Katherine A. Gruett, Gary L. Gruett v. Victoria B. Labriola ( 2016 )

  •                            This opinion will be unpublished and
                               may not be cited except as provided by
                               Minn. Stat. § 480A.08, subd. 3 (2014).
                                    STATE OF MINNESOTA
                                    IN COURT OF APPEALS
                                        Katherine A. Gruett,
                                          Gary L. Gruett,
                                    Victoria B. Labriola, et al.,
                                     Filed November 14, 2016
                                           Reilly, Judge
                                   Dakota County District Court
                                   File No. 19HA-CV-14-1118
    Katherine A. Gruett, Burnsville, Minnesota (pro se appellant)
    Gary L. Gruett, Burnsville, Minnesota (pro se appellant)
    Kay Nord Hunt, Barry A. O’Neil, Lommen Abdo, P.A., Minneapolis, Minnesota (for
             Considered and decided by Reilly, Presiding Judge; Halbrooks, Judge; and Johnson,
                               UNPUBLISHED OPINION
    REILLY, Judge
             Appellants Katherine A. Gruett and Gary L. Gruett challenge the district court’s
    imposition of frivolous-litigant sanctions under Minnesota General Rule of Practice 9.
    Because the district court did not abuse its discretion by imposing frivolous-litigant
    sanctions and appellants’ pro se arguments are without merit, we affirm.
             This case arises out of a protracted family dispute involving commercial real estate.
    Appellants are the daughter and son-in-law of respondent Victoria B. Labriola and John
    Labriola Sr. Appellants and John Labriola Sr. each held a one-half interest in commercial
    property. Victoria Labriola inherited this interest following her husband’s death. Victoria
    Labriola also held unpaid promissory notes from appellants. In 2006, Victoria Labriola
    and appellants entered into a loan agreement governing the repayment of the promissory
             Case File No. 19HA-CV-08-957
             In 2008, Victoria Labriola sued appellants to enforce her contractual rights under
    the 2006 Loan Agreement after appellants defaulted on payment. The parties reached an
    agreement to resolve the dispute, the terms of which were captured in a settlement
    agreement and mutual release executed in September 2008 (the 2008 Settlement
    Agreement). The 2008 Settlement Agreement contained a mutual release provision in
    which the parties agreed to “release and forever discharge each other from any and all
    actions, causes of action, claims and demands, whatsoever.”
           In April 2012, appellants filed a complaint against Victoria Labriola for breach of
    contract and tortious interference, using the same file number from the 2008 action. The
    district court determined that “the majority of the . . . allegations pre-date the parties’
    Agreement and Mutual Release dated September 26, 2008.” Victoria Labriola moved to
    dismiss the complaint on the grounds that it “violate[d] a number of Minnesota Rules of
    Civil Procedure” and attempted “to re-litigate matters resolved by the parties in the 2008
    Settlement Agreement.” Appellants filed “counterclaims” in response. The district court
    dismissed appellants’ complaint with prejudice “because these pleadings are not allowed
    by the Minnesota Rules of Civil Procedure and violate the parties’ 2008 Settlement
    Agreement and Mutual Release,” and dismissed appellants’ counterclaims because they
    violated the 2008 Settlement Agreement and attempted to re-litigate previously resolved
    matters. The district court also ruled that, to the extent appellants raised new issues, “their
    claims are without merit.” The district court made an explicit factual finding that Victoria
    Labriola and her codefendants “have complied with the terms of the 2008 Settlement
    Agreement.” However, the district court declined to impose monetary sanctions, finding
    that appellants’ conduct had not yet risen to the level required for rule 11 sanctions.
           Case File No. 19HA-CV-12-3716
           In July 2012, Victoria Labriola initiated foreclosure by advertisement proceedings
    and served appellants with notice of a mortgage foreclosure sale of appellants’ one-half
    interest in the commercial property. Appellants sued respondents and their attorney, re-
    asserting claims of breach of contract, tortious interference with contract, and abuse of
    process. Appellants also sought injunctive relief to enjoin the mortgage foreclosure sale,
    which the district court denied. The district court found that Victoria Labriola had a
    “contractual right to pursue this remedy [of foreclosure],” and had complied with the
    statutory requirements for foreclosure by advertisement. The commercial property was
    sold at sheriff’s sale in August 2012 and the redemption period expired in February 2013.
    Appellants’ one-half interest in the real estate terminated with the expiration of their
    redemption rights on that date.
