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Kaeding v. Auleciems

Court of Appeals of Minnesota

October 31, 2016

Andrew Kaeding, et al., Respondents,
Karl Auleciems, Appellant, Susanne Auleciems, Appellant.

         Washington County District Court File No. 82-CV-14-4555


          Samuel C. Spaid, Minneapolis, Minnesota (for respondents)

          Karl Auleciems, Lake Elmo, Minnesota (pro se appellant)

          Susanne Auleciems, Lake Elmo, Minnesota (pro se appellant)

          Considered and decided by Hooten, Presiding Judge; Peterson, Judge; and Bratvold, Judge.


         I. An attempt to waive Minn. Stat. § 504B.178 (2014) by agreeing to forfeit a security deposit as a remedy for violating a lease provision that does not require a payment of funds to the landlord is void and unenforceable under Minn. Stat. § 504B.178, subds. 3, 10.

         II. When a conciliation court decision is appealed by removal to the district court and the removing party does not prevail, the opposing party is not limited by Minn. Stat. § 491A.02, subd. 6 (2014), to recovering $50 for costs and disbursements.


          PETERSON, Judge.

         In this landlord-tenant dispute regarding forfeiture of security deposits, pro se appellant landlords challenge the district court's summary judgment that the forfeiture clause in a lease is unenforceable and the district court's award of attorney fees, costs, and disbursements to respondent tenants. We affirm.


         Respondent-tenants Andrew and Elisa Kaeding leased a house from appellant-landlords Karl and Susanne Auleciems. The house had a basement, a main floor, and a second floor. The lease ran from April 1, 2013, through March 31, 2014, with monthly rent of $2, 700, a $2, 500 security deposit, and an additional $1, 000 pet deposit. Respondents lived in the house with their two children and two dogs.

         The lease prohibited pets from being in the basement or on the second floor. To prevent their dogs from going into the prohibited areas, respondents kept the basement door closed and installed a gate at the top of the stairs leading up to the second floor. Despite these precautions, the dogs got into the prohibited areas several times during respondents' tenancy. The dogs were always immediately removed from the prohibited areas and caused no damage.

         After respondents moved out of the house, appellants retained the $3, 500 in deposits and also sought an additional $1, 425 for damages. Appellants sent respondents a letter in which they listed the items for which they were seeking damages[1] and informed respondents that the entire security deposit was forfeited because the dogs were on the upper and lower floors.

         Respondents brought an action in conciliation court seeking to recover the $3, 500. Appellants filed a counterclaim, asserting that they were entitled to retain the entire security deposit under a lease clause that stated that "[t]enants agree to forgoe [sic] security deposit if pets are found to have been on the top or bottom floors of the house." The conciliation court determined that the forfeiture clause was unenforceable but awarded appellants $800 for damages beyond normal wear and tear. The conciliation court awarded respondents the remaining $2, 700 balance of the security deposits plus $75 in costs.

         Appellants filed a demand for removal to district court. Respondents filed an amended complaint, and the parties filed summary-judgment motions. The district court granted the motions in part and denied them in part. The district court concluded that the forfeiture clause was unenforceable under Minn. Stat. § 504B.178, subds. 3(b) and 10 (2014). The district court also concluded that appellants' retention of the two deposits constituted bad faith under Minn. Stat. § 504B.178, subd. 7 (2014), and awarded respondents $1, 000 in punitive damages. The district court granted summary judgment for appellants on respondents' claim for unjust enrichment based on the lease making respondents responsible for snow removal and lawn care.[2] The district court denied summary judgment on appellants' claim for $1, 425 in damages and ordered that the issue of damages proceed to trial.

         The damages issue was tried to the court, and, on the day of trial, appellants orally moved to add a diminution-of-value claim, asserting that damages that occurred during respondents' tenancy were a factor in appellants' decision to sell the property for $389, 000 after respondents moved out, although appellants' initial asking price had been $469, 000. Appellants' proposed order following trial set the diminution-of-value claim at $12, 000.

         The district court made specific findings on each item of damages claimed by appellants and awarded appellants $640 for damages beyond normal wear and tear and ordered that the balance of the security deposits, $2, 860, be returned to respondents. The district court determined that appellants failed to present sufficient evidence to prove their diminution-in-value claim.

         Following trial, respondents submitted an application for costs and disbursements and a motion for attorney fees. The district court awarded respondents $50 for costs under Minn. R. Gen. Pract. 524 and Minn. Stat. § 491A.02, subd. 7 (2014), and $1, 142.95 for disbursements under Minn. Stat. § 549.04 (2014). The disbursements included $601 in court fees, a $100 payment to a court reporter for a two-hour deposition, $241.95 for deposition transcripts, and a $200 professional-witness fee for testimony on the diminution-of-value claim.

         The district court determined that respondents were entitled to recover attorney fees under a lease clause that stated that "[t]he court may award reasonable attorney's fees and costs to the party who prevails in a lawsuit about the tenancy" and awarded respondents $12, 350 for attorney fees. The fee award was based on 49.4 hours billed at $250 per hour, which the district court found was a reasonable rate for an attorney of counsel's experience and a reasonable number of hours for a contested matter with multiple motions and a one-day trial. The court explained:

[Respondents] appear to have attempted to resolve the case as quickly as possible at each turn. [Appellants] have repeatedly prolonged and complicated this case. Rather than go directly to trial after losing most claims on summary judgment, [appellants] chose to increase their demands by adding a legally and factually baseless claim for the alleged diminution of value to the Premises, without properly filing any pleadings with this court. Clearly, the diminution of value claim was an attempt to weaken [respondents'] resolve with the specter of a financially crippling monetary judgment. [Respondents] were entirely within their rights to take these claims seriously, and invest in more time, discovery, research, trial preparation, and a trial.

         This ...

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