Dering Pierson Group, LLC, Appellant,

This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (2016).

STATE OF MINNESOTA
IN COURT OF APPEALS
A17-1105

Dering Pierson Group, LLC,
Appellant,

vs.

Rockstar Design LLC,
Respondent,

Cash Flow Management, Inc., et al.,
Defendants.

Filed January 8, 2018
Affirmed in part, reversed in part, and remanded
Reilly, Judge

Hennepin County District Court
File No. 27-CV-15-11142

Tim L. Droel, J. Matthew Berner, Shana L. Marchand, Droel, PLLC, Bloomington,
Minnesota (for appellant)

Kyle R. Gabriel, Richard J. Gabriel, Ga briel Law Office, PLLC, Mendota Heights,
Minnesota (for respondent)

Considered and decided by Rodenberg, Presiding Judge; Worke, Judge; and Reilly,
Judge.
U N P U B L I S H E D O P I N I O N
REILLY, Judge
Appellant Dering Pierson Group LLC (Dering) challenges the district court’s grant
of summary judgment in respondent Rock star Design LLC’s favor on appellant’s

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vicarious-liability-for-the-unauthorized-practice-of-law and defamation claims arising out
of a mechanic’s lien filed by Cash Flow Ma nagement Inc. (CFM) on Rockstar’s behalf
naming Dering as the debtor. We affirm su mmary judgment with respect to Dering’s
vicarious liability claim. However, because genuine issues of material fact exist regarding
Dering’s defamation claim and the statements in the mechanic’s lien are not protected by
conditional privilege, we reverse and remand th e district court’s or der dismissing that
claim.
FACTS
In 2014, Dering, a general contractor, cont racted to furnish labor and materials for
a building project and agreed to defend and indemnify the property owner from any claims
asserted by Dering’s subcontractors, su b-subcontractors, or suppliers. Dering
subcontracted with Minnesota Valley Concrete LLC to furnish labor and material, and
Minnesota Valley Concrete subcontracted with its affiliate, Rockstar, to furnish concrete
material and labor. Dering removed Rockstar from the project, and, in 2015, Rockstar
hired CFM to draft and record a mechanic’s lien against the property. CFM’s website had
an online registration form that allowed its clients to seek mechanic’s lien services through
a fill-in-the-blank process. Based on the information Rockstar provided through this online
form, CFM’s president recorded a mechanic’s lien on the prop erty on Rockstar’s behalf
and against Dering. Dering secured a disc harge of the mechanic ’s lien and filed a
complaint against Rockstar, CFM, and CFM’s president, asserting claims, in relevant part,
for the unauthorized practice of law, for vicarious liability, a nd for defamation. In 2017,
the district court granted summary judgment in Rockstar’s favor on Dering’s vicarious-

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liability-for-the-unauthorized-practice-of-law and defamation claims , and this appeal
follows.
D E C I S I O N
I. Standard of Review
Summary judgment is properly rendered when “the pleadings, depositions, answers
to interrogatories, and admissions on file, togeth er with the affidavits, if any, show that
there is no genuine issue as to any material fact and that either party is entitled to a judgment
as a matter of law.” Minn. R. Civ. P. 56.03. We review a district court’s summary
judgment decision de novo to “determine wh ether the district court properly applied the
law and whether there are genuine issues of material fact that preclude summary
judgment.” Riverview Muir Doran, LLC v. JADT Dev. Grp., LLC, 790 N.W.2d 167, 170
(Minn. 2010). The evidence is viewed in the light most favorable to the party against whom
judgment was granted. Kratzer v. Welsh Cos., LLC , 771 N.W.2d 14, 18 (Minn. 2009).
Judgment will be affirmed “if no genuine issues of material fact exist and if the court below
properly applied the law.” Id. Even if we “disag ree with the district court’s analysis of
some issues, summary judgment w ill be affirmed if it can be sustained on any grounds.”
Allianz Ins. Co. v. PM Servs. of Eden Prairie, Inc ., 691 N.W.2d 79, 82-83 (Minn. App.
2005).
II. The district court did not err by dismissing Dering’s vicarious liability claim
In Minnesota, “a principal is liable for the act of an agent committed in the course
and within the scope of agency. . . .” Bedow v. Watkins , 552 N.W.2d 543, 547 (Minn.
1996). “A principal-agent relationship results from the manifestation of consent by one

