Opinion
No. A03-1218.
Filed April 27, 2004.
Appeal from District Court, Steele County, File No. C202667.
Douglas L. Ruth, Steele County Attorney, (for respondent).
Phillip Brase, (pro se appellant).
Considered and decided by Willis, Presiding Judge; Schumacher, Judge; and Wright, Judge.
This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (2002).
UNPUBLISHED OPINION
This is an appeal from summary judgment in a delinquent-tax proceeding in which appellant Phillip Brase contested the validity of taxes assessed against his realty. The district court granted summary judgment in favor of respondent County of Steele and ordered rule 11 sanctions against Brase. Brase challenges the grant of summary judgment. We affirm.
FACTS
Brase owns approximately 345 acres of land in Steele County, Minnesota. On February 1, 2001, a notice listing delinquent taxes owed for tax year 2000 on Brase's land was filed with the Steele County District Court Administrator.
On April 15, 2002, Brase filed a document titled "Notice of Objection to Taxes and Penalties on Real Property owned by Phillip Brase" with the Steele County District Court Administrator. Brase argued the tax levied against his realty violates the Minnesota Constitution, Article 1, Section 15, prohibiting feudal tenures and violates a land patent created by the United States government. He declares he is a "holder of . . . legal titles, or Land Patents, of the above mentioned parcels" and "does not recognize any superior government to whom any `duty' or `tax' is due." He further states: "Any so-called tax upon this land would have to be voluntary" and he is "not volunteering any tax."
During the litigation process, Brase served interrogatories and requests for admissions on numerous county officials. Citing State v. Elam, the district court disallowed these requests, finding they were not calculated to lead to the discovery of admissible evidence because they did not address the three defenses allowed in a delinquent-tax proceeding. 250 Minn. 274, 289, 84 N.W.2d 227, 232 (1957) (holding three defenses allowed in delinquent-tax proceeding include whether property was exempt from taxes, whether taxes have been paid, and whether there are jurisdictional objections to delinquent-tax proceedings).
On April 23, 2003, the district court granted summary judgment in favor of the county. Citing chapter 279 and Elam, the district court again identified the available defenses in a delinquent-tax proceeding and found Brase had failed to allege any available defense. Furthermore, the court acknowledged Brase's arguments that "taxation violates the Minnesota Constitution, Article 1, Sec. 15, prohibiting feudal lands" and "the United States Government has created a land patent which precludes taxation of the property" and determined neither was valid under existing law.
On April 23, 2003, the court also ordered Brase to appear at a hearing "to show cause why he has not violated Minnesota Rule of Civil Procedure 11." The incorporated memorandum of law provided:
Mr. Brase's arguments before this Court are baseless and without merit. Mr. Brase's arguments are not warranted by existing law and are frivolous. His arguments in no way argue for the extension, modification, or reversal of existing law. Many of Mr. Brase's submissions are without evidentiary support. Many of his allegations are for an improper purpose, such as to harass or unnecessarily delay or needlessly increase the costs of litigation. For these reasons, the Court requests an order to show cause hearing to determine appropriate sanctions.
On May 28, 2003, Brase personally appeared and participated in the hearing. By order filed June 26, 2003, the district court imposed a sanction of $1,000 or 100 hours community service. The court explained the basis for the sanction stating, in part, that (1) Brase's discovery requests lacked legal merit and were submitted solely to annoy, embarrass, and create undue burden and expense on the county; (2) Brase raised no material factual disputes and therefore summary judgment was appropriate; (3) Brase raised issues that were not related to the three defenses allowed in the proceeding and engaged in legal analysis that was unsound and illogical, including counter claims that the county misappropriated tax funds and trespassed on his property; and (4) the court was concerned that Brase would continue to pursue similar claims and that other individuals would attempt similar litigation.
DECISION
1. "On an appeal from summary judgment, we ask two questions: (1) whether there are any genuine issues of material fact and (2) whether the lower courts erred in their application of the law." State by Cooper v. French, 460 N.W.2d 2, 4 (Minn. 1990). No genuine issue of material fact exists "[w]here the record taken as a whole could not lead a rational trier of fact to find for the nonmoving party." DLH, Inc. v. Russ, 566 N.W.2d 60, 69 (Minn. 1997) (quotation omitted).
