Kenneth A. Roseland, Law Offices of Richard E. Bosse, Chartered v. Joseph A. Wentzell, Attorney at Law, Richard L. Kusick, and Roseland Acres, LLC, third party v. Eric Brever, Attorney at Law, third party

• Court: Court of Appeals of Minnesota
• Decided: May 18, 2015
• Docket: A14-1699
• Status: Unpublished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This opinion will be unpublished and may not be cited except as provided by Minn.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 A14-1699

Kenneth A. Roseland, et al., Respondents,

Law Offices of Richard E. Bosse, Chartered, Appellant,

vs.

Joseph A. Wentzell, Attorney at Law, et al., defendants,

Richard L. Kusick, et al., Respondents,

and

Roseland Acres, LLC, et al., third party plaintiffs, Respondents,

Eric Brever, Attorney at Law, et al., third party defendants.

Filed May 18, 2015 Reversed and remanded Schellhas, Judge

Pine County District Court File No. 58-CV-12-479 Kenneth A. Roseland, et al., Moose Lake, Minnesota (pro se respondents)

Richard E. Bosse, Law Offices of Richard E. Bosse, Chartered, Henning, Minnesota (for appellant)

Robert L. Meller, Jr., Joseph J.W. Phelps, Best & Flanagan LLP, Minneapolis, Minnesota (for respondents Richard L. Kusick, et al. and Roseland Acres, et al.)

Considered and decided by Hooten, Presiding Judge; Schellhas, Judge; and

Stauber, Judge.

UNPUBLISHED OPINION

SCHELLHAS, Judge

Appellant challenges the district court’s denial of statutory attorney liens. We

reverse and remand.

FACTS

Respondents Kenneth and Diana Roseland own farmland identified as parcels A

through E in Pine County and parcels F and G in Carlton County.1 To secure loans from

First National Bank, Roselands granted First National mortgages on parcels A, B, and G.

In January 2008, First National mailed to Roselands formal notice of their default on the

loans. In March, First National served Roselands with notice of mortgage foreclosure sale

by advertisement of parcels A and B and sued Roselands for judicial foreclosure of parcel

G. First National purchased parcels A and B at a sheriff’s sale on May 22. Regarding

parcel G, the district court entered summary judgment for First National in the judicial

foreclosure action.

1 In April 2009, the appraised value of the farmland was $1.2 million.

2 Joseph Wentzell and Wentzell Law Office P.L.L.C. (individually or collectively,

Wentzell) represented Roselands in the foreclosure proceedings. In April 2009, Wentzell

contacted respondents Richard Kusick, Lauris Valtinson, and James Christian and

proposed their entry in a transaction that would enable Roselands’ redemption of parcels

A, B, and G. Kusick, Valtinson, and Christian retained Eric Brever, of Foster & Brever

P.L.L.C. (individually or collectively, Brever), to negotiate and structure the redemption

transaction. Brever organized respondent Roseland Acres LLC, whose members included

Kusick, Valtinson, and Christian, to enter into the redemption transaction.

On May 5, 2009, Roselands agreed to sell the farmland to Roseland Acres for

$420,472.02. The parties do not dispute that May 22 was the last day of the mortgage-

foreclosure redemption period for parcels A and B. On May 20 and 21, Roseland Acres

deposited $421,000 in escrow with a title company to allow Roselands to redeem parcels

A and B from foreclosure and to satisfy the judgment against parcel G and mortgage debt

on other parcels. On May 21, Roselands conveyed the farmland to Roseland Acres by

warranty deeds and entered into contracts for deed with Roseland Acres to repurchase the

farmland. Roselands agreed to make monthly interest payments of $3,508.33 beginning

on June 1, 2009, and a balloon payment of $568,350 on June 1, 2012. Around October

2010, Roselands stopped making payments.

In August 2011, Roselands retained Richard Bosse, of appellant Law Offices of

Richard E. Bosse Chartered (individually or collectively, Bosse) “to investigate and pre-

suit mediat[e]” a legal malpractice claim against Wentzell. Bosse also represented

Kenneth Roseland in a criminal case that arose out of a confrontation between Kenneth

3 Roseland and Christian in January 2012. The criminal case ended with Kenneth

Roseland’s guilty plea to first-degree damage to property.

