Woodland Development Corporation, Appellant, vs. City of Andover, Respondent.

Woodland Development Corporation, Appellant, vs. City of Andover, Respondent. A05-1636, Court of Appeals Unpublished, June 13, 2006.

This opinion will be unpublished and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

A05-1636

 

 

Woodland Development Corporation,

Appellant,

 

vs.

 

City of Andover,

Respondent.

 

 

Filed June 13, 2006

Affirmed

Toussaint, Chief Judge

 

Anoka County District Court

File No. C4-01-8273

 

 

Gary A. Van Cleve, Tamara O'Neill Moreland, Larkin Hoffman Daly & Lindgren Ltd., 1500 Wells Fargo Plaza, 7900 Xerxes Avenue South, Minneapolis, MN 55431-1194 (for appellant)

 

Clifford M. Greene, John M. Baker, Kevin G. Ross, Greene Espel, P.L.L.P., 200 South Sixth Street, Suite 12100, Minneapolis, MN 55402 (for respondent)

 

 

            Considered and decided by Toussaint, Chief Judge; Hudson, Judge; and Crippen, Judge.*

U N P U B L I S H E D   O P I N I O N

TOUSSAINT, Chief Judge

On appeal in this dispute over development contracts between appellant Woodland Development Corporation and respondent City of Andover (the city), Woodland argues that the district court misapplied the law, erred in its findings of fact, and misconstrued the parties' agreements when it concluded that Woodland had not been overcharged and owed the city attorney fees.   Because we conclude that Woodland waived its assessment-based claims and that its other claims are not supported by the law or the facts, we affirm.

FACTS

Woodland executed eight development contracts with the city between July 18, 1995 and March 6, 2001.   Woodland alleges breach of these contracts and statutory violations,[1] arguing that it was overcharged and overassessed by the city in the amount of $344,506.19.  The city raised the affirmative defense of waiver and counterclaimed for declaratory judgment and attorney fees. 

Following a bench trial and a hearing on attorney fees, the district court filed a January 14, 2005 order and memorandum[2] setting out the basis of its judgment against Woodland on its claims and for the city on its counterclaim for attorney fees. The court awarded the city $450,671.53 for attorney fees and costs, denied Woodland's post-decision motions, and amended its order. 

D E C I S I O N

I.

 

Of Woodland's total claim of $344,506.19, $260,862.34 was alleged to be unauthorized charges made through the assessment process.  Woodland challenges the district court's conclusion that Woodland's sole means of challenging the assessments was through the assessment-appeal statute, Minn. Stat. § 429.081 (2004), which Woodland did not timely pursue. 

Section 429.081 states:

Within 30 days after the adoption of the assessment, any person aggrieved, who is not precluded by failure to object prior to or at the assessment hearing, or whose failure to so object is due to a reasonable cause, may appeal to the district court . . . The court shall either affirm the assessment or set it aside and order a reassessment  . . . All objections to the assessment shall be deemed waived unless presented on such appeal.  This section provides the exclusive method of appeal from a special assessment levied pursuant to this chapter.

 

Minn. Stat. § 429.081 (2004).  The final sentence of this section "clarified legislative intent that there be no other avenue of contesting special assessments."  Sievert v. City of Lakefield, 319 N.W.2d 43, 44 (Minn. 1982). 

Whether section 429.081 is the exclusive method to appeal the special assessments is a question of statutory interpretation, which this court reviews de novo.  See Brookfield Trade Ctr., Inc. v. County of Ramsey, 584 N.W.2d 390, 393 (Minn. 1998).    If the statute's language, on its face, is clear, this court need not interpret the statute.  "A statute is only ambiguous when the language therein is subject to more than one reasonable interpretation."  Am. Family Ins. Group v. Schroedl, 616 N.W.2d 273, 277 (Minn. 2000) (quotation omitted).

Section 429.081 on its face is unambiguous:  it provides the "exclusive" method of appeal from a special assessment levied pursuant to chapter 429 and "[a]ll objections" to the assessment are deemed waived unless presented on appeal.  Woodland argues that the statute applies only to certain types of objections to assessments.  But the legislature's use of the term "all objections" suggests no limitation on the types of permissible objections, and no statutory language precluded Woodland from timely objecting to the assessments.    The cases that Woodland cites in support of its argument do not expressly or implicitly create an exception to the statute's clear mandate; none of them concerns a legal, as opposed to a factual, basis for an assessment.  Finally, Woodland does not allege fraud, which arguably could toll the limitation period.

