This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480A.08, subd. 3 (2004).






John T. Feltl,


Leon A. Greenblatt, et al.,


Filed February 1, 2005

Affirmed as modified; motion granted in part

Minge, Judge


Hennepin County District Court

File No. CT 03-13751



F. Chet Taylor, Meikle & Taylor, P.A., 4000 Campbell Mithun Tower, 222 South Ninth Street, Minneapolis, MN 55402 (for appellant)


Philip R. Schenkenberg, IV, Jesse R. Orman (of counsel), Briggs and Morgan, P.A., 2200 IDS Center, 80 South Eighth Street, Minneapolis, MN 55402 (for respondents); and


Alan R. Dolinko (pro hac vice), Robinson, Curley & Clayton, P.C., 300 South Wacker Drive, Suite 1700, Chicago, IL 60606 (for respondent Greenblatt); and


James W. Naisbitt (pro hac vice), James W. Naisbitt, Ltd., 205 West Wacker Drive, Suite 1600, Chicago, IL 60606 (for respondents Banco Panamericano, Inc., Loop Corporation, Nola, L.L.C., and Repurchase Corporation)


            Considered and decided by Toussaint, Chief Judge; Willis, Judge; and Minge, Judge.



U N P U B L I S H E D  O P I N I O N


MINGE, Judge


Appellant John T. Feltl challenges the dismissal with prejudice of his action to recover $3 million, which he paid as a guarantor to cover a portion of respondents’ debt.  Respondents Leon A. Greenblatt and related companies, who are debtors, challenge the district court’s determination that Feltl was not a volunteer when he agreed to guarantee $3 million of their debt.  Because Feltl was under economic pressure to execute the guarantee to protect his property interest; he is not a volunteer, he may ultimately pursue a claim against respondents for the debt he has paid, and we affirm that conclusion by the district court.  Because Feltl’s claims against respondents for unjust enrichment, equitable subrogation, and piercing the corporate veil cannot be pursued at this time, we affirm the dismissal.  Because at a future date Feltl’s claims will probably be enforceable, the district court erred by dismissing with prejudice.  Respondents also seek to strike Feltl’s supplemental record.  That motion is granted in part and denied in part. 



From 1986 to August 2000, Feltl owned R.J. Steichen and Company (Steichen), a securities-brokerage firm.  Steichen opened margin accounts for respondents Banco Panamericano, Loop Corp., Nola L.L.C., and Repurchase Corp. and extended lines of credit to the companies for investment.  Respondent Greenblatt formed the four corporate entities and made representations to Steichen employees that his assets were behind their obligations.  During this time, Feltl sold Steichen to Stockwalk Group, Inc. (Stockwalk).  Stockwalk continued to operate Steichen as a subsidiary, then merged Steichen with other firms, and renamed the firm Miller Johnson Steichen Kinnard, Inc. (MJSK).  Feltl was a shareholder and member of the board of directors of Stockwalk, which is the parent company of MJSK. 

In May 2001, the margin accounts of respondent corporations suffered severe market losses, resulting in a combined debt of approximately $7.1 million.  The outstanding debts negatively affected the net value of MJSK and its parent company, Stockwalk, and their ability to conduct business.  On July 10, 2001, Feltl entered into a guarantee agreement with MJSK to guarantee up to $3 million of the unpaid balances in respondents’ accounts.  This guarantee agreement included the following paragraph:

The [appellant] will not exercise or enforce any right of contribution, reimbursement, recourse or subrogation available to the undersigned against any person liable to payment of the Indebtedness, or as to any collateral security therefore, unless and until all of the Indebtedness shall have been fully paid and discharged.


Two days later, respondents entered into a repayment plan with MJSK, agreeing to pay several million dollars and transfer tax credits to MJSK for a total settlement of $6.85 million.  Respondents were to complete performance under the plan by August 1, 2002.  Feltl was not a party to this repayment plan, and it did not mention him or his personal guarantee.

Subsequently, MJSK transferred its clearing and margin-financing functions and assets to MJK Clearing, which is also a subsidiary of Stockwalk.  MJK Clearing is now the debtor in a bankruptcy proceeding.  In August 2002, respondents failed to make payment on the repayment plan, and the MJK bankruptcy trustee initiated a collection action against them in bankruptcy court.  In the context of this MJK bankruptcy collection action, Feltl paid $3 million pursuant to his guarantee agreement to MJK Clearing’s bankruptcy trustee.  The remainder of Greenblatt’s and the corporate entities’ debt is unpaid and the collection action is pending. 