           In October 2012, a Dakota County District Court judge dismissed appellants’
    complaint with prejudice, determining that appellants’ claims “make[] essentially the same
    claims against the Labriolas as their Complaint in the 2008 case,” and to the extent the case
    raised new issues, “[appellants] have failed to offer any evidence in support of their
    allegations.” The district court concluded that “[appellants] have failed to allege any
    legally cognizable claim of action against any of the [respondents], and as such, their
    Complaint must be dismissed in its entirety.” The district court held that appellants’ claims
    were barred by the doctrine of res judicata because the August 2012 order in case number
    19HA-CV-08-957 “dismissed these same claims involving these same parties and
    constituted a final judgment on the merits.” The district court reiterated that the Labriola
    defendants “have complied with the terms of the [2008] Settlement Agreement” and stated
    that “[t]he evidence shows that the Labriolas have . . . attempted in good faith to work with
    [appellants] to find a long-term solution for the [commercial] property.” The district court
    also awarded attorney fees in favor of respondents, stating:
                  [Appellants] have now filed two meritless lawsuits against the
                  Labriolas, have needlessly contributed to the length of these
                  proceedings, and have caused the Labriolas and their attorney
                  to incur considerable expenses and attorneys’ fees. . . . [T]he
                  Court finds it necessary to award the Labriolas and [their
                  attorney] reasonable attorney’s fees and costs to deter
                  [appellants’] repetition of this conduct.
           Case File No. 19HA-CV-14-1118
           In October 2013, appellants filed pleadings in Hennepin County Conciliation Court
    asserting causes of action for breach of fiduciary duty, breach of contract, and diversion of
    funds. The conciliation court granted judgment in favor of respondents, finding that
    appellants failed to demonstrate that they were entitled to relief. Appellants appealed the
    conciliation court judgment to district court and sought de novo review. The district court
    transferred venue of the action from Hennepin County to Dakota County.
           Respondents moved for dispositive relief. Shortly thereafter, appellants sought
    leave to file an amended complaint. The district court granted appellants’ motion to amend
    the complaint, denied respondents’ motion for dispositive relief, and set the case on for
    trial in April 2015. Appellants submitted an amended complaint asserting that respondents
    were liable for breach of contract, misappropriation, and conversion by depriving
    appellants of rents and profits from the commercial property. Appellants subsequently
    filed additional motions to amend the complaint and continue the trial date. The district
    court denied these motions “because they were not brought in a timely fashion and . . .
    would be unduly burdensome and significantly prejudicial” to respondents.
           The matter proceeded to trial as scheduled. At the close of appellants’ case,
    respondents moved for a directed verdict, which the district court granted. The district
    court found that appellants’ claims “were limited to the time frame of February 2013 as
    their interest in the rental property was extinguished by foreclosure about February 28,
    2013.” The district court found that appellants “presented absolutely no evidence that
    would allow a finder of fact to ascertain or determine damages,” and “failed to establish or
    support any of the alleged causes of action and failed to provide any testimony whatsoever
    regarding the issue of damages.” The district court concluded that appellants “failed to
    establish essential elements of [their] claims,” ordered a directed verdict in respondents’
    favor, and subsequently dismissed appellants’ claims with prejudice.
           Respondents thereafter sought sanctions under Minnesota Rule of Civil Procedure
    11 and Minnesota Statute § 549.211 as well as frivolous-litigant sanctions under Minnesota
    General Rule of Practice 9.01.1 The district court denied respondents’ motion for rule 11
    and section 549.211 sanctions but granted rule 9 relief. The district court found that it was
    “abundantly clear” that appellants “prepared their case poorly,” and that “[f]rom the outset
    of the trial it was abundantly clear . . . that [appellants] were engaging in attempts to delay
    the proceedings.” The district court noted that “[i]n light of [appellants’] inadequate trial
    preparation and their desire to delay the trial . . . , it is illogical to not assume that they
    knew their case was weak.” The district court found that appellants “had to know they
    were going to lose, but they persisted in an obvious effort to use the judicial system to
    harass [respondents].”
      Appellants also filed a motion seeking relief from judgment and for an order compelling
    binding arbitration. The district court denied appellants’ motion, and appellants appealed.
    We dismissed this portion of the appeal as untimely and limited the scope of the appeal to
    the district court’s order imposing frivolous-litigant sanctions.
