Ron Schaff, et al., on behalf of themselves and all others similarly situated, Appellants, vs. Hometown America, L.L.C., d/b/a Cedar Knolls Manufactured Home Community, Respondent.

Ron Schaff, et al., on behalf of themselves and all others similarly situated, Appellants, vs. Hometown America, L.L.C., d/b/a Cedar Knolls Manufactured Home Community, Respondent. A04-1778, Court of Appeals Unpublished, July 5, 2005.

This opinion will be unpublished and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

A04-1778

 

Ron Schaff, et al., on behalf of themselves

and all others similarly situated,

Appellants,

 

vs.

 

Hometown America, L.L.C.,

d/b/a Cedar Knolls Manufactured Home Community,

Respondent.

 

Filed July 5, 2005

Affirmed

Randall, Judge

 

Dakota County District Court

File No. C2-04-7568

 

 

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

 

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

 

 

            Considered and decided by Randall, Presiding Judge, Kalitowski, Judge, and Huspeni, Judge.* 

U N P U B L I S H E D   O P I N I O N

RANDALL, Judge

            Appellants appeal denial of their post-trial motion for JNOV and amended findings or, alternatively, a new trial.  Appellants argue that the district court erred in its determination that respondent's rental increase was not retaliatory, abused its discretion in a number of evidentiary rulings, and showed bias.

FACTS

            Appellants Ron Schaff and George Sayer are individual residents of Cedar Knolls Manufactured Home Community (Cedar Knolls) in Apple Valley and represent a class of individuals consisting of residents of Cedar Knolls.  Respondent is the owner of Cedar Knolls. 

            The lease between appellants and respondent provides that modification of the lease's terms and rule changes may only be made upon 60 days written notice to the residents.  The lease also provides that rent increases must be reasonable.  Both lease provisions are in accordance with Minnesota law.

            In December 1998, respondent gave the residents notice that water meters had been installed and residents would, as of March 1, 1999, be billed directly for their water and sewer usage in addition to rent.  The residents were also informed that, as of March 1, 1999, monthly rent would be reduced by $29 in order to offset the imposition of direct utility
charges.  Prior to March 1, 1999, the water and sewer expenses had been included in the base rent on a pro rata basis regardless of usage. 

A.        Cedar Knolls I

            A previous action (Cedar Knolls I) seeking damages and injunctive relief was filed by Schaff and two other residents, William Anderson and David Knutson.  The case was tried to a jury on March 22-24, 2004.  During the trial, each of the named plaintiffs testified that they wanted respondent to revert to the flat rate amount in monthly rent to cover utility expenses. 

Schaff testified:

Q: Is it also your position in this case that you want the park to go back to a situation where instead of there being separate metering, you want a situation where the sewer and water is once again included in the rent for everybody?

           

Schaff: Those that have a lease that read the same as mine, yes sir.

 

William Anderson testified:

Q: And you understand, do you not, that if in fact, as you are suggesting, the park should change how it bills for sewer and water, that that will result in going back to the old way where it's just simply the same for everybody, correct?  Do you understand that?

 

                        Anderson: I understand that.

 

                        Q: And that's what you are saying you want?

 

                        Anderson: Yes.

 

David Knutson testified:

Q: You are asking to go back to a flat rate, aren't you?  You want it included again in the rent?

 

Knutson: Yeah.

 

Q: It used to be included, the park changed that and separately metered.  Now you want it to be included again, right?

 

Knutson: Right.

 

            The jury found in favor of the plaintiff class and awarded appellants approximately $384,000 in damages relating to the past utilities charges.  And the district court ordered respondent to stop assessing charges for water and sewer usage pursuant to the 1999 rule change.  Because approximately one-third of the current residents of Cedar Knolls were members of the class in Cedar Knolls I, this injunctive order prohibited respondent from continuing to impose the 1999 rule change against one-third of its residents. 

            The residents who were not part of the class in Cedar Knolls I had entered into leases that did not include utilities in the rental agreement.  These residents were metered in 1999 and, thus, paid sewer and water charges according to actual usage. 

            Respondent requested a stay of enforcement of the injunction while it appealed.  The request was denied.  On April 28, 2004, respondent notified its residents by letter of another proposed rule change.  The letter stated,

In March 1999, a rental reduction of $29.00 per month was implemented to offset the impact of the rule change by which you were invoiced monthly for your individual water and sewer usage.  Prior to March 1999, the amounts incurred by Cedar Knolls for your water and sewer usage had been an expense, which was included in your monthly rent. 

 

Because a number of residents brought a class action lawsuit challenging the individual metering, a flat amount for the expense incurred by Cedar Knolls for sewer and water usage will again be included in your monthly rent.  We are notifying you that effective July 1, 2004, you will no longer be billed for your individual sewer and water usage, and the rent for your home site will increase by $36.00 per month to $464.00.