In late 2011 or early 2012, Roseland Acres provided Roselands notice of

cancellation of the contracts for deed. In July 2012, after Roselands failed to make the

balloon payment due under the contracts for deed, Roseland Acres notified Roselands

that it would evict them from the farmland unless they remedied their defaults on the

contracts for deed. Soon after, Roselands, represented by Bosse, sued Wentzell, Roseland

Acres, Kusick, Valtinson, and Christian, asserting a variety of claims relating to the

redemption transaction (the lawsuit). Roseland Acres asserted counterclaims, including a

counterclaim for foreclosure of an equitable mortgage on the farmland; Christian asserted

counterclaims against Kenneth Roseland arising out of the January 2012 confrontation;

and the district court allowed Roseland Acres, Kusick, Valtinson, and Christian to

implead Brever as a third-party defendant on claims that included professional

negligence. Bosse represented Roselands throughout the pleading and discovery stages of

the lawsuit. But on November 4, 2013, after conflicts over Bosse’s fee arose and

Roselands refused to sign a fee agreement, Bosse withdrew as Roselands’ attorney of

record in the lawsuit.

On November 22, 2013, Bosse filed with the Pine County Recorder against parcels

A through E notice of claim and intent to hold attorney liens in the amounts of

$164,606.07, $134,480.59, and $16,011.70.2 On November 25, Bosse filed with the

2 The $164,606.07 figure represents Bosse’s calculation of the “reasonable value” of unpaid legal services rendered by Bosse in connection with Roselands’ redemption-

4 Carlton County Recorder against parcels F and G notice of claim and intent to hold

attorney liens in the same amounts. On December 11, Bosse served notice of such claim

and intent on Roselands. On December 20, Bosse filed in the lawsuit notice of claim and

intent to hold attorney liens upon Roselands’ interest in property affected by “this

action,” along with an affidavit of service of notice of such claim and intent on

Roselands. In May 2014, Bosse moved the district court to establish attorney liens in the

same amounts against the farmland.

Meanwhile, the lawsuit continued without Bosse. In early 2014, Wentzell moved

for summary judgment on Roselands’ claims, and Roseland Acres, Kusick, Valtinson,

and Christian moved for summary judgment on Roselands’ claims, for summary

judgment on Roseland Acres’s counterclaims, and for decree of foreclosure on an

equitable mortgage. The district court granted summary judgment to Wentzell, Roseland

Acres, Kusick, Valtinson, and Christian on Roselands’ claims; determined that the

redemption transaction resulted in an equitable mortgage on which Roselands had

defaulted; granted summary judgment to Roseland Acres on its counterclaim for

foreclosure of the equitable mortgage; and awarded a decree of foreclosure of the

equitable mortgage. Roselands appealed the summary judgment in a companion case. See

transaction claims against Roseland Acres, Kusick, Valtinson, and Christian; the $134,480.59 figure represents Bosse’s calculation of the “reasonable value” of unpaid legal services rendered by Bosse in connection with Roselands’ malpractice claims against Wentzell; and the $16,011.70 figure represents Bosse’s calculation of the “reasonable value” of unpaid legal services relating to Bosse’s criminal defense of Kenneth Roseland.

5 Roseland v. Wentzell, ___ N.W.2d ___, ___, No. A14-1254, slip op. at 6 (Minn. App.

May 18, 2015).

In August 2014, the district court denied Bosse’s motion to establish attorney liens

against the farmland and subsequently denied two requests by Bosse for leave to move

for reconsideration. This appeal follows.

DECISION

The attorney lien “traces its origins to common law, but the Minnesota legislature

has long since preempted this field and has substituted statutory procedures.” Dorsey &

Whitney LLP, v. Grossman, 749 N.W.2d 409, 420 (Minn. App. 2008) (quotation

omitted); see also Schroeder, Siegfried, Ryan & Vidas v. Modern Elec. Products, Inc.,

295 N.W.2d 514, 516 (Minn. 1980) (stating that “[a]lthough the attorney’s charging lien

existed at common law and at equity, it is now wholly governed by statute”).

“Interpretation of the attorney-lien statute presents a question of law, which [appellate

courts] review de novo.” Grossman, 749 N.W.2d at 420; see also Effrem v. Effrem, 818

N.W.2d 546, 549 (Minn. App. 2012) (stating that “to the extent that the issue requires an

interpretation of the [attorney-lien] statute, . . . the applicable standard of review is de

novo”).

