Bemidji Township v. City of Bemidji, Northern Township ( 2015 )

This opinion will be unpublished and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
A14-0637, A14-1215, A14-1525
Bemidji Township,
Appellant,
vs.
City of Bemidji,
Respondent,
Northern Township,
Respondent.
Filed May 18, 2015
Affirmed
Hooten, Judge
Beltrami County District Court
File No. 04-CV-12-2601
John J. Steffenhagen, Hellmuth & Johnson, PLLC, Edina, Minnesota (for appellant)
James J. Thomson, Kennedy & Graven, Chartered, Minneapolis, Minnesota (for
respondent City of Bemidji)
Jason J. Kuboushek, Iverson Reuvers Condon, Bloomington, Minnesota (for respondent
Northern Township)
Considered and decided by Stauber, Presiding Judge; Cleary, Chief Judge; and
Hooten, Judge.
UNPUBLISHED OPINION
HOOTEN, Judge
Appellant-township and respondent-city entered into a mediated settlement
agreement which, as the result of a binding arbitration proceeding, was determined to be
in full force and effect as to essentially all of its provisions and binding upon the parties.
In these consolidated appeals, appellant asserts that the district court erred by:
(1) confirming the arbitration award on terms other than those in the award;
(2) dismissing its pending district court action against respondents; (3) denying its motion
to amend its complaint; (4) dissolving a temporary injunction in its favor; (5) enforcing
the resulting judgment and ordering injunctive relief for respondent-city; and (6) staying
its post-appeal arbitration demand to determine whether appellant’s claims were barred
by the mediated settlement agreement. We affirm.
FACTS
The genesis of these proceedings was a number of agreements entered into by
appellant Bemidji Township (the Township), respondent City of Bemidji (the City), and
respondent Northern Township pursuant to Minn. Stat. § 414.0325, subd. 6 (2014): a
November 2004 orderly annexation agreement amended in March 2011 (OAA), and a
January 2005 joint powers agreement (JPA) revised in December 2007 (R-JPA). The
OAA provided that the City would annex certain properties of both townships and also
detach a few City properties to Bemidji Township. As provided for in the OAA, the JPA
and R-JPA created the Greater Bemidji Area Joint Planning Board and empowered the
board to handle zoning and land use issues for all three entities.
2
This consolidated appeal by the Township is from three separate orders and
judgments issued by the district court arising out of an action filed by the Township
against the City in August 2012. In its complaint, the Township alleged that the City had
repeatedly breached numerous provisions of the OAA by, in part, improperly annexing
properties and failing to provide proper municipal utility services to annexed properties.
The Township sought $50,000 in damages and a declaratory judgment that the OAA was
unenforceable due to the alleged breaches.
A mediated settlement agreement resolving the suit was approved by the
governing bodies of both parties and took effect on June 11, 2013. Among other things,
the settlement agreement provided that the OAA and R-JPA would “be amended to
release [the] Township as a party,” with the caveat that such amendment would be
“[s]ubject to the approvals noted below.” The settlement agreement further stated that
“[a]ny approvals needed by Northern Township to effectuate this Mediated Settlement
Agreement must be obtained in order for this agreement to be effectuated.” Finally, the
mediated settlement agreement provided that “[a]ny dispute(s) and/or questions of any
kind or nature regarding this Settlement shall be decided by Binding Arbitration.”
However, the board of Northern Township, which at this point was not a party to
the breach-of-contract action or the mediated settlement agreement, voted against
approving the agreement. The City and the Township disagreed as to what effect
Northern Township’s lack of approval had on the validity of the settlement agreement.
To resolve this dispute, the City demanded arbitration on July 31, 2013, in accordance
with the settlement agreement’s arbitration clause. During the arbitration process, both
3
parties also moved the district court for temporary injunctions in the still-pending district
court action.
