• January 5, 2011

Update:  In an opinion authored by Justice Alan C. Page (and a concurrence by Justice Christopher J. Dietzen), the Minnesota Supreme Court affirms the Court of Appeals in favor of the plaintiff in this fraud case against the now defunct firm of Rider Bennett and attorney Stephen Schmidt.

Original Post (May 5, 2010):  William Skolnick of Skolnick & Schiff, P.A., for client Katherine Rucker, took on her ex-husband, Robert Rucker, for fraud in connection with their divorce (and Mr. Rucker’s double set of books in connection with his business projections).  Mr. Rucker had been represented in both the divorce and in the fraud action by the now-defunct Rider Bennett law firm (“RB”).  Skolnick won in the underlying case against Robert Rucker.

Skolnick, as counsel for Ms. Rucker, then set his sights on Rider Bennett and Steven Schmidt, the RB lawyer who represented Mr. Rucker in the divorce (but not in defending the fraud case).  The district court dismissed “Ruckerfraud, The Sequel,” finding that Skolnick missed his chance and should have sued RB in the first action.  The Minnnesota Court of Appeals, in a published case, reversed.  This morning, before a packed audience on the second floor of the state capitol (Glencoe Silver Lake students overflowing out of the gallery), the case was argued before the Minnesota Supreme Court.  Chief Justice Eric Magnuson and Justice Lorie Skjerven Gildea recused themselves (Magnuson was an RB partner for 10 years; the basis for Gildea’s recusal is unknown), leaving a five-member panel to hear Joe Anthony argue on behalf of the lawyer/law firm appellants and Skolnick for Ms. Rucker.

Justice Helen M. Meyer‘s position seemed quite clear.  Appellants’ counsel, Joe Anthony, conceded repeatedly that it would have been consistent with Minnesota law if Rider Bennett and Schmidt both had been named in the original fraud action and had been separately set out on the verdict form as potentially liable.  (The quick inference, then, would seem to be that they were not “so in privity” or “so interrelated” with Mr. Rucker that they could not be held separately liable.  That being the case, there would be insufficient privity to bar a later case against them.)

Others on the Court were somewhat harder to read in their apparent leanings.  Anthony argued policy considerations — that is, that the Court should be leery of setting a precedent allowing for serial lawsuits.  (The contrary policy position was not articulated: the Court should be leery of setting out a rule that would promote “shoot first, aim later,” litigation in which litigants are forced to sue every and any potential liable related person or entity or forever be barred if, later in the litigation, a claim manifests itself against an unnamed third party.)

Anthony also argued at great length that Minnesota law on collateral estoppel and res judicata had to be analyzed from the perspective of whether the doctrines were being invoked defensively or offensively.  Is the party invoking the doctrines trying to use them against a person who was a party in the underlying litigation or not?  In the former scenario, he argued, there were not due process concerns because the litigant against whom the doctrines were to be applied was present and represented in the underlying action.

Are there not public policy concerns, if not due process concerns, when a litigant is barred from a claim against a tort-feasor where the law provides a cause of action against that tortfeasor, where the law in fact provides for enhanced damages against that tortfeasor, the plaintiff has never brought a claim before against that tortfeasor, the case is brought against that tortfeasor within applicable statute of limitations, and the claim is barred because the litigant did not name that tortfeasor in an earlier action against another party?

Leave a Reply

Your email address will not be published. Required fields are marked *