This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (2000).
STATE OF MINNESOTA
IN COURT OF APPEALS
Douglas E. Schmidt,
Sieben, Grose, Von Holtum, McCoy & Carey, Ltd.,
Filed January 30, 2001
Steven C. Eggimann, Jenneane L. Jansen, Meagher & Geer, P.L.L.P., 4200 Multifoods Tower, 33 South Sixth Street, Minneapolis, MN 55402 (for respondent Schmidt)
Charles E. Lundberg, Bassford, Lockhart, Truesdell & Briggs, P.A., 3550 Multifoods Tower, 33 South Sixth Street, Minneapolis, MN 55402 (for respondent Sieben, Grose, Von Holtum, McCoy & Carey)
U N P U B L I S H E D O P I N I O N
Appellants Charles Untiedt and Wanda Untiedt appeal from the dismissal of their complaint against respondents Douglas E. Schmidt and Sieben, Grose, Von Holtum, McCoy & Carey, Ltd. We affirm.
The Untiedts operate a dairy farm in southwestern Minnesota. Beginning in 1988, their use of a contaminated vaccine led to significant disease among their cattle. The Untiedts retained Douglas E. Schmidt of the Sieben firm in an action against the vaccine producer. The Untiedts won a jury verdict of $1,038,775, an amount that exceeded their own experts' damages estimates. The trial court declined to grant a remitter, and on appeal this court affirmed the judgment. Untiedt v. Grand Lab., Inc., No. C4-94-772, 1994 WL 714308, at *7 (Minn. App. Dec. 27, 1994), review denied (Minn. Mar. 1, 1995).
The Untiedts were also granted an award of $366,584.24 in costs and attorney fees. To support their claim for attorney fees, the Untiedts established to the trial court's satisfaction that Schmidt's representation was more than adequate. In the order awarding fees, the trial court stated that the "case was difficult for a number of reasons" and that the "result obtained by Plaintiffs' counsel was excellent."
The Untiedts disputed whether the Sieben firm was entitled to the contingency percentage of the attorney fees award in addition to a share of the jury award. The attorney fees award was placed in escrow, and the Untiedts retained their current counsel. The Untiedts sought district court review of the retainer agreement. The district court denied the Untiedts' motion for disgorgement. On appeal, this court reversed. Untiedt v. Grand Lab., Inc., 552 N.W.2d 571 (Minn. App. 1996), review denied (Minn. Oct. 15, 1996). Noting it was ambiguous as to whether "recovery" included attorney fees, this court ruled that the Untiedts were entitled to a construction in their favor. Id. at 574-75.
The Untiedts now claim that the award they received in the underlying litigation was inadequate and that they should be awarded more money damages because Schmidt and the Sieben firm committed misconduct. The Untiedts instituted a complaint with the Minnesota Lawyers Professional Responsibility Board against Schmidt. On January 28, 2000, the Untiedts initiated this action against Schmidt and the Sieben firm, alleging breach of contract, breach of fiduciary duty, attorney deceit and collusion, attorney misconduct, fraud, consumer fraud, and negligent supervision. On March 22, 2000, the professional responsibility board determined that discipline was not warranted against Schmidt. The chair of the board, Charles Lundberg, recused himself because he was defending the Sieben firm against the Untiedts' lawsuit.
In March 2000, Schmidt and the Sieben firm brought a rule 12 motion to dismiss for failure to state a claim upon which relief can be granted. Their filings included documents that were part of the record in the underlying proceeding. On May 15, 2000, the Untiedts filed a motion to amend their complaint and to disqualify Lundberg from representing any party in the matter. The filing included an affidavit of Charles Untiedt and exhibits numbered 4 to 11. On May 22, 2000, Schmidt and the Sieben firm filed responsive pleadings, including a motion to strike Charles Untiedt's affidavit and exhibits 4 to 11 as not properly before the court under rule 12.02.
On May 23, 2000, the district court heard the motions. In a May 24, 2000 order, the district court granted Schmidt and the Sieben law firm's motion to strike and denied the Untiedts' motions to amend their complaint and to disqualify Lundberg. In June 2000, the district court granted Schmidt and the Sieben law firm's rule 12 motion to dismiss for failure to state a claim upon which relief can be granted. The district court entered judgment. The Untiedts appeal.
1. As a preliminary matter, the Untiedts argue that the district court erred by (a) refusing to disqualify Lundberg, (b) refusing to allow them leave to amend their complaint, and (c) granting Schmidt and the Sieben law firm's motion to strike Charles Untiedt's affidavit and exhibits 4 to 11 thereto.
a. The Untiedts contend the district court erred in refusing to remove Lundberg for apparent conflict of interest and/or the appearance of impropriety. Lundberg represents the Sieben firm in this action. Lundberg is also the chair of the Lawyers Professional Responsibility Board, although he recused himself from consideration of the Schmidt disciplinary matter. The district court has discretion to disqualify a law firm if a conflict is shown. Buysse v. Baumann-Furrie & Co., 428 N.W.2d 419, 426 (Minn. App. 1988), rev'd on other grounds, 448 N.W.2d 865 (Minn. 1989). In this case, there was no conflict because Lundberg recused himself in the disciplinary matter. The district court's denial of the motion to disqualify was not an abuse of discretion.
b. The Untiedts argue that the district court erred in granting the motion to strike. A court may strike from any pleading "any redundant, immaterial, impertinent or scandalous matter." Minn. R. Civ. P. 12.06. In a rule 12 motion to dismiss, if "matters outside the pleading are presented to and not excluded by the court," the motion shall be treated as a summary judgment motion. Minn. R. Civ. P. 12.02. The disputed affidavit and attached exhibits were not part of the underlying record, are not of public record, and were not attached to the Untiedts' complaint in this action. In considering the rule 12 motion, the district court did not abuse its discretion in granting the motion to strike.