On October 24, 2013, the arbitrator issued his award. The arbitrator found that
“[a]ny provision of the [settlement] [a]greement that involves Northern under the [OAA]
and [the R-JPA] must have Northern’s approval to be enforced.” He then found that the
settlement term releasing the Township from the OAA and JPA required Northern
Township’s approval, while the other terms of the settlement agreement between the
Township and the City did not. He therefore concluded that the settlement agreement
was enforceable and binding upon the Township and the City, but the provision releasing
the Township from the OAA and the JPA could not take effect until and unless Northern
Township approved. Neither the Township nor the City sought modification of the
arbitration award.
The City moved to confirm the arbitration award on November 14, shortly after
the district court heard oral argument on the pending cross-motions for injunctive relief
on October 30. The district court ruled on the injunction motions on December 3,
granting injunctive relief for the Township and enjoining the City from taking any action
that affected the planning and zoning authority of the Township. The district court also
sua sponte joined Northern Township as an indispensable party to the action. After its
joinder, Northern Township filed a notice of removal and a new district court judge was
assigned to the case.
While the City’s motion to confirm the arbitration award was still pending before
the newly-assigned district court judge, the Township moved to amend its complaint.
4
The proposed amended complaint added Northern Township and the joint planning board
as parties and now sought declaratory relief and damages for breach of the OAA and the
R-JPA.
In a March 20, 2014 order and accompanying judgment, the district court
concluded that the mediated settlement agreement had fully and finally resolved the
lawsuit due to the arbitrator’s determination that the settlement agreement was in full
force and effect, save for the provision releasing the Township from the OAA and R-JPA.
Accordingly, the district court (1) granted the City’s motion to confirm the arbitration
award; (2) denied the Township’s motion to amend its complaint; (3) vacated the
temporary injunction; and (4) dismissed with prejudice all claims in the case. The
Township appealed from this order and judgment on April 18.
On May 1, the Township demanded further arbitration with the City, seeking a
determination as to whether the prior arbitration award adjudicated the merits of the
underlying court action and barred its assertion of other claims. On May 14, the City
moved the district court to stay this arbitration demand. The City also moved for an
order enforcing the March 20 order and judgment, claiming that the Township was
refusing to comply with the court order and participate in the joint planning board.
In a June 2, 2014 order, the district court granted the City’s motion to enforce the
district court’s prior order and judgment and ordered the Township to act in compliance
with the OAA and the R-JPA. The district court also granted the City’s motion to stay
arbitration, but noted that this stay was partially dependent on the outcome of the
5
Township’s second lawsuit against the same defendants in a separate proceeding.1 The
district court then awarded costs, disbursements, and attorney fees to the City and
Northern Township. The Township appealed from this order and also appealed from a
later order and judgment confirming the amount of costs, disbursements, and attorney
fees awarded to the City and Northern Township. This court consolidated these two
appeals with the Township’s appeal from the March 20 order and judgment.
DECISION
The Township raises numerous challenges to the district court’s decisions in this
case. While it strenuously argues that the district court made a number of procedural
errors requiring us to reverse and thus revive this litigation, absent from those arguments
is the acknowledgement that the district court’s rulings were premised on a mediated
settlement agreement between the Township and the City and a binding arbitration award
interpreting the mediated settlement. “Settlement of disputes without litigation is highly
favored, and such settlements will not be lightly set aside by the courts.” Johnson v. St.
Paul Ins. Co., 305 N.W.2d 571, 573 (Minn. 1981) (citation omitted). Absent fraud,
misrepresentation, or mutual mistake of fact, we uphold settlements between equally-
situated parties, even if “a judicial decision should afterwards be made showing that these
rights were different from what they supposed them to be, or showing that one of them
1
On March 24, 2014, the Township filed a second lawsuit against the City, Northern
Township, and the joint planning board, again alleging violations of the OAA and R-JPA.
On October 28, 2014, the district court dismissed nearly all of the claims brought by the
Township on the basis that such claims were barred by res judicata and collateral
estoppel, or were resolved by the mediated settlement agreement. This order has been
separately appealed and, after we denied consolidation with this case, is currently
pending before this court.
