This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480A.08, subd. 3 (1996).




Charles Rathcke, individually and as Personal

Representative of the Estate of Alma Rathcke,



City of Pequot Lakes,


Filed January 28, 1997


Schumacher, Judge

Crow Wing County District Court

File No. C1951713

Wilbert E. Hendricks, Hendricks Law Firm, Post Office Box 90, Pine River, MN 56474 (for Appellant)

Paul J. Sandelin, Steven R. Qualley, 308 First Street, Post Office Box 298, Pequot Lakes, MN 56472 (for Respondent)

Considered and decided by Amundson, Presiding Judge, Schumacher, Judge, and Klaphake, Judge.



Appellant Charles Rathcke, individually and as Personal Representative of the Estate of Alma Rathcke, challenges the district court's grant of summary judgment to respondent City of Pequot Lakes. We affirm.


In 1991, the city began condemnation proceedings against land owned by Rathcke. In November 1991, the parties agreed that the city would purchase Rathcke's land for $96,250. The agreement included a provision for payment of real estate taxes. The agreement was read into the record, and the parties also signed a stipulation of settlement, a purchase agreement, and an addendum to the purchase agreement. The transaction was to be closed in July 1992, but because of disputes over testing for underground contaminants in the land, the transaction did not close until 1995.

Under the agreement, the city initially was to pay for contamination testing, but if contaminants were found, then Rathcke would be responsible for both the cleanup and testing costs. Environmental testing revealed the presence of some contaminants on the land. Because the amount of contaminants was small, neither the Minnesota Pollution Control Agency nor the Minnesota Department of Agriculture required the land to be cleaned up. The city moved the court to enforce the stipulation agreement, contending that because some contamination was found, Rathcke was obligated to pay testing costs and clean up the land. In an order dated October 31, 1995, the district court interpreted the parties' agreements to mean that Rathcke

would be responsible for the costs of testing and cleanup only if testing revealed contamination of a magnitude requiring cleanup in accordance with state and/or federal laws and regulations.

Because there was not contamination of such a magnitude, the court ordered the city to pay the costs of testing and related expenses. The court further ordered Rathcke to satisfy an attorney's lien on the land and directed the parties to close the transaction within 30 days.

Before the district court in the original action issued the October 31 order, Rathcke initiated the present action, which included numerous counts, including breach of contract, defamation, bad faith, fraudulent misrepresentation, punitive damages, and rescission of contract. The city moved for summary judgment and dismissal. Rathcke then moved for partial summary judgment, seeking attorney fees, payment of real estate taxes, and interest. The district court granted the city's motion for summary judgment and dismissed the case.


On appeal from summary judgment, this court asks whether there are any genuine issues of material fact and whether the district court erred in applying the law. State by Cooper v. French, 460 N.W.2d 2, 4 (Minn. 1990).

1. The district court concluded that res judicata prevented it from considering whether to award that portion of Rathcke's attorney fees that was covered by an attorney's lien on the land. The district court noted that the court in the original condemnation action stated that Rathcke "shall be responsible for payment of the attorney's lien in favor of" Rathcke's attorney.

The applicability of res judicata is reviewed de novo. Ascher v. Commissioner of Pub. Safety, 527 N.W.2d 122, 125 (Minn. App. 1995), review denied (Minn. March 21, 1995). Under the doctrine of res judicata:

"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 privies, not only as to every other matter which was actually litigated, but also as to every matter which might have been litigated therein."

Dorso Trailer Sales v. American Body & Trailer, 482 N.W.2d 771, 774 (Minn. 1992) (quoting Mattsen v. Packman, 358 N.W.2d 48, 49 (Minn. 1984)). Res judicata prevents a plaintiff from splitting a cause of action and bringing successive suits involving the same set of facts. Hauser v. Mealey, 263 N.W.2d 803, 807 (Minn. 1978).

