Jovani Nassar v. U.S. Home Corporation d/b/a Lennar Homes

• Court: Court of Appeals of Minnesota
• Decided: April 27, 2015
• Docket: A14-1108
• Status: Unpublished

Opinion

This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (2014).

STATE OF MINNESOTA IN COURT OF APPEALS A14-1108

Jovani Nassar, et al., Appellants,

vs.

U.S. Home Corporation d/b/a Lennar Homes, Respondent.

Filed April 27, 2015 Affirmed Hooten, Judge

Hennepin County District Court File No. 27-CV-12-21299

David D. Hammargren, Hammargren & Meyer, P.A., Bloomington, Minnesota; and

Paul S. Almen, DeWitt Mackall Crounse & Moore S.C., Minneapolis, Minnesota (for appellants)

Robert H. Torgerson, Stephen E. Schemenauer, Stinson Leonard Street, LLP, Minneapolis, Minnesota (for respondent)

Considered and decided by Stauber, Presiding Judge; Connolly, Judge; and

Hooten, Judge.

UNPUBLISHED OPINION

HOOTEN, Judge

In this attorney-fee dispute, appellants argue that the district court (1) failed to

apply the correct statutory and caselaw standard for determining a fee award; and (2) failed to consider all of the relevant circumstances in assessing the reasonableness of the

attorney fees requested by respondent. We affirm.

FACTS

This case has a long procedural history,1 which is summarized in our previous

decision involving these parties, Nassar v. U.S. Home Corp., No. A13-1137, 2014 WL

621700 (Minn. App. Feb. 18, 2014), review denied (Minn. Apr. 29, 2014). Appellants

Jovani Nassar and Sonia Morales purchased a home from respondent U.S. Home

Corporation d/b/a Lennar Homes, Inc. in 2009 and experienced problems with improper

drainage on the property. Id. at *1. Appellants claimed that, prior to their purchase,

respondent had failed to properly grade the property by installing drainage swales. Id. In

June 2012, the parties entered arbitration to resolve this dispute due to a clause in their

purchase agreement. Id.

The arbitrator ultimately found that respondent had failed to properly grade

appellants’ property with an adequate swale and that a repair plan submitted by

respondent would adequately address the drainage problem. Id. The arbitrator did not

allow appellants to rescind the purchase agreement, but required respondent to pay for

repair of the property in accordance with the repair plan. Id.

1 In addition to their arbitration dispute with respondent, appellants filed a separate suit against their neighbors, alleging various tort claims and a breach-of-contract claim in relation to their property’s drainage problems. After summary judgment and a partially successful appeal that reinstated some of appellants’ claims, a jury found in favor of the neighbors and we affirmed. Nassar v. Chamoun, No. A13-2097 (Minn. App. Sept. 22, 2014), review denied (Minn. Dec. 16, 2014); see also Nassar v. Chamoun, No. A11-0793 (Minn. App. Feb. 13, 2012).

2 However, appellants claimed that the repair plan did not conform to the building

code, and when the arbitrator refused to modify his award, appellants moved the district

court to vacate the arbitration award under Minn. Stat. § 572B.23 (2012). Id. at *1–2.

Appellants essentially claimed that the remedy ordered by the arbitrator was “deeply

flawed,” raising seven different arguments in support of this proposition. The district

court found that some of these arguments “misidentif[ied] or conflate[d] grounds for

vacating an arbitration award” and were repetitious. The district court further noted that

“a number of other arguments . . . [did] not constitute recognized bases to vacate an

arbitration award under Minnesota law.” Addressing appellants’ “statutorily approved

arguments,” the district court ultimately denied the motion to vacate the award,

concluding that there was no prejudicial misconduct by the arbitrator and that the

arbitrator did not exceed his authority under the parties’ purchase agreement.

Appellants appealed to this court, and we affirmed in an unpublished opinion. Id.

at *1. We concluded that (1) the remedy created by the arbitrator was within his

authority, (2) appellants’ claim that the arbitrator denied them the opportunity to respond

to respondent’s proposed repair plan was unsubstantiated by the record, and (3) the

arbitrator did not exceed his authority by denying costs and disbursements to appellants

and ordering the parties to equally share arbitration costs. Id. at *3–5. Subsequently,

respondent filed a motion with this court for appellate attorney fees under Minn. Stat.

