Court Opinion

ID: 9714982
Source: CourtListenerOpinion
Date Created: 2023-08-26 05:50:49.639404+00
Date Added: 2024-06-11T18:23:30.103327
License: Public Domain

GILBERT, Justice
(concurring in part and dissenting in part).
The questions before this court are (1) whether the district court has personal jurisdiction over JAG in Ryan’s hen action and (2) whether the district court has personal jurisdiction over JAG in GMH’s cross-claim. With respect to the first issue, I concur with the majority’s decision declining to adopt a joint-venture service rule and that actual notice of the mechanics’ hen action without service is insufficient to subject a party to personal jurisdiction. However, there are additional theories of personal jurisdiction that were not considered by the courts below. The relevance and strength of these theories are a function of the relationship between JAG, JDC, and the Fairway Hills property. Because there remain numerous genuine issues of material fact regarding this relationship, a reversal under these facts calls for a remand. Accordingly, I respectfully dissent from the majority’s decision.
I also respectfully dissent from the majority’s decision that the district court lacks personal jurisdiction over JAG in GMH’s cross-claim. The majority’s conclusion that GMH needed to personally serve JAG improperly imports the rules of civil procedure into our mechanics’ hen jurisprudence. Although party status is established through service in ordinary civil actions, the Mechanics’ Lien Statute provides elaborate rules for establishing party status in mechanics’ hen actions. Because those speciahzed rules take precedence over conflicting rules of civil proce*189dure, under these facts GMH has properly-asserted its cross-claim.
I. Personal Jurisdiction Over JAG in Ryan’s Lien Action
The question before the court is whether the district court has personal jurisdiction over JAG in Ryan’s lien action. Ryan’s principal theories of jurisdiction are (1) Minn. R. Civ. P. 4.03 and Minn.Stat. §§ 514.10-514.12 (2000) (Mechanics’ Lien Statute) permit a joint-venture service rule and (2) actual notice of a lien action without service is sufficient to subject a party to personal jurisdiction under the Mechanics’ Lien Statute. Because adopting these theories would require this court either to create new rules of service of process or depart from the plain meaning of statutory language, I concur with the majority’s decision to reject these theories of personal jurisdiction. I disagree, however, with the disposition of this case and would remand the case to the district court for further factual findings.
A remand is the proper disposition of this case because there is a material factual dispute regarding the relationship between JAG, JDC, and the Fairway Hills property. The majority insists that this relationship “is not a factual question material to the resolution of this case.” If the lower courts had considered and exhausted the universe of personal jurisdiction theories raised by the parties, the legal and factual relationship between JAG, JDC, and the Fairway Hills property indeed would be immaterial. However, this did not happen.
The lower courts considered only the joint-venture theory of personal jurisdiction. Yet Ryan’s complaint alleges that JAG and JDC are “related business entities and share common ownership and control.” Ryan thus raises two theories that could support a finding that the district court has personal jurisdiction over JAG. First, there could be a principal-agent relationship between the party served, JDC, and JAG such that service upon JDC was sufficient to provide personal jurisdiction over JAG. Derrick v. Drolson Co., 244 Minn. 144, 148-49, 69 N.W.2d 124, 127-28 (1955). Second, JAG and JDC may be engaged in a family partnership so that service upon JDC constituted service upon JAG. MinmStat. § 540.152 (2000); State v. Ritholz, 257 Minn. 201, 202-03, 100 N.W.2d 722, 724 (1960); Ford Motor Co. v. Sylte, 188 Minn. 578, 579-80, 248 N.W. 55, 56 (1933).
The factual record before us indicates that JAG is wholly owned by Jim Jagod-zinski. JDC is wholly owned by Joe Jag-odzinski, Jim Jagodzinski’s son. There is some indication that JAG and JDC operate out of the same business address at Fairway Hills in Chaska. It is unclear who owns the Fairway Hills property. Although JAG insists in its memorandum in support of its motion for summary judgment that it owns the Fairway Hills Development, neither JAG nor JDC submitted any title evidence to the district court. In addition, attached to the sworn affidavit of Joe Jagodzinski submitted in support of JDC’s motion for summary judgment are two documents identifying JDC as the owner of the Fairway Hills property1 as well as an affidavit of Tom Veenker, presi*190dent of All Metro Development Consultants, in which Mr. Veenker states that the Fairway Hills Development in Chaska “was developed by Jagodzinski Development Corporation and known [sic] by JAG Investments, Inc.” Significantly, the contract documents signed by the parties and submitted to the district court by JDC contain an affirmative representation by JDC that it is the owner of the Fairway Hills property. Furthermore, Joe Jagod-zinski testified in his deposition that there was a joint-venture and profit-sharing agreement between JAG and JDC and, in its answer, JAG claimed as an offset alleged damages claimed by JDC.
These facts, particularly the profit sharing agreement between JAG and JDC relating to the Fairway Hills property, suggest that JAG and JDC were either engaged in business as a partnership or JDC was an agent of JAG. At a minimum, they indicate that Ryan’s improvements to Fairway Hills through JDC were done with the knowledge and consent of JAG. It is therefore possible that service on JDC was sufficient to preserve Ryan’s action against JAG.