 

At that time, respondent gave notice of the monthly increase of $36 per month to all residents.   

B.        Cedar Knolls II

            On April 30, 2004, Schaff and Sayer initiated this lawsuit on behalf of all residents of Cedar Knolls, alleging that the proposed rule change (which was in addition to a January 2004 increase of $18 per month) is retaliatory and violates Minn. Stat. §327C.12 (2004); that it is an unenforceable substantial modification of the lease and violates Minn. Stat. § 327C.02, subd. 2 (2004; and that the proposed rule change is a breach of the lease agreements.

            The underlying action was tried before the district court on June 14 and 15, 2004.  It is undisputed that the residents received a $29 decrease in rent when the metering and separate billing had commenced with the 1999 rule change.  Thus, the $36 a year increase represents a net increase of $7 per month over a five-year period.

            Kyle Howieson, respondent's regional manager, testified at trial that the April 28, 2004 rule change was in response to the court's order to cease charging separately for utilities.  Howieson testified that the change was based on amounts charged respondent by the City of Apple Valley for water and sewer services.   Howieson also testified that he looked at a 12-month period and calculated the monthly averages.  Howieson testified further that he did not consider the amount of the damages verdict in Cedar Knolls I in determining the amount of the rental increase.

            Respondent also offered the testimony of Rodger Skare, a licensed real estate appraiser and senior vice president at Colliers International.  Colliers is a full-service commercial real estate company.  Skare compared the rents charged at five other manufactured home communities in the vicinity of Cedar Knolls.  Based on this comparison, Skare concluded that the rule change was reasonable.  Appellants' counsel cross-examined Skare at length about his compilations and calculations.  

            On June 22, 2004, the district court issued its findings of fact, conclusions of law and order for judgment.  The district court found that the judgment in Cedar Knolls I prohibited respondent from enforcing the 1999 rule change against one-third of its residents.  And the court found that the named plaintiffs in Cedar Knolls I wanted respondent to return to the situation where a flat amount for water and sewer usage was included in their monthly lot rent.  The district court also noted that none of appellants' witnesses offered any evidence as to the impact of the proposed rule change on other residents.  Further, the district court noted that respondent had demonstrated through Howieson's testimony that the overall economic impact of the proposed rule change on all of the residents would be less than $1 per month, higher or lower, for the average Cedar Knolls resident.  Finally, the district court pointed out that the proposed base rent of $464 is consistent with what residents of Cedar Knolls would have been paying had individual metering never been implemented.

            Based on these findings, the district court concluded that the proposed $36 increase was reasonable, and that the rule change was neither unreasonable nor a substantial modification of the lease agreements.  The court also concluded that the increase was not a penalty under the statute.

            Appellants subsequently brought a post-trial motion for JNOV and amended findings, or, alternatively, a new trial.  On August 17, 2004, the district court denied appellants' post trial motion.  This appeal followed.

D E C I S I O N

            Appellants challenge the district court's denial of their motion for JNOV and amended findings or, alternatively, a new trial.  Because appellants had a bench trial, rather than a jury trial, they were not entitled to bring a JNOV motion.  "[A JNOV] motion is only available in jury trials."  1A David F. Herr & Roger S. Haydock, Minnesota Practice § 50.10 (2003).  Therefore, we review appellants' challenge, but we will analyze their claims in the context of the district court's denial of appellants' motion for amended findings and a new trial. 

            A court may amend its findings or make additional findings, and, if judgment has been entered, amend the judgment accordingly.  Minn. R. Civ. P. 52.02.  On appeal, the scope of review is limited to deciding whether the district court's findings are clearly erroneous and whether the district court erred in its legal conclusions.  Foster v. Bergstrom, 515 N.W.2d 581, 585 (Minn. App. 1994).  The district court's findings of fact will be reversed only if the reviewing court is left with the definite and firm conviction that a mistake has been made.  Snesrud v. Instant Web, Inc., 484 N.W.2d 423, 428 (Minn. App. 1992), review denied (Minn. June 17, 1992).  The district court also has the discretion to grant a new trial, and we will not disturb such a decision absent a clear abuse of that discretion.  Halla Nursery, Inc. v. Baumann-Furrie & Co., 454 N.W.2d 905, 910 (Minn. 1990).  However, a district court's decision on a purely legal issue is independently reviewed.  Frost-Benco Elec. Ass'n v. Minn. Pub. Utils. Comm'n, 358 N.W.2d 639, 642 (Minn. 1984). 