§ 572B.25(c) (2014). We denied respondent’s request, noting our disagreement with

respondent’s view that “fees should be awarded as a sanction or that the appeal should be

characterized as frivolous or completely without merit.” Nassar v. U.S. Home Corp., No.

3 A13-1137 (Minn. App. June 19, 2014) (order). At the same time, we also rejected

appellants’ claim that attorney fees could be awarded only if there was a determination

that their claims were frivolous. Id.

After our opinion was filed, respondent moved the district court for attorney fees

in the amount of $39,637.69, which were incurred during the district court litigation prior

to appellants’ appeal. The district court granted the motion in part and awarded

respondent $9,852.13. The district court rejected appellants’ claim that it had to find

their underlying arguments frivolous in order to award attorney fees, and instead applied

the “lodestar” analysis from Green v. BMW of N. Am., LLC, 826 N.W.2d 530 (Minn.

2013). The district court concluded that the hours billed by respondent’s counsel were

reasonable, but only granted 25% of the fees requested because appellants’ litigation

conduct only “caused [respondent] to incur 25% more in attorneys’ fees than it

reasonably should have in responding to this matter.”

Appellants challenge the district court’s attorney-fee award, asking this court to

reverse the attorney-fee award and hold that respondent is not entitled to recover any

attorney fees. Respondent does not separately appeal from the district court’s decision to

award only 25% of its requested attorney fees.

DECISION

Appellants argue that the district court failed to correctly apply the statutory and

caselaw authority for an award of attorney fees, and that its findings as to the

reasonableness of respondent’s asserted fees and the impact of appellants’ litigation

conduct were erroneous. Under the Minnesota Uniform Arbitration Act (MUAA), the

4 district court has discretion to award “attorney fees and other reasonable expenses of

litigation” to the prevailing party in an arbitration challenge. Minn. Stat. § 572B.25(c).2

We review a district court’s award of attorney fees for an abuse of discretion. Green, 826

N.W.2d at 534.

I.

In support of their claim that the district court failed to correctly apply the law for

an award of attorney fees, appellants first argue that the district court erred as a matter of

law by awarding attorney fees against them in the absence of a finding that their claims

were brought in bad faith or were frivolous. Second, appellants claim that the district

court erred by failing to apply caselaw-specific factors when awarding attorney fees

under Minn. Stat. § 572B.25. The district court abuses its discretion if it applies

improper standards when awarding fees. Id. at 534–35.

Appellants initially argue that, based on respondent’s assertion at the district court

level that the MUAA is intended to discourage overly litigious conduct, “it would follow

that an award of attorneys’ fees would be unreasonable unless a motion to vacate is

frivolous or brought in bad faith.” Using federal caselaw, appellants made similar

arguments that were rejected not only by the district court, but also by this court when

respondent previously moved for appellate attorney fees. Here, appellants again provide

no Minnesota precedent supporting this proposition, and the plain language of the statute

2 This provision has not yet been construed in any Minnesota appellate decision, as its application to arbitration challenges became mandatory as of August 1, 2011. See Minn. Stat. § 572B.03(b) (2014). Its predecessor statute only allowed for the taxation of costs and disbursements and did not provide for an award of attorney fees by the district court. Minn. Stat. § 572.21 (2010).

5 does not indicate that the district court’s discretion to award fees is constrained to

frivolous or bad-faith arbitration award challenges. See Minn. Stat. § 572B.25(c) (“[T]he

court may add to a judgment confirming . . . an award, attorney fees and other reasonable

expenses of litigation incurred in a judicial proceeding after the award is made.”

(Emphasis added.)). Adopting appellants’ construction of the statute would also

contravene the presumption that “the legislature intends the entire statute to be effective

and certain,” Minn. Stat. § 645.17(2) (2014), as district courts are already empowered,

when civil actions are litigated in bad faith, to award fees as a sanction under Minn. Stat.

§ 549.211 (2014) and Minn. R. Civ. P. 11.03. We therefore decline appellants’ invitation

to so narrowly construe section 572B.25.

Alternatively, appellants claim that when statutes like section 572B.25 give district

courts discretion in awarding fees, “something other than the lodestar method of review is

required to determine whether an award of attorneys’ fees is warranted.” Appellants

appear to argue that, instead of the lodestar method, district courts should be required to

consider the circumstances set out in State by Head v. Paulson, 290 Minn. 371, 188

N.W.2d 424 (1971), and Jadwin v. Kasal, 318 N.W.2d 844 (Minn. 1982). Appellants

claim that the district court therefore abused its discretion by not considering either the

Paulson or the Jadwin circumstances in this case.

