Dakota Heritage Bank v. Pankonin, 849 N.W.2d 219

Willard and Christi Pankonin owned mortgaged real property; Dakota Heritage Bank obtained a foreclosure judgment. Willard filed bankruptcy and his interest passed to the trustee, Michael Iaccone.
The trustee and Christi moved for relief from the foreclosure judgment; the district court denied relief on June 6, 2012 and reserved any attorney-fee award.
On July 3, 2012 the Bank moved for sanctions and attorney’s fees; on September 6, 2012 the court found the defendants’ claims frivolous and awarded $2,100 under N.D.C.C. § 28-26-01(2), and admonished defense counsel under Rule 11.
The district court entered a judgment for the $2,100 against Iaccone, Christi Pankonin, and attorney Timothy Lamb on July 18, 2013; formal notice of entry was not filed until April 16, 2014, and the Bank attempted service by mail (not electronic) on July 19, 2013.
Christi appealed the attorney-fee judgment on January 10, 2014; the Bank moved to dismiss as untimely, asserting (1) service by mail started the appeal clock and (2) appellants had actual knowledge earlier.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether appeal was timely	Bank: mailed notice of entry on July 19, 2013 started 60-day appeal period	Pankonin: no proper service; actual knowledge did not occur more than 60 days before appeal	Appeal was timely; mail service failed to satisfy electronic service rules and no record evidence of earlier actual knowledge
Whether attorney-fee award was improper for untimeliness under Rule 54(e)(3)	Bank: fee motion was properly considered	Pankonin: Bank failed to file fee motion within 21 days of June 6 order so award was untimely	Court did not abuse discretion; 21-day clock did not start because no notice of entry of the June 6 order was served or filed
Whether district court abused discretion in awarding fees as frivolous	Bank: defendants’ repeated shifting/frivolous arguments justified fees	Pankonin: challenges merits/amount of fees	No abuse of discretion; statute requires fees for frivolous claims and court has discretion over amount; $2,100 upheld
Whether judgment is unenforceable due to defective notice of entry	Pankonin: failure to timely serve/file notice within 14 days renders judgment unenforceable	Bank: judgment is valid and can be enforced once notice filed or party has actual knowledge	Judgment is valid (not jurisdictional defect). It was unenforceable against Pankonin until she had actual knowledge, but she obtained actual knowledge by appeal; judgment is enforceable now

Thorson v. Thorson, 541 N.W.2d 692 (N.D. 1996) (actual knowledge to start appeal period requires affirmative action on record by the appealing party)
Barrett v. Gilbertson, 827 N.W.2d 831 (N.D. 2013) (standard that court must award reasonable fees for frivolous claims but has discretion on amount)
Gress v. Kocourek, 427 N.W.2d 815 (N.D. 1988) (enforcement of a judgment depends on notice of its entry)
First Am. Bank & Trust Co. v. George, 239 N.W.2d 284 (N.D. 1976) (a judgment is valid if the court has jurisdiction despite procedural defects in entry or notice)
Piccagli v. N.D. State Health Dept., 319 N.W.2d 484 (N.D. 1982) (time limit for serving notice of entry is procedural, not jurisdictional)
Alliance Pipeline L.P. v. Smith, 833 N.W.2d 464 (N.D. 2013) (procedural defects in entry or notice do not deprive a judgment of validity)