Under chapter 278, anyone having a right, title, or interest in property may initiate proceedings regarding assessed property taxes on or before April 30 in the year the tax becomes payable. Minn. Stat. § 278.01, subd. 1 (2002). Under this chapter, a person may raise the defenses including unequal assessment, payment, exemption, and illegal levy of tax. Id. "No defense or objection which might have been interposed by [a chapter 278 proceeding] shall be interposed in delinquent-tax proceedings except the defense that the taxes levied have been paid or that the property is exempt from the taxes so levied." Minn. Stat. § 278.13 (2002).
A delinquent-tax proceeding arises under chapter 279 and is commenced by the county auditor filing with the district court a list of properties on which taxes are delinquent. Minn. Stat. § 279.05 (2002). "Any person having any estate, right, title, or interest in . . . any parcel of land embraced in such list as published . . . may file with the court administrator of the district court an answer setting forth a defense or objection to the tax." Minn. Stat. § 279.15 (2002). The Minnesota Supreme Court in Elam discussed the relationship between chapters 278 and 279 and held that section 279.15, because of the language in section 278.13, is repealed insofar as it permits one to assert defenses other than the land is exempt from taxation, the taxes have been paid, or jurisdictional defect. 250 Minn. at 281, 84 N.W.2d at 232.
Here, Brase did not pay 2000 property taxes as they became due in 2001 and his property was, accordingly, included on the delinquent-tax list filed with the district court. This action commenced a delinquent-tax proceeding under chapter 279. Brase filed an answer setting forth his defenses and objections. He argued that the property tax levied violates the Minnesota Constitution, Article 1, Section 15, prohibiting feudal tenures, and that the United States government has created a land patent, which precludes taxation of the property. Brase argues the Elam interpretation of section 279.15 is no longer controlling because the legislature has since revised section 279.15 and did not change the statute's language to comport with the holding in Elam. Therefore, Brase contends, the defenses he raised are allowed by law and the district court erred in granting summary judgment in favor of the county. We disagree.
After the supreme court in Elam interpreted section 278.13 and held that section 279.15 only allowed for three defenses, the legislature reenacted section 279.15, altering the language of the statute only slightly. Compare Minn. Stat. § 279.15 (stating person "may file with the court administrator of the district court an answer setting forth a defense or objection to the tax or penalty") with Minn. Stat. § 279.15 (1957) (stating person "may file with the clerk of the district court an answer, verified as a pleading in a civil action, setting forth his defense or objection to the tax or penalty"). The language of section 278.13 remains the same as that which was interpreted by the Elam court.
In interpreting statutes, courts presume the legislature acts with full knowledge of previous statutes and existing case law. Pecinovsky v. AMCO Ins. Co., 613 N.W.2d 804, 809 (Minn. App. 2000), review denied (Minn. Sept. 26, 2000). Moreover, it is presumed that "[w]hen a court of last resort has construed the language of a law, the legislature in subsequent laws on the same subject matter intends the same construction to be placed upon such language." Minn. Stat. § 645.17(4) (2002).
Thus, under the rules for statutory interpretation, the legislature has presumptively adopted the supreme court's interpretation of section 279.15 and Elam remains controlling precedent. See, e.g., State v. Newman, 538 N.W.2d 476, 478 (Minn. App. 1995) (stating that "after the supreme court ruled that a BB gun could be a firearm under the aggravated robbery and mandatory minimum sentence statutes, the legislature has reenacted the criminal statutes without giving `firearm' another definition and, thus, has presumptively adopted the supreme court's definition"), review denied (Minn. Nov. 30, 1995). Brase did not raise an available defense. The district court did not err in entering summary judgment.
2. In the alternative, Brase appears to argue in his brief to this court, that the defenses he raised before the district court did comport with the defense of exemption "even if the word `exempt' is not mentioned." Property that is exempt from tax is defined under Minn. Stat. § 272.02 (2002). Exemption from property-tax liability is strictly construed and is an exception to the general rule that all property is presumed taxable. Skyline Pres. Found. v. County of Polk, 621 N.W.2d 727, 731 (Minn. 2001). Parties seeking exemptions bear the burden of proof. Id.
