Hoang Minh LY d/b/a Lee‘s Garden, petitioner, Appellant, v. Kim NYSTROM, et al., Respondents.
No. C6-99-565.
Supreme Court of Minnesota.
Aug. 3, 2000.
615 N.W.2d 302
Hunt contends that the prosecutor twice used a misleading analogy that suggested the state‘s burden of proof was not beyond a reasonable doubt but a mere preponderance of the evidence. Misstatements of the burden of proof are highly improper and would, if demonstrated, constitute prosecutorial misconduct. See State v. Coleman, 373 N.W.2d 777, 782 (Minn. 1985). However, Hunt‘s counsel did not object to the analogy made by the prosecutor in his closing argument. See Atkins, 543 N.W.2d at 647 (noting that failure to object to prosecutor‘s statement forfeits defendant‘s right to have issue reviewed on appeal). In the absence of a timely objection, we review the claim under the plain-error rule, asking whether the alleged conduct was so clearly erroneous under applicable law and so prejudicial to the defendant‘s right to a fair trial that the defendant‘s right to a remedy should not be forfeited. See Rairdon v. State, 557 N.W.2d 318, 323 (Minn. 1996).
In closing argument the prosecutor made an analogy to the ancient Greek juries, the substance of which implied that Greek juries would place a stone on either side of a scale for each successful argument by one party or the other.8 We agree with the court of appeals that the prosecutor‘s analogy to the Greek jury, although questionable, does not rise to the level of plain error. The prosecutor stated the appropriate burden of proof in his closing argument, and the trial court also properly instructed the jury on the state‘s burden of proof and told the jury to disregard any statements by the attorneys to the contrary. Given that both the prosecutor and the trial court instructed the jury on the correct burden, the prosecutor‘s conduct did not deny Hunt his right to a fair trial. Nonetheless, the analogy was arguably confusing and should not be repeated should Hunt be retried.
Concluding that the state violated the discovery rules by failing to timely disclose the results of a competency evaluation of its key witness, and that this nondisclosure prejudiced Hunt, we reverse Hunt‘s convictions and remand for a new trial.
Reversed and remanded.
Stephen William Hance, Martin & Squires, P.A., St. Paul, for respondents.
Mike Hatch, Atty. Gen., Prentiss Cox, St. Paul, for amicus curiae State of Minn.
Thomsen & Nybeck, P.A., Donald D. Smith, David J. McGee, Edina, for amicus curiae Minn. Assn. of Realtors.
Will Mahler Law Office, Will Mahler, Rochester, for amicus curiae Council on Asian-Pacific Minnesotans.
Meagher & Geer, P.L.L.P., William H. Hart, Thomas E. Propson, Jenneane L. Jansen, Minniapolis, for amicus curiae Legal Aid Society of Minneapolis.
Winthrop & Weinstein, P.A., Thomas H. Boyd, Charles Schoenwetter, St. Paul, for amicus curiae Southern Minnesota Regional Legal Services.
Lind, Jensen, Sullivan & Peterson, P.A., William L. Davidson, Minneapolis, for amicus curiae Minn. Defense Lawyers Assn.
OPINION
STRINGER, Justice.
During negotiations between appellant Hoang Minh Ly and respondent Kim Nystrom for the purchase of respondent‘s restaurant, respondent made misrepresentations to appellant relating to monthly profits and the condition of the restaurant and its inventory. The restaurant never made a profit and discussion between the parties led to a contract cancellation. Appellant then brought suit alleging common law fraud and a violation of Minnesota‘s Consumer Fraud Act (CFA),
In 1981 appellant Hoang Minh Ly came to the United States from Vietnam at the age of 32. When first arriving in the U.S. he worked in various Chinese restaurants as a dishwasher and cook‘s assistant, positions neither requiring nor providing any business or management experience. In 1989 he met respondent Kim Nystrom while employed as a cook‘s assistant and she as a waitress at May Ninh restaurant in Maple Grove. Appellant speaks, reads and writes very little English and his formal education ended in Vietnam at the second grade. Respondent is also from Vietnam but speaks and reads English.
