T.B.T.G. Foundation, Appellant, vs. Timothy T. Pendleton, Respondent, and Timothy T. Pendleton, Respondent, vs. G. Bradford Merkle, et al., Appellants.

This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480 A. 08, subd. 3 (1998).

 

STATE OF MINNESOTA

IN COURT OF APPEALS

C7-00-615

 

T.B.T.G. Foundation,

Appellant,

 

vs.

 

Timothy T. Pendleton,

Respondent,

 

and

 

Timothy T. Pendleton,

Respondent,

 

vs.

 

G. Bradford Merkle, et al.,

Appellants.

 

Filed November 14, 2000 Affirmed in part and reversed in part Amundson, Judge

 

Winona County District Court

File Nos. C8-97-844, C8-97-987

 

 

Karl W. Sonneman, Sonneman & Sonneman, P.A., 111 Riverfront, Suite 202, Winona, MN  55987 (for appellants)

 

David A. Joerg, David A. Joerg, P.A., 209 St. Paul Street Southwest, P.O. Box 257, Preston, MN  55965 (for respondent)

 

            Considered and decided by Kalitowski, Presiding Judge, Amundson, Judge, and Halbrooks, Judge.

U N P U B L I S H E D   O P I N I O N

AMUNDSON, Judge

Appellant T.B.T.G. Foundation challenges the judgment entered against it, arguing that respondent Pendleton is not entitled to equitable relief because he violated zoning and housing codes and that the district court erred in awarding prejudgment interest.  Appellant Merkl alleges the district court erred in denying his private nuisance claim.  The district court did not err in granting equitable relief.  But we do not find the award of prejudgment interest appropriate under these circumstances.  We affirm in part and reverse in part. 

FACTS

Appellant G. Bradford Merkl and respondent Timothy T. Pendleton met in the early 1980s when they worked together on a variety of construction projects.  In 1990, Merkl conveyed 40 acres of real property to appellant T.B.T.G. Foundation (T.B.T.G).  Merkl is the secretary-treasurer of T.B.T.G. with the authority to act on behalf of the foundation. 

In 1993, with Merkl's permission, Pendleton began constructing a residence on the property.  Merkl lives in a mobile home approximately 300 feet from the construction site.  During construction, neither party acquired construction permits or assurances that the construction complied with zoning ordinances.  In early 1994, Pendleton moved into the partially completed structure ("greenhouse").

            Between October 1993 and December 1995, Pendleton requested information about T.B.T.G and indicated his desire to join the board of directors.  In December 1993, at T.B.T.G.'s sixth annual board meeting, the board of directors created an "Agreement of Understanding" ("agreement") for Pendleton's signature.  The agreement states, in part, that (1) Pendleton has no ownership interest or legal rights in the greenhouse, (2) Pendleton would receive no compensation for his labor, and (3) the building materials, once incorporated into the structure, become the property of T.B.T.G.  Merkl invited Pendleton to this meeting, but he did not attend.

In January 1996, Merkl presented the agreement to Pendleton.  Pendleton refused to sign it because he did not consider it a fair reflection of his association with T.B.T.G.  On May 24, 1996, Merkl brought the document to Pendleton's work site and demanded that Pendleton sign.  Pendleton accompanied Merkl to the office of a notary public and signed the agreement, believing that if he did not, Merkl and T.B.T.G. would have him removed from the greenhouse.

In January 1997, Merkl, on behalf of T.B.T.G., presented Pendleton with "guidelines" and "measures," conditions referred to but not detailed in the original agreement.  These provisions regulated Pendleton's conduct on the land and established penalties for violations.  In May 1997, Merkl asked Pendleton to vacate T.B.T.G.'s land due to a violation of a "guideline."  Pendleton refused.

By July 1997, the parties had filed multiple lawsuits and mutual restraining orders.  Merkl and T.B.T.G. sued Pendleton for trespass, private nuisance, damage to personal property, and failure to comply with the guidelines.  Pendleton's lawsuit requested a mechanic's lien and alleged fraud and misrepresentation, and unjust enrichment.  The mechanic's lien was dismissed by partial summary judgment on June 22, 1998.

