicity by the residents and their attorneys in procedures that produced delays. The district court did not abuse its discretion in declining to apply an enhancement factor to the fee award so as to account for the delay in payment.

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.

Respondents’ Issue

Oakland Park contends that much of the Burtch litigation was devoted to pursuing benefits only to the residents and not to the general public. Oakland Park argues that the case should be remanded so that the district court can eliminate those portions for attorney fees and costs not related to a public benefit. Specifically, Oakland Park urges that August 17, 2001, the date of the court’s “verdict” resolving Count I of the amended complaint, is the last date on which any public benefit was conferred by the litigation.

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 Oakland Park’s contention that the law requires that attorney fees and costs be limited as they suggest.

Affirmed.