A few weeks after the two met respondent left the May Ninh restaurant to work at another restaurant, and between 1990 and 1995 appellant and respondent spoke periodically regarding jobs at various restaurants, including a Shakopee restaurant called Chin Yung, the subject of this litigation. In June of 1996 respondent told appellant she had bought the Chin Yung in 1994 and that she was having trouble hiring people, she wanted to sell the restaurant and encouraged him to consider buying it.
A few days later, on approximately June 14, 1996,1 appellant visited the restaurant before it opened in the morning. Respondent told appellant “this is a very good place, and it‘s a good business,” and that she would sell the restaurant for $100,000. Appellant called the next day asking respondent to lower the price; she refused, warning him that someone else wanted to buy it so if he was interested he should decide soon. Respondent then represented to appellant that the restaurant‘s estimated monthly gross revenue was between $25,000 and $30,000 and the monthly prof-
The next day, approximately June 15, appellant and his wife went to the restaurant at about 8:00 p.m. The restaurant was not busy and when appellant asked why there were so few patrons respondent replied that customers in Shakopee usually eat and go to sleep earlier because they commute to work. When appellant‘s wife asked to see the books respondent said that they were not there but a lawyer did not need to review them because she would not lie to appellant. Respondent agreed to lower the purchase price from $100,000 to $90,000 with a cash down payment of $20,000. She also agreed to charge appellant $2,000 a month for rent, $1,200 a month for taxes and a 9% interest rate on the business loan. That night appellant decided to buy the restaurant because he thought $90,000 was a fair price to pay for a restaurant taking in $25,000 to $30,000 a month and because he trusted that respondent would not misrepresent the business.
On June 19, 1996, the parties met again and appellant‘s wife wrote a check for $5,000, leaving blank the payee designation on the check at respondent‘s request. The remaining $15,000 was to be paid before June 30. Appellant wanted to show his lawyer the agreement but decided not to do so after respondent assured him that he did not need a lawyer because they were friends and she would not cheat him. When the check was returned to appellant the payee was designated “Anderson Produce.”
On June 25, 1996, at around 2:00 p.m. the parties met to sign the lease agreement and promissory note, which respondent prepared, and she again told appellant he did not need a lawyer. Appellant signed the documents without reading them and respondent did not review the documents with him.2
At the closing on June 30, 1996, appellant delivered checks for the down payment balance—one for $10,000 and another for $5,000—and respondent again asked appellant to leave the payee designations blank.3 Appellant also bought food inventory from respondent for $3,990.27 but a few days later about 50% of the meat and all of the shrimp was unusable and about 60% of the canned food was unusable because the cans were swollen. Respondent agreed to reduce the purchase price of the inventory by subtracting the value of the unusable food but the parties could not agree on the amount of the reduction. Appellant estimated the inventory to be worth a little over $1,000.
Appellant retained the original menu, the sign and the lunch buffet for a couple of weeks after opening the restaurant but took in only a little over $200 daily. When appellant told respondent that the restaurant was not taking in $700 a day she suggested that he change the sign, menu and buffet. Appellant followed the suggestions and with radio ads and coupons business increased slightly but profits did not increase. The restaurant never made $700 a day and never turned a profit. Appellant estimated his sales per month to be about $6,000 to $7,000, not the $25,000 to $30,000 respondent represented. The physical facilities presented additional problems with the plumbing backed up, the refrigerator and dishwasher not working, the roof leaking, faulty wiring and a parking lot with many potholes. Respondent later told appellant that this may be his fate and to see a fortune teller. She also told him that she would lower his rent but she never did.
Appellant paid respondent about $4,000 in July and August but as his loans increased the amount he could pay decreased—to $3,000 in September, $1,000 in October and $1,000 in November. Respondent refused his offer of a payment of $1,000 for December, warning him that he owed her three months rent and she was going to evict and sue him. In December, respondent called almost every day to ask for payment and told appellant that if he did not give her back the restaurant she would take him to court where he would lose his credit and his home would be seized. During this period appellant was able to keep the restaurant open by running up a $45,000 credit card debt and borrowing approximately $30,000 from friends and family.
