Daniel J. Engstrom, 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This opinion will be unpublished and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
A18-0366

Daniel J. Engstrom,
Appellant,

vs.

Whitebirch, Inc., et al.,
defendants and third party plaintiffs,
Respondents,

vs.

Daniel J. Engstrom,
third party defendant,
Appellant.

Filed September 10, 2018
Affirmed
Halbrooks, Judge

Crow Wing County District Court
File No. 18-CV-17-2657

Carl E. Christensen, Christensen Law Office PLLC, Minneapolis, Minnesota; and

Prentiss Cox, Prentiss Cox Attorney At Law, Minneapolis, Minnesota (for appellant)

Jonathan D. Wolf, Nicholas R. Delaney, Rinke Noonan, St. Cloud, Minnesota (for
respondents)

Considered and decided by Halbrooks, Presiding Judge; Bjorkman, Judge; and
Hooten, Judge.

2
U N P U B L I S H E D O P I N I O N
HALBROOKS, Judge
Appellant challenges the district court’ s dismissal of his claim under Minn. Stat.
§ 8.31, subd. 3a (2016), the private attorney general statute, arguing that the district court
erred by determining that he had not adequately pleaded that he had been injured by
respondents’ alleged violation of the Minnesota Consumer Fraud Act (MCFA), Minn.
Stat. § 325F.69 (2016). We affirm.
FACTS
Appellant Daniel J. Engstrom’s mother purchased a timeshare within respondent
Whitebirch, Inc.’s1 timeshare community on June 7, 2001 . One month later, Engstrom’s
mother signed a joint-ownership authorization form authorizing respondent Breezy Point
to add Engstrom to the deed as a joint owner. On August 5, 2002, Whitebirch issued a
deed that listed Engstrom and his mother as joint tenants. The deed was signed by the vice
president of Whitebirch and notarized.
Engstrom’s mother used the timeshare until her death in July 2015. In August 2016,
a Whitebirch employee contacted Engstrom, informed him that he had been added as a
joint owner to the timeshare deed in 2001, and stated that he could either surrender the
property by signing a quitclaim deed or pay the outstanding fees and keep the property.
The Whitebirch employee contacted Engstrom two more times in November and December

1 Respondent Whitebirch Estates Owners Association, Inc. is responsible for and oversees
the rules and administration of the Whitebirch timeshare community. Respondent Breezy
Point International, Inc. is a corporation that manages the Whitebirch timeshare community
and oversees the sale of its timeshare properties.

3
to see if he would pay outstanding maintenance fees for the timeshare and to determine if
he wanted to surrender or keep the property.
In January 2017 , Engstrom’s attorney sent a letter to Whitebirch, stating that
Engstrom refused to pay the maintenance fees and that the deed was invalid because it was
not delivered to his client and had an invalid notary stamp. Engstrom requested that
Whitebirch cancel the statement for fees , pay him $2,500 for fraud and special damages,
and send him the recorded deed. Whitebirch responded, refus ing to pay him $2,500 in
damages and requesting that he sig n the quitclaim deed . Whitebirch also informed
Engstrom that a timeshare owner is responsible for recording the deed with the county and
that his mother did not record her deed.
Engstrom brought suit against respondents, alleging that they violated the MCFA,
Minn. Stat. § 325F.69, subd. 1, by fraudulently adding Engst rom as an owner to either
collect fees that he did not owe or to compel a sale of his mother’s timeshare property.
Engstrom further alleged that respondents violated the MCFA by knowingly engaging in
deceptive practices by using a notary with a “revoked n otary stamp to falsely certify and
acknowledge hundreds of timeshare deeds .” In the remaining counts, Engstrom asserted
claims of general fraud, fraudulent conveyance, and violation of the Minnesota quiet title
statute under Minn. Stat. §§ 559.01-.25 (2016). Engstrom sought (1) to enjoin respondents
from engaging in fraud, (2) a declaratory judgment that he is not responsible for the
maintenance fees, (3) a judgment quieting title, (4) and an order determining that
respondents violated the MCFA and awarding him his costs, disbursements, and reasonable

4
attorney fees pursuant to Minnesota’s private attorney general statute, Minn. Stat. § 8.31
(2016).
Respondents denied all allegations of fraud and asserted a counterclaim, alleging
that Engstrom tortiously interfered with prospective business relations . Respondents also
asserted a third -party complaint, seeking foreclosure o f Engstrom’s timeshare property
interest and cancellation of the purchase contract that conveyed the interest to Engstrom
and his mother as joint tenants on the ground that the deed was never recorded .
Respondents moved to dismiss Engstrom’s complaint with prejudice, and requested that
the district court (1) order Engstrom to pay the maintenance fees, costs, and attorney fees;
(2) determine all rights and interests that the parties have in the timeshare and determine
that respondents’ rights are superior to any other interest in the timeshare, (3) bar Engstrom
from any equity or interest in the t imeshare, (4) cancel the 2001 purchase contract, and
(5) order the sale of the timeshare.
Engstrom moved to dismiss respondents’ counterclaims under Minn. R. Civ.
P. 12.02(e). Respondents brought a separate motion to dismiss Engstrom’s complaint with
prejudice under Minn. R. Civ. P. 12.02(e) and moved for attorney fees and expenses under
Minn. R. Civ. P. 11.03.
The district court held a hearing on the motions to dismiss and respondents’ rule 11
motion. At the hearing, the parties stipulated that Engstrom has no interest in the timeshare
property. Respondents dismissed their third-party counterclaims, and Engstrom dismissed
his claim that respondents violated Minnesota’s quiet-title statute. Respondents argued
that Engstrom lacks standing to sue because he has not suffered an injury, has paid no fees,

