Hennepin County District Court File No. 27-CV-12-13236
William Rydrych, Eagan, Minnesota (pro se appellant)
Scott J. Strouts, Minneapolis, Minnesota (attorney pro se and for respondents)
Considered and decided by Smith, Presiding Judge; Worke, Judge; and Rodenberg, Judge.
Appellant challenges the district court's grant of summary judgment dismissing his claims against respondents based on application of the doctrine of res judicata. Because some of appellant's purported claims are barred by res judicata and some are not, we affirm in part, reverse in part, and remand for further proceedings.
This appeal arises from the district court's summary dismissal of appellant William Rydrych's third lawsuit arising from his claims against respondent Scott Strouts. Because the district court relied upon the doctrine of res judicata in summarily dismissing this third lawsuit, a detailed recitation of what has gone before is in order.
In 2006, Rydrych sued Strouts and obtained a personal judgment against Strouts. At that time, Strouts was the sole shareholder of respondent GK Cab Co., Inc. (GK Cab) and respondent Spike Holding Corp., Inc. (Spike) (collectively the cab companies). Strouts owned 3, 000 shares in each corporation. After his successful lawsuit against Strouts, Rydrych levied on Strouts's stock in the cab companies on July 18, 2008. On October 8, 2008, two days before the sheriff's sale of the corporate shares, GK Cab and Spike each issued 20, 000 new shares, which respondent Blue & White Service Corp. of Minnesota (Blue & White) purchased for cash. Blue & White appointed Strouts as its representative and proxy in voting the new shares for all purposes related to the election of directors, officers, and running the operations of the cab companies.
The sheriff's sale of the levied-upon shares took place as scheduled on October 10, 2008, and Rydrych purchased Strouts's 3, 000 shares in both cab companies. Rydrych expected to become the sole owner of each entity as a result of the purchase of those shares. However, due to the dilution of his shares resulting from Blue & White's purchase of the newly issued shares, Rydrych became a 13% shareholder in each entity, while Blue & White became an 87% shareholder in each corporation. Rydrych first learned of his diluted ownership interest on October 21, 2008, after making a demand to see the cab companies' corporate records. In response, Rydrych brought a postjudgment motion in his original lawsuit against Strouts, attempting to pierce the corporate veils of the cab companies and claiming that the October 8, 2008 transaction was a fraudulent transfer. The motion was denied. Rydrych continued attempting to enforce his unsatisfied judgment.
On July 8, 2010, Rydrych sued the cab companies and Blue & White, alleging trespass upon chattels, conversion of chattels, prejudicial treatment of a shareholder, and breach of fiduciary duty. The district court summarily dismissed the complaint pursuant to Minn. R. Civ. P. 56 on motion of the defendants, and Rydrych appealed to this court. We held that Rydrych had no standing to challenge the October 8, 2008 stock-issuance transaction because he was not a shareholder at the time. Rydrych v. GK Cab Co., Inc., No0. A11-0471, 2011 WL 5829337, at *3 (Minn.App. Nov. 21, 2011). We also held that Rydrych's claims of prejudicial treatment of a shareholder and breach of fiduciary duty related to the time period after the levy but before the sheriff's sale failed for the same reason. Id. at *7. ...