Kammy Rahaman, Appellant, vs. Derrick N. Weber, et al., Respondents.

Kammy Rahaman, Appellant, vs. Derrick N. Weber, et al., Respondents. A04-882, Court of Appeals Unpublished, January 18, 2005.

This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480 A. 08, subd. 3 (2002).

 

STATE OF MINNESOTA

IN COURT OF APPEALS

A04-882

 

 

Kammy Rahaman,

Appellant,

 

vs.

 

Derrick N. Weber, et al.,

Respondents.

 

 

Filed January 18, 2005

Reversed and remanded; motion denied

Halbrooks, Judge

 

 

Hennepin County District Court

File No. CT 03-17451

 

 

Robert J. Bruno, Robert J. Bruno, Ltd., 1601 East Highway 13, Suite 107, Burnsville, MN 55337 (for appellant)

 

Derrick N. Weber, Matthew R. Smith, Jeffrey Cohen, Messerli & Kramer, P.A., 3033 Campus Drive, Suite 250, Plymouth, MN 55441 (for respondents)

 

            Considered and decided by Shumaker, Presiding Judge, Halbrooks, Judge, and Huspeni, Judge.*

U N P U B L I S H E D   O P I N I O N

HALBROOKS, Judge

            Appellant challenges the district court's order granting judgment on the pleadings to respondents, dismissal of appellant's complaint, and denial of appellant's motion to amend her complaint.  Because the district court considered documents outside the pleadings in its decision, we review this matter as if it had been decided on summary judgment.  Because issues of material fact exist, we reverse and remand.

FACTS

            In June 2003, the Dakota County District Court entered judgment for $11,764.27 against appellant Kammy Rahaman in favor of respondent Ford Motor Credit Company (Ford).  The district court also issued a writ of execution on the judgment.

On July 7, 2003, pursuant to Minn. Stat. § 551.05 (2002), respondents served a levy on appellant's account at U.S. Bank.  In response, U.S. Bank withheld $11,780.15 from appellant's account.  Three days later, appellant delivered an exemption notice to U.S. Bank and respondents, asserting that all the funds in her account were exempt under Minn. Stat. § 550.37 (2002) because they were social-security-disability benefits and disability-pension benefits.  On the same day, respondents sent a written objection to appellant's exemption notice to the bank and to appellant.  Ford objected based on appellant's failure to substantiate her exemption claim pursuant to Minn. Stat. § 550.37.  Attempting to prove that the funds in her account were exempt, appellant forwarded copies of her bank statements and other documents to respondents and spoke to Ford's attorney on the telephone.  But she did not request a hearing on the claimed exemptions as provided for in Minn. Stat. § 551.05, subd. 6.  Because U.S. Bank did not receive notice of a hearing, the bank paid $11,780.15 from appellant's account to respondents at their request.  Respondents executed and delivered a written satisfaction of judgment to appellant on August 20, 2003.

            In September 2003, appellant filed a complaint in Hennepin County District Court against respondentsthe law firm of Messerli & Kramer, three attorneys employed by Messerli & Kramer, and Ford Motor Credit Company.  In her complaint, appellant alleged that respondents committed a wrongful levy on her exempt property and that respondents acted in bad faith within the meaning of Minn. Stat. § 550.143, subd. 10 (2002).  Appellant subsequently moved to amend her complaint to refer to Minn. Stat. § 551.05, subd. 8 (relating to an attorney's execution on funds at a financial institution), instead of Minn. Stat. § 550.143 (2002) (relating to a sheriff's levy on funds at a financial institution), and to add claims for abuse of process and punitive damages.  Appellant also moved to compel discovery.  Respondents moved for judgment on the pleadings.

            The Hennepin County District Court concluded that appellant "is required to pursue her exemption claim in Dakota County District Court as Dakota County has proper jurisdiction over this issue."  Because the district court determined that appellant "improperly circumnavigated the statutory procedures governing attorney's summary executions[,]" the court granted respondents' motion for judgment on the pleadings.  The district court further concluded that there were no facts to support appellant's claims of abuse of process or for punitive damages and denied appellant's motion to amend.  The district court denied appellant's discovery motion on the ground that it was moot.  This appeal follows.

D E C I S I O N

I.

            Appellant challenges the district court's order for judgment on the pleadings on the ground that Minn. Stat. §§ 551.01-.06 (2002) does not abrogate the common-law tort of conversion and contends that the court abused its discretion by denying her motions to amend the complaint to add claims of abuse of process and punitive damages.

            The district court concluded that appellant's exclusive remedy is through the process set forth in Minn. Stat. § 551.05, and the only forum where appellant may pursue her remedy is Dakota County District Court.  Statutory interpretation is an issue of law, which we review de novo.  Ill. Farmers Ins. Co. v. Glass Serv. Co., 683 N.W.2d 792, 803 (Minn. 2004).  Statutes are not construed to modify or abrogate common law unless the statutes so provide.  Minn. Equal Access Network Servs. v. Burlington N. & Santa Fe R.R. Co., 646 N.W.2d 911, 914 (Minn. App. 2002).  Generally, common-law remedies are not abrogated unless a statute clearly expresses the intention to abrogate them.  Anderson v. Federated Mut. Ins. Co., 481 N.W.2d 48, 49 (Minn. 1992).

