Maria Olson, et al., Appellants,

This opinion will be unpublished and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
A18-0166

Maria Olson, et al.,
Appellants,

vs.

Christenson Law Office, PLLC, et al.,
Respondents.

Filed July 16, 2018
Affirmed
Florey, Judge

Hennepin County District Court
File No. 27-CV-17-10460

Frederic W. Knaak, Wayne B. Holstad, Crai g J. Beuning, Holstad and Knaak, P.L.L.C.,
St. Paul, Minnesota (for appellants)

Paul C. Peterson, William L. Davidson, João C.J.G. de Medeiros, Lind, Jensen, Sullivan &
Peterson, P.A., Minneapolis, Minnesota (for respondents)

Considered and decided by Bjorkman, Pr esiding Judge; Larkin, Judge; and Florey,
Judge.
U N P U B L I S H E D O P I N I O N
FLOREY, Judge
Appellants challenge the district cour t’s dismissal with prejudice of their
malpractice claims as barred by res judicata . Appellants argue that res judicata is not
applicable for procedural dismissals and that the current action is based on new evidence.

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Because we determine that res judicata applies and that the district court did not abuse its
discretion by dismissing appellants’ claims, we affirm.
FACTS
In 2010, appellants Shannon Olson, Maria Olson, and SSO, LLC sold two properties
(the properties) to James Scott Kent and MNSilverCare, Inc. (the buyers). The transaction
was funded in part by fina ncing from People’s National Bank of Mora (the bank). In
addition, the buyers signed promissory notes for the benefit of appellants. At closing, the
parties signed a standby-creditors agreement that limited appellants’ ability to sue the
buyers under the promissory notes without th e bank’s consent. In 2012, the buyers
purchased an adjacent property from appellants (Lot 2). That year, the buyers defaulted on
the notes, and appellants sued the buyers in vi olation of the standby-creditors agreement.
Appellants retained respondents Christenson Law Office, P.L.L.C. and attorney Daniel M.
Eaton to represent them in the matter. Defendant Eaton did not inform appellants that filing
suit against the buyers would violate the standby-creditors agreement and expose them to
liability. The court enforced the standby-cr editors agreement and dismissed appellants’
claims on the notes.
Meanwhile, the City of Ca mbridge sued appellants and the buyers, alleging that
appellants failed to properly plat Lot 2 in conjunction with the development of the
properties. Because of the error, the properties were in accessible without imposing a
conveyance of Lot 2. Respondents did not conduct a title search on the properties on behalf
of appellants prior to the sale or during the ensuing litigation regarding the plat issues. The
parties stipulated to a dismissal with the city and commenced an independent suit between

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each other. The buyers sought reformation of the deed, cancellation of certificate of title,
and issuance of new certificate of title for Lo t 2. The bank filed a fraud claim against
appellants, alleging that appellants misreprese nted that Lot 2 was part of the original
purchase of the property. The parties ultimately settled before going to trial on March 25,
2015. The terms of the settleme nt agreement further restrict ed appellants’ ability to sue
the buyers for defaulting on the notes. The settlement agreement also prevented appellants
from suing the bank or any of its agents or attorneys for events arising before the settlement
agreement.
In April 2015, appellant Maria Olson brought a pro se claim against Dwight
McKinnis, an attorney who had previously represented both her and the bank. Olson
alleged that McKinnis simultaneously repres ented her and the bank during the time the
bank attempted to collect on its loan to the buyer. In Au gust 2015, the district court
determined that Olson violated the settle ment agreement by sui ng McKinnis, because
McKinnis was the bank’s attorney, and Olson had agreed not to sue any agent or attorney
of the bank for prior actions. In October 20 15, appellants were notified by the Office of
Lawyer’s Professional Responsibility (OLPR) that McKinnis was under investigation for
misconduct. According to the information provided by the OLPR, the bank was aware of
the plat issues with Lot 2 at all stages of the prior dispute, and the bank was able to use that
information during the settlement process to its advantag e. Appellants then moved to
vacate the settlement agreement and argued that the bank committed fraud and made false
statements concerning the existence of easements over Lot 2. Olson argued that, had she
known of the bank’s prior awaren ess of the plat issues, she w ould not have se ttled. In a

