Opinion
No. A05-1094.
Filed April 11, 2006.
Appeal from the District Court, Hennepin County, File No. 04-001399.
Yan Zhang, (pro se appellant).
David A. Orenstein, Parsinen Kaplan Rosberg Gotlieb, P.A., (for respondents).
Considered and decided by Kalitowski, Presiding Judge; Willis, Judge; and Stoneburner, Judge.
This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (2004).
UNPUBLISHED OPINION
This is a pro se appeal from a judgment dismissing appellant's complaint and imposing sanctions against appellant for violations of Minn. R. Civ. P. 11.02. Because the district court did not abuse its discretion by applying collateral estoppel to bar appellant's claims or by imposing sanctions against appellant, we affirm.
FACTS
In January 2004, pro se appellant Yan Zhang, the president, chairman of the board, and majority shareholder of Global Industries, Inc. (Global), sued respondents MN-Northland Plaza, L.L.C. (Northland), Equity Office Properties Trust (EOP Trust), David Orenstein, and an unnamed Northland in-house lawyer. Zhang's claims include intentional and negligent infliction of emotional distress, malicious prosecution, and breach of contract, all of which are based on events that occurred in connection with a 2003 suit brought by Northland against Global and Zhang. Orenstein represented Northland in that action, and EOP Trust had an ownership interest in Northland.
In March 2000, Northland leased office space to Global. Global became insolvent in July 2001, and in January 2003, Northland sued Global for unpaid rent. Global served and filed an answer and a counterclaim. When Global's attorney told Orenstein that Zhang and the other shareholder of Global, Mark Kaiser, had transferred Global's assets to themselves, Northland asked Global to consent to an amendment of Northland's complaint to add Zhang and Kaiser as defendants. Global initially refused, but Orenstein mailed Global's attorney a proposed amended complaint that added claims against Zhang and Kaiser and asked that Global reconsider consenting to the amended complaint.
Approximately a month later, Global consented to the amended complaint and served Northland with an answer and counterclaim, along with Zhang's pro se answer and counterclaims, dated May 2, 2003. Orenstein subsequently called Global's attorney and told him that Northland did not wish to pursue its claims against Zhang because it had learned during Zhang's deposition that he and Kaiser had not transferred Global's assets to themselves. After Global's attorney withdrew, Orenstein asked Zhang if he would agree to being dismissed as a party to the suit. Zhang refused because Northland was not willing to dismiss with prejudice. Zhang, acting pro se, then served Orenstein with another answer and counterclaims, dated May 15, 2003. Zhang asserted three counterclaims: two claims of breach of contract arising from agreements that Zhang claims Northland made to release Global from liability under its lease and a claim that Northland "intentionally fabricated allegations and accusations against [Zhang] and is using the law system to harass [Zhang]," in violation of Minn. Stat. § 549.211.
Northland moved to dismiss its claims against Zhang and for summary judgment on Zhang's counterclaims; the district court granted both motions on December 1, 2003. Zhang subsequently moved the district court (1) to allow Zhang to intervene in the pending litigation against Global; (2) to enjoin Orenstein from talking with Zhang's former business partner, Kaiser; (3) to compel Orenstein to detail his recent conversations with Kaiser; (4) to compel Northland to produce certain discovery items; and (5) to reconsider its December 1 order dismissing Zhang as party to the first suit. Zhang sought to enjoin Orenstein from talking to Kaiser because "Orenstein advised Mark Kaiser that [Zhang] wear[s] a bulletproof vest." At the hearing on Zhang's motion for an injunction, he claimed that Kaiser owned several guns and had threatened to kill Zhang and that is why Zhang wore a bulletproof vest. It appears from the record that Zhang in fact wore a bulletproof vest at the hearing. Orenstein admitted in an affidavit that he spoke to Kaiser regarding Northland's claims against Global and that he may have mentioned Zhang's bulletproof vest but stated that he intended no harm to Zhang and that he never heard Kaiser threaten harm to Zhang. At the conclusion of the hearing, the district court found that Orenstein had acted without malice.