            The common-law torts of trespass and conversion by wrongful levy have existed since at least the late 1800s.  See Lundgren v. W. State Bank of Duluth, 189 Minn. 476, 476, 250 N.W. 1, 1 (1933) (alleging conversion by wrongful levy); Lesher v. Getman, 30 Minn. 321, 322, 15 N.W. 309, 310 (1883) (alleging conversion by wrongful levy); Lynd v. Picket, 7 Minn. 184, 184, 7 Gil. 128, 129 (1862) (alleging trespass by wrongful levy).  The language of section 551.05 does not address the common-law torts or state that alternative remedies are precluded.  Therefore, we follow the general rule that appellant's common-law remedies are not abrogated and conclude that appellant is not precluded from bringing a claim for wrongful levy.  Minn. Equal Access, 646 N.W.2d at 914. 

            Alternatively, if appellant chooses to seek a remedy under Minn. Stat. § 551.05, she must follow the procedure set forth in the statute.  Both the statute and the notices respondents sent appellant state, "At any time after your funds have been held, you may ask for a court decision on the validity of your exemption claim by filing a request for hearing which may be obtained at the office of the court administrator of the above court."  Minn. Stat. § 551.05, subd. 1a.  If appellant requests a hearing under the statute and her exemption claim is upheld and the court finds that the judgment creditor disregarded the claim of exemption in bad faith, she may seek damages under Minn. Stat. § 551.05, subd. 8.  Thus, appellant must choose whether to request a hearing on her exemption claim as required by section 551.05 to seek the damages available therein or to continue with her tort claim.

II.

            Having concluded that appellant may pursue a tort claim against respondents, we address whether Hennepin County District Court is an appropriate venue for appellant's claims.  The appropriate venue for appellant to bring her tort claim is determined by Minn. Stat. § 542.09 (2002).  This statute provides that venue is proper "in a county in which one or more of the defendants reside when the action is begun or in which the cause of action or some part thereof arose."  Minn. Stat. § 542.09.  A corporation resides in any county where it has an office or place of business.  Id.  Respondent Messerli & Kramer, P.A., has offices in Hennepin County.  Thus, Hennepin County District Court is an appropriate venue for appellant's tort claim. 

            If appellant chooses to attempt to establish the validity of her exemption claim under section 551.05, that section determines the appropriate venue.  Under Minn. Stat. § 551.05, subd. 8, if the judgment debtor or judgment creditor acted in bad faith and the opposing party is awarded damages, "[t]he underlying judgment must be modified to reflect assessment of damages, costs, and attorney fees."  Id.  Because only the district court that enters such a judgment may modify it, appellant's section 551 claim must be brought in Dakota County District Court, where the underlying judgment was entered. 

III.

Appellant further contends that the district court erred in granting respondents' motion for judgment on the pleadings.  Rule 12.03 requires a court to treat a motion for judgment on the pleadings as a motion for summary judgment if matters outside the pleadings are presented to and not excluded by the court.  Minn. R. Civ. P. 12.03.  Here, in their motion for judgment on the pleadings, respondents specifically relied on matters outside of the pleadings: three sets of answers to appellant's discovery requests; the affidavit of Derrick Weber, an attorney at Messerli and Kramer; a copy of the third-party levy; a letter notifying appellant of respondents' objection to the exemption notice; and a copy of the exemption notice.  Because the district court did not exclude these matters as being outside the pleadings, the district court should have treated respondents' motion as a motion for summary judgment.  See Minn. R. Civ. P. 12.03. 

            Because the case involves a motion for judgment on the pleadings where more than just the pleadings were considered, we review the district court's determinations under a summary-judgment standard.  See N. States Power Co. v. Minn. Metro. Council, 684 N.W.2d 485, 491 (Minn. 2004) (reviewing district court's decision using the standard of review for summary-judgment issues because district court considered matters outside of the pleadings in ruling on a motion for judgment on the pleadings).  In reviewing a ruling on summary judgment, "we consider (1) whether there are any genuine issues of material fact for trial and (2) whether the lower courts erred in their application of the law."  Id.  We view the evidence in the light most favorable to the nonmoving party.  Id. 

Appellant presented evidence that the funds in her bank account were social-security and disability-pension benefits, both of which are exempt under Minn. Stat. § 550.37 (2002).  Appellant also presented evidence that she notified respondents of the status of these funds and sent respondents copies of her bank records and other documents.  Respondents have not articulated what additional evidence appellant could have provided to satisfy them that the funds were exempt.  Respondents simply declared that appellant's explanation was not adequate.  Additionally, respondents admit that they levied more than the $10,000 limit set by Minn. Stat. § 551.01 (2002).  Because we conclude that genuine issues of material fact exist as to whether appellant's funds are exempt, the district court erred in granting respondents' motion.  We therefore reverse. 

IV.

