Opinion
No. CX-01-134
Filed July 10, 2001.
Appeal from the District Court, Goodhue County, File No. CX97246.
George L. May, and Kent W. Speight, (for respondents)
Julie A. Doherty, Paul L. Ratelle, (for appellants)
Considered and decided by Amundson, Presiding Judge, Lansing, Judge, and Shumaker, Judge.
This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (2000).
UNPUBLISHED OPINION
On appeal following remand, Eugene and Ione McClelland argue that the district court ignored this court's remand instructions by failing to enter a judgment of foreclosure and improperly denied their claims for interest and attorneys' fees. Because the district court did not abuse its discretion on remand and because the McClellands are not entitled to costs and fees, we affirm. We grant in part John Redmond and Lynda Arendt's motion to dismiss issues from this appeal and deny their motion for attorneys' fees on appeal.
FACTS
Gary Wagner, now deceased, owned ten parcels of farmland. Wagner was in default on a contract for deed for three parcels and in default of mortgages held by a bank on nine parcels. He approached Eugene McClelland in an effort to borrow the money necessary to retain his property. McClelland agreed to provide the money but required Wagner to execute quitclaim deeds that transferred Wagner's interests in the encumbered parcels to McClelland.
Instead of loaning money directly to Wagner, McClelland made various payments on Wagner's behalf. McClelland eventually paid off the creditors who had judgment liens against Wagner's property. He also paid the property taxes due on the parcels. McClelland borrowed money from banks to make some of these payments.
Wagner contacted McClelland to determine the amount that McClelland required Wagner to pay to regain title to his property. McClelland demanded nearly $121,000 and stated that daily interest of $30.94 would accrue. Wagner was unable to pay the principal. A year later, McClelland notified Wagner that he would need to pay $350,000 to regain title. Wagner secured a loan from a bank for $425,000, but McClelland then demanded more than $518,000. Each time McClelland raised the price, he claimed additional costs but provided no accounting to Wagner.
Around this time, John Redmond and Lynda Arendt were named special conservators for Wagner. They sued the McClellands for cancellation of the quitclaim deeds executed by Wagner and damages based on several claims, including usury. The McClellands counterclaimed for trespass and, in the alternative, for foreclosure of any equitable mortgage that the court found to exist.
Following trial, the district court concluded that the quitclaim deeds executed by Wagner were given as security for indebtedness and constituted an equitable mortgage in favor of the McClellands. The court partitioned the property and dismissed all remaining claims with prejudice and on the merits.
The McClellands appealed. This court affirmed the district court's conclusion that the McClellands hold an equitable mortgage, reversed the court's dismissal of respondent's usury claim and partition of the property, and remanded to allow foreclosure by action. Redmond v. McClelland, No. C0-99-1811, 2000 WL 1015774, *4-*7 (Minn.App. July 25, 2000), review denied (Minn. Sept. 27, 2000).
On remand, the parties agreed that various payments had been made by the McClellands on Wagner's behalf and that McClellands were owed approximately $168,500. But the parties disputed whether the McClellands were also entitled to interest paid on loans that funded Wagner's tax and lien payments and to attorneys' fees incurred in this action.
After the remand hearing, the district court issued an order and judgment determining the principal and interest amounts of the equitable mortgage, denying the McClellands' claims for interest and attorneys' fees, and allowing the McClellands to proceed with foreclosure by action. The district court later issued a supplemental judgment to clarify that Wagner's estate is the fee owner of the property, subject to the equitable mortgage.
The McClellands appeal, contending that the district court erred (1) by not entering a judgment of foreclosure of the equitable mortgage and (2) by denying their claims for interest and attorneys' fees. Redmond and Arendt seek attorneys' fees associated with this appeal and also move to dismiss two issues raised by the McClellands in their brief.
DECISION I
The McClellands argue that this court's remand in Redmond I, No. C0-99-1811, 2000 WL 1015774 (Minn.App. July 25, 2000), review denied (Minn. Sept. 27, 2000), directed the district court to order a judgment of foreclosure.
The district court's duty on remand is to execute the mandate of the appellate court strictly according to its terms. Halverson v. Village of Deerwood, 322 N.W.2d 761, 766 (Minn. 1982). But if the appellate court does not specifically direct the district court on how to proceed, the district court has broad discretion to handle the matter so long as its discretion is exercised consistent with the remand order. Duffey v. Duffey, 432 N.W.2d 473, 476 (Minn.App. 1988) (citing John Wright Assocs., Inc. v. City of Red Wing, 256 Minn. 101, 102-3, 97 N.W.2d 432, 434 (1959)).
