Michael Otto Hartmann v. Minnesota Department of Agriculture ( 2017 )

This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (2016).
STATE OF MINNESOTA
IN COURT OF APPEALS
A16-0755
Michael Otto Hartmann,
Appellant,
vs.
Minnesota Department of Agriculture, et al.,
Respondents.
Filed January 30, 2017
Reversed and remanded
Smith, Tracy M., Judge
Sibley County District Court
File No. 72-CV-15-94
Zenas Baer, Zenas Baer Law Office, Hawley, Minnesota (for appellant)
Lori Swanson, Attorney General, Christina M.B. Herriges, Assistant Attorney General,
St. Paul, Minnesota (for respondents)
Considered and decided by Reyes, Presiding Judge; Johnson, Judge; and Smith,
Tracy M., Judge.
UNPUBLISHED OPINION
SMITH, TRACY M., Judge
Appellant Michael Otto Hartmann initiated the current action against the Minnesota
Department of Agriculture (MDA), seeking the return of property seized by the agency
during searches of his farm and truck, and injunctive relief barring the agency from
regulating raw-milk sales without going through rulemaking and from unconstitutionally
interfering with his business. Hartmann was previously involved in litigation with the
MDA from 2010 to 2011. In that prior action, the district court granted the MDA’s petition
for condemnation of food from Hartmann’s farm. The district court also granted
Hartmann’s motion under Minn. R. Civ. P. 41.01 for voluntary dismissal of counterclaims
that he had brought alleging constitutional violations, although the court—contrary to
Hartmann’s request—did so with prejudice. In the current action, the district court
converted the MDA’s motion to dismiss to one for summary judgment, dismissed his
claims for injunctive relief on the basis of collateral estoppel, and granted Hartmann some,
but not all, of his requested relief on the return-of-property petition.
On appeal, Hartmann argues that collateral estoppel does not bar his claims for
injunctive relief and that a genuine dispute of material fact precludes summary judgment
on his return-of-property petition. We conclude that, because identical issues were not
actually litigated and determined in the prior action, the district court erred in determining
that Hartmann’s claims for injunctive relief are barred by collateral estoppel. We further
conclude that the district court did not err in determining that there was no genuine dispute
of material fact regarding damages on the return-of-property petition, but that, in light of
the remand of the other issues, the court must reconsider the amount of damages. We
therefore reverse and remand.
FACTS
In 2010, the MDA embargoed food products at Hartmann’s farm and petitioned the
district court to condemn the embargoed food because it was adulterated and misbranded.
Hartmann defended against the condemnation petition by asserting that he had a right under
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article XIII, section 7 of the Minnesota Constitution to sell and peddle the products of his
farm without interference by the MDA. Hartmann also asserted counterclaims against the
MDA in that action, alleging that the MDA’s actions had violated his due process rights
and seeking damages and injunctive relief quashing the MDA’s administrative orders.
After a trial, the district court, in December 2010, granted the MDA’s condemnation
petition, rejecting Hartmann’s defense under the Minnesota Constitution. The district court
reasoned that, although the Minnesota Constitution gives farmers a limited right to sell and
peddle the products of their farms without a license, it does not exempt them from
regulations imposed on the production of those products.
At the same time, the district court in the condemnation action severed Hartmann’s
constitutional counterclaims. The MDA brought a dispositive motion on those claims.
Hartmann did not respond to the MDA’s motion but instead moved for voluntary dismissal
of his counterclaims without prejudice under Minn. R. Civ. P. 41.01. The MDA objected
to dismissal without prejudice. The district court agreed to dismiss the claims but decided
do so with prejudice, explaining that it had been “inclined on prior occasions to dismiss the
claims” but had refrained from doing so in order to “afford Hartmann every opportunity
for due process.”
In 2015, Hartmann initiated the current action. Pursuant to Minn. Stat. § 626.04
(2016), he petitioned for the return of property seized by the MDA during searches of his
truck and farm in 2012 and 2013. Hartmann also sought damages and injunctive relief
based on various theories of alleged constitutional violations, including deprivation of
liberty and property interests without due process of law and violation of equal protection
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under the Fourteenth Amendment to the U.S. Constitution, and violation of the right to sell
and peddle under the Minnesota Constitution. He also alleged that the MDA is barred from
regulating raw-milk sales until the agency goes through rulemaking. The basis for this
latter allegation is not clear—the petition cites Minn. Stat. § 32.397 (2016), but the parties
and the district court referred to this claim as one of Hartmann’s “constitutional claims.”
