This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (2002).
STATE OF MINNESOTA
IN COURT OF APPEALS
Harold-Chevrolet-Geo, Inc., et al.,
Filed November 23, 2004
Hennepin County District Court
File No. CT0216097
Thomas J. Lyons, Jr., John H. Goolsby, Consumer Justice Center, P.A., 342 East County Road D, Little Canada, MN 55117; and
Thomas J. Lyons, Sr., Thomas J. Lyons & Associates, P.A., 342 East County Road D, Little Canada, MN 55117 (for appellant)
Michael S. Kreidler, Louise A. Behrendt, Stich, Angell, Kreidler & Dodge, P.A., 120 The Crossings, 250 Second Avenue South, MN 55401 (for respondents)
Considered and decided by Halbrooks, Presiding Judge, Schumacher, Judge, and Parker, Judge.*
Appellant challenges the district court’s grant of summary judgment to respondent on appellant’s claims for damages under the Minnesota Prevention of Consumer Fraud Act, contending that the court erred (1) in finding that appellant failed to prove damages or establish a causal nexus between respondent’s actions and the alleged damages and (2) in granting summary judgment sua sponte on the issue of whether loans were included under the 1996 version of the Act. Appellant also challenges the district court’s grant of summary judgment to respondent on appellant’s claim for common-law conversion. Because we conclude that the district court did not err in granting summary judgment on appellant’s failure to prove damages, failure to establish a causal nexus, and on appellant’s conversion claim, we affirm on those bases. While we determine that the district court erred in granting summary judgment to respondent on the issue of whether loans were included in the 1996 Act without giving appellant an opportunity to be heard, we conclude that the error is harmless.
In November 1996, appellant Travis Higgins bought a used Chevrolet Cavalier from respondent automobile dealership, Harold Chevrolet-Geo, Inc. Appellant financed $9,866.02 of the total purchase price of the car through the dealership. The amount financed included $1,270.02 for credit insurance. The retail installment contract (RIC) included the following under the “Itemization of Amount Financed”:
(4) Amounts Paid on Your Behalf
. . . .
To Insurance Companies for
Vehicle Insurance $N/A
Credit Life Insurance $371.55
Credit Disability Insurance $898.47
The contract did not disclose to appellant that respondent would retain a portion of the cost of this insurance as a commission. Appellant also testified during his deposition that respondent’s “finance person” led appellant to believe that all of the money would be paid to the insurance company. In fact, respondent retained as a commission $552.93 of the total cost of the credit insurance.
In September 2002, appellant sued respondent, alleging violation of the Minnesota Prevention of Consumer Fraud Act, Minn. Stat. §§ 325F.68-.70 (1996) (the CFA), and common-law conversion. The claims were based on respondent’s retention of $552.93 of the credit-insurance payment.
Although appellant was not certain, he testified at his deposition that respondent “probably” discussed credit insurance with him before the RIC was drawn up and that he decided to accept this insurance before seeing the RIC. Appellant was aware that credit insurance was optional, that he could buy the vehicle even if he rejected the coverage, and that the cost of the insurance would increase his monthly payments. Appellant also knew that he could cancel the credit insurance, but he elected to keep it the entire time he owned the car because he “believed that it was a good thing to have.” Appellant also initially financed a service contract on the Cavalier. He eventually cancelled the service contract and was sent a refund check by respondent.
During his deposition, appellant was asked what he “would have done differently had [he] known” that respondent would be keeping part of the price of the credit insurance as a commission. Appellant responded, “I would have probably tried to negotiate the price or not take it at all. I’m not sure what I would have done. I wasn’t offered a choice.” Appellant also stated that he did not ask whether the price of the credit insurance was negotiable or whether he could get that price reduced.
In July 2003, respondent moved for summary judgment on both of appellant’s claims. The district court granted respondent’s motion. The court found that “[c]redit life insurance is regulated by Minnesota law. The Commerce Commissioner determines whether the premium rates are acceptable and takes into consideration allowances for underwriting expenses, including commissions. Minn. Stat. § 62B.07. The premium rates, including commissions, are fixed by the insurance company.” Based on the affidavit of Robert O’Brien, respondent’s former finance manager, the district court also found that respondent does not negotiate insurance premiums with its customers.
The district court concluded that appellant’s CFA claim failed for two reasons. First, the court held, sua sponte, that the claim was not actionable because at the time of the alleged misrepresentation, loans were not considered merchandise within the meaning of the statute. Second, the court held that appellant failed to show a causal nexus between the actions of respondent and his alleged damages, or, in fact, that appellant sustained actual damages as a result of respondent’s alleged misrepresentation. The court concluded that appellant’s conversion claim failed because there was no evidence that appellant paid too much for his credit insurance, that he could have purchased it elsewhere for less, or that he would have looked elsewhere for the insurance. This appeal follows.