But, the district court did not indicate that it was refusing to consider the

circumstances provided in Paulson and Jadwin. In fact, at a hearing, it noted that it

“intend[ed] to consider all of the relevant factors because that’s what the courts tell us to

do. Whether it’s the Jadwin case or the Green . . . case, the courts urge a fulsome

6 consideration.” In its order, the district court provided that it was following the lodestar

method for awarding attorney fees as provided in Green. The supreme court, in adopting

the lodestar method in Green, explicitly directed district courts to consider “all relevant

circumstances” when determining the reasonable value of legal services, including the six

factors originally set forth in the Paulson decision. Id. (emphasis added) (quoting

Paulson, 290 Minn. at 373, 188 N.W.2d at 426). In considering all relevant

circumstances, district courts are not precluded from also considering the additional

circumstances provided in Jadwin that go beyond those explicitly delineated in Paulson

and Green, such as the taxed party’s ability to pay. See Jadwin, 318 N.W.2d at 848.

Because utilization of the lodestar method under Green includes consideration of all

relevant circumstances, including those set forth in Paulson and Jadwin, the district court

did not abuse its discretion by choosing to apply this standard.

II.

Appellants next argue that the district court improperly applied the lodestar

method by failing to adequately consider the reasonableness of respondent’s requested

attorney fees and the circumstances of the case. The lodestar method requires district

courts to consider the reasonableness of the number of hours billed and the fee rate.

Green, 826 N.W.2d at 536. In addition, district courts “should consider all relevant

circumstances” in setting the amount of recoverable attorney fees, including: (1) the time

and labor required; (2) the nature and difficulty of the responsibility assumed; (3) the

amount involved and the results obtained; (4) the fees customarily charged for similar

legal services; (5) the experience, reputation, and ability of counsel; and (6) the fee

7 arrangement existing between counsel and the client. Id. (quoting Paulson, 290 Minn. at

373, 188 N.W.2d at 426). “The reasonableness of [the] hours expended and the fees

imposed raise questions of fact,” and we reverse findings of fact only if they are clearly

erroneous. City of Maple Grove v. Marketline Constr. Capital, LLC, 802 N.W.2d 809,

819–20 (Minn. App. 2011).

The district court found that in light of the district court’s familiarity with the case

and its review of the billings, the 112.6 hours billed by respondent’s counsel were

reasonable. It did not analyze the hourly rate because appellants did not dispute the

reasonableness of the rate. The district court then proceeded to reduce respondent’s

requested award by 75%. It reasoned that appellants’ conduct in the litigation, while not

frivolous, “unnecessarily complicated the proceedings” by presenting several arguments

that were either repetitive or invalid reasons under MUAA to vacate an arbitration award.

The district court found that this litigation conduct caused respondent to incur 25% more

attorney fees than it otherwise would have and accordingly awarded $9,852.13 to

respondent, about one-quarter of the nearly $40,000 requested.

Appellants first challenge the district court’s failure to assess the reasonableness of

the fee rate. Respondent’s affidavit provided that its attorneys charged around $275 per

hour for roughly 43 hours of associate work, and around $400 per hour for about 69

hours of shareholder work. But, appellants did not dispute the reasonableness of these

rates before the district court. Therefore, the question is not properly before this court.

See Thiele v. Stitch, 425 N.W.2d 580, 582 (Minn. 1988) (stating that, generally, appellate

courts address only those questions presented to and considered by the district court).

8 Further, appellants provide no indication on appeal why the rates should have been

considered unreasonable by the district court. See In re Estate of Rutt, 824 N.W.2d 641,

648 (Minn. App. 2012) (providing that a party who inadequately briefs an argument

forfeits that argument), review denied (Minn. Jan. 29, 2013). Because this record

otherwise indicates the district court’s familiarity with this case, any error by the district

court in foregoing a reasonableness analysis in light of appellants’ apparent concession of

this issue is harmless. See Minn. R. Civ. P. 61 (requiring harmless error to be ignored).