We next address whether the district court abused its discretion in denying appellant's motion to amend her complaint.  The district court has broad discretion to grant or deny leave to amend a complaint, and its ruling will not be disturbed absent an abuse of discretion. Fabio v. Bellomo, 504 N.W.2d 758, 761 (Minn. 1993).  Whether the district court has abused its discretion in ruling on a motion to amend may turn on whether it was correct in an underlying ruling.  Id. at 761-62. 

Under rule 15.01, after a responsive pleading has been served, "a party may amend a pleading only by leave of court or by written consent of the adverse party; and leave shall be freely given when justice so requires."  Minn. R. Civ. P. 15.01.  The factors courts use to determine whether to grant leave to amend a complaint are whether the amendment states a claim upon which relief can be granted and whether sufficient evidence exists to support the amendment.  1 David F. Herr & Roger A. Haydock, Minnesota Practice § 15.5 (4th ed. 2002).  If a party attempts to amend a complaint after significant discovery has occurred and the proposed amendment states a cognizable legal claim, the court may look at the evidence to determine whether it supports the claim.  Id.  In doing so, the court may properly deny an amendment when the movant fails to establish evidence to support the new claim.  Bib Audio-Video Prods. v. Herold Mktg. Assocs., Inc., 517 N.W.2d 68, 73 (Minn. App. 1994).  If evidence exists to support the claim, but raises a question of fact, the court should evaluate the request to amend the complaint as it would decide a motion for summary judgment.  Herr & Haydock, supra, § 15.5.  Thereafter, the motion may be properly denied when the claim would not survive summary judgment.  Bebo v. Delander, 632 N.W.2d 732, 740 (Minn. App. 2001), review denied (Minn. Oct. 16, 2001).  A claim will survive summary judgment when there is a genuine issue as to any material fact.  Minn. R. Civ. P. 56.03.

            Appellant sought to amend references to Minn. Stat. § 550.143 in the complaint to Minn. Stat. § 551.05.  Appellant's tort claim would remain the same if she is permitted to reference Minn. Stat. § 551.05 because the statutes are the same except that Minn. Stat. § 551.143 (2002) applies to a sheriff's levy upon funds at a financial institution and section 551.05 applies to an attorney's execution on funds at a financial institution.  Compare Minn. Stat. § 551.143 with Minn. Stat. § 551.05.  Therefore, the district court abused its discretion in not permitting appellant to amend her complaint in this manner.

Second, appellant sought to add a claim for abuse of process, alleging that respondents wrongfully seized more than $10,000 from appellant's bank account in violation of the statutory limit.  Respondents concede that they seized $11,780.15 from appellant's account.  The statute regulating an attorney's summary execution of judgment debts states that "[n]o more than $10,000 may be recovered by a single notice of execution levy pursuant to this section."  Minn. Stat. § 551.01.  Because respondents admit that they seized more than $10,000, appellant's claim would survive a motion for summary judgment.  The district court abused its discretion in refusing to permit appellant to amend her complaint to add a claim for abuse of process.

            Appellant also sought to add a claim for punitive damages.  As with the decision to allow other amendments, the decision to allow an amendment to seek punitive damages is within the district court's discretion.  Williamson v. Prasciunas, 661 N.W.2d 645, 653 (Minn. App. 2003).  A plaintiff may not seek punitive damages in an original complaint.  Minn. Stat. § 549.191 (2002).  A plaintiff must first file a complaint and then move to amend the pleadings to claim punitive damages.  Id.  With the motion to amend the pleadings, the plaintiff must allege the applicable legal basis of the claim and file one or more affidavits showing the factual basis for the claim.  Williamson, 661 N.W.2d at 653. 

Minnesota law allows a punitive damage award when there is clear and convincing evidence that a party has displayed "deliberate disregard for the rights or safety of others" in order to punish wrongdoers and deter others from acting similarly.  Molenaar v. United Cattle Co., 553 N.W.2d 424, 428 (Minn. App. 1996) (emphasis omitted) (quoting Minn. Stat. § 549.20, subd. 1 (2002)).  This includes violation of property rights.  Id.

            Here, appellant claims that respondents deliberately disregarded her right to the funds in her bank account.  She also claims that respondents committed an intentional tort by executing a wrongful levy.  In support of her motion to amend the complaint, appellant filed an affidavit setting forth the factual basis for her claim.  On this record, we conclude that the district court abused its discretion by denying appellant's motion to amend based on its factual findings on summary judgment that there were no facts to support the claims. 

V.

            Finally, we address appellant's motion for attorney fees on appeal.  This court has discretion to award attorney fees.  Minn. R. Civ. App. P. 139.06.  Although the respondents' continuing objection to appellant's claim of exemption may later be found to be wrongful, we are not persuaded that their position on appeal was motivated by bad faith or an intent to harass or delay.  See Glass Serv. Co. v. Progressive Specialty Ins. Co., 603 N.W.2d 849, 853 (Minn. App. 2000) (denying attorney fees where there was no evidence of an intent to delay proceedings or increase costs).  We therefore decline to award attorney fees on appeal.

            Reversed and remanded; motion denied.

*  Retired judge of the Minnesota Court of Appeals, serving by appointment pursuant to Minn. Const. art. VI, § 10.