On January 9, 2004, the district court issued an order denying all of Zhang's motions and, with regard to the request for an injunction, concluded that "there [was] no legal basis" to enjoin Orenstein from speaking with Kaiser but denied the injunction on the ground that Zhang no longer had standing to bring motions because he was no longer a party. On the same day, the district court issued an order and amended memorandum, correcting a typographical error in the December 1, 2003 order and memorandum and again dismissing Northland's claims against Zhang and Zhang's counterclaims against Northland. In April 2004, the district court entered judgment against Global in the first suit.
In January 2004, before final resolution of the first lawsuit, Zhang brought this suit against respondents. In response to Zhang's claims, respondents filed separate answers, asserted affirmative defenses, and requested that the case be heard by the same judge who had presided over the first lawsuit. That judge was assigned to the case, and respondents moved for judgment on the pleadings under Minn. R. Civ. P. 12.03, arguing that all of Zhang's current claims had been raised and decided in the first lawsuit and were therefore barred by the doctrine of collateral estoppel. Respondents also moved to dismiss the claims of intentional and negligent infliction of emotional distress on the additional ground that Zhang failed to state a claim on which relief can be granted, under Minn. R. Civ. P. 12.02(e). Finally, respondents moved for a protective order staying all discovery pending the district court's rulings on their motions. The district court granted the protective order.
In February 2004, July 2004, and January 2005, Zhang brought motions in this action to set aside the dismissal of his counterclaims in the first suit, arguing that he had newly discovered evidence that showed that Northland had obtained the dismissal of his counterclaims in the first suit by committing perjury and fraud. The district court denied each motion. Respondents moved for sanctions under Minn. R. Civ. P. 11.02 against Zhang for asserting frivolous claims against respondents. The district court granted respondents' motions to dismiss and for judgment on the pleadings and imposed rule 11 sanctions against Zhang. This appeal follows.
DECISION I.
Zhang argues that he should not be collaterally estopped from bringing his claims against respondents. Collateral estoppel, also known as issue preclusion, prevents a party from relitigating an issue that was determined in a prior action. Nelson v. Am. Family Ins. Group, 651 N.W.2d 499, 511 (Minn. 2002). Collateral estoppel applies when (1) the issue is identical with one in a prior adjudication; (2) there is a prior final judgment on the merits; (3) the estopped party was a party in the prior adjudication; and (4) the estopped party received a "full and fair opportunity to be heard on the adjudicated issue." Care Inst., Inc.-Roseville v. County of Ramsey, 612 N.W.2d 443, 448 (Minn. 2000). The availability of collateral estoppel is a mixed question of law and fact, subject to de novo review. Falgren v. State, Bd. of Teaching, 545 N.W.2d 901, 905 (Minn. 1996). If collateral estoppel is available, this court will not reverse a district court's decision to apply the doctrine absent a "demonstrated abuse of discretion." Pope County Bd. of Comm'rs v. Pryzmus, 682 N.W.2d 666, 669 (Minn.App. 2004), review denied (Minn. Sept. 29, 2004).
Here, Zhang's claims include (1) malicious prosecution for including Zhang as a defendant in the first lawsuit when Northland knew that Zhang and Kaiser had not transferred Global's assets to themselves; (2) intentional and negligent infliction of emotional distress based on Zhang's claim of malicious prosecution and his claim that Orenstein told Kaiser that Zhang wore a bulletproof vest; and (3) breach of two separate agreements, of which Zhang claims to be a third-party beneficiary, made by Northland to release Global from liability under its lease. Zhang does not argue in this appeal that the district court erred by dismissing Zhang's claim of intentional and negligent infliction of emotional distress based on his claim of malicious prosecution. Therefore, we need only consider whether collateral estoppel applies to Zhang's claims of malicious prosecution, intentional and negligent infliction of emotional distress based on Zhang's allegation that Orenstein told Kaiser that Zhang wore a bulletproof vest, and breach of contract. See Melina v. Chaplin, 327 N.W.2d 19, 20 (Minn. 1982) (treating an issue not briefed on appeal as waived).
