Mendota Heights Associates v. Friel, C5-87-1152
| Decision Date | 27 October 1987 |
| Docket Number | No. C5-87-1152,C5-87-1152 |
| Citation | 414 N.W.2d 480 |
| Parties | MENDOTA HEIGHTS ASSOCIATES, et al., Appellants, v. Bernard P. FRIEL, et al., James P. Losleben, et al., Respondents. |
| Court | Minnesota Court of Appeals |
Syllabus by the Court
1. Summary judgment was properly granted.
2. Since there is probable cause for respondents to sue, an action for malicious prosecution and tortious interference with business expectancy does not lie.
3. Respondents failed to state a claim upon which relief may be granted.
Frank J. Walz, Best & Flanagan, Minneapolis, for appellants.
John M. Anderson, Charles E. Lundberg, Bassford, Heckt, Lockhart & Mullin, P.A., R. Scott Davies, Briggs and Morgan, Minneapolis, for respondents.
Heard, considered and decided by FORSBERG, P.J., and LANSING and NIERENGARTEN, JJ.
Respondents, residents of the City of Mendota Heights, sued the City of Mendota Heights to invalidate preliminary approval of appellants' building project. Respondents refused to allow appellants to intervene, and dismissed the suit one day before appellants' motion to intervene was to be heard. Appellants then sued respondents alleging malicious prosecution and tortious interference. Respondents counterclaimed, alleging intentional infliction of mental distress and seeking fees and costs under Minn.Stat. Sec. 549.21 (1984). The trial court eventually granted respondents' motion for summary judgment, and granted appellants' motion to dismiss respondents' counterclaims on the pleadings. Both parties appeal. We affirm.
Appellants own about 120 acres of undeveloped land in the City of Mendota Heights ("the City"). In the spring of 1985, appellants proposed to build 592 apartment units in four phases on 70 acres of its land in the City. Appellants' proposal set in motion the following chain of events.
Appellants requested that the City amend its Comprehensive Plan to permit high-density development, and to correspondingly rezone the property from single family to multiple family residential.
On October 1, 1985, the city council met and approved an amendment to the Comprehensive Plan. At the same time, the council gave "concept approval to [appellants'] proposal, and direct[ed] staff to prepare a proposed planned unit development agreement and a draft ordinance amendment or zoning change * * *." Only three of the five council members voted for rezoning.
The 3/2 vote concerned city administrator Kevin Frazell, who wrote that
On September 17, 1985, appellants requested a public hearing on their application for four housing revenue bond issues of $10 million each. The council passed four separate resolutions, calling for a public hearing on each application to take place on October 15, 1985. The council eventually gave preliminary approval to one $10 million bond issue.
There was concern over the tax characterization of this bond issue. The City requested and received an opinion on this and other issues from attorney Roger D. Gordon. Gordon stated that "[a]bsent an unconditional statement of intent to vote for rezoning by at least four members of the City Council, it cannot be stated with the requisite certainty that the necessary rezoning will be granted within the immediate future."
Generally, the interest on the bonds issued by a city is not included in gross income, except when the bonds qualify as "arbitrage" bonds. I.R.C. Secs. 103(a), 103(c)(1), (2) (1985). Gordon stated that because "it would not appear that the City would have the requisite 'reasonable expectations' that the project will in fact be built * * * it is at least possible that the subject bonds could be found to be 'arbitrage bonds' * * *."
Under state law, the City was required to submit appellants' proposal to the Metropolitan Council for review and comment. Minn.Stat. Sec. 462C.04, subd. 2 (Supp.1985). The statute requires that the City shall give notice and hold a public hearing on the proposal, and that
Any comment submitted by the reviewing agency to the city must be presented to the body considering the proposed program at the public hearing held on the program.
Minn.Stat. Sec. 462C.04, subd. 2 (Supp.1985). Finally, the statute requires that the proposal considered by the City shall not contain any material changes from the program submitted to the Metropolitan Council. Any materially altered proposal must be resubmitted and may not be adopted until the City obtains a new comment and holds another public hearing.
