Amica Mut. Ins. Co. v. Wartman
| Decision Date | 06 January 2014 |
| Docket Number | A13-0937 |
| Parties | Amica Mutual Insurance Company, Appellant, v. Thomas B. Wartman, individually and as shareholder/owner of Landform, Inc., Respondent. |
| Court | Minnesota Court of Appeals |
Affirmed
Hennepin County District Court
Michael W. Lowden, Shari L. Lowden, The Lowden Law Firm, LLC, Minnetonka, Minnesota (for appellant)
Gregory J. Collins, Mulligan & Bjornnes, PLLP, Minneapolis, Minnesota (for respondent)
Considered and decided by Johnson, Presiding Judge; Rodenberg, Judge; and Chutich, Judge.
Minnesota law requires that an action upon a judgment be commenced "within ten years after the entry of such judgment." Minn. Stat. § 541.04 (2012). To extend a judgment beyond the ten-year period of limitations, the judgment creditor must bring suit against the original judgment debtor within the ten-year period. An action against a corporate judgment debtor's sole shareholder seeking to impose personal liability on theshareholder for a judgment against the corporation is not an action upon a judgment within the meaning of Minn. Stat. § 541.04.
Appellant Amica Mutual Insurance Company appeals from the district court's grant of summary judgment in favor of respondent Thomas B. Wartman dismissing appellant's suit claiming entitlement to "piercing of the corporate veil" because the underlying judgment against the corporate entity had expired under Minn. Stat. § 541.04. We affirm.
Respondent was the owner and sole shareholder of Landform, Inc., which built a home in Shorewood. Appellant insured the home under a homeowner's policy. In 2001, appellant paid a claim for water damage at the Shorewood home. Appellant then sued Landform, alleging that the water damage was caused by negligent construction. On October 14, 2002, a default judgment was entered against Landform and in favor of appellant for $126,014.99. Landform ceased doing business in 2002 and the judgment was never paid.
On April 7, 2007, appellant served respondent with a summons and complaint, alleging that respondent dissolved Landform "in an attempt to hinder, delay and discard its obligation" under the 2002 judgment. Appellant sought to pierce the corporate veil of Landform to hold respondent personally liable for the 2002 judgment against the corporation. Respondent timely answered appellant's complaint.
Although the complaint was served in 2007, appellant did not file its complaint with the district court until 2012. Respondent acknowledges having instructed his attorney not to respond to or participate in the litigation beyond interposing the answer until after the 2002 judgment against Landform expired on October 14, 2012 by operation of the ten-year limitation in Minn. Stat. § 541.04. On January 23, 2013, respondent served and filed a motion for summary judgment, contending that the district court could not find him "personally liable for a judgment that no longer exists."
On April 13, 2013, the district court granted respondent's motion for summary judgment, stating:
[Appellant] did not seek to renew or extend the judgment against Landform in its Complaint. [Appellant] only sought to pierce the corporate veil, an action akin to a creditor's bill. The Minnesota Supreme Court has specifically held that these types of actions do not serve to renew the ten-year period found in Minn. Stat. § 541.04.
The district court explained that a creditor's bill does not seek to obtain a new judgment but instead seeks to satisfy an existing judgment. Because appellant's complaint "is not a renewal action that serves to extend the ten-year statute of limitations on the 2002 judgment," the original judgment "has expired and no longer exists." The district court concluded that, "[a]s [appellant] has not renewed the underlying judgment and that judgment has expired, [appellant] does not have a judgment that could be satisfied if [appellant] succeeded in its veil-piercing action." Because it found that appellant could not obtain relief, the district court granted respondent's motion for summary judgment. This appeal followed.
Did the district court err in granting summary judgment in favor of respondent based on the conclusion that appellant's veil-piercing action is akin to a creditor's bill and does not renew the ten-year life of a judgment?
Summary judgment is appropriate when "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that either party is entitled to a judgment as a matter of law." Minn. R. Civ. P. 56.03. "On appeal, we review a grant of summary judgment to determine (1) if there are genuine issues of material fact and (2) if the district court erred in its application of the law." Osborne v. Twin Town Bowl, Inc., 749 N.W.2d 367, 371 (Minn. 2008) (quotation omitted). "We view the evidence in the light most favorable to the party against whom summary judgment was granted." STAR Ctrs. v. Faegre & Benson, L.L.P., 644 N.W.2d 72, 76-77 (Minn. 2002). Here, the parties agreed on the facts of the case and informed the district court that the sole issue before it was a question of law. "When the material facts are not in dispute, we review the [district] court's application of the law de novo." In re Collier, 726 N.W.2d 799, 803 (Minn. 2007).