On August 5, 2003, Feltl sued respondents in state court to recover the $3 million he had paid on their indebtedness to MJK Clearing pursuant to the guarantee.  Appellant asserted he was entitled to relief on several theories: respondents’ liability on the margin account; respondents’ violation of the margin agreements; enforcement of the July 12, 2001 repayment plan; unjust enrichment; equitable subrogation; and piercing the corporate veil.  The district court granted respondents’ motion to dismiss Feltl’s amended complaint with prejudice on the ground that he could not seek payment until respondents’ debts were paid in full.[1]  The district court rejected respondents’ defense that Feltl voluntarily paid the $3 million and that as a volunteer he could not maintain the equitable-subrogation claim.  Feltl appealed, arguing that he properly pleaded claims of unjust enrichment, equitable subrogation, and piercing the corporate veil and that the district court erred in dismissing the complaint with prejudice.  Respondents contest the district court’s finding that Feltl was not a volunteer.  After the appeal was filed and briefs submitted, Repurchase Corp., one of the corporate respondents, filed for bankruptcy.  This court stayed the appeal as it pertains to Repurchase Corp., but after briefing from the parties, ordered the appeal to proceed with regard to the four other respondents. 



In reviewing cases that were dismissed for failure to state a claim on which relief can be granted pursuant to Minn. R. Civ. P. 12.02(e), the only question before the reviewing court is whether the complaints set forth a legally sufficient claim for relief.  Barton v. Moore, 558 N.W.2d 746, 749 (Minn. 1997).  The reviewing court must consider only the facts alleged in the complaint, accepting those facts as true, and must construe all reasonable inferences in favor of the nonmoving party.  Bodah v. Lakeville Motor Express, Inc., 663 N.W.2d 550, 553 (Minn. 2003).  The standard of review is de novo.  Id.


            The first issue is whether the district court erred in dismissing with prejudice Feltl’s claims of unjust enrichment, equitable subrogation, and piercing the corporate veil.  The district court found that under his guarantee agreement, Feltl’s equitable-subrogation claim would not attach until MJK Clearing’s trustee was paid in full and the debt discharged.  Feltl concedes that the rule in Minnesota is that full payment of the guaranteed debt to the creditor is required before a party can seek equitable subrogation and that MJSK and its successor have not received full payment.  See Westendorf v. Stasson, 330 N.W.2d 699, 703 (Minn. 1983) (stating the general rule that subrogation “will be denied prior to full recovery”).  But Feltl argues that respondents do not have standing to assert the full payment defense and that his subrogation claims should be allowed under the reasoning in City of Ortonville v. Hahn, 181 Minn. 271, 232 N.W. 320 (1930).  In Hahn,the court found that the subrogation claim was for a debt distinct from the original debt and could proceed on its own merits.  Id. at 273, 232 N.W. at 321.  However, Hahn is distinguishable.  Unlike the claimant in Hahn,Feltl is attempting to enforce his subrogation claim against respondents while part of the original debt remains unpaid.  In this sense, Feltl is trying to divide the debt and pursue his subrogation claim incident to that part of the debt which he has paid.  In fact, the Hahn court noted that if subrogation involved a division of the debt then the full payment rule would apply.  Id.  Therefore, until MJK Clearing’s trustee is fully paid and the debt discharged, Feltl cannot pursue his claim for equitable subrogation.

Next, Feltl argues that he properly pleaded the claim for unjust enrichment because respondents received a collective benefit of $3 million at his expense.  Unjust enrichment and equitable subrogation are related equitable theories of recovery.  See Westendorf, 330 N.W.2d at 703.  As equitable claims, unjust enrichment and subrogation will not be allowed if they infringe upon the legal or equitable rights of others.  See Benson v. Saffert-Gugisberg Cement Constr. Co., 159 Minn. 54, 60, 198 N.W. 297, 299 (1924).  Feltl is seeking to recover from respondents before MJK Clearing’s trustee has been paid.  Without evidence that the trustee has consented to Feltl’s action or waived its rights to fully collect the debt, Feltl cannot pursue his claim for unjust enrichment.  We do not reach the merits of the claim. 

            Also, Feltl argues that the district court erred in dismissing his claim for piercing the corporate veil.  However, Feltl recognizes that this is a collection remedy that is not viable independent of the unjust-enrichment and equitable-subrogation claims.  Because we find that dismissal without prejudice of Feltl’s claims for unjust enrichment and equitable subrogation is proper, dismissal without prejudice of the claim for piercing the corporate veil is also proper.

