This opinion will be unpublished and may not be cited except as provided by Minn.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 A14-1332
Timothy Edward Knoedler, Appellant,
Candace Lynn Knoedler, Appellant,
vs.
Wilford, Geske & Cook, P. A., Respondent.
Filed April 6, 2015 Affirmed Rodenberg, Judge
St. Louis County District Court File Nos. 69DU-CV-14-432, 69-DU-CV-13-2359
Timothy E. Knoedler, Saginaw, Minnesota (pro se appellant)
Candace L. Knoedler, Saginaw, Minnesota (pro se appellant)
David Mortensen, Wilford, Geske & Cook, P.A., Woodbury, Minnesota (for respondent)
Considered and decided by Chutich, Presiding Judge; Rodenberg, Judge; and
Smith, Judge.
UNPUBLISHED OPINION
RODENBERG, Judge
Appellants challenge the district court’s grant of respondent’s motion to dismiss.
We affirm. FACTS
In 2013, appellants Timothy and Candace Knoedler brought suit in Minnesota
state court against respondent Wilford Geske & Cook, P.A., and Ocwen Loan Servicing,
LLC, U.S. Bank National Association, and Credit Based Asset Servicing and
Securitization, LLC, alleging that the procedures used in foreclosing appellants’
mortgage were improper. The case was removed to federal court. See Knoedler v.
Wilford, Geske & Cook, P.A. et. al., No. 13-2782, 2014 WL 28795 (D. Minn. Jan. 2,
2014). Although respondent is a Minnesota company, the federal court held that
respondent’s party status did not deprive the federal court of diversity jurisdiction
because respondent had been fraudulently joined. Id. at *2. The federal court dismissed
appellants’ claims against all defendants with prejudice. Id. at *3. Appellants appealed
to the Eighth Circuit Court of Appeals, but have since voluntarily dismissed their appeal.
Appellants then sued respondent in Minnesota state court, again alleging that its
foreclosure procedures were improper and specifically alleging that respondent was
negligent in representing the mortgagees. The district court dismissed appellants’ claims
on three bases. First, the district court held that it did not have jurisdiction to hear
appellants’ case because there was an appeal pending in federal court.1 Second, the
district court held that, even if the appeal in the federal court system did not deprive the
state court of jurisdiction, appellants’ claims were barred by res judicata and collateral
1 While the record before us admits of no conclusion concerning the federal appeal, the parties to this appeal have both represented that there is no pending federal appeal and we therefore proceed with that understanding. We also observe that whether the federal appeal has been dismissed is not dispositive.
2 estoppel. Third, the district court held that, even if it had jurisdiction and appellants’
claims were not barred, appellants’ complaint failed to state a claim against respondent
upon which relief may be granted. This appeal followed.
DECISION
Fundamental to the doctrines of res judicata and collateral estoppel is the notion
that a “right, question or fact distinctly put in issue and directly determined by a court of
competent jurisdiction cannot be disputed in a subsequent suit between the same parties.”
Hauschildt v. Beckingham, 686 N.W.2d 829, 837 (Minn. 2004) (quotation omitted).
While related, res judicata and collateral estoppel serve different purposes. Id. Res
judicata is broader and applies “to a set of circumstances giving rise to entire claims or
lawsuits” and prevents litigation of claims arising from those circumstances, even if the
later claims are brought under new legal theories. Id. Collateral estoppel applies to
specific legal issues. Id. A reviewing court must decide whether application of either
doctrine “would work an injustice on the party against whom the doctrines are urged.”
Id. Whether collateral estoppel applies is “a mixed question of law and fact,” which we
review de novo. Id. Whether res judicata applies is a question of law, which we also
review de novo. Id. at 840.
Res judicata is available when “(1) the earlier claim involved the same set of
factual circumstances; (2) the earlier claim involved the same parties . . . ; (3) there was a
final judgment on the merits; [and] (4) the estopped party had a full and fair opportunity
to litigate the matter.” Id. A good indicator that the new claims arise from the same set
of operative facts as an earlier claim is that the new claim will rely largely on the same
3 evidence as the previous claim. Id. at 840-41. The elements of collateral estoppel are
similar to those of res judicata except that the first element of collateral estoppel requires
that the specific issue in the earlier case be identical to the specific issue in the current
case. Id. at 837. When either res judicata or collateral estoppel is available, the decision
to apply either doctrine for preclusive effect is left to the district court’s discretion, and
we review only for abuse of that discretion. Fain v. Andersen, 816 N.W.2d 696, 699
(Minn. App. 2012).
Appellants’ claim that respondent was negligent in the foreclosure-by-
advertisement procedure arises from the same set of facts underlying appellants’ earlier
claims, which were dismissed by the federal district court. And appellants’ state-court
negligence claim will rely on the same evidence underlying their federal claims.
