This opinion will be unpublished and may not be cited except as provided by Minn.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 A14-1997
Christina Wagner, Appellant,
vs.
Mark Sowl, Respondent.
Filed May 18, 2015 Affirmed Bjorkman, Judge
St. Louis County District Court File No. 69DU-CV-14-737
Christina Wagner, Barnum, Minnesota (pro se appellant)
Mark Sowl, Duluth, Minnesota (pro se respondent)
Considered and decided by Reyes, Presiding Judge; Hudson, Judge; and
Bjorkman, Judge.
UNPUBLISHED OPINION
BJORKMAN, Judge
Plaintiff-appellant challenges the district court’s determination that she did not
prove her fraud claim against defendant-respondent and that the action is otherwise
barred by res judicata and collateral estoppel. We affirm. FACTS
Respondent Mark Sowl owned and operated the Takk for Maten Café in Duluth.
Appellant Christina Wagner was a patron. In 2010, the restaurant was not doing well.
On November 9, Wagner gave Sowl a check for $3,000. The check was made out to the
restaurant; Sowl deposited it in the restaurant’s bank account. Wagner’s payment was
not otherwise memorialized.
The relationship between the parties deteriorated. In June 2012, Wagner filed a
conciliation court claim against the restaurant. According to the claim statement, Wagner
loaned the money to the restaurant based on an oral agreement that she would be treated
as an investor with the rights to review the restaurant’s financial records and to meet with
the restaurant’s attorney. Wagner alleged that the restaurant had not met these terms and
demanded repayment of the $3,000.
On July 1, Sowl and his co-owner transferred ownership of the restaurant to
Sandra Thompson. But both Sowl and the co-owner remained on the board of governors
of Takk for Maten, LLC until December 2012, when they discontinued their involvement
in the corporation.
Wagner’s conciliation court claim was heard in late August. On November 15, the
conciliation court entered judgment in favor of Wagner in the amount of $3,075. The
judgment identifies the debtor as “Takk for Maten Café.” Shortly after the judgment was
entered, the restaurant closed.1 Wagner attempted to collect on the judgment through a
writ of execution. Wagner contends that Thompson agreed to satisfy the judgment
1 Wagner asserts that the restaurant closed sometime in January 2013.
2 through periodic payments, but Wagner only received one $500 payment. Thompson
later filed for bankruptcy. On May 29, 2013, the bankruptcy court discharged all of
Thompson’s personal debts and any debts of Takk for Maten, LLC to which she extended
a personal guaranty.
On December 31, Wagner filed a conciliation court claim against Sowl, seeking to
recover the $3,000 she provided to the restaurant. Wagner described her claim as seeking
[r]ecovery of damages incurred due to [Sowl’s] role in intentionally neglecting duty of care, duty of full disclosure, knowledge of false information and not correcting to my detriment. Actions include holding monies unfairly under the guise of “investment,” without transparency, business meeting, paperwork, intentionally withheld information, and denied agreed upon specified participation. Actions derived from malice, and breach of agreement to prevent any mirror image.
The conciliation court dismissed the claim with prejudice, determining that Wagner gave
the $3,000 to the restaurant, not to Sowl, and that Wagner had already obtained a
judgment against the restaurant.
Wagner removed the matter to district court for a trial de novo. She filed a new
complaint seeking $3,200 from Sowl based on:
A). Intentional misrepresentation; B). Intentional breach of LLC duty; C). Intentional breach of Loyalty; D). Intentional deceit with malice; E). Intentional breach of LLC grounds; F). Fraudulent Inducement; G). Clandestine disposition; H). Convoluted language that frequently contradicted himself; I). Intentional unjust enrichment for owners at plaintiff’s expense; and J). Flagrant disregard for the civil process and judgment ordered.
3 Wagner asserted that these claims are not identical to those litigated in the 2012 action
against the restaurant because “[t]he claim against Mark Sowl is fraud.” She alleged
Sowl’s sale of the restaurant to Thompson was a fraudulent transfer because it allowed
Thompson to discharge Wagner’s judgment against the restaurant.
The matter came before the district court on August 22, 2014. At the beginning of
the hearing, the district court indicated that it believed res judicata and collateral estoppel
barred Wagner’s claims, but permitted Wagner to argue why her claims should proceed.
Wagner acknowledged that she was seeking to recover the same $3,000 for which she
obtained a judgment against the restaurant, but she explained that her action against Sowl
is based on a different theory (fraud). Based on the parties’ arguments, written
submissions, and additional exhibits, the district court dismissed Wagner’s complaint.
