Webb Golden Valley, LLC, Evelyn Thomson v. State of Minnesota, Global One Golden Valley, LLC, intervenor ( 2014 )

This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (2012).
STATE OF MINNESOTA
IN COURT OF APPEALS
A13-2044
Webb Golden Valley, LLC,
Appellant,
Evelyn Thomson,
Plaintiff,
vs.
State of Minnesota, et al.,
Respondents,
Global One Golden Valley, LLC, intervenor,
Respondent.
Filed July 7, 2014
Reversed and remanded; motion denied
Smith, Judge
Hennepin County District Court
File No. 21-CV-13-5177
Daniel N. Rosen, Mark J. Kiperstin, Parker Rosen, LLC, Minneapolis, Minnesota; and
Eric J. Magnuson, Robins, Kaplan, Miller & Ciresi, LLP, Minneapolis, Minnesota (for
appellants)
Lori Swanson, Attorney General, Natasha M. Karn, Assistant Attorney General, St. Paul,
Minnesota (for respondent State of Minnesota, et al.)
James R. Dorsey, Marc D. Simpson, Ryan M. Sugden, Stinson Leonard Street, LLP,
Minneapolis, Minnesota (for respondent Global One Golden Valley)
Allen D. Barnard, John T. Sullivan, Best & Flanagan LLP, Minneapolis, Minnesota (for
respondent Golden Valley Housing and Redevelopment Authority)
Considered and decided by Cleary, Chief Judge; Hudson, Judge; and Smith,
Judge.
UNPUBLISHED OPINION
SMITH, Judge
We reverse the district court’s dismissal of appellant’s suit for failure to pay a
surety bond because respondent’s allegation that delays caused by the litigation will harm
the public interest is not supported by evidence in the record. We reverse the district
court’s order partially dismissing appellant’s declaratory judgment action because
appellant has standing as possessor of an interest protected by Minn. Stat. § 161.44(2012). We remand for further proceedings and deny the motion for expedited release of
this opinion.
FACTS
Between 1988 and 1999, respondent State of Minnesota acquired title to three
parcels of land near what is now I-394 and Highway 100 in Golden Valley for use during
construction of I-394. The state no longer needs the parcels for road construction and
plans to transfer them to respondent Golden Valley Housing and Redevelopment
Authority (GVHRA). GVHRA has agreed to “[u]se commercially reasonable efforts to
acquire” the parcels in order to transfer at least one of them to respondent Global One
Golden Valley, LLC, but its agreement with Global One disavows any obligation to
perform if it is unable to acquire all of the parcels. Global One plans to construct
residential apartments on portions of the transferred parcels.
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Global One originally planned to complete construction of at least one of the
buildings by September 30, 2014, but it agreed that “[t]he times . . . for commencement
and completion of construction shall . . . be extended to the extent of any Unavoidable
Delays,” “including but not limited to actions of governmental authorities other than
[Golden Valley] or [GVHRA], labor disputes, unusually severe or prolonged bad
weather, acts of God, civil disturbances, accidents, fire or other casualty, injunctions, or
other court or administrative orders.”
In March 2013, appellant Webb Golden Valley, LLC (“Webb”), sued the state,
seeking a declaratory judgment that the transfer violated Minn. Stat. § 161.44, an
injunction to halt the transfer, and an injunction requiring the state to either sell the
property to Webb or offer it for public sale to the highest bidder. The district court
granted Global One’s motion to intervene.
On July 22, 2013, the district court granted motions by the state and Global One to
dismiss Webb’s suit with regard to two of the parcels (Tract N and Lot 18), holding that
Webb lacked standing to assert any rights under Minn. Stat. § 161.44 because it did not
possess any legal interest in these two parcels. On August 9, the district court denied
Webb permission to file a motion to reconsider.
On August 5, a previous owner of one of the three parcels filed a separate
complaint seeking the same relief as Webb, and the district court consolidated the cases.
The state and Global One again moved to dismiss the complaints. While those motions
were pending, GVHRA moved to appear specially, and it requested that the district court
require Webb and the previous owner to post a surety bond. After a hearing, the district
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court found that a surety bond of $3.2 million was justified under Minn. Stat. § 469.044(2012) because the lawsuits “call into question [GVHRA’s] power, right, or authority to
execute and perform redevelopment contracts . . . by preventing [GVHRA] from
receiving the land the State wishes to convey,” and because “the lawsuits ‘might directly
or indirectly impair [GVHRA’s] borrowing power, increase the cost of its projects, or be
otherwise injurious to the public interest.’” As support, the district court cited Global
One’s statements that delays caused by the litigation might cause investors to pull out of
the project, resulting in its inability to develop the land.
Neither Webb nor the previous owner posted the surety bond, and the district court
dismissed their complaints.
DECISION
I.
