STATE OF MINNESOTA

IN COURT OF APPEALS

OFFICE OF APPELLATE COURTS

MAY 2O 2014

FILED Jim Knoblach,

Appellant,

vs.

State of Minnesota, et al.,

Respondents.

ORDER

#A14-0344

Considered and decided by Cleary, Chief Judge; Peterson, Judge; and Connolly,

Judge.

BASED ON THE FILE, RECORD, AND PROCEEDINGS, AND FOR THE

FOLLOWING REASONS:

This appeal was filed on February 28, 2014. Appellant seeks review of a

judgment dismissing his complaint for failure to state a claim. The supreme court has

denied appellant's petition for accelerated review. Approximately two months after the

appeal was filed, appellant filed a motion for expedited handling. Respondents do not

oppose that motion. The parties indicate that financing arrangements are imminent or

underway and a groundbreaking ceremony for the project that is the subject of the bill

being challenged in this appeal is scheduled for July 1, 2014. Briefing is now complete.

The parties have established good cause for expedited consideration of the appeal.

Respondents move to require appellant to post a surety bond under Minn. Stat.

§ 562.02 (2012). If a party brings an action in any court of this state that challenges the

validity of actions taken by a public body or its agents in the course of the sale or

issuance of bonds or the making of a contract for a public improvement, and if the court

in which the action is pending "determines that loss or damage to the public or taxpayers

may result from the pendency of the action or proceeding, the court may require" the

posting of "a surety bond," which shall guarantee "payment . of any loss or damage

which may be caused to the . . . taxpayers" as a result of delay, payable in the event that

the party does not prevail in the action. Minn. Stat. § 562.02. The court must "consider

whether the action presents substantial constitutional issues or substantial issues of

statutory construction, and the likelihood of a party prevailing on these issues." Id.

Because the parties have filed their briefs, we have considered these factors in ruling on

respondents' motion.

If a bond is "not filed within a reasonable time allowed therefor by the court, the

action shall be dismissed with prejudice." Id. The purpose of this statute is "to protect

taxpayers from delays in the implementation of public projects." Pike v. Gunyou, 491

N.W.2d 288, 291 (Minn. 1992). A particular plaintiff's "financial inability to furnish the

required bond" is irrelevant. Gram v. Viii. of Shoreview, 259 Minn. 145, 154, 106

N.W.2d 553, 559 (1960). Appellant has not provided any information about his readiness

to post a bond, if ordered to do so, and we therefore assume that he can and will make

good-faith efforts to post a bond within a reasonable time.

Appellant does not contest the respondents' affidavit evidence that a six-month

work stoppage would result in increased project costs in the amount of $3,570,000.

Appellant argues that there is insufficient evidence to support the assertion by

respondents' witness that delaying the project will require taxpayers to incur costs for

temporary office, chambers, hearing rooms, and related facilities in an amount exceeding

$15 million. We were not provided with an itemization of the anticipated costs of

obtaining temporary facilities elsewhere. But it is clear that obtaining temporary

facilities, in the event that the project that is the subject of this appeal is delayed, would

require the expenditure of substantial public funds. In light of the overall estimated costs

of the project and the evidence submitted, we conclude that the existing record supports

the establishment of a bond in the amount of $11,070,000 (including $3.57 million for

increased project costs and $7.5 million for temporary facilities and related costs). See

The Kilowatt Org., Inc. v. Dep 't of Energy, Planning & Dev., 336 N.W.2d 529, 533

(Minn. 1983) (concluding there was no abuse of discretion in ordering posting of

$6 million surety bond, where respondents sought bond in the amount of $26 million and

amount ordered was "justified by the evidence presented"). If respondents assert that this

amount is inadequate to fully protect the taxpayers from loss or damage attributable to

delay caused by the pendency of this appeal, they may move for an increase in the bond,

with appropriate supporting documentation, as set forth below.

In light of the parties' agreement that expedited consideration is appropriate, we

will establish a schedule for additional submissions.

IT IS HEREBY ORDERED:

1. The motions for expedited handling and to require a surety bond are

granted.

2. Appellant shall obtain and post with the district court a surety bond in the

penal amount of $11,070,000 by noon on Tuesday, May 27, 2014. Proof of the bond

shall be served on counsel for respondents and shall be received by the clerk of appellate

courts no later than 12:00 noon on May 27, 2014.

3. Failure to post the surety bond and to serve and file proof of the bond by

12:00 noon on May 27, 2014 will result in dismissal of this appeal, without further

motion or notice.

4. If the surety bond is posted as ordered, and respondents assert that the

amount is inadequate to fully protect taxpayers from loss or damage attributable to the

delay caused by this appeal, they may serve and file a motion to increase the bond by

4:30 p.m. on Friday, May 30, 2014. Counsel shall ensure that any such motion is actually

received by appellant's counsel and the clerk of appellate courts no later than the stated

date and time.

In

5. Any response to a motion served and filed in accordance with paragraph

four shall be served and filed no later than 9 a.m. on Tuesday, June 3, 2014. Counsel

shall ensure that any such response is actually received by respondents' counsel and the

clerk of appellate courts no later than the stated date and time.

6. Oral argument on the merits of this appeal is scheduled for 1:30 p.m. on

Tuesday, June 10, 2014. Oral arguments will be heard in Courtroom 200, Minnesota

Judicial Center, St. Paul, MN, before the special term panel identified on this order.

Subject to enlargement or limitation by the panel on the date of argument, appellant will

be afforded 15 minutes to present his principal argument, respondents shall be afforded

15 minutes to present their argument, and appellant will be allowed five minutes for

rebuttal.

Dated: May 20, 2014

BY THE COURT

e r~-4 ~n Edward J. Clea Chief Judge

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