Ronald Schaff, et al., Respondents, vs. Chateau Communities, Inc., d/b/a Cedar Knolls Manufactured Home Park, Appellant.

Ronald Schaff, et al., Respondents, vs. Chateau Communities, Inc., d/b/a Cedar Knolls Manufactured Home Park, Appellant. A04-1246, Court of Appeals Unpublished, July 26, 2005.

This opinion will be unpublished and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

A04-1246

 

Ronald Schaff, et al.,

Respondents,

 

vs.

 

Chateau Communities, Inc.,

d/b/a Cedar Knolls Manufactured Home Park,

Appellant.

 

Filed July 26, 2005

Affirmed

Kalitowski, Judge

 

Dakota County District Court

File No. CX-03-6402

 

Kay Nord Hunt, Barry A. O'Neil, Lommen, Nelson, Cole & Stageberg, P.A., 2000 IDS Center, 80 South Eighth Street, Minneapolis, MN 55402 (for respondents)

 

John F. Bonner, III, Robyn K. Johnson, Thomas F. DeVincke, Bonner & Borhart LLP, Suite 1750, U.S. Bank Plaza, 220 South Sixth Street, Minneapolis, MN 55402 (for appellant)

 

Margaret Kaplan, Timothy Thompson, Housing Preservation Project, 570 Asbury Street, Suite 105, St. Paul, MN 55104 (for amicus curiae All Parks Alliance for Change)

 

Charles N. Nauen, William A. Gengler, Lockridge Grindal Nauen, P.L.L.P., 100 Washington Avenue South, Suite 2200, Minneapolis, MN 55401 (for amicus curiae Minnesota Manufactured Housing Association)

 

            Considered and decided by Kalitowski, Presiding Judge; Toussaint, Chief Judge; and Dietzen, Judge.

U N P U B L I S H E D   O P I N I O N

KALITOWSKI, Judge

            Appellant, Chateau Communities, Inc., challenges the district court's decision to grant class certification and award attorney fees to respondents, who are residents of appellant's mobile-home community.  Appellant also contends:  (1) the district court erred in a number of evidentiary rulings; and (2) the jury award is not supported by sufficient evidence and is excessive and inconsistent.  We affirm.

D E C I S I O N

I.

1.         Class certification

 

            Appellant argues that the district court abused its discretion because respondents cannot satisfy the class-certification requirements of Minn. R. Civ. P. 23.  District courts have considerable discretion when determining whether a class action is maintainable.  Peterson v. BASF Corp., 618 N.W.2d 821, 825 (Minn. App. 2000), review denied (Minn. Jan. 26, 2001).  And a Minnesota court may not certify a class unless the class satisfies the requirements of rule 23.  Lewy 1990 Trust ex rel. Lewy v. Inv. Advisors, Inc., 650 N.W.2d 445, 451 (Minn. App. 2002), review denied (Minn. Nov. 19, 2002).  Class certification under rule 23 is a two-step process.  Id. First, the class must satisfy all four mandatory requirements of rule 23.01, and, second, the class must also satisfy the requirements of one of the subdivisions of rule 23.02.  Id.at 451-52. 

            A.        Rule 23.01

Appellants argue that the class fails to satisfy the typicality and representative requirements of Minn. R. Civ. P. 23.01.  Rule 23.01 provides, in pertinent part:

One or more members of a class may sue or be sued as representative parties on behalf of all only if:

. . . .

(c) the claims or defenses of the representative parties are typical of the claims or defenses of the class; and

(d) the representative parties will fairly and adequately protect the interests of the class.