            Feltl disputes the district court’s finding that MJSK and its successors are an indispensable party but fails to cite any legal authority to support his position.  This court does not undertake to analyze questions not briefed.  See Minn. R. Civ. App. P. 128.02, subd. 1(d) (providing that briefs must include citations to legal authorities); State Dep’t of Labor & Indus. v. Wintz Parcel Drivers, Inc., 558 N.W.2d 480, 480 (Minn. 1997) (declining to address issues not adequately briefed).  Therefore, we do not further consider this claim except to note that given our disposition of the subrogation claim, MJK Clearing’s trustee is entitled to be paid before Feltl. 

The district court dismissed Feltl’s amended complaint with prejudice on the grounds that Feltl failed to join an indispensable party and that the equitable-subrogation claim was not ripe because MJSK and its successors had not yet been paid.  This is not a dismissal on the merits and therefore not a basis for dismissing the action with prejudice.  See Unbank Co. LLP v. Merwin Drug Co., 677 N.W.2d 105, 109 (Minn. App. 2004) (holding that dismissal of action for failure to join indispensable party was not on the merits and designating the dismissal without prejudice).  Consequently, we conclude that the district court erred in its dismissal of Feltl’s action with prejudice.  Instead, the dismissal should be designated as being without prejudice.



            The second issue is whether the district court erred in finding that Feltl was not a volunteer for purposes of the equitable-subrogation claim.  Respondents claim Feltl is an uninvited participant in this situation.  A recent case by this court addressed whether an employer without workers’ compensation insurance who voluntarily paid wages to an injured employee could be subrogated to the employee’s claim.  Olson v. Blesener, 633 N.W.2d 544 (Minn. App. 2001), review denied (Minn. Nov. 13, 2001).  In Olson, the court held that the employer could pursue a claim for subrogation because the employee was a 50% shareholder of the company and a key employee, and failure to pay the employee threatened the viability of the company.  Id. at 547.  While the court noted that the employer potentially faced some liability for the employee’s injuries, the court focused on the employee’s contributions to the company and the company’s viability in concluding that the company was not a volunteer.  Id.  Here, Feltl was not a stranger to the situation.  He was heavily invested in Steichen, Stockwalk, and ultimately MJSK and MJK Clearing.  He was a shareholder and board member of Stockwalk when he made the guarantee.  Unless MJSK, MJK Clearing, and Stockwalk obtained additional operating capital, their financial stability was in danger.  It is reasonable to infer that Feltl stood to lose a substantial investment if MJSK and Stockwalk were forced to cease operations.  Thus, the district court did not err in finding that Feltl was not a volunteer; he had a property interest to protect, and he was financially compelled to make the guarantee.



The last issue is whether we should strike Feltl’s supplemental record, which consists of transcripts, letters, and other public materials relating to the federal action between the MJSK Clearing trustee and respondents.  These items were not included in the pleadings and were not reviewed by the district court in ruling on respondents’ motion to dismiss Feltl’s action.  In reviewing orders to dismiss a complaint, this court considers only the facts alleged in the complaint.  Bodah, 663 N.W.2d at 553.  Portions of Feltl’s supplemental record, which include letters from his counsel, are extrinsic and should not be considered on appeal.  Other documents are part of the public record of proceedings in federal courts.  Because they are a matter of public record, we may consider such documents.  See State v. Rewitzer, 617 N.W.2d 407, 411 (Minn. 2000) (refusing to strike documents on appeal which were matters of public record and finding that court was free to refer to them in the course of its own research).  We grant the motion to strike with respect to all documents except the public record of federal court proceedings.

Because the district court did not err in dismissing Feltl’s action, but did err in dismissing it with prejudice, we modify the dismissal to designate it without prejudice, and we affirm as so modified.  Because the district court properly concluded that Feltl was not a volunteer, we affirm that determination.  Respondents’ motion to strike Feltl’s supplemental record is granted in part and denied in part.

            Affirmed as modified; motion granted in part.

[1] Appellant argued to the district court and also to this court that MJK Clearing’s bankruptcy trustee did not oppose his suit. But appellant did not make this allegation in his complaint, there is nothing in the record establishing the trustee’s consent or acquiescence to this action, and the district court refused to consider the argument as outside the pleadings.  See Bodah v. Lakeville Motor Express, Inc., 663 N.W.2d 550, 553 (Minn. 2003) (finding that a court reviewing cases to dismiss on the pleadings must only consider facts alleged in the complaint).