Mary Parr, et al., Respondents, vs. Marlene Fearing, et al., Appellants, Theodore Perlinger, et al., Defendants.

Mary Parr, et al., Respondents, vs. Marlene Fearing, et al., Appellants, Theodore Perlinger, et al., Defendants. A04-1191, Court of Appeals Unpublished, March 15, 2005.

This opinion will be unpublished and

may not be cited except as provided by

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

 

STATE OF MINNESOTA

IN COURT OF APPEALS

A04-1191

 

Mary Parr, et al.,

Respondents,

 

vs.

 

Marlene Fearing, et al.,

Appellants,

 

Theodore Perlinger, et al.,

Defendants.

 

Filed March 15, 2005

Affirmed
Klaphake, Judge

 

Washington County District Court

File No. C0-03-3415

 

Jon E. Kingstad, Lake Elmo Bank Building, Suite 260, 600 Inwood Avenue North, Oakdale, MN  55128 (for respondents)

 

Mark J. Kallenbach, 2260 Ridge Drive, Suite 13, Minneapolis, MN  55416 (for appellants)

 

            Considered and decided by Klaphake, Presiding Judge, Kalitowski, Judge, and Peterson, Judge.

U N P U B L I S H E D   O P I N I O N

KLAPHAKE, Judge

            Appellants, who included Marlene Fearing, the developer of a common-interest senior housing development and former president of its homeowner's association, appeal from the district court's grant of partial summary judgment.  The judgment granted declaratory relief, dismissed appellant Fearing's counterclaim, and awarded attorney fees and costs to respondents.       

            Because we conclude that the district court did not abuse its discretion in its award of attorney fees and did not err in its application of the law, we affirm.           

FACTS

            In May 2003, respondents, the Lake St. Croix Villas Homeowners Association and several of its members, brought the present action against appellants Marlene Fearing, M.A. Fearing, Progressive Real Estate, Transaction Real Estate, and other affiliated real estate interests, including owners who were renting out their units.  Respondents alleged that appellants were converting or attempting to convert the Lake St. Croix Villas from a common-interest senior housing development into a joint venture for real estate and rental property investment.  Appellants denied the allegations and asserted that the restrictive covenants regarding age and occupancy were illegal and unenforceable under federal and state law.

            On April 30, 2004, the district court ordered judgment on cross-motions for summary judgment.  This appeal involves the district court's grant of three of respondents' motions.  The first involves the district court's award of attorney fees and costs to respondents in connection with the grant of declaratory relief.  The second issue on appeal is the court's grant of declaratory relief to the effect that the Lake St. Croix Villas were established and remain in compliance with state and federal law as "housing for older persons."  The third issue is the district court's grant of respondents' motion to dismiss a counterclaim filed by Fearing seeking compensation for expenses allegedly paid on behalf of the association.         

D E C I S I O N

            1.         Attorney Fees

            We will not reverse a district court's award of attorney fees absent an abuse of discretion.  Becker v. Alloy Hardfacing & Eng'g Co., 401 N.W.2d 655, 661 (Minn. 1987).  The reasonable value of counsel's work is a question of fact and must be upheld unless that value is clearly erroneous.  Amerman v. Lakeland Dev. Corp., 295 Minn. 536, 537, 203 N.W.2d 400, 400-01 (1973). 

            Respondents sought attorney fees pursuant to the Minnesota Common Interest Ownership Act (MCIOA), which gives a "claim for appropriate relief" to persons adversely affected by the violation of "any provision of the declaration, bylaws, or rules and regulations."  Minn. Stat. § 515B.4-116(a) (2002).  The MCIOA provides further that "[t]he court may award reasonable attorney's fees and costs of litigation to the prevailing party."  Minn. Stat. § 515B.4-116(b).  The court here considered respondents' claim for attorney fees solely with respect to their request for a declaratory judgment, because their other claims were either dismissed or had yet to be resolved.  The court awarded respondents $33,065.12 "in legal fees and costs plus post-judgment interest." 

            Appellants first argue that an award under Minn. Stat. § 515B.4-116 was improper because any claim for a breach of an obligation under the express or implied warranty provisions of the MCIOA "shall be commenced within six years after the cause of action accrues."  Minn. Stat. § 515B.4-115(b) (2002).  But this is not a warranty action.  Because the statute of limitations cited by appellants does not apply to the action before us, appellants' argument is without merit.