On December 22, 1996, an insurance agent went with respondent to the restaurant “with papers * * * declar[ing] the contract null.” When appellant said that he wanted his lawyer to evaluate the papers respondent told him that if he did not sign the papers by the next day “the police will come and lock the doors and you cannot bring anything out of the restaurant. And if you try to get in, they will take you away. They will lock you up.”
The next day, December 23, 1996, respondent went to appellant‘s house, again with an insurance agent, and told him that he either had to pay her the full amount he owed or sign a contract stating that all prior contracts were cancelled, and if he did not do either she would take appellant to court because his rent was three months late. Appellant signed the contract declaring all prior contracts “null.” Respondent also gave appellant a check for $2,500 to help him pay bills and support his family, but she stopped payment on the check.4 Respondent sold the restaurant to another purchaser later that day.
Appellant filed a complaint on October 21, 1997 alleging, among other counts, that respondent defrauded appellant and violated the CFA, and requested damages in excess of $50,000, attorney fees and costs pursuant to the Private AG Statute and pre- and post-judgment interest. After a three-day trial the court ruled that respondent defrauded appellant and that the value of the restaurant was $65,000 at the time of the sale. The court applied the damage award formula for common law fraud—the difference between what appellant paid for the restaurant and the fair market value of the restaurant, plus damages resulting from reasonable attempts to mitigate—and reasoned that since appellant bought the restaurant for $90,000 and the fair market value of the restaurant was $65,000, appellant was entitled to judgment for $25,000.5 The court made no ruling regarding application of the CFA or the Private AG Statute in this order.
On November 9, 1998, appellant moved for costs and attorney fees pursuant to the CFA and the Private AG Statute, claiming $60,920.55. The trial court denied the motion on the basis that appellant‘s award was based on a common law fraud finding which provided no right to recover attorney fees and the CFA did not apply because respondent‘s representations were not made to a large number of consumers and did not have the potential to deceive or ensnare any other consumer. With no violation of the CFA, the court ruled that appellant could not recover attorney fees under the Private AG Statute.
The court of appeals affirmed both the finding of common law fraud and the ruling that appellant had no cause of action under the CFA, noting that appellant did not meet the definition of “consumer” because he bought the restaurant with “the intent to produce, manufacture, and resell food, rather than with the intent of direct ownership of the product.” Ly, 602 N.W.2d at 646-47. As to application of the CFA, the court held that it “only applies in consumer fraud situations and the fraud or misrepresentation must be disseminated to others.” Id. The court concluded that this was a one-on-one business transaction and that if the court were to adopt appellant‘s interpretation of the CFA, the CFA would provide remedies for virtually every fraudulent transaction, an expansion of the statute not contemplated by the legislature. See id. Finally, the court denied appellant‘s request for prejudgment interest of $1,265.40 because the district court did not rule on the issue. See id.
On review here, we address de novo as a matter of statutory interpretation appellant‘s argument that as a victim of common law fraud he has a cause of action under the CFA and is entitled to attorney fees and costs under the Private AG Statute. See Hibbing Educ. Ass‘n v. Public Employment Relations Bd., 369 N.W.2d 527, 529 (Minn. 1985). We are guided by the principle that the object of all statutory interpretation and construction of law is to ascertain and effectuate the intent of the legislature, see
In the late 1950‘s many state legislatures enacted statutes designed to prohibit deceptive practices and to address the unequal bargaining power often present in consumer transactions. See Jeff Sovern, Private Actions Under the Deceptive Trade Practices Acts: Reconsidering the FTC Act as Role Model, 52 Ohio St. L.J. 437, 446 (1991). By 1981, every state in the United States had statutes providing for consumer protection enforcement by a state agency—commonly, as in Minnesota, the state attorney general—with broad enforcement authority. See id. Minnesota‘s Consumer Fraud Act was adopted in 19636 to achieve the same purpose and provides the attorney general with authority to seek and obtain injunctive relief to protect consumers from unlawful and fraudulent trade practices in the marketplace. See State v. Philip Morris, Inc., 551 N.W.2d 490, 496 (Minn. 1996) (stating consumer protection statutes “are generally very broadly construed to enhance consumer protection“). The CFA provides in relevant part:
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 herein.