Woodland argues that the costs of aerial mapping, the drainage plan, and administration should not have been assessed because these improvements were not among those expressly authorized by the legislature.  But chapter 429 identifies a municipality's power to make improvements and enables it to assess benefited properties with the "cost of any improvement."  Minn. Stat. §§ 429.021, .051 (2004).  Woodland argues that the cost of any item not expressly included in the Minn. Stat. § 428.021 list of permissible improvements is not assessable.   But Minn. Stat. § 429.021 authorizes the city to assess for "the cost of" any improvements.  Aerial mapping, drainage plans, and administration are among the costs of constructing, reconstructing, and maintaining the permitted improvements, and this court presumes the validity of the municipality's judgment on them.  Cf. Bisbee v. City of Fairmont, 593 N.W.2d 714 (Minn. App. 1999) (finding error in assessment method that "was completely unrelated to the costs of construction of a particular improvement in a particular year").

Woodland also argues that assessments for sealcoating of the streets, to be applied as construction of homes was nearing completion,[3] were illegal.  The parties' development contracts provided that the final sealcoating fell within the improvement designated "permanent street surfacing."[4]    Nevertheless, Woodland claims that the sealcoating was too distant in time to be included in the assessment.[5]

We conclude that there is no basis to overturn the city's single assessment for the complete street-improvement process.  First, street improvements are expressly governed by chapter 429, and the objection should have been raised as a chapter 429 special-assessment appeal.  Second, neither the statute nor the caselaw precludes assessment of the final stage of an improvement at the same time as its earlier stages.  Cf. Quality Homes, Inc. v. Village of New Brighton, 289 Minn. 274, 286, 183 N.W.2d 555, 562-63 (1971) (noting that single assessment was inappropriate for separate projects, in separate years, with separate feasibility reports, resolutions, and construction contracts).   Therefore, the district court did not err in its conclusion that section 429.081 was the exclusive method of appeal for Woodland's assessment-based claims.  

II.

Woodland argues that the district court erred in its determination that Woodland had contractually waived any right to challenge the assessments. 

Each of the parties' urban-development contracts called for the city's construction and installation of improvements, listed the improvements, and set the terms governing construction and financing by levying an assessment.   The contracts provided:

The Developer waives any and all procedural and substantive objections to the installation of the public improvements and the special assessments, including but not limited to hearing requirements and any claim that the assessments exceed the benefit to the property.  In the event the total of all City Installed Improvements is less than originally estimated by the City Engineer in his feasibility report, Developer waives all rights they have by virtue of Minnesota Statute 429.081 or otherwise to challenge the amount or validity of amounts, or the procedure used by the City in levying the assessments and hereby releases the City, its officers, agents, and employees from any and all liability related to or arising out of the levy of the assessments.

 

Whether a contract is ambiguous (reasonably susceptible to more than one construction) is a question of law, on which the reviewing court owes no deference to the district court's determination.  Blackburn, Nickels & Smith, Inc. v. Erickson, 366 N.W.2d 640, 643 (Minn. App. 1985), review denied (Minn. June 24, 1985).  We see no ambiguity in the express terms of the parties' waiver clause.  The contract extends the waiver beyond Woodland's rights under chapter 429 and unambiguously waives any right to challenge the amount or validity of the assessment. 

Woodland also argues that the city did not plead waiver as an affirmative defense because it did not reassert that defense in an amended answer.  We agree with the district court that the city was not required to reassert a defense already pleaded in its original answer after Woodland filed an amended complaint.  It "is generally recognized that the right [to respond to an amended pleading under Minn. R. Civ. P. 15.01] is limited to the right to respond to the new allegations and to meet any new theory contained in the amended pleading."  Nw. Nat'l Bank of Minneapolis v. Shuster, 388 N.W.2d 370, 372 (Minn. 1986) (emphasis added).     Requiring an amended answer to be filed after an amended complaint when the city had no new or changed affirmative defenses, would be contrary to the liberal practice of encouraging the resolution of disputes on the merits rather than upon the formalities of pleadings.  See generally 1 David F. Herr & Roger S. Haydock, Minnesota Practice § 15.3 (3rd ed. 1998).