Zhang argues that he is not re-litigating the same issues that were part of the first action. But his counterclaims in the first suit included claims of breach of contract identical with the two he makes here and a claim that Northland "intentionally fabricated allegations and accusations against [Zhang] and [used] the law system to harass [Zhang]," which is the basis for Zhang's malicious-prosecution claim here. Also, in the first lawsuit, Zhang moved the district court to enjoin Orenstein from speaking with Kaiser because Orenstein allegedly told Kaiser that Zhang wore a bulletproof vest, which is the basis for Zhang's remaining claim here of intentional and negligent infliction of emotional distress. The district court concluded that these issues are identical with those raised in the first lawsuit, and we agree.
We also agree with the district court's conclusion that these four identical claims were adjudicated in the first lawsuit. The record shows that the district court dismissed on summary judgment in the first suit Zhang's counterclaims of breach of contract and his counterclaim that Northland "intentionally fabricated allegations and accusations against [Zhang]" to harass him in violation of Minn. Stat. § 549.211. And during a hearing on Zhang's motion for an injunction against Orenstein in the first suit, the district court stated that it found no malice based on Orenstein's alleged statement to Kaiser, and in its order denying Zhang's motion, the district court determined that "[t]here is nothing unlawful about Orenstein talking to Kaiser."
The district court properly concluded that Zhang had a full and fair opportunity to be heard on all four claims in the first lawsuit. The record shows that in the first suit Zhang made lengthy oral arguments during the hearings on Northland's motion for summary judgment on Zhang's counterclaims and on Zhang's motion for an injunction, and that further Zhang had the opportunity to argue to the district court that it reconsider its grant of summary judgment.
Zhang argues that he was denied a full and fair opportunity to be heard in the first suit because the district court prohibited him from conducting the deposition of a person whom Zhang does not identify in his brief, who, Zhang argues, would have provided evidence that Northland named Zhang as a defendant in the first suit in bad faith. Zhang's argument is relevant only to his claim of malicious prosecution, and the record shows that in the first lawsuit Zhang made lengthy arguments regarding whether Northland and Orenstein knew when they added Zhang as a defendant that he had not transferred Global's assets to himself. The district court decided this issue against Zhang in the first suit. Zhang does not show how deposing a person whom Zhang does not identify would have resulted in a different outcome on this issue or how the lack of this deposition affected his opportunity to be heard in the first lawsuit.
Zhang also argues that the first lawsuit cannot be a basis for the application of collateral estoppel here because the district court lacked personal jurisdiction over him, claiming insufficient service of process resulting in an "ineffective lawsuit." But the record shows that Zhang did not object to the sufficiency of service of process or personal jurisdiction in the first lawsuit; that he filed counterclaims against Northland in the first suit, thereby affirmatively invoking the district court's jurisdiction; and that he opposed Northland's attempts to dismiss him as a party. Therefore, Zhang waived the defenses of lack of personal jurisdiction and insufficiency of process. See Minn. R. Civ. P. 12.08 (a) (stating that objections to the sufficiency of process and to personal jurisdiction are waived if not raised as a defense by motion or in a responsive pleading); see also Patterson v. Wu Family Corp., 608 N.W.2d 863, 867 (Minn. 2000) (acknowledging that such defenses may be implicitly waived when a party affirmatively invokes the district court's jurisdiction on the merits of a claim).
Zhang also makes several arguments regarding the first lawsuit that are not relevant to this appeal. He attacks the merits of the final judgment against Global in the first lawsuit, and he claims that the district court erred in awarding Northland's attorney fees against Global. These issues are not properly before this court.
Because the record shows that the issues in this case are identical with those decided in the first lawsuit and that Zhang had a full and fair opportunity to be heard on these issues, we conclude that the district court did not abuse its discretion by applying collateral estoppel to bar Zhang's claims.
II.
Zhang also argues that the district court "erred" by issuing a protective order that prohibited Zhang from conducting discovery in this case pending the district court's ruling on respondents' dispositive motions. Absent a clear abuse of discretion, this court will not disturb a district court's decision regarding discovery, including the issuance of a protective order. WDSI, Inc. v. County of Steele, 672 N.W.2d 617, 622 (Minn.App. 2003). Here, the district court stayed all discovery pending its ruling on respondents' motions to dismiss and for judgment on the pleadings, both of which raised only questions of law. This was not an abuse of its discretion. Discovery under such circumstances may have resulted in undue burden or expense to respondents. See Minn. R. Civ. P. 26.03 (stating that "[u]pon motion by a party . . . from whom discovery is sought, and for good cause shown, the court . . . may make any order which justice requires to protect a party or person from annoyance, embarrassment, oppression, or undue burden or expense").
