This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480A.08, subd. 3 (2014).

STATE OF MINNESOTA

IN COURT OF APPEALS

A14-2041

Bemidji Township,

Appellant,

vs.

City of Bemidji,

Respondent, 

Northern Township,

Respondent, 

Greater Bemidji Area Joint Planning Board,

Respondent.

Filed July 20, 2015

Reversed & remanded

Johnson, Judge

Beltrami County District Court

File No. 04-CV-14-1119

John J. Steffenhagen, Hellmuth & Johnson, PLLC, Edina, Minnesota (for appellant)

James J. Thomson, Kennedy & Graven, Chartered, Minneapolis, Minnesota (for City of 

Bemidji)

Paul D. Reuvers, Jason J. Kuboushek, Iverson Reuvers Condon, Bloomington, Minnesota 

(for Northern Township)

George C. Hoff, Jared D. Shepherd, Hoff, Barry & Kozar, P.A., Eden Prairie, Minnesota 

(for Greater Bemidji Area Joint Planning Board)

Considered and decided by Hooten, Presiding Judge; Cleary, Chief Judge; and 

Johnson, Judge. 
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U N P U B L I S H E D O P I N I O N

JOHNSON, Judge

This appeal concerns a set of disputes between Bemidji Township and the City of 

Bemidji, Northern Township, and the Greater Bemidji Area Joint Planning Board (JPB)

concerning their respective and joint responsibilities over land-use and zoning issues. 

This is the second lawsuit relating to that general subject. Bemidji Township previously 

was unsuccessful in a lawsuit against the City in which similar issues were raised or 

sought to be raised. For that reason, the district court dismissed Bemidji Township’s 

second lawsuit, primarily on the grounds of res judicata and collateral estoppel. We 

conclude that the requirements of res judicata and collateral estoppel have not been 

satisfied. But we also conclude that an arbitrator must resolve the question whether the 

second lawsuit is barred by the release provision of the settlement agreement that 

resolved the first lawsuit. Therefore, we reverse and remand for further proceedings.

FACTS

The facts and procedural history relevant to this appeal include the facts and 

procedural history of the first lawsuit brought by Bemidji Township. We need not and 

will not repeat all of that information, which was thoroughly discussed in this court’s 

opinion in the first lawsuit, in which we affirmed the district court’s judgment in favor of 

the City. See Bemidji Twp. v. City of Bemidji, No. A14-0637, 2015 WL 2341112 (Minn. 

App. May 18, 2015), pet. for review filed (Minn. June 17, 2015). 

Bemidji Township commenced its second lawsuit against the City in April 2014. 

In the second lawsuit, Bemidji Township sued not only the City but also Northern 
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Township (which is adjacent to the City in Beltrami County) and the JPB (an entity 

created pursuant to Minn. Stat. § 471.59 (2014), which is comprised of elected officials 

of Bemidji Township, the City, and Northern Township). 

Bemidji Township’s complaint in the second lawsuit consists of four counts. 

Bemidji Township’s primary allegations are in count 2, which alleges a claim of breach 

of contract. Count 2 has four parts, which we categorize and summarize as follows: 

(a) Northern Township breached the OAA by engaging with the City in selective and 

accelerated annexation (see paragraphs 17-22 of the complaint); (b) the City breached the 

settlement agreement by not facilitating Northern Township’s approval of that agreement

(see paragraphs 23-31 of the complaint); (c) all defendants breached the JPA and RJPA 

by facilitating the JPB’s exercise of land-use control without a comprehensive plan (see

paragraphs 32-34 of the complaint); and (d) all defendants violated the temporary 

injunction by impairing Bemidji Township’s land-use authority (see paragraphs 35-37 of 

the complaint).

Two other counts of the complaint are relevant to this appeal. In count 3, Bemidji 

Township alleges that all defendants breached the implied covenant of good faith and fair 

dealing. In count 1, Bemidji Township seeks a declaratory judgment that the JPA, RJPA, 

and OAA are unenforceable due to the defendants’ breaches of those agreements. Counts 

1 and 3 are, in essence, derivative of counts 2(a), 2(b), and 2(c) because counts 1 and 3 

seek relief based on the same alleged facts. Count 4 has been dismissed with prejudice 

by stipulation of the parties and, thus, is not relevant to the appeal. 
4

In July 2014, the City, Northern Township, and the JPB filed separate motions to 

dismiss Bemidji Township’s complaint. In October 2014, the district court issued an 

order and memorandum in which it granted each defendant’s motion. The district court 

reasoned that the claims that we have described as counts 2(a) and 2(c), as well as the 

corresponding portions of counts 1 and 3, are barred by the doctrine of res judicata. The 

district court reasoned that count 2(d) is barred by the doctrine of collateral estoppel. The 

district court reasoned that count 2(b) must be resolved through arbitration, and Bemidji 

Township does not challenge that part of the district court’s ruling on appeal. 