We do not fully agree with the district court's conclusion because this is not a typical situation in which a plaintiff failed to present its entire claim in the original lawsuit. Instead, this started as a condemnation action initiated by the city. As this court has noted,

where a defendant does not interpose a counterclaim even though he is entitled to do so, he is not thereby precluded from subsequently maintaining a second cause of action against the plaintiff on the cause of action which could have been set up as a counterclaim.

McBroom v. Al-Chroma, Inc., 386 N.W.2d 369, 373 (Minn. App. 1986); see also Restatement (Second) of Judgments § 22 (1982). Because Rathcke was the respondent in the condemnation action, his failure to assert his claims in the original action does not by itself necessarily bar the present action.

Even if res judicata does not bar consideration of Rathcke's claim for attorney fees, however, the district court's grant of summary judgment may be affirmed because--as the district court recognized with respect to the remaining attorney fees--there is no legal basis for an award of attorney fees. See Myers Through Myers v. Price, 463 N.W.2d 773, 775 (Minn. App. 1990) (reviewing court will affirm entry of summary judgment if it can be sustained on any grounds), review denied (Minn. Feb. 4, 1991).

A statute or contract usually must provide a basis for recovering attorney fees. Independent Sch. Dist. No. 697 v. St. Paul Fire & Marine Ins. Co., 515 N.W.2d 576, 581 (Minn. 1994). Rathcke contends that the hold harmless clause in the purchase agreement addendum provides such a basis. It states that the city

shall be provided unrestricted access to the property for the purposes of investigation and testing to determine the present or past existence of Hazardous Substances

and the city

shall pay all costs of such investigation and testing and shall indemnify and hold [Rathcke] and the property harmless from such entry and testing.

Because the hold harmless clause applies to claims arising from the entry and investigation of the land, and Rathcke's present action pertains to consequential damages resulting from the city's alleged breach of the parties' agreement, the hold harmless clause cannot provide a basis for attorney fees. Furthermore, Rathcke points to no evidence indicating the district court erred in its conclusion that none of the statutory bases for awarding attorney fees is present here. See Minn. Stat. § 549.21 (1996) (court in its discretion may award costs, including attorney fees, if opposing party acted in bad faith, asserted frivolous claim, asserted position to delay proceedings or harass, or committed fraud upon court). Accordingly, we affirm the summary judgment on this issue.

2. Rathcke argues that under the terms of the purchase agreement, the city is liable for real estate taxes on the land beginning with the second half of 1992. The purchase agreement provides:

Real estate taxes due and payable in and for the year of closing shall be paid as follows: [Rathcke] shall pay the first half of the real estate taxes due and payable in the year 1992, and [the city] shall pay the second half of the real estate taxes due and payable in the year 1992, and [the city] shall pay all real estate taxes due in all years thereafter.

Where there is no ambiguity in a contract, it is unnecessary to construe its terms. North Star Ctr. v. Sibley Bowl, 295 Minn. 424, 426, 205 N.W.2d 331, 332 (1973). If ambiguity necessitates construction of a contract, the parties' intent should be determined from giving all words and phrases "'a meaning in accordance with the obvious purpose of the * * * contract as a whole.'" Davis v. Outboard Marine Corp., 415 N.W.2d 719, 723 (Minn. App. 1987) (quoting Cement, Sand & Gravel Co. v. Agricultural Ins. Co., 225 Minn. 211, 216, 30 N.W.2d 341, 345 (1947)), review denied (Minn. Jan. 28, 1988).

Here, the contract provision is ambiguous because the first clause refers to real estate taxes due in "the year of closing," although it later refers specifically to the year 1992. It is obvious that the purpose of this provision was to address the payment of property taxes in the year of closing. We agree with the district court that because the transaction did not close in 1992, the language specifically referring to 1992 ceased to be binding.

3. Rathcke argues that he is entitled to interest on the $76,250 that the district court in the original action ordered the city to pay pursuant to the parties' agreement. Rathcke does not point to any basis for an award of interest, however. There has never been any finding that the city breached its contract with Rathcke. Instead, the court in the original action simply ordered the parties to close the transaction according to their agreement. Rathcke has not been awarded damages or shown a breach of contract, and the district court properly denied his request for interest.