Appellants also argue that the district court failed to provide any analysis of the

reasonableness of the hours expended by respondent. “[W]hen the reasonableness of the

‘hours expended’ component of the fee claim is challenged, the [district] court should

scrutinize it, and either make findings or otherwise concisely explain why it felt the hours

claimed are reasonable or unreasonable.” Anderson v. Hunter, Keith, Marshall & Co.,

417 N.W.2d 619, 630 (Minn. 1988). While perhaps lacking in explicit detail, the district

court made clear that it had reviewed the detailed billings provided by respondent and

found them reasonable in light of its familiarity with the case and knowledge of the work

required for this litigation. We decline to second-guess this determination, as the district

court adjudicated the underlying claims and therefore was in a “much better position”

than an appellate court to assess the reasonableness of those billings. Id. at 629; see also

Jadwin, 318 N.W.2d at 848 (noting the district court’s “superior vantage point for

observing many of the relevant factors”).

Appellants further contend that the district court failed to make any findings

regarding the Paulson factors, including the amount of money involved in the dispute and

9 the results obtained in the litigation. While the district court promised “fulsome

consideration” of relevant circumstances at oral argument, its order did not explicitly set

forth and make findings regarding any of the Paulson or Jadwin factors. But, caselaw

does not dictate that failure to explicitly note and examine every relevant circumstance is

reversible error. We have affirmed attorney-fee awards lacking “specific findings

relating to the award” when the district court has considered the factors and the record

contains support in the form of detailed time records and an explanatory affidavit.

Automated Bldg. Components, Inc. v. New Horizon Homes, Inc., 514 N.W.2d 826, 831

(Minn. App. 1994), review denied (Minn. June 15, 1994); see also Geske v. Marcolina,

624 N.W.2d 813, 817 (Minn. App. 2001) (noting that lack of findings for need-based fee

awards in dissolution proceedings is “not fatal to an award where review of the order

reasonably implies that the district court considered the relevant factors” and was familiar

with the case history (quotation omitted)).

Here, the same district court judge adjudicated the merits of the underlying

arbitration challenge and was provided detailed time records and an explanatory affidavit

by respondent. The district court further conducted an extensive review of the underlying

proceeding in determining the proper fee award, which effectively was an analysis of the

time required and the difficulty of the litigation for respondent, two of the circumstances

noted in both Jadwin and Paulson. See Jadwin, 318 N.W.2d at 848; Paulson, 290 Minn.

at 373, 188 N.W.2d at 426. And, the $9,852.13 in attorney fees awarded by the district

court here is significantly less than the approximately $13,000 of damages at stake—in

stark contrast to a case like Green, in which the attorney-fee award was nearly ten times

10 the amount in dispute. See 826 N.W.2d at 533 (noting that the district court awarded

plaintiff $221,499 in attorney fees after plaintiff received a $25,157 damages judgment).

Appellants finally argue that the district court abused its discretion by finding that

appellants’ litigation conduct caused respondent to incur 25% more attorney fees than it

otherwise would have. Appellants claim that finding is without support in the record,

pointing to the fact that this court decided that their arbitration challenge was not

frivolous or wholly without merit when respondent had earlier requested appellate

attorney fees.

However, our earlier denial of respondent’s request for its attorney fees incurred in

the prior appeal has no bearing on what findings of fact may be made by the district court

in considering the course of district court litigation, as opposed to the course of appellate

litigation that was before this court. Before respondent moved for attorney fees in either

court, the district court had already found that some of appellants’ arguments at the

district court level were repetitive, “misidentif[ied] and conflate[d] grounds for vacating

an arbitration award,” and were not recognized bases to vacate under Minnesota law. In

awarding attorney fees, the district court further analyzed how these arguments

repetitively challenged the arbitrator’s choice of remedy. Moreover, the district court’s

decision to make this finding and then limit its attorney-fee award to those fees that were

incurred by respondent due to appellants’ “unnecessar[y] complicat[ion]” of the

proceedings, after already determining that the number of hours spent by respondent in

litigating the district court action was reasonable, actually reduced appellants’ fee-award

liability to respondents. To the extent there was any error here, it did not prejudice

11 appellants. See Midway Ctr. Assocs. v. Midway Ctr., Inc., 306 Minn. 352, 356, 237

N.W.2d 76, 78 (1975) (“[W]e do not reverse unless there is error causing harm to the

appealing party.” (quotation and emphasis omitted)). Considering the record before us

and the arguments made by appellants, we conclude that this finding is not clearly

erroneous.

Therefore, we conclude that the district court did not abuse its discretion in its

award of attorney fees against appellants.

Affirmed.