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Murphy v. Superior National Bank

Minnesota Court of Appeals
Jan 2, 2007
No. A06-237 (Minn. Ct. App. Jan. 2, 2007)

Opinion

No. A06-237.

Filed January 2, 2007.

Appeal from the District Court, St. Louis County, File No. 69DU-CV-05-102.

Robert E. Mathias, Mathias Law Firm, Duluth, MN 55802 (for appellant).

Mark L. Knutson, Agnew Dryer Storaasli Knutson Pommerville, Ltd., Duluth, MN 55802 (for respondents).

Considered and decided by TOUSSAINT, Chief Judge; MINGE, Judge; and HUDSON, Judge.


This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (2004).


UNPUBLISHED OPINION


Appellant Patrick Murphy challenges the summary judgment granted in favor of respondents Superior National Bank and its president Cyrus Gray, Jr. The district court concluded that prior mortgage foreclosure proceedings precluded this action for fraud and breach-of-fiduciary duty against Superior National and Gray. Because Murphy raised and could have fully litigated the issues of fraud and breach-of-fiduciary duty in the foreclosure proceedings, we affirm.

DECISION

In an appeal from summary judgment, the appellate court must determine whether there are genuine issues of material fact and whether the district court erred in its application of the law. Cooper v. French, 460 N.W.2d 2, 4 (Minn. 1990). The reviewing court must view the evidence in the light most favorable to the party against whom judgment was granted. Fabio v. Bellomo, 504 N.W.2d 758, 761 (Minn. 1993) (citation omitted).

No genuine issue for trial exists "[w]here the record taken as a whole could not lead a rational trier of fact to find for the nonmoving party." DLH, Inc. v. Russ, 566 N.W.2d 60, 69 (Minn. 1997) (alteration in original) (quoting Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S. Ct. 1348, 1356 (1986)). "[T]he party resisting summary judgment must do more than rest on mere averments." Id. at 71. A genuine issue for trial must be established by "substantial evidence." Id. at 69-70.

After Superior National Bank foreclosed on Murphy's mortgages in Wisconsin and Minnesota, he commenced this action for fraud and breach of duty in Minnesota. Murphy alleges that Gray advised him to withhold the mortgage payments that led to the foreclosure of his properties. The district court concluded that collateral estoppel barred relitigation of Murphy's claim that the foreclosures were fraudulently induced by Gray's statements in his capacity as an executive of the bank and that res judicata barred relitigation of the breach-of-fiduciary claim as one that could have, and should have, been asserted in the Wisconsin foreclosure proceedings.

The availability of collateral estoppel is a mixed question of law and fact subject to de novo review. Falgren v. State, Bd. of Teaching, 545 N.W.2d 901, 905 (Minn. 1996). But if collateral estoppel is available, this court will not reverse a district court's decision to apply the doctrine absent a "demonstrated abuse of discretion." Pope County Bd. of Comm'rs v. Pryzmus, 682 N.W.2d 666, 669 (Minn.App. 2004), review denied (Minn. Sept. 29, 2004). The application of collateral estoppel to preclude relitigation of an issue is appropriate "where (1) the issue [is] identical to one [decided] in a prior adjudication; (2) there [is] a final judgment on the merits; (3) the estopped party was a party or in privity with a party to the prior adjudication; and (4) the estopped party [had] a full and fair opportunity to be heard." Kaiser v. N. States Power Co., 353 N.W.2d 899, 902 (Minn. 1984). Res judicata, which operates to preclude a subsequent lawsuit on the same cause of action, bars both matters actually litigated and those other claims or defenses that could have been litigated. Roseberg v. Steen, 363 N.W.2d 102, 105 (Minn.App. 1985); see also Anderson v. Werner Continental, Inc., 363 N.W.2d 332, 335 (Minn.App. 1985) (stating for purposes of res judicata, that identical-claims test is met "if the same operative nucleus of facts is alleged in support of the claims").

Murphy does not dispute that there was a final judgment on the merits in the prior foreclosure proceedings, that the two actions involved the same parties, or that the same facts gave rise to both actions. Murphy urges this court to reverse the district court's grant of summary judgment because the issues in the two proceedings were not identical and he did not have a full and fair opportunity to be heard in the foreclosure proceedings.

Murphy's defense in the Wisconsin foreclosure proceedings and his claims in this Minnesota action contained the same core nucleus of operative facts. In Murphy's detailed answer in the Wisconsin foreclosure proceedings, he alleged that he relied on Gray's advice to use rents to improve the properties instead of making timely mortgage payments and Gray's agreement to extend mortgage payments. The district court concluded that Murphy had re-alleged the same facts argued in the Wisconsin foreclosure proceeding to support his cause of action of fraud in these proceedings. The record supports this conclusion.

Murphy also argues that he was not afforded a full and fair opportunity to litigate his claims in the foreclosure proceedings. Whether a party had a full and fair opportunity to litigate generally focuses on "whether there were significant procedural limitations in the prior proceeding, whether the party had the incentive to litigate fully the issue, or whether effective litigation was limited by the nature or relationship of the parties." State v. Joseph, 636 N.W.2d 322, 328 (Minn. 2001) (quoting Sil-Flo, Inc. v. SFHC, Inc., 917 F.2d 1507, 1521 (10th Cir. 1990) (other citation omitted)).

Murphy concedes that he had the opportunity to raise the issues of fraud in the previous litigation and failed to do so but argues that he was unable to understand "issues of fraud and breaches of a fiduciary relationship in a highly technical proceeding" brought in a foreign jurisdiction. The record, however, does not demonstrate that Murphy was in any way denied a full and fair opportunity to litigate as a result of significant procedural reasons or that he was limited in any way by his relationship with Superior National Bank and Gray. In Wisconsin, Superior National Bank commenced foreclosure proceedings and filed a complaint against Murphy, putting him on notice of the pending actions, and giving him full and fair opportunity to answer. Murphy submitted a lengthy and detailed answer responding to each paragraph of the complaint, arguing that he had relied on Gray's allegedly fraudulent assurances that he should use rent payments to improve the properties rather than making timely mortgage payments. The completeness of Murphy's answer in light of the fairly complex and lengthy complaint shows that Murphy was in no way hindered by lack of understanding of a "highly technical proceeding." The record is unclear why Murphy did not obtain counsel when proceedings commenced; however, Murphy was an experienced real estate investor who had apparently retained an attorney for other matters prior to the foreclosures, and did, in fact, retain him for this appeal. Therefore, the district court did not err in ruling that Murphy's claims were barred by res judicata and collateral estoppel and properly granted summary judgment.

Superior National Bank and Gray challenged the district court's denial of attorney fees in their brief. A party must file a notice of review to address a district court's ruling on particular issues. If a party fails to file a notice, the issue is not preserved for appeal. Minn. R. Civ. P. 106; see also City of Ramsey v. Holmberg, 548 N.W.2d 302 (Minn.App. 1996) (holding that court need not address respondent's allegations that res judicata and collateral estoppel precluded appellant's claim, because respondent did not file notice of review). Superior National Bank and Gray did not file a notice of review, so this court will not address the issue of attorney fees.

Affirmed.


Summaries of

Murphy v. Superior National Bank

Minnesota Court of Appeals
Jan 2, 2007
No. A06-237 (Minn. Ct. App. Jan. 2, 2007)
Case details for

Murphy v. Superior National Bank

Case Details

Full title:Patrick Murphy, Appellant, v. Superior National Bank, et al., Respondents

Court:Minnesota Court of Appeals

Date published: Jan 2, 2007

Citations

No. A06-237 (Minn. Ct. App. Jan. 2, 2007)