6
had no rights at all, and so nothing to forego.” N. States Power Co. v. City of Sunfish
Lake, 659 N.W.2d 271, 274 (Minn. App. 2003) (quoting Johnson, 305 N.W.2d at 574),
review denied (Minn. June 25, 2003). Likewise, arbitration is also a proceeding favored
in law. Seagate Tech., LLC v. W. Digital Corp., 834 N.W.2d 555, 559 (Minn. App.
2013), aff’d, 854 N.W.2d 750 (Minn. 2014). Thus, we evaluate the Township’s
arguments while remaining cognizant of the “strong public policy interest in the finality
of settlements.” Johnson, 305 N.W.2d at 574.
I.
The Township makes a number of challenges to the district court’s March 20,
2014 order and judgment that resulted in the dismissal of this action. We address each of
them in turn.
A. Confirmation of the Arbitration Award
The district court confirmed the arbitration award in its March 20 order. It
correctly noted that it was “compel[led]” to confirm the arbitration award under the
Minnesota Uniform Arbitration Act (MUAA), as the statute provides that the district
court “shall” confirm an award unless the award is otherwise modified, corrected, or
vacated. See Minn. Stat. § 572B.22 (2014). The Township made no motion to modify,
correct, or vacate the award within the statutory time limits. See Minn. Stat.
§§ 572B.20(b), .23(b), .24(a) (2014) (providing deadlines for moving the arbitrator or
district court for modification, correction, or vacation of an award).
The Township now argues that the district court’s March 20 order, along with that
order’s later enforcement in the June 2 order, “substantially expanded the breadth and
7
terms of the [a]rbitration [award]” in violation of the MUAA. The Township points to
language in the MUAA providing that when the district court grants an order confirming
an arbitration award, “the court shall enter a judgment in conformity therewith.” Minn.
Stat. § 572B.25(a) (2014). The Township claims that the district court erred by
interpreting and then confirming the award as opposed to returning the award to the
arbitrator for modification or correction, citing Menahga Educ. Ass’n v. Menahga Indep.
Sch. Dist. No. 821, 568 N.W.2d 863, 868–69 (Minn. App. 1997), review denied (Minn.
Nov. 18, 1997). Specifically, the Township contends that the district court’s legal
conclusion that the Township continued to be a member of the joint planning board and
was bound by the OAA and R-JPA went beyond the scope of the arbitration award that
the district court was confirming.
The Township is correct that the arbitration award does not specifically state that
the Township remains bound by the OAA and the R-JPA. But, in the award, the
arbitrator concludes that the settlement agreement is enforceable and that the Township
cannot be released from the OAA and the R-JPA without the approval of Northern
Township. That is, the arbitrator deemed the provision in the settlement agreement
releasing the Township to have no legal effect without Northern Township’s approval,
and therefore there is nothing in the settlement agreement that affirmatively releases the
Township from the OAA or the R-JPA. Under these circumstances, there was nothing
for the district court to interpret after the arbitrator concluded that this provision was
ineffectual until Northern Township gave its approval. The district court’s conclusion
that the Township therefore remains bound by the agreements is wholly consistent with
8
the arbitration award’s construction of the settlement agreement. Accordingly, the
district court’s March 20 order requiring the Township to obey the OAA and R-JPA is
within the scope of the award.
B. Dismissal of the Action
In its motion to confirm the arbitration award, the City requested dismissal of the
action in accordance with the award and the settlement agreement. The district court
agreed, finding that the Township was “obligated to dismiss the [c]omplaint” pursuant to
the settlement agreement and the arbitration award’s direction that the parties carry out
the terms of that agreement. The district court thereby dismissed all claims in the case
with prejudice. “We review a district court’s dismissal of a claim with prejudice under an
abuse of discretion standard.” Minn. Humane Soc’y v. Minn. Federated Humane
Societies, 611 N.W.2d 587, 590 (Minn. App. 2000).
