Western National Mutual Insurance Company, Plaintiff, Dri-Kleen, Inc., a Nevada corporation, Appellant, vs. Eagle Rigid Spans, Inc., a North Dakota corporation, Respondent, James W. Martin d/b/a Advanced Engineering, Defendant, Dean Kapphahn d/b/a Pomme de Terre Construction, Respondent. C1-00-156, Court of Appeals Unpublished, August 8, 2000.

This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480A.08, subd. 3 (1998).

STATE OF MINNESOTA

IN COURT OF APPEALS

C1-00-156

Western National Mutual Insurance Company,

Plaintiff,

Dri-Kleen, Inc., a Nevada corporation,

Appellant,

vs.

Eagle Rigid Spans, Inc., a North Dakota corporation,

Respondent,

James W. Martin d/b/a Advanced Engineering,

Defendant,

Dean Kapphahn d/b/a Pomme de Terre Construction,

Respondent.

Filed August 8, 2000

Reversed and remanded

Shumaker, Judge

Grant County District Court

File No. C29992

James T. Martin, Gislason, Martin & Varpness, 7600 Parklawn Avenue South, Suite 444, Edina, MN 55435 (for Western National Ins. Co.)

Michael M. Fluegel, Fluegel, Helseth, McLaughlin, Anderson & Brutlag, Chtd., 215 Atlantic Avenue, P.O. Box 527, Morris, MN 56267; and

Christopher T. Byrd, Hale, Lane, Peek, Dennison, Howard and Anderson, 2300 West Sahara Avenue, Suite 800, Box 8, Las Vegas, NV 89102 (for appellant)

Gordon H. Hansmeier, Patrick J. Larkin, Rajkowski Hansmeier, Ltd., 11 Seventh Avenue North, P.O. Box 1433, St. Cloud, MN 56302-1433 (for respondent Eagle Rigid Span, Inc.)

Timothy R. Murphy, O’Neill & Murphy, LLP, 5482 County Road 18, P.O. Box. 880, Nisswa, MN 56468 (for respondent Kapphahn dba Pomme De Terre Construction)

Considered and decided by Harten, Presiding Judge, Schumacher, Judge, and Shumaker, Judge.

U N P U B L I S H E D O P I N I O N

SHUMAKER, Judge

Appellant Dri-Kleen, Inc., a Nevada corporation, appeals from summary judgment dismissing its claims, arguing that the district court erred by ruling that it was not represented by a licensed Minnesota lawyer when it commenced the lawsuit. We reverse.

FACTS

Eagle Rigid Spans, Inc., and Dean Kapphahn d/b/a Pomme de Terre Construction built warehouse facilities for Dri-Kleen, Inc. James W. Martin d/b/a Advanced Engineering performed engineering services for the work project.

Dri-Kleen then bought a policy of fire and casualty insurance from Western National Insurance Company.

During a winter storm, part of the warehouse facilities collapsed. Dri-Kleen made a claim against its casualty insurance policy. Western National made a payment on the claim that was less than the policy limit and less than the total damages Dri-Kleen alleged to have sustained.

Western National and Dri-Kleen sued Eagle, Kapphahn, and Martin in Minnesota. The complaint named both Western National and Dri-Kleen as "plaintiffs." Western National described its claim as one of subrogation and Dri-Kleen's claim as one for damages in excess of the insurance proceeds. The ad damnum clause recited that "plaintiffs" demand judgment against the defendants and "[p]laintiff Dri-Kleen, Inc." seeks additional damages from Pomme De Terre.

James T. Martin, a Minnesota licensed attorney, signed the complaint as attorney for "Plaintiff Western National." Listed on the complaint without signatures were attorneys for Dri-Kleen from Nevada and Arizona. Dri-Kleen believed that James Martin had commenced a lawsuit that included Dri-Kleen's claim for any damages not covered by insurance.

After all of the issues were joined, the parties conducted discovery. Defense discovery was directed to both plaintiffs and James Martin as their attorney. James Martin responded as "Attorney for Plaintiffs." Martin also served discovery requests as "Attorney for Plaintiffs."

About three months after commencement of the lawsuit, Martin indicated that he was not the attorney for Dri-Kleen and never had been. That revelation prompted Eagle and Kapphahn to move for summary judgment dismissing Dri-Kleen's claims against them. The ground for the motion was that Dri-Kleen, Inc. is a Nevada corporation and was not represented by an attorney licensed to practice law in Minnesota.