A.        Retaliation

            Appellants first challenge the district court's determination that the proposed rent increase was not retaliation for the civil judgment in favor of the appellants in Cedar Knolls I.  Minn. Stat. 327C.12 (2004) provides that an owner of a manufactured home community may not increase rent as a penalty for a resident's attempt to exercise their rights or remedies under the law.  Specifically, the statute provides that

            [a] park owner may not increase rent, decrease services, alter an existing rental agreement or seek to recover possession or threaten such action in whole or in part as a penalty for a resident's:

            (a) good faith complaint to the park owner or to a government agency or official;

 

            (b) good faith attempt to exercise rights or remedies pursuant to state or federal law; or

 

            (c) joining and participating in the activities of a resident association as defined under section 327C.01, subdivision 9a.

 

            In any proceeding in which retaliatory conduct is alleged, the burden of proving otherwise shall be on the park owner if the owner's challenged action began within 90 days after the resident engaged in any of the activities identified in clause (a), (b), or (c). If the challenged action began more than 90 days after the resident engaged in the protected activity, the party claiming retaliation must make a prima facie case. The park owner must then prove otherwise.

 

Minn. Stat. § 327C.12.  Further, under Minn. Stat. § 327C.06, subd. 2 (2004), "[n]o rent increase shall be valid if its purpose is to pay, in whole or in part, any civil or criminal penalty imposed on the park owner by a court or a government agency." 

            Appellants argue that the increase here was retaliation for the civil judgment in Cedar Knolls I.  And appellants contend that the district court failed to properly apply the above-referenced statutory law to the facts in this case.  Specifically, appellants contend that the district court erred by not specifically citing Parkin v. Fitzgerald, 307 Minn. 423, 430, 240 N.W.2d 828, 832 (1976) in its findings.  In Parkin, the Minnesota Supreme Court interpreted the statutory predecessor to Minn. Stat. § 504B.285, which protects tenants from retaliatory eviction by landlords.  The supreme court, in Parkin, adopted the following standard in order to determine whether a landlord has satisfied his burden of proving a nonretaliatory purpose for a tenant-adverse action:

A landlord must establish by a fair preponderance of the evidence a substantial nonretaliatory reason for the eviction, arising at or within a reasonably short time before service of the notice to quit. A nonretaliatory reason is a reason wholly unrelated to and unmotivated by any good-faith activity on the part of the tenant protected by the statute (e.g., nonpayment of rent, other material breach of covenant, continuing damage to premises by tenants, or removal of housing unit from market for a sound business reason). Such a standard will give full protection to tenants and will enhance the legislative policy of liberal construction of statutory covenants to insure adequate housing.

 

Id. at 832-33. 

            To highlight the retaliatory nature of respondent's proposed rule change, appellants argue that, in an April 28, 2004 letter to residents, respondent admitted that the proposed rule change was in response to the prior class action.  Appellants argue that this letter, on its face, shows the retaliatory nature of respondent's actions.  Further, appellants argue that respondent's rental increase constituted a substantial modification for those residents who were not part of Cedar Knolls I, but had entered into agreements allowing for individually metered systems.  Therefore, appellants argue, the district court's findings do not accurately reflect the facts of the case,[1] nor do they reflect consideration of the applicable law, including respondent's burden of proof.  We disagree. 

            While the post-trial court did not issue findings in denying appellants' motion, there is sufficient evidence in the record to support its conclusions.  On June 14 and 15, 2004, the case was tried before the district court as a bench trial.  In its June 23, 2004 order, the district court found that:

3.  In or around March 1999, [respondent's] predecessor implemented a rule change by which it reduced the monthly lot rent for its residents by $29.00 per month and, at the same time, began separately invoicing the residents for their individual sewer and water consumption based upon metered usage. . . .

 

4.  A class action lawsuit was commenced in late 2002 by a group of Cedar Knolls residents who contended that the March, 1999, rule change reducing rent and imposing individual metered sewer and water charges was unenforceable as an unreasonable rule and substantial modification of their lease agreements. . . .

 

                                    . . . .

 

            6.  Cedar Knolls residents Ron Schaff, William Anderson, and David Knutson were the named plaintiffs and class representatives in Cedar Knolls I.  Each of these individuals testified during the trial in Cedar Knolls I that they wanted [respondent] to stop billing for sewer and water according to individual metered usage, and instead to return to the situation that existed prior to the March 1999 rule change where a flat equivalent amount for each resident's sewer and water was included in monthly lot rent. 

 

7.  On April 28, 2004 [respondent] notified its residents that effective July 1, 2004, [respondent] would stop billing for metered water and sewer usage and that at the same time the rent would be increased by $36.00 per month. 

 

Ultimately, the district court concluded that the new rule change was not unreasonable or a substantial modification and that it was not retaliatory. 