Woodland also argues that the parties' contractual waiver provision is contrary to public policy and therefore unenforceable.  Exculpatory clauses have been upheld based on the public interest in freedom of contract.  Schlobohm v. Spa Petite, Inc., 326 N.W.2d 920, 923 (Minn. 1982).  "If the clause is either ambiguous in scope or purports to release the benefited party from liability for intentional, willful or wanton acts, [however,] it will not be enforced."  Id.  Here, the parties' waiver provision is unambiguous and does not expressly waive rights as to intentional or wanton acts.  Even if it did purport to release the city from liability for such acts, however, the district court correctly determined that Woodland made no claim of intentional, willful, or wanton acts.[6]  Furthermore, we agree with the district court that Woodland did not establish that the contract was one of adhesion, requiring more scrutiny. 

The district court correctly determined that the waiver clause was enforceable and it was not against public policy[7] for Woodland to waive its assessment claims.  Therefore, the contractual waiver clause was an alternative basis for the court's denial of Woodland's assessment-based claims.

III.

The district court determined that Woodland failed to prove any overcharges, duplicative charges, or damages and that Woodland "passed on" assessment-based fees and direct-billed charges.  Woodland argues that the district court disregarded evidence and relied on after-the-fact, self-serving testimony to reach its erroneous conclusions.

Findings of fact, whether based on oral or documentary evidence, shall not be set aside unless clearly erroneous, and due regard shall be given to the opportunity of the district court to judge the credibility of the witnesses.  Minn. R. Civ. P. 52.01.  "Findings of fact are clearly erroneous only if the reviewing court is left with the definite and firm conviction that a mistake has been made."  Fletcher v. St. Paul Pioneer Press, 589 N.W.2d 96, 101 (Minn. 1999) (quotation omitted).  This court will not reverse the district court's judgment merely because we view the evidence differently.  Rogers v. Moore, 603 N.W.2d 650, 656 (Minn. 1999).

The general rule in breach-of-contract cases is that damages are limited to out-of-pocket damages.  Woodland argues that it should not be limited to out-of-pocket damages, citing Whitney v. Buttrick, 376 N.W.2d 274 (Minn. App. 1985), review denied (Minn. Jan. 23, 1986).  Unlike Whitney, however, there is no allegation of negligent misrepresentation here.  In any event, Woodland simply seeks recovery of "overcharges," amounts in excess of the amounts it agreed to pay, and we see no clear error in the district court's findings on these alleged damages.

Woodland agreed to fully reimburse the city "for all costs incurred by the city including, but not limited to the actual costs of construction of said improvements, engineering fees . . . and any other costs incurred by the city relating to" the development contracts and the installation and financing of the improvements.  No contract provisions obliged the city to prove its costs before obtaining reimbursement.

Woodland argues that it was contractually obligated to pay only "actual costs."  This argument ignores the unambiguous contract language, which is much broader and which governs Woodland's claims.  See City of Virginia v. Northland Office Props. Ltd. P'ship, 465 N.W.2d 424, 427 (Minn. App. 1991) (stating that, if no ambiguity exists, interpretation of contract is question of law), review denied (Minn. Apr. 18, 1991).  Moreover, a plaintiff must show damages caused by the breach to prevail in a breach-of-contract action.  Nguyen v. Control Data Corp., 401 N.W.2d 101, 105 (Minn. App. 1987).   

On Woodland's claim of duplicative charges, various employees of the city testified that there were none.  Woodland argues that the city's evidence to support its charges was not credible documentation or was "conclusory testimony."  But though Woodland found the proffered evidence unsatisfactory, the court was not required to see the evidence in the same light.  The court laboriously reviewed the evidence and testimony and found that the city had supported its charges.

Woodland argues that the multiplier used by the city to recoup the actual costs of employees' time was too high to reflect the cost of the labor.  But this was a question for the accounting experts.  The court thoroughly considered the parties' experts' testimony and gave more weight to the city's expert.  "A district court is given wide latitude in determining whether there is sufficient foundation upon which an expert may state an opinion."  Benson v. N. Gopher Enters., Inc., 455 N.W.2d 444, 446 (Minn. 1990).  Appellate courts defer to the district court's credibility determinations.  Sefkow v. Sefkow, 427 N.W.2d 203, 210 (Minn. 1988).  We see no error in the district court's careful consideration of the strengths and weaknesses of both experts' testimony.

To claim excessive charges, Woodland primarily relies on its position that the city failed to establish that the service was provided or the expense was incurred.  The city addressed each alleged overcharge and supported its charges.  The district court determined that Woodland's claims of excessive charges were speculative, subjective, and not factually substantiated.[8]  Again, we see no clear error in the district court's consideration of the evidence offered by the parties on each claimed overcharge and conclude that Woodland did not meet its burden of proof.

