Catherine C. Carey, Respondent, vs. Tudor Oaks Condominium Project, an Ontario Limited partnership, et al., Defendants, S.B. McLaughlin & Company, Ltd., acting liquidating trustee of Tudor Oaks Condominium Project, Appellant.

Catherine C. Carey, Respondent, vs. Tudor Oaks Condominium Project, an Ontario Limited partnership, et al., Defendants, S.B. McLaughlin & Company, Ltd., acting liquidating trustee of Tudor Oaks Condominium Project, Appellant. A05-1104, Court of Appeals Unpublished, February 21, 2006.

This opinion will be unpublished and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

A05-1104

 

 

Catherine C. Carey,

Respondent,

 

vs.

 

Tudor Oaks Condominium Project,

an Ontario Limited partnership, et al.,

Defendants,

 

S.B. McLaughlin & Company, Ltd.,

acting liquidating trustee of Tudor Oaks Condominium Project,

Appellant.

 

 

Filed February 21, 2006

Remanded

Dietzen, Judge

 

Hennepin County District Court

File No. 96-9659

 

William G. Cottrell, Cottrell Law Firm, P.A., 3445 Washington Drive, Suite 204, Eagan, MN 55122-1340 (for respondent)

 

Wood R. Foster, Mark H. Thieroff, Siegel, Brill, Greupner, Duffy & Foster, P.A., 1300 Washington Square, 100 Washington Avenue South, Minneapolis, MN 55401 (for appellant)

 

            Considered and decided by Wright, Presiding Judge; Dietzen, Judge; and Worke, Judge.

U N P U B L I S H E D   O P I N I O N

 

DIETZEN, Judge

 

            Appellant challenges the district court order and judgment releasing a cash bond to respondent that had been posted as security for a temporary restraining order in a separate lawsuit, arguing that the district court erred because the record is devoid of any factual or legal basis for the release of the cash bond to respondent.  Because the district court did not provide any explanation for its ruling that would allow appellate review, we remand to the district court for further consideration consistent with this opinion.

FACTS

 

Appellant S.B. McLaughlin & Co. is an Ontario corporation.  Appellant was the limited partner of, and is the liquidating trustee for, Tudor Oaks Condominium Project (Tudor Oaks), a dissolved limited partnership chartered in Ontario, Canada.  Both appellant and Tudor Oaks were at one time partners of ABIO Holdings, Inc. (ABIO), which was a general partner of Tudor Oaks.  Respondent Catherine Carey is the assignee of a 1986 judgment (the Hickey Judgment) against Tudor Oaks.  The crux of this dispute is whether the district court erred in ordering funds that appellant posted as security for a temporary restraining order (TRO) to be attached in partial satisfaction of the judgment against Tudor Oaks.

There is a long history of litigation between and among the parties to this litigation, which is only briefly summarized here.  In 1986, Hickey, Thorstenson, Grover, Ltd. (Hickey) obtained a consent judgment in Hennepin County against Tudor Oaks and ABIO for $23,529.36 (the Hickey judgment).[1]  In 1987, in a separate action, appellant filed suit in district court against respondent's father, attorney John Cochrane, who was representing Tudor Oaks in a bank foreclosure action involving a multimillion dollar condominium project, and a group of real estate investors Cochrane had assembled referred to as K.S.C.S. Properties, Inc. (KSCS), which asserted various legal theories, including breach of fiduciary duty.  In 1994, after re-alignment of the parties, a jury trial, and an appeal,[2] judgment in the amount of $1,744,568.22 was ultimately entered in favor of Tudor Oaks against John Cochrane and KSCS, jointly and severally (the Cochrane judgment).[3] 

John Cochrane vigorously challenged collection of the Cochrane judgment in various ways, including filing for bankruptcy and collaterally attacking the judgment.[4]  In 1994, Hickey assigned the Hickey judgment against Tudor Oaks to Carolyn Cochrane, John Cochrane's wife, who in turn assigned the judgment to respondent.[5] In May 1995, respondent obtained a writ of execution from the district court to enforce the Hickey judgment against Tudor Oaks.  By that time, Tudor Oaks was involuntarily dissolved, and appellant had become liquidating trustee for Tudor Oaks under its articles of partnership and Canadian law.  In June 1995, the Hennepin County Sheriff levied and attached all right, title, and interest of Tudor Oaks and ABIO to the Cochrane judgment.  Later that month, the sheriff's office gave notice that it would hold an execution sale of the Cochrane judgment to satisfy the Hickey judgment. 