Of course, the fact that there are hints in the factual record before us that an agency or partnership theory might support a finding of personal jurisdiction over JAG does not mean that Ryan ultimately will prevail on this issue. The relevance and strength of these theories are a function of the business relationship between JAG, JDC, and the Fairway Hills property. This is why our prior case law emphasizes the importance of determining the connections between the parties and the property in a mechanics’ lien foreclosure action. Smith v. Hurd, 50 Minn. 503, 506-07, 52 N.W. 922, 922 (1892). Satisfying the standards for service of process depends on the structure of business relationships. Id., 52 N.W. at 922. The existence of an agency relationship is a question of fact. Vacura v. Haar’s Equipment, Inc., 364 N.W.2d 387, 391 (1985). The existence of a partnership is a question of fact. Cyrus v. Cyrus, 242 Minn. 180, 183, 64 N.W.2d 538, 541 (1954). We should remand this case for further factual findings regarding the true relationship between JAG, JDC, and the Fairway Hills property.
The majority’s summary disposition of this case selectively ignores our notice pleading standard. In dismissing this case, the majority is granting JAG summary judgment relief on one jurisdictional ground — the joint-venture theory — even though the parties never advanced the joint-venture theory of jurisdiction to the district court.2 Yet the majority ignores the agency and partnership theories of jurisdiction that were placed before the district court by Ryan’s complaint. Since the days of code pleading are gone, Ryan properly raised the agency and partnership theories of personal jurisdiction by asserting in its complaint that JAG and JDC are “related business entities and share common ownership and control.” We should remand this case so the factual basis for evaluating these theories can be established.
The purpose of the Mechanics’ Lien Statute is “to protect the rights of workmen and materialmen who furnish labor and material in the improvement of real estate.” See, e.g., Armco Steel Corp. v. Chicago & N.W. Ry. Co., 276 Minn. 133, 137, 149 N.W.2d 23, 26 (1967). Joe Jagod-zinski, JDC’s owner, represented to Ryan *191and subcontractors, in writing, that it owned the Fairway Hills property. Now, after all the work has been done and the risks have been incurred, Jim Jagodzinski, JAG’s owner and Joe Jagodzinski’s father, argues that JAG is the true owner. A remand under these facts helps fulfill the longstanding promise of the Mechanics’ Lien Statute that “[h]e whose property is enhanced in value by the labor and toil of others should be made to respond in some way by payment and full satisfaction for what he has secured.” Emery v. Hertig, 60 Minn. 54, 57, 61 N.W. 830, 831 (1895).
II. Personal Jurisdiction Over JAG in GMH’s Cross-claim
I also respectfully dissent from the majority's dismissal of GMH’s answer and cross-claim. The majority’s holding that GMH could make JAG a party only by personally serving its answer on JAG pursuant to Minn. R. Civ. P. 4.03 is based on a misunderstanding of the relationship between the Mechanics’ Lien Statute and the Minnesota Rules of Civil Procedure. The majority explains that because the Mechanics’ Lien Statute does not set forth the procedures for service of a summons to commence a lien action, the rules of civil procedure apply. Under rule 3.01, one is not a party to an action until served. Thus, the majority concludes that a lien claimant named as a defendant has the right to maintain an action to foreclose his or her own particular mechanics’ lien only by formally serving a cross-claim pursuant to rule 4.03.
It is true that the Mechanics’ Lien Statute does not set forth rules for service of process. However, this does not mean that the statute fails to provide rules for making one a party to a mechanics’ lien action. Under the rules of civil procedure, service and party status are inextricably linked. One must be served to be a party. Under the rules for establishing party status detailed in the Mechanics’ Lien Statute, however, one can be a party without being served. In arguing that party status is always a function of service of process, the majority improperly imposes a rule applicable in ordinary civil actions on statutory mechanics’ lien actions. This directly contradicts the Mechanics’ Lien Statute as well as prior decisions of this court.
Our holding in Sandberg v. Palm, 53 Minn. 252, 54 N.W. 1109 (1893), involves a situation directly analogous to that of the instant case. In Sandberg, the property owner’s agent executed a contract to sell the land to Burkey, who engaged several laborers to construct four buildings on the land. Sandberg, one of the laborers, filed an action in Ramsey County to foreclose his mechanics’ lien because he had not been paid for his services. In that action, Hammer, another lien claimant who was named by Sandberg as a defendant, filed an answer to foreclose on his (Hammer’s) particular mechanics’ lien. The district court determined that although Sandberg’s action to foreclose was filed within 1 year after the date of the last item of work on Sandberg’s lien, Sandberg did not properly serve the summons on the landowner until after the 1-year statutory period had passed. Nevertheless, the district court entered judgment in favor of Hammer even though it dismissed Sandberg’s action.