Webb argues that the district court erred by requiring it to submit a $3.2 million
surety bond based on a motion by GVHRA. It argues that GVHRA lacks the authority to
move the district court to require a surety bond because the litigation does not implicate
any “right, power, or authority” of GVHRA and because the litigation does not injure the
public. See Minn. Stat. § 469.044 (2012) (addressing circumstances under which a surety
bond may be sought). Identifying who may seek a surety bond under Minn. Stat. §
469.044 requires interpretation of that statute. “Interpretation of a statute presents a
question of law that we review de novo.” Swenson v. Nickaboine, 793 N.W.2d 738, 741
(Minn. 2011). But we review a district court’s ultimate determination of the need for and
amount of a surety bond only for an abuse of discretion. Anderly v. City of Minneapolis,
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552 N.W.2d 236, 241 (Minn. 1996). A district court abuses its discretion when it makes
findings unsupported by evidence or if it misapplies the law. In re Paul W. Abbott Co.,
Inc., 767 N.W.2d 14, 18 (Minn. 2009).
A housing and redevelopment authority1 may move the district court to require a
surety bond when (1) the litigation “draw[s] in[to] question the right, power, or authority”
of the housing authority “to make or perform any contract or agreement” and (2) the
housing and redevelopment authority “deems that the pendency of the litigation might
directly or indirectly impair its borrowing power, increase the cost of its projects, or be
otherwise injurious to the public interest.” Minn. Stat. § 469.044. A housing and
redevelopment authority may appear specially to make a motion for a surety bond. Minn.
Stat. § 469.045 (2012). “If the [district] court determines that loss or damage to the
public or taxpayers may result from the pendency of the action or proceeding, the
[district] court may require the party who instituted [the litigation] to give a surety bond .
. . in a penal sum to be determined by the [district] court to protect against loss or
damage.” Id. “If the bond so ordered is not filed within the reasonable time allowed by
the [district] court, the action or proceeding shall be dismissed with prejudice.” Id.1
Housing and redevelopment authorities are public corporations established in each city
in the state for purposes including providing a “sufficient supply” of housing, clearing
blighted areas, and planning housing projects. See Minn. Stat. §§ 469.003, subd. 1
(2012) (creating a housing and redevelopment authority in each city); 469.002, subd. 2
(2012) (defining “authority” as a housing and redevelopment authority when the term is
used in sections 469.001 through 469.047); 469.012, subd. 1 (2012) (stating that a
housing and redevelopment authority is a public corporation); 469.001 (2012) (stating the
purposes of a housing and redevelopment authority). The parties agree that the
provisions of sections 469.001 through 469.047 apply to GVHRA.
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Webb first argues that its litigation does not implicate a “right, power, or
authority” of GVHRA because GVHRA holds no entitlement to receive the land from the
state. But section 469.044 focuses on the “right, power, or authority” of a housing and
redevelopment authority to “make or perform any contract or agreement.” Since
GVHRA needs to receive the land from the state to perform its agreement with Global
One, Webb’s litigation challenging that transfer and requesting that the land be
transferred to Webb or put up for sale jeopardizes GVHRA’s authority to perform under
that agreement. Accordingly, Webb’s first argument fails.
Webb also argues that its litigation poses no threat of injury to the public. The
district court found that Webb’s litigation threatened to harm the public interest by
causing investors to withdraw from the project, which could cause the project to collapse,
resulting in frustration of GVHRA’s goals and a loss of property tax revenue. Loss of
financing for a project as a result of pending litigation is sufficient to justify a surety-
bond requirement. See, e.g., Anderly, 552 N.W.2d at 241 (concluding that a surety bond
was justified when project financing was conditions on resolution of litigation). But such
a finding must be supported by evidence in the record. See Paul W. Abbott Co., 767
N.W.2d at 18. In Anderly, for example, the supreme court affirmed a district court’s
requirement of a surety bond when its determination that the pending litigation threatened
to cause investors to pull out of a project was supported by testimony from one of the
investors that was threatening to pull out. See 552 N.W.2d at 241-42.
The record here lacks any such testimony from investors threatening to pull out of
the project. Instead it contains only a general claim from Global One that unidentified
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investors will pull out as a result of the pending litigation, causing the project to collapse.
The affidavit submitted on behalf of GVHRA contains no indication that investors would
pull out or that the project would collapse because of delays. Unsupported conclusory
claims from an interested party—claims that Webb was not given the opportunity to
challenge in an evidentiary hearing—are inadequate to support the district court’s finding
that the public would be harmed by the collapse of the project resulting from Webb’s
litigation. Cf. DLH, Inc. v. Russ, 566 N.W.2d 60, 71 (Minn. 1997) (“[T]he party resisting
summary judgment must do more than rest on mere averments.”). Accordingly, we hold
that Global One’s unsupported claim is insufficient to support the district court’s order
for a surety bond.
GVHRA implicitly argues that the public is injured by a delay as well as by the
collapse of the project. It asserts that a loss of tax revenues resulting from delays
constitutes an injury to the public, thereby justifying a surety bond. But its agreement
with Global One foresaw and provided for potential delays. The legislature has also
specifically excluded an increase of tax revenues from its definition of “public purposes”
for lands seized by eminent domain. Minn. Stat. § 117.025, subd. 11(b) (2012). We find
it difficult to see how a lost tax-revenue opportunity would be inadequate to support a
taking for a “public purpose,” but sufficient to demonstrate a “public injury” supporting a
demand for a surety bond in a suit challenging whether a particular disposition of seized
land was for a “public purpose.” We therefore conclude that GVHRA’s argument also
fails to support the district court’s grant of a surety bond, and we reverse the district
court’s partial dismissal of Webb’s complaint for failure to post a surety bond.
