Kenneth L. Kellar, et al., Appellants, vs. John E. VonHoltum, et al., Respondents, Grand Marais State Bank, et al., Defendants.

This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480 A. 08, subd. 3 (1998).

 

STATE OF MINNESOTA

IN COURT OF APPEALS

CX-00-1127

 

Kenneth L. Kellar, et al.,

Appellants,

 

vs.

 

John E. VonHoltum, et al.,

Respondents,

 

 

Grand Marais State Bank, et al.,

Defendants.

 

 

Filed December 5, 2000

Affirmed as modified
Peterson, Judge

 

 

Cook County District Court

File No. C795175

 

Richard A. Saliterman, Floyd E. Siefferman, Jr., Saliterman & Siefferman, P.C., 1000 Northstar East, 608 Second Avenue South, Minneapolis, MN  55402 (for appellants)

 

Gregory J. Bien, Sloan, Listrom, Eisenbarth, Sloan & Glassman, L.L.C., 714 Capitol Federal Building, 700 Kansas Avenue, Topeka, KS  66603-3881; and

 

Michael Berens, Kelly & Berens, P.A., 3720 IDS Center, 80 South Eighth Street, Minneapolis, MN  55402 (for respondents)

 

            Considered and decided by Willis, Presiding Judge, Crippen, Judge, and Peterson, Judge.

 

U N P U B L I S H E D   O P I N I O N

PETERSON, Judge

            Appellants challenge the district court's award of sanction-based attorney fees and argue that the award improperly included appellate attorney fees.  We affirm as modified.

FACTS

Appellants Kenneth Kellar and Security State Agency of Aitkin, Inc., who applied for and were granted a bank charter to open a bank in Grand Marais, Minnesota, brought suit against respondents John VonHoltum and Michael LaVigne and defendants Grand Marais State Bank and VH Bancorporation, Inc., alleging discrimination and unfair competition, restraint of trade, defamation, and abuse of process/malicious prosecution.[1] 

In January 1996, the district court granted VonHoltum's and Grand Marais's motion for judgment on the pleadings as to the claims for discrimination and unfair competition and restraint of trade.  The district court denied this motion as to the other claims.  In June 1996, the district court ordered dismissal of Kellar's defamation claims as a discovery sanction.  Finally, the district court granted summary judgment to defendants on the claim for abuse of process/malicious prosecution.  Kellar challenged the dismissal of all claims, this court affirmed, and the supreme court denied further review.  Kellar v. VonHoltum, 568 N.W.2d 186 (Minn. App. 1997), review denied (Minn. Oct. 31, 1997).

            After this court affirmed, VonHoltum and Grand Marais moved for attorney fees pursuant to Minn. R. Civ. P. 11 and Minn. Stat. § 549.21 (1996), and the district court awarded them $75,000 without apportioning the amount between them.

            Kellar challenged the order, arguing that the district court lacked jurisdiction to impose sanctions.  This court concluded that the district court lacked jurisdiction to award attorney fees "after the entire appeals process had been completed" and reversed the attorney fee award. Kellar v. VonHoltum, 583 N.W.2d 761, 764 (Minn. App. 1998), aff'd in part, rev'd in part, & remanded, 605 N.W.2d 696 (Minn. 2000).  This court also concluded that the district court had no jurisdiction to award costs and disbursements for the portion of costs and disbursements associated with the appeal on the merits and remanded to the district court for exclusion of that portion of the award.  Id. at 765.

Upon review of this court's decision, the supreme court affirmed in part, reversed in part, and remanded, holding that (1) the district court retained jurisdiction to hear motions for attorney fees and costs and disbursements after the appeal had been completed; (2) attorney fees were properly awarded as a sanction of last resort against Kellar and in favor of VonHoltum who gave adequate notice that sanctions were to be sought; (3) Grand Marais did not give timely notice of intention to seek sanctions and, therefore, was not entitled to an award of attorney fees as a sanction; and (4) the district court lacked authority to award costs and disbursements related to the appellate process.  Kellar v. VonHoltum, 605 N.W.2d 696 (Minn. 2000).  Because Grand Marais's attorney fee award was reversed, the supreme court remanded to the district court to determine what portion of the $75,000 attorney fee award should be apportioned to VonHoltum.  Id. at 700-03.  On remand, the district court awarded $41,000 in attorney fees to VonHoltum.

D E C I S I O N

I.

