Court Opinion

ID: 8245460
Source: CourtListenerOpinion
Date Created: 2022-10-16 09:31:11.518351+00
Date Added: 2024-06-11T16:42:41.923463
License: Public Domain

DIETZEN, Justice
(concurring).
I concur with the result reached by the majority that res judicata does not bar Katherine Rucker’s fraud claim against Schmidt and Rider Bennett. But I disagree with the underlying reasoning of the majority, particularly its application of our res judicata doctrine to the facts of this case. Accordingly, I concur only in the result. To explain my disagreement with the majority, it is necessary to examine the law of res judicata, and then apply that law to the facts of this ease.
Res judicata is an affirmative defense that must be pleaded and proven by the party asserting it. Beutz v. A.O. Smith Harvestore Prods., Inc., 431 N.W.2d 528, 532 n. 3 (Minn.1988). It is a finality doctrine, which provides that there must be an end to litigation. See Hauschildt v. Beckingham, 686 N.W.2d 829, 840 (Minn.2004). Pursuant to res judicata, a judgment on the merits of a lawsuit is a bar to a second lawsuit for the same cause of action, or any other matter that could have been, but was not, litigated in the first lawsuit. Hauser v. Medley, 263 N.W.2d 803, 807 (Minn.1978). Its virtue is to “relieve parties of the burden of relitigating *122issues already determined in a prior action.” Beutz, 431 N.W.2d at 531. Consequently, “a plaintiff may not split his cause of action and bring successive suits involving the same set of factual circumstances.” Hauser, 263 N.W.2d at 807.
Whether res judicata bars a claim is a question of law that we review de novo. Hauschildt, 686 N.W.2d at 840. To determine whether a prior lawsuit and resulting judgment are a bar to the current lawsuit, we must examine whether the same evidence will sustain the cause of action or claim asserted in both matters. See McMenomy v. Ryden, 276 Minn. 55, 58, 148 N.W.2d 804, 807 (1967) (“The common test for determining whether a former judgment is a bar to a subsequent action is to inquire whether the same evidence will sustain both actions.”). The elements of res judicata are that (1) the cause of action or claim involved the same set of factual circumstances; (2) the cause of action or claim involved the same parties or their privies; (3) there was a final judgment on the merits; and (4) the estopped party had a full and fan* opportunity to litigate the matter. Hauschildt, 686 N.W.2d at 840; see also Dorso Trailer Sales, Inc. v. Am. Body & Trailer, Inc., 482 N.W.2d 771, 774 (Minn.1992). It is undisputed that the first, third, and fourth elements of res judicata are not at issue in this case. The sole issue is whether the cause of action asserted by Katherine Rucker in the prior fraud lawsuit “involved the same parties or their privies” as the current lawsuit. Hauschildt, 686 N.W.2d at 840.
Pursuant to the doctrine of res judicata, we examine the cause of action or claim adjudicated in a prior lawsuit and the resulting judgment to determine whether that judgment bars the cause of action or claim asserted in the current lawsuit. See Hauser, 263 N.W.2d at 807 (“ ‘A judgment on the merits constitutes an absolute bar to a second suit for the same cause of action ....”’ (quoting Youngstown Mines Corp. v. Prout, 266 Minn. 450, 466, 124 N.W.2d 328, 340)). The judgment in the dissolution lawsuit cannot be asserted as a bar to the current lawsuit because that judgment did not adjudicate Katherine Rucker’s cause of action or claim for fraud. Thus, we must examine the fraud lawsuit brought by Katherine Rucker against Robert Rucker and the resulting judgment to determine whether that judgment bars the current lawsuit against Schmidt and Rider Bennett.
Moreover, the other three elements of res judicata focus on the prior lawsuit and judgment that adjudicated the cause of action for fraud. Specifically, the other three elements examine whether the prior lawsuit involved the same set of factual circumstances (cause of action for fraud) as the current lawsuit, whether there was a final judgment on the merits (cause of action for fraud) in the prior lawsuit, and whether the estopped party — Katherine Rucker — had a full and fair opportunity to litigate (cause of action for fraud) in the prior lawsuit. Thus, it logically follows that we should also examine the prior fraud lawsuit and resulting judgment to determine whether privity exists.
Privity means that the party and non-party are so closely identified to the cause of action or claim adjudicated in the prior lawsuit and the resulting judgment that they represent the same legal right. See Beutz, 431 N.W.2d at 533; see also Margo-Kraft Distribs., Inc. v. Minneapolis Gas Co., 294 Minn. 274, 278, 200 N.W.2d 45, 47 (1972). We have previously identified several circumstances in which privity, and an identity of interest, is nearly always found to exist. Thus, “ ‘those who control an action although not parties to it’ ” represent an identity of interest and are in privity. Margo-Kraft, 294 Minn. at 278, *123200 N.W.2d at 47-48. Additionally, “ ‘successors in interest to those having derivative claims’ ” and “ ‘those whose interests are represented by a party to the action’ ” represent the same legal right. Id. at 278, 200 N.W.2d at 48 (quoting Restatement (First) of Judgments § 83 cmt. a (1942)).
The majority concludes we must carefully examine the circumstances of each case to determine whether an identity of interest, and therefore privity, exists. See id. at 278, 200 N.W.2d at 47-48. I do not disagree that we must look at each case individually, but in my view, a more explicit explanation is required. Thus, the court must examine the legal relationship of the party and the nonparty, and their connection to the subject matter of the cause of action in the prior fraud lawsuit, to determine whether they were so closely identified to that cause of action that the same legal right was adjudicated. See Beutz, 431 N.W.2d at 533 (the nonparty must be “so identified in interest with another that he represents the same legal right”); Hentschel v. Smith, 278 Minn. 86, 95, 153 N.W.2d 199, 206 (1967) (the court examines “the relation of the parties to the subject matter” of the claim). It is not enough that the nonparty share a concern for the outcome of the litigation, or that the legal interests between the party and nonparty “happened to coincide.” Pirrotta v. Indep. Sch. Dist. No. 347, Willmar, 396 N.W.2d 20, 22 (Minn.1986); see also State v. Lemmer, 736 N.W.2d 650, 660 (Minn. 2007). Rather, the nonparty must be so “ ‘connected’ ” with the party that the interests of both were “ ‘affected by the judgment’ ” in the prior fraud litigation. Margo-Kraft, 294 Minn. at 278, 200 N.W.2d at 47 (quoting Restatement (First) of Judgments § 83 cmt. a (1942)).