            Appellants also dispute the amount of the attorney-fee award as excessive and as not supported by the evidence.  Appellants first claim that no statement or other evidence for fees was affixed to a particular affidavit filed by respondents and dated March 24, 2004.  But the record contains another affidavit dated April 13, 2004, which included as an attached exhibit detailed billing invoices from respondents' attorney with a cumulative value of over $50,000.  Appellants next argue that it is inconceivable that respondents' attorney could have incurred 220 hours in connection with the request for declaratory judgment and that any evidence of his services was legally insufficient because it was not accompanied by an affidavit affirming its accuracy.  Appellants, however, provide no legal support for this argument, nor do they provide any context for their assessment that the number of hours billed was, in their words, "ludicrous."  The district court considered a series of invoices and parsed the billings according to what it determined were the reasonable expenses related to the prosecution of the declaratory judgment, and appellants have not demonstrated that this valuation was clearly erroneous.  We therefore conclude that the district court did not abuse its discretion in awarding attorney fees.

            2.         Declaratory Judgment

            On appeal from a declaratory judgment, we apply a clearly erroneous standard to the district court's factual findings, but review its determination on questions of law de novo.  Rice Lake Contracting Corp. v. Rust Env't & Infrastructure, Inc., 549 N.W.2d 96, 98-99 (Minn. App. 1996), review denied (Minn. Aug. 20, 1996).  Appellants do not maintain that material facts remain in dispute, but take issue with the district court's interpretation of the Fair Housing Act, 42 U.S.C. § 3607 (2000).  We need not defer to the district court's application of the law when the material facts are not in dispute.  Hubred v. Control Data Corp., 442 N.W.2d 308, 310 (Minn. 1989).  We review de novo the district court's interpretation of a statute.  State by Beaulieu v. RSJ, Inc., 552 N.W.2d 695, 701 (Minn. 1996). 

            In 1993, appellant Fearing, acting as M.A. Fearing Company, obtained approval of a planned-unit development in the City of Lake St. Croix Beach (the city).  Soon thereafter, Fearing incorporated the Lake St. Croix Villas Homeowners Association (the association), filed a declaration of covenants with Washington County, and entered into a developer's agreement with the city.  The developer's agreement stated that Fearing had secured permission

to construct three single family residences and eight side-by-side (common wall) duplex like structures . . . designed . . . to be marketed to seniors (person of 55 years of age or greater) with the expressed purpose of providing a market for housing needs to the elderly and senior members of Lake St. Croix Beach community.  All of these dwelling units are to be occupied by no more than two adults each[.]

 

The association's by-laws stated that the units were "designed for mature adult[s]."  The declaration of covenants stated further that each unit "must be owner occupied."   

            Four duplexes housing eight units were constructed and sold between 1995 and 1999.  The district court found that Fearing's sales brochure marketed the units as "housing for seniors" and included the claim that "M.A. Fearing Companies created an adult community that is better suited to accommodate the seniors' changing needs in housing[.]"  Of those first eight units, six were sold to parties over 55, one was sold to a party younger than 55, and one was occupied by Fearing herself, who was also under 55 at the time of occupancy.  During the first phase of construction, appellant M.A. Fearing Company was involved in multiple mechanic's lean foreclosures, and it ultimately filed for and obtained bankruptcy protection.  M.A. Fearing Company sold the remaining lots to appellant Progressive Real Estate, another corporation owned and controlled by Marlene Fearing.

            No units were built between 1999 and 2001.  The remaining four duplexes were constructed in 2002, after Progressive sold the vacant lots on a contract for deed to appellant Transaction Real Estate.  All but one of the eight units were sold, and most of the occupants of these duplexes are much younger than 55 and/or do not own the unit they occupy.  The three single-family lots have not been developed, and ownership reverted to Progressive for nonpayment after Fearing failed to obtain approval of duplex construction on those lots from the city.

            In June 2003, respondents obtained a court order mandating a court-supervised meeting to elect board members to the homeowners association.  During the meeting Fearing was replaced as president of the association, and the association has since taken action to enforce the covenant's restrictions on owner-occupancy.