The district court concluded that her claims are barred by res judicata and collateral
estoppel. It also determined that to the extent Wagner asserted new claims, they
essentially allege fraud and Wagner did not meet her burden of proof. Wagner appeals.
DECISION
I. The district court did not clearly err in finding that Wagner did not prove that she is entitled to recover damages based on fraud.
“On appeal from the decision of a district court sitting without a jury, this court
determines whether the evidence sustains the findings of fact and whether the findings
sustain the conclusions of law and judgment.” Roberts v. Brunswick Corp., 783 N.W.2d
226, 230 (Minn. App. 2010). We do not set aside a district court’s findings of fact unless
they are clearly erroneous. Id.; see also Minn. R. Civ. P. 52.01. “If there is reasonable
4 evidence to support the district court’s findings, we will not disturb them.” Rogers v.
Moore, 603 N.W.2d 650, 656 (Minn. 1999).
Wagner challenges the district court’s findings that she did not present a prima
facie case of fraud by Sowl. To prove fraud by misrepresentation, a claimant must show:
(1) there was a false representation by a party of a past or existing material fact susceptible of knowledge; (2) made with knowledge of the falsity of the representation or made as of the party’s own knowledge without knowing whether it was true or false; (3) with the intention to induce another to act in reliance thereon; (4) that the representation caused the other party to act in reliance thereon; and (5) that the party suffer[ed] pecuniary damage as a result of the reliance.
Hoyt Props., Inc. v. Prod. Res. Grp., L.L.C., 736 N.W.2d 313, 318 (Minn. 2007)
(quotation omitted).
The district court found that Wagner failed to establish fraud because (1) she did
not produce evidence that she gave the money to the restaurant based on any
representations by Sowl; (2) most of Sowl’s claimed misrepresentations and other
fraudulent conduct occurred after Wagner provided the money to the restaurant; and
(3) the only damages Wagner sustained are the loan proceeds, for which Wagner already
obtained a judgment against the restaurant. And the court further found that Wagner
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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 A14-1997
Christina Wagner, Appellant,
vs.
Mark Sowl, Respondent.
Filed May 18, 2015 Affirmed Bjorkman, Judge
St. Louis County District Court File No. 69DU-CV-14-737
Christina Wagner, Barnum, Minnesota (pro se appellant)
Mark Sowl, Duluth, Minnesota (pro se respondent)
Considered and decided by Reyes, Presiding Judge; Hudson, Judge; and
Bjorkman, Judge.
UNPUBLISHED OPINION
BJORKMAN, Judge
Plaintiff-appellant challenges the district court’s determination that she did not
prove her fraud claim against defendant-respondent and that the action is otherwise
barred by res judicata and collateral estoppel. We affirm. FACTS
Respondent Mark Sowl owned and operated the Takk for Maten Café in Duluth.
Appellant Christina Wagner was a patron. In 2010, the restaurant was not doing well.
On November 9, Wagner gave Sowl a check for $3,000. The check was made out to the
restaurant; Sowl deposited it in the restaurant’s bank account. Wagner’s payment was
not otherwise memorialized.
The relationship between the parties deteriorated. In June 2012, Wagner filed a
conciliation court claim against the restaurant. According to the claim statement, Wagner
loaned the money to the restaurant based on an oral agreement that she would be treated
as an investor with the rights to review the restaurant’s financial records and to meet with
the restaurant’s attorney. Wagner alleged that the restaurant had not met these terms and
demanded repayment of the $3,000.
On July 1, Sowl and his co-owner transferred ownership of the restaurant to
Sandra Thompson. But both Sowl and the co-owner remained on the board of governors
of Takk for Maten, LLC until December 2012, when they discontinued their involvement
in the corporation.
Wagner’s conciliation court claim was heard in late August. On November 15, the
conciliation court entered judgment in favor of Wagner in the amount of $3,075. The
judgment identifies the debtor as “Takk for Maten Café.” Shortly after the judgment was
entered, the restaurant closed.1 Wagner attempted to collect on the judgment through a
writ of execution. Wagner contends that Thompson agreed to satisfy the judgment
1 Wagner asserts that the restaurant closed sometime in January 2013.
2 through periodic payments, but Wagner only received one $500 payment. Thompson
later filed for bankruptcy. On May 29, 2013, the bankruptcy court discharged all of
Thompson’s personal debts and any debts of Takk for Maten, LLC to which she extended
a personal guaranty.
