This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (1998).


Westin & Sellum, et al.,


St. James Automotive Corporation, et al.,

Filed June 29, 1999
Kalitowski, Judge

Watonwan County District Court
File No. C798214

Steven R. Sunde, Sunde, Olson, Kircher and Zender, 108 Armstrong Blvd. South, P.O. Box 506, St. James, MN 56081 (for appellants)

Laura J. Hein, Nancy Quattlebaum Burke, Peter Baatrup, Gray, Plant, Mooty, Mooty & Bennett, P.A., 3400 City Center, 33 South Sixth Street, Minneapolis, MN 55402 (for respondents)

Considered and decided by Lansing, Presiding Judge, Crippen, Judge, and Kalitowski, Judge.

U N P U B L I S H E D   O P I N I O N


Appellants Westin & Shellum, a partnership, and Clarence E. Westin challenge the district court's grant of summary judgment in favor of respondent St. James Automotive Corporation. Appellants contend there are genuine issues of material fact, and that respondent is barred from asserting certain offset language as a defense to payment. We affirm.


This matter arises out of a November 1, 1991, sublease of real property by appellant Westin & Shellum, a partnership that operated a metal plating business on the property, to respondent St. James Automotive. The parties have previously litigated two matters relating to the effect of an environmental indemnification letter executed by Clarence E. Westin individually to respondent (Westin I and Westin II). This litigation involves respondent's exercise of its option to purchase the property under the terms of the sublease. Specifically, appellants challenge respondent's attempt to withhold from the purchase price $159,051.03 plus interest as a setoff for costs incurred in investigating and remediating hazardous substances on the property.

Summary judgment is appropriate where there are no genuine issues of material fact and the moving party is entitled to judgment as a matter of law. Minn. R. Civ. P. 56.03. When reviewing a district court's grant of summary judgment, reviewing courts determine: (1) whether there are any genuine issues of material fact; and (2) whether the district court erred in its application of the law. Lubbers v. Anderson, 539 N.W.2d 398, 401 (Minn. 1995). In making these determinations, we view the evidence in the light most favorable to the nonmoving party. Nicollet Restoration, Inc. v. City of St. Paul, 533 N.W.2d 845, 847 (Minn. 1995). Where there is doubt as to the existence of a material fact, the doubt must be resolved in favor of finding that a fact issue exists. State by Beaulieu v. City of Mounds View, 518 N.W.2d 567, 571 (Minn. 1994).


Appellants contend the district court erred in rejecting their argument that res judicata applies to preclude respondent's claimed offset because Westin I and Westin II determined that respondent's cleanup expenses do not relate to pre-1991 environmental problems. We disagree.

In Westin I, the district court concluded that respondent could not withhold payments to appellants for costs that respondent had not yet incurred. The district court's order was not based on when the environmental problems occurred. We conclude that Westin I has no res judicata effect on the present litigation. See Wessling v. Johnson, 424 N.W.2d 795, 798 (Minn. App. 1988) (res judicata will not bar a second claim that does not arise out of the same operative nucleus of facts alleged in support of the claims), review denied (July 28, 1988).

In rejecting appellants' argument that Westin II precludes this action, the district court correctly summarized the decision in Westin II:

In Westin II it was decided that the Environmental Indemnification Letter allowed an offset up until the date of the last payment due to Westin under a promissory note and consulting agreement, but did not allow an offset against future environmental costs.

Thus, the jury accepted the $6,500 in expenses related to removal of asbestos, but rejected $43,000 in preliminary expenses because the $43,000 in expenses had not been incurred at the time of trial. Further, respondent's expert offered evidence that the environmental problems at issue existed prior to 1991 and appellants failed to come forward with any competent evidence refuting this evidence.


Appellants also contend there is a genuine issue of material fact as to the reasonableness of respondent's claimed setoffs. Specifically, appellants allege that respondent spent an unreasonable amount of money on attorney fees and is attempting to withhold money spent for preventative rather than remedial measures. We disagree.

Appellants have failed to come forward with any evidence challenging the reasonableness of respondent's well-documented cleanup measures. Instead, appellants claim that

[t]he language contained in the Sublease and the mere presentation of the exhibits by Respondent in relationship to its motion for Summary Judgment, raise issues of material fact relative to the reasonableness of the expense incurred.
We disagree. Respondent presented evidence that $13,641 was spent for attorney fees to oversee the development of a cleanup plan in conjunction with the Minnesota Pollution Control Agency. Respondent further indicated its expert witness was prepared to testify that these fees were reasonable. Appellants offered no evidence showing the attorney fees were unreasonable but simply argue that reasonableness is a fact issue. Because appellant has failed to come forward with specific facts showing that there is a genuine issue of material fact for trial, the district court properly granted summary judgment to respondent.

Appellants also contend the money spent by respondent for sealant does not qualify as an offset under the indemnification agreement because the sealant is preventative rather than remedial. But respondent offered evidence from its expert that

the proposed response actions [which included applying sealant] focused on measures to eliminate the original sources of contamination and thus the vehicles that would otherwise allow the contamination to spread further to the groundwater.

Again, appellants offered no evidence to refute respondent's expert's affidavit. Because appellants have failed to come forward with specific facts showing that there is a genuine issue for trial, we conclude the district court did not err in granting summary judgment.