Robert K. Pearson, Respondent, vs. All American Builders of Duluth, Inc., et al., Appellants.

Robert K. Pearson, Respondent, vs. All American Builders of Duluth, Inc., et al., Appellants. A05-890, Court of Appeals Unpublished, July 11, 2006.

This opinion will be unpublished and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

A05-890

 

 

Robert K. Pearson,

Respondent,

 

vs.

 

All American Builders of Duluth, Inc., et al.,

Appellants.

 

 

Filed July 11, 2006

Affirmed in part and reversed in part

Toussaint, Chief Judge

 

St. Louis County District Court

File No. C0-01-600766

 

 

John H. Bray, Kanuit & Bray, Ltd., 5155 Miller Trunk Highway, Hermantown, MN 55811 (for respondent)

 

William D. Paul, William Paul Law Office, 1217 East First Street, Duluth, MN 55805 (for appellants)

 

            Considered and decided by Toussaint, Chief Judge; Hudson, Judge; and Worke, Judge.

U N P U B L I S H E D   O P I N I O N

TOUSSAINT, Chief Judge

            In this dispute over commissions owed respondent-employee Robert K. Pearson from appellants All American Builders of Duluth, Inc. and All American Builders of Rice Lake, Inc. after he resigned, the district court awarded attorney fees under Minn. R. Civ. P. 11 to respondent for his motion to dismiss a frivolous counterclaim and granted partial summary judgment to respondent based on a concession by appellants' counsel.  Appellants argue that granting summary judgment was erroneous because there were genuine issues of material fact and that the district court abused its discretion in awarding rule 11 attorney fees.  Because appellants were not given proper notice of the motion for rule 11 attorney fees and the opportunity to withdraw or correct the counterclaim, we reverse the award of rule 11 attorney fees.  Because the district court properly relied on the concession, we affirm summary judgment.

D E C I S I O N

            Respondent sued appellants for $13,447.64 in commissions that he asserted he had earned through and after the last day of employment, a civil penalty, and statutory attorney fees.  Appellants counterclaimed, seeking a monetary set-off to recover their costs for correcting mistakes and errors allegedly made by respondent in bids and contracts.  Appellants challenge the district court's grant of attorney fees to respondent based on a determination that their counterclaim was frivolous and partial summary judgment to respondent for commissions owed.

I.

            The district court granted respondent's motion to dismiss the set-off counterclaim, finding that no legal authority supported the claim and that it was frivolous.  The court also granted respondent's request for costs and attorney fees under Minn. R. Civ. P. 11.  An appellate court will not reverse the district court's award of sanctions under rule 11 unless there was an abuse of discretion.  Uselman v. Uselman, 464 N.W.2d 130, 145 (Minn. 1990); Gibson v. Coldwell Banker Burnet, 659 N.W.2d 782, 787 (Minn. App. 2003).

            Appellants contend that the district court abused its discretion in imposing rule 11 sanctions because (a) their conduct did not warrant a sanction under rule 11 and (b) the court imposed sanctions without proper notice.  A district court may impose sanctions for violation of rule 11.02 only after notice and a reasonable opportunity to respond.  Minn. R. Civ. P. 11.03.  Rule 11.03 sets forth the type of notice required before sanctions may be awarded.  See Gibson, 659 N.W.2d at 788-89 (noting that while minimum procedural requirements were set forth in Uselman, current requirements are found in rule 11.03). When sanctions are initiated by a motion, the motion must be made separately from other motions or requests and shall describe the specific conduct alleged to violate rule 11.02.  Minn. R. Civ. P. 11.03(a)(1).  The motion for sanctions also must be served as provided in rule 5, "but shall not be filed with or presented to the court unless, within 21 days after service of the motion . . . the challenged paper, claim, defense, contention, allegation, or denial is not withdrawn or appropriately corrected."  Id.  If the moving party does not follow this "safe harbor" procedure, the motion for sanctions must be rejected because the offending party was not given the opportunity to correct the situation.  Gibson, 694 N.W.2d at 790.

            Here, respondent did not make a separate motion for sanctions but instead, at the end of his memorandum in support of his motion for partial summary judgment on the counterclaim, he sought dismissal of respondent's counterclaim and an award of attorney fees for the motion.  Under rule 11.03(a)(1) and Gibson, the district court abused its discretion in awarding sanctions because appellants were not given notice by separate motion and were not given the opportunity for safe harbor in which to withdraw the counterclaim.  In view of this procedural error, we need not address the issue of whether appellants' conduct warranted a rule 11 sanction.

II.

            The district court granted respondent's motion for partial summary judgment on commissions owed him by appellants.  An appellate court will review an appeal from summary judgment to determine whether there are genuine issues of material fact and whether the district court erred as a matter of law.  State by Cooper v. French, 460 N.W.2d 2, 4 (Minn. 1990).  The evidence will be viewed in the light most favorable to the party against whom judgment was granted.  Westrom v. Minn. Dep't of Labor & Indus., 686 N.W.2d 27, 32 (Minn. 2004).

            When an employee quits, "the wages or commissions earned and unpaid" at that time must be paid in full, generally on the next scheduled pay day.  Minn. Stat. § 181.14, subd. 1(a) (2000).  If not paid as required, they become "immediately payable upon the demand of the employee."  Id., subd. 2 (2000).  If the employer does not pay the amount due within 24 hours after the demand, the employer is also liable for a penalty "equal to the amount of the employee's average daily earnings provided in the contract of employment, for every day, not exceeding 15 days," until the amount is paid or settled.  Id.  An employee may sue the employer in district court for redress for such violations and for costs and attorney fees.  Minn. Stat. § 181.171, subds. 1, 3 (2000).

            Respondent supported his motion for partial summary judgment with a schedule that appellants' counsel had sent to respondent's counsel indicating that respondent actually owed appellants money.  The schedule listed a number of jobs, the amounts respondent earned for commissions on each job, which totaled $3,573.90, and the amount respondent owed appellants for errors and additional deductions, which totaled $5,526.55.  Respondent sought summary judgment for $3,573.90 and advised the court that, if his motion were granted, he would dismiss the remaining claims.  Appellants opposed the motion, asserting that factual issues remained as to whether respondent earned these commissions and the set-off.

            Appellants argue that the work on which the challenged commissions was based was not completed until after respondent quit employment, and, at a minimum, a fact issue exists as to whether respondent earned the commissions he is claiming.[1]  But the district court did not base its decision on disputed fact questions.  The court's findings are supported by the record, namely the schedule prepared by appellants' counsel in which appellants conceded that they owed respondent commissions totaling $3,573.90.  Appellants do not explicitly challenge the decision by the district court to rely on the concession, but we note that a district court may consider concessions of counsel in resolving a summary-judgment motion.  See Lundgren v. Eustermann, 370 N.W.2d 877, 881 n.1 (Minn. 1985) (noting material properly considered on motions for summary judgment).  Further, although in the schedule appellants claimed respondent owed them $5,526.55 for a set-off,  the district court had earlier dismissed the counterclaim in which appellants sought judgment against respondent for the cost of correcting mistakes and errors he made.  Appellants do not challenge the dismissal of the counterclaim.  Consequently, we uphold the district court's summary judgment.

            Affirmed in part and reversed in part.

[1]  Appellants do not challenge the award of a penalty or attorney fees under Minn. Stat. §§ 181.14, subd. 2 (penalty), 181.171, subd. 3 (attorney fees).