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Vermillion State Bank v. State

Court of Appeals of Minnesota

April 17, 2017

Vermillion State Bank, Plaintiff-Petitioner Below, Faegre Baker Daniels, Respondent,
v.
State of Minnesota, by its Department of Transportation, Appellant.

         Dakota County District Court File No. 19HA-CV-15-971

          David M. Jann, Bruce Jones, Faegre Baker Daniels LLP, Minneapolis, Minnesota (for respondent)

          Lori Swanson, Attorney General, Stephen D. Melchionne, Assistant Attorney General, Jeffery S. Thompson, Assistant Attorney General, St. Paul, Minnesota (for appellant)

          Patrick B. Steinhoff, Malkerson Gunn Martin LLP, Minneapolis, Minnesota; and Leland J. Frankman, Frankman Law Offices, Minneapolis, Minnesota (for amicus curiae Minnesota Eminent Domain Institute)

          Considered and decided by Worke, Presiding Judge; Halbrooks, Judge; and Jesson, Judge.

         SYLLABUS

         Minn. Stat. § 117.045 (2016) entitles a landowner who successfully brings an inverse condemnation action to petition the court for attorney fees and other costs; the landowner's attorney has no standing to petition for fees and costs directly and independently of the landowner.

          OPINION

          WORKE, Judge

         Appellant challenges the district court's award of attorney fees and other costs directly to respondent law firm under Minn. Stat. § 117.045. Because respondent did not have statutory standing to petition for fees directly and independently of plaintiff-petitioner, its former client, we reverse.

         FACTS

         In 2012, appellant State of Minnesota Department of Transportation (MnDOT) permanently closed a restaurant's only access to a state highway. The restaurant's owners had purchased the property with the assistance of a mortgage loan from plaintiff-petitioner Vermillion State Bank (Vermillion). Within months, loss of highway access forced the restaurant to close. The restaurant owners were no longer able to pay the mortgage, and Vermillion foreclosed on the property.

         In January 2014, Vermillion retained respondent Faegre Baker Daniels (Faegre) to represent it in an inverse condemnation action against MnDOT. Faegre conducted title work to establish the exact physical location of the property, conducted extensive legal research, sent a demand letter, and drafted pleadings. In February 2015, Vermillion, pointing to a "lack of progress" on the case, terminated its agreement with Faegre and hired Larkin Hoffman Daly & Lindgren Ltd. (Larkin Hoffman). As directed by Vermillion, Faegre forwarded its work to Larkin Hoffman. Shortly thereafter, Larkin Hoffman filed a summons and complaint that were substantially identical to the pleadings prepared by Faegre.

         In December 2015, the district court granted Vermillion's motion for summary judgment and ordered MnDOT to commence condemnation proceedings. Faegre filed a motion for $63, 495.50 in attorney fees and $368.46 in costs under Minn. Stat. § 117.045. Vermillion also filed a motion for attorney fees, seeking reimbursement for $55, 416.19 in fees and costs incurred while it was represented by Larkin Hoffman. Vermillion did not request any fees for the work performed by Faegre and informed Faegre that it would not pay Faegre directly. Vermillion maintains that Faegre is not entitled to fees because it was hired on a contingent basis-meaning that it would be paid only if it successfully prosecuted the inverse condemnation action-and fired before the inverse condemnation action was commenced. MnDOT agreed to pay Larkin Hoffman's fees but argued that Faegre had no standing to bring a motion for attorney fees because Minn. Stat. § 117.045 allows only the landowner to petition the court for reimbursement; it does not allow an attorney to make a direct claim for fees.

         The district court ordered MnDOT to pay Faegre $52, 065 in attorney fees and $368.46 in other costs. It rejected MnDOT's claim that Faegre lacked standing to petition ...


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