Kellar v. VonHoltum
| Decision Date | 26 August 1997 |
| Docket Number | No. C3-97-132,C3-97-132 |
| Court | Minnesota Court of Appeals |
| Parties | Kenneth KELLAR, et al., Appellants, v. John E. VonHOLTUM, et al., Grand Marais State Bank, VH Bancorporation, Inc., Respondents. |
Syllabus by the Court
1. Defamatory matter published in the course of a hearing on a bank charter application and related to the subject matter of the proceeding is absolutely privileged.
2. Respondents' statutorily authorized request to the Department of Commerce for a hearing on a bank charter application may not form the basis for liability in a tort action for abuse of process or malicious prosecution.
Richard A. Saliterman, Thomas J. Seymour, Saliterman & Siefferman, Minneapolis, for appellants.
Gregory Bien, Sloan, Listrom, Eisenbarth, Sloan & Glassman, L.L.C., Topeka, KS, Michael Berens, Kelly & Berens, P.A., Minneapolis, for respondents VonHoltum, et al.
Thomas R. Thibodeau, Jerome D. Feriancek, Johnson, Killen, Thibodeau & Seiler, P.A., Duluth, for respondents Grand Marais State Bank and VH Bancorporation.
Considered and decided by PARKER, P.J., and HUSPENI and DAVIES, JJ.
Appellants challenge the district court's dismissal of their restraint of trade, unfair competition, defamation, abuse of process, and malicious prosecution claims against respondents. We affirm.
Four applicants, including appellant Kenneth Kellar, filed with the Minnesota Department of Commerce (the department) an application in the name of Cook County State Bank for a bank charter to open a bank in Grand Marais, Minnesota. Applicants for bank charters must publish notice of the filing of applications in a local newspaper and must mail notice of filing, by certified mail, to every bank located within three miles of the proposed location of the bank. Minn.Stat. § 46.041, subd. 2 (1996). The applicants complied with this law. After receiving notification that appellant had filed an application for a bank charter, respondent Grand Marais State Bank requested that the department hold a hearing on the application. SeeMinn.Stat. § 46.041, subd. 3 (1996) (). In addition to respondent's request for a hearing, over 35 residents of the Grand Marais community wrote letters to the department commenting on the bank charter application.
The department ordered a hearing on the bank charter application. After the hearing, the department granted the charter, but expressed concern about a number of issues: Kellar's failure to report his true level of education, a troubling loan made by Kellar to one of his partnerships, and the lack of banking expertise of a proposed bank employee.
Kellar and appellant Security State Agency of Aitkin, Inc., subsequently brought suit against respondents John VonHoltum, Michael LaVigne, Grand Marais State Bank, and VH Bancorporation, Inc., 1 alleging: (1) defamation incident to or within the administrative hearing; (2) defamation outside the administrative hearing; (3) unfair competition; (4) restraint of trade; and (5) abuse of process/malicious prosecution.
Respondents filed a motion for judgment on the pleadings. While this motion was pending, they filed a motion for protection, prohibiting appellants from inquiring into matters that were privileged, protected, or irrelevant. The district court granted respondents' motion for protection and stayed discovery until after the court's determination of respondents' motion for judgment on the pleadings. Subsequently, the district court awarded judgment on the pleadings on appellants' unfair competition and restraint of trade claims and ordered appellants to submit complete responses to two of respondents' interrogatories within 30 days. One interrogatory requested that appellants identify and provide a summary of testimony of individuals who might have information regarding the subject matter of appellants' complaint. The other interrogatory requested that appellants identify the defamatory statements that formed the basis of their defamation claim.
In response to this order, appellants submitted amended interrogatory answers. These answers, however, failed to identify the defamatory statements that formed the basis of their defamation claim. After expiration of the 30-day period, respondents moved for a protective order and for sanctions due to appellants' failure to comply with the district court's discovery order. The district court then issued an order giving appellants 30 days to identify actionable defamatory statements and stated that failure to comply with this order would result in dismissal of the defamation action. After 30 days, the district court dismissed appellants' defamation claims as a discovery sanction, stating that the statements claimed by appellants to be defamatory were, as a matter of law, not defamatory.