            Kellar argues on the merits that sanctions under Minn. R. Civ. P. 11 and Minn. Stat. § 549.21 (1996)[2] were not warranted. Because this issue was decided in the previous appeal, we will not consider it.  The law-of-the-case doctrine is based on a policy that requires issues that have been fully litigated to be set at rest.  Lange v. Nelson-Ryan Flight Serv., Inc., 263 Minn. 152, 156, 116 N.W.2d 266, 269 (1962).  The doctrine applies when an appellate court has ruled on a legal issue and remanded the case for further proceedings on other matters.  Sigurdson v. Isanti County, 448 N.W.2d 62, 66 (Minn. 1989).  The issue decided becomes the law of the case and may not be relitigated in the district court or re-examined in a second appeal. Id.

            The supreme court found that "[b]ecause [appellant] did not avail itself of the chance to correct the litigation, attorney fees were properly awarded as a sanction of last resort."  Kellar v. VonHoltum, 605 N.W.2d 696, 702 (Minn. 2000).  The supreme court affirmed the district court's award of attorney fees to VonHoltum, but reversed the award of attorney fees to Grand Marais.  Id. at 702-03.  Because the district court's original award did not apportion the fees between VonHoltum and Grand Marais, the supreme court remanded the case to determine VonHoltum's fees.  Id. at 700-03.

In the previous appeal, Kellar challenged the award of attorney fees as a sanction.  The supreme court affirmed the award and remanded only to determine the proper amount of attorney fees to be apportioned to VonHoltum.  The supreme court's decision awarding attorney fees as a sanction is the law of the case and must be followed.  Therefore, the only issue properly before this court is Kellar's challenge to the amount of fees awarded to VonHoltum.

II.

We review district court decisions on attorney fees and costs under both Minn. Stat. § 549.21 (1996) and Minn. R. Civ. P. 11 under an abuse-of-discretion standard.  Radloff v. First Am. Nat'l Bank, 470 N.W.2d 154, 156 (Minn. App. 1991), review denied (Minn. July 24, 1991).

Kellar contends that the district court erred by including $12,525 for attorney fees incurred on appeal in the $41,000 award.  Sanctions for violating either Minn. Stat. § 549.21 or Minn. R. Civ. P. 11 may include attorney fees and other expenses incurred as a result of the violation.  See id. at 156-57 (explaining operation of rule 11 and section 549.21).  But a party seeking an award of attorney fees for work done on appeal should seek the award in the appellate court.  Johnson v. City of Shorewood, 531 N.W.2d 509, 511 (Minn. App. 1995), review denied (Minn. July 7, 1995). 

VonHoltum relies on Federated Mut. Ins. Co. v. Concrete Units, Inc., 363 N.W.2d 751 (Minn. 1985), to support the argument that the district court can award attorney fees incurred on appeal.  In Johnson, however, this court specifically addressed the conflicting authorities about which is the proper court to determine appellate attorney fees.  Johnson, 531 N.W.2d at 511 (citing Hughes v. Sinclair Mktg., Inc., 389 N.W.2d 194, 200 (Minn. 1986) (in Franchise Act suits, better practice is for appellate courts themselves to determine appropriate attorney fees for appeals portion of lawsuit); Federated Mut. Ins., 363 N.W.2d at 757 (remanding for district court to award attorney fees incurred both on appeal and at trial)).  In Johnson, this court explained Federal Mut. Ins.

simply as a decision of the supreme court to delegate the appellate fee decision to the trial court in order to avoid the problem of apportioning costs between trial and appeal.

 

Id.  Where there is no such delegation "a claim for attorney fees on appeal is properly addressed to the appellate courts."  Id.  (citing Hughes, 389 N.W.2d at 200 (better practice is to allow appellate courts to award fees for appellate work)).  When the supreme court remanded this case to the district court to determine the amount of fees to be apportioned to VonHoltum, it did not delegate the appellate-fee decision to the district court.

Because the appellate-fee decision was not delegated to the district court, the district court improperly included appellate attorney fees in its award.  We, therefore, reduce the attorney fee award by $12,525 and modify the award to grant $28,475 for attorney fees.

Affirmed as modified.

[1] For ease of discussion, Kellar and Security State Agency will be referred to collectively as Kellar;  VonHoltum and LaVigne will be referred to collectively as VonHoltum;  and Grand Marais State Bank and VH Bancorporation will be referred to collectively as Grand Marais.

 

[2] Minn. Stat. § 549.21 was repealed in 1997 and replaced with Minn. Stat. § 549.211 (1997).  1997 Minn. Laws ch. 213, art. 1, § 1, 1997 Minn. Laws ch. 213, art. 2, § 6.  Section 549.21 applies to causes of action arising before August 1, 1997.  Cole v. Star Tribune, 581 N.W.2d 364, 370 (Minn. App. 1998).  This action was commenced in the district court before August 1, 1997.