On appeal from summary judgment, this court asks whether there are any genuine issues of material fact and whether the district court erred in its application of the law. State by Cooper v. French, 460 N.W.2d 2, 4 (Minn. 1990). “[T]he reviewing court must view the evidence in the light most favorable to the party against whom judgment was granted.” Fabio v. Bellomo, 504 N.W.2d 758, 761 (Minn. 1993). No genuine issue of material fact exists “[w]here the record taken as a whole could not lead a rational trier of fact to find for the nonmoving party.” DLH, Inc. v. Russ, 566 N.W.2d 60, 69 (Minn. 1997) (alteration in original) (quoting Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S. Ct. 1348, 1356 (1986)).
To defeat a motion for summary judgment, a plaintiff must produce sufficient evidence to show a genuine issue of material fact as to each element of the claim. Rouse v. Dunkley & Bennett, P.A., 520 N.W.2d 406, 410-11 (Minn. 1994). Damages are a necessary element of an action under the CFA. D.A.B. v. Brown, 570 N.W.2d 168, 172 (Minn. App. 1997). Moreover, a causal nexus must be shown between such damages and the alleged wrongful conduct complained of. Group Health Plan, Inc. v. Philip Morris Inc., 621 N.W.2d 2, 14 (Minn. 2001).
Minn. Stat. § 8.31, subd. 3a (2002), authorizes any person “injured by a violation” of the CFA to sue for damages. The CFA prohibits
[t]he act, use, or employment by any person of any fraud, false pretense, false promise, misrepresentation, misleading statement or deceptive practice, with the intent that others rely thereon in connection with the sale of any merchandise, whether or not any person has in fact been misled, deceived, or damaged thereby.
Minn. Stat. § 325F.69, subd. 1 (2002). To state a claim alleging a violation of Minn. Stat. § 325F.69, subd. 1, a plaintiff must plead (1) an intentional misrepresentation relating to the sale of merchandise, and (2) damages to the plaintiff caused by the misrepresentation. Group Health, 621 N.W.2d at 12.
Appellant argues that the court erred in failing to find evidence that appellant sustained actual damages. In Minnesota, fraud damages are generally measured following the out-of-pocket rule. Yost v. Millhouse, 373 N.W.2d 826, 830 (Minn. App. 1985). Under this rule, the measure of damages is the difference between the amount the defrauded person paid for merchandise and the actual value of the merchandise, plus any other damages proximately caused by the fraud. Id. at 830-31. Here, nothing in the record shows that the value of the contract insurance purchased by appellant was less than he paid for it. There is no testimony regarding the “market value” of such insurance. Further, appellant knew that the credit insurance was optional and that he could cancel the insurance if he no longer wanted it. Nonetheless, he never gave any consideration to doing so and, in fact, kept the insurance the entire time he owned his car, because he thought that the credit insurance “was a good thing to have.” This indicates that, for appellant, the cost of the credit insurance did not exceed its value. Thus, the district court did not err in concluding that appellant suffered no out-of-pocket damages.
Appellant also argues that the district court erred in failing to find a causal nexus between respondent’s actions and his alleged damages. Appellant contends that the district court’s grant of summary judgment is inappropriate because “absolute proof of reliance . . . [is not] required under the CFA.” While it is true that it is not necessary to plead individual consumer reliance to state a claim under the CFA, it is necessary to prove reliance to recover damages. Group Health, 621 N.W.2d at 13. Because Minn. Stat. § 8.31, subd. 3a, authorizes recovery only by a party injured by a violation of the CFA, causation “remains an element of such a claim.” Group Health, 621 N.W.2d at 13. While reliance is not an independent element of a private action for damages based on a violation of Minn. Stat. § 325F.69, subd. 1, reliance is a necessary component of the causation element of such a claim. Group Health, 621 N.W.2d at 13. As explained by the supreme court in Group Health:
[A]s a practical matter it is not possible that the damages could be caused by a violation without reliance on the statements or conduct alleged to violate the statutes. Therefore, in a case such as this, it will be necessary to prove reliance on those statements or conduct to satisfy the causation requirement.
Id. Thus, to prove a claim for damages under section 325F.69, subd. 1, plaintiffs must establish a causal nexus between their alleged damages and the conduct of the defendants alleged to have violated the statute. Group Health, 621 N.W.2d at 14. Although direct evidence of reliance is not required to prove causation, appellant must at least present circumstantial evidence of some reliance on the respondent’s alleged misrepresentations. Id.; Flynn v. Am. Home Prods. Corp., 627 N.W.2d 342, 351 (Minn. App. 2001).
Appellant testified at his deposition that he was aware that the credit insurance was optional and that he decided to purchase it prior to seeing the RIC. In addition, he testified that he did not think that the finance officer affirmatively stated that respondent would not retain a commission from the sale of the insurance, simply that there was no disclosure that respondent would retain such a commission. Accordingly, he can demonstrate no reliance on the alleged misrepresentation.