The Township claims that the district court erred by dismissing the action after
confirming the arbitration award, and it primarily argues that dismissal is not required by
the terms of the arbitration award. This argument misconstrues both the arbitration award
and the settlement agreement. The settlement agreement provided:
Each party’s attorney shall promptly file with all courts and
agencies having jurisdiction, an executed copy of this
[a]greement or otherwise cause all claims, charges and
matters to be dismissed or withdrawn with prejudice, and
each party shall execute and deliver in addition all other
forms of separate written dismissal and withdrawal as may be
required.
And, in the following paragraph, each party agreed to a complete release of “any and all
claims and causes of action of any kind or nature whatsoever . . . which may exist or
9
might be claimed to exist, at, prior to or subsequent to the date hereof by reason of any
matter or thing arising out of or in connection with the claims in this mediation, and any
matter relating thereto.” Consistent with these provisions in the agreement, the
arbitration award stated that “[b]oth the City and the Township are directed to cooperate
and as soon as practica[ble] to carry out all terms of the May 31, 2013 [settlement
agreement].” By the clear terms of these documents, the arbitration award contemplated
dismissal of the action in accordance with the settlement agreement.
The Township also claims that the City waived any right to dismiss the action by
continuing to seek a temporary injunction after the arbitration award was issued.
“Minnesota favors arbitration as a means of conflict resolution, but the right to arbitration
may be waived.” Fedie v. Mid-Century Ins. Co., 631 N.W.2d 815, 819 (Minn. App.
2001), review denied (Minn. Oct. 16, 2001). Whether a party has waived its contractual
right to arbitration requires evidence that the party intended to relinquish this right and is
generally a question of fact subject to clear-error review. Id. Caselaw provides that a
party who chooses to commence and litigate a lawsuit waives the right to later demand
arbitration on the litigated issues. See, e.g., Anderson v. Twin City Rapid Transit Co.,
250 Minn. 167, 178–80, 84 N.W.2d 593, 601–02 (1957).
But, the record here provides no indication that the City waived arbitration. The
City demanded arbitration, both parties participated in arbitration, and a resulting
arbitration award was issued. The parties’ cross-motions for injunctive relief were filed
while arbitration was still pending, and the MUAA explicitly provides that a motion
before the district court for provisional remedies that cannot be provided by the arbitrator
10
“does not waive any right of arbitration.” Minn. Stat. § 572B.08(c) (2014). Given the
unique procedural history of this case, it would be illogical for us to conclude that the
City waived its right to enforce an arbitration award via action taken after the arbitration
process had already run its course.
The Township also argues that, because of Northern Township’s failure to approve
its release from the OAA and the R-JPA, it received “incomplete . . . consideration” for
the settlement and the agreement was therefore unenforceable. However, the plain
language of the agreement provides that the release of the Township from the OAA and
R-JPA was “[s]ubject to the approvals” of the City, the Township, and Northern
Township. The issue of whether Northern Township’s failure to approve the Township’s
release from the OAA and R-JPA would invalidate that provision or any other provision
of the agreement for lack of “complete consideration” was an issue for the arbitrator.
Because the Township failed to timely challenge the merits of the arbitration award, its
arguments are unpersuasive to the extent that it is seeking to relitigate the arbitrator’s
ruling that this provision was valid and enforceable as written. Even if this provision
were unenforceable because of a lack of complete consideration, the severance clause in
the agreement provides that, in such case, such result would not affect or impair the
remaining provisions of the agreement.
The district court did not err by confirming the arbitration award and enforcing the
award by its dismissal of the Township’s action against the City and Northern Township.
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C. Denial of the Motion to Amend
The Township argues that the district court erred by refusing to allow it to amend
its complaint after the district court granted its motion for a temporary injunction and
joined Northern Township as a party. Because the City served its answer well before the
Township’s motion to amend and did not consent to the amended complaint, the
Township could only amend its complaint with leave of the court. See Minn. R. Civ. P.