Thereafter, respondents moved for summary judgment on the remaining abuse of process claim; the court granted the motion.
1. Did the district court err by ordering judgment on the pleadings on appellants' unfair competition claims?
2. Did the district court err by dismissing appellants' defamation claims?
3. Did the district court err by granting summary judgment on appellants' abuse of process claim?
The elements of a common law unfair competition claim based on interference with prospective contractual relations are set forth in Restatement (Second) of Torts § 766B (1979).
One who intentionally and improperly interferes with another's prospective contractual relation (except a contract to marry) is subject to liability to the other for the pecuniary harm resulting from loss of the benefits of the relations, whether the interference consists of
(a) inducing or otherwise causing a third person not to enter into or continue the prospective relation or
(b) preventing the other from acquiring or continuing the prospective relation.
Id., quoted in United Wild Rice, Inc. v. Nelson, 313 N.W.2d 628, 633 (Minn.1982). Alternatively, a plaintiff may plead a statutory unfair competition claim alleging that in the course of business a person has disparaged the "goods, services or business of another by false or misleading representation of fact." Minn.Stat. § 325D.44, subd 1(8) (1996).
The only question on review of a judgment on the pleadings is whether the complaint sets forth a legally sufficient claim for relief. Elzie v. Commissioner of Pub. Safety, 298 N.W.2d 29, 32 (Minn.1980). If questions of fact exist, the court should not order judgment on the pleadings. See State ex rel. Minneapolis v. Minneapolis St. Ry., 238 Minn. 218, 225-26, 56 N.W.2d 564, 568 (1952); Ryan v. Lodermeier, 387 N.W.2d 652, 653 (Minn.App.1986) ().
The district court, in granting judgment on the pleadings on appellants' unfair competition claims, concluded that appellants failed to state a cause of action for either common law or statutory unfair competition. Even if we were to conclude that the allegations set forth in appellants' complaint are sufficient to state either a common law or statutory cause of action for unfair competition and that the district court erred in dismissing appellants' unfair competition claims on the pleadings, dismissal of these claims was not prejudicial. The underlying premise of these claims was preserved in appellants' defamation claim, which survived judgment on the pleadings. The district court's dismissal of the unfair competition claims on the pleadings constituted, at most, harmless error because it is clear from the record that these claims would have properly been dismissed on summary judgment. See Minn. R. Civ. P. 61 ().
Appellants argue that the district court erred by restricting their ability to conduct necessary discovery on their defamation claims and that these claims were improperly dismissed as a discovery sanction. Appellants specifically challenge the district court's restrictions on deposing the attorneys and investigators that respondents hired to contest appellants' application for a bank charter.
"[T]he trial judge has wide discretion to issue discovery orders and, absent clear abuse of that discretion, normally its order with respect thereto will not be disturbed." Shetka v. Kueppers, Kueppers, Von Feldt & Salmen, 454 N.W.2d 916, 921 (Minn.1990). We find no abuse of the district court's broad discretion here.
Although the district court suspended appellants' ability to depose these individuals on more than one occasion during the discovery process, appellants did, in fact, have a [w]hile [appellants] make much of the restrictions the Court has placed upon discovery * * *, the record discloses otherwise. Extensive numbers of individuals have been interviewed as to what representations were made to them by [respondents] or agents or others on behalf of [respondents]. None of those statements have disclosed actionable statements as the Court understands them and as the Court understands the law of defamation. There is no evidence of record suggesting that there would be other persons out there who would indicate anything differently.
limited opportunity to depose them. The district court's initial order suspended discovery until the district court decided respondents' motion for judgment on the pleadings. After the district court issued its decision on that motion, appellants again had an opportunity to depose respondents' investigators. The record does not indicate that appellants sought to conduct these depositions during this period. Moreover, in dismissing the defamation claims as a discovery sanction, the district court stated that appellants had failed to come forward with any evidence supporting their allegations and observed:
We conclude that the district court did...
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