 

The prerequisites of typicality and representivity exist "to insure that the claims of the class members are fully presented and vigorously prosecuted."  Streich v. Am. Family Mut. Ins. Co., 399 N.W.2d 210, 215 (Minn. App. 1987) (quotation omitted), review denied (Minn. Mar. 25, 1987).  Typicality looks at whether the interests of the representative parties are compatible with those of the putative class that they seek to represent.  Id.  And representivity "means the representative parties' interests must coincide with the interests of other class members and the parties and their counsel will competently and vigorously prosecute the lawsuit."  Id.  Factors used to determine if the representivity requirement is satisfied include:

(1) whether the representatives' interests are sufficiently identical to those of absent class members so that the representatives will vigorously prosecute the suit on their behalf; (2) whether the attorneys are qualified, experienced, and capable of conducting the litigation; and (3) whether the representatives have any interests in conflict with the objective of the class they represent.

 

Id.

Here, appellant allegedly injured all of the class members in the same manner.  Therefore, respondents' claims are based on the same legal theories.  While the class members were not all injured to the same degree, their injuries arose out of the same conduct on the part of appellant:  a unilateral change to the terms of the parties' leases.  And all claims involve the same legal determination:  whether there was a violation of Minn. Stat. § 327C (2004).  And appellant offers no evidence to refute the assertion that the attorneys for the representative class members are capable of conducting a vigorous class-action litigation.  Because the claims of respondents as the representative members of the class are compatible with those of the other class members and because appellants have failed to show that the attorneys here are not qualified, experienced, and capable of conducting the litigation, we conclude that the requirements of typicality and representivity are met. 

B.        Rule 23.02

Appellant argues further that respondents failed to meet the requirement under Minn. R. Civ. P. 23.02 that common issues "predominate over any questions affecting only individual members, and that a class action is superior to other available methods for the fair and efficient adjudication of the controversy."  We disagree.

No bright-line rule exists to determine whether common questions predominate.  Lewy 1990 Trust, 650 N.W.2d at 455 (citing Lockwood Motors, Inc. v. Gen. Motors Corp., 162 F.R.D. 569, 580 (D. Minn. 1995)).  Instead, a court must consider whether generalized evidence will prove or disprove an element on a simultaneous, class-wide basis that would not require examining each class member's individual position.  Id. Thus, a class action is appropriate when common questions representing a significant issue in a case can be resolved by a single action.  Id.

Here, the district court was required to make a preliminary determination of whether class-action status was appropriate to resolve respondents' claims that appellant violated Minn. Stat. § 327C.  Under section 327C, "substantial modification" is defined as,

any change in a rule which:  (a) significantly diminishes or eliminates any material obligation of the park owner; (b) significantly diminishes or eliminates any material right, privilege or freedom of action of a resident; or (c) involves a significant new expense for a resident. 

 

Minn. Stat. § 327C.01, subd. 11.  In subsection (a) there is no individualized proof requirement.  The rule requires only that a material obligation of the park owners be significantly diminished or eliminated.  Thus, because one of the elements here is common to the class and predominates, certification is appropriate.  Lewy 1990 Trust, 650 N.W.2d at 456-57. 

In addition, respondents seek to remedy a common legal grievance.  Appellant created a single, uniform change to the leases of all the tenants in the park.  The change was widespread and not limited to the named respondents.  Thus, we conclude that common issues relating to respondents' claim here predominate over questions affecting individual class members, and individualized proof is unnecessary to prove the elements of substantial modification, as defined by Minn. Stat. § 327C.01, on this record.

Finally, for certification under rule 23.02(c), a court must find that a class action is superior to other available methods for the fair and efficient adjudication of the controversy.  Factors to consider in a "superiority" analysis include "manageability, fairness, efficiency, and available alternatives."  Streich, 399 N.W.2d at 218.  The class action is most often needed in litigation where the individual claims are small.  Id.  (citing Forcier v. State Farm Mut. Auto. Ins. Co., 310 N.W.2d 124, 130 (Minn. 1981)).  "When collective adjudication . . . makes it possible for class members with small claims to bring suit and enforce the substantive law, a class action is superior to other available methods for the fair adjudication of the controversy."  Lewy 1990 Trust, 650 N.W.2d at 457.