On December 31, Wagner filed a conciliation court claim against Sowl, seeking to
recover the $3,000 she provided to the restaurant. Wagner described her claim as seeking
[r]ecovery of damages incurred due to [Sowl’s] role in intentionally neglecting duty of care, duty of full disclosure, knowledge of false information and not correcting to my detriment. Actions include holding monies unfairly under the guise of “investment,” without transparency, business meeting, paperwork, intentionally withheld information, and denied agreed upon specified participation. Actions derived from malice, and breach of agreement to prevent any mirror image.
The conciliation court dismissed the claim with prejudice, determining that Wagner gave
the $3,000 to the restaurant, not to Sowl, and that Wagner had already obtained a
judgment against the restaurant.
Wagner removed the matter to district court for a trial de novo. She filed a new
complaint seeking $3,200 from Sowl based on:
A). Intentional misrepresentation; B). Intentional breach of LLC duty; C). Intentional breach of Loyalty; D). Intentional deceit with malice; E). Intentional breach of LLC grounds; F). Fraudulent Inducement; G). Clandestine disposition; H). Convoluted language that frequently contradicted himself; I). Intentional unjust enrichment for owners at plaintiff’s expense; and J). Flagrant disregard for the civil process and judgment ordered.
3 Wagner asserted that these claims are not identical to those litigated in the 2012 action
against the restaurant because “[t]he claim against Mark Sowl is fraud.” She alleged
Sowl’s sale of the restaurant to Thompson was a fraudulent transfer because it allowed
Thompson to discharge Wagner’s judgment against the restaurant.
The matter came before the district court on August 22, 2014. At the beginning of
the hearing, the district court indicated that it believed res judicata and collateral estoppel
barred Wagner’s claims, but permitted Wagner to argue why her claims should proceed.
Wagner acknowledged that she was seeking to recover the same $3,000 for which she
obtained a judgment against the restaurant, but she explained that her action against Sowl
is based on a different theory (fraud). Based on the parties’ arguments, written
submissions, and additional exhibits, the district court dismissed Wagner’s complaint.
The district court concluded that her claims are barred by res judicata and collateral
estoppel. It also determined that to the extent Wagner asserted new claims, they
essentially allege fraud and Wagner did not meet her burden of proof. Wagner appeals.
DECISION
I. The district court did not clearly err in finding that Wagner did not prove that she is entitled to recover damages based on fraud.
“On appeal from the decision of a district court sitting without a jury, this court
determines whether the evidence sustains the findings of fact and whether the findings
sustain the conclusions of law and judgment.” Roberts v. Brunswick Corp., 783 N.W.2d
226, 230 (Minn. App. 2010). We do not set aside a district court’s findings of fact unless
they are clearly erroneous. Id.; see also Minn. R. Civ. P. 52.01. “If there is reasonable
4 evidence to support the district court’s findings, we will not disturb them.” Rogers v.
Moore, 603 N.W.2d 650, 656 (Minn. 1999).
Wagner challenges the district court’s findings that she did not present a prima
facie case of fraud by Sowl. To prove fraud by misrepresentation, a claimant must show:
(1) there was a false representation by a party of a past or existing material fact susceptible of knowledge; (2) made with knowledge of the falsity of the representation or made as of the party’s own knowledge without knowing whether it was true or false; (3) with the intention to induce another to act in reliance thereon; (4) that the representation caused the other party to act in reliance thereon; and (5) that the party suffer[ed] pecuniary damage as a result of the reliance.
Hoyt Props., Inc. v. Prod. Res. Grp., L.L.C., 736 N.W.2d 313, 318 (Minn. 2007)
(quotation omitted).
The district court found that Wagner failed to establish fraud because (1) she did
not produce evidence that she gave the money to the restaurant based on any
representations by Sowl; (2) most of Sowl’s claimed misrepresentations and other
fraudulent conduct occurred after Wagner provided the money to the restaurant; and
(3) the only damages Wagner sustained are the loan proceeds, for which Wagner already
obtained a judgment against the restaurant. And the court further found that Wagner
failed to prove that Sowl is personally liable for the judgment. The evidence supports
these findings.
Wagner does not dispute the fact that her allegations against Sowl are based on
conduct that occurred two years after she provided money to the restaurant. But she
argues that Sowl should be held liable because he is “the most reprehensible party in [a]
5 fraudulent sell of LLC ownership” carried out to escape liability for the judgment. We
are not persuaded. Wagner’s argument is premised on the claim that Sowl sold the
restaurant to Thompson to avoid personal liability. But at the time of the sale, there was
no judgment, only a conciliation court claim against the restaurant. The record also
indicates that Sowl informed Wagner of his plan to transfer ownership of the restaurant to
Thompson in July 2012, prior to the first conciliation court hearing. Moreover, Wagner
does not explain how the transfer of ownership would allow the judgment to be
discharged.