Bemidji Township appeals from the dismissal of counts 2(a), 2(c), and 2(d) and 

the corresponding portions of counts 1 and 3.

D E C I S I O N

Bemidji Township argues that the district court erred by granting the three motions 

to dismiss.

I. Res Judicata

The district court concluded that counts 2(a) and 2(c) and the corresponding 

portions of counts 1 and 3 are barred by the doctrine of res judicata. Count 2(a) is 

asserted against Northern Township only; count 2(c) is asserted against all three 

defendants. 

The doctrine of res judicata, also known as claim preclusion, prevents a party 

from asserting a claim after the completion of a prior lawsuit involving an earlier claim if 

“‘(1) the earlier claim involved the same set of factual circumstances; (2) the earlier claim 

involved the same parties or their privities; (3) there was a final judgment on the merits; 
5

(4) the estopped party had a full and fair opportunity to litigate the matter.’” BrownWilbert, Inc. v. Copeland Buhl & Co., 732 N.W.2d 209, 220 (Minn. 2007) (quoting 

Hauschildt v. Beckingham, 686 N.W.2d 829, 840 (Minn. 2004)); see also Rucker v. 

Schmidt, 794 N.W.2d 114, 117 (Minn. 2011). “Res judicata applies equally to claims 

actually litigated and to claims that could have been litigated in the earlier action.” 

Brown-Wilbert, 732 N.W.2d at 220. This court applies a de novo standard of review to a 

district court’s application of the doctrine of res judicata. Schober v. Commissioner of 

Revenue, 853 N.W.2d 102, 111 (Minn. 2013); Hauschildt, 686 N.W.2d at 840.

A. First Requirement: Same Set of Factual Circumstances

“[A] plaintiff may not split his cause of action and bring successive suits involving 

the same set of factual circumstances.” Hauschildt, 686 N.W.2d at 840 (quotation 

omitted). To determine whether the claims alleged in two lawsuits involve the same set 

of factual circumstances, courts “‘inquire whether the same evidence will sustain both 

actions.’” Id. at 840-41 (quoting McMenomy v. Ryden, 276 Minn. 55, 58, 148 N.W.2d 

804, 807 (1967)). Claims alleged in two different lawsuits “cannot be considered the 

same cause of action if the right to assert the second claim did not arise at the same time 

as the right to assert the first claim.” Id. at 841 (quotation omitted).

Bemidji Township contends that the district court erred by reasoning that count 

2(c), which is asserted against all three defendants, involves the same set of factual 

circumstances as the claims alleged in the first lawsuit. The district court concluded that 

the allegations relevant to count 2(c) involve the same set of factual circumstances as the 

corresponding allegations in the first lawsuit because “the facts of both cases regarding 
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the comprehensive plan have not changed over time” and “[w]hether or not there was a 

comprehensive plan in place and whether or not it was required to be in place under the 

JPA or RJPA are facts that existed and were known at the initial lawsuit.” But the first 

lawsuit did not encompass the question whether a comprehensive plan was in place when 

the JPB began exercising authority over planning and zoning at the direction of the City 

and Northern Township. Neither the complaint in the first lawsuit nor the settlement 

agreement referred to the issue of a comprehensive plan. In the first lawsuit, Bemidji 

Township alleged breaches of the OAA but did not allege breaches of the JPA or RJPA, 

which are the agreements that Bemidji Township now claims were breached in count 

2(c). Because the two lawsuits concern breaches of different agreements, the evidence 

that would sustain Bemidji Township’s allegations in count 2(c) is different from the 

evidence that would have been offered in support of Bemidji Township’s allegations in 

the first lawsuit.1 See id.

Thus, respondents have not satisfied the first requirement of the doctrine of res 

judicata with respect to count 2(c) and the corresponding portions of counts 1 and 3. 

