Mattson v. Underwriters at Lloyds of London

al., MATTSON, Appellants, et Glenn D. AT LLOYDS OF

UNDERWRITERS

LONDON, al., Respondents. et

No. C1-87-547. of Minnesota.

Supreme Court

Oct. Hunegs, Riley, Min- Peter W.

Richard G. neapolis, appellants. Halleland, Ohm, Min-

Kеith Brian J. W. respondents. neapolis, for OPINION SIMONETT, Justice. final- issues presents

This about case appellate court decision. ity of an court, agree the trial certified in with which entered the amount of the us, appeals that the court of this matter to dramshop judgment. unsatisfied in concluded Lloyds appealed judgment to the this case that the trial court without and appeals. Lloyds court of did not contest jurisdiction plaintiff-appellants’ to entertain faith, jury verdict of bad but instead pоst-appeal summary judgment. motion renewed its claim assign- that Car-DePs begin by briefly litiga- describing ment of its bad faith cause of action up tion to the time of the of Mattsons was time barred and invalid. decision. In June Glenn D. Mattson cross-appealed Mattsons the trial court’s family and of per- members his obtained a attorney denial of fees and reduction of dramshop against injury judgment sonal judgment. interest Car-Del, Inc., corporаtion. a Minnesota insurer, had filed its Lloyds Car-DePs certificate vol- Underwriters London, paid 29, its policy untary July 1976, the Mattsons dissolution on and $100,000, $156,562.65 limits but this left Lloyds pointed out judgment of the unsatisfied. About this plaintiff Mattsons had obtained time, the Mattsons discovered that Car- assignment Car-DePs of its bad faith claim Del, dramshop pending, while the suit was September 15, 1979, until which voluntary had filed a certificate for dissolu- 3-year period winding-up corpo- for the tion. The Llоyds Mattsons decided to sue expired. ration’s affairs had Relying on portion for the unsatisfied of their tort (1986),3 Minn.Stat. 300.59 Lloyds argued § Lloyds on the had that because Car-Del could itself sue Car-Del, acted bad faith towards its 3-year winding-up period, neither insured, settling in not dramshop claim assign could it what it could sue. The prior within the limits to trial. Plain- Mattsons judge contended the trial had Mattsons, therefore, tiff obtained an as- properly upheld assign- signmеnt of Car-DePs bad faith by relying statute, on a different the former trustee dissolution and com- (1980) (repealed 1981), Minn.Stat. 301.56 § against menced this action defendant says, which “The title omitted assets Lloyds. pretrial motions, In ‍‌‌‌‌‌​‌​‌​‌‌‌‌​‌​​‌‌​​​​‌​‌​​‌‌‌​‌‌‌​​‌‌‌‌​​​‌‌​‍defendant winding up from the shall vest in the trust- Lloyds contested the Car-DePs * * They argued ee before the court assignment, contending it was time barred that Car-DePs bad faith claim because made after the had asset, and, anwas omitted because section completely dissolved.1 The trial court specifies 301.56 ending time for a trust- granted plaintiffs’ partial nonetheless sum- duties, ee’s of Car-DePs judgment, mary holding assign- trustee, executed the former ment was not time barred and was valid.2 valid. briefs filed with the The bad faith case was tried to a plaintiff resulted a verdict for did not mention additional Lloyds. Judgment defendant grounds, yet undecided before the trial 1, April 1.Glenn Mattson’s aсcident was appealed summary 2. Defendant rul- 1976, January In dramshop 29, the Mattsons commenced their supreme court. This court declined Car-Del, July action Inc. On discretionary partial to take review of the sum- 1976, voluntary Car-Del filed a certificate of mary judgment, preferring that all issues be State, Secretary dissolution with the which first tried at the trial court level. 3-year winding-up period started the under (1986). Minn.Stat. tion was ac- 3. "[A] whose existence terminates April tried 1977 and Mattsons’ tort limitation, forfeiture, or otherwise continues 22, Only was entered on June years for three after the termination date for the thereafter, Mattsons, say learn of purpose prosecuting defending sole ac- 29, 1979, July the dissolution. On tions, affairs, closing disposing proper- its of its 15, winding-up period September On ended. ty, dividing capital.” Minn.Stat. the Mattsons obtained an (1986). § 300.59 Car-Del’s bad faith claim from thе former trust- dissolution, and, ee in commenced against Lloyds. this suit They should have stand- contended this why the Mattsons was not a new theory, theory they urged sue. but had trial court earlier but the trial court decid April the court decided, which, therefore, never ed v. Underwriters at Mattson could not have re- London, (Minn.App. N.W.2d motion, viewed.4 The trial court denied the 1986), position. The court adopting Lloyd’s concluding jurisdiction and, lacked assignment purported held “Car Del’s event, by plaintiffs issues raised faith claim was invalid because it bad were without merit. The trial court certi- year three limitation was made by questions fied the raised mo- 859. further period ran.” Id. at The court important tion and as doubtful without attorney claim for ruled that Mattsons’ framing specific issues for this court to and properly fees denied had been “[i]n consider.5 unnecessary is light our decision it to relating to intеrest.” The questions decide dispositive question, We believe the concluded, part, opinion “Affirmed re may question, which is also threshold dissented, part.” judge versed in One as be stated follows: Does agreeing with that Car-Del’s as preclude plaintiffs court decision from rais- signment of an “omitted asset” was valid. raise they the issues now seek to petition to this for further Mattsons’ court post-trial, post-appeal motion for sum- wаs denied. review mary judgment? giving reach immedi- We now the events appeal. Eight