The attorney-lien statute provides in relevant part:

An attorney has a lien for compensation whether the agreement for compensation is expressed or implied . . . upon the interest of the attorney’s client in any money or property involved in or affected by any action or proceeding in which the attorney may have been employed, from the commencement of the action or proceeding . . . .

6 Minn. Stat. § 481.13, subd. 1(a) (2014).3 “The lien granted under subdivision 1(a), is an

inchoate lien[.] . . . To make the lien choate, an attorney may petition the district court to

summarily establish the lien.” Grossman, 749 N.W.2d at 420 (citing Minn. Stat.

§ 481.13, subd. 1(c)).

On a petition to establish an attorney lien, “the district court must determine

(1) the lienholder; (2) the subject of the lien as defined by the attorney-lien statute; and

(3) the amount due. The resulting judgment is in the nature of a declaratory judgment that

establishes the lien . . . .” Id. at 422 (citation omitted). The attorney-lien statute permits

only summary establishment—not summary enforcement—of an attorney lien. Id.

“[E]stablishment of a lien pursuant to section 481.13, subdivision 1(c), enables the

attorney to pursue any available methods for foreclosing on a security interest if the client

does not satisfy the underlying debt.” Id. at 421.

In this case, the district court denied Bosse’s motion to establish attorney liens,

concluding that the summary-judgment order in the lawsuit “fully severed any and all

claims of [Roselands] to the real estate at issue” and that the court was “without authority

to grant any attorney’s lien claim . . . by Attorney Bosse as the terms of the summary

judgment order effectively transferred any ownership interest of [Roselands] to

Defendant Roseland Acres, LLC.” Bosse argues that the court erred in its conclusions. In

3 We apply the most recent version of the statutes in this opinion because the statutes have not been amended in relevant part. See Interstate Power Co. v. Nobles Cnty. Bd. of Comm’rs, 617 N.W.2d 566, 575 (Minn. 2000) (stating that, generally, “appellate courts apply the law as it exists at the time they rule on a case”).

7 consideration of the court’s unchallenged determination that the redemption transaction

resulted in an equitable mortgage, see Roseland, slip op. at 6−7, we agree.

“If an arrangement is an equitable mortgage, the mortgagor . . . has title to the

property, has a right to redeem the property after foreclosure, and has a right to the

proceeds of the sale that exceed the amount of indebtedness.” United Prairie Bank-

Mountain Lake v. Haugen Nutrition & Equip., LLC, 782 N.W.2d 263, 268 n.3 (Minn.

App. 2010), rev’d in part on other grounds, 813 N.W.2d 49 (Minn. 2012). If the

mortgagor does not redeem the property during the redemption period, the mortgagor’s

interest in the property terminates and each of the mortgagor’s creditors—beginning with

the most senior creditor and descending in order of priority—has seven days to redeem

the property. Minn. Stat. §§ 580.12, .24(a) (2014).

Here, the district court determined that the redemption transaction resulted in an

equitable mortgage against the farmland and that Roselands had defaulted on the

equitable mortgage. Accordingly, the court granted summary judgment to Roseland

Acres on its counterclaim for foreclosure of the equitable mortgage and awarded a decree

of foreclosure. The Carlton County Sheriff sold parcels F and G to Roseland Acres at

public auction on December 16, 2014, and the Pine County Sheriff sold parcels A though

E to Roseland Acres at public auction on December 18, 2014. Until Roselands’ 12-month

redemption periods expire, Roselands continue to have title to the farmland, a right to

redeem the farmland, and a right to any proceeds of the sheriff’s sales of the farmland

exceeding the amount of their indebtedness to Roseland Acres. Indeed, the court

acknowledged Roselands’ 12-month redemption rights in its summary-judgment order.

8 Because Roselands have an interest in the farmland that survived summary

judgment in the lawsuit, the district court erred by concluding that such judgment “fully

severed any and all claims” of Roselands to the farmland and that the judgment

“effectively transferred [to Roseland Acres] any ownership interest” of Roselands in the

farmland. Nevertheless, if Bosse did not satisfy the requirements of the attorney-lien

statute, this court may uphold the district court’s denial of Bosse’s motion to establish

attorney liens against the farmland. Cf. Schweich v. Ziegler, Inc., 463 N.W.2d 722, 728

(Minn. 1990) (stating that “[appellate courts] will not reverse a correct decision simply

because it is founded on incorrect reasons”). Those requirements are that (1) the farmland

is “property involved in or affected by” the lawsuit; (2) Roselands and Bosse had an

expressed or implied agreement for compensation; and (3) Bosse cleared various

procedural hurdles discussed in greater detail below. See Minn. Stat. § 481.13 (2014)

(setting forth requirements to perfect attorney lien). We discuss these requirements in

turn.

