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O'Leary v. Carefree Living of America

January 08, 2003

ROBERT O'LEARY, AS TRUSTEE OF LAKELAND PRINTING CO., INC., ET AL., RESPONDENTS,
v.
CAREFREE LIVING OF AMERICA (MINNETONKA), INC., APPELLANT.



Hennepin County District Court File No. MC96013648

Considered and decided by Willis, Presiding Judge, Peterson, Judge, and Halbrooks, Judge.

SYLLABUS BY THE COURT

1. A court that approves a supersedeas bond to stay enforcement of a judgment during the pendency of an appeal has the power to assess damages actually incurred as a result of the stay, and this power may be invoked by the motion of a party after appellate proceedings are completed.

2. When an appellant posts a supersedeas bond to stay enforcement of a judgment during the pendency of an appeal, the appellant's liability for damages incurred as a result of the stay is not limited to the amount of the supersedeas bond.

The opinion of the court was delivered by: Peterson, Judge

Affirmed in part and remanded in part

OPINION

This appeal is from a judgment awarding respondents compensatory damages for the lost value of the use and occupation of real property during the pendency of an appeal from a judgment that directed the recovery and sale of the real property. Appellant argues that the district court erred by awarding respondents damages in an amount that exceeds the supersedeas bond posted to stay enforcement of the judgment during the pendency of the previous appeal and by determining that payments appellant made constituted waste. We conclude that appellant's liability for damages is not limited by the amount of the supersedeas bond, but because the district court did not explain how the amount of damages it awarded reflects the lost value of the use and occupation of the real property during the previous appeal, we affirm in part and remand in part with instructions.

FACTS

The respondents in this appeal were limited partners in Leisure Living of Minnetonka Limited Partnership, a Minnesota limited partnership that owned an option to purchase real estate. The option was wrongfully transferred to appellant Carefree Living of America (Minnetonka), Inc., which exercised the option, acquired the real estate, and built a building on it. Following a trial in an action brought by respondents to recover the real estate from appellant, the district court ordered that the partnership should recover the property, that the property should be sold, and that the proceeds of the sale should be distributed as provided by the Uniform Limited Partnership Act. Judgment was entered, and Carefree Living appealed. The district court conditioned a stay of enforcement of the judgment on the posting of a $90,000 supersedeas bond, and appellant posted the bond. The amount of the bond was based on an assumption that the appeal would take six months.

This court affirmed the judgment, and the supreme court denied further review. O'Leary v. Carefree Living of Am., Inc., 2001 WL 1083757 (Minn. App. Sept. 18, 2001), review denied (Minn. Dec. 11, 2001). Respondents then brought a motion in the district court seeking damages for the use and occupancy of the property during the earlier appeal, which actually took 14 months, and to apply the supersedeas bond against the total amount of damages. The district court initially awarded respondents $210,000 for the value of the use and occupation of the property. This amount was determined by applying the $15,000 monthly value used to determine the bond amount to the 14-month appeal period. In an amended judgment, the district court increased the damages award to $448,517.07, which was the sum of (1) several payments appellant made to third parties while the appeal was pending using rents received from the property and (2) the increase in the mortgage debt on the property due to appellant's failure to make mortgage payments.

ISSUES

1. When a supersedeas bond is posted to stay enforcement of a judgment during the pendency of an appeal, may the court that approved the supersedeas bond later assess actual damages incurred as a result of the stay on the motion of a party?

2. When an appellant posts a supersedeas bond to stay enforcement of a judgment during the pendency of an appeal, is the appellant's liability for damages incurred as a result of the ...


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