ate rise to this second I. months after our denial of further review parties tend to frame the decision, plaintiffs of the court judicata threshold issue in terms of res and Mattson returned to quite law of the case. Neither doctrine end, yet tending case at an fits. If had commenced a new summary judgment. moved for Plaintiffs’ they now seek to action to raisе the issues grounds, in- motion was made on several assert, judicata res would be an grounds that if Car-Del’s cluding the even presented, point out squarely but assignment barred, underly- was time bringing a they are not new action. proceeding was itself invalid dissolution judicata, litigated res issues or which could invalidity of the trustee’s as- so that have in a former action can been signment moot. Plaintiffs reasoned relitigated subsequent in a action. be рroviding for by dissolving without Co., See Kaiser v. Northern States Power judgment, payment of Mattsons’ (Minn.1984); 902 Mattsen N.W.2d comply had failed to (Minn. Packman, 49-50 N.W.2d voluntary dissolution statute terms hand, and, therefore, legally On the other ‍‌‌‌‌‌​‌​‌​‌‌‌‌​‌​​‌‌​​​​‌​‌​​‌‌‌​‌‌‌​​‌‌‌‌​​​‌‌​‍law of the case had not dissolved. (1980) (repealed ordinarily applies appellate an court Minn.Stat. where See belonging corporation notwithstanding to In addition dissolution 4. invalid, inability plaintiff Mattsons also alter- of the dissolved assignment upheld natively, be bring suit? corpora- as from the shareholders rather property of a dissolved Does 3. trustee, or that an may than from in its so that tion vest shareholders necessary have a direct validly assign judgment a creditor for it to against the cause of action insurer. prosecution? follows: frame the "undecided issues” as judgment is dissolved 4. Where the debtor pursuing a bad faith attempted corporаte and has no interest claim, Is an judgment a single largest a creditor have direct which fails marshall asset largest liability pay single an insurer bad detri- cause of action creditor, of a invalid as a ment faith? of law? matter proper questions, see need to frame On the a 2. Where dissolves without creditors, Aktiengesellschaft v. Invest- providing may Investment adequately a Duxor Rarities, Inc., (Minn.1987). 413 N.W.2d 502 cause of action creditor enforce legal stances, has ruled on a issue and has dispose remand- complete the case as ly possible. ed the case to the court for lower appeal With an proceedings. structured, Bystrom properly appellate Brezinka v. Broth- court ers, Inc., (Minn.1987). affirms, reverses, 403 N.W.2d then modifies or takes Issues in first will such other action as appeal determined the interests of justice may relitigated require. Minn.R.Civ.App.P be in the trial court re-exam- If nor 103.04. however, complete finality appeal; accomplished, in a cannot be if ined second issues something may, remains be done court not determined the first below, remand, appellate litigated. ordinarily will Id. reconsidera- indicate, (and usually subsequent remand with di tion a case on remand rections a mandate which the trial court appeal) is a continuation Cоnsequently, must scope follow. proceeding. Maher, Maher v. appellate depends of an (Minn.App.1986). Plaintiffs con- final, what court intends to be here, apply tend law of the case should is determined what the deci court’s permitting thus a on decision their undecid- sion says. “The effect of of the reversal issues, Lloyds argues ed but defendant the judgment depends upon ground upon the because, apply doctrine thе first based, which isit as expressed in deci appeal, there was no remand to consider sion reversing it.” Chicago Great West any further issues. Zahner, ern 27, Railroad Co. v. 149 Minn. question, it, The we see one of 29, (1921). 