15.01. “The district court should liberally grant motions to amend when justice requires
and doing so will not result in prejudice to the adverse party.” Ag Servs. of Am., Inc. v.
Schroeder, 693 N.W.2d 227, 235 (Minn. App. 2005). We will not reverse a district
court’s denial of a motion to amend “absent a clear abuse of discretion.” Johns v.
Harborage I, Ltd., 664 N.W.2d 291, 295 (Minn. 2003).
The Township first claims that the district court failed to give a sufficient reason
explaining its denial of the motion to amend. The district court briefly explained its
rationale in refusing to allow the amendment in the memorandum accompanying its
March 20 order:
Instead of dismissing its complaint as ordered by the
[a]rbitrator and requested by the City, the Township has
doubled down by attempting to amend the [c]omplaint.
Because I find that the Township was obligated to dismiss the
[c]omplaint as of June 11, 2013, it follows that I cannot
revive a case the parties agreed to dismiss by granting the
Township’s motion to amend the [c]omplaint.
Thus, the district court gave a reason for its refusal to allow the amendment: the district
court would not allow the amendment of a complaint that the parties were obligated to
dismiss under the settlement agreement. The federal case cited by the Township, Foman
12
v. Davis, specifically provides that futility of amendment, as well as bad faith and undue
prejudice to the opposing party, are reasons to disallow amendment under the federal
analogue to rule 15. See 371 U.S. 178, 182, 83 S. Ct. 227, 230 (1962). Minnesota
caselaw similarly provides that amendment of a complaint can be denied when it “would
serve no legal purpose” or would prejudice the opposing party. Lumbermen’s
Underwriting Alliance v. Tifco, Inc., 465 N.W.2d 580, 584 (Minn. App. 1991), review
denied (Minn. Apr. 1, 1991). The parties’ settlement agreement required the dismissal of
all claims in the instant action, and moreover contained a complete, mutual release from
all asserted and unasserted claims. It would defy logic, and the settlement agreement, to
have allowed the Township to amend its complaint to add claims when it had already
agreed to dismissal of the suit.
The Township next argues that the denial of its motion to amend is
“fundamentally irreconcilable” with the district court’s earlier decision to add Northern
Township as an indispensable party. “An indispensable party is one without whom the
action could not proceed in equity and good conscience.” Murray v. Harvey Hansen–
Lake Nokomis, 360 N.W.2d 658, 661 (Minn. App. 1985); see Minn. R. Civ. P. 19.01.
The first judge assigned to this case added Northern Township when it awarded a
temporary injunction in favor of the Township before any of the underlying issues raised
by the Township had been resolved by the district court. But, once the district court
confirmed the arbitration award, which had declared the settlement agreement to be
enforceable, the circumstances had changed. What initially involved unresolved claims
by the Township arising out of its settlement agreement with the City became a final
13
resolution of those claims upon the district court’s confirmation of the arbitration award.
And, since the settlement agreement required the Township to dismiss the action in
district court, it necessarily required that the action also be dismissed against Northern
Township as well.
The Township’s remaining arguments are unpersuasive. It argues that the denial
of its motion to amend prejudiced its separate lawsuit by facilitating later res judicata and
collateral estoppel defenses. However, “[a] judgment based on a settlement agreement is
a final judgment on the merits . . . with respect to those issues and claims actually
settled.” Goldberger v. Kaplan, Strangis & Kaplan, P.A., 534 N.W.2d 734, 736 n.1
(Minn. App. 1995), review denied (Minn. Sept. 28, 1995). The Township chose to settle
this lawsuit—it follows that it should then have to bear any preclusive consequences.
The Township also claims that the district court’s denial of its motion to amend led to the
injunction being dissolved for a lack of remaining claims. But, the Township agreed to
settle and dismiss their claims and, as explained below, this necessarily resulted in
dissolution of the temporary injunction.
D. Dissolving the Temporary Injunction
The Township next argues that the district court abused its discretion by sua
sponte dissolving the temporary injunction when the district court dismissed the action.