It is clear from the record that the $36 amount is a flat fee meant to supplant the individual metering for utilities.  As part of that surcharge, the residents from Cedar Knolls I received a rental reduction of $29 to effectuate the change in utilities from the flat rate which was included in the rental payment prior to separate metering.  The difference in the amounts was $7 per month in a five-year period.  We hold, as a matter of law, that such an increase is not unreasonable.  The residents who had been involved in the first lawsuit (successfully) got what they wanteda return to the old flat rate system.  The new tenants who had always been on the metered systemwere now charged a flat rate.  Evidence was presented that the flat rate was averaged from the actual utility bill.  The record indicates many of those complaining about the switch to a flat charge of $36 a month were actually paying more than that on a metered basis for actual usage.  Respondent argues, logically, that this new flat-rate billing will actually represent a savings to some of the complainants.  Finally, after evaluating the credibility of the witnesses and weighing the evidence, the district court sorted through the parties' claims and defenses and concluded that there was no violation of Minn. Stat. § 327.12C.  With the district court's vantage point as the trier of fact, this conclusion was well within its discretion.  The district court did not abuse its discretion in refusing to amend its findings.  The rent increase was not retaliatory. 

B.        Evidentiary rulings and bias

            Appellants next contend that the district court committed a number of evidentiary errors, showed bias, and when taken cumulatively, these errors show that appellants were deprived of a fair trial. 

            Evidentiary rulings are within the district court's sound discretion and will be reversed only if there has been an abuse of discretion.  Bahl v. Country Club Mkt., Inc., 410 N.W.2d 916, 919 (Minn. App. 1987).  The admission of expert opinion testimony is within the broad discretion of the district court.  State v. Ritt, 599 N.W.2d 802, 810 (Minn. 1999); Dunshee v. Douglas, 255 N.W.2d 42, 47 (Minn. 1977).  "If scientific, technical, or other specialized knowledge will assist the trier of fact to understand the evidence or to determine a fact at issue, a witness qualified as an expert by knowledge, skill, experience, training, or education, may testify thereto in the form of an opinion or otherwise."  Minn. R. Evid. 702. 

            A trial judge must avoid showing either hostility or partiality toward a litigant or counsel.  Fortier v. Ritter's Hairdressing Studios, Inc., 282 Minn. 382, 385, 164 N.W.2d 897, 899 (1969). 

            To constitute reversible error, an evidentiary ruling must be prejudicial.  Kroning v. State Farm Auto Ins. Co., 567 N.W.2d 42, 46 (Minn. 1997) (citation omitted). 

            Appellants argue that the admission of Mr. Skare's expert testimony and exhibits, which did not include the $36.00 increase, was in error.  Appellants further argue that the district court should not have considered the data from apartment rental or those mobile home parks "hand-picked" by respondent.  The district further compounded the error, appellants argue, when it refused to include appellants' exhibits 22 and 23 which used Skare's data but included the $36.00 rental increase omitted by Skare's exhibit. Additionally, appellants argue that the district court was biased against them.  We disagree. 

            Here, the district court heard expert testimony from Mr. Skare regarding comparable properties.  Skare supplied a number of exhibits to the court, as well as testified based upon his expertise in real estate appraisals.  The issue of the $36.00, or lack thereof, in the exhibits was brought up during cross-examination.  Therefore, the district court was apprised of this issue and weighed the evidence with this in mind.  With regard to the data on apartments buildings, the district court determined that the data was not going to be "terribly helpful" so limited the amount of testimony in this area.  The court did, however, determine that the data from other mobile home parks could be instructive.  Skare admitted that the data was not comprehensive, and appellants had the ability to rebut this evidence with its own evidence.  With regard to the exclusion of exhibits 22 and 23, these exhibits were prepared by appellant's own counsel.  The district court concluded that the exhibits were being entered for argument, which had already been addressed during cross-examination.  Finally, we find no bias on the part of the district court in this matter.

            The district court did not err in refusing to amend its findings.  There is evidence reasonably supporting the findings.  The district court properly denied appellants' motion for a new trial.  See ZumBerge v. N. States Power Co., 481 N.W.2d 103, 110 (Minn. App. 1992) ("[o]n appeal from a denial of a motion for a new trial, the verdict must stand unless it is manifestly and palpably contrary to the evidence, viewed in a light most favorable to the verdict."), review denied (Minn. Apr. 29, 1992).

            Affirmed.

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

[1] Specifically, appellants attack the findings that the rent increase was necessary in order to comply with Cedar Knolls I.  Also, throughout the findings, the district court used the terms "rental increase" and "utility charges" interchangeably, even though the statute defines these two terms separately.