182 N.W. finality appellate judgments. case, In this we believe the court judi- same considerations behind res appeals, in reversing plaintiffs’ judgment, cata and namely, law case— intended its reversal to conclude bringing litigation to a definite conclu litigation. The court money reversed the sion with dispatch support reasonable — judgment for plaintiffs Mattson. No re finality of appellate end, decisions. To this any proceedings mand for stat was there are principles gov various rules and implied. ed or holding From the court’s erning appellate practice, such as the re standing that lacked to maintain quirements preserving for error below for action, Car-Del’s bad it necessarily faith appellate review, 51; e.g., Minn.R.Civ.P. that followed could not recover parties may the rule that be bound on Lloyds. from Consequently, the court appeal by the on theories which the case the judgment plain reversed below, see, tried e.g., Annis, was Annis v. tiffs. The being reversed, noth 256, 263, 250 Minn. 84 N.W.2d litigated, remained to be and the case (1957); appellate the rule that an court will completely was concluded. ordinarily consider issue not first presented to Gruenhagen the trial court was unaware that Larson, 454, 457, 310 Minn. anything litigated. remained to be The de- (1976); prohibition presented cisive issue to it was entering partial trial court standing sue, final to and this ultimate issue was determining unless just posed there is no solely cause in terms of whether the trust- delay, 54.02; see Minn.R.Civ.P. ‍‌‌‌‌‌​‌​‌​‌‌‌‌​‌​​‌‌​​​​‌​‌​​‌‌‌​‌‌‌​​‌‌‌‌​​​‌‌​‍and the ee’s was valid for the reasons parties in requiring appellate rule their stated By framing court. concisely briefs to state the issues involved the parties represented precise sought, relief appellate see Minn.R. court that the of the dis- Civ.App.P. 128.02. These rules various aim itself being challenged, solution was structure into a form that proceeded on this appellate court, representation.6 enables the in most in- then, Ordinarily, ap- judgment against It is clear understood Car-Dеl would have been a parties questioning were nullity since the effect the dissolution. Thus the court observes in its corporation wholly ceased to exist for opinion, "At common law Minnesota the 1977 us, however, It seems to the ultimate decision on pellate obligation preserve under an were conclusive. should be sue. alternative theories for contend, however, Plaintiffs they had the “first round” when While won not be accorded the trial court ruled their procedural of the unusual valid, plaintiffs defendant knew that history of this case. did) (and intending issue; if had sustaining the trial court’s rul- II. cern about appeal, they should have taken mea- post- post-trial, The Mattsons claim arguments preserve sures to their other summary judgment appeal motion standing. could have renewed not, could “raises issues which ruling their motion to the trial court for a been, рrior to decided the Court not have * * theories, either at or on their alternative Appeals decision *.” trial, explaining after the bad faith trial of the It that before will be recalled judge why ruling was needed. such See action, plaintiffs had moved for faith bad Or, once supra. footnote right to summary judgment on their partial appealed, plaintiffs could have moved (1) they argued At that time sue. directing for a remand Car-Del, even assignment obtained is- the trial court to decide the undecided 3-year winding- though obtained then sues so that all issues would under Minn.Stat. up period, was valid Or, appellate court.8 before statute); and, (the assets omitted least, plaintiffs