           The district court order summarized appellants’ history of re-litigating issues that
    were previously litigated or settled, both in Dakota County District Court and in Hennepin
    County District Court. The order determined that the Dakota County court’s attempts and
    efforts to deter appellants’ conduct “have not been heeded.” The district court found that
    appellants had a “well established pattern of filing and maintaining frivolous actions” as
    part of a bad-faith effort to “harass” respondents. The district court found that appellants’
    “frivolous actions” were “wasting valuable judicial resources,” and that appellants would
    continue to engage in vexatious litigation “unless they are prevented and/or effectively
    deterred from doing so.” The district court concluded that appellants were frivolous
    litigants under rule 9.06(b), granted respondents’ motion to impose rule 9 preconditions as
    a sanction, and ordered that appellants “must provide $25,000 security (cash or bond) prior
    to instituting any future action against any of the [respondents], individually or as a group.”
           This appeal follows.
           A district court may require a frivolous litigant to furnish security or fulfill
    preconditions before serving or filing new claims, motions, or requests. Minn. R. Gen.
    Pract. 9.01. A “frivolous litigant” is:
                  (1) A person who, after a claim has been finally determined
                  against the person, repeatedly relitigates or attempts to
                  relitigate either
                         (i) the validity of the determination against the same
                         party or parties as to whom the claim was finally
                         determined, or
                         (ii) the cause of action, claim, controversy, or any of the
                         issues of fact or law determined or concluded by the
                         final determination against the same party or parties as
                         to whom the claim was finally determined; or
                  (2) A person who in any action or proceeding repeatedly serves
                  or files frivolous motions, pleadings, letters, or other
                  documents, conducts unnecessary discovery, or engages in . . .
                  tactics that are frivolous or intended to cause delay; or
                  (3) A person who institutes and maintains a claim that is not
                  well grounded in fact and not warranted by existing law or a
                  good faith argument for the extension, modification or reversal
                  of existing law or that is interposed for any improper purpose,
                  such as to harass or cause unnecessary delay or needless
                  increase in the cost of litigating the claim.
    Minn. R. Gen. Pract. 9.06(b). We apply an abuse-of-discretion standard to a district court’s
    determination that a party is a frivolous litigant. Szarzynski v. Szarzynski, 
    732 N.W.2d 285
    295 (Minn. App. 2007).
           The district court considers the factors outlined in rule 9.02(b):
                  (1) the frequency and number of claims pursued by the
                  frivolous litigant with an adverse result;
                  (2) whether there is a reasonable probability that the frivolous
                  litigant will prevail on the claim, motion, or request;
                  (3) whether the claim, motion, or request was made for
                  purposes of harassment, delay, or vexatiousness, or otherwise
                  in bad faith;
                  (4) injury incurred by other litigants prevailing against the
                  frivolous litigant and to the efficient administration of justice
                  as a result of the claim, motion, or request in question;
                  (5) effectiveness of prior sanctions in deterring the frivolous
                  litigant from pursuing frivolous claims;
                  (6) the likelihood that requiring security or imposing sanctions
                  will ensure adequate safeguards and provide means to
                  compensate the adverse party;
                  (7) whether less severe sanctions will sufficiently protect the
                  rights of other litigants, the public, or the courts.
    Minn. R. Gen. Pract. 9.02(b).
           Here, the record demonstrates that the district court made factual findings with
    respect to each statutory factor in making its determination. See Minn. R. Gen. Pract.
    9.02(c) (“If the court determines that a party is a frivolous litigant and that security or
    sanctions are appropriate, it shall state on the record its reasons supporting that
           First, the district court characterized the frequency of litigation as an “unending
    stream of litigation” spanning “two counties and multiple files.” The record amply
    supports this finding. The district court dismissed appellants’ complaint and counterclaims
    with prejudice in the 19HA-CV-08-957 action. After appellants re-filed their complaint in
    19HA-CV-12-3716 re-asserting the same claims, the district court again dismissed the
    complaint with prejudice and characterized both of appellants’ lawsuits as “meritless.”
    Appellants filed a third complaint in conciliation court, which again led to an adverse
    result. Ultimately, the district court granted a directed verdict against appellants because
    they “presented absolutely no evidence” to support their claims.
           Second, the district court made several findings related to the reasonable probability
    that appellants would prevail on their claims. The district court found that appellants’ case
    “had no chance of succeeding in that it was not supported by fact or by law.” The district
    court pointed to appellants’ failure to prepare their case, subpoena witnesses, or introduce
    evidence corroborating their version of events.
           Third, the district court identified several instances demonstrating that appellants
    pursued their claims in an effort to harass respondents. The district court found that
    appellants “had to know they were going to lose, but persisted in an obvious effort to use
    the judicial system to harass” respondents. The district court found that appellants were
    acting in “bad-faith” to cause respondents to accumulate legal fees and waste their time.