5
and could have avoided any liability for the fees by signing a quitclaim deed. Engstrom
argued that the deed is fraudulent and that he suffered an injury by having to hire an
attorney to investigate the timeshare’s title. The district court denied respondents’ rule 11
motion and dismissed Engstrom’s and respondents’ claims with prejudice. Engstrom now
appeals.
D E C I S I O N
A. Standard of Review
The parties disagree on what standard of review we should apply when analyzing
the district court’s order. Engstrom argues that this court should apply a de novo standard
of review because the district court dismissed his complaint under Minn. R. Civ.
P. 12.02(e). Respondents argue that this court should instead analyze the order under the
summary-judgment standard of review because both parties presented matters outside the
pleadings. See Minn. R. Civ. P. 12.02 (“If, on a motion asserting the defense that th e
pleading fails to state a claim upon which relief can be granted, matters outside the pleading
are presented to and not excluded by the court, the motion shall be treated as one for
summary judgment . . . .” ); see also Dickhoff ex rel. Dickhoff v. Green , 836 N.W.2d 321,
328 (Minn. 2013 ) (characterizing a district court’s order dismissing the plaintiff’s
complaint as one for summary judgment because the plaintiff’s motion did not cite to any
Minnesota Rules of Civil Procedure, the defendants responded to the motion as one for
summary judgment, the parties presented matters outside the pleadings, and the district
court relied on matters outside the pleadings).

6
Engstrom brought his motio n to dismiss under Minn. R. Civ. P. 12.02(e), arguing
that respondents’ counterclaim failed to state a claim upon which reli ef can be granted.
Respondents also brought their motion under Minn. R. Civ. P. 12.02(e). The district court
treated both motions as motions to dismiss, cited caselaw concerning motions to dismiss ,
and did not rely on matters outside of the pleadings. Because the district c ourt and both
parties treated the motions as motions to dismiss, we will review de novo the district court’s
order dismissing Engstrom’s complaint under Minn. R. Civ. P. 12.02(e).
The question to be answered is “whether the complaint sets forth a legally sufficient
claim for relief. ” Bodah v. Lakeville Motor Express, Inc. , 663 N.W.2d 550, 553 (Minn.
2003). “A pleading must contain a short plain statement of the claim showing that the
pleader is entitled to relief and a demand for judgment for the relief sought. ” Bahr v.
Capella Univ., 788 N.W.2d 76, 80 (Minn. 2010) (quotation omitted). When reviewing a
district court’s order dismissing a complaint under rule 12.02(e), we consider only the facts
alleged in the complaint, accept those facts as true, and construe all reasonable inferences
in favor of the nonmoving party. Id.
B. Injury
The district court dismissed Engstrom’s complaint seeking attorney fees and costs
under the MCFA and the private attorney general statute, Minn. Stat. § 8.31, subd. 3a,
because it determine d that he had not pleaded that he had been injured by respondents’
conveyance of the timeshare d eed. Engstrom argues the district court erred because his
claim for attorney fees and litigation costs satisfy the injury requirement under the MCFA
and the private attorney general statute.

7
The attorney general has broad statutory authority to enforce laws regarding
unlawful business practices, including the MCFA. Minn. Stat. § 8.31, subds. 1, 3a (2016).
Additionally, the private attorney general statute provides that “any person injured by a
violation of [the MCFA] may bring a civil action and recover damages, together with costs
and disbursements, including . . . reasonable attorney’s fees.” Id., subd. 3a. Before
Engstrom can recover attorney fees under the private attorney general statute, he must be
able to prove a claim arising out of one of the statutes listed in Minn. Stat. § 8.31, subd. 1.
Therefore, we must first determine whether Engstrom sufficiently pleaded a violation of
the MCFA before analyzing whether he is entitled to attorney fees under Minn. Stat. § 8.31,
subd. 3a.
The MCFA provides:
The act, use, or employment by any person of any fraud,
false pretense, false promise, misrepresentation, misleading
statement or deceptive practice, with the intent that others rely
thereon in connection with the sale of any merchandise,
whether or not any person has in fact been misled, deceived, or
damaged thereby, is enjoinable as provided in section 325F.70.