Brase was put on notice in the district court's pretrial order dated February 20, 2003, of the three defenses available to him, including the defense of exemption from tax. Brase was also informed that his legal arguments prior to the court's pretrial order did not comport with the available defenses. Brase did not thereafter argue that his property was exempt from tax as defined by section 272.02 or that the two defenses he raised otherwise satisfied the exemption defense. Thus, to the extent Brase may be arguing on appeal that his property is exempt from tax, he failed to raise this argument before the district court and is precluded from doing so on appeal. Thiele v. Stich, 425 N.W.2d 580, 582 (Minn. 1988) (holding this court will generally not consider matters not argued and considered in court below).
3. A district court's decision on a motion for rule 11 sanction is reviewed under an abuse-of-discretion standard. Uselman v. Uselman, 464 N.W.2d 130, 145 (Minn. 1990). Rule 11 allows the district court, on its own initiative, to enter an order "describing the specific conduct that appears to violate Rule 11.02 and directing . . . [a] party to show cause why it has not violated Rule 11.02." Minn. R. Civ. P. 11.03(a)(2). "If, after notice and a reasonable opportunity to respond, the court determines that Rule 11.02 has been violated, the court may, . . . impose an appropriate sanction." Minn. R. Civ. P. 11.03. When imposing sanctions, "the court shall describe the conduct determined to constitute a violation of this rule and explain the basis for the sanction imposed." Minn. R. Civ. P. 11.03(c).
Brase argues the district court's procedure in imposing sanctions was flawed. Brase contends the order to show cause did not contain a description of the specific conduct that violated rule 11, the district court determined sanctions should be imposed prior to providing notice and a reasonable opportunity to respond, and the conduct determined to constitute a violation was not properly described. We disagree.
The record shows the district court's order of April 23 directed Brase to show cause why he had not violated rule 11 and stated the conduct that appeared to violate the rule. An order to show cause hearing was held, Brase appeared, and Brase provided his reasons at the hearing for why the court should find he had not violated the rule. Finally, the district court's June 26 order explained the basis for the sanctions imposed. We conclude the district court properly proceeded under rule 11.03.
Furthermore, the court's memorandum to the April 23 order, which provides, "the Court requests an order to show cause hearing to determine appropriate sanctions," is at most an inadvertent error. The order itself demonstrates the court's clear understanding of the proper procedure, providing Brase should appear at a hearing to show he had not violated rule 11 prior to determining whether sanctions should be imposed. See Bloom v. Hydrotherm, Inc., 499 N.W.2d 842, 845 (Minn. App. 1993) (stating, "[i]n addition to their burden to show error, appellants have the burden on appeal to demonstrate that the trial court error caused them prejudice), review denied (Minn. June 28, 1993).
Brase, citing Uselman, further argues that notice was not provided to him as early as possible and therefore precluded him from the opportunity to correct his conduct. 464 N.W.2d at 143. Contrary to Brase's contention, the district court did warn him in a memorandum of law incorporated with the court's pretrial order of February 20, 2003, which provided:
In this case, Mr. Brase challenges the requirements to pay [property tax]. In proceedings under Minn. Stat. § 279.01 et. seq., there are essentially three defenses. These defenses are: whether the property is exempt from taxes, whether the taxes have been paid, whether there are jurisdictional objections. . . . In reviewing the legal arguments and the affidavit submitted by Mr. Brase, the court concludes that the discovery questions have nothing to do with the proper legal defenses which can be raised in these proceedings. They are not calculated to lead to the discovery of admissible evidence, and they involve irrelevant matters.
Under Radloff v. First Am. Nat. Bank of St. Cloud, N.A. this is an appropriate level of warning. 470 N.W.2d 154, 159 (Minn. App. 1991) (concluding district court's orders provided ample warning of possibility of rule 11 sanctions for failing to dismiss baseless causes of action even though orders did not make explicit warning of sanctions), review denied (Minn. July 24, 1991).
Finally, Brase argues the district court's findings of fact are not supported by the evidence and contain erroneous statements. The court imposed sanctions finding, in part, that Brase acted in bad faith in pursuing the defenses he raised. The existence of bad faith that triggers the statutory sanction is an issue of fact, which is best determined by the district court. State Bank of Young Am. v. Fabel, 530 N.W.2d 858, 863 (Minn. App. 1995) (citing Uselman, 464 N.W.2d at 145), review denied (Minn. June 29, 1995). The record shows Brase was warned that the defenses he was pursuing did not comport with the legal defenses allowed under Elam. The record further shows that after this warning Brase did not change his strategy to comport with the legally viable defenses available to him.