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December 2015 order, the district court de nied her motion to v acate the settlement
agreement and found that Olson did not exercise her own due diligence in uncovering the
newly discovered evidence sooner and that she did not rely on the alleged
misrepresentations made by the bank.
Beginning in February 2015, appellants cea sed making payments to their attorneys,
respondents.1 In April 2015, respondents withdrew from representation, shortly after
negotiating the settlement agreement between appellants and the bank. Soon after,
respondents sued for breach of contract for unpaid legal b ills. Appellants filed pro-se
counterclaims for malpractice and breach of fiduciary duty in June 2015. Both parties
moved for summary judgment. The district court held a summary-judgment hearing on
November 4, 2015. Although appellants obtained new inform ation from the OLPR
regarding the bank’s knowledge of the plat is sues and respondents’ failure to uncover the
same issues in October 2015, appellants did not address those facts as part of its summary-
judgment briefing or at the summary-judgmen t hearing. The district court granted
summary judgment to respondents on their breach-of-contract claim for unpaid legal bills.
The court found that appellants did not provide an expert affidavit to support their claim
for legal malpractice as required by statute, 2 and it dismissed appellants’ claims.
Appellants did not file a direct appeal.

1 Appellants also ceased making payments in 2014, and the parties created a payment plan.
2 Appellants’ claim for breach of fiduciary duty was premised on their claim for legal
malpractice, so it also failed for not satisfying the statutory expert-affidavit requirement.

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On July 10, 2017, appellants sued respon dents for legal malpractice and breach of
fiduciary duty, now with the a ssistance of counsel. Appella nts alleged that respondents’
failure to run a title search materially prejudiced their ability to negotiate with the bank and
led to a disadvantageous settle ment agreement. Appellant s claimed they possessed new
facts and that their claims arose after the prior counterclaims for malpractice and breach of
fiduciary duty. Appellants also claimed that they could not have brought their arguments
in the prior action for legal malpractice, because the prior litigation against McKinnis and
the validity of the settlement agreement was not yet final. They reasoned that the
proceeding determining the validity of the settlement agreement was pending direct appeal,
and because the settlement agr eement was the sole source of damages for its malpractice
claim, its malpractice claim was not yet ripe at the time of the prior action. The district
court determined that the doctrine of res judi cata barred appellants’ claims because the
facts alleged by appellants were not new and were known during the prior proceeding, and
the malpractice claim arose before appellants’ prior co unterclaims, not after the
counterclaims as appellants suggest.
This appeal follows.
D E C I S I O N
I. Res judicata applies to appellants’ claims.
The decision of a district court to grant a motion to dismiss under Rule 12.02(e) is
subject to de novo review. Hebert v. City of Fifty Lakes , 744 N.W.2d 226, 229 (Minn.
2008). The question of whether the elements of res judicata are met is a question of law
and is also reviewed de novo. Hauschildt v. Beckingham, 686 N.W.2d 829, 837 (Minn.