In its March 20 order, the district court vacated the temporary injunction originally
granted by the first judge as a “necessary corollary” to its dismissal of the action,
reasoning that the injunction would “disappear[]” as a matter of course with the lawsuit’s
dismissal and would further be “inconsistent” with the arbitration award.
14
“A temporary injunction is an extraordinary remedy,” and “[i]ts purpose is to
preserve the status quo until adjudication of the case on its merits.” Haley v. Forcelle,
669 N.W.2d 48, 55 (Minn. App. 2003) (quotations omitted), review denied (Minn. Nov.
25, 2003). “The grant of a temporary injunction does not establish the law of the case or
constitute an adjudication on the merits.” Id. “[C]ourts have the inherent power to
amend, modify, or vacate an injunction where the circumstances have changed and it is
just and equitable to do so.” Channel 10, Inc. v. Indep. Sch. Dist. No. 709, St. Louis
Cnty., 298 Minn. 306, 327–28, 215 N.W.2d 814, 829 (1974). We review the district
court’s ruling for an abuse of discretion. See Krueger v. Wash. Fed. Sav. Bank of
Montevideo, 406 N.W.2d 543, 546 (Minn. App. 1987).
The Township’s various arguments regarding the district court’s dissolution of the
temporary injunction must fail in light of the fact that the district court was dismissing the
lawsuit, with prejudice, at the behest of the parties’ mediated settlement agreement. The
temporary injunction could not continue operating after the dismissal with prejudice of
the underlying suit. See Arnoldy v. Nw. State Bank, 142 Minn. 449, 451, 172 N.W. 699,
699 (1919) (“Necessarily, the injunction would fall when final judgment was entered.”).
Analogous federal law provides that a temporary injunction necessarily dissolves when
the case is dismissed and final judgment is entered. See U.S. Philips Corp. v. KBC Bank
N.V., 590 F.3d 1091, 1093 (9th Cir. 2010) (collecting cases); 11A Charles Alan Wright,
Arthur R. Miller & Mary Kay Kane, Federal Practice & Procedure § 2947 (3d ed. 2013)
(“A preliminary injunction remains in effect until a final judgment is rendered or the
complaint is dismissed . . . .”). We conclude that the district court did not abuse its
15
discretion by dissolving the temporary injunction when it dismissed the underlying
lawsuit.
II.
The Township also challenges the district court’s June 2, 2014 order and resulting
order and judgment awarding attorney fees and costs and disbursements on two grounds.
A. Enforcement of the March 20 Order and Attorney Fees
After judgment was entered on the March 20 order, the City moved the district
court “to order the Township to take no action that is inconsistent” with the March 20
order and judgment, in light of the Township’s continued refusal to obey the OAA and
R-JPA and to cease conducting its own zoning and planning activities. The resulting
order of the district court indicated that it was granting the City’s motion for an order
“enforcing the March 20, 2014 [o]rder and [f]inal [j]udgment,” and further ordered that
the Township immediately cease all actions and activities related to its own zoning and
planning. The district court also granted the City’s motion for costs, disbursements, and
attorney fees.
The Township raises two challenges2 to these district court actions, each of which
is ultimately unpersuasive. Building on its prior argument, the Township first argues that
this injunctive relief and attorney-fee award further impermissibly expands upon the
2
The Township’s reply brief included additional arguments on this issue that were not
argued in its principal brief or raised in respondents’ briefs. These arguments have
therefore been forfeited and will not be considered here. Wood v. Diamonds Sports Bar
& Grill, Inc., 654 N.W.2d 704, 707 (Minn. App. 2002) (“If an argument is raised in a
reply brief but not raised in an appellant’s main brief, and it exceeds the scope of the
respondent’s brief, it is not properly before this court and may be stricken from the reply
brief.”), review denied (Minn. Feb. 26, 2003).