The CFA defines “merchandise” as “objects, wares, goods, commodities, intangibles, real estate, loans, or services.”
In most areas, the proper way to solve consumer problems is to educate the consumer; there are, however, other areas where the complication of the problem, or the peculiar nature of the consuming public involved, makes it necessary for the state to protect the consumer.
* * * *
[This bill] is designed to expand the powers of the state to deal with fraud, deception, and misrepresentation in connection with the sale of merchandise. * * * [T]he intrastate practice of fraud has grown into a field of great profit and great damage both to individual citizens and to honest businessmen.7
We recently observed that the CFA “reflect[s] a clear legislative policy encouraging aggressive prosecution of statutory violations” and thus should be “generally very broadly construed to enhance consumer protection.” Philip Morris, Inc., 551 N.W.2d at 495-96 (holding that Blue Cross and Blue Shield of Minnesota, a health care provider, had standing to pursue claims under the CFA for increased costs incurred in medical and hospital care of insureds with tobacco-related illnesses). We have also noted that the CFA is remedial and should be liberally construed in favor of protecting consumers. See Boubelik v. Liberty State Bank, 553 N.W.2d 393, 402 (Minn. 1996); see generally Governmental Research Bureau, Inc. v. Borgen, 224 Minn. 313, 323, 28 N.W.2d 760, 766 (1947).
Our recent decisions bear out this broad and flexible application of the CFA. In Church of Nativity of Our Lord v. WatPro, Inc., the respondent alleged that the appellant, a large chemical corporation, violated the CFA when it produced and installed defective roofing materials on
In Boubelik, we interpreted the CFA more narrowly where the plaintiffs, who obtained a loan from a bank, alleged that the bank violated the CFA by defrauding them in connection with the loan. 553 N.W.2d at 402. The issue before us was whether the term “merchandise” or “services” included bank loans.8 See Boubelik, 553 N.W.2d at 402. We held that the legislature could have specifically referred to loans within the definition of “merchandise” but did not do so, thus bank loans did not fall within the meaning of “services” under the CFA. See id. at 403. We reasoned, “[p]ublic policy not only includes protection for consumers who enter certain transactions in an unequal bargaining position, but it also includes the freedom for sophisticated parties to borrow and to invest moneys subject to certain risks.” Id.9 Less than a year later in 1997, the legislature amended the definition of “merchandise” to include loans.10
Appellant and amicus first note that the CFA is to be interpreted liberally and if its breadth is narrowed it should be by legislative enactment, not by judicial decision. Appellant argues that
Respondent contends that the legislature did not intend the CFA to apply to non-consumer commercial transactions, as here, where appellant was a veteran of the restaurant business, had substantial bargaining power in the transaction and clearly purchased the restaurant for commercial, not personal, use. Respondent reads the use of “others” in the CFA language “with the intent that others rely thereon” to require the fraud to be perpetrated on others in addition to the plaintiff.