Once a judgment is docketed, it exists for ten years as a lien upon the judgment debtor's real property. Minn. Stat. § 548.09, subd. 1 (2012). "No action shall be maintained upon a judgment or decree of a court of the United States, or of any state or territory thereof, unless begun within ten years after the entry of such judgment." Minn.Stat. § 541.04. The parties dispute whether appellant's veil-piercing suit constitutes an "action" on the judgment under this statute. An action under Minn. Stat. § 541.04 is "intended both by statutory definition and at common law to be confined to judicial proceedings." Gerber v. Gerber, 714 N.W.2d 702, 704 (Minn. 2006) (quotation omitted).1 In Gerber, the supreme court determined that administrative income withholding to collect child support arrearages is not a judicial proceeding and is therefore not an action under Minn. Stat. § 541.04. Id. at 706.
Here, the district court determined that appellant's corporate-veil-piercing suit was not an action that "renew[s] the ten-year period found in Minn. Stat. § 541.04," distinguishing between actions to extend or renew a judgment and actions to collect on a judgment. A "judgment may be renewed by an independent action upon the judgment, but such an action must be commenced within the ten-year period." In re Sitarz, 150 B.R. 710, 724 n.20 (Bankr. D. Minn. 1993) (quotation marks omitted). If no renewal action is brought within that ten-year period, "the original judgment lapses, and becomes unenforceable." Id. But if a renewal action is brought within the ten-year period, the judgment is valid for an additional ten years. Dahlin, 796 N.W.2d at 505. In fact, "an action on a judgment results in a new judgment, which may then serve as the basis for a subsequent action on a judgment," such that multiple "renewals" of a judgment arepermissible so long as each is renewed by an action on the prior judgment commenced within ten years. Id. at 507. A renewal action can be commenced "on the very last day of the ten years" that a judgment remains in effect. Sandwich Mfg. Co. v. Earl, 56 Minn. 390, 397, 57 N.W. 938, 940 (1894). Therefore, a plaintiff's suit can proceed to trial after a judgment has expired as long as the plaintiff commenced a renewal action within the ten-year period. Id.
Historically, a party could bring a suit in the form of a pleading known as a creditor's bill. Snyder Elect. Co. v. Fleming, 305 N.W.2d 863, 870 n.2 (Minn. 1981). There were two types of creditor's bills in equity:
The first was where the judgment creditor sought to satisfy his judgment out of the equitable assets of the debtor which could not be reached by execution. The second was where property legally liable to execution had been fraudulently conveyed and the creditor attempted to have the conveyance set aside.
Lind v. O.N. Johnson Co., 204 Minn. 30, 36, 282 N.W. 661, 665-66 (1938). For the first type of creditor's bill, the statute of limitations did not start to run until the creditor demonstrated that it had exhausted its remedy at law by having an execution returned unsatisfied. Id. at 37, 282 N.W. at 666. For the second type, the statute of limitations started to run when the judgment was docketed because the creditor was not required to first exhaust its other remedies. Id. A creditor without a judgment could also bring suit under the second type of creditor's bill to set aside a fraudulent conveyance. Id. at 39, 282 N.W. at 667.
In Minnesota, a creditor's bill is ancillary to the original judgment. Newell v. Dart, 28 Minn. 248, 249, 9 N.W. 732, 733 (1881). It is not "an action brought upon the judgment as a cause of action, in order to obtain a new judgment, but simply an action ancillary to and for the purpose of obtaining satisfaction of, an existing judgment." Id. at 249-50, 9 N.W. at 733. Bringing a creditor's bill action during the life of the judgment "neither creates a new lien, nor extends the judgment lien." Id. at 250, 9 N.W. at 733.
A creditor's bill has been characterized as similar to a garnishment proceeding. Alton M. Johnson Co. v. M.A.I. Co., 451 N.W.2d 651, 655 (Minn. App. 1990), rev'd on other grounds, 463 N.W.2d 277 (Minn. 1990). A "proceeding against the garnishee is statutory, in the nature of a creditor's bill to reach assets of the defendant." Bassi v. Bassi, 165 Minn. 100, 102, 205 N.W. 947, 947-48 (1925). Like a creditor's bill, a garnishment proceeding "is not an independent action but merely an ancillary proceeding, to secure and make effectual any judgment recovered in the main action." Gilloley v. Sampson, 203...
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