We conclude that certifying the class action here (1) allows the issues raised to be given a meaningful hearing; (2) allows the common issues to be tried efficiently in a single action; and (3) avoids inundating the district courts with individual lawsuits that would burden the state's judicial resources.  Therefore, the district court did not abuse its discretion in determining class certification was appropriate to this set of facts.

2.         Attorney fees

 

            Appellant argues that the district court erred in awarding respondents attorney fees and costs under the private attorney general statute because this action involves no state interest or public rights, and no public benefit was realized by its outcome.  This is a legal issue, and a reviewing court is not bound by, and need not give deference to, a district court's decision on a purely legal issue.  Frost-Benco Elec. Ass'n v. Minn. Pub. Utils. Comm'n, 358 N.W.2d 639, 642 (Minn. 1984). 

The attorney general is authorized to investigate and enforce violations of unfair and unlawful business and commerce practices, including violations of the Minnesota Consumer Fraud Act.  Minn. Stat. §§ 8.31, subd. 1, .32, subd. 2(a) (2004).  An individual injured by a violation of this law may also bring a private civil action for damages.  Minn. Stat. § 8.31, subd. 3a (2004).  Attorney fees are available under Minn. Stat. § 8.31, subd. 3a, to those private citizens who can demonstrate that their claim furthers the public interest.  Ly v. Nystrom, 615 N.W.2d 302, 314 (Minn. 2000). 

Appellant relies on Nystrom and argues that because there was no public benefit attorney fees were inappropriate.  We disagree.  In Nystrom,a single plaintiff brought an action under the Consumer Fraud Act and sought attorney fees under the private attorney general statute. Id. at 307.  The defendant made numerous fraudulent representations concerning its restaurant business, but made the representations only to the plaintiff.  Id. at 305-06.  Emphasizing that the misrepresentations were made to only one person and that the fraudulent transaction was completed on a one-on-one basis, the Nystrom court concluded that the plaintiff did not demonstrate that his claim furthered the public interest.  Id. at 314.  The facts here are thus distinguishable from the facts in Nystrom.   

Importantly, the statute here allows the attorney general to bring an action for noncompliance.  See Minn. Stat. § 327C.02, subd. 5.  Further, there were 400 households affected by appellant's actions.  As discussed above, appellant made a unilateral change to a lease agreement affecting a large group of people for which class certification was appropriate.  Moreover, appellant is in a business that has the potential to affect an even larger number of people, and the resolution of this case could extend to residents of other manufactured-home parks.  Accordingly, we conclude that the public interest is served here and that the district court properly awarded attorney fees.

II.

            Appellant argues that the district court abused its discretion when it denied appellant's request for a new trial based on a number of the court's evidentiary and discovery rulings.  "The granting of a new trial rests in the discretion of the [district court], and the [district court's] decision will be reversed only for a clear abuse of discretion."  Boschee v. Duevel, 530 N.W.2d 834, 840 (Minn. App. 1995) (quotation omitted), review denied (Minn. June 14, 1995).  The supreme court has stated that:

A new trial should not be granted unless the verdict is so contrary to the preponderance of the evidence as to imply that the jury failed to consider all the evidence or acted under some mistake or from some improper motive, bias, feeling or caprice, instead of honestly and dispassionately exercising its judgment.

 

Lamb v. Jordan, 333 N.W.2d 852, 855-56 (Minn. 1983) (quotation omitted).  Further, "[e]ntitlement to a new trial on the grounds of improper evidentiary rulings rests upon the complaining party's ability to demonstrate prejudicial error."  Kroning v. State Farm Auto Ins. Co., 567 N.W.2d 42, 46 (Minn. 1997) (quoting Uselman v. Uselman, 464 N.W.2d 130, 138 (Minn. 1990)).

1.         Damages

 

Appellant argues that the district court abused its discretion when it allowed respondents to proceed to trial without disclosing the amount of damages they were claiming and without disclosing their calculation methodologies, when such information was requested months earlier and was central to defending against respondents' claims.

