Cochrane v. Tudor Oaks Condominium Project
| Decision Date | 28 March 1995 |
| Docket Number | Nos. C8-94-1813,C4-94-2036,s. C8-94-1813 |
| Parties | John A. COCHRANE, Respondent (C8-94-1813), Appellant (C4-94-2036), v. TUDOR OAKS CONDOMINIUM PROJECT, an Ontario Limited Partnership, Nul Tiel, Respondent, K.S.C.S. Properties, Inc., a Minnesota Corporation, Applicant for Intervention, Appellant (C8-94-1813). |
| Court | Minnesota Court of Appeals |
Syllabus by the Court
A judgment debtor who has not previously raised the issue of a judgment creditor's capacity to sue has waived the right to do so, and may not seek to vacate the judgment on the grounds that the judgment creditor lacked capacity to sue.
Jan Stuurmans, Law Offices of Jan Stuurmans, P.A., Minneapolis, for Cochrane.
Wood R. Foster, Jr., Jordan M. Lewis, Siegel, Brill, Greupner & Duffy, P.A., Minneapolis, for Tudor Oaks Condominium Project.
Laura J. Hanson, Joseph W.E. Schmitt, Meagher & Geer, Minneapolis, Thomas M. Zappia, Fridley, for K.S.C.S. Properties, Inc.
Considered and decided by HUSPENI, P.J., HARTEN and FOLEY, * JJ.
Following protracted litigation and an appeal in the underlying action, respondent Tudor Oaks Condominium Project was awarded a judgment against appellants John A. Cochrane and K.S.C.S. Properties. Appellants brought this action seeking to have the judgment vacated, alleging the judgment was void because it was obtained by a nul tiel entity. Tudor Oaks moved for summary judgment on the grounds that appellants had waived their right to challenge Tudor Oaks' status as a corporate entity by proceeding with the underlying action; the motion was granted. Appellants now seek to have the summary judgment reversed and to have this court remand with instructions to vacate the underlying judgment. Because we find that appellants have waived their right to challenge Tudor Oaks' capacity to sue, we affirm the grant of summary judgment.
In 1987, S.B. McLaughlin & Co. (McLaughlin) brought an action against John Cochrane, K.S.C.S. Properties, Inc. (KSCS), Tudor Oaks Condominium Project (Tudor Oaks), and ABIO Holdings, Inc. (ABIO). McLaughlin proceeded as plaintiff individually and in a derivative capacity on behalf of Tudor Oaks and ABIO, alleging that Cochrane and KSCS had breached their fiduciary duties. When suit was commenced, Tudor Oaks was a limited partnership chartered in Ontario, Canada. ABIO, Tudor Oaks's general partner, was a Minnesota corporation. McLaughlin was a limited partner of Tudor Oaks.
The action was removed to federal court on diversity grounds. On September 12, 1989, McLaughlin acquired sole ownership of Tudor Oaks and ABIO. On August 19, 1990, Tudor Oaks lost its limited partnership charter in Ontario. The action was remanded to the state district court in November 1990. On October 11, 1991, ABIO was statutorily dissolved in Minnesota.
On December 12, 1991, McLaughlin moved to amend its complaint to reflect its sole ownership of Tudor Oaks and ABIO. The district court granted McLaughlin's motion on January 10, 1992. This eliminated McLaughlin's derivative action against Tudor Oaks and ABIO, and realigned Tudor Oaks and ABIO as plaintiffs proceeding in their own right against Cochrane and KSCS. The parties did not inform the court that Tudor Oaks had dissolved or that ABIO was no longer a legal entity.
The case proceeded to trial in the summer of 1992. The jury returned a special verdict finding Cochrane had breached a fiduciary duty to McLaughlin, causing damages of $792,000. The jury also found Cochrane had breached a fiduciary duty to Tudor Oaks, causing damages of $1.628 million, and that KSCS had conspired with Cochrane to breach a fiduciary duty to Tudor Oaks, causing damages of $3.52 million.
On appeal, this court reversed the award to McLaughlin, holding that as a matter of law Cochrane owed no fiduciary duty to McLaughlin. See S.B. Mclaughlin & Co., Ltd. v. Cochrane, No. C4-92-2081, 1993 WL 231672 (Minn.App. June 29, 1993), pet. for rev. denied (Minn. Aug. 24, 1993). This court also reduced the remaining damages owed by KSCS and Cochrane to $1.26 million. Id.
