Minneapolis Auto Parts Co., Inc. v. City of Minneapolis

• Decision Date: 31 July 1984
• Docket Number: No. 83-2251,83-2251
• Citation: 739 F.2d 408
• Parties: MINNEAPOLIS AUTO PARTS COMPANY, INC., Joseph E. Garber and Nancy Garber, Appellants, v. The CITY OF MINNEAPOLIS; Albert J. Hofstede; Judy Corrao; Patrick M. Daugherty; Louis Demars; Walter Dziedzic; Zollie Green; Sally Howard; Charlee Hoyt; Mark Kaplan; Alice W. Rainville; Walter H. Rockenstein; Dennis W. Schulstad; Jacqueline Slater and Parker Trostel, Appellees.
• Court: U.S. Court of Appeals — Eighth Circuit

Page 408

739 F.2d 408

MINNEAPOLIS AUTO PARTS COMPANY, INC., Joseph E. Garber and Nancy Garber, Appellants, v. The CITY OF MINNEAPOLIS; Albert J. Hofstede; Judy Corrao Patrick M. Daugherty; Louis Demars; Walter Dziedzic Zollie Green; Sally Howard; Charlee Hoyt; Mark Kaplan Alice W. Rainville; Walter H. Rockenstein; Dennis W Schulstad; Jacqueline Slater and Parker Trostel, Appellees.

No. 83-2251.

United States Court of Appeals, Eighth Circuit.

Submitted June 7, 1984.

Decided July 31, 1984.

Robert J. Alfton, City Atty., by Les R. Karjala, Asst. City Atty., Minneapolis, Minn., for appellees.

William S. Rosen, Mark J. Kiperstin, St. Paul, Minn., for appellants.

Before LAY, Chief Judge, and HEANEY and BOWMAN, Circuit Judges.

LAY, Chief Judge.

In December, 1979, a Minnesota state court determined that the City of Minneapolis and its City Council unlawfully refused to issue to Minneapolis Auto Parts Company, Inc. (MAPCO) the necessary permits and licenses required to lawfully operate a used auto parts business. ¹ The court granted injunctive relief to MAPCO, and ordered the City to issue such permits. In October, 1982, MAPCO brought an action in federal court for damages under 42 U.S.C. Sec. 1983 against the City of Minneapolis and members of the City Council. The federal district court, the Honorable Donald D. Alsop presiding, granted Minneapolis's motion for summary judgment, concluding that MAPCO had no cognizable substantive due process claim under 42 U.S.C. Sec. 1983. 572 F.Supp. 389. The summary judgment was appealed, and oral argument was held February 14, 1984. We remanded the case to the district court to allow Minneapolis leave to amend their answer and assert the defense of res judicata. The district court was requested to certify its ruling within 60 days of our order. ²

On remand the City amended its answer and asserted the Migra defense of claim preclusion. The district court concluded that Minnesota law on res judicata would preclude a subsequent Sec. 1983 action for damages by a party who prevailed in an earlier action for declaratory and injunctive relief. We now have before us the district court's alternative rulings on the motions for summary judgment. We affirm the district court's grant of summary judgment based on res judicata and therefore do not reach the substantive due process issue.

The district court noted that Minnesota has three requirements for claim preclusion. First, there must be a final judgment on the merits. Second, the cause of action must be the same. Third, there must be an identity of the parties or their privies. O'Neil v. Rueb, 215 Minn. 296, 10 N.W.2d 363 (1943); Melady-Briggs Cattle Corp. v. Drovers State Bank, 213 Minn. 304, 6 N.W.2d 454 (1942). A judgment on the merits is an absolute bar to a second suit for the same cause of action not only to matters litigated, but also to every matter that might have been litigated therein. Scott-Peabody & Associates v. Northern Leasing Corp., 273 Minn. 236, 140 N.W.2d 614 (1966); Youngstown Mines Corp. v. Prout, 266 Minn. 450, 124 N.W.2d 328 (Minn.1963).

The City contended that MAPCO's state and federal actions sought redress for the same wrong: refusal to approve applications for licenses and permits to conduct a used auto parts business. Both actions relied on identical operative facts to seek relief, although each sought different forms of relief. Additionally, the parties in the second suit are clearly in privy with the parties in the first suit, and there is no dispute that the judgment in the state action was a final judgment on the merits. The district court agreed.

MAPCO argues to this court, however, that its action for money damages did not exist, and the damages were not ascertainable, during the trial of the first action. Therefore, the damages could not have been litigated in the first action. Moreover, MAPCO contends that the Minnesota rule is that when a subsequent suit for money damages is brought by the prevailing party in a declaratory judgment action, the cause of action for money damages is not precluded by the earlier declaratory judgment.

The City contends that any business losses allegedly suffered after denial of the applications in May of 1979 until the time of the state court trial in November, 1979, were readily ascertainable at the time of the state court trial. In addition, future damages were recoverable as long as plaintiffs could prove there was a reasonable certainty they would be incurred. We agree with the district court that these damages were ascertainable.

The district court acknowledged that the claim preclusive effect of a declaratory judgment generally is more limited than that of a full judgment on the merits. The Restatement (Second) of Judgments has restricted the claim preclusive effect of a declaratory judgment to "the matters declared." Restatement (Second) of Judgments Sec. 33 (1980). Additionally, the Minnesota Supreme Court in Howe v. Nelson, 271 Minn. 296, 135 N.W.2d 687, 692 (1965), stated: "Where a subsequent suit for money damages is brought by the prevailing party in a declaratory judgment action, the cause of action for damages should not be considered merged into a judgment that merely declares abstract rights." ³

We find the statement made in Howe distinguishable here because MAPCO sought more than declaratory relief in the original state court suit. MAPCO prayed for a decree that, first, determined that Minneapolis's denial of MAPCO's application was unreasonable, arbitrary, capricious, unlawful, and void; second, ordered and directed Minneapolis to adopt a resolution granting MAPCO's applications; third, enjoined Minneapolis from interfering with MAPCO's use of property; fourth, retained jurisdiction in the state court;...