But as respondents note, the damage amounts relied on by respondents were already in the hands of appellant; the damages were calculated based on appellant's monthly charges for sewer and water after the change to metering.  And the record reflects that the jury was fully apprised of these charges.  In addition, appellant has failed to meet its burden of establishing that it was prejudiced by respondents' alleged lack of disclosure.  We therefore conclude that the district court did not abuse its discretion in its evidentiary ruling regarding damages.  And finally, on this record, we cannot say the district court erred in giving a general damage instruction and rejecting appellant's request for a special instruction on unjust enrichment.  

2.         Amendment to pleading

 

Appellant argues that the district court erred when it allowed respondents to amend their special verdict form one business day prior to trial.  A party may amend a pleading by leave of court, and amendments should be freely granted, except where to do so would result in prejudice to the other party.  Minn. R. Civ. P. 15.01; Hughes v. Micka, 269 Minn. 268, 275, 130 N.W.2d 505, 510 (1964).  Whether a party is prejudiced is a question of fact.  Fedie v. Mid-Century Ins. Co., 631 N.W.2d 815, 820 (Minn. App. 2001), review denied (Minn. Oct. 16, 2001).  The district court has wide discretion to grant or deny an amendment, and its determination will not be reversed absent a clear abuse of that discretion.  LaSalle Cartage Co. v. Johnson Bros. Wholesale Liquor Co., 302 Minn. 351, 35758, 225 N.W.2d 233, 238 (1974). 

Here, the amended special verdict form set forth a claim for violation of Minn. Stat. § 327C.04, based on differences in utility rates charged by appellant and the City of Apple Valley.  Appellant claims that it had no notice of such a claim prior to respondents' submission of the special verdict form and, therefore, it was prejudiced by this late disclosure.  But the record indicates that appellant knew of this claim prior to the amended form.  The complaint from January 30, 2003, states that "[u]pon information and belief, [appellant] is improperly charging class members based on inaccurate readings and calculations."  And, in paragraph 29 of the complaint, respondents specifically refer to violations of Minn. Stat. § 327C.04.  The joint statement of the case also reflects that appellant was well aware of the section 327C.04 claim.  We conclude that because appellant was notified of this claim prior to the amendment of the form, appellant has failed to show that it was prejudiced when the district court allowed respondents to amend the special verdict form.  Accordingly, the district court did not abuse its discretion in allowing the amendment.

3.         Exhibits

 

Appellant argues that the district court abused its discretion by admitting into evidence a number of prejudicial, inflammatory, and irrelevant exhibits.  The admission of "evidence rests within the broad discretion of the trial court and its ruling will not be disturbed unless it is based on an erroneous view of the law or constitutes an abuse of discretion."  Uselman, 464 N.W.2d at 138.  

Exhibits 23, 24, and 27 were offered by respondents at trial and admitted into evidence over appellant's objection.  Exhibit 23 is a bill summary and exhibit 24 is a senate committee memorandum from 1982, which was drafted with respect to the ratification of Minn. Stat. § 327C.  Appellant argues that the legislative intent behind the enactment of Minn. Stat. § 327C should not have been given to the jury because there was no question of statutory construction or ambiguity.  Exhibit 27 is a press release printed from the internet concerning appellant's acquisition by another company entitled "Hometown America to Acquire Chateau Communities in $2.2 Billion Transaction." 

While we agree that the exhibits at issue were of questionable relevance and that their admission may have been error, we conclude that appellant has failed to demonstrate how admission of this evidence might reasonably have influenced the jury and changed the results of the trial.  See W.G.O. ex rel. A.W.O. v. Crandall, 640 N.W.2d 344, 349 (Minn. 2002).  Accordingly, appellant is not entitled to a new trial. 