We are also on established ground in holding that even though the unlawful practices respondent engaged in here were in the context of an isolated one-on-one transaction, coverage under the CFA may still be afforded. In Church of Nativity we held that the transaction fell under the CFA where an individual purchaser was involved in a single transaction without regard to whether the fraudulent representations were disseminated to other consumers. 491 N.W.2d at 8 (plaintiff was a parish contracting to reroof school and convent).12 We attach no importance to the statutory reference to the term “others” in “with the intent that others rely thereon,” as it most reasonably can only mean that the fraudulent conduct must not have been committed in a vacuum—it must have been intended to deceive someone. See
II. The Private Attorney General Statute
The attorney general is provided broad statutory authority under
allow the individual person to bring a civil action for the damages he sustained * * * it‘s a great means of private enforcement. It‘s simply impossible for the Attorney General‘s Office to investigate and prosecute every act of consumer fraud in this state. * * * [And] if a[n] individual could bring an action, he can do some of the prosecuting, he can do some of the enforcing, he can provide some of the protection for himself and others that the Attorney General‘s Office * * * can not do today * * * 13
Similarly, on March 30, 1973, Representative Sieben stated that the purpose of the Private AG Statute is to stop the “unscrupulous * * * businessman who makes * * * false and deceptive ads,” and with its adoption “a private citizen may take the person to court * * * when the citizen has been defrauded and he may recover damages plus reasonable attorney‘s fees or injunctive relief.”14 Representative Sieben also referred to the importance of providing an incentive to consumers to privately enforce the fraudulent business practices laws: “an operator who can * * * rip off a large number of citizens, and cease operating * * * may likely be able to do so with little threat of legal action. More stringent remedies are therefore needed. * * * [This bill] provides a route for private recovery for the victims of consumer fraud.”15
The Private AG Statute thus advances the legislature‘s intent to prevent fraudulent representations and deceptive practices with regard to consumer products by offering an incentive for defrauded consumers to bring claims in lieu of the attorney general. In Church of Nativity we acknowledged the legislative intent to “eliminate financial barriers to the vindication of a plaintiff‘s rights * * * and to provide incentive for counsel to act as private attorney general.” 491 N.W.2d at 8 (quoting Liess v. Lindemyer, 354 N.W.2d 556, 558 (Minn. App. 1984)). We commented:
Nativity‘s pursuit of a remedy has involved much time and labor; it has been difficult, lengthy and expensive. If there are no attorney fees awarded in this case, Nativity will spend virtually all of its damage award paying its attorneys. The private attorney general statute was intended to cover just this type of case.
Id. at 8 (footnote omitted). Thus we held that the parish was entitled to the benefits of the Private AG Statute. See id.16
Appellant argues that the aim of the Private AG Statute is to encourage victims of fraud to bring claims and nowhere does it provide that attorney fees are contingent upon demonstrating that a cause of action creates a public benefit. Respondent contends that the Private AG Statute should not cover fraud arising from private disputes but only those where the fraud has the potential to deceive more than the single claimant and the lawsuit benefits the public. Respondent emphasizes that the purpose of the Private AG Statute is to protect public, not private, interests and that attorney fees should be awarded only if the record reflects proper consideration of the policies underlying the statute.
A determination of the scope of the private remedies provision in the Private AG Statute must begin with the recognition that it was adopted by the legislature in 197319 as part of the statutory charter for the duties and responsibilities of the attorney general and provides a reward to private parties for uncovering and bringing to a halt unfair, deceptive and fraudulent business practices, functions that, to that point, had been the responsibility of the attorney general. Since the Private AG Statute grants private citizens the right to act as a “private” attorney general, the role and duties of the attorney general with respect to enforcing the fraudulent business practices laws must define the limits of the private claimant under the statute.
may institute, conduct, and maintain all such actions and proceedings as he deems necessary for the enforcement of the laws of the state, the preservation of order, and the protection of public rights. * * * He has the authority to institute in a district court a civil suit in the name of the state whenever the interests of the state so require.
260 Minn. 303, 308, 110 N.W.2d 1, 5 (1961) (citation omitted). The duty of the attorney general‘s office, and thus the purpose of any statute granting private citizens authority to bring a lawsuit in lieu of the attorney general, is the protection of public rights and the preservation of the interests of the state.
