Washington County District Court File No. 82-C2-07-000377
Jon Erik Kingstad, Oakdale, Minnesota (for appellant)
Pierre N. Regnier, Leonard J. Schweich, Mark K. Hellie, Jardine, Logan & O'Brien, P.L.L.P., Lake Elmo, Minnesota (for respondent)
Considered and decided by Larkin, Presiding Judge; Halbrooks, Judge; and Willis, Judge.
WILLIS, Judge [*]
Appellant challenges the district court's dismissal of its claim with prejudice under Minn. R. Civ. P. 41.02(a). Because the district court's findings and the record support dismissal, we affirm.
In October 2005, appellant Walker Properties of Woodbury II, LLC, entered into a developer's agreement with respondent City of Woodbury for the development of a subdivision of single-family homes. The agreement distinguished between "Plan A Activities, " which would be undertaken by Walker, and "Plan B Improvements, " to be constructed by the city and financed through assessments on the property. The agreement required Walker to waive any challenge to the validity of the assessments. Under the agreement, Walker had to provide the city with two irrevocable letters of credit, one for the estimated cost of Plan A Activities and one for Plan B Improvements. The letters of credit were for the benefit of the city, and the city could draw on the letters of credit if Walker defaulted on the agreement. Construction Mortgage Investors Company (CMIC) issued the letters of credit.
The city completed the Plan B Improvements in July 2006. In September 2006, the city served Walker with a notice of assessment for the final cost of Plan B Improvements. Walker objected to the assessments and challenged them in a lawsuit, which was dismissed, based on Walker's waiver in the developer's agreement.
In August 2007, Walker filed this lawsuit against the city when the city refused to release the letters of credit. Walker alleged that the developer's agreement is an illegal contract, or alternatively, that the city had breached the agreement.
In September 2008, after Walker had failed to pay the assessments on its property for two years, the city sent Walker a notice of default. Walker failed to cure the default, and the city notified CMIC that it intended to draw on the letters of credit. Walker sought a temporary injunction to prevent the city from drawing on the letters of credit. In January 2009, the district court granted Walker a temporary injunction and required Walker to post a $500 cost bond.
In March 2010, the city moved to dissolve the temporary injunction; alternatively, the city argued that the $500 bond was inadequate. The district court denied the city's motion to dissolve the injunction and failed to address the city's argument regarding the adequacy of the bond. The city appealed, and this court reversed and remanded to the district court with instructions to consider the adequacy of the bond. On remand, the district court determined that "[i]n order to protect the [c]ity a bond is to be posted in the amount of $684, 079.08 . . . within 60 days of the entry of judgment." Judgment was entered on October 25, 2011. Walker failed to post the bond.
In February 2012, the city moved to dismiss Walker's complaint for failure to comply with the district court's order. The district court found that Walker violated the court order by failing to post the bond ordered and that the city has been prejudiced by Walker's failure because the city paid for the Plan B Improvements with city funds. The district court also found that the letters of credit do not adequately protect the city because the city's exposure is greater than the security provided by the letters of credit and ...