IV.

Woodland argues that "percentage fees, the multiplier, sealcoating and administrative sign fees were all illegal because the city violated the statutory requirement that municipal fees be adopted by ordinance" under Minn. Stat. § 462.353, subd. 4 (2000).

The city argues that Woodland did not properly plead this claim and did not raise it in the district court until after written closing argument, when the city timely objected.  The city urges this court to treat this issue as waived by Woodland.  Alternatively, the city notes that Woodland briefed only two of the five reasons given by the district court to conclude that Woodland cannot prevail under this statute.  Despite the alleged procedural irregularities, the district court considered and decided the issue, and we conclude that the statute does not provide Woodland with relief.  

            Minn. Stat. § 462.353, subd. 4, provides that a city "may prescribe fees sufficient to defray the costs incurred by it in reviewing, investigating, and administering an application."  It further states: "Fees as prescribed shall be by ordinance."  Id.  The "fees  . . . must be fair, reasonable, and proportionate to the actual cost of the service for which the fee is imposed."  2001 Minn. Laws ch. 207, § 11.[9]

The only relevant ordinance in place at the time of the development contracts stated that developers shall pay "all costs" associated with their development projects.  Woodland does not analyze the statute or provide authority to reach its conclusion that this ordinance was inadequate,[10] but it argues that the ordinance did not meet the statutory requirements and the city instead should have adopted ordinances setting fee schedules for its charges.

            Statutory construction is a legal question, which we review de novo.  Brookfield Trade Ctr., 584 N.W.2d at 393.  We need not address the adequacy of the specific content of the ordinance because we conclude that the city's fees satisfied the statute's fair-reasonable-and-proportionate requirement.  Woodland did not show that the city's fees were excessive, duplicative, or unrelated to actual costs.  Therefore, even if the ordinance lacked the required specificity, Woodland nevertheless was not entitled to relief under Minn. Stat. § 462.353, subd. 4, and the district court correctly denied its claim.     

V.

Woodland argues that the district court erroneously awarded the city $450,671.53 for attorney fees and costs.  It argues that the city was not entitled to fees under the contracts.[11] 

Whether a contract is ambiguous and reasonably susceptible to more than one construction is a question of law, which we review de novo.  Blackburn, 366 N.W.2d at 643. 

The contract stated:  "The Developer agrees to reimburse the city for all costs incurred by the city in defense of enforcement of this contract, or any portion thereof, including court costs and reasonable engineering and attorneys' fees."  Here, the city had a covenant with the League of Minnesota Cities through which it and other Minnesota cities self-insure.  Under the city's covenant with the League, the League "will pay on behalf of [the city] all sums which [the city] shall become legally obligated to pay."

Woodland argues that the city did not "incur" legal fees and costs because the city's insurer, not the city, actually paid the claimed fees and costs. The parties' contract, however, does not use the language "actually paid"; it uses the word "incur," and the city's agreement with the League preconditioned payment of the fees on the city's legal obligation to pay the fees. In the context of an attorney-fee award, "fees are incurred when there is a legal obligation to pay them."  Sec. & Exch. Comm'n v. Comserv. Corp., 908 F.2d 1407, 1414 (8th Cir. 1990) (determining employee did not have fee arrangement because employer had undertaken provision and payment of attorney for employee in securities litigation); U.S. v. 122 Acres of Land, 856 F.2d 56, 58 (8thCir. 1988) (construing contingent contract with attorney in which plaintiff was not obligated to pay fees unless plaintiff prevailed in condemnation action).    The Minnesota Supreme Court has defined "incur" as "to become liable for" rather than "to pay for."  Collins v. Farmers Ins. Exch., 271 Minn. 239, 244, 135 N.W.2d 503, 507 (1965).  Thus, Woodland's argument has no support in the contract language or case law.  

Woodland also argues that the attorney fees were not "in defense of the enforcement of the contract" as required by the contracts.  Woodland focuses on "enforcement" and argues that this was not an action brought by the city to enforce performance.  In light of the entire provision, the contract unambiguously covers this litigation in which the city was required to defend its contractual rights.  Therefore, the district court did not err in deciding that Woodland agreed to reimburse the city for its attorney fees.

Affirmed.

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

[1] Woodland's claim of consumer fraud was dismissed, and it did not litigate or appeal its claim under the Minnesota Government Data Practices Act, Minn. Stat. ch. 13.

