Jan Reed, Appellant, vs. Rooms Plus LLC, et al., Respondents, W.S. Property Management, Defendant. A05-141, Court of Appeals Unpublished, October 4, 2005.

This opinion will be unpublished and

may not be cited except as provided by

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

STATE OF MINNESOTA

IN COURT OF APPEALS

A05-141

Jan Reed,

Appellant,

vs.

Rooms Plus LLC, et al.,

Respondents,

W.S. Property Management,

Defendant.

Filed October 4, 2005

Affirmed in part, reversed in part, and remanded

Gordon W. Shumaker, Judge

Hennepin County District Court

File No. AC 04-7817

Jan Reed, 441 Ridgewood Avenue, #23, Minneapolis, MN 55403 (pro se appellant)

Douglass E. Turner, Law Office of Douglass E. Turner, PSC, 401 North Third Street, Suite 600, Minneapolis, MN 55401 (for respondents)

Considered and decided by Kalitowski, Presiding Judge; Shumaker, Judge; and Minge, Judge.

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

GORDON W. SHUMAKER, Judge

Appellant Jan Reed challenges the district court’s dismissal of his claims against respondents Rooms Plus and The Miles Group and defendant W.S. Property Management, arguing that respondents Rooms Plus and The Miles Group are successors in interest to W.S. Property Management and therefore responsible for payment of a previously obtained judgment against W.S. Property Management. The district court determined that Reed had failed to state a claim on which relief could be granted with respect to respondent Rooms Plus and that Reed’s claim against W.S. Property Management was barred by res judicata. The district court did not expressly rule on Reed’s claim against respondent The Miles Group. We affirm in part, reverse in part, and remand.

FACTS

Appellant Jan Reed was a tenant of property located at 1019 University Avenue S.E. in Minneapolis from December 1999 until June 2001. W.S. Property Management was the landlord during Reed’s tenancy. As required by the lease agreement, Reed gave to the landlord a security deposit of $100.

The landlord failed to return Reed’s deposit or to give any reason for retaining it when the tenancy ended. Reed then sued W.S. Property Management in conciliation court and obtained a default judgment of $418.24. Reed was not successful in trying to collect it.

At some point between the termination of Reed’s tenancy and January 2004, respondent The Miles Group became the landlord of the University Avenue property. Reed learned that at least by January 2004 Rooms Plus, LLC was the owner of the property.

Because of his inability to collect the judgment from W.S. Property Management, Reed brought a second conciliation court action in March 2004 against W.S. Property Management, The Miles Group, and Rooms Plus, LLC. In his complaint Reed alleged that “W.S. Property Management transferred management responsibilities for 1019 University Ave. S.E. Mpls., MN to the Miles Group on or about 1/2004.” He also alleged that Rooms Plus is the owner of the property. He referred to his conciliation court judgment and to statutory liability of successor landlords for security deposits and alleged that The Miles Group is responsible for the debts of W.S. Property Management. The conciliation court referee dismissed Reed’s second action, and Reed removed the matter to the district court.

The district court scheduled a pretrial conference and then treated that proceeding as a dispositive motion hearing. On the basis of Reed’s second conciliation court complaint and the previous conciliation court file, the district court found that Reed had been a tenant of the University Avenue property; that Reed gave to the landlord a $100 security deposit; that, when the deposit was not returned, Reed obtained a judgment against W.S. Property Management; that Reed had difficulty collecting the judgment; that upon learning that The Miles Group had become the new landlord and that Rooms Plus was the owner, Reed started a second conciliation court action against all three parties; and that, in the action, Reed did not allege that he was a tenant of Rooms Plus.

The district court dismissed the lawsuit, holding that (1) the statute under which Reed brought his action applies only to security deposits of current tenants, “or those security deposits which were transferred from the former landlord to the new landlord”; (2) Reed did not allege that he was a tenant of Rooms Plus or that “his disputed deposit was transferred to the new property owner”; and (3) because Reed has already obtained a judgment for the recovery of his security deposit, he “cannot bring a second lawsuit to litigate the same issue.”

Reed challenges the dismissal of the parties to the second lawsuit.

D E C I S I O N

Although the district court did not expressly so indicate, it appears that the dismissal was based on Minn. R. Civ. P. 12.02 for failure to state a claim in two respects: first, that Reed alleged no claim whatsoever against Rooms Plus; and, second, that, having already litigated his claim in a previous action, he cannot relitigate it in this lawsuit. The court apparently relied on the principle of res judicata for the second ground for dismissal.

This court reviews rule 12 dismissals de novo. Bodah v. Lakeville Motor Express, Inc., 663 N.W.2d 550, 553 (Minn. 2003). Under a rule 12 review, the only question before us is whether the complaint sets forth a legally sufficient claim for relief. Id. This court must accept all facts alleged in the complaint as true. Id.

