Opinion
A20-0881
03-02-2021
Evelyn Guggisberg, Appellant, Douglas Kluver, Co-Appellant, v. Holly Guggisberg, et al., Respondents.
ORDER OPINION
Pope County District Court
File No. 61-CV-18-521 Considered and decided by Worke, Presiding Judge; Reyes, Judge; and Jesson, Judge.
BASED ON THE FILE, RECORD, AND PROCEEDINGS, AND BECAUSE:
1. In 2013, appellant Evelyn Guggisberg sued respondents, her son and daughter-in-law Daniel and Holly Guggisberg, for claims related to the management of the family trust. The district court found for the respondents. In December 2018, Guggisberg filed suit against respondents again, this time asserting breach-of-contract claims related to the family trust. Respondents filed a rule 11 motion for sanctions against Guggisberg's then-counsel, noting that the 2018 complaint was barred by res judicata because it involved the same claims and parties as the 2013 lawsuit.
2. Guggisberg then retained new counsel, co-appellant Douglas Kluver. In March 2019, respondents served a rule 11 notice for motion for sanctions on Kluver based on the same reasoning as the previous rule 11 motion. Respondents also filed a motion for judgment on the pleadings. Kluver did not immediately respond. Nor did he take corrective action to address the allegations in the rule 11 motion. The following month, Kluver filed a response in opposition to the judgment-on-the-pleadings motion. Following a hearing on the matter, the district court granted the respondent's motion and dismissed Guggisberg's claims under res judicata.
3. Respondents then filed an additional motion seeking sanctions against Guggisberg and Kluver under Minnesota Statutes section 549.211, subdivision 3 (2020), and asked the court to declare Guggisberg a frivolous litigant. The district court denied the request to deem Guggisberg a frivolous litigant, but found that sanctions were appropriate. Because Kluver was retained late in the matter, the court found him to be ten percent at fault ($1,343.76) and Guggisberg to be 90% at fault ($12,093.89).
4. Appellants appeal the district court's order, arguing that the sanctions were improper because notice was defective and, further, that the record does not support an award of sanctions.
5. When an attorney or party presents pleadings or motion papers to the court, that attorney certifies three things: that the claims are not being presented for an improper purpose, that they are supported by existing law or nonfrivolous argument to change the law, and that factual allegations or their denials have evidentiary support. Minn. Stat. § 549.211, subd. 2 (2020); Minn. R. Civ. P. 11.02. A district court may impose sanctions against an attorney or a party who violates these requirements. Minn. Stat. § 549.211 subd. 3; Minn. R. Civ. P. 11.03.
6. Before seeking sanctions for violating these requirements, the offending party must have received notice and had an opportunity to respond. Minn. R. Civ. P. 11.03. The rules require that "a party seeking sanctions serve its motion on the nonmoving party, wait for 21 days, and, if the challenged material has not been withdrawn or corrected by then, file the motion for sanctions in the district court." Gibson v. Coldwell Banker Burnet, 659 N.W.2d 782, 789 (Minn. App. 2003) (citing Minn. R. Civ. P. 11.03(a)(1)). This "safe-harbor" provision is intended to give the offending party time to "withdraw the improper papers or otherwise rectify the situation." Id. at 790 (quotation omitted). Section 549.211, subdivision 4(a) (2020) includes an almost identically worded safe-harbor provision. Johnson ex rel. Johnson v. Johnson, 726 N.W.2d 516, 519 (Minn. App. 2007). Our standard of review for imposed sanctions is whether the district court abused its discretion. Collins v. Waconia Dodge, Inc., 793 N.W.2d 142, 145 (Minn. App. 2011), review denied (Minn. Mar. 15, 2011).
7. Here, appellants do not dispute that Kluver was served with a rule 11 notice of motion for sanctions on March 2019, or that he failed to take corrective action. Instead, they argue that because Kluver was not Guggisberg's counsel when the original complaint was filed in December 2018, he had no rule 11 obligation with respect to that pleading. Appellants acknowledge that rule 11.02 and section 549.211 make clear that "advocating" for a pleading makes counsel subject to the same requirements as if Kluver filed the complaint. But, they argue that because Kluver did not advocate for the pleadings until the end of April 2019, that is the first moment at which he could be properly served a notice for motion for sanctions. Essentially, appellants argue that he was served too soon, and therefore the notice was ineffective.