The claims were consolidated into one action and heard on August 12 and 13, 1999.  The district court denied most of the claims, but granted Pendleton $35,000 on his unjust enrichment claim against T.B.T.G.  In addition, the district court awarded Pendleton prejudgment interest and granted an equitable lien against the property.  In post-verdict motion orders, the district court ordered Pendleton to pay monthly rent to T.B.T.G. and allowed him to remain on the premises until 45 days after the effective date of any appealed judgment.  The rent paid was to accrue and offset any judgment for Pendleton.  This appeal followed.

D E C I S I O N

I.          Standard of Review

            Findings of fact by the district court "shall not be set aside unless clearly erroneous."  Minn. R. Civ. P. 52.01.  Findings of fact are "clearly erroneous" only when "they are not reasonably supported by the evidence."  Fletcher v. St. Paul Pioneer Press, 589 N.W.2d 96, 102 (Minn. 1999) (citation omitted).  The record is reviewed "in the light most favorable to the judgment of the district court."  Rogers v. Moore, 603 N.W.2d 650, 656 (Minn. 1999) (citation omitted).

II.        Equitable Relief

A.        Unjust Enrichment

Unjust enrichment is an equitable remedy available when a party knowingly receives a benefit that, under the circumstances, would be unjust to retain.  Southtown Plumbing, Inc. v. Har-Ned Lumber Co., 493 N.W.2d 137, 140 (Minn. App. 1992).  The remedy is appropriate when a party receives money or property of another that in "equity and good conscience" should be repaid.  Klass v. Twin City Fed. Sav. & Loan Ass'n, 291 Minn. 68, 71, 190 N.W.2d 493, 494-95 (1971) (quotation omitted).  But one seeking equity must "come into equity with clean hands."  Marso v. Mankato Clinic, Ltd., 278 Minn. 104, 117, 153 N.W.2d 281, 290 (1967) (quotation omitted).  A party may be denied equitable relief if its conduct "has been unconscionable by reason of a bad motive."  Johnson v. Freberg, 178 Minn. 594, 597-98, 228 N.W. 159, 160 (1929) (citations omitted).

The district court awarded Pendleton $35,000, pursuant to the doctrine of unjust enrichment.  The amount of "recovery for unjust enrichment is based upon what the person enriched has received rather than what the opposing party has lost."  Anderson v. DeLisle, 352 N.W.2d 794, 796 (Minn. App. 1984) (citations omitted), review denied (Minn. Nov. 8, 1984).  Ronald Jaastad testified that the improvements made by Pendleton increased the value of the T.B.T.G property by $30,000 to $36,000. 

Merkl and T.B.T.G. argue that Pendleton is barred from seeking equitable relief because, having failed to obtain building or zoning permits, his hands were "unclean."  Pendleton testified at trial that he applied for but was unable to obtain permits because he lacked ownership interest in the property.  Conversely, Merkl, as a T.B.T.G. board of director member, would have been better able to secure the permit, yet did not.  There is no evidence of a bad motive.  Merkl and T.B.T.G. assert that one who builds on the land of another has no right to title to the building or to reimbursement from the owner of the real property.  See Mitchell v. Bridgman, 71 Minn. 360, 361-62 74 N.W. 142, 142 (1898) (defendant mistakenly built on the plaintiff's land and the plaintiff was unaware of defendant's error).  Here, Merkl lives 300 feet from the greenhouse and Pendleton, although perhaps believing he would be invited to join T.G.T.B., never considered himself an owner of the property.  Merkl and T.B.T.G. argue that Pendleton is not entitled to that equitable relief because the greenhouse is incomplete, but they cite no Minnesota law to support this argument.

"Granting equitable relief is within the sound discretion of the trial court.  Only a clear abuse of discretion will result in reversal."  Nadeau v. County of Ramsey, 277 N.W.2d 520, 524 (Minn. 1979).  The district court did not abuse its discretion in awarding equitable relief to Pendleton.

B.        Equitable Lien

An equitable lien is essentially a constructive trust and may be imposed where "there is clear and convincing evidence that such imposition is justified to prevent unjust enrichment."  Fredin v. Farmers State Bank of Mountain Lake, 384 N.W.2d 532, 535 (Minn. App. 1986).  If no security interest exists, an equitable lien is inappropriate.  Trondson v. Janikula, 446 N.W.2d 414, 418 (Minn. App. 1989), aff'd in part, rev'd in part, 458 N.W.2d 679 (Minn. 1990).  Here, the district court ordered an equitable lien after finding that the T.B.T.G. was unjustly enriched by the partial construction of the greenhouse.  Because the lien protects Pendleton's interest, the order is within the district court's discretion.