            The district court subsequently issued its declaratory judgment based upon its interpretation of the Fair Housing Act, 42 U.S.C. § 3607 (2000), the MCIOA, Minn. Stat. §§ 515B.1-101 - .4-118 (2002), and the Minnesota Human Rights Act, Minn. Stat. § 363.03 (2002).  The district court found that the association's restrictions on ownership and occupancy were valid and consistent with the exemption for "housing for older persons" provided by the Fair Housing Act from the general prohibition of discrimination on account of family status.  Under the Fair Housing Act, Congress defined three categories of "housing for older persons" including housing "intended and operated for occupancy by persons 55 years of age and older," qualified by the following requirements:

(i) at least 80 percent of the occupied units are occupied by at least one person who is 55 years of age or older;

(ii) the housing facility or community publishes and adheres to policies and procedures that demonstrate the intent required under this subparagraph; and

(iii) the housing facility or community complies with rules issued by the Secretary for verification of occupancy, which shall--

(I) provide for verification by reliable surveys and affidavits; and

(II) include examples of the types of policies and procedures relevant to a determination of compliance with the requirement of clause (ii). Such surveys and affidavits shall be admissible in administrative and judicial proceedings for the purposes of such verification.

 

42 U.S.C. § 3607 (b)(2)(C) (2000).

            Fearing argues that the district court should have applied the federal statute as it existed when the first units were sold and not as later amended.  Compare 42 U.S.C. § 3607(b)(2)(C) (1994) with 42 U.S.C. § 3607(b)(2)(C) (2000) (provision amended in 1995 to strike out requirement of "the existence of significant facilities and services specifically designed to meet the physical or social needs of older persons").  Fearing also argues that, regardless of which version was relevant, the district court misapplied the statute.  But given the record before us, we conclude that Fearing is estopped from making these arguments.    

            "Estoppel is an equitable doctrine addressed to the discretion of the court and is intended to prevent a party from taking unconscionable advantage of his own wrong by asserting his strict legal rights."  N. Petrochemical Co. v. U.S. Fire Ins. Co., 277 N.W.2d 408, 410 (Minn. 1979).  Because Fearing failed to guide the association consistent with its principles, the district court determined that she was estopped from disputing the association's intent and compliance with 42 U.S.C. § 3607(b)(2)(C)(ii) & (iii); Fearing does not challenge this estoppel determination on appeal.  Similarly, we conclude that because Fearing failed to enforce the restrictive covenants, she is also estopped from gaining advantage by claiming that the development may now have less than 80% occupancy by older persons.  As the court stated in construing the 80% requirement:  "To hold otherwise would allow a developer to unilaterally modify the senior housing community by selling units in violation of the age and occupancy restrictions causing the community to lose its [Fair Housing Act] exemption."

            We find support for our estoppel holding in the Minnesota Nonprofit Corporation Act (MNCA), Minn. Stat. § 317A.001-.909 (2002), under which Fearing organized the homeowners association in 1994.  The MNCA provides that the duties of officers can be defined by the articles and bylaws of the association.  Minn. Stat. § 317 A. 305, subd. 1.  The MNCA further provides that "[a] director shall discharge the duties of the position of director in good faith [and] in the best interests of the corporation."  Minn. Stat. § 317 A. 251, subd. 1.  The record clearly shows that Fearing intended the development to be a senior housing community, and she does not dispute that she made such representations to respondents.  "It is elementary law that one who . . . intentionally . . . induces another to believe that certain facts exist is estopped to deny the existence of such facts where to do so would prejudice the other party."  Suske v. Straka, 229 Minn. 408, 416, 39 N.W.2d 745, 751 (1949).

            For these reasons, we affirm the district court's declaration that the association's restrictions on ownership and occupancy are, for purposes of the present litigation, valid and consistent with state and federal prohibitions against discrimination on account of family status.

            3.         Dismissal of Counterclaim

            We will reverse a district court's dismissal of an action for failure to state a claim on which relief can be granted only if we are convinced that the complaint sets forth a legally sufficient claim for relief.  Barton v. Moore, 558 N.W.2d 746, 749 (Minn. 1997). 

            The district court granted respondents' motion to dismiss Fearing's counterclaim that she was owed $28,750 by the association for expenses she allegedly paid on its behalf.  The court found Fearing's claim insufficient in light of the statute of frauds, Minn. Stat. § 513.01 (2002), because she failed to produce any written documentation of the agreement.  Fearing argues in her appellate brief that "Association minutes containing her agreement with the Association [are] in the possession of the Respondents, who have refused to provide Association minutes to the Appellants."  But her December 2, 2003 counterclaim, and the answer to respondent's amended complaint which it incorporated by reference, contain no allegation of refusal to produce documents and make no reference to an "agreement, or some note or memorandum thereof, expressing the consideration . . . in writing" as required by the statute of frauds for a promise to answer for a debt.  Id. 

            Because Fearing's counterclaim fails to set forth a legally sufficient claim for relief, we affirm the district court's grant of respondents' motion to dismiss the counterclaim.

            Affirmed.