In Redmond I, this court affirmed the district court's determination that the McClellands hold an equitable mortgage on Wagner's property but reversed the court's sua sponte partition of the property. 2000 WL 1015774, at *4. We remanded "to allow foreclosure by action." Id. The McClellands assert that this language left the district court with no alternative on remand but to order a judgment of foreclosure. We disagree.
The effect of this court's remand to allow foreclosure by action was to reverse the district court's dismissal with prejudice of the McClellands' counterclaim for foreclosure. Because we reversed the district court's sua sponte partition of the property, the McClellands' counterclaim for a foreclosure action on the equitable mortgage remained valid. Thus, Redmond I requires the district court to allow the McClellands to proceed with a foreclosure by action in this or, if necessary, a future lawsuit.
But within this mandate, this court's remand did not require that the district court enter a "judgment of foreclosure," only that on remand the McClellands should be allowed to proceed on an action for foreclosure of the equitable mortgage. Thus, the district court had broad discretion to effectuate the remedy so long as it permitted the proceedings to go forward. See Duffey, 432 N.W.2d at 476. On remand, the district court considered Redmond I and, on the basis of the remand language and because the McClellands were unwilling to adhere to a specific amount due on the mortgage, made a finding of fact on the amount due so that Redmond and Arendt would have an opportunity to pay it. The court then ordered that the McClellands "may proceed with a foreclosure * * * by action," essentially dismissing without prejudice their counterclaim for foreclosure.
We conclude that the district court acted well within its discretion on remand. To enter a judgment of foreclosure on these facts would short-circuit the procedural safeguards that allow Redmond and Arendt to know the amount due and to have an opportunity to pay it. See Minn. Stat. § 581.01-.12 (2000) (setting forth procedure for foreclosure of mortgage by action). As Redmond I required, the district court's decision allows the McClellands to bring an action for foreclosure if Redmond and Arendt default on the amount owed, as determined by the district court, on the equitable mortgage.
In a related argument, the McClellands contend that the Minnesota Farmer-Lender Mediation Act does not preclude the foreclosing of the equitable mortgage. Because the McClellands will not receive a judgment of foreclosure in this action, we do not reach this issue.
II
The McClellands argue that the district court erred by denying their claims for interest paid on bank loans used to obtain the monies paid on Wagner's behalf and for attorneys' fees incurred in this action. The McClellands contend that they are entitled to recover the interest and attorneys' fees as costs under Minnesota's foreclosure statutes.
Minnesota law provides that a judgment on a foreclosure by action "shall be entered, under the direction of the court, adjudging the amount due, with costs and disbursements * * * ." Minn. Stat. § 581.03 (2000). But because the district court did not enter a judgment of foreclosure, the McClellands are not entitled to recover costs under this statute. The McClellands cite no other authority in support of their claims.
III
Redmond and Arendt move to dismiss two issues raised by the McClellands in their brief. In light of our analysis, we deny the motion to dismiss the issue of whether the McClellands were entitled to a judgment of foreclosure. The second part of the dismissal motion is directed to the district court's refusal to release the supersedeas bond the McClellands posted to stay the court's judgment in Redmond I. The district court has now released the bond, and therefore we dismiss this issue as moot. See In re Application of Minnegasco, 565 N.W.2d 706, 710 (Minn. 1997) (stating that if, during appeal, an event occurs that makes decision on the merits unnecessary, appeal will be dismissed as moot).
Redmond and Arendt also request attorneys' fees incurred on appeal. This court has discretion to award attorneys' fees when a party acts in bad faith or asserts an unfounded position to harass or to cause unnecessary delay or litigation costs. Minn. Stat. § 549.211, subds. 2, 3 (2000); Toughill v. Toughill, 609 N.W.2d 634, 642 (Minn.App. 2000) (stating that whether to award attorneys' fees on appeal under Minn. Stat. § 549.211 is discretionary with this court). Although the McClellands' claims were ultimately unsuccessful, we are not persuaded that their appeal was motivated by bad faith or an intent to harass or delay. We therefore decline to award attorneys' fees on appeal.