On appeal, we explicitly rejected the property owner’s argument that no other lien claimant could appear in an action to assert his or her particular lien when an original plaintiff who did not commence the foreclosure action properly was procedurally barred from asserting his lien. Instead, we held that a plaintiff commences an action to foreclose on a mechanics’ lien by filing a complaint and a notice for lis pendens and serving a summons. Id. at *192255, 54 N.W. at 1109. Once a plaintiff commences an action to foreclose a lien, any other lien claimant who intends to assert their lien may do so by filing an answer. Id., 54 N.W. at 1109. Once the answer is filed, judgment is not dependent on the disposition of the original plaintiffs claim. Id., 54 N.W. at 1109. Under Sand-berg, GMH properly commenced an action to foreclose its lien against JAG by filing its answer even though Ryan failed to serve a summons on JAG within the statutory period.
Similarly, in Olson & Serley Sash & Door Co. v. Juckem, 163 Minn. 375, 204 N.W. 51 (1925), we emphasized that any individual lien claimant may commence an action to foreclose a mechanics’ lien but, once an action is commenced, all the other claimants who have been joined as party defendants must file an answer to assert their own particular mechanic’s lien. Id. at 377, 204 N.W. at 51. After such a lien claimant files an answer, his action to enforce his lien is independent of the original plaintiffs action. Id., 204 N.W. at 52. We held that “the filing of the answer is the essential thing. Filing it is a substitute for the service of the summons [once] an action to foreclose is commenced. It keeps the lien alive whether the plaintiffs action was begun in time or not, and whether the plaintiff prevails or is defeated.” Id., 204 N.W. at 52; Bauman v. Metzger, 145 Minn. 133, 140, 176 N.W. 497, 500 (1920) (holding that filing an answer commences an action to foreclose a lien). Under Olson, GMH commenced its action against both JAG and JDC when it filed its answer, whether Ryan’s action was begun in time or not. Service by GMH was irrelevant and unnecessary.
The results in Sandberg and Olson are consistent with the statutory language and goals of the Mechanics’ Lien Statute. Of course, they are inconsistent with the Minnesota Rules of Civil Procedure precisely because mechanics’ lien actions are excepted from the requirements contained in the rules to the extent that they are inconsistent or in conflict with the rules. Minn. R. Civ. P. 81.01(a) & App. A. The Mechanics’ Lien Statute specifies the manner in which one is made a party to a mechanics’ lien action. A lienholder asserts his or her hen “by filing a complaint or answer with the court administrator, within one year after the date of the last item of the claim as set forth in the recorded lien statement.” Minn.Stat. § 514.12, subd. 3. After a plaintiff files the complaint, all other lienholders must be made defendants in the action and the named defendants are only required to file their answer with the district court administrator. The statute mandates that “[n]o copies of such complaint or answer need be served on any party, upon demand, or otherwise.” Minn.Stat. § 514.11. In fact, these defendants are prohibited from commencing any action on their own if a notice of lis pendens was filed with the county recorder. Minn.Stat. § 514.12, subd. 2. Under the Mechanics’ Lien Statute, service of process is not necessary to make one a party to a lien action. Because this rule is directly at odds with rule 4.03, the procedures specified under the Mechanics’ Lien Statute take precedence.
Here, the summons and complaint naming GMH as one of the defendants was filed with the district court on December 4, 1998, and notice of lis pendens was filed with the Carver County Recorder, thus complying with the requirements of the statutory provisions governing the commencement of mechanics’ lien actions. The notice in the summons only directed GMH to file its answer, which it did within 20 days of service of the complaint. The notice did not say any further steps were required by GMH. In fact, GMH was prohibited by statute at that time to com-*193menee any action on its own if, as was done here, a notice of lis pendens was filed with the county recorder. Accordingly, when GMH filed its answer with the court, it was in compliance with all of the statutory requirements. GMH properly joined the parties and issues.
In sum, in dismissing GMH’s cross-claim action against JAG, the majority improperly imports the rules of civil procedure into our mechanics’ lien jurisprudence. In doing so, it ignores and overrules our century-old standards regarding the legal effect of an answer filed by a defendant in an already-commenced action to foreclose a mechanics’ lien. The practical result of the majority opinion is that foreclosure of a lien will now require a stipulation regarding proper service by the plaintiff or service of all the answers of the multiple defendants on the property owner and all other codefendants. This will create uncertainty, enhance the expense of litigation, and undermine the remedial purpose of the lien statutes. For these reasons, I respectfully dissent from the majority’s dismissal of GMH’s answer and cross-claim.
PAUL H. ANDERSON, Justice (concurring in part, dissenting in part).
I join in the concurrence and dissent of Justice GILBERT.

. Attached to the sworn affidavit of Joe Jagod-zinski submitted in support of JDC's motion for summary judgment is a document entitled “Instructions to Bidders” which identifies JDC as the owner of the Fairway Hills property. Similarly, in the actual construction agreement between JDC and Ryan Contracting, dated April 16, 1997, which was attached as Exhibit "B” to Joe Jagodzinski’s affidavit, JDC is designated as the owner of the Fairway Hills subdivision.

. Ryan, in its memorandum to the district court opposing summary judgment, characterizes the relationship between JAG and JDC as a joint-venture but does not raise a joint-venture theory of personal jurisdiction. JAG and JDC dispute that they were involved in a joint-venture.