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II.
Webb argues that the district court also erred by partially dismissing its complaint
for lack of standing. “When the facts relevant to standing are undisputed, the standing
inquiry raises a question of law subject to de novo review.” Olson v. State, 742 N.W.2d
681, 684 (Minn. App. 2007). “To establish standing, a plaintiff must have sufficient
personal stake in a justiciable controversy.” Id. “A sufficient stake may exist if the party
has suffered an injury-in-fact or if the legislature has conferred standing by statute.” Id.(internal quotation marks omitted). “[S]tanding for purposes of alleging violation of a
statute . . . requires a showing of injury in fact, plus an interest arguably among those
sought to be protected by the statute in question.” Dufresne v. Am. Nat’l Bank & Trust
Co., 374 N.W.2d 763, 766 (Minn. App. 1985) (internal quotation marks omitted) (citing
Twin Ports Convalescent, Inc. v. Minn. State Bd. of Health, 257 N.W.2d 343, 346 (Minn.
1977)), review denied (Minn. Dec. 13, 1985).
Webb argues that it has standing to challenge the state’s conveyance of Tract N
and Lot 18 because it would be prevented from bidding on the land and that this interest
is among those protected by section 161.44, which governs relinquishment by the state of
lands no longer needed for trunk highways. Its argument is well-founded. If the transfer
is accomplished as intended by the state, GVHRA, and Global One, Webb will be
precluded from any opportunity to purchase the land. It alleges an interest in purchasing
the land to incorporate it with its nearby land holdings. This by itself constitutes
sufficient injury to give Webb standing to challenge the procedure by which the state
intends to dispose of the land. Cf. Lujan v. Defenders of Wildlife, 504 U.S. 555, 572 n.7,
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112 S. Ct. 2130, 2142 n.7 (1992) (“[O]ne living adjacent to the site for proposed
construction of a federally licensed dam has standing to challenge the licensing agency’s
failure to prepare an environmental impact statement . . . .”).
More importantly, it is clear that Webb’s interest is among those protected by the
land-relinquishment statute. “Interpretation of a statute presents a question of law, which
we review de novo.” Swenson, 793 N.W.2d at 741. Section 161.44 provides that “any
lands . . . owned in fee by the state for trunk highway purposes but . . . in excess of what
is needed for highway purposes may be transferred for public purposes to any political
subdivision . . . of the state.” Minn. Stat. § 161.44, subd. 1 (2012). Lands not so
transferred “must first be offered for reconveyance to the previous owner or the owner’s
surviving spouse” or to the owners (or surviving spouses of owners) of larger tracts from
which the state’s tracts were taken. Id., subds. 2, 3 (2012). Lands not transferred for
public purposes to a subdivision of the state and not reconveyed to a previous owner or
surviving spouse may be sold to the highest bidder, either through advertisement or
public auction. See id., subds. 5, 6 (2012). These provisions protect at least three groups
of persons interested in excess trunk-highway land: (1) other government entities who
want to use the land for “public purposes,” (2) previous owners and their surviving
spouses who want to reassemble the unused portions of their prior holdings, and (3)
members of the public who want to bid on the land. Webb’s interest lies squarely within
the third category of interests protected by the land-relinquishment statute. Cf. Bensman
v. U.S. Forest Serv., 408 F.3d 945, 950-52 (7th Cir. 2005) (holding that a person denied
the statutory right to participate in a process regarding use of land has standing to
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challenge an alleged violation of the governing statute). We therefore conclude that
Webb has standing to challenge the state’s conveyance of Tract N and Lot 18 under
Minn. Stat. § 161.44, we reverse the district court’s partial dismissal of Webb’s
complaint, and we remand to the district court for further proceedings not inconsistent
with this opinion.2
III.
GVHRA and Global One jointly moved this court for an expedited opinion
release, citing damage to the project that would result from continuing delay. Because
we have already found that there is no evidence in the record supporting the claim that
the litigation presents an injury to the public, their motion is denied.
Reversed and remanded; motion denied.
2
Webb also seeks a ruling on the merits of the transfer, arguing that the district court
determined that the definition of “public purpose” in Minn. Stat. § 117.025 applies, and
alleging that this determination is now “law of the case” that prohibits the state’s planned
conveyance entirely. But the district court’s application of section 117.025 was limited
to the parcel regarding which it did not dismiss Webb’s complaint, and it did not reach a
final decision as to whether that conveyance satisfied the “public purposes” component of
section 161.44. The issue is therefore not within the scope of our review. See Thiele v.
Stich, 425 N.W.2d 580, 582 (Minn. 1988) (stating that appellate courts generally address
only questions previously presented to and considered by the district court).
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