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Kelbro Co. v. Vinnys On River LLC

Court of Appeals of Minnesota

March 13, 2017

Kelbro Company, Respondent,
v.
Vinny's on the River, LLC, et al., Appellants.

         Washington County District Court File No. 82-CV-13-5851

          John A. Markert, Larson King, LLP, St. Paul, Minnesota (for respondent).

          Daniel L. M. Kennedy, Kennedy Law Group, PLLC, Minneapolis, Minnesota (for appellants).

          Considered and decided by Hooten, Presiding Judge; Peterson, Judge; and Larkin, Judge.

         SYLLABUS

         I. Minnesota Rule of Civil Procedure 15.02 does not authorize the amendment of a pleading to add a party over the proposed party's objection.

         II. If a pleading is amended to add an adverse party after judgment has been entered on the claims asserted in the pleading, the new party must have an opportunity to contest its liability on the claims before the party may be added as a judgment debtor.

          OPINION

          PETERSON, Judge

         Appellants challenge judgments entered against them after a bench trial following removal from conciliation court. We affirm in part, reverse in part, and remand.

         FACTS

         Appellant River Fun LLC (River Fun), a Minnesota limited liability company, was owned by appellant Tim Kennedy and nonparty Jhalpaul Narpaul. River Fun owned Vinny's on the River LLC (Vinny's), a Minnesota limited liability company that operated a restaurant in a building owned by River Fun; the restaurant also was called Vinny's on the River.

         In April 2010, River Fun entered into a credit agreement with respondent Kelbro Company (Kelbro), a Minnesota corporation. The credit agreement listed Vinny's as River Fun's "Assumed Name or Business Name" and obligated River Fun to "pay for any and all products, equipment, services or other merchandise purchased on credit" by Vinny's. Soon after, Vinny's and Kelbro entered into a products-requirement agreement and two equipment leases (beverage contracts). Under the beverage contracts, Kelbro supplied Vinny's with beverage products and related equipment and provided maintenance for the equipment.

         In April 2013, Kelbro commenced an action in conciliation court, alleging that Vinny's and Tim Kennedy breached the beverage contracts and seeking $3, 565.68 in damages. Vinny's and Tim Kennedy asserted a counterclaim, alleging that Kelbro breached the beverage contracts and seeking $1, 050 in damages. On October 3, 2013, the conciliation court conducted a trial and issued an order for judgment against Kelbro on its claims and for Vinny's and Tim Kennedy on their counterclaims and awarded Vinny's and Tim Kennedy $1, 125.

         On October 21, 2013, Kelbro filed a demand for removal of the conciliation court action to the district court. The demand for removal was signed only by Jarrod Condon, Kelbro's nonattorney representative in the conciliation court action.[1] The next day, the district court issued an order that vacated the conciliation court judgment.

         Vinny's and Tim Kennedy filed a motion to dismiss Kelbro's district court action on the ground that Kelbro's demand for removal was not signed by an attorney. Vinny's and Tim Kennedy refused Kelbro's request to stipulate to its amendment of the demand for removal. Kelbro then filed a motion for leave to amend the demand for removal and a memorandum opposing the motion by Vinny's and Tim Kennedy to dismiss. Vinny's and Tim Kennedy filed a memorandum opposing Kelbro's motion for leave to amend. On April 4, 2014, the district court issued an order granting the motion for leave to amend and denying the motion to dismiss. One week later, Kelbro filed an amended demand for removal, which was signed by its attorney, John Markert.

         In November 2014, Vinny's and Tim Kennedy urged Kelbro to dismiss Tim Kennedy from the district court action with prejudice and refused Kelbro's request to stipulate to the dismissal of Tim Kennedy without prejudice. Kelbro then filed a motion for an order dismissing Tim Kennedy without prejudice, and the district court granted the motion just before trial began on December 17.

         On the first day of the bench trial in district court, attorney Daniel Kennedy, who represented Vinny's, alleged that Markert had a conflict of interest and orally moved for Markert's disqualification; the district court granted a continuance while it considered the conflict-of-interest issue.[2] Markert filed an informal memorandum that described his conflicts investigation, and he refused to withdraw from his representation of Kelbro. Daniel Kennedy filed an informal memorandum and withdrew the motion to disqualify but noted a continuing objection to Markert's refusal to withdraw from the representation.

         The trial resumed on May 6, 2015, and concluded the next day. On August 25, the district court issued findings of fact, conclusions of law, and order for judgment for Kelbro on its claims and against Vinny's on its counterclaim and awarded Kelbro $5, 437.23 plus reasonable attorney fees and costs. The same day, partial judgment was entered against Vinny's.

         After entry of partial judgment against Vinny's, Kelbro moved to amend its pleadings to add River Fun as a defendant and for an award of attorney fees and costs against Vinny's and River Fun. Kelbro later filed memoranda in support of the motion, requesting $28, 242.23 in attorney fees and costs. Vinny's opposed Kelbro's motion to amend its pleadings and for attorney fees and costs.

         Following a hearing, the district court, on February 5, 2016, granted Kelbro's motion to amend its pleadings, awarded $22, 088.73 in attorney fees and costs against Vinny's and River Fun (fees-and-costs award), directed entry of judgment on the fees-and-costs award, and amended its August 25, 2015 judgment to add River Fun as a judgment debtor. On February 8, Kelbro filed an amended statement of claim and summons and a second amended demand for removal of the conciliation court action to district court, both of which listed Vinny's and River Fun as defendants.

         River Fun, Vinny's, and Tim Kennedy (collectively, appellants) now appeal the August 25, 2015 and February 5, 2016 judgments.

         ISSUES

         I. Did the district court err by allowing Kelbro to amend its demand for removal to add an attorney's signature?

         II. Did the district court err by dismissing Tim Kennedy from the action without prejudice?

         III. Did the district court err in awarding Kelbro attorney fees and costs?

         IV. Did the district court err by allowing Kelbro to amend its pleadings after trial to add River Fun as a defendant and make River Fun a judgment debtor?

         ANALYSIS

         I.

         Kelbro acknowledges that its initial demand for removal of the conciliation court action to the district court was defective because it was not signed by an attorney. Citing World Championship Fighting, Inc. v. Janos, 609 N.W.2d 263, 264-65 (Minn.App. 2000), review denied (Minn. July 25, 2000), appellants argue that, because the demand for removal was not signed by an attorney, the district court lacked subject-matter jurisdiction and should have dismissed the action instead of deciding its merits. Whether subject-matter jurisdiction exists "is a question of law that we review de novo." Nelson v. Schlener, 859 N.W.2d 288, 291 (Minn. 2015).

         The opinion in World Championship Fighting supports appellants' argument. See 609 N.W.2d at 265 (affirming district court's dismissal of case removed from conciliation court by unrepresented corporation, reasoning that "[t]he district court was correct to conclude that it lacked jurisdiction over [the] case" because notice of removal was signed only by nonattorney). But the relevant portion of that opinion was implicitly overruled ...


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