My disagreement with the majority is that its conclusion regarding privity rests upon its examination of the dissolution lawsuit. Specifically, it states: “Something more than the common objective of attorney and client in obtaining an outcome favorable to the client is necessary to establish privity. That something more— here, a mutuality of legal interest in the outcome of the dissolution action — is missing in this case.” In doing so, the majority misapplies the doctrines of res judicata and privity. While Schmidt and Rider Bennett’s conduct in the dissolution lawsuit provides the factual support for Katherine Rucker’s fraud claim, that conduct does not determine whether privity exists in the fraud lawsuit. Rather, the existence of privity is based on an identity of interest between Schmidt, Rider Bennett, and Robert Rucker in the fraud lawsuit.
Applying these principles to the fraud lawsuit, I would conclude that Schmidt and Rider Bennett have failed to establish that they were in privity with Robert Rucker. Several reasons support my conclusion. First, there is no evidence that Schmidt and Rider Bennett “controlled” the defense in the prior fraud lawsuit. They suggest that an attorney always directs the litigation, and therefore controls the lawsuit. They rely on cases from other jurisdictions to urge the court to adopt a per se rule that an attorney will always be in privity with a client for purposes of res judicata.1 But privity requires that the *124court go beyond the legal relationship of the parties and examine whether they were so closely identified with the cause of action in the prior lawsuit and judgment that they represent the same legal rights adjudicated in the prior lawsuit. See Beutz, 431 N.W.2d at 533. Thus, I would reject a per se rule establishing privity between attorneys and clients.
Here, Schmidt did not represent Robert Rucker or otherwise participate in the pri- or fraud lawsuit. Moreover, Schmidt did not direct or control that lawsuit. While Rider Bennett did represent Robert Ruck-er in the prior lawsuit, Rider Bennett’s involvement was only as Robert Rucker’s attorney. Importantly, Rider Bennett was not a decision-maker that controlled the litigation. Rather, Robert Rucker made the decisions in the litigation, and Rider Bennett took direction from him.
Additionally, Schmidt and Rider Bennett’s interests in the prior fraud lawsuit were not represented by Robert Rucker in the fraud lawsuit.2 Specifically, in the pri- or lawsuit Robert Rucker pursued his own interests and acted on his own behalf. While Schmidt and Rider Bennett may have had a common interest in a successful result for Robert Rucker in the prior lawsuit, privity requires a showing that Schmidt and Rider Bennett’s legal interests were represented by Robert Rucker in that lawsuit. The legal interests of Schmidt and Rider Bennett on the one hand, and Robert Rucker on the other, are separate and distinct. Schmidt and Rider Bennett have different defenses available than Robert Rucker, and have different legal interests than Robert Rucker. For example, Schmidt and Rider Bennett could argue that they acted solely as Robert Rucker’s attorneys, that Robert Rucker made all litigation decisions, that they were unaware of the fraud, and therefore they are not liable. Also, if Schmidt and Rider Bennett are found to have engaged in fraud, they are subject to treble damages under Minn.Stat. §§ 481.07-.071 (2010). Consequently, the legal interests of Schmidt, Rider Bennett, and Robert Rucker are separate and distinct.
In summary, privity means that the party and nonparty are so closely identified to the cause of action or claim adjudicated in the prior lawsuit and judgment that they represent the same legal right. Schmidt and Rider Bennett have failed to demonstrate that their connection to Robert Rucker at the time of the prior fraud lawsuit created an identity of interest such that their legal rights were adjudicated in the fraud lawsuit and the resulting judgment. Because they are not in privity with Robert Rucker, res judicata does not bar Katherine Rucker’s claim against Schmidt and Rider Bennett. Consequently, I concur with the majority in affirming the court of appeals.

. See Plotner v. A T & T Corp., 224 F.3d 1161, 1169 (10th Cir.2000) (concluding that privity existed between law firm defendants and clients because law firm defendants appeared by virtue of activities as representatives of clients); Fearing v. Lake St. Croix Villas Homeowner’s Ass’n, No. 06-456, 2006 WL 3231970, at *9 (D.Minn. Nov. 8, 2006) (holding that lawyer was in privity with client in underlying lawsuit); Johnson v. U.S. Bank, N.A., No. 04-494, 2005 WL 1421461, at *2 (D.Minn. June 17, 2005) (holding that law firm was in privity with client when law firm was added to second litigation based on ac*124tions representing client in first litigation); Merchs. State Bank v. Light, 458 N.W.2d 792, 794-95 (S.D.1990) (concluding that relaxed privity concept in South Dakota included lawyer who directed the prior litigation).

. Schmidt and Rider Bennett do not argue that they are “ 'successors in interest to those having derivative claims’ ” in the prior fraud lawsuit. Margo-Kraft, 294 Minn. at 278, 200 N.W.2d at 48 (quoting Restatement (First) of Judgments § 83 cmt. a (1942)). Thus, this type of privity is not applicable.