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person to another that the other shall act on the first person’s behalf and subject to his
control; and the other must consent so to act.” White v. Boucher , 322 N.W.2d 560, 566
(Minn. 1982). Whether an agency relationship exists is generally a question for the jury,
unless the evidence is conclusive. PMH Props. v. Nichols, 263 N.W.2d 799, 802-03 (Minn.
1978).
A. Stipulated Consent Judgment Against CFM, in Dering’s Favor
In December 2015, the district court granted summary judgment in favor of Dering
and against CFM and its president for the una uthorized practice of law and permanently
enjoined CFM from providing mechanic’s lien services. Following this order, Dering filed
an amended complaint asserting additional causes of action and alleging a claim against an
indemnity bond issued to CFM. In October 2016, Dering reached a settlement with CFM,
its president, and the insurance company, on the claims asserted in the amended complaint.
Dering and CFM stipulated to entry of a consent judgment in Dering’s favor in the amount
of $250,000. Rockstar was not a party to the settlement discussion. The settlement
agreement is not part of the district court or appellate records.
Dering argued that its $250,000 consent judgment with CFM “controlled Rockstar’s
liability” on Dering’s vicarious-liability-for-the-unauthorized-practice-of-law claim. The
district court rejected this argumen t. On appeal, Dering argues that Engelstad v. Cargill,
Inc., 336 N.W.2d 284 (Minn. 1983), precludes Rockstar from contesting liability,
following CFM’s confessed judgment. But Dering’s reliance on this case is misplaced. As
the district court correctly noted, Engelstad does not address “whether a settlement
including a confession of judgment as to one of the parties in all circumstances is binding

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or compels entry of the judgment against th e other.” Here, Rockstar has not had an
opportunity to litigate “the merits of the sc ope of any agency an d the measure of and
amount of damages claimed.” It is undisput ed that Rockstar was not present for the
settlement discussions between Dering and CFM, and did not agree to be bound by any of
the settlement terms, including damages. We therefore dis cern no error in the district
court’s determination that the stipulated c onsent judgment between Dering and CFM did
not bind Rockstar.
B. Attorney-in-Fact
Dering argued that Rockstar was vicariously liable for CFM’s unauthorized practice
of law because Rockstar retained CFM as its “attorney-in-fact and agent” to execute the
mechanic’s lien statement. The district c ourt disagreed and declined to hold Rockstar
vicariously liable for CFM’s activities, determining that “undisputed evidence in the record
regarding the agency does not include acts supporting the unauthorized practice of law.”
We agree with the district court’s dete rmination that CFM was not Rockstar’s
attorney-in-fact and was not authorized to engage in acts c onstituting the practice of law.
The term “power of attorney” means “a validly executed power of attorney.” Minn. Stat.
§ 523.03 (2016). A “validly executed power of attorney” is:
A person who is a competent adult may, as principal, designate
another person or an authorized corporation as the person’s
attorney-in-fact by a written power of attorney. The power of
attorney is validly executed when it is dated and signed by the
principal and, in the case of a signature on behalf of the
principal, by another, or by a mark, acknowledged by a notary
public. Only powers of attorn ey validly created pursuant to
this section or section 523.02 ar e validly executed powers of
attorney for the purposes of sections 523.01 to 523.24.

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Id., § 523.01 (2016).
The plain language of sec tion 523.01 requires a validly executed power of attorney
to be “dated and signed by the principal.” There is no such instrument here. Accordingly,
the district court did not err by rejecting Dering’s attorney-in-fact argument.
C. Independent Contractor
Our decision affirming the district cour t’s grant of dispositive relief is further
buttressed by Dering’s counsel’s concession that the nature of the agency between Rockstar
and CFM was that of a principa l and an independent contracto r, not master and servant.
“The existence of an employment relationship is determined by a number of factors,” the
most important of which “is the right of the employer to control the means and manner of
performance.” Nichols v. Metro. Bank , 435 N.W.2d 637, 6 39 (Minn. App. 1989)
(quotation and citation omitted); see also Hammes v. Suk, 291 Minn. 233, 235, 190 N.W.2d
478, 481 (1971) (noting that an independent c ontractor “contracts to do a piece of work
according to his own methods an d is subject to his employer’s control only as to the end
product or final result of his work”). Rockst ar did not have control over CFM’s day-to-
day operations, nor did it have the right to control the means and manner of the company’s
performance. And while an organization may be vicariously liable for its agent’s torts,
Lange v. Nat’l Biscuit Co ., 297 Minn. 399, 404, 211 N.W.2d 783, 786 (1973), it is not
vicariously liable for negligent acts committed by its independent contractors, Conover v.
N. States Power Co., 313 N.W.2d 397, 407 (Minn. 1981).

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D. Applicability of Exceptions
Lastly, we reject Dering’s argument that the “negligent direction” and “authorized
conduct” exceptions apply. The negligent- direction exception provides that an
independent contractor’s employer is liable for “ physical harm caused by an act or
omission committed by the contractor pursuant to orders or directions negligently given by
the employer, as though the act or omission were that of the employer himself.”
Restatement (Second) of Torts § 410 (1965) (emphasis added ). The authorized-conduct
exception imposes liability upon a principal “for physical harm caused by the negligent
physical conduct of a non-servant agent during the performance of the principal’s business,
if he neither intended nor authorized the re sult nor the manner of performance, unless he
was under a duty to have the act performed with due care.” Restatement (Second) of
Agency § 250 (1958) (emphasis added). Beca use it is uncontested that Dering did not
suffer physical harm, neither exception applies.
For these reasons, we hold that the distri ct court did not e rr by granting summary
judgment in Rockstar’s favor on Dering’s vicarious liability claim.
III. The district court erred by dismissing Dering’s defamation claim against
Rockstar, where there are factual i ssues outstanding and conditional
privilege does not apply
The fundamental basis of a defamation claim is that “one is liable for an
unprivileged communication or p ublication of false and defama tory matter [that] injures
the reputation of another.” Matthis v. Kennedy, 243 Minn. 219, 222-23, 67 N.W.2d 413,
416 (1954). “The elements of defamation re quire the plaintiff to prove (1) that the
statement was false; (2) that it was communica ted to someone besides the plaintiff; and