 

1A side-by-side comparison of the proposed amended complaint in the first lawsuit 

and the complaint in the second lawsuit demonstrates that count 2(c) is a reformulation of 

the claims that Bemidji Township attempted to add, but was not allowed to add, in its 

motion to amend the complaint (which was, in reality, a motion to supplement the 

complaint, see Minn. R. Civ. P. 15.04). Specifically, the allegations supporting count 

2(c), which are found in paragraphs 32-34 of the complaint in this lawsuit, are 

substantially identical to the allegations in paragraphs 54-58 of Bemidji Township’s 

proposed amended complaint in the first lawsuit. The City opposed the motion to amend 

in part by stating that Bemidji Township “is, of course, free to assert its [new] claims in a 

new lawsuit.” The district court’s denial of the motion to amend prompted Bemidji 

Township’s second lawsuit, as adumbrated by the city’s counsel.
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This conclusion is a sufficient basis to reverse the district court’s judgment in favor of the 

City, Northern Township, and the JPB with respect to those claims.2

B. Second Requirement: Same Party or in Privity with Same Party

The doctrine of res judicata applies only to a person who was a party to a prior 

case or is in privity with a party to the prior case. Rucker, 794 N.W.2d at 117. In this 

sense, privity is an “exception” to the general rule that only parties to a prior case may be

bound by a judgment in that case. Richards v. Jefferson Cnty., 517 U.S. 793, 798, 116 S. 

Ct. 1761, 1766 (1996). A person is in privity with a party only if the person’s “‘interests 

are affected by the judgment with reference to interests involved in the action, as if they

were parties,’” Rucker, 794 N.W.2d at 118 (quoting Margo-Kraft Distribs., Inc. v. 

Minneapolis Gas Co., 294 Minn. 274, 278, 200 N.W.2d 45, 47 (1972) (quoting 

Restatement (First) of Judgments § 83 cmt. A (1942))), or if the person “is otherwise so 

identified in interest with another that he represents the same legal right,” id. (quotations 

omitted).

Bemidji Township contends that the district court erred by concluding that 

Northern Township and the JPB are in privity with the City for purposes of this dispute. 

The district court reasoned that Northern Township is in privity with the City because 

“[i]t is impossible to say that Northern Township was not connected to the interests of the 

 

2Bemidji Township’s challenge to the district court’s application of the doctrine of 

res judicata also extends to count 2(a), which is asserted solely against Northern 

Township. In light of our conclusion below in part I.B., we need not analyze whether 

count 2(a) involves the same set of factual circumstances as the claims in the first lawsuit. 
8

first lawsuit as if it was a party.”3 The caselaw makes clear, however, that sharing a 

common interest in the outcome of a case is insufficient to establish privity. See id. at 

118-19; State v. Lemmer, 736 N.W.2d 650, 660-61 (Minn. 2007). Privity may exist if, 

for example, a non-party controlled the party’s actions in the previous case, had interests 

that were represented by the party in the previous case, is a successor in interest, or is

otherwise “so identified in interest with another that [the non-party] represents the same 

legal right.” Rucker, 794 N.W.2d at 118 (quotations omitted). Northern Township 

appears to rely on the last of these examples. But the City and Northern Township are 

separate legal entities with separate legal interests (and, we note, separate counsel). See 

City of New York v. Beretta U.S.A. Corp., 315 F. Supp. 2d 256, 267 (E.D.N.Y. 2004) 

(reasoning that “distinct” government agencies are not in privity if “applying preclusion 

would interfere with the proper allocation of authority between them” (quotation 

omitted)); see also Restatement (Second) of Judgments § 36 cmt. f (1980). Northern 

Township’s claim of privity is inconsistent with the fact that it refused to give its 

approval to a significant provision of the settlement agreement, to which the City had 

agreed in full, thereby frustrating the complete resolution of the first lawsuit. Northern 

Township’s actions during and following the first lawsuit demonstrate that its interests 

 

3All parties to this appeal implicitly agree that privity is necessary to allow 

Northern Township to benefit from the district court’s judgment in the first lawsuit. No 

party contends that Northern Township can satisfy the second requirement of the doctrine 

of res judicata on the ground that the district court in the first lawsuit sua sponte made 

Northern Township a party to that case. The absence of such a contention is consistent 

with the fact that Bemidji Township was not granted leave to amend its complaint to 

assert claims against Northern Township in the first lawsuit. 
9

are separate and distinct from the City’s interests. Thus, Northern Township is not in 

privity with the City.