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2004). If the elements of res judicata are pres ent, this court reviews the district court’s
decision to apply the doctrine for an abuse of discretion. Dixon v. Depositors Ins. Co., 619
N.W.2d 752, 755 (Minn. App. 2000).
The doctrine of res judicata seeks to a void wasteful litigation so “that a party may
not be twice vexed for the same cause.” Breaker v. Bemidji State University, 899 N.W.2d
515, 518-19 (Minn. App. 2017) (quotation omitted). Res judicata bars a subsequent claim
if: (1) the earlier claim involved the same set of factual circumstances; (2) the earlier claim
involved the same parties; 3 (3) there was a final judgmen t on the merits; and (4) the
estopped party had a full and fair opportunity to litigate the matter. Rucker v. Schmidt, 794
N.W.2d 114, 117 (Minn. 2011). Res judicata applies to claims actually litigated and to
claims that could have been litigated in the prior action. Brown-Wilbert, Inc. v. Copeland
Buhl & Co., P.L.L.P. , 732 N.W.2d 209, 220 (Minn. 2007 ). Res judicata should not be
rigidly applied. Hauschildt, 686 N.W.2d at 837. Instead, the court should consider whether
applying the doctrine against a party would work an injustice. Id. Here, it is not disputed
that both claims involved the same parties. We address the remaining res judicata elements
in turn.
A. Appellants’ claims arise from the same set of factual circumstances.
Under the first prong of res judicata, a clai m is barred if it arises from the same set
of factual circumstances. Id. at 840. The rule is designed to prevent parties from pursuing

3 It is not disputed that both claims involved the same parties.

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a different legal theory under the same factual circumstances. See Hauser v. Mealey, 263
N.W.2d 803, 807 (Minn. 1978) (“[A] plainti ff may not split his cause of action and bring
successive suits involving the same set of factual circumstances.”). The “common test for
determining whether a former judgment is a bar to a subsequent action is to inquire whether
the same evidence will sustain both actions.” Hauschildt, 686 N.W.2d at 840-41 (quoting
McMenomy v. Ryden, 276 Minn. 55, 58, 148 N.W.2d 804, 807 (1967)). In a claim for legal
malpractice, a plaintiff must allege: (1) the existence of an attorney-client relationship;
(2) acts constituting negligence or breach of contract; (3) that such acts were the proximate
cause of appellants’ damages; and (4) but for the attorney’s conduct, appellants would have
obtained a more favorable result in the underl ying transaction than the result obtained.
Jerry’s Enterprises, Inc. v. Larkin, Hoffman, Daly & Lindgren, Ltd., 711 N.W.2d 811, 819
(Minn. 2006).
Appellants argue that this action involves a different set of factual circumstances
because arguments relating to the evidence uncovered by the OLPR were not considered
by the district court. Appellants’ argument fails. Appellants’ two claims are “alternative
theories of recovery” arising from the same factual circumstances. Hauschildt, 686
N.W.2d at 840-41. Respondents’ representation of appellants in their lawsuits against the
buyers and the bank formed one factual circumstance. Appellants could have alleged both
claims in the prior action because facts existed at the time of the prior action to allege both
claims. Although appellants had not discovered evidence of respondents’ failure to run a
title search at the time they asserted their counterclaims, appellants obtained that evidence
before the summary-judgment hearing and befo re the final judgment. Appellants could

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have raised the issue of respondents’ failure to run a title search, but they did not. The first
prong of res judicata is met, because both claims of legal malpractice arose from the same
factual circumstances.
B. There was a final judgment on the merits.
A dismissal with prejudice is a final ju dgment on the merits. Minn. R. Civ. P.
41.02(c). A judgment “can form the basis for res judicata” even when it “is disposed of on
nonsubstantive grounds.” Johnson v. Hunter, 447 N.W.2d 871, 873 (Minn. 1989). In a
legal-malpractice action, the co mplaint must be accompanied by an expert affidavit or it
will be dismissed with prejudice. Minn. Stat . § 544.42, subd. 6(b) (2016). In the prior
action, the district court dismissed appellants’ claims for failure to provide such an expert
affidavit. That judgment was final on the merits.
Appellants argue that there was not a final judgment on the merits because a
procedural dismissal is not on the merits. Appellants rely on inapposite and stale caselaw,
and their arguments fail. Statute and caselaw hold that a procedural dismissal forms the
basis for res judicata. See id.; Johnson, 447 N.W.2d at 873. A ppellants’ argument fails.
There was a final judgment on the merits.
C. Appellants had a full and fair opportunity to litigate their prior claim.
The question of whether a party had a full and fair op portunity to litigate a matter
generally addresses whether there were “signi ficant procedural limitations in the prior
proceeding, whether the party had the incentive to litigate fu lly the issue, or whether
effective litigation was limited by the nature or relationship of the parties.” State v. Joseph,
636 N.W.2d 322, 328 (Minn. 2001) (quotation omitted).