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(3) that it tended to harm the plaintiff’s reputation and lower him in the estimation of the
community.” Kuechle v. Life’s Companion P.C.A., Inc., 653 N.W.2d 214, 218 (Minn. App.
2002). False statements “concerning one’s business, trade, or profession are actionable per
se, without proof of actual damages.” Id.
Dering claims that Rockstar committed per se defamation by presenting false
information in the mech anic’s lien statement. Specifically, Dering argues that the
mechanic’s lien statement falsely stated that (1) Rockstar provided concrete and labor for
the project; (2) there was an outstanding balance for the labor performed and the materials
provided; and (3) the outstan ding balance was $7,939.64. The district court granted
dispositive relief in Rockstar’s favor on Dering ’s defamation claim, determining that the
mechanic’s lien statement was protected by conditional privilege.
We disagree. A conditional privilege may serve as a defense to defamation. Harlow
v. State Dep’t of Human Servs ., 883 N.W.2d 561, 569-70 (M inn. 2016). Conditional
privilege applies if a statement “is published under circumstances that make it conditionally
privileged and if privilege is not abused,” even if the statem ent is otherwise defamatory.
Lewis v. Equitable Life Assur. Soc. of the U.S., 389 N.W.2d 876, 889 (Minn. 1986) (citing
Restatement (Second) of Torts § 593 (1977)). For the conditional privilege to apply, the
communication “must be made upon a proper occasion, from a proper motive, and must be
based upon reasonable or probable cause.” Id. When made in good faith, “[a]ctual malice
must be proved,” and the defamed party is precluded from recovery in the absence of such
proof. Id. However, defamatory statements are “take[n]. . . out of the realm of privilege”

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if made in bad faith. Stuempges v. Parke, Davis & Co., 297 N.W.2d 252, 257 (Minn. 1980).
The existence of a privilege is a question of law. Lewis, 389 N.W.2d at 889.
The district court determined that statem ents made in the mechanic’s lien were
protected by conditional privile ge. The district court di d not identify any Minnesota
caselaw supporting this ruling. Instead, the district court reasoned that the current case was
analogous to Kelly v. First State Bank of Rothsay, a case in which the reviewing court ruled
that a slander-of-title claim failed where the party acted in good fa ith and recorded an
instrument that the party had a right to file. 145 Minn. 331, 333, 177 N.W. 347, 348 (1920).
Relying on Kelly, the district court found that the benefit to Rockstar outweighed the harm
to Dering because mechanic’s lien laws must be “liberally construed” to protect “the labor
and toil of claimants even if at the occasional expense of the alleged debtor,” and concluded
that “a conditional privilege applies to defamation claims i nvolving the filing of
mechanic’s liens.”
Upon review, we determine that the dist rict court improperly applied the law by
extending the application of conditional privilege to en compass mechan ic’s lien
statements. Minnesota law does not recogniz e the application of conditional privilege in
this context, and “the task of extending existi ng law falls to the supreme court or [to] the
legislature, but it does not fall to this court.” Tereault v. Palmer , 413 N.W.2d 283, 286
(Minn. App. 1987), review denied (Minn. Dec. 18, 1987). Because we decline to recognize
conditional privilege as a defense to a defamation claim arising out of statements made in
a mechanic’s lien, and because factual issues remain re garding the truthfulness of
Rockstar’s statements in the mechanic’s lien, we reverse a nd remand to the district court

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for further consideration cons istent with this opinion. See, e.g., Osborne v. Twin Town
Bowl, Inc., 749 N.W.2d 367, 371 (Minn. 2008) (noting that “summary judgment is a blunt
instrument” that is “inappropriate when reasonable persons mi ght draw different
conclusions from the evidence pr esented” (citation omitted)); Lewis, 389 N.W.2d at 889
(noting in defamation action that “the truth or falsity of a statement is inherently within the
province of the jury”).1
Affirmed in part, reversed in part, and remanded.

1 The district court determined that Rock star was entitled to summary judgment on the
defamation claim because Dering failed to produce evidence of Ro ckstar’s malice. See
Lewis, 389 N.W.2d at 890 (explaining that if conditional privilege applies, the burden shifts
to defamed party to show actual malice). Because we determine that conditional privilege
does not apply, we do not reach the question of whether Dering demonstrated that Rockstar
acted with actual malice.