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arbitration award and fatally conflicts with the first judge’s earlier temporary injunction
in favor of the Township. These arguments are as equally unavailing here as they were
regarding the March 20 order. We can reject the Township’s request that we reverse the
attorney-fee award because the Township’s only assertion of error regarding that award is
that the district court’s “expan[sion]” of the arbitration award rendered the attorney-fee
award a “nullity.” As addressed supra, the March 20 order’s legal conclusion that the
Township was bound by the OAA and R-JPA was within the scope of the arbitration
award, and consequently the June 2 order was also within the scope of the award to the
extent that the district court granted relief based on the legal conclusion of its prior order.
And, any inconsistency between the June 2 order and the earlier temporary injunction is
irrelevant—that injunction was imposed before the arbitration award had been confirmed,
and it was finally dissolved by the March 20 order.
The Township also claims that, in enjoining the Township from conducting certain
activities, the district court was required to analyze the temporary injunction factors in
Dahlberg Bros., Inc. v. Ford Motor Co., 272 Minn. 264, 274–75, 137 N.W.2d 314, 321–
22 (1965). Typically, we review a district court’s determination on a motion for an
injunction for an abuse of discretion, and “[t]he [district] court’s failure to make the
appropriate findings or conclusions of law constitutes error, requiring reversal and
remand.” Oxford Dev., Inc. v. Cnty. of Ramsey, 417 N.W.2d 319, 321 (Minn. App.
1988). But, we conclude that the district court was not required to address the Dahlberg
Bros. factors in its determination here. We construe the district court’s order as granting
permanent, not temporary, injunctive relief, and thus the district court had no reason to
17
consider the temporary injunction factors. Rather, the district court was required to
consider the inadequacy of legal remedies and whether the injunction was “necessary to
prevent great and irreparable harm.” River Towers Ass’n v. McCarthy, 482 N.W.2d 800,
805 (Minn. App. 1992), review denied (Minn. May 21, 1992). “[I]rreparable harm may
be inferred from the breach of a contract between private parties,” id., and the only
adequate remedy to prevent the harm to the City of the Township’s continued refusal to
abide by its agreements appears to be the permanent injunctive relief ordered by the
district court. Based on this record, the findings of the district court, and the fact that the
Township does not challenge the merits of the permanent injunction on appeal, we
conclude that the district court did not err by ordering injunctive relief requested by the
City.
B. Stay of Arbitration
Two weeks after filing its appeal from the March 20 order and judgment, the
Township demanded additional arbitration with the City on two issues: (1) whether the
arbitration award adjudicated the merits of the already-dismissed prior court action; and
(2) whether the March 20 order bars claims brought by the Township against the City in
the separate lawsuit apart from those asserted by the Township in its initial complaint in
this case. The City moved to stay the arbitration demand. The district court granted an
arbitration stay in its June 2, 2014 order, but noted that the stay was partially dependent
on the outcome of the Township’s second, separate lawsuit against the City, Northern
Township, and the joint planning board.
18
The Township first argues that the district court lacked jurisdiction to stay
arbitration while its order and judgment were on appeal. While an appeal is pending, the
“[district] court’s authority to make any order that affects the order or judgment appealed
from” is suspended. Minn. R. Civ. App. P. 108.01, subd. 2. However, “the [district]
court retains jurisdiction as to matters independent of, supplemental to, or collateral to the
order or judgment appealed from.” Id.We conclude that the district court properly exercised jurisdiction over the City’s
motion for an arbitration stay, as its ruling on the issue of arbitrability did not affect the
March 20 order and judgment on appeal. Caselaw indicates that district courts cannot
amend an already-appealed order and judgment. See, e.g., Gummow v. Gummow, 356
N.W.2d 426, 428 (Minn. App. 1984) (holding that district court lacked jurisdiction to
enter post-appeal order amending judgment and decree). Here, the order staying
arbitration did not affect the substance of the underlying order and judgment, as it simply
stayed a proceeding that was intrinsically collateral to the order and judgment on appeal.