The district court concluded that the JPB is in privity with the City because “the 

JPB’s interests in the previous lawsuit were represented.” But, again, the City and the 

JPB are separate legal entities with separate legal interests (and separate counsel). See 

City of New York, 315 F. Supp. 2d at 267. Specifically, the City entered into a settlement 

agreement with Bemidji Township that would have released Bemidji Township from 

membership in the JPB, thereby substantially decreasing the scope and authority of the 

JPB, if Northern Township had approved. This alone demonstrates that the City was 

“pursuing its own interests” in the first lawsuit and “acting in its own behalf and without 

any accountability to” the JPB such that “the requisite privity is lacking.” Pirrotta v. 

Independent Sch. Dist. No. 347, 396 N.W.2d 20, 22 (Minn. 1986) (holding that employer 

and employee were not in privity despite fact that interests “happened to coincide” in 

prior matter). In addition, a finding of privity based solely on the City’s membership in 

the JPB would be incongruous because Bemidji Township also is a member of the JPB, 

but Bemidji Township and the JPB obviously are not in privity with each other. Thus, 

the JPB is not in privity with the City.

Neither Northern Township nor the JPB has satisfied the second requirement of 

the doctrine of res judicata with respect to counts 2(a) and 2(c) and the corresponding 

portions of counts 1 and 3. This conclusion is a sufficient basis to reverse the district 

court’s judgment in favor of Northern Township and the JPB with respect to those 

claims.
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Therefore, the district court erred by dismissing counts 2(a) and 2(c) and the 

corresponding portions of counts 1 and 3 on the basis of the doctrine of res judicata.

II. Collateral Estoppel

The district court concluded that count 2(d) is barred by the doctrine of collateral 

estoppel. The doctrine of collateral estoppel precludes the re-litigation of issues that 

previously were decided in a prior lawsuit. Hauschildt, 686 N.W.2d at 840. To establish 

that the doctrine applies, a party must satisfy each of the following requirements:

(1) the issues in the prior and present adjudication must be 

identical; (2) there must have been a final adjudication on the 

merits; (3) the estopped party must have been a party or in 

privity with a party to the prior adjudication; (4) and the 

estopped party must have been given a fair and full 

opportunity to be heard on the adjudicated issue.

Haavisto v. Perpich, 520 N.W.2d 727, 731 (Minn. 1994).

The issue whether respondents violated the temporary injunction was not decided 

in the first lawsuit. The temporary injunction was issued on December 3, 2013. The 

temporary injunction was vacated a few months later, on March 20, 2014, when the 

district court dismissed the first lawsuit pursuant to the settlement agreement and the 

arbitrator’s decision concerning the settlement agreement. Bemidji Township attempted 

to amend its complaint in the first lawsuit to add alleged violations of the temporary 

injunction, but its motion was denied. The district court simply did not resolve the 

substance of Bemidji Township’s allegation that respondents violated the temporary 

injunction when the district court denied the motion to amend, vacated the temporary 

injunction, or dismissed the first lawsuit. Thus, respondents have not satisfied the second 
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requirement of the doctrine of collateral estoppel, which requires a “final adjudication,” 

because there was no adjudication at all of the issue whether respondents violated the 

temporary injunction. See Haavisto, 520 N.W.2d at 731. Therefore, the district court 

erred by dismissing count 2(d) on the basis of the doctrine of collateral estoppel.

III. Alternative Grounds for Affirmance

A. Failure to State a Claim Upon Which Relief May be Granted

In their responsive briefs, the City and the JPB argue in the alternative that, if the 

district court erred by dismissing the second lawsuit based on the doctrines of res 

judicata and collateral estoppel, the district court’s judgment nonetheless should be 

affirmed on the ground that Bemidji Township’s complaint fails to state a claim upon 

which relief can be granted. In its reply brief, Bemidji Township argues that the City and 

the JPB have not preserved this alternative argument because they did not present it to the 

district court in connection with their respective motions to dismiss. 

As a general rule, a respondent on appeal may assert alternative grounds for 

affirmance so long as the respondent preserved the alternative argument by presenting it 

to the district court. See Day Masonry v. Independent Sch. Dist. 347, 781 N.W.2d 321, 

331 (Minn. 2010). In this case, however, both the City and the JPB failed to preserve this 

alternative argument. Neither the City nor the JPB argued in their respective initial 

memoranda of law in support of their motions to dismiss that Bemidji Township’s 

complaint fails to state a claim upon which relief can be granted. Both the City and the 

JPB made such an argument only in their respective reply memoranda of law. But a 

moving party may not make an argument for relief for the first time in a reply 
12

memorandum of law. Minn. R. Gen. Pract. 115.03(c). In this case, the district court did 

not consider or even mention the alternative argument that Bemidji Township’s 

complaint fails to state a claim upon which relief can be granted, and appropriately so. 