The MDA moved to dismiss Hartmann’s petition. The district court granted the
motion with respect to Hartmann’s damages claim for constitutional violations under 42
U.S.C. § 1983 (2012) but denied the motion with respect to Hartmann’s other claims for
relief. As to the latter claims, the district court decided to treat the motion as one for
summary judgment under Minn. R. Civ. P. 56 and gave the parties an additional
opportunity to submit briefs. Following another hearing, the district court awarded
Hartmann $68.33 in damages for seized property and granted summary judgment for the
MDA on Hartmann’s constitutional claims for injunctive relief—specifically, on
Hartmann’s request for an order barring the state from regulating raw-milk sales until it
goes through rulemaking and on his request to enjoin the state from “interfering with the
private transaction between Hartmann and his consumers.”
Hartmann appeals.
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DECISION
I. The district court did not err in converting the agency’s motion to dismiss to a
motion for summary judgment.
Hartmann asserts that the district court erred in converting MDA’s motion to
dismiss for failure to state a claim into a motion for summary judgment with respect to his
claims for injunctive relief and return of property. Under Minn. R. Civ. P. 12.02:
If, on a motion asserting the defense that the pleading fails to
state a claim upon which relief can be granted, matters outside
the pleading are presented to and not excluded by the court, the
motion shall be treated as one for summary judgment and
disposed of as provided in Rule 56, and all parties shall be
given reasonable opportunity to present all material made
pertinent to such a motion by Rule 56.
In deciding the MDA’s motion, the district court considered matters outside of Hartmann’s
petition, including an affidavit and supporting documents submitted by Hartmann’s
counsel. “[W]hen the district court considers matters outside the pleadings, the motion to
dismiss [for failure to state a claim] shall be treated as one for summary judgment.” Defs.
of Wildlife v. Ventura, 632 N.W.2d 707, 711 (Minn. App. 2001) (quotation omitted), review
denied (Oct. 24, 2011). The district court informed the parties that it was converting the
motion and gave them the opportunity to make additional submissions and to be heard.
The district court did not err.
II. The district court erred in granting summary judgment for the MDA on
Hartmann’s claims for injunctive relief on the basis of collateral estoppel,
which may also affect the damages award under Minn. Stat. § 626.04.
Hartmann argues that the district court erred in granting the MDA summary
judgment on his constitutional claims and in awarding him only $68.33 on his return-of-
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property petition. Summary judgment is appropriate when “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, “[w]e review a district
court’s summary judgment de novo. In doing so, we determine whether the district court
properly applied the law and whether there are genuine issues of material fact that preclude
summary judgment.” Riverview Muir Doran, LLC v. JADT Dev. Grp., LLC, 790 N.W.2d
167, 170 (Minn. 2010) (citation omitted). The facts must be viewed in the light most
favorable to the nonmoving party. Grondahl v. Bullock, 318 N.W.2d 240, 242 (Minn.
1982). Any uncertainty about whether an issue of fact exists must be resolved in favor of
the nonmoving party. Winstrom v. Duluth, Missabe & Iron Range Ry., 636 N.W.2d 611,
613 (Minn. App. 2001).
A. Collateral estoppel
Hartmann argues that the district court erred in concluding that his claims for
injunctive relief are barred by collateral estoppel.1 “Whether collateral estoppel precludes
1
In his petition, Hartmann also asserted damages claims against the MDA and the
commissioner of agriculture for alleged constitutional violations under 42 U.S.C. § 1983.
The district court granted the MDA’s motion to dismiss Hartmann’s constitutional-
damages claims for failure to state a claim, reasoning that the state is not a “person” subject
to suit under section 1983 and that Hartmann failed to assert any facts stating a claim
against the commissioner in his personal capacity. Hartmann does not challenge the
dismissal of these damages claims in his brief on appeal. He has therefore forfeited any
arguments regarding those claims. See Melina v. Chaplin, 327 N.W.2d 19, 20 (Minn.
1982).
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litigation of an issue is a mixed question of law and fact that we review de novo.”
Hauschildt v. Beckingham, 686 N.W.2d 829, 837 (Minn. 2004).