First, in the lawsuit, Roselands attacked the validity of the redemption transaction

involving parcels A through G. The farmland therefore is “property involved in or

affected by” the lawsuit. See Minn. Stat. § 481.13, subd. 1(a)(2).

Second, the record contains evidence of Roselands’ agreement to pay Bosse for

legal services rendered in connection with the lawsuit, despite their refusal to sign a fee

agreement. An inchoate lien for compensation therefore attached to Roselands’ interest in

the farmland upon the commencement of the lawsuit. See Minn. Stat. § 481.13, subd. 1(a)

9 (providing that “[a]n attorney has a lien for compensation whether the agreement for

compensation is expressed or implied”).

Third, within three weeks of withdrawing as Roselands’ attorney of record in the

lawsuit, Bosse filed notice of claim and intent to hold attorney liens against the farmland

with the relevant county recorders. Fewer than 20 days later, Bosse served notice of such

claim and intent on Roselands. And about six months after filing notice of claim and

intent with the county recorders, Bosse moved to establish attorney liens against the

farmland. Bosse therefore met the procedural demands of the attorney-lien statute. See

Minn. Stat. § 481.13, subds. 2–3 (providing that, to perfect attorney lien on client’s

interest in real property, (1) “a notice of intention to claim a lien on the property must be

filed in the office of the county recorder” no more than 120 days after the last item of

claim; (2) the lien “claimant must prepare and deliver a written notice of the filing

personally or by certified mail to the owner of the real property” within 30 days of the

filing; and (3) the lienholder must “assert[] a lien within one year after the filing”).

Bosse satisfied every requirement of the attorney-lien statute. As a result, Bosse is

entitled to an attorney lien on Roselands’ interest in the farmland in an amount that

represents the reasonable value of unpaid legal services rendered by Bosse in connection

with the lawsuit.4 See Crolley v. O’Hare Int’l Bank, 346 N.W.2d 156, 159 (Minn. 1984)

4 Bosse conceded before the district court, and concedes on appeal, that any attorney lien is subordinate to Roseland Acres’s equitable mortgage. We agree. See Somsen, Mueller, Lowther & Franta, PA v. Estates of Olsen, 790 N.W.2d 194, 197 (Minn. App. 2010) (concluding that mortgage had priority over attorney lien where “mortgage was filed and registered several years before the law firm’s attorney’s lien existed”). The documents effecting the redemption transaction were recorded more than three years before

10 (stating that “the attorney’s charging lien . . . applies only to an attorney’s charges for

services in connection with the particular action or proceeding involved and not to a

client’s general account” (quotation omitted)); Thomas A. Foster & Assocs., LTD v.

Paulson, 699 N.W.2d 1, 6 (Minn. App. 2005) (stating that, absent retainer agreement,

“the amount of the lien is determined by the reasonable value of the services rendered”).

On remand, the district court must determine the reasonable value of Bosse’s legal

services and enter “judgment . . . in the nature of a declaratory judgment that establishes

the [attorney] lien, as defined by the district court with regard to the lienholder, the

subject, and the amount.” See Grossman, 749 N.W.2d at 422 (stating that, “when a lien

claimant petitions the district court under section 481.13, subdivision 1(c), the district

court must determine . . . the amount due”); see also Paulson, 699 N.W.2d at 4 (stating

that “the reasonable value of attorney fees is a question of fact”). The district court also

must address whether Bosse’s attorney lien should include the reasonable value of unpaid

legal services provided by Bosse in connection with Roselands’ malpractice claims

against Wentzell or the reasonable value of unpaid legal services related to Bosse’s

criminal defense of Kenneth Roseland. See Crolley, 346 N.W.2d at 157−59 (reversing

part of district court’s order establishing attorney liens for legal services rendered in past

proceedings that were related to, but separate from, present action).

Reversed and remanded.

commencement of the lawsuit and more than four years before Bosse filed and served notice of claim and intent to hold attorney liens.