Therefore, the first element of res judicata is met.
Appellants argue that the earlier claim did not involve the same parties because it
was “legally impossible for [respondent] to have been party to the federal case” as
respondent’s Minnesota residency deprived the federal court of diversity jurisdiction.
But appellants are mistaken. The federal court took jurisdiction over respondents through
the doctrine of fraudulent joinder. See Wiles v. Capitol Indem. Corp., 280 F.3d 868, 871
(8th Cir. 2002) (stating that federal courts may take jurisdiction over resident parties
without destroying diversity jurisdiction when “there exists no reasonable basis in fact
and law supporting a claim against the resident defendants”). The federal court then
4 dismissed the claims against respondent on the merits after asserting jurisdiction.2
Appellants concede not pursuing the federal appeal and the federal district court action is
final. Respondent was a party to the previous action. Therefore, this case and the earlier
case involve the same parties.
Finally, appellants argued to the district court that they did not have a full and fair
opportunity to litigate the matter because the judge in the dismissed federal case did not
hear oral arguments on every aspect of appellants’ claims. Appellants do not appear to
make this argument on appeal. Even if they did, whether the proceedings in the federal
court were improper or inadequate would have been an issue in the federal appeal.
Appellants cite no authority for the notion that we or a state district court could properly
decide the adequacy of a federal district court’s consideration of this or any matter. We
also observe that appellants and respondent argued extensively before the federal district
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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 A14-1332
Timothy Edward Knoedler, Appellant,
Candace Lynn Knoedler, Appellant,
vs.
Wilford, Geske & Cook, P. A., Respondent.
Filed April 6, 2015 Affirmed Rodenberg, Judge
St. Louis County District Court File Nos. 69DU-CV-14-432, 69-DU-CV-13-2359
Timothy E. Knoedler, Saginaw, Minnesota (pro se appellant)
Candace L. Knoedler, Saginaw, Minnesota (pro se appellant)
David Mortensen, Wilford, Geske & Cook, P.A., Woodbury, Minnesota (for respondent)
Considered and decided by Chutich, Presiding Judge; Rodenberg, Judge; and
Smith, Judge.
UNPUBLISHED OPINION
RODENBERG, Judge
Appellants challenge the district court’s grant of respondent’s motion to dismiss.
We affirm. FACTS
In 2013, appellants Timothy and Candace Knoedler brought suit in Minnesota
state court against respondent Wilford Geske & Cook, P.A., and Ocwen Loan Servicing,
LLC, U.S. Bank National Association, and Credit Based Asset Servicing and
Securitization, LLC, alleging that the procedures used in foreclosing appellants’
mortgage were improper. The case was removed to federal court. See Knoedler v.
Wilford, Geske & Cook, P.A. et. al., No. 13-2782, 2014 WL 28795 (D. Minn. Jan. 2,
2014). Although respondent is a Minnesota company, the federal court held that
respondent’s party status did not deprive the federal court of diversity jurisdiction
because respondent had been fraudulently joined. Id. at *2. The federal court dismissed
appellants’ claims against all defendants with prejudice. Id. at *3. Appellants appealed
to the Eighth Circuit Court of Appeals, but have since voluntarily dismissed their appeal.
Appellants then sued respondent in Minnesota state court, again alleging that its
foreclosure procedures were improper and specifically alleging that respondent was
negligent in representing the mortgagees. The district court dismissed appellants’ claims
on three bases. First, the district court held that it did not have jurisdiction to hear
appellants’ case because there was an appeal pending in federal court.1 Second, the
district court held that, even if the appeal in the federal court system did not deprive the
state court of jurisdiction, appellants’ claims were barred by res judicata and collateral
1 While the record before us admits of no conclusion concerning the federal appeal, the parties to this appeal have both represented that there is no pending federal appeal and we therefore proceed with that understanding. We also observe that whether the federal appeal has been dismissed is not dispositive.
2 estoppel. Third, the district court held that, even if it had jurisdiction and appellants’
claims were not barred, appellants’ complaint failed to state a claim against respondent
upon which relief may be granted. This appeal followed.
DECISION
Fundamental to the doctrines of res judicata and collateral estoppel is the notion
that a “right, question or fact distinctly put in issue and directly determined by a court of
competent jurisdiction cannot be disputed in a subsequent suit between the same parties.”
Hauschildt v. Beckingham, 686 N.W.2d 829, 837 (Minn. 2004) (quotation omitted).
While related, res judicata and collateral estoppel serve different purposes. Id. Res
judicata is broader and applies “to a set of circumstances giving rise to entire claims or
lawsuits” and prevents litigation of claims arising from those circumstances, even if the
later claims are brought under new legal theories. Id. Collateral estoppel applies to
specific legal issues. Id. A reviewing court must decide whether application of either
doctrine “would work an injustice on the party against whom the doctrines are urged.”