III.
Finally, Zhang argues that the district court "erred" by sanctioning him under Minn. R. Civ. P. 11.02, requiring him to pay $56,344 of respondents' costs and attorney fees. This court will reverse a district court's decision to impose rule 11 sanctions only if the district court abused its discretion. See Uselman v. Uselman, 464 N.W.2d 130, 145 (Minn. 1990). By signing and submitting a pleading or a written motion, an unrepresented party certifies that to the best of his knowledge and belief, formed after a reasonable inquiry,
(a) it is not being presented for any improper purpose, such as to harass or to cause unnecessary delay or needless increase in the cost of litigation;
(b) the claims, defenses, and other legal contentions therein are warranted by existing law or by a nonfrivolous argument for the extension, modification, or reversal of existing law or the establishment of new law.
Minn. R. Civ. P. 11.02(a), (b). Rule 11 sanctions should not be imposed when a party has an "objectively reasonable basis for pursuing a factual or legal claim." Uselman, 464 N.W.2d at 143. When imposing such sanctions, the district court "shall describe the conduct determined to constitute a violation of this rule and explain the basis for the sanction imposed," and the sanctions "shall be limited to what is sufficient to deter repetition of such conduct" and may include payment of an opposing party's "reasonable attorney fees and other expenses incurred as a direct result of the violation." Minn. R. Civ. P. 11.03(b), (c).
Here, the district court granted respondents' motion for sanctions against Zhang, finding that he violated rule 11.02(a) and (b) by "re-litigating the same breach of contract claims under the same facts and the same legal theories," renaming other claims that were based on the same facts as claims that were determined in the first lawsuit, and bringing a malicious-prosecution claim "for the improper purpose of harassing opposing counsel." The district court found that Zhang was an "experienced litigator" and that he had no objectively reasonable basis for pursuing these claims again in a second lawsuit. In its order determining the amount of the financial sanctions to be imposed, the district court found that Zhang's "numerous filings of excessive pleadings and motions were made for an improper purpose under Rule 11 because [Zhang] was on notice through the Court's prior rulings that the position he persisted in advancing was not well grounded in fact or law."
Zhang denies that he is re-litigating the same issues and argues that Minn. R. Civ. P. 60.02 and Minn. Stat. § 548.14 (2004) allow him to bring this action against respondents to request that the district court set aside its ruling dismissing his counterclaims in the first lawsuit because he had new evidence that he believed would prove respondents' "perjuries, frauds, and misconduct." The claimed "new evidence" is (1) Orenstein's disclosure in the first lawsuit that Global's attorney had told Orenstein that Global had $400,000 in assets before Northland proposed adding Zhang as a party defendant and (2) the amended complaint in the first lawsuit was not properly served on Zhang. The district court concluded that the claimed new evidence was known to Zhang at the time of the first suit and is not, therefore, newly discovered evidence. The record supports this conclusion.
The record shows that during a September 2003 hearing in the first suit, Orenstein stated that he mistakenly said that Global's attorney had never told him that Global had $400,000 in assets, but after reviewing his records he discovered that Global's attorney had made such a statement. But Orenstein further explained to the district court that it was after the conversation regarding the $400,000 that Global's attorney told Orenstein that Zhang and Kaiser had transferred Global's assets to themselves and only then did Orenstein mail the proposed amended complaint. The district court concluded in the first suit that "Northland had a reasonable basis for amending its Complaint to include Zhang."
Zhang also argues that the district court erred by considering Zhang's involvement in unrelated litigation in determining that Zhang violated rule 11 here. The district court noted that Zhang had been involved in many other litigation matters, including claims that Zhang brought against attorneys for opposing parties. But the district court relied on this information only for the purpose of concluding that Zhang, although acting pro se, was in fact an experienced litigant.
Based on the record, we conclude that the district court did not abuse its discretion by sanctioning Zhang.