Opinion ID: 768509
Heading Depth: 3
Heading Rank: 1

Heading: Inconsistent Remedies

Text: 17 In its grant of partial dismissal, the federal district court initially found that the election of remedies doctrine barred the Dissenters from bringing a fraud claim after the appraisal proceeding had come to a determinative conclusion. We hold this to be error. 18 The election of remedies is the act of choosing between different remedies allowed by law on the same state of facts, where the party has but one cause of action, one right infringed, one wrong to be redressed. Geo. A. Hormel Co. v. First Nat'l Bank, 212 N.W. 738, 740-41 (Minn. 1927) (citation omitted). The doctrine is frequently seen in situations where the claimant is faced with the choice of affirming the contract or, if the remedy of rescission exists, disaffirming the contract. See Medcom Holding Co. v. Baxter Travenol Laboratories, Inc., 984 F.2d 223, 228 (7th Cir. 1993) (citing Roberts v. Sears, Roebuck and Co., 617 F.2d 460 (7th Cir.), cert. denied, 449 U.S. 975 (1980)). The point is, a claimant cannot do both. The doctrine's purpose is to prevent the claimant from collecting twice for a single misdeed against it. See Twin Cities Fed. Sav. & Loan Assoc. v. Transamerica Ins. Co., 491 F.2d 1122, 1125 (8th Cir. 1974). 19 Although the election of remedies is considered a harsh doctrine, Lear v. Equitable Life Assurance Soc'y, 798 F.2d 1128, 1134 (8th Cir. 1986), it is basically an outmoded form of collateral estoppel. Unfortunately, the breadth implied by its name can cause parties to attempt to apply the doctrine in situations where it does not fit. See Medcom, 984 F.2d at 228. Election of remedies has no application where a party has different remedies for the enforcement of different and distinct rights or the redress of different and distinct wrongs. Hormel, 212 N.W. at 740. 20 The federal district court held that although parallel fraud and valuation actions could have proceeded initially, once the Dissenters collected their respective judgments in the valuation proceeding, the Dissenters were barred from pursuing the fraud claim. This was the precise holding of the district court. Appellees cite Northwestern State Bank v. Foss, 197 N.W.2d 662, 666 (Minn. 1972), which observes that once an available remedy is taken to its conclusion, the party cannot thereafter assert a new theory to enhance recovery. We do not dispute the viability of this position; however, we are not convinced of its application in this instance. 21 The district court found that although the state court dismissed the counterclaim suit without prejudice, the Dissenters should have filed a motion to stay the valuation suit until the fraud action had been litigated. It is tenuous at best for ASI to rest its argument on what the Dissenters hypothetically could have done when ASI presents nothing that suggests a motion to stay would have been granted by the state district court had the Dissenters chosen to bring it. Furthermore, it was the state district court that found the fraud proceeding to be outside the scope of the limited appraisal proceeding and dismissed the fraud counterclaim without prejudice. Obviously, if the court had deemed it appropriate to first pursue the fraud action, it could have ordered a stay of the valuation suit; however, since the two suits were found not to involve the same issues or to be inconsistent with one another, the state court simply bifurcated the claims, stated its jurisdiction was limited in the valuation suit, and proceeded accordingly. 10 We emphasize that although the present fraud suit has now been removed to federal court, it nevertheless is governed by Minnesota law. As we have pointed out, both Judge Howard of the state district court and the Minnesota Court of Appeals in Sharecom II, recognized that under Minnesota law an action for common law fraud is available to the Dissenters notwithstanding the completion of the appraisal proceeding. 11 Hence, contrary to the federal district court's holding, we are not convinced that the Dissenters were required to secure a stay in order to preserve their fraud action. 22 In JCA Partnership v. Wenzel Plumbing & Heating, Inc., 978 F.2d 1056 (8th Cir. 1992), this court refused to apply the election of remedies doctrine to a breach of contract claim that was brought following a settlement in a fraudulent conveyance proceeding. The appellant, a foreclosed-upon mortgagor/vendee, sued its mortgagee for fraudulent conveyance, claiming the mortgagee purchased the foreclosed property at the sheriff's sale at an unreasonably low price. Before a settlement was finalized, the appellant sued for breach of contract based on the vendor's failure to deliver possession of the property at issue after the appellant cured its default. This court rejected the application of election of remedies, stating that the two actions dealt with separate and distinct wrongs and, moreover, the vendor was not a party to the fraudulent conveyance action. Thus, the two actions addressed separate wrongs and involved separate parties, making the doctrine of election of remedies altogether inapplicable. See JCA, 978 F.2d at 1061. 23 We feel the case at bar is similar to JCA. In the valuation proceeding, the wrong to be addressed was the undervaluation of Corporation stock as of May 8, 1992. Here in the fraud proceeding, on the other hand, the wrong to be addressed is the alleged scheme by ASI to illegally gain control of all of the Corporation's stock, force out all other shareholders, sell the Corporation at a huge profit, and defraud the Dissenters and the state district and appellate courts. Thus, the election of remedies doctrine is not implicated, as its purpose is to prevent double recovery on the same wrong. Furthermore, only the Corporation was a party to the valuation proceeding. Simon, Weinert, and King were not named parties in that action. For all these reasons, the election of remedies doctrine is not applicable under these facts.