Id. Whether collateral estoppel applies is “a mixed question of law and fact,” which we
review de novo. Id. Whether res judicata applies is a question of law, which we also
review de novo. Id. at 840.
Res judicata is available when “(1) the earlier claim involved the same set of
factual circumstances; (2) the earlier claim involved the same parties . . . ; (3) there was a
final judgment on the merits; [and] (4) the estopped party had a full and fair opportunity
to litigate the matter.” Id. A good indicator that the new claims arise from the same set
of operative facts as an earlier claim is that the new claim will rely largely on the same
3 evidence as the previous claim. Id. at 840-41. The elements of collateral estoppel are
similar to those of res judicata except that the first element of collateral estoppel requires
that the specific issue in the earlier case be identical to the specific issue in the current
case. Id. at 837. When either res judicata or collateral estoppel is available, the decision
to apply either doctrine for preclusive effect is left to the district court’s discretion, and
we review only for abuse of that discretion. Fain v. Andersen, 816 N.W.2d 696, 699
(Minn. App. 2012).
Appellants’ claim that respondent was negligent in the foreclosure-by-
advertisement procedure arises from the same set of facts underlying appellants’ earlier
claims, which were dismissed by the federal district court. And appellants’ state-court
negligence claim will rely on the same evidence underlying their federal claims.
Therefore, the first element of res judicata is met.
Appellants argue that the earlier claim did not involve the same parties because it
was “legally impossible for [respondent] to have been party to the federal case” as
respondent’s Minnesota residency deprived the federal court of diversity jurisdiction.
But appellants are mistaken. The federal court took jurisdiction over respondents through
the doctrine of fraudulent joinder. See Wiles v. Capitol Indem. Corp., 280 F.3d 868, 871
(8th Cir. 2002) (stating that federal courts may take jurisdiction over resident parties
without destroying diversity jurisdiction when “there exists no reasonable basis in fact
and law supporting a claim against the resident defendants”). The federal court then
4 dismissed the claims against respondent on the merits after asserting jurisdiction.2
Appellants concede not pursuing the federal appeal and the federal district court action is
final. Respondent was a party to the previous action. Therefore, this case and the earlier
case involve the same parties.
Finally, appellants argued to the district court that they did not have a full and fair
opportunity to litigate the matter because the judge in the dismissed federal case did not
hear oral arguments on every aspect of appellants’ claims. Appellants do not appear to
make this argument on appeal. Even if they did, whether the proceedings in the federal
court were improper or inadequate would have been an issue in the federal appeal.
Appellants cite no authority for the notion that we or a state district court could properly
decide the adequacy of a federal district court’s consideration of this or any matter. We
also observe that appellants and respondent argued extensively before the federal district
court and appellants apparently perfected and later abandoned a federal appeal.
Appellants had a full and fair opportunity to litigate the issues in the earlier case.
2 Whether the federal court’s application of fraudulent joinder to this case was proper is outside the scope of our subject matter jurisdiction. See Chesapeake & Ohio Ry. Co. v. McCabe, 213 U.S. 207, 217, 221, 29 S. Ct. 430, 434, 436 (1909) (holding that after a federal court has decided that a case is removable, taken jurisdiction of the case, and rendered a final judgment, the judgment is binding unless reversed by the United States Supreme Court and the state court lacks subject matter jurisdiction to review the judgment, including the decision that removal was proper).
5 All of the elements of res judicata are clearly met here. The district court did not
err in concluding that the dismissal of appellants’ claims by the federal district court may
operate as a ban to the present claims.3
Further, the district court’s application of res judicata did not work an injustice on
appellants. As the district court held, aside from claim-preclusion considerations,
appellants failed to state a claim against respondent. See McDonald v. Stewart, 289
Minn. 35, 40, 182 N.W.2d 437, 440 (1970) (stating that “an attorney acting within the
scope of his employment as attorney is immune from liability to third persons for actions
arising out of that professional relationship,” but this immunity may be defeated by a
fraudulent or unlawful act). As the district court succinctly stated: Appellants “simply
have no case against the law firm.” Appellants claim respondent was negligent. Even if
true, that would not give rise to a claim by a nonparty to the attorney-client relationship.
See id. The federal district court dismissed appellants’ complaint for failure to state a
claim and the district court correctly determined that, even if appellants’ state-court
action were not barred by res judicata, their complaint also fails to state a claim against
respondent. Application of res judicata in this circumstance was within the district
court’s discretion.
In short, the district court’s analysis was exactly correct.
Affirmed.
3 The district court also concluded that collateral estoppel applies so as to bar relitigation of the same issues involved in the earlier federal litigation. Because we conclude that the district court properly applied res judicata (claim preclusion), we do not separately analyze whether collateral estoppel (issue preclusion) also applies. See generally Hauschildt, 686 N.W.2d at 837.