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Appellants argue they were not able to fully litigate their prior claim because they
were not able to present their claim regardi ng respondents’ failure to run a title search.
Appellants claim that the litigation regarding the validity of the settlement agreement had
yet to be adjudicated because the final appeal had not been resolved and that the lack of
finality prevented them from presenting the argument in the prior action. A judgment
becomes final for the purposes of res judicata wh en it is entered in the district court and
remains final until it is reversed or othe rwise modified by a su bsequent appeal. Brown-
Wilbert, Inc., 732 N.W.2d at 221. This is true even if an appeal is pending at the time a
subsequent claim is barred by res judicata. Id. Appellants reason that their malpractice
claim could not be litigated because it was premised on whether the settlement agreement
remained valid, and the issue of whether th e settlement agreement was valid was as yet
undetermined. However, the district court en tered a judgment relating to that litigation,
which became final when it was entered. Id. It remained final even though appellants filed
a direct appeal. Id. No procedural limitation preven ted appellants from litigating their
claims. See Joseph, 636 N.W.2d at 328.
Appellants next argue that their claim had not accrued because they did not discover
evidence of respondents’ malpractice and breach of fiduciary duty at the time of the prior
action. Appellants cite Antone in support of their argument. 720 N.W.2d at 335. Antone
is inapposite and addresses the question of when a claim for legal malpractice accrues and
when the statute of limitations begins to run. Id. at 335-37. It does not apply claim-accrual
analysis to the doctrine of res judicata, and we will not extend Antone beyond the context
of statutes of limitation.

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Irrespective of appellants’ citation to in apposite authority, appellants’ argument
fails. Appellants were aware that respondents failed to run a title search in October 2015.
The summary-judgment heari ng for the prior action occu rred in November 2015.
Appellants could have presente d the issue by amending thei r response, amending their
motion for partial summary judgment, or, at the very least, presenting the new evidence at
the summary-judgment hearing. Appellants chos e not to address the issue. The record
does not indicate that appellants experienced procedural obstacles or disincentives to fully
litigate the issue. See Joseph , 636 N.W.2d at 328. Ap pellants had a full and fair
opportunity to litigate their claim.
II. The district court did not abuse its dis cretion by applying the doctrine of res
judicata to bar appellants’ claims.

Res judicata is not rigidly applied. Hauschildt, 686 N.W.2d at 837. If the doctrine
fits a set of facts, the decision to apply the doctrine is reviewed for an abuse of discretion.
Erickson v. Comm’r of Dep’t of Human Servs. , 494 N.W.2d 58, 61 (Minn. App. 1992).
The question of whether to apply res judicata to a given set of facts hinges upon whether
its “application would contravene an overriding public policy.” Id.
Appellants should have brought every clai m and theory for lega l malpractice they
had against respondents at the time of the prio r action. That they we re pro se litigants in
the prior action does not change the analysis, because pro se litigants are held to the same
standard as attorneys. Fitzgerald v. Fitzgerald, 629 N.W.2d 115, 119 (Minn. App. 2001).
Not only did the claims exist at the time of the prior action, but appellant knew about the
claims at the time of the prior action. Appellants failed to bring them. The district court’s

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application of the doctrine of res judicata in this case to preclude appellants from litigating
the same facts under a different legal theory comports with the “courts’ disfavor with
multiple lawsuits for the same cause of action and wasteful litigation.” Schober v. Comm’r
of Revenue , 853 N.W.2d 102, 111 (Minn. 2013). The district court did not abuse its
discretion by applying the doctrine of res judicata to bar appellants’ claims.
Affirmed.