Kulczyk v. Tioga Ready Mix Co., 2017 ND 218

In Dec. 2011 William and Rhonda Kulczyk sold Tioga Ready Mix to Bernard and Marlene Vculek; Tioga executed a $1.4 million promissory note and granted a mortgage to the Kulczyks; the Vculeks signed a $1.4 million personal guaranty.
Triple Aggregate sued Tioga Ready Mix in May 2012 for unpaid aggregate; Tioga counterclaimed and brought William Kulczyk in as a third‑party defendant; the litigation expanded to add the Vculeks and Rhonda Kulczyk.
The district court in the prior action found Tioga Ready Mix in default and held the Vculeks liable under the personal guaranty; the Vculeks satisfied the $1.4 million judgment.
The Kulczyks later filed a separate foreclosure action (Oct. 2015) against Tioga Ready Mix (and others) seeking foreclosure of the mortgage for amounts they said remained due (approx. $147,000 plus interest), and asserting mortgage priority issues against Scott Financial and possession issues against Triple Aggregate.
Tioga Ready Mix moved for summary judgment, arguing res judicata/collateral estoppel barred the foreclosure because the parties litigated related matters in the earlier suit; the district court granted summary judgment, dismissed the foreclosure complaint, and released the mortgage.
The Supreme Court reversed and remanded, holding res judicata did not bar the foreclosure action because the promissory note and mortgage were not litigated in the earlier suit and Scott Financial was not a party to that suit.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether res judicata bars the Kulczyks’ separate foreclosure action	Kulczyks: Alerus permits separate actions against guarantors and mortgagors; the note and mortgage were not litigated earlier, so foreclosure may be pursued now	Tioga: Prior litigation between the same parties arose from the same transaction; Kulczyks could have and should have raised foreclosure previously, so claim is precluded	Court reversed district court: res judicata does not bar foreclosure because note/mortgage were not litigated and previous action did not resolve those claims
Whether privity (re: Scott Financial) makes prior judgment preclusive	Kulczyks: Scott Financial was not a party to the prior suit, so no privity; its involvement in the earlier case did not require joinder	Tioga: Scott Financial was closely involved (advisor, testimony) and had aligned interests; privity exists and Kulczyks should have joined it earlier	Court held Scott Financial’s involvement did not establish privity for res judicata; absence of Scott from prior suit weighs against preclusion

A. R. Audit Servs., Inc. v. Tuttle, 2017 ND 68, 891 N.W.2d 757 (summary judgment standard and de novo review)
Missouri Breaks v. Burns, 2010 ND 221, 791 N.W.2d 33 (res judicata prevents relitigation of claims raised or that could have been raised)
Ungar v. N.D. State Univ., 2006 ND 185, 721 N.W.2d 16 (privity definition and factors showing right to participate)
Skogen v. Hemen Township Bd., 2010 ND 92, 782 N.W.2d 638 (applicability of res judicata reviewed as question of law)
Alerus Fin., N.A. v. Marcil Grp., Inc., 2011 ND 205, 806 N.W.2d 160 (action against guarantor is distinct from action to foreclose mortgage)
Hofsommer v. Hofsommer Excavating, Inc., 488 N.W.2d 380 (factors indicating active participation that can create privity)