The City submitted the proposed housing program to the Metropolitan Council on September 25, 1985. The Metropolitan Council responded on October 10, 1985, in a letter stating that:
Council staff has reviewed the information provided and finds no inconsistencies between the proposed program and the city's housing bond plan or policies of the Metropolitan Development Guide. The bond program does, however, propose a land use different from that currently indicated in the city's comprehensive plan for the site in question. Therefore, the city should amend its comprehensive plan to reflect this change of land use and revise its sewer plan to include this area in its pre-1990 sewered area.
However, the council added that
we can only consider our findings of no inconsistencies with Council policy to be preliminary to those of an EAW review.
(Emphasis added.)
The council discussed the Metropolitan Council response on November 5, 1985, 20 days after the council presented the bond proposal to the public. A transcript of portions of the November 5 meeting reveals that the Metropolitan Council comment was not presented to the public when the City originally held hearings on the proposal on October 15, 1985.
Also at the November 5 meeting, the council discussed a compromise offered by appellants. That proposal included 300 units based on $20 million in bond financing, rather than the original 590 units based on $40 million. The minutes do not disclose whether or not this proposal had been submitted to the Metropolitan Council. Respondent Friel, present at the meeting, called attention to Minn.Stat. Sec. 462C.04 which requires that the council resubmit materially altered proposals to the Metropolitan Council, and await their response before acting further. Friel felt that a change from 590 to 300 units was material under the statute, and that he was "informed preliminarily by the Metropolitan Council" that this was indeed the case. Appellants question this assertion.
Gordon addressed the material change issue in his opinion letter. Gordon stated that "it would appear that the City has adequately complied with the requirements of Section 462C.04, Subdivision 2." However, he added that "[t]he determination of whether a proposed change * * * is a 'material change,' requiring resubmission and requiring a second public hearing, should be made by the Metropolitan Council." Gordon recommended that the City obtain written confirmation that the reduction of units was not a material change. There is no evidence that the City obtained such confirmation.
Respondents sued the City on December 4, 1985, to invalidate preliminary approval of the bond issue and to enjoin the City from proceeding without complying with state law. On January 7, 1986, the council acknowledged that the bond underwriters withdrew because of respondents' suit. Appellants then withdrew their application for bond approval. Respondents voluntarily dismissed their suit against the City on February 17, 1986. Appellants thereafter sued respondents for malicious prosecution and tortious interference.
Appellants argue that respondents concocted a lawsuit against the City knowing that the underwriters of financing vital to appellants' proposal would then back out. Lacking financing, and the time to settle the suit before year end, appellants were forced to scrap the project. Respondents then dismissed the suit without having to test its merits.
1. Did the trial court properly grant summary judgment?
2. Did the trial court correctly rule that facts established by respondents support the legal conclusion that respondents had probable cause to sue the City, thus negating essential elements of appellants' claims?
3. Did the trial court correctly dismiss respondents' counterclaim of bad faith litigation and intentional infliction of mental distress on the pleadings alone?
On review of summary judgment, the court must first determine whether there are genuine issues of fact, and then whether the trial court correctly applied the law. Betlach v. Wayzata Condominium, 281 N.W.2d 328, 330 (Minn.1979). The court must view the evidence in the light most favorable to the party who lost the motion below. Hauser v. Mealey, 263 N.W.2d 803, 805 n. 1 (Minn.1978).
The party moving for summary judgment has the burden of proving that no genuine issue of material fact exist. Nord v. Herreid, 305 N.W.2d 337, 339 (Minn.1981). When the moving party produces evidence to support the motion, the adverse party may not rest upon his pleadings but must present specific facts showing that there is a genuine issue for trial. Minn.R.Civ.P. 56.05. Analysis of the material submitted by the parties shows that respondents established indisputable facts that supported the conclusion of the trial court, and that the trial court properly granted summary judgment.
A. "Probable cause for pursuing a civil action consists of such facts and circumstances as will warrant a cautious, reasonable and prudent person in the honest belief that...
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...maintain a claim of malicious prosecution, a plaintiff must establish both malice and want of probable cause. Mendota Heights Assocs. v. Friel, 414 N.W.2d 480, 484 (Minn.App.1987). There is an additional element which a plaintiff in a malicious prosecution suit must prove: the criminal proc......
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