Minnesota is a notice-pleading state that does not require absolute specificity in pleading, but rather requires only information sufficient to fairly notify the opposing party of the claim against it. See Minn. R. Civ. P. 8.01 (requiring pleading to include a “short and plain statement of the claim” showing entitlement to relief); Minn. R. Gen. Pract. 507 (the statement of the claim must “contain a brief statement of the amount and nature of the claim . . . .”); Roberge v. Cambridge Coop. Creamery Co., 243 Minn. 230, 232, 67 N.W.2d 400, 402 (1954) (stating that pleadings must be framed so as to give notice of the claim asserted and permit the application of the doctrine of res judicata).

Sufficiency of the Pleadings

One basis for the district court’s dismissal was that Reed failed to allege a claim against Rooms Plus, LLC. That is correct. Reed’s complaint merely identifies Rooms Plus as the owner of the property but does not allege that as such Rooms Plus has any liability, statutory or otherwise, for the return of the security deposit. The dismissal of Rooms Plus, LLC must be affirmed.

With respect to The Miles Group, Reed alleged that it was the transferee of management responsibilities from the previous landlord. One of the statutory responsibilities of a landlord is to return or otherwise account for a tenant’s security deposit. Minn. Stat. § 504B.178, subds. 3-6 (2004). Reed alleged that responsibility. The district court did not expressly rule on the sufficiency of Reed’s complaint against The Miles Group. We hold that Reed’s statement of the claim against that party was sufficient in that it gave adequate notice of the contention that, because of the previous landlord’s failure to return the security deposit, Reed was asserting that the obligation to return the deposit inured to the successor landlord. Thus, the district court erred in finding the complaint to have failed to state a claim against The Miles Group.

Res Judicata

At the dispositive motion hearing, respondents argued that res judicata precluded Reed’s claim against them. On appeal, they argue, in addition, that collateral estoppel bars relitigation of the security-deposit issue.

Res judicata is designed to prevent the relitigation of causes of action already determined. Beutz v. A.O. Smith Haverstore Prods., 431 N.W.2d 528, 531 (Minn. 1988). A subsequent lawsuit will be barred entirely by res judicata when (1) the earlier action involved the same claim for relief; (2) the earlier action involved the same parties or their privies; (3) there was a final judgment on the merits; and (4) the barred party had a full and fair opportunity to litigate the claim on the merits. State v. Joseph, 636 N.W.2d 322, 327 (Minn. 2001). Collateral estoppel applies a similar preclusion, but instead of barring an entire action it bars the relitigation of issues previously determined. Nelson v. Am. Family Ins. Group, 651 N.W.2d 499, 511 (Minn. 2002). As with res judicata, collateral estoppel bars the subsequent litigation of an issue only if there is identity of parties or their privies. Schlichte v. Kielan, 599 N.W.2d 185, 187-88 (Minn. App. 1999), review denied (Minn. Nov. 17, 1999).

Reed’s second lawsuit names as defendants W.S. Property Management, The Miles Group, and Rooms Plus, LLC. W.S. Property Management is the same party-defendant from Reed’s initial lawsuit, which involved the identical claim asserted in this action. Res judicata bars relitigation of the claim against W.S. Property Management.

As we have held, Reed failed to state any claim against Rooms Plus, LLC, and, thus, no res judicata analysis is necessary as to that party.

However, The Miles Group was not a party to the previous action, and there is no record before us from which to conclude that The Miles Group was in privity with W.S. Property Management. Res judicata and collateral estoppel are affirmative defenses. Minn. R. Civ. P. 8.03. The burden is on the party asserting an affirmative defense to prove it. At this stage, there has been no showing whatsoever that either of those defenses is provable. Thus, the district court erred in dismissing The Miles Group on grounds of either res judicata or collateral estoppel.

In Minnesota landlord-tenant law, a landlord receives a security deposit in a fiduciary capacity and it “shall be held by the landlord for the tenant . . . .” Minn. Stat. § 504B.178, subd. 2 (2004). At the end of the tenancy, the landlord is required either to return the entire deposit with interest or to account for withholding part or all of it. Id., subds. 3-5 (2004). If a new landlord succeeds the former, the successor landlord assumes the same obligation of the former respecting security deposits, subject to certain statutory limitations. Id., subd. 6 (2004).

Reed was entitled to either a return of his security deposit or to notice as to why it was being withheld. He received neither and was awarded judgment against his landlord. But the statute obligates a successor landlord to return the deposit or otherwise account for its withholding, and Reed has properly alleged a claim against The Miles Group as that successor landlord. We offer no opinion as to the merits of that claim because a rule 12 dismissal does not implicate the merits of a claim. But we affirm the dismissals of W.S. Property Management and Rooms Plus, LLC, and we reverse the dismissal of The Miles Group and remand the matter to the district court.

Affirmed in part, reversed in part, and remanded.