Minn. Stat. § 325F.69, subd. 1. “Merchandise” under the MCFA includes real estate.
Minn. Stat. § 325F.68, subd. 2 (2016).
To state a claim alleging a violation of the MCFA, a plaintiff must plead that “the
defendant engaged in conduct prohibited by the statute[] and that the plaintiff was damaged
thereby.” Grp. Health Plan, Inc. v. Philip Morris Inc. , 621 N.W.2d 2, 12 (Minn. 2001);
Wexler v. Bros. Entm’t Grp., Inc. , 457 N.W.2d 218, 221 (Minn. App. 1990) ( stating “to
prevail on a consumer protection claim, [ the plaintiff] must prove that [the defendant ]

8
violated . . . Minn. Stat. § 325F.69 and that [the plaintiff] was injured in some way by the
violation”). Nominal damages are sufficient to support the injury requirement of the
MCFA. Wexler, 457 N.W.2d at 222. Minnesota courts follow the out-of-pocket rule to
measure monetary damages resulting from fraudulent representations that in duced a
contract. That rule provides that,
where the property is not returned, the measure of damages is
the difference between the actual value of the property received
and the price paid for it, and in addition thereto such other or
special damages as were naturally and proximately caused by
the fraud prior to its discovery, inclusive of restitution for
expenses reasonably and necessarily incurred after discovery
of the fraud in a bona fide effort to mitigate the aforesaid
damages.

Yost v. Millhouse, 373 N.W.2d 826, 830-31 (Minn. App. 1985) (quotation omitted).
Because Engstrom has not paid any value for the property and stipulated that he has
no ownership interest in it, it is not possible to measure the difference between the price he
paid for the timeshare interest and its actual value. Therefore, the out-of-pocket rule does
not apply to Engstrom’s claim. But Engstrom contends that the expense of hiring an
attorney, by itself, const itutes an injury because Whitebirch limited his options to either
signing a quitclaim deed or pay ing the fees, thereby necessitating that he hire an attorney
to help him resolve a fraudulent demand. Engstrom relies on Love v. Amsler to support
this argument. 441 N.W.2d 555, 560 (Minn. App. 1989), review denied (Minn. Aug. 15,
1989).

9
In Love, a tenant, in response to her landlord’s action in conciliation court for unpaid
rent and damages, sued her landlord under Minn. Stat. § 325F.69, subd. 1 (1988), alleging
that he required the tenants to pay unincurred water bills, unsupported cleaning and damage
costs, and nonexistent attorney fees. Id. at 557. The district court found that the landlord
engaged in deceptive practices and awarded the tenant damages in the form of a rent
abatement. Id. The district court also awarded the tenant attorney fees under Minn. Stat.
§ 8.31, subd. 3a (1988). On appeal, t he landlord argued that the tenant should not have
been awarded attorney fees because the tenant had not suffered any damages. Id. at 560.
We rejected that argument, rea soning that the effect of having to defend against the
landlord’s deceptive practices satisfied the injury requirement under Minn. Stat. § 8.31. Id.
We disagree with Engstrom’s assertion that Love stands for the principle that a
plaintiff’s incurrence of attorney fees and litigation costs, alone, satisfies the injury
requirement under the MCFA. The tenant in Love was awarded actual damages for the
MCFA violation—specifically, an abatement of rent, in addition to attorney fees and costs
under Minn. Stat. § 8.31, subd. 3a.
Engstrom also contends that he need not allege pecuniary loss to sufficiently plead
an injury under the MCFA, but instead may satisfy the injury requirement by asserting that
he would have taken another course of action, absent respondents’ alleged fraud. Engstrom
alleges that, under this theory, he satisfied the i njury requirement because he would not
have been required to hire an attorney if respondents had not fraudulently added him as a
co-owner of his mother’s timeshare interest.

10
In D.A.B. v. Brown , patients alleged that a medical doctor committe d fraud by
failing to disclose that he received kickbacks for a drug that he prescribed. 570 N.W.2d
168, 169-70 (Minn. App. 1997). We concluded that the patients did not sufficiently plead
an injury under the MCFA because the complaint only revealed a general allegation that
the patients had bee n harmed by the kickback scheme. Id. at 173. We noted that the
patients had not sought damages for a price differential caused by t he doctor’s failure to
disclose or alleged that they would have switched drugs if the doctor had disclosed the
kickback scheme. Id.
Brown supports the conclusion that a person may satisfy the injury requirement
under the MCFA by alleging that he would have taken another course of action, absent the
alleged fraud. See Brown, 570 N.W.2d at 169 -70. But Engstrom did not plead that he
would have taken another course of action . The district court stated in its order that
Engstrom alleged that respondents “gave [him] an ultimatum, to either pay the fees
associated with the timeshare or sign a quitcl aim deed. But, even in the event of this
ultimatum, there is still no injury to Mr. Engstrom because he did not take any action that
may have caused him injury.”
Engstrom has cited no caselaw that supports his theory that attorney fees and
litigation costs , by themselves, constitute damages under a n MCFA claim. Engstrom
experienced no monetary loss that was caused by respondents and could not have been
injured by the conveyance of a property interest that he disclaims interest in. Engstrom has
not sufficiently pleaded that he was injured by respondents’ purported violation of the
MCFA. Because Engstrom has not adequately pleaded a claim under the MCFA, he cannot

11
recover under the private attorney general statute. See Minn. Stat. § 8.31, subds. 1, 3a. We
conclude that the district court did not err by granting respondents’ motion to dismiss for
failing to state a claim.
Affirmed.