Appellant suggests that the supreme court’s recent decision in Wiegand v. Walser Auto. Groups, Inc., 683 N.W.2d 807 (Minn. 2004), bears on his arguments regarding the level of reliance necessary to establish a causal nexus. But in Wiegand, the court addressed the issue in the context of a rule 12 motion to dismiss rather than a motion for summary judgment. Id. at 811. On a motion to dismiss, the only question before the court is whether the petition states a legally sufficient claim for relief. Elzie v. Comm'r of Pub. Safety, 298 N.W.2d 29, 32 (Minn. 1980). When deciding whether to grant a motion to dismiss pursuant to Minn. R. Civ. P. 12.02(e), the district court is only to consider the evidence alleged in the petition. In re Milk Indirect Purchaser Antitrust Litig., 588 N.W.2d 772, 775 (Minn. App. 1999). A claim prevails against a motion to dismiss if it is possible to grant relief on any evidence that is consistent with the plaintiff’s theory. Geldert v. Am. Nat’l Bank, 506 N.W.2d 22, 25 (Minn. App. 1993), review denied (Minn. Nov. 16, 1993). Where, as here, matters outside the pleadings are considered by the court, the summary-judgment standard applies. Wallin v. Minn. Dep’t of Corr., 598 N.W.2d 393, 399 (Minn. App. 1999), review denied (Minn. Oct. 21, 1999). Additionally, the issue in Wiegand was whether a causal nexus could ever be proven between oral representations and consumer injuries where a written contract contradicts the content of those oral representations. 683 N.W.2d at 809. This issue is not relevant to appellant’s arguments. Thus, Wiegand is inapposite.
Appellant also testified that, had he known respondent was going to keep part of the purchase price of the credit insurance as a commission, he “would have probably tried to negotiate the price or not take[n] it at all,” but that he was “not sure” what he would have done. Appellant argues that his situation is analogous to that addressed by this court in Sutton v. Viking Oldsmobile Nissan, Inc., No. C2-99-1843, 2001 WL 856250 (Minn. App. July 31, 2001), review denied (Minn. Oct. 24, 2001).
In Sutton, the appellant purchased a service contract and disability and term life insurance from Viking. Id. at *1. The RIC included the total cost of the service contract and insurance under a section titled “Amounts Paid to Others on my behalf.” Id. But Viking kept a portion of the payments as a commission. Id. During his deposition, Sutton testified that “had he known Viking would keep almost half the cost of the extended service contract as profit, he would have tried to negotiate a lower price; if the dealership had been unwilling to negotiate, he would not have purchased the service contract.” Id. (emphasis added). Relying on Group Health, this court held that Sutton had presented a genuine issue of material fact sufficient to withstand a motion for summary judgment. Id. at *2 (citing Group Health, 621 N.W.2d 2).
There is one key difference between Sutton and this case. In Sutton, this court observed that a lost opportunity to negotiate is a legally cognizable injury under the CFA and that a fact issue existed regarding causation of that injury. 2001 WL 856250, at *2. But no such fact issue exists here. In Sutton, the appellant testified that he would have negotiated the service contract price or refused to buy if he had known that the dealership was retaining a portion of the purchase price; here, appellant testified that he would have probably tried to negotiate the credit insurance price or refused to buy it, but that he was not sure. As a result, any damages are, at best, speculative.
Because appellant cannot prove that he suffered any actual damages, he cannot prove a claim under the CFA. Jackson v. Reiling, 311 Minn. 562, 563, 249 N.W.2d 896, 897 (1977). Thus, the district court did not err in granting respondent’s motion for summary judgment.
Appellant also argues that the district court erred in granting summary judgment sua sponte based on its holding that loans were not considered merchandise within the meaning of the CFA as it existed at the time of the alleged misrepresentation, because appellant had no opportunity to be heard on the matter.
A district court may grant summary judgment sua sponte so long as the adverse party is afforded an opportunity to oppose such an action. Zimprich v. Stratford Homes, Inc., 453 N.W.2d 557, 561 (Minn. App. 1990). “Unless an objecting party can show prejudice from lack of notice or other procedural irregularities, or was not afforded a meaningful opportunity to oppose summary judgment, the court’s judicious exercise of its inherent power to grant summary judgment in appropriate cases should not be disturbed.” Doe v. Brainerd Int’l Raceway, Inc., 514 N.W.2d 811, 822 (Minn. App. 1994) (emphasis added), rev’d on other grounds, 533 N.W.2d 617 (Minn. 1995). Although “meaningful opportunity” may vary with the circumstances of an individual case, Hebrink v. Farm Bureau Life Ins. Co., 664 N.W.2d 414, 419 (Minn. App. 2003), “[p]rejudice is unavoidable when a [district] court denies any opportunity to marshal evidence in opposition to a basis for summary judgment raised sua sponte.” Doe, 514 N.W.2d at 822.
