County District Court File No. 14-CV-15-4395
Brakke, Drew J. Hushka, Vogel Law Firm, Fargo, North Dakota
R. Hanson, Nilles Law Firm, Fargo, North Dakota (for
Considered and decided by Halbrooks, Presiding Judge;
Schellhas, Judge; and Smith, John, Judge.
order to satisfy an outstanding judgment, a creditor is not
required to exhaust legal remedies before bringing a
creditor's suit to pierce the corporate veil.
Offensive collateral estoppel may be applied in an action to
pierce the corporate veil where required factors are
satisfied and its application is fair.
Interest awarded on a judgment in a creditor's suit to
pierce the corporate veil is not prejudgment interest when
the creditor's suit is ancillary to the original judgment
and is intended only to satisfy an existing judgment.
JOHN, Judge [*]
affirm the judgment entered on a creditor's suit that
pierces the corporate veil to hold appellant personally
liable for a judgment entered against a corporation in a
previous action because the district court correctly (1)
rejected appellant's argument that recovery was barred by
the creditor's failure to exhaust remedies, laches, and
unclean hands; (2) applied offensive collateral estoppel to
hold appellant liable; and (3) amended the judgment to award
postjudgment interest on the judgment.
Roger Erickson (Erickson) formed Erickson Contracting of
Fargo-Moorhead, Inc. (Erickson Contracting) in 1988. Erickson
Contracting is a construction business that is set up as a
corporation, and Erickson is the sole shareholder, officer,
and director of the corporation.
4, 2012, respondent All Finish Concrete, Inc. (All Finish)
obtained a judgment against Erickson Contracting in the
amount of $33, 849.58. Several years later, All Finish
brought this action to recover the entire judgment sum from
Erickson personally under a corporate veil-piercing theory.
All Finish moved for summary judgment, claiming that a prior
decision involving Erickson and a different judgment creditor
should be afforded collateral-estoppel effect in the instant
action to make Erickson personally liable under the
"alter ego" theory of corporate veil piercing.
See Stenerson Bros. Lumber Co. v. Erickson, No.
14-CV-12-1525 (Minn. Dist. Ct. Aug. 28, 2013). Erickson moved
for summary judgment arguing that All Finish failed to
exhaust legal remedies before filing this suit. Erickson also
argued for dismissal of All Finish's claims under the
doctrines of laches and unclean hands.
district court denied Erickson's motion for summary
judgment, granted All Finish's motion for summary
judgment, and entered judgment against Erickson in the amount
of $33, 849.58. All Finish moved to amend the judgment,
claiming that it was entitled to postjudgment interest
against Erickson Contracting from the May 2012 judgment. The
district court granted All Finish's motion to amend the
judgment. The amended judgment was entered "in the
amount of $39, 838.91, the amount of the underlying judgment
plus interest at the statutory rate from May 4, 2012, the
date that judgment was entered against Erickson Contracting,
through the date of this order."
I. Did the district court err in denying Erickson's
motion for summary judgment because All Finish's recovery
was barred by the doctrines of laches and unclean hands, and
it failed to exhaust legal remedies?
II. Did the district court err in granting All Finish's
motion for summary judgment by applying offensive collateral
III. Did the district court err by amending the judgment to
award postjudgment interest to All Finish?
district court must grant a motion for summary judgment if
the "pleadings, depositions, answers to interrogatories,
and admissions on file, together with the affidavits, if any,
show that there is no genuine issue as to any material fact
and that either party is entitled to a judgment as a matter
of law." Minn. R. Civ. P. 56.03. On appeal from summary
judgment, this court reviews de novo whether there are
genuine issues of material fact and whether the district
court erred in applying the law. Commerce Bank v. West
Bend Mut. Ins. Co., 870 N.W.2d 770, 773 (Minn. 2005). We
need not adopt the reasoning of the district court, and
"may affirm a grant of summary judgment if it can be
sustained on any grounds." Doe v. Archdioceses of
St. Paul, 817 N.W.2d 150, 163 (Minn. 2012).
argues that All Finish's claims are barred by (A) the
failure to exhaust legal remedies; (B) the doctrine of
latches; and (C) the doctrine of unclean hands. Thus,
Erickson argues that the district court erred by denying his
motion for summary judgment.
Failure to exhaust legal remedies
creditor's suit/creditor's bill is "an
equitable action to satisfy a judgment 'out of the
equitable assets of the debtor which could not be reached on
execution.'" Brakemeier v. Wittek, 386
N.W.2d 408, 410 (Minn.App. 1986) (quoting Wadsworth v.
Schisselbaur, 32 Minn. 84, 86, 19 N.W. 390, 390 (1884)).
A creditor's suit is "'in essence an equitable
execution comparable to proceedings supplementary to
execution.'" Id. (quoting Pierce v.
United States, 255 U.S. 398, 401-02, 41 S.Ct. 365, 366
(1921)). In Minnesota, a creditor's suit is ancillary to
the original judgment. Newell v. Dart, 28 Minn. 243,
249, 9 N.W. 732, 733 (1881). It is not "an action
brought upon the judgment as a cause of action, in order to
obtain a new judgment, but simply an action ancillary to and
for the purpose of obtaining satisfaction of, an existing
judgment." Id. at 249-50, 9 N.W. at 733. The
general rule is that a creditor must "first exhaust his
remedy at law by the issuance of an execution and its return
unsatisfied, for until then the remedy at law ha[s] not been
shown to be inadequate." Brakemeier, 386 N.W.2d
at 410 (quotation omitted).
undisputed that the action brought by All Finish is in the
nature of a creditor's suit. As such, Erickson contends
that All Finish "must show that it exhausted its
remedies at law by issuing an execution on the May 4, 2012
judgment against [Erickson Contracting] that was returned
unsatisfied." Erickson argues that because "it is
undisputed" that All Finish did not make any attempt to
recover on its judgment, All Finish failed to exhaust its
remedies. For these reasons, Erickson argues that the
district court erred by denying his motion for summary
support his claim that the district court erred in denying
his motion for summary judgment, Erickson relies on
Brakemeier and Amica Mut. Ins. Co. v.
Wartman, 841 N.W.2d 637 (Minn.App. 2014), review
denied (Minn. Mar. 18, 2014). In Brakemeier,
this court noted that in a creditor's suit, the general
rule is that the creditor is "required to first exhaust
his remedy at law by the issuance of an execution and its
return unsatisfied." 386 N.W.2d at 410 (quotation
omitted). This court concluded that the district court
correctly determined that the Brak ...