4.         Closing argument

 

Appellant objects to respondents' argument, during closing, that appellant should have asked its residents to change the terms of the lease and to agree to the rule change for utilities billing and argues that the district court's failure to sustain its objection at trial or give a curative instruction was an abuse of discretion that warrants a new trial.  "The decision whether to grant a new trial due to improper argument by counsel rests almost entirely within the discretion of the trial court and should not be reversed on appeal absent a clear abuse of discretion."  Jewett v. Deutsch, 437 N.W.2d 717, 721 (Minn. App. 1989).  "A new trial is not warranted unless the misconduct of counsel clearly resulted in prejudice to the losing party."  Sather v. Snedigar, 372 N.W.2d 836, 839 (Minn. App. 1985).  And the district court is in a much better position than an appellate court to determine whether improper arguments by counsel resulted in prejudice.  Ellingson v. Burlington N. R.R. Co., 412 N.W.2d 401, 404 (Minn. App. 1987), review denied (Minn. Nov. 13, 1987). 

  While appellant argues that respondents' closing was a misstatement of the law by implication, this is not a basis for reversal on the grounds of improper argument.  And because appellant also has failed to show how it was substantially prejudiced by the argument, we conclude that the district court did not abuse its discretion.

III.

            Appellant argues it is entitled to a new trial because the jury's damage award is not supported by sufficient evidence and is excessive and inconsistent.  This court will set aside a damage award if it is "manifestly and palpably contrary to the evidence."  Levienn v. Metro. Transit Comm'n,, 297 N.W.2d 272, 273 (Minn. 1980).  But this court must consider the evidence in the light most favorable to the verdict.  Rayford v. Metro. Transit Comm'n, 379 N.W.2d 161, 165 (Minn. App. 1985), review denied (Minn. Feb. 14, 1986).  An award of damages is excessive when it "so greatly exceed[s] what is adequate as to be accountable on no other basis than passion and prejudice."  Dallum v. Farmers Union Cent. Exch., Inc., 462 N.W.2d 608, 614 (Minn. App. 1990) (quotation omitted), review denied (Minn. Jan. 14, 1991). 

Here, the damage award was based on charges for sewer and water by appellant as a result of the change to metering and the imposition of monthly bills pursuant to this metering.  A number of witnesses testified regarding the additional expense incurred as a result of appellant's action, and documents were introduced regarding past billing amounts.  During closing arguments, respondents presented their calculations of damages and asserted that they were entitled to damages in excess of $500,000.  Accordingly, we conclude that because the record contains support for the jury's damage award, the district court did not abuse its discretion in denying appellant's motion for a new trial. 

Appellant also argues that there was insufficient evidence to support the jury's determination that there was a substantial modification to the lease, and that the modification was unreasonable.  Minn. Stat. § 327C.02, subd. 1(c), requires a manufactured-home park rental agreement to specify "all rules applicable to the resident."  A "rule" is a "provision, regulation, rule or policy through which a park owner . . . seeks to control or affect the behavior of residents."  Minn. Stat. § 327C.01, subd. 10.  And a new or amended rule is unenforceable against a resident with an existing rental agreement unless the "rule is reasonable and is not a substantial modification of the original agreement."  Minn. Stat. § 327C.02, subd. 2.  As stated above, substantial modification is defined by section 327C as,

any change in a rule which:  (a) significantly diminishes or eliminates any material obligation of the park owner; (b) significantly diminishes or eliminates any material right, privilege or freedom of action of a resident; or (c) involves a significant new expense for a resident. 

 

Minn. Stat. § 327C.01, subd. 11. 

We reject appellant's argument that the verdict must be reversed because the jury erroneously determined that all three definitions under Minn. Stat. § 327C.01 had been met.  For a substantial modification finding, the statute requires that only one of the three subsections has been violated.  And the first definition of substantial modification, under subsection (a), requires a rule change that "significantly diminishes or eliminates any material obligation of the park owner."  Minn. Stat. § 327C.01, subd. 11.  The jury found that appellant's decision to install water meters and begin charging residents for water and sewer services significantly diminished or eliminated a material obligation of appellant; namely that it would provide those services.  We cannot say, on this record, that such a finding was "manifestly and palpably contrary to the evidence."  Levienn, 297 N.W.2d at 273.  Accordingly, we will not disturb the jury's verdict.

Affirmed.