Thus, in Doe, this court reversed the district court’s grant of summary judgment sua sponte where the appellant “received no notice that the [district] court would consider summary judgment” on the basis of appellant’s alleged failure to prove damages. Id. In Hebrink, the district court granted summary judgment sua sponte, prompted by an argument in respondent’s motion in limine. 664 N.W.2d at 418. This court reversed, finding that appellant was not given a meaningful opportunity to oppose summary judgment where the motion in limine was filed seven days before trial and appellant did not know until the day of trial that he was expected to address a potential summary-judgment motion based on an argument raised in that motion in limine. Id. at 419-20. But cf. Septran, Inc. v. Indep. Sch. Dist. No. 271, 555 N.W.2d 915, 921 (Minn. App. 1996) (concluding that an adverse party had a meaningful opportunity to oppose summary judgment where the court gave the parties notice at the motion hearing that it would consider summary judgment and provided the parties 18 days to submit briefs on the issue), review denied (Minn. Feb. 27, 1997).
Here, the record contains no evidence that appellant was afforded an opportunity to oppose summary judgment based on the scope of the 1996 statute. Therefore, the district court erred in granting summary judgment sua sponte. But because we conclude that the district court correctly granted summary judgment on other grounds, this error is harmless.
Appellant argues that the district court erred in granting summary judgment on appellant’s claim for conversion. “Conversion is the exercise of dominion and control over goods inconsistent with, and in repudiation of, the owner’s rights[.]” Rudnitski v. Seely, 452 N.W.2d 664, 668 (Minn. 1990). An action that “willfully interferes with the personal property of another without lawful justification that deprives the lawful possessor of use and possession” is conversion. Indep. Sch. Dist. No. 404 v. Castor, 670 N.W.2d 758, 766 (Minn. App. 2003). To establish a claim for conversion, appellant must establish that respondent converted property owned by appellant. See McNeill & Assocs., Inc. v. ITT Life Ins. Corp., 446 N.W.2d 181, 184 (Minn. App. 1989) (noting that a party seeking to establish a claim for conversion must establish ownership of the property alleged to have been converted), review denied (Minn. Dec. 1, 1989).
The district court granted summary judgment, concluding that “Minnesota law . . . authorizes the payment of a commission in the context of [an] insurance premium.” The premium rates for credit insurance authorized by the commerce commissioner include allowances for costs, including “compensation to agents.” Minn. Stat. § 62B.07, subd. 2 (2002).
Appellant cites Wigdale v. Anderson, 193 Minn. 384, 258 N.W. 726 (1935), for the proposition that an action will lie for the conversion of money where there is an obligation to return or otherwise particularly treat specific money. But appellant’s reliance on Wigdale is misplaced.
In Wigdale, the defendant sent the plaintiff $700 with instructions to put the money in a bank account. Id. at 385, 258 N.W. at 726-27. Instead, the plaintiff used the money to buy $700 worth of bonds issued by a religious corporation. Id. The court concluded that the defendant had a claim for conversion because the plaintiff had violated the defendant’s instructions in buying bonds rather than depositing the funds in a bank account. Id. at 389, 258 N.W. at 728.
Here, there is no evidence that respondent violated appellant’s instructions to treat appellant’s money in a particular way. Appellant knew that credit insurance was optional, yet agreed to buy it. Furthermore, appellant knew that he could cancel the insurance but did not do so because he thought it was good to have. Respondent followed appellant’s instructions in using the money to buy the desired credit insurance. Because commissions such as those retained by respondent are allowed under Minnesota law, appellant is unable to establish ownership of the money he alleges was converted. That respondent realized a legal commission on this transaction does not give rise to a claim for conversion. Thus, the district court did not err in granting summary judgment on this issue.
* Retired judge of the Minnesota Court of Appeals, serving by appointment pursuant to Minn. Const. art. VI, § 10.
 Appellant testified that he did not think that the finance officer specifically stated that respondent would not retain part of the insurance premium, just that the finance person did not say that respondent would retain part of it.
Pursuant to Minn. Stat. § 62B.07 (2002), the commissioner is required to disapprove insurance forms if the “premium rates charged or to be charged are excessive in relation to benefits.” Minn. Stat. § 62B.07, subd. 2.
 “Merchandise” is defined by Minn. Stat. § 325F.68, subd. 2. The 1996 version of this statute was in effect at the time of the alleged misrepresentation. The statute was amended in 1997 to add “loans” to the definition of merchandise. 1997 Minn. Laws ch. 157, § 60. Because we conclude that appellant has not demonstrated damages or a causal nexus, we do not reach the question of whether loans are “merchandise” under the 1996 statute.