[2] Woodland generally complains about the district court's use of the city's proposed findings and conclusions, but waived any challenge to the issue:  it did not brief or otherwise cite legal authority addressing the question, and even the wholesale adoption of a party's proposed findings (which did not occur here) is not reversible error per se.  See, e.g., Schoepke v. Alexander Smith & Sons Carpet Co., 290 Minn. 518, 519-20, 187 N.W.2d 133, 135 (1971) (stating assignment of error in appellate brief based on "mere assertion" and unsupported by argument or authority, is waived unless prejudice is obvious on mere inspection); State v. Modern Recycling, Inc., 558 N.W.2d 770, 772 (Minn. App. 1997) (applying Schoepke); Bliss v. Bliss, 493 N.W.2d 583, 590 (Minn. App. 1992) (stating verbatim adoption of proposed findings is not per se error).  Here, there is no indication that the district court abrogated its responsibility to consider and decide the case.  To the contrary, the record reveals the court's focused attention on the myriad claims and arguments throughout a lengthy trial and posttrial proceedings.  It is clear from the transcript that the decision was made only after careful observations and extensive analysis of the law.

[3] The sealcoating is the final layer on the streets in the subdivisions. It is done after all the homes in the development are built to avoid construction damage to the completed street.  To save money, the city bid the sealcoating out as a large project, not separately for each subdivision.    

[4] Apparently, none of the sealcoating for the disputed contracts had been completed at the time of trial.  The record shows that sealcoating was a cost of the development and was adopted as an assessment only after meetings with the city and developers, including Byron Westlund of Woodland, at which Woodland never objected.  In a letter from Lawrence Carlson to the city after the city approved the sealcoating assessment, Woodland stated that it was a cost that would be borne by the homebuyer.

[5] The district court addressed Woodland's sealcoating claims at length. On appeal, its claims are abbreviated and focus on the illegality of assessing in one year for an improvement not to be completed for several years.

[6] Although Woodland alleges that the city "fabricated" time cards for people no longer employed by the city, Woodland does not allege any intent to deceive or any specific acts that could constitute fraud or intentional misrepresentation.

[7] Woodland notes that Minn. Stat. § 462.353, subd. 4(d) now precludes such waiver provisions in developer contracts.  These new provisions became effective August 1, 2004, and, therefore, do not control this case.  See Minn. Stat. § 645.02 (2004).

[8] Woodland argued in the district court and again in its appellate brief that the city actually intended to make a profit by providing more services and billing excessively.  It cites excerpts of council minutes in which a city engineer stated that the city could make money and generate income.  The district court evaluated the minutes in context and as explained by the various city officials at trial and concluded that "[e]very witness testified that there is no profit incentive or encouragement to bill time at the City." 

[9] The parties apparently agree that the quoted language, an amendment to the statute effective January 1, 2002, after the last of the disputed development contracts was executed, should be retroactively applied. See Carlson v. Lilyerd, 449 N.W.2d 185, 190 (Minn. App. 1990), review denied (Minn. Mar. 8, 1990).  Although the parties agree that the fair-reasonable-and-proportionate-fee language should apply retroactively, there is no agreement and no legal basis for applying other statutory language added in 2001 or thereafter and not made effective until after the last development contract was executed.  See 2001 Minn. Laws ch. 207, § 11 (requiring that "municipality shall adopt management and accounting procedures to ensure that fees are maintained and used only for the purpose for which they are collected"); 2004 Minn. Laws ch. 178, § 1 (adding, "Upon request, a municipality must explain the basis of its fee")  (effective August 1, 2004).

[10] Woodland argues that the city's later adoption of specific ordinances covering these items in 2002 (multiplier) and 2003 (fee schedules) establishes that the city should have had these in place earlier.  Later-enacted ordinances do not per se establish a statutory violation.

[11] Woodland does not challenge the amount of fees in its primary brief.  In its reply brief, Woodland suggests that a fee award larger than the primary claim is per se unreasonable.  Although it cites a case that lists nine factors besides a fee's relation to the judgment as relevant to a determination of reasonableness, Woodland makes no mention of the nine factors or citations to the record demonstrating unreasonableness of the award.  In light of Woodland's failure to address this question in its primary brief and its failure to address these factors or to cite the record in support of its claim, we decline to review the issue of reasonableness of the attorney-fee award.  See McIntire v. State, 458 N.W.2d 714, 717 n.2 (Minn. App. 1990) (stating issues not addressed in appellant's primary brief are waived and cannot be revived in reply brief), review denied (Minn. Sept. 28, 1990).