8. We disagree. Even if the 21-day count did not begin until the end of April, as appellants assert, the respondents filed an additional motion for sanctions at the end of August—well over the 21 days required by rule 11 for Kluver to amend the pleadings.
9. Additionally, appellants argue that because Kluver was served a rule 11 motion for sanctions and the respondents instead filed a motion for sanctions under section 549.211, the respondents showed an "indifference to the strict requirements" of those authorities. This argument is unpersuasive because section 549.211 is the statutory version of rule 11, and those authorities are "almost identically worded." Johnson, 726 N.W.2d at 519. And appellants do not point to how the difference in those statutes resulted in undue prejudice.
10. For these reasons, we conclude that the notice for sanctions was proper and effective. The district court did not abuse its discretion when it rejected appellant's asserted lack of proper notice and awarded sanctions.
11. Next, appellants argue that the district court abused its discretion in awarding sanctions because the record supports an objectively reasonable basis for making the legal claim.
12. To award sanctions requires determining whether counsel had an objectively reasonable basis for making the factual or legal claim. Uselman v. Uselman, 464 N.W.2d 130, 143 (Minn. 1990), superseded by statute on other grounds, Minn. Stat. § 549.21 (1990) (repealed 1997). When evaluating this reasonableness standard, this court does not focus on whether the arguing attorney personally believes his challenged argument is compelling, but whether "a competent attorney could form a reasonable belief" that the pleading arises from the facts and law. Id. at 143. But the aim is to penalize only the filing of "clearly meritless claims, not the advancement of losing but arguably merited claims or theories." In re Adoption of T.A.M., 791 N.W.2d 573, 579 (Minn. App. 2010).
13. Here, the claim was that the respondents wrongfully discontinued their trust payments to Guggisberg. But the district court found that each element of res judicata was clearly satisfied when comparing the 2013 and 2018 lawsuits. Res judicata applies as an absolute bar to a subsequent claim when: "(1) the earlier claim involved the same set of factual circumstances; (2) the earlier claim involved the same parties or their privies; (3) there was a final judgment on the merits; (4) the estopped party had a full and fair opportunity to litigate the matter." Hauschildt v. Beckingham, 686 N.W.2d 829, 840 (Minn. 2004). "Neglecting to consider, or entirely disregarding," the doctrine of res judicata can subject a plaintiff to sanctions, as "no competent lawyer could reasonably believe there was a colorable or legally-supportable claim." Willhite v. Collins, 459 F.3d 866, 870 (8th Cir. 2006) (quotations omitted).
14. Upon review, the record supports the district court's determination that it was unreasonable for Kluver to continue to advocate for this claim. The new lawsuit entailed the same factual circumstances, involved the same parties and privies, was disposed of in 2013, and provided Guggisberg a full and fair opportunity to litigate the exact issue earlier. A reasonable attorney would recognize that a claim barred by res judicata is not a colorable claim.
15. To persuade us otherwise, appellants argue that if the district court did not find the response to the motion for judgment on the pleadings to be frivolous, then the underlying complaint cannot be frivolous either. Appellants cite no authority to support this argument. Regardless, it is unpersuasive because nothing in rule 11 or section 549.211 requires that all subsequent pleadings be found frivolous or made in bad faith for the original pleading to be considered frivolous or otherwise violate those rules.
16. At oral argument, appellants raised new arguments to explain how the sanctions were objectively unreasonable. Generally, this court will not address arguments not argued before and considered by the district court. Thiele v. Stich, 425 N.W.2d 580, 582 (Minn. 1988). We may consider a new argument on appeal, but it is not mandatory for us to do so. Minn. R. Civ. App. P. 103.04. Here, appellants' new argument was not raised in briefing before the district court and was not "implicit in" the already-brief original argument. Watson v. United Servs. Auto. Ass'n, 566 N.W.2d 683, 688 (Minn. 1997). As such, we do not consider those arguments here.
17. In sum, because res judicata unambiguously applies here, it follows that the district court did not abuse its discretion when determining that the pleadings lacked evidentiary support and violated rule 11 and section 549.211.
IT IS HEREBY ORDERED:
1. The district court's judgment is affirmed.
2. Pursuant to Minn. R. Civ. App. P. 136.01, subd. 1(c), this order opinion is nonprecedential, except as law of the case, res judicata, or collateral estoppel.
Dated: March 2, 2021
BY THE COURT
/s/_________
Judge Lucinda E. Jesson