Based on our careful review of the record, we conclude that the district court did
not clearly err in determining that Wagner did not prove that Sowl committed fraud or
that she suffered resulting damages.
II. Wagner’s claims are barred by res judicata.
Res judicata is a finality doctrine that prevents a party from bringing a claim that
was, or could have been, raised in a prior action. Drewitz v. Motorwerks, Inc., 728
N.W.2d 231, 239 (Minn. 2007). The doctrine applies when “(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; [and] (4) the
estopped party had a full and fair opportunity to litigate the matter.” Brown-Wilbert, Inc.
v. Copeland Buhl & Co., P.L.L.P., 732 N.W.2d 209, 220 (Minn. 2007) (quotation
omitted). Res judicata requires a party “to assert all alternative theories of recovery in the
initial action.” Hauschildt v. Beckingham, 686 N.W.2d 829, 840 (Minn. 2004) (quotation
6 omitted). The application of res judicata is a question of law that we review de novo.
Schober v. Comm’r of Revenue, 853 N.W.2d 102, 111 (Minn. 2013).
Same factual circumstances
“A claim or cause of action is a group of operative facts giving rise to one or more
bases for suing.” Hauschildt, 686 N.W.2d at 840 (quotation omitted). Wagner argues
that this action does not involve the same group of operative facts as the 2012
conciliation court proceeding because it is based on subsequent events. We disagree.
First, Wagner’s assertions that she was not afforded the investor rights she was
promised—access to financial information and involvement with the restaurant’s
attorney—and that her money was not returned on demand, appear in both her first
conciliation court claim statement and the complaint in this case. Second, we agree with
the district court that both actions seek recovery for the same damages. Therefore, both
actions are premised on the factual circumstances surrounding Wagner’s initial payment
to the restaurant and subsequent demands for repayment.
Same parties
Sowl was not a party to the initial action, so we consider whether he was in privity
with the restaurant. Privity recognizes “that a judgment should also determine the
interests of certain non-parties closely connected with the litigation.” Reil v. Benjamin,
584 N.W.2d 442, 445 (Minn. App. 1998), review denied (Minn. Nov. 17, 1998).
“Because the circumstances in which privity will be found cannot be precisely defined,
we have held that determining whether parties are in privity requires a careful
7 examination of the circumstances of each case.” Rucker v. Schmidt, 794 N.W.2d 114,
118 (Minn. 2011).
The undisputed facts demonstrate that Sowl was in privity with the restaurant.
Although not a party, Sowl was closely connected with both the underlying
circumstances and the initial conciliation court proceeding. Sowl was a co-owner of the
restaurant and served on the board of governors of Takk for Maten, LLC at all relevant
times. See id. at 120 (stating that the legal interests of a corporation and its officers are
similarly affected by the outcome of a legal proceeding). He received the check from
Wagner, deposited it in the restaurant’s account, and allegedly made statements to
Wagner concerning repayment and her role in the company. And Sowl appeared on
behalf of the restaurant in the 2012 court proceeding.
Final judgment on the merits
Wagner argues that the first conciliation court judgment was not final because it
was narrow in scope and because she submitted a letter after the judgment was entered
indicating that she had unanswered questions. We disagree. The conciliation court
proceeding resulted in entry of judgment in the amount of $3,075 against the restaurant.
Wagner attempted to collect on the judgment, ultimately obtaining a writ of execution.
Full and fair opportunity to litigate
Wagner argues that this res judicata element is not met because the district court
judge in this case “redirected [her] attention to anything but the evidence” and the
evidence was “suppressed during [the] hearing.” We are not persuaded. The focus of our
analysis is whether Wagner had a full and fair opportunity to litigate her first conciliation
8 court claim. State v. Joseph, 636 N.W.2d 322, 328-29 (Minn. 2001) (concluding the
application of res judicata was proper where a party had a full and fair opportunity to
litigate a claim in a prior proceeding). Nothing in the record indicates that Wagner
lacked this opportunity. Indeed, the initial action resulted in judgment in her favor
against the restaurant for the full amount she sought.
In conclusion, all four elements of res judicata are present in this case.2 While we
understand Wagner’s frustration that she is unable to collect on her judgment against the
restaurant, that fact does not make Sowl personally liable for the restaurant’s debt.
Affirmed.
2 The district court also concluded that collateral estoppel bars this action. Because we conclude that res judicata applies, we do not separately analyze the issue of collateral estoppel. See generally Hauschildt, 686 N.W.2d at 837.