Dollar Travel Agency, Inc. v. Northwest Airlines, Inc.

• Decision Date: 25 September 1984
• Docket Number: No. C2-84-705,C2-84-705
• Parties: DOLLAR TRAVEL AGENCY, INC., etc., et al., Appellants, v. NORTHWEST AIRLINES, INC., Respondent, Air Traffic Conference of America, a Division of Air Transport Association of America, Respondent.
• Court: Minnesota Court of Appeals

Page 880

354 N.W.2d 880

DOLLAR TRAVEL AGENCY, INC., etc., et al., Appellants, v. NORTHWEST AIRLINES, INC., Respondent Air Traffic Conference of America, a Division of Air Transport Association of America, Respondent.

No. C2-84-705.

Court of Appeals of Minnesota.

Sept. 25, 1984.

Review Denied December 21, 1984.

Syllabus by the Court

1. Appellants' claim against the Air Traffic Conference (ATC) is barred by res judicata. A party may not split a cause of action and bring successive suits involving the same set of factual circumstances.

2. Appellants' complaint fails to set forth a cognizable claim of fraud against either of respondents.

3. Respondents are entitled to attorneys' fee under Minn.Stat. § 549.21 because of appellants' abuse of process.

Manly A. Zimmerman, Zimmerman & Bix, Minneapolis, for appellants.

David A. Ranheim, Dorsey & Whitney, Minneapolis, for Northwest Airlines, Inc.

William Z. Pentelovitch, Maslon, Edelman, Borman & Brand, Minneapolis, for Air Traffic Conference of America, a Division of Air Transport Association of America.

Considered and decided by PARKER, P.J., and FOLEY and HUSPENI, JJ., with oral argument waived.

OPINION

FOLEY, Judge.

The trial court summarily dismissed Dollar Travel's fraud claims against the Air Traffic Conference (ATC) and Northwest Airlines for failure to state a claim upon which relief can be granted. The court also found that Dollar Travel's complaint against ATC is barred by res judicata. The trial court awarded ATC and Northwest attorneys' fees in recognition of Dollar Travel's "classic abuse of process." Dollar Travel appeals. We affirm.

FACTS

In July 1981, Marsha Hunt, an employee of Dollar Travel, issued four international Northwest Airline tickets to her brother John Hunt. John Hunt claims he paid Dollar Travel $11,400 for the tickets. The travel agency admits receiving $11,400, but contends the money was a loan to be repaid in four installments due in October 1981, and January, April and July 1982. Dollar Travel alleges that the tickets were stolen.

In August 1981, John Hunt returned the four tickets to Dollar Travel and received three others and $2,760, the price of one ticket. John Hunt contends the payment was a refund; Dollar Travel, that it was a loan payment unrelated to the tickets. A few days later Dollar Travel reported to the police the theft of the three new tickets issued to Hunt.

John Hunt subsequently sought a refund for those three tickets. When Dollar Travel refused, John and Marsha Hunt complained to the ATC and the Hennepin County Attorney's office. Dollar Travel paid John Hunt another $2,760 in January 1982, but has not made the final two payments under the alleged loan agreement. Hennepin County brought criminal theft charges against Garrett Barry, the owner of Dollar Travel in July 1982. The charges were later dropped as part of a negotiated settlement.

The ATC also investigated the matter. An ATC investigator allegedly told Barry that the Hunts' attorney had, and would keep, the three tickets; that the Hunts did not intend to seek a refund; and that, as far as he was concerned, the matter was closed. The Hunts returned the disputed tickets in September 1982 to Northwest for a refund of the remaining $5,520. The airline turned the tickets over to Hennepin County.

Dollar Travel alleges that as a result of the ATC investigator's misrepresentations to Barry, and Northwest Airlines' wrongful cooperation with the Hennepin County prosecution, the company was forced out of business and Barry suffered mental anguish.

Barry and Dollar Travel have filed at least seven other lawsuits as a result of their dispute with the Hunts. One alleged that ATC breached a contract duty "to protect Plaintiff Barry and to persuade the authorities not to prosecute Plaintiff Barry for theft." The trial court granted summary judgment in favor of ATC. No appeal was taken and that judgment is final.

ISSUES

1. Is appellants' claim against ATC barred by res judicata?

2. Have appellants alleged sufficient facts to state a claim of fraud upon which relief can be granted?

3. Are respondents entitled to attorneys' fees under Minn.Stat. § 549.21?

ANALYSIS

I.

The action against ATC is barred by res judicata. A party may not split a cause of action and bring successive suits involving the same set of factual circumstances. Hauser v. Mealey, 263 N.W.2d 803, 807 (Minn.1978).

A judgment on the merits constitutes an absolute bar to a second suit for the same cause of action and is conclusive between parties and privies, not only as to every matter which was actually litigated, but also as to every matter which might have been litigated therein.

Youngstown Mines Corp. v. Prout, 266 Minn. 450, 466, 124 N.W.2d 328, 340 (1963); see Bifulk v. Evans, 353 N.W.2d 258 (Minn.Ct.App.1984).

The instant case arises out of the same facts as Dollar Travel's earlier contract action. Both complaints allege that ATC's wrongful conduct caused, or failed to prevent, prosecution by the Hennepin County authorities. The only distinction is that this case is characterized as a tort action, while the earlier case was a contract action. Dollar Travel could have brought both claims at once. The company, having failed with its contract claim, cannot now relitigate the same basic issues under a tort theory.

II.

In any event, Dollar Travel's complaint fails to set forth a cognizable claim of fraud against either ATC or Northwest.

In Minnesota, to prove a prima facie case of fraud, it must be shown that there was a false representation by a party of a past or existing material fact susceptible of knowledge, made...