In July 1995, before the scheduled auction, appellant filed a motion and notice of motion for a temporary restraining order (TRO) in district court to restrain the auction on the theory that respondent was unlawfully using the Hickey judgment as a means to avoid the Cochrane judgment.  The district court granted the TRO, which prohibited the sheriff and respondent from conducting or participating in the auction of the Cochrane judgment, and ordered appellant to post a bond of $30,000.  Appellant's law firm tendered a check to the district court using funds allegedly borrowed from a third party, Western Delta Lands, Inc., to satisfy the cash bond.  In August 1995, respondent moved to dissolve the TRO and to proceed with the auction of the Cochrane judgment.  The district court denied the motion.[6]       

            In May 1996, respondent initiated an action to renew the Hickey judgment, which was set to expire that year (after ten years) pursuant to Minn. Stat. § 550.01 (1996); and filed a complaint against Tudor Oaks, ABIO, and appellant as liquidating trustee for Tudor Oaks.[7]  Appellant answered the complaint by admitting that it was the liquidating trustee for Tudor Oaks, denying the other allegations, and raising various affirmative defenses and counterclaims.  In October 1996, the district court renewed the Hickey judgment, and entered judgment against appellant, in its capacity as liquidating trustee of Tudor Oaks, as one of the judgment debtors.  The order for judgment also indicated that the 1995 TRO precluding the auction of the Cochrane judgment remained in full force and effect.  In April 1997, respondent obtained a new writ of execution against appellant on the Hickey judgment.

            In March 2004, the TRO was dissolved by consent of the parties.  That same month, the Cochrane judgment expired and was not renewed.  But the renewed Hickey judgment remained effective.  In July 2004, at the request of respondent, the sheriff attempted to levy on appellant's property, ostensibly on the basis of the writ of execution issued on the renewed Hickey judgment in April 1997, but reported that it found no property held by appellant.[8] 

In October 2004, respondent filed a motion to obtain the $30,000 cash deposited as security for the TRO to partially satisfy the Hickey judgment, plus interest and costs.  Appellant filed a memorandum opposing the motion and requesting the return and release of the TRO deposit.  Following briefing and oral argument on the motion, the district court ordered that the funds be released to respondent.  The district court did not issue any findings of fact or conclusions of law with the order.  This appeal follows.

D E C I S I O N

On appeal, appellant contends that the district court erred by releasing the $30,000 cost bond deposited with the district court to respondent.  Appellant argues that the record is devoid of any factual or legal basis for the release of the cash bond to respondent.  Respondent counters that the court was acting within its equitable powers by allowing her to levy on the cash bond in satisfaction of the Hickey judgment.

The district court order is not supported by findings of fact and conclusions of law, or a memorandum.[9]  Consequently, we cannot determine the factual or legal basis for the district court order.

Generally, a litigant may bring a motion under Minn. R. Civ. P 65.03(b) as an aggrieved party to recover damages suffered as a result of having been wrongfully enjoined or restrained.[10]  To recover on an injunction bond, the party seeking recovery on the bond must establish damages that were proximately caused by a restraining order to which the other party was not entitled.  Electro-Craft Corp. v. Controlled Motion, Inc., 370 N.W.2d 465, 466 (Minn. App. 1985), review denied (Minn. Sept. 19, 1985). The purpose of allowing recovery on a TRO bond is to allow for damages that may have been incurred by a party who is later found to have been wrongfully enjoined or restrained.  Minn. R. Civ. P. 65.03(a). 

The record is unclear whether such a rule 65(b) motion was made or is pending.  Here, the district court issued the TRO and subsequently denied respondent's motion to dissolve the TRO in 1995.  Consequently, as a matter of law, respondent had no basis to recover for an action on the injunction bond.  Cf. Hubbard Broad., Inc. v. Loescher, 291 N.W.2d 216, 22021 (Minn. 1980) (holding that if the suit is resolved in favor of the enjoined party by an adjudication on the merits, the injunction bond can be released to the wrongfully enjoined party). 

