Strand v. Cass County

• Decision Date: 25 July 2008
• Docket Number: No. 20070168.,20070168.
• Citation: 2008 ND 149,753 N.W.2d 872
• Parties: John STRAND, Cass County resident and tax payer, and other Concerned Citizens and tax payers, similarly situated, Plaintiffs and Appellants v. CASS COUNTY, North Dakota, a political subdivision, Defendant and Appellee and The Cass County Commission, Defendant.
• Court: North Dakota Supreme Court

753 N.W.2d 872

2008 ND 149

John STRAND, Cass County resident and tax payer, and other Concerned Citizens and tax payers, similarly situated, Plaintiffs and Appellants v. CASS COUNTY, North Dakota, a political subdivision, Defendant and Appellee and The Cass County Commission, Defendant.

No. 20070168.

Supreme Court of North Dakota.

July 25, 2008.

Robert W. Harms (argued), Bismarck, N.D., and John T. Goff (on brief), Montgomery, Goff and Bullis, Fargo, N.D., for plaintiffs and appellants.

W. Todd Haggart, Vogel Law Firm, Fargo, N.D., for defendant and appellee.

MARING, Justice.

[¶ 1] John Strand and other Cass County residents and taxpayers ("Strand") appeal from a district court order entered after remand, denying Strand's request for an award of attorney's fees. Because we conclude the district court did not err in denying Strand's request for attorney's fees, we affirm.

I

[¶ 2] We previously set forth relevant facts in our prior decision in this case, Strand v. Cass County, 2006 ND 190, 721 N.W.2d 374 ("Strand I"), and we will not repeat them here except as necessary to resolve the issues raised in this appeal.

[¶ 3] In April 2003, Strand sued Cass County alleging that under N.D.C.C. ch. 11-11 the County was obligated to hold a vote before demolishing the old jail and sheriff's residence located in Fargo. Although demolition work had begun, Strand obtained a temporary restraining order prohibiting further demolition of the buildings. On April 22, 2003, the temporary restraining order was vacated by the parties' stipulation because the buildings had already been severely damaged. On May 7, 2003, the County filed its answer and counterclaim asserting Strand's actions resulted in additional costs to the County "in excess of $39,000." The County also alleged Strand's "allegations are untrue, made without reasonable cause and not in good faith and are frivolous pursuant to N.D.C.C. § 28-26-31" and, in the prayer for relief, requested "costs, disbursements and reasonable attorney fees as may be allowed by law."

[¶ 4] On May 22, 2003, Strand filed a reply to the County's counterclaim, which in part denied "any damage or injury was caused as a proximate result of Plaintiffs' actions" and reserved the right to amend his reply or complaint "to add additional claims constituting violations of Federal Law under USC Section 1983 and other Federal Constitutional Provisions." Strand's reply also asserted, "Plaintiffs reserve and seek the protections provided by North Dakota Century Code § 28-26-31," and sought relief "[a]warding Plaintiffs their costs, disbursements and reasonable attorney's fees as may be allowed by law." The district court subsequently permitted Strand to amend his complaint. On July 23, 2004, Strand filed his amended complaint and amended reply to counterclaim, asserting claims against the County for attorney's fees alleging the County's pleadings were frivolous and not filed in good faith; for civil rights violations under the First Amendment, the North Dakota Constitution, and 42 U.S.C. § 1983; and for abuse of process.

[¶ 5] On August 10, 2004, the County filed its answer to the amended complaint, again alleging Strand's "claims are frivolous, not made in good faith, or untrue, permitting an award of all expenses, including attorney fees, based on N.D.C.C. § 28-26-31." The County, however, withdrew its request for attorney's fees against Strand on the morning of trial. A jury trial was held on Strand's civil rights and abuse of process claims and on the County's counterclaim for the additional costs of the demolition. The jury found in favor of the County on Strand's claims and in favor of Strand on the County's counterclaim. The district court held that the County did not violate N.D.C.C. ch. 11-11. Strand moved for an award of attorney's fees under N.D.R.Civ.P. 11(b), N.D.C.C. § 28-26-01, and N.D.C.C. § 28-26-31 against the County. The district court entered judgment dismissing Strand's claims and entered an order denying Strand's request for attorney's fees.

[¶ 6] In Strand I, 2006 ND 190, ¶ 15, 721 N.W.2d 374, Strand argued the district court erred by failing to address his claim for attorney's fees based upon his allegation that the County's claim for attorney's fees was frivolous or made in bad faith. This Court summarized the proceedings below:

In his post-trial motion, Strand sought an award of attorney fees under N.D.R.Civ.P. 11(b) and N.D.C.C. §§ 28-26-01 and 28-26-31. Strand's motion had two bases: (1) the County's counterclaim against him for $39,000 was frivolous and filed in bad faith; and (2) the County's request for attorney fees against him, which was withdrawn on the first day of trial, was frivolous and filed in bad faith. In its order denying Strand's motion, the district court only ruled on the first basis, holding Strand was not entitled to an award of attorney fees based on the County's assertion of the counterclaim. Strand does not challenge the court's refusal to award attorney fees for defending against a counterclaim, but asserts the court erred in failing to address his claim for attorney fees based on the County's request for attorney fees which was subsequently withdrawn.