Dri-Kleen then retained a licensed Minnesota attorney to associate with its Nevada attorneys. The Minnesota attorney petitioned the district court for the pro hac vice admission of the Nevada lawyers.

The district court heard the summary judgment motions, the petition for pro hac vice admission, and a motion by Western National to amend the complaint so as to add a claim for other damages.

The district court granted the summary judgment motions, dismissing Dri-Kleen's claims with prejudice. The court ruled that "no attorney representing Dri-Kleen signed the complaint." Because the complaint had not been signed by a lawyer for Dri-Kleen, the court ruled that Minn. R. Civ. P. 11 required that the claim be stricken.

The court granted the petition for pro hac vice admission, conditioned on proof of good standing in Nevada, but held that admission would not be retroactive so as to allow the Nevada lawyers to sign the complaint. The court also granted Western National's motion to amend the complaint.

Dri-Kleen, Inc. appeals from the summary judgment dismissing its claims and from the order striking its claim.

D E C I S I O N

On appeal from summary judgment this court determines whether genuine issues of material fact exist and whether the district court erroneously applied the law. State by Cooper v. French, 460 N.W.2d 2, 4 (Minn. 1990). Summary judgment is a determination of the merits of a claim or defense. In re Bush's Estate,302 Minn. 188, 211, 224 N.W.2d 489, 503 (1974) cert. denied, 420 U.S. 1008 (1975). That procedure is used to ascertain whether there exists a genuine fact issue in a claim or a defense for a trier of fact to decide. Greaton v. Enich, 290 Minn. 74, 77, 185 N.W.2d 876, 878 (1971). It is also a device properly used to apply an absolute bar to a case as a matter of law, irrespective of factual merit. See Hermann v. Fossum, 270 N.W.2d 18 (Minn. 1978) (where court dismissed negligence claim on summary judgment, finding claim was barred by statute of limitations). However, dismissal of a case with prejudice is the most punitive sanction and should only be granted in exceptional circumstances. Firoved v. General Motors Corp., 277 Minn. 278, 283, 152 N.W.2d 364, 368 (1967). A district court's dismissal of an action for procedural irregularities will be reversed if the district court abused its discretion. Sorenson v. St. Paul Ramsey Med. Ctr., 457 N.W.2d 188, 190 (Minn. 1990).

Here, the summary judgment motions did not implicate the merits of the action. Nor were they posited on an absolute bar, such as an expired statute of limitation. Rather, the motions alleged a curable procedural irregularity. The district court abused its discretion by granting summary judgment that resulted in dismissal of Dri-Kleen’s claims with prejudice.

Irrespective of the procedural vehicle the court used, we still must consider whether or not it was proper to strike Dri-Kleen's complaint.

A corporation may not appear as a party in a Minnesota lawsuit without the representation of an attorney. Nicollet Restoration, Inc. v. Turnham, 486 N.W.2d 753, 754 (Minn. 1992). The attorney for the corporation cannot sign pleadings unless the attorney is licensed to practice here or has obtained a pro hac vice admission to practice. SeeMinn. Stat. § 481.02, subd. 2 (1998); Rule 5, Minn. R. Gen. Pract.

An insurer who pays a claim to an insured is subrogated to the insured's interest to the extent of that payment and may sue a third-party wrongdoer in the insurer's own name. Blair v. Espeland, 231 444, 446, 43 N.W.2d 274, 276 (Minn. 1950). An insured who is not fully compensated against a loss through insurance claim proceeds, retains a right to sue a third-party wrongdoer for the uncompensated loss. Id.

An insurer may properly bring both its subrogation claim and the insured's uncompensated loss claim in the same action. See Lines v. Ryan, 272 N.W.2d 896, 903 (Minn. 1978) (where insured had uncompensated loss and court allowed insurer to maintain a claim in insured's name).

Minnesota-licensed attorney James Martin started this lawsuit on behalf of both Western National and Dri-Kleen. The title and text of the complaint show this. Martin engaged in discovery for several months as attorney for both plaintiffs. Various discovery documents show this. Dri-Kleen believed that Martin was prosecuting its claims. There is nothing in the record to suggest otherwise or that Dri-Kleen’s belief was unfounded. The respondents believed that Martin was representing both plaintiffs. Various discovery documents and correspondence show this.

The only inference supported by the objective record is that, when this action was started, a Minnesota lawyer was representing Dri-Kleen. That lawyer was also representing Dri-Kleen’s casualty insurer on a subrogation claim. It was permissible under Minnesota law for the lawyer to represent both parties in the same action.

The district court erred in striking Dri-Kleen’s claim.

Reversed and remanded.