           Fourth, the district court found that it was “abundantly clear” that appellants “were
    engaging in attempts to delay the proceedings” and waste judicial resources. Specifically,
    the district court noted that appellants sought, on several occasions, to amend their pleading
    and continue the trial date. The district court found that appellants “knew their case was
    weak” but engaged in “frivolous actions” that wasted “valuable judicial resources.”
           Fifth, the district court found that prior sanctions were ineffective in deterring
    appellants’ conduct, reciting appellants’ history of re-litigating issues that were previously
    litigated or settled. The order noted that appellants’ first two lawsuits were “meritless,”
    and it was therefore “necessary to award the Labriolas and [their attorney] reasonable
    attorney’s fees and costs to deter . . . repetition of this conduct.” When appellants filed a
    subsequent lawsuit in another district, the Hennepin County District Court found that the
    Dakota County District Court’s “attempts and efforts to deter this conduct have not been
           Sixth, the district court found that sanctions were necessary because appellants “will
    continue to bring such actions unless they are prevented and/or effectively deterred from
    doing so.” Appellants’ history of continually asserting meritless claims supports this
    finding. Lastly, the district court found that the sanctions imposed were the least-severe
    sanctions the court could impose.
           Based upon the district court’s thorough analysis and the facts in the record, we
    conclude that the district court appropriately identified litigation conduct justifying
    sanctions under Minn. R. Gen. Pract. 9.02(b) and 9.06. Consequently, the district court did
    not abuse its discretion by determining that appellants are frivolous litigants and imposing
    preconditions on future filings.
           Appellants’ other arguments
           Appellants argue that the district court abused its discretion by adopting
    respondents’ proposed findings of fact, conclusions of law, and order “verbatim.” We note
    that “[t]he verbatim adoption of a party’s proposed findings and conclusions of law is not
    reversible error per se.” County of Dakota v. Blackwell, 
    809 N.W.2d 226
    , 230 (Minn. App.
    2011) (quotation omitted). But that is not the case here. Respondents’ proposed order is
    markedly different from the district court’s order, which contains a number of factual
    findings and legal conclusions demonstrating that the district court “independently
    evaluated each party’s testimony and evidence” in its ruling. Id. (quotation omitted).
           Appellants also argue that they are not frivolous litigants because they previously
    survived a motion for summary judgment. In 2014, the district court denied respondents’
    motion for dispositive relief on the ground that the district court was required to view the
    facts in the light most favorable to the nonmoving party, given the early stage of the case.
    Rochester City Lines, Co. v. City of Rochester, 
    868 N.W.2d 655
    , 661 (Minn. 2015) (noting
    that, at the summary-judgment stage, the district court views the evidence in the light most
    favorable to the nonmoving party and resolves all doubts and factual inferences against the
    moving party). However, in its December 2015 order, the district court expounded at
    length regarding appellants’ history of bad-faith litigation and the weakness of appellants’
    case. The district court found that the case “had no chance of succeeding” by the time it
    reached the trial stage and that appellants “had to know they were going to lose, but they
    persisted in an obvious effort to use the judicial system to harass” respondents. The district
    court did not abuse its discretion by imposing rule 9 sanctions in spite of appellants’ earlier
    survival of a summary judgment motion.
           Appellants claim that the court “close[d] the doors to the court house” to them
    “because they are self-represented litigants.” The district court has “a duty to ensure
    fairness to a pro se litigant by allowing reasonable accommodations so long as there is no
    prejudice to the adverse party.” Kasson State Bank v. Haugen, 
    410 N.W.2d 392
    , 395
    (Minn. App. 1987). Although a court traditionally accords some latitude and consideration
    to a pro se litigant, Liptak v. State ex rel. City of New Hope, 
    340 N.W.2d 366
    , 367 (Minn.
    App. 1983), pro se parties “are generally held to the same standards as attorneys and must
    comply with court rules.” Fitzgerald v. Fitzgerald, 
    629 N.W.2d 115
    , 119 (Minn. App.
    2001). Appellants assert that the district court failed to accommodate their pro se status.
    The record belies this claim. While appellants did not receive the outcome they preferred,
    our review reveals that the district court afforded appellants the opportunity to present their
    case and conducted a careful analysis of the record in issuing its ruling. The district court
    thoroughly addressed the issues presented and provided factual findings and legal
    conclusions to support its decision. We discern no error or abuse of discretion in the district
    court’s findings and decision.
           Appellants raise several other arguments relating to their arbitration motion, the
    district court’s grant of a directed verdict, and the underlying merits of their claims against
    respondents. Appellants’ reply memorandum raises no new arguments and is essentially a
    list of their interpretation of various facts. Because these issues are not properly before
    this court on appeal, they are not addressed.