Strand I, at ¶ 16. Because the district court had failed to address Strand's second basis for attorney's fees, we reversed the court's order and remanded "for consideration of Strand's request for attorney fees based on the County's request for attorney fees from Strand." Id. at ¶ 17.

[¶ 7] On March 6, 2007, the district court held an evidentiary hearing on remand, including testimony and oral argument. In an April 5, 2007, order, the district court denied Strand's motion for attorney's fees.

II

[¶ 8] Strand argues the district court abused its discretion in failing to award his attorney's fees for the County's allegation that Strand's pleadings were frivolous entitling the County to attorney's fees. Strand asserts the court abused its discretion under N.D.R.Civ.P. 11, N.D.C.C. § 28-26-31, and N.D.C.C. § 28-26-01 because the County's repeated allegations and requests for fees were frivolous, untrue, made without reasonable inquiry, and unwarranted by existing law.

[¶ 9] Generally, under North Dakota law, each party to a lawsuit bears its own attorney's fees absent statutory or contractual authority. Danzl v. Heidinger, 2004 ND 74, ¶ 6, 677 N.W.2d 924. Strand's post-trial motion for attorney's fees asserted grounds under N.D.R.Civ.P. 11(b), and N.D.C.C. §§ 28-26-01(2) and 28-26-31.

[¶ 10] Section 28-26-01(2), N.D.C.C., states:

In civil actions the court shall, upon a finding that a claim for relief was frivolous, award reasonable actual and statutory costs, including reasonable attorney's fees to the prevailing party. Such costs must be awarded regardless of the good faith of the attorney or party making the claim for relief if there is such a complete absence of actual facts or law that a reasonable person could not have thought a court would render judgment in that person's favor, providing the prevailing party has in responsive pleading alleged the frivolous nature of the claim. This subsection does not require the award of costs or fees against an attorney or party advancing a claim unwarranted under existing law, if it is supported by a good-faith argument for an extension, modification, or reversal of the existing law.

(Emphasis added.)

[¶ 11] The plain language of this statute requires courts in civil actions to award costs and fees, including attorney's fees, upon finding a claim for relief was frivolous, providing the prevailing party pled the alleged frivolousness of the claim. N.D.C.C. § 28-26-01(2). "Frivolous claims are those which have `such a complete absence of actual facts or law that a reasonable person could not have expected that a court would render judgment in [that person's] favor.'" Deacon's Development, LLP, v. Lamb, 2006 ND 172, ¶ 12, 719 N.W.2d 379 (citing Peterson v. Zerr, 477 N.W.2d 230, 236 (N.D.1991) and N.D.C.C. § 28-26-01(2)). When a party requests attorney's fees under N.D.C.C. § 28-26-01(2), the court "must first determine whether a claim is frivolous. If the court makes that determination, the court must then award reasonable attorney's fees to the prevailing party." Soentgen v. Quain & Ramstad Clinic, P.C., 467 N.W.2d 73, 84 (N.D.1991). "Authorizations of attorney's fees for frivolous claims are not meant to chill enthusiasm and creativity in pursuing factual or legal theories, and a court should not use the wisdom of hindsight to determine whether claims are frivolous." Id. at 84-85. "If the law is unclear or unsettled on a particular claim, that circumstance makes it more likely that a party might reasonably expect to prevail on that claim." Id. at 85. "An award under N.D.C.C. § 28-26-01(2) is within the discretion of the district court and will only be disturbed on appeal for abuse of that discretion." Deacon's Development, at ¶ 12.

[¶ 12] Based upon this statute's language, however, the district court's decision whether to award attorney's fees is not completely within the court's discretion. Rather, if the district court determines that a claim is frivolous, the court must award attorney's fees. In 1987, our Legislature amended N.D.C.C. § 28-26-01(2) to its present form using "shall" and "must" and removed the discretionary language of "may." See 1987 N.D. Sess. Laws ch. 387, § 1; see also Blackburn, Nickels & Smith, Inc. v. National Farmers Union Prop. and Cas. Co., 482 N.W.2d 600, 605-06 (N.D.1992). Before this amendment, § 28-26-01(2), N.D.C.C., stated in relevant part, "In civil actions the court may, in its discretion, upon a finding that a claim for relief was frivolous, award reasonable actual or statutory costs, or both, including reasonable attorney's fees to the prevailing party. Such costs may be awarded regardless of the good faith of the attorney or client...." (Emphasis added.) The 1987 amendment also added the final...