Moreover, the Township’s arbitration demand sought an arbitrator’s ruling as to the
effect of the initial arbitration award, which by extension would affect the order and
judgment on appeal. Consequently, the district court would have risked running afoul of
rule 108.01 if it had not exercised its jurisdiction and stayed arbitration.3
3
The Township also contends that the district court’s attorney-fee award violates rule
108.01, subd. 2. This argument is unavailing, as caselaw provides that attorney-fee
claims are “treated as a matter independent of the merits of the litigation.” Spaeth v. City
of Plymouth, 344 N.W.2d 815, 825 (Minn. 1984).
19
The Township also contends that the district court improperly applied the MUAA
by granting the arbitration stay, in light of the settlement agreement’s arbitration clause.
The statute provides that:
On motion of a person alleging that an arbitration proceeding
has been initiated or threatened but that there is no agreement
to arbitrate, the court shall proceed summarily to decide the
issue. If the court finds that there is an enforceable agreement
to arbitrate, it shall order the parties to arbitrate. If the court
finds that there is no enforceable agreement, it may not order
the parties to arbitrate.
Minn. Stat. § 572B.07(b) (2014). “In actions to stay arbitration, the limited issue
presented to the district court is the existence and scope of the arbitration agreement.”
Indep. Sch. Dist. No. 775 v. Holm Bros. Plumbing & Heating, Inc., 660 N.W.2d 146, 149
(Minn. App. 2003). “The court shall decide whether an agreement to arbitrate exists or a
controversy is subject to an agreement to arbitrate . . . .” Minn. Stat. § 572B.06(b)
(2014). We conduct an independent interpretation of the arbitration agreement. Heyer v.
Moldenhauer, 538 N.W.2d 714, 716 (Minn. App. 1995).
The settlement agreement provides that “[a]ny dispute(s) and/or questions of any
kind or nature regarding this [s]ettlement shall be decided by [b]inding [a]rbitration.”
(Emphasis added.) Both of the Township’s claims in its arbitration demand fell outside
the scope of this arbitration clause. The Township sought to have the arbitrator not only
review the merits of its own arbitration award and the district court’s March 20 order, but
to also issue a “threshold determination” as to the preclusive effects that the March 20
district court order would have in the separate district court action. But, the arbitration
clause does not provide that the parties can pursue arbitration in order to relitigate the
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arbitrator’s prior award or the actions of the district court pursuant to that award. Instead,
if the Township desired review of either the arbitration award or the March 20 district
court order, it had clear avenues to obtain such review: a vacation, modification, or
correction motion within the statutory time limit for the arbitration award, and an appeal
to this court relative to the district court order. The Township failed to pursue a vacation,
modification or correction motion within the statutory time limit, and was already
pursuing an appeal of the district court order confirming the arbitration award. As
recognized above, the district court correctly recognized that allowing arbitration to
proceed would have undermined this court’s authority on appeal.
The Township lastly argues that the district court lacked jurisdiction to stay
arbitration on the second claim in its arbitration demand, the effect of the arbitration
award on the Township’s claims in its separate lawsuit, because the current district court
judge in this case had been assigned to, and then removed from, the separate lawsuit.
The Township argues that the district court ignored the notice of removal and exercised
jurisdiction in the separate suit by issuing the stay in this case.
This argument is wholly without merit. The only authority cited by the Township
in support of this argument is a case holding that the judge in a prior action can be
removed under Minn. R. Civ. P. 63.03 in a subsequent action involving similar parties
and claims. See Omaha Fin. Life Ins. Co. v. Continental Life Underwriters, Ins. Co., 427
N.W.2d 290, 291–92 (Minn. App. 1988), review denied (Minn. Oct. 26, 1988). There is
no indication here that the district court judge refused to honor the Township’s removal
motion, as he was removed in the separate suit. The district court’s order in this case
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consciously refrains from invading the jurisdiction of the district court in the separate
lawsuit. Instead of deciding the arbitrability issue itself, the district court shifted the
resolution of arbitrability and other accompanying issues onto the decisionmaker who
had the Township’s new claims before it in a separate lawsuit.
Affirmed.
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