Collateral estoppel has the purpose of “protecting litigants from the burden of
relitigating an identical issue with the same party . . . and of promoting judicial economy
by preventing needless litigation.” Parklane Hosiery Co. v. Shore, 439 U.S. 322, 326, 99
S. Ct. 645, 649 (1979). Collateral estoppel applies when
(1) the issue [is] identical to one in a prior adjudication;
(2) there was a final judgment on the merits [in the prior
proceeding]; (3) the estopped party was a party or in privity
with a party to the prior adjudication; and (4) the estopped
party was given a full and fair opportunity to be heard on the
adjudicated issue.
Kaiser v. N. States Power Co., 353 N.W.2d 899, 902 (Minn. 1984) (quotation omitted).
Collateral estoppel is an equitable doctrine and may be applied only if its application is
fair. Barth v. Stenwick, 761 N.W.2d 502, 508 (Minn. App. 2009). The doctrine applies
only to issues “actually litigated, determined by, and essential to a previous judgment.” In
re Application of Hofstad, 376 N.W.2d 698, 700 (Minn. App. 1985) (quotation omitted).
The key questions in this case are (1) whether the constitutional issues asserted by
Hartmann as a defense or as counterclaims in the condemnation action are identical to the
issues raised in the current action and (2) whether there was a final judgment on the merits
in the prior proceeding—in other words, whether the relevant issues were actually litigated,
determined by, and necessary to the judgment in the condemnation proceeding.
1. Identical Issues
We begin with whether the issues in the two actions are identical.
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In the condemnation action, which was initiated by the MDA, the district court held
that condemning adulterated and misbranded food is a valid exercise of the state’s police
power and that, while Hartmann may be permitted under the Minnesota Constitution to
make occasional sales of his farm products without a license, he is not free to ignore
regulations. In that action, Hartmann asserted a defense to the MDA’s requested
condemnation of embargoed food based on the Minnesota Constitution, and he also
asserted counterclaims against the agency for alleged due-process violations under the
Fourteenth Amendment to the U.S. Constitution.
In the current action, which Hartmann initiated, Hartmann seeks an order enjoining
the state from regulating raw-milk sales until the agency goes through rulemaking and
enjoining the state from “interfering with the private transaction between Hartmann and
his consumers.” Hartmann bases his claims for injunctive relief on the Minnesota
Constitution, due process under the Fourteenth Amendment, and equal protection under
the Fourteenth Amendment.2
The issue of whether the MDA must engage in rulemaking before it can regulate
raw-milk sales was not raised or addressed in the condemnation action. This issue was not
actually litigated or determined in the previous action, and thus collateral estoppel may not
be applied to preclude Hartmann from asserting it in the current action. See Hofstad, 376
N.W.2d at 700.
2
Although the parties and the district court in the current action refer to the need-for-
rulemaking claim as a constitutional claim, that claim also appears to be statutory in nature,
and neither the constitutional nor the statutory issue was raised or addressed in the
condemnation action.
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Similarly, no equal-protection issue was raised in the condemnation action, so that
issue is not barred by collateral estoppel. Id.
Hartmann did raise the issue of his alleged constitutional right to sell and peddle
under the Minnesota Constitution both in the current action and in his defense and in
counterclaims in the condemnation action. See Minn. Const. art. XIII, § 7 (establishing
such a right). In the current action, Hartmann argues that the MDA lacks authority to
“regulat[e] raw milk sales” or to “interfer[e] with the private transaction between Hartmann
and his consumers” because he is exercising his constitutional right to sell and peddle the
products of his farm without a license. In count one of his counterclaims in the
condemnation action, Hartmann alleged that the MDA’s actions in that case—seizing and
embargoing food and issuing certain administrative orders—“deprive[d] Hartmann of his
constitutional privileges guaranteed by . . . [the] Minnesota Revised Constitution, Article
13, Section 7.” In count two of his counterclaims, Hartmann alleged that the MDA’s
actions and orders in that case “prevent[] Hartmann from exercising his constitutional
rights to produce and sell farm products.” Because Hartmann characterizes the issue in the
current action as the constitutional right to enjoin future MDA regulation generally, as
opposed to a constitutional right to preclude specific MDA conduct, the Minnesota
constitutional issue in the current action is not identical to the condemnation action’s sell-
and-peddle