III.       Nuisance

Nuisance is defined by Minn. Stat. § 561.01 (1998) as

[a]nything which is * * * indecent or offensive to the senses, or an obstruction to the free use of property, so as to interfere with the comfortable enjoyment of life or property.

 

The conduct causing the nuisance harm must be wrongful.  Highview N. Apts. v. Ramsey, 323 N.W.2d 65, 70 (Minn. 1982).  For an interference with the enjoyment of life or property to constitute a nuisance, it must be material and substantial.  Jedneak v. Minneapolis Gen. Elec. Co., 212 Minn. 226, 229, 4 N.W.2d 326, 328 (1942).  A court measures the degree of discomfort by the standards of ordinary people in relation to the area where they reside.  Id.

Merkl argues that the district court erred by denying his nuisance claim.  Pendleton's "wrongful" behavior included bringing a gaggle of geese onto the property, building a pen for the geese, tearing up sod along a driveway, removing a log barrier from a road, demolishing a shed, leaving tire tracks on the lawn, and dumping "trash and debris around the place."  Merkl also argues that the use of the greenhouse without the proper inspections and installation of sewage facilities is wrongful conduct that obstructs the appellant's free and unrestricted use and enjoyment of the property.  Merkl, however, is unable to cite any evidence in the record supporting this assertion. 

While the district court made no specific findings of fact concerning the claim of nuisance, it did decline to award Merkl relief.  Reviewing the conclusion that Merkl did not assert a cognizable nuisance claim is a legal conclusion to be reviewed de novo.  But viewing the testimony and evidence in the light most favorable to Merkl, the facts still do not support a claim for nuisance.  No ordinary person living in a rural area would find Pendleton's conduct a material and substantial interference with the enjoyment of land.  Because the conduct does not reach the level necessary for a finding of nuisance, the district court did not err.

IV.       Prejudgment Interest

An award of prejudgment interest is a question of law reviewed de novo.  S.B. Foot Tanning Co. v. Piotrowski, 554 N.W.2d 413, 420 (Minn. App. 1996), review denied (Minn. Dec. 17, 1996).  "Prejudgment interest is not interest in the traditional sense of the word; ‘it is an element of damages awarded to provide full compensation.'"  Balder v. Haley, 441 N.W.2d 539, 544 (Minn. App. 1989), review denied (Minn. July 27, 1989) (quotation omitted).

The district court awarded prejudgment interest to Pendleton of 5% per annum from July 28, 1997, through December 31, 1998, and 4% since January 1, 1999, pursuant to Minn. Stat. § 549.09 (1998).  T.B.T.G argues that the district court erred in awarding statutory prejudgment interest to Pendleton when he retains the benefit of its use.  But prejudgment interest is inappropriate when a damage amount is uncertain.  Moosbrugger v. McGraw-Edison Co., 284 Minn. 143, 160, 170 N.W.2d 72, 83 (1969) ("The general rule in this state is * * * not to allow interest in a case of an unliquidated claim because a defendant does not know how much he owes until the verdict is reached.").  Here, Merkl could not know the amount of the unjust enrichment claim until after the district court's decision.  Like an uncertain jury verdict, the amount of the unjust enrichment was undetermined until after the district court's order. 

In addition, the dual purpose of an award of prejudgment interest is

(1) to compensate the plaintiff for the loss of use of his money, and, by implication, to deprive the defendant of any gain resulting from the use of money rightfully belonging to the plaintiff; and (2) to promote settlement.

 

Burniece v. Illinois Farmers Ins. Co., 398 N.W.2d 542, 544 (Minn. 1987).  Here, Pendleton remained on the land and was not deprived of the use of his money.  In fact,  he has lived rent-free for six years.  Conversely, T.B.T.G. is denied the benefit of the "gain" to the land until after Pendleton vacates without the need to impose prejudgment interest.  For the same reasons, there is incentive for Merkl and T.B.T.G. to settle regardless of the prejudgment interest award.       

Because the amount of the damage was uncertain and the benefit does not pass until after an appeal is finalized, the district court improperly awarded prejudgment interest and the judgment is reduced by the amount of that interest award.

Affirmed in part and reversed in part.