In late 1993 and early 1994, Cochrane and KSCS brought actions to obtain relief from the judgment, arguing that the dissolution of Tudor Oaks and ABIO deprived the district court of subject matter jurisdiction, and that the judgment had been procured by fraud. Both actions were consolidated and Tudor Oaks moved for judgment on the pleadings. Tudor Oaks conceded that its limited partnership registration had expired and that ABIO, its general partner, was dissolved. The district court held genuine issues of fact exist regarding whether the judgment was procured by fraud, but ordered summary judgment for Tudor Oaks, holding that the fraud issue should have been raised during the previous trial. The court also held that even though Tudor Oaks did not have a right to maintain an action as a dissolved partnership, Canadian law allowed McLaughlin, as the only remaining partner, to continue the action because it was commenced before the partnership dissolved. This appeal followed.
1. Are subject matter jurisdiction and standing viable theories of this case?
2. Did appellants waive their right to challenge Tudor Oaks' capacity to sue by not timely challenging it?
Tudor Oaks moved for judgment on the pleadings under Minn.R.Civ.P. 12.03. Because appellants presented matters outside the pleadings, Tudor Oaks' request for dismissal was treated as a motion for summary judgment. See Minn.R.Civ.P. 12.02.
On appeal from a summary judgment, this court must determine (1) whether there are any genuine issues of material fact, and (2) whether the trial court erred in its application of the law.
City of Virginia v. Northland Office Properties, 465 N.W.2d 424, 427 (Minn.App.1991), pet. for rev. denied (Minn. Apr. 18, 1991). Even though an appellate court may disagree with the trial court's analysis, summary judgment will be affirmed if it can be sustained on any grounds. Myers v. Price, 463 N.W.2d 773, 775 (Minn.App.1990), pet. for rev. denied (Minn. Feb. 4, 1991).
Appellants argue the district court erred in its conclusion that the question of fraud should have been raised in the underlying action. "On appeal, this court need not defer to the trial court's conclusion when reviewing questions of law." County of Lake v. Courtney, 451 N.W.2d 338, 340 (Minn.App.1990), pet. for rev. denied (Minn. Apr. 13, 1990).
1. Appellants frame their argument in terms of "standing" and "subject matter jurisdiction." We believe, however, that neither theory is applicable to the case at hand. Rather, we conclude that the issue we must address is more properly analyzed in terms of "capacity to sue." A brief discussion of the differences among these three concepts may aid our resolution of the question raised by this case.
Subject matter jurisdiction has been defined as
not only authority to hear and determine a particular class of actions, but authority to hear and determine the particular questions the court assumes to decide.
Duenow v. Lindeman, 223 Minn. 505, 511, 27 N.W.2d 421, 425 (Minn.1947) (quoting Sache v. Wallace, 101 Minn. 169, 172, 112 N.W. 386, 387 (Minn.1907)). Because subject matter jurisdiction goes to the authority of the court to hear a particular class of actions, lack of subject matter jurisdiction may be raised at any time, including for the first time on appeal. Minn.R.Civ.P. 12.08(c) (); Berke v. Resolution Trust Corp., 483 N.W.2d 712, 714 (Minn.App.1992) (), pet. for rev. denied .
Despite the fact that appellants couch certain of their arguments on appeal in terms of subject matter jurisdiction, there is no question that the district courts of Minnesota have jurisdiction to consider matters brought under Minn.R.Civ.P. 60.02 or any other Minnesota Rule of Civil Procedure, to consider matters brought under Minn.Stat. § 548.14 (1992) and to consider any of the legal or equitable theories raised in a case. Nor is there any claim that the district court here violated the ruling set forth in Duenow, 223 Minn. 505, 27 N.W.2d 421. 1 Any relief granted to appellants must be granted under a theory other than that of lack of subject matter jurisdiction.
We are also unable to bring appellants' challenges within the concept of "standing." This court has observed that "standing has been called one of the most amorphous concepts in the entire domain of public law." Sundberg v. Abbott, 423 N.W.2d 686, 688 (Minn.App.1988) (citation omitted), pet. for rev. denied (Minn. June 29, 1988).
The concept of standing is filled with complexities and uncertainties[, but] the fundamental aspect of standing is that it focuses on the party seeking to get his complaint before a court and not on the issues he wishes to have adjudicated.
Id. (citations and quotations omitted). Essentially, a potential litigant must allege injury in fact, or otherwise have a sufficient stake in the outcome, to have a court decide the merits of a dispute. See Middlewest Motor Freight Bureau v. United States, 525 F.2d 681, 683 (8th Cir.1975) ().
Standing may be raised at any time. In re Welfare of Mullins, 298 N.W.2d 56, 61 n. 7 (Minn.1980). Nonetheless, courts appear hesitant to deny standing under circumstances which would prejudice the party whose standing would be found lacking. The eighth circuit in Middlewest, having noted that satisfaction of the constitutional element of standing requires that a plaintiff allege a sufficient stake in the outcome of the litigation, denied a challenge to standing. 525 F.2d at 683.
Policy factors in the instant case favor the conclusion that the appellants have the requisite standing. Appellants have been...
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