Accordingly, neither the City nor the JPB has preserved this alternative argument for 

appellate review. See Thiele v. Stich, 425 N.W.2d 580, 582 (Minn. 1988). Thus, we will 

not consider in the first instance the City’s and the JPB’s alternative argument that 

Bemidji Township’s complaint in the second lawsuit fails to state a claim upon which 

relief can be granted.

B. Contractual Release

In its responsive brief, the City argues in the alternative that, if the district court 

erred by dismissing the second lawsuit based on the doctrines of res judicata and 

collateral estoppel, the district court’s judgment nonetheless should be affirmed on the 

ground that Bemidji Township’s claims against the City for breach of the JPA (i.e., count 

2(c) and the corresponding portions of counts 1 and 3) are barred by the provision in the 

settlement agreement in which Bemidji Township released the city from future claims. 

The release provision states as follows:

It is the specific intent of the parties to release and 

discharge the other from any and all claims and causes of 

action of any kind or nature whatsoever, whether known or 

unknown, asserted or unasserted, and whether specifically 

mentioned herein or not, which may exist or might be claimed 

to exist, at, prior to or subsequent to the date hereof by reason 

of any matter or thing arising out of or in connection with the 

claims in this mediation, and any matter relating thereto. The 

parties specifically waive any right to assert that any claim 

has been, through oversight or error, or intentionally or 
13

unintentionally omitted from this Mediated Settlement 

Agreement. 

Likewise, the JPB argues that it is a third-party beneficiary of the settlement agreement 

between the City and Bemidji Township such that the release provision should bar 

Bemidji Township’s claims against the JPB as well. 

In response, Bemidji Township argues that any disputes relating to the scope or 

effect of the settlement agreement must be resolved in arbitration, as provided by a 

different provision of the settlement agreement. The arbitration provision of the 

settlement agreement states, “Any dispute(s) and/or questions of any kind or nature 

regarding this Settlement shall be decided by Binding Arbitration before the Mediator, 

who shall be the sole Arbitrator.” Anticipating Bemidji Township’s argument, the City 

contends that Bemidji Township has waived its right to demand arbitration by 

commencing the second lawsuit. In the district court, however, the City did not argue 

that Bemidji Township waived its right to arbitrate the effectiveness and applicability of 

the release provision of the settlement agreement, even though Bemidji Township

invoked the arbitration provision in its memorandum of law in opposition to the City’s 

motion to dismiss. Thus, the City has not preserved its argument that Bemidji Township 

has waived its right to arbitrate the parties’ dispute concerning the release provision of 

the settlement agreement. See Thiele, 425 N.W.2d at 582.

We turn to the substance of Bemidji Township’s counter-argument to the City’s 

alternative argument. The pertinent language of the arbitration provision is broad. It 

applies to “[a]ny dispute(s) and/or questions of any kind or nature regarding this 
14

Settlement.” Whether the release provision in the settlement agreement bars, in whole or 

in part, Bemidji Township’s claims against the City in the second lawsuit is a matter 

within the scope of the arbitration provision. See David Co. v. Jim W. Miller Constr., 

Inc., 444 N.W.2d 836, 842 (Minn. 1989) (giving broad interpretation to “extremely 

broad” arbitration clause covering “all claims, disputes, and other matters in question”). 

Thus, the City’s and the JPB’s alternative argument that Bemidji Township’s claims are

barred, in whole or in part, by the release provision of the settlement agreement must be 

resolved in arbitration.

In sum: Counts 2(a) and 2(c) of Bemidji Township’s complaint, and the 

corresponding portions of counts 1 and 3, are not barred by the doctrine of res judicata. 

Count 2(d) of Bemidji Township’s complaint is not barred by the doctrine of collateral 

estoppel. Whether the claims against the City and the JPB are barred, in whole or in part, 

by the release provision of the settlement agreement must be resolved in arbitration. 

Therefore, we reverse the judgment of the district court and remand the case to the 

district court, with instructions that the district court compel arbitration of the issues 

identified above in part III.B., stay litigation in the district court while the arbitration is 

pending, and thereafter conduct further proceedings, as appropriate.

Reversed and remanded.