Respondent sought to execute on the Hickey judgment by serving and filing a writ of execution.  A judgment creditor (or the assignee of a judgment creditor) may seek execution on its judgment at any time within ten years of the entry of the judgment (or renewed judgment).  Minn. Stat. § 550.01 (2004).  To execute on a judgment, the judgment creditor must first seek and obtain a writ of execution from the court administrator issued to the county sheriff.  Id. § 550.04 (2004).  "The sheriff may [then] levy upon money . . . owed by a third party to the judgment debtor."  Id. § 550.135, subd. 3 (2004).  Here, such a writ was obtained by respondent yet expired well before respondent moved to release the cash bond.  See id. § 550.051, subd. 1 (2004) (writ of execution expires after 180 days).

Appellant argues that the judgment against it in its capacity as the liquidating trustee and, therefore, respondent may only execute against assets it holds in that capacity.  Respondent argues that by depositing the cash bond with the district court, the asset was converted from an asset of appellant into an asset of Tudor Oaks; when the TRO was dissolved, the cash bond was no longer required and, by operation of law, was converted into an asset of Tudor Oaks subject to attachment.  We believe that these issues present questions of fact and mixed questions of fact and law that must be determined by the district court.

Consequently, we remand to the district court to determine: (1) whether the $30,000 cash bond, which was posted as security for a TRO that is now dissolved, is subject to attachment; and (2) if so, the ownership of the assets, i.e., to whom the assets belong.  The district court retains the discretion to conduct an evidentiary hearing, but is not required to do so. 

            Remanded.

[1] This judgment was docketed in court file number 85-013902.

[2] See S.B. Mclaughlin & Co. v. Cochrane, No. C4-92-2081, 1993 WL 231672 (Minn. App. June 29, 1993), review denied (Minn. Aug. 24, 1993).  

[3]KSCS eventually settled with appellant for $840,000, leaving John Cochrane liable for the remainder of the Cochrane judgment.

[4] In re Cochrane, 179 B.R. 628, 630 n.4, 636 (Bankr. D. Minn. 1995), aff'd sub nom., Tudor Oaks Ltd. P'ship v. Cochrane (In re Cochrane), No. 3-95-389 (D. Minn. Feb. 6, 1996), aff'd, 124 F.3d 978, 984 (8th Cir. 1997).  Cochrane also sought bankruptcy relief in Florida, but was unable to discharge the judgment.  Tudor Oaks Ltd. v. Cochrane, 90 F. App'x 388, No. 03-12022, 2004 WL 110679 (11th Cir. 2004).  Cochrane also tried to collaterally attack the Cochrane judgment on grounds of subject matter jurisdiction and standing, but this court upheld the judgment.  Cochrane v. Tudor Oaks Condo. Project, 529 N.W.2d 429, 436 (Minn. App. 1995).

[5]The family apparently intended to levy as judgment creditors of Tudor Oaks on one of the few remaining assets to Tudor Oaks, the Cochrane judgment.  In effect, they sought to obtain satisfaction of the Cochrane judgment at a discount by obtaining judgments that others held against Tudor Oaks. 

[6] The district court held that the Cochrane judgment fell within the scope of Minn. Stat. § 550.135, subd. 4(2) (1994), which provided that property is not subject to a writ of execution "if the third party or the third party's property is liable on an execution levy."  There was not, technically, an execution levy outstanding that sought to collect the Cochrane judgment (and with the judgment creditors dissolved, no execution was imminent).  But the district court concluded that the bankruptcy court's determination that the Cochrane judgment was nondischargeable was substantially the same.  The bankruptcy ruling was then pending on appeal before the Eighth Circuit.  The district court stated that it would not allow the auction because it would have the effect of circumventing the bankruptcy ruling, but should the ruling be reversed, it would revisit respondent's motion.  The bankruptcy court was affirmed, and the state district court never revisited the motion.

[7] This action was docketed in court file number 96-9659.

[8] It appears this may have been related to the use of different file numbers for various proceedings.  The TRO was issued in file number 85-0132902, but the renewed Hickey judgment was entered in file number 96-9659.

[9]The district court order releasing the cost bond stated:

That the Hennepin County District Court Administrator shall pay to the Plaintiff $30,000, through [respondent's] counsel, and issue a partial satisfaction of Judgment.  The funds paid by the District Court Administrator are the $30,000 in funds held by the District Court Administrator pursuant to the prior Order of this Court in file No. 85-0132902, dated July 13, 1995.

[10] Minn. R. Civ. P. 65.03(b) reads, in pertinent part: "The surety's liability [on the injunction bond] may be enforced on motion without the necessity of an independent action. The motion and such notice of the motion as the court prescribes may be served on the court administrator . . . ."