The Untiedts further complain that the district court nonetheless permitted Schmidt and the Sieben firm to submit pleadings in the underlying litigation. When evaluating a rule 12 motion to dismiss, a court may take judicial notice of opinions in an underlying action, or consider documents central to the claim alleged. See In re Hennepin County 1986 Recycling Bond Litig., 540 N.W.2d 494, 497 (Minn. 1995) (court may consider contract central to claims alleged); Rohricht v. O'Hare, 586 N.W.2d 587, 589 (Minn. App. 1998) (court did not err in taking judicial notice of decisions in underlying action). "Conversion [from rule 12 motion to motion for summary judgment] is not necessary where the court only considers an authenticated copy of a key document upon which the complaint is premised." 1 David F. Herr & Roger S. Haydock, Minnesota Practice § 12.9 (1998); see also Johnson v. State, 536 N.W.2d 328, 332 (Minn. App. 1995), rev'd on other grounds, 553 N.W.2d 40 (Minn. 1996). The district court did not abuse its discretion in considering pleadings in the underlying litigation, and consideration of those pleadings did not convert the motion to dismiss into a summary judgment motion.
c. The Untiedts argue the district court erred in refusing to permit them to amend their complaint. After a responsive pleading has been served,
a party may amend a pleading only by leave of court or by written consent of the adverse party; and leave shall be freely given when justice so requires.
Minn. R. Civ. P. 15.01. "Although motions to amend should be freely granted, such amendments 'may properly be denied when the additional alleged claim cannot be maintained.'" Smith v. Woodwind Homes, Inc., 605 N.W.2d 418, 424 (Minn. App. 2000) (quotation omitted). "Absent a clear abuse of discretion, a district court's denial of a motion to amend a complaint will not be reversed." Benson v. Northwest Airlines, Inc., 561 N.W.2d 530, 540 (Minn. App. 1997) (citation omitted), review denied (Minn. June 11, 1997).
In response to Schmidt and the Sieben firm's motion to dismiss, the Untiedts filed a motion for leave to serve and file an amended complaint. An amendment may be denied if the proposed amendment does not state a viable claim for relief. Anderson v. Minnesota Ins. Guar. Ass'n, 520 N.W.2d 155, 159 (Minn. App. 1994) (citing Eisert v. Greenberg Roofing & Sheet Metal Co., 314 N.W.2d 226, 228-29 (Minn. 1982)), rev'd on other grounds, 534 N.W.2d 706 (Minn. 1995). The court's review "is focused on the proposed amended pleading." 1 David F. Herr & Roger S. Haydock, Minnesota Practice § 15.5 (1998). The Untiedts never submitted a proposed amended complaint for the district court's consideration. The district court did not abuse its discretion in denying their motion.
2. The Untiedts argue that the district court erred in dismissing their complaint under rule 12 for failure to state a claim on which relief can be granted. The standard is "whether the complaint sets forth a legally sufficient claim for relief." Elzie v. Commissioner of Pub. Safety, 298 N.W.2d 29, 32 (Minn. 1980) (quotation omitted). The district court ruled that the Untiedts' claims are barred by, among other things, the doctrine of res judicata.
"We review de novo whether the doctrine of res judicata can apply to a given set of facts." Erickson v. Commissioner of Dep't of Human Servs., 494 N.W.2d 58, 61 (Minn. App. 1992) (citation omitted). "If the doctrine applies, the decision whether to actually apply it is left to the discretion of the trial court." Id. The doctrine of "res judicata," or "claim preclusion," prevents parties from splitting claims into more than one lawsuit and precludes further litigation of the same claim. Loo v. Loo, 520 N.W.2d 740, 746 (Minn. 1994).
A judgment on the merits constitutes an absolute bar to a second suit for the same cause of action, and is conclusive between parties and privities, not only as to every matter which was actually litigated, but also as to every matter which might have been litigated, therein.
Beck v. American Sharecom, Inc., 514 N.W.2d 584, 588 (Minn. App. 1994) (citation omitted), review denied (Minn. June 29, 1994). "Res judicata requires (1) a final adjudication on the merits; (2) a subsequent suit involving the same cause of action; and (3) identical parties or persons in privity with the original parties." G.A.W. v. D.M.W., 596 N.W.2d 284, 287 (Minn. App. 1999) (citation omitted), review denied (Minn. Sept. 28, 1999).
The three requirements of res judicata are met in this case. First, there was a final judgment on the merits of the Untiedts' claim against Schmidt and the Sieben firm. In the underlying litigation, the Untiedts sought judicial review of the retainer agreement and, on appeal to this court, successfully blocked Schmidt and the Sieben firm from collecting a contingency percentage of the fee award. Second, this suit, seeking further remuneration from their former attorney, involves the same set of operative facts as the prior suit. See Paulos v. Johnson, 597 N.W.2d 316, 319 (Minn. App. 1999), review denied (Minn. Sept. 28, 1999). Third, this suit involves parties to the prior matter. The application of res judicata by the district court was not an abuse of discretion. Because we affirm the application of res judicata, we do not reach challenges to alternative bases for dismissal.