The interest of the legislature in creating a supplemental force of private enforcement to address unlawful trade practices is clear from the testimony at committee hearings,21 but it is equally clear that the sweep of the statute can be no broader than the source of its authority—that of the attorney general—whose duties are to protect public rights in the interest of the state. Conversely, it is not the responsibility of the attorney general to protect private or individual interests independent of a public purpose. See, e.g., Humphrey v. McLaren, 402 N.W.2d 535, 543 (Minn. 1987) (stating that the attorney general “has for a client the public, * * * [t]hus, a government litigator must take positions with the common public good in mind, unlike the private practitioner who seeks vindication of a particular result for a particular client“).22
We find further support for our holding that public interest must be demonstrated to state a claim under the Private AG Statute based on our conclusion that the legislature could not have intended to sweep every private dispute based on fraud, and falling within the CFA, into a statute where attorney fees and additional costs and expenses would be awarded, because to do so would substantially alter a fundamental principle of law deeply ingrained in our common law jurisprudence—that each party bears his own attorney fees in the absence of a statutory or contractual exception. See Church of Nativity, 491 N.W.2d at 10 (Simonett, J., concurring in part and dissenting in part); see also Barr/Nelson, Inc. v. Tonto‘s, Inc., 336 N.W.2d 46, 53 (Minn. 1983) (“We have long held that attorney fees are not recoverable in litigation unless there is a specific contract permitting or a statute authorizing such recovery.“). We have for as long presumed that statutes are consistent with the common law, and if a statute abrogates the common law, the abrogation must be by express wording or necessary implication. See In re Shetsky, 239 Minn. 463, 469, 60 N.W.2d 40, 45 (1953). We decline to construe legislative intent to abrogate the common law with regard to the attorney fees provision in the absence of a clear purpose to do so.
Based on these considerations we hold that the Private AG Statute applies only to those claimants who demonstrate that their cause of action benefits the public.23 We believe that this conclusion is consistent with the history and purpose of the office of the attorney general to prosecute misrepresentations involving only matters of public interest.24 Appellant was defrauded in a single one-on-one transaction in which the fraudulent misrepresentation, while evincing reprehensible conduct, was made only to appellant. A successful prosecution of his fraud claim does not advance state interests and enforcement has no public benefit, and is not a claim that could be considered to be within the duties and responsibilities of the attorney general to investigate and enjoin.25
Affirmed in part and reversed in part.26
Notes
I respectfully dissent. I agree with that portion of the court‘s opinion holding that the Consumer Fraud Act applies to a cause of action brought by a plaintiff who was defrauded in an isolated one-on-one purchase of a restaurant for the purpose of selling restaurant services. I disagree, however, with that part of the opinion holding that
In addition to the remedies otherwise provided by law, any person injured by a violation of any of the laws referred to in subdivision 1 may bring a civil action and recover damages, together with costs and disbursements, including costs of investigation and reasonable attorney‘s fees, and receive other equitable relief as determined by the court.
Had the legislature intended to limit the scope of section 8.31, subdivision 3a, to those causes of action that have a public benefit, it could have easily done so. Whether for good or for ill, by the plain words of the statute, it did not. This court is not authorized nor is it this court‘s role to read into a statute that which the legislature, by its plain language, has left out.
We also deny appellant‘s request to consider this issue.
GILBERT, Justice (dissenting).
I join in the concurrence and dissent of Justice Page.
GILBERT, Justice (concurring in part, dissenting in part).
I concur with the majority‘s holding that
Even if the majority is correct in finding some implicit requirement of public benefit in the private attorney general statute, I disagree with the majority‘s resolution of the fact question at the appellate level. As the majority notes, respondent sold this same restaurant to another purchaser later the same day after respondent fraudulently induced appellant to nullify the contract of sale. It is quite possible that enforcing the fraudulent business laws against this particular respondent will have a benefit to more than appellant-purchaser. This fact question should be remanded to the district court. I, would, however, interpret this newly discovered “public benefit” requirement to include private enforcement of the consumer protection laws.
We hold that appellant is a person injured by a violation of
PAUL H. ANDERSON
ASSOCIATE JUSTICE, SUPREME COURT OF MINNESOTA