in their brief to the (2) proceeding the dissolution apparently, explained should have Plaintiffs was of no force effect.7 itself situation of the undecided issues and therefore, that their of the argue, asked, if the court of reversed dissolution never been invalidity of the has limitation matter because, ap- litigated, until the court the trial court standing be remanded to reversed, a need to peals there was never reserved, alternative for a decision on the effect, plaintiffs In are litigate that issue. Minn.R.Civ.App.P. 128.02 theories. See seeking (brief much a “new” trial as an “precise not so contain rеlief should presumably Failing pre- on issues sev- some such sought”). additional trial to take attempting the first to raise the preserved or otherwise at caution and then ered party theory leaves a vulnerable “new” trial. argued, that the fact purpose.” “[T]he v. Underwriters at Mattson London, (Minn.App.1986). to the issue of the is dissolved is irrelevant validity assignment.” of the say plaintiffs “apparently” sepa- raised the We briefs, least, at it is undеrstandable From validity of the dissolution be- rate issue of not, granting partial why the trial court did that this issue was cause the record is not clear any- plaintiffs, summary judgment mention for raised, except obliquely explicitly perhaps as a itself, thing the dissolution about the assignment. upholding In their for reason understood that because it would not have September court in 1981 on the brief to the trial invalidity asserting plaintiffs of the summary judgment, for crоss-motions upholding grounds as a for dissolution legally existing argued assignment. standing separate sue from the dissolving escape could not time of the tort however, Lloyds, Defendant-respondent argument liability that tort. But this for dispute claim that the not seem to the Mattsons’ that, argument support made in sepa- raised as a Mechanism, Inc., of the dissolution was Gassert v. Commercial trial court and we will rate issue before the (Minn.1979), liability should contin- N.W.2d 392 Thus, purposes of the case for the this assume this was plaintiffs’ brief ue after dissolution. appeal. ac- "The verdict [in states: year less than one was rendered tion] possible to file a It was not for proceedings, of dissolution well commencement Minn.R.Civ.App.P. 106 review under notice of three-year period. applicable Conse- within the because, having on the trial court not ruled responsibili- quently, attemрt Car-Del’s to evade theories, adjudication commencing pro- alternative ty for its torts appellate court to review. ceedings for the was of no force or effect.” party impermissibly claim We hold that the deci- seeking shifting theories on or is standing sion lack of to main- theory. revive abandoned tain bad faith settlement action is to be complete finality. accorded We answer the might add that quеstion threshold certified in the affirma- petitioned appeals’ questions. tive need not reach the other supreme court for further review. this Question answered. contending petition, besides that the court erroneously applied WAHL, JJ., YETKA dissenting. (since statute, repealed) winding-up plain- first time pretrial tiffs for the since their SCOTT, J., part took no in the summary judgment motion for raised consideration or decision of this case. theоry. petition Their alternative stated YETKA, (dissenting). Justice to be: issue opinion I dissent majority from the Is a “dissolution” which fails to list a following reasons: corporation’s largest asset and fails to pay largest liability to the detriment outset, disagree At the majori- of creditors valid? ty’s necessity determination litigation justifies ending this Appeals

Court not decide. litigation. The majority’s decision that this petition it, did not nor could case ended with the court appeals’ deci- that the court of had overlooked an sion, remand, made mention of Rather, issue have decided. manifestly leads unfair result. The alleged was an this issue that had majority reasons that and, indeed, “was nev- never been ‍‌‌‌‌‌​‌​‌​‌‌‌‌​‌​​‌‌​​​​‌​‌​​‌‌‌​‌‌‌​​‌‌‌‌​​​‌‌​‍decided at the court of er before the trial court.” (Petitioners’ when it held from the emphasis.) Defendant responded However, trustee was invalid. that this was a being new issue raised ignores possibility Considering the first time. petition may have a Lloyds indepen- under the Minn.R.Civ.App.P. criteria of of the assignment. dent Plaintiffs’ attor- subd. this court denied re- ney Lloyds maintains London en- view.9 couraged Car-Del to quietly dissolve

secretly that, plaintiffs, unknown to III. plaintiffs statute would bar from collecting deficiency against Throughout litigation this the issues and, therefore, bar Car-Del’s have had a quality. chameleon-like As the against Lloyds of Lоndon. Such a out, points argument plain- dissent at oral claim stands independent assign- tiffs Lloyds claimed that encouraged Car- ment. secretly Del escape just to dissolve This, however, debt. is impermissible policy corporations Public demands that recovery shift in the permitted on which existing not avoid be liabilities plain- this lawsuit has been maintained. If merely by secretly dissolving. impor- The claiming tiffs are now Lloyds policy over-emрha- tance of this cannot be spired corpo- plaintiffs with Car-Del to preclude dissolve the sized. To litigat- from ration, this would an entirely be different issue opens of Car-Del’s dissolution which, cause action having been possibility the door to the that a tort victim involving asserted this case judgment against the with a will simply is justly different law- compensated not be because cor- suit. poration illegally dissolved. Such a petition Cо., ‍‌‌‌‌‌​‌​‌​‌‌‌‌​‌​​‌‌​​​​‌​‌​​‌‌‌​‌‌‌​​‌‌‌‌​​​‌‌​‍9. A denial of a for further review Milbank Mutual Insurance (Minn. precedential this court is of no petition effect and is not simply Denial of the approving disapproving to be construed as granting meant there were not three votes for Murphy petition. the court of decision. See v. contrary good-faith to a had not manifestly unfair result made a They defense. opportunity had an justified by any to settle the case publiс policy and is within limits and Why did not do so. regarding finality litiga the concerns Lloyds now have benefit of our Furthermore, ju- theories of tion. res common law rule that one can’t sue an case, embody dicata and law of company directly? case, insurance In this finality litigation, the notion of are ad I plaintiffs may would hold that the sue mittedly inapplicable in this case. More Lloyds of directly London to recover the over, even when such doctrines are techni deficient balance. applicable, cally a court should restrain public policy their use where a would be Finally, disagree I majority with be- unjust violated or an result would follow. cause it 3-year corporate writes into the Giarrusso, dissolution statute a See Garner v. 571 F.2d 1330 statute of limitations. very purpose (5th Cir.1978); of the statute of limita- Tipler v. E.I. duPont de prevent tions is to being stale claims from Co., (6th 443 F.2d 125 Nemours and Cir. brought, where witnesses are dead or have 1971); Cram, 258 Minn. Gollner away, moved and evidence is hard to dis- (1960); N.W.2d 521 Bertrand v. Johns- always cover. The courts have looked with Corp., F.Supp. Manville Sales disfavor on extending statutes of limita- (D.Minn.1982). beyond original tions Lloyds intent. majority’s The basis of the concern for way London is harmed in no because of finality litigation in this case lies in what delay in They this case. were notified of plaintiffs should have done on believes original helped claim when appeal. agree majority’s I cannot along. defend it all The case has finding plaintiffs precluded are fully litigated been on its merits continuing litigation they this and, lawsuit, separate insured in a preserve alternative theories of stand- a determination was made that case, ing. prior In this need Thus, London had defended bad faith. litigate regarding the alternativе claim argument there can has dissolution since Car-Del’s prejudiced. ever been assign- succeeded at the trial court on the sum, the need for theory. only appealed outweigh injustice does not the manifest whether the as- preclud- that would result if signment valid. It is unfair now to continuing litigation. ed from I would say should have permit plaintiffs to show dissolu- theory prior appeal. their alternative derogation tion was of thе statute and prevailed Once have in trial Further, scope. beyond its intent and immediately required should not be permit would them to show that disso- argue and defend all alternative theories which, effect, lution, was a substitute which were not at issue because of the trial bankruptcy, obviously effectuated a result court’s decision. original not within the intent of the statute. legal policy-based Finally, plaintiffs pro- No other reasons should be allowed precluding they sought ceed either in the manner exist for a direct suit separate, proceed here or in a direct law- of London even the absence of an against Lloyds suit of London. Car-Del. purpose allowing in not a direct suit WAHL, (dissenting). Justice company per- insurance mit on the merits between join the dissent of YETKA for Justice original parties knowledge of in- without reversal of the decision of the court of Here, appeals. coverage. surance protection origi-

need such lawsuit between

nal individu-

als, $250,000 verdict of over then, only

secured. Then and it was deter- separately

mined of London

Case Details

Case Name: Mattson v. Underwriters at Lloyds of London

Court Name: Supreme Court of Minnesota

Date Published: Oct 30, 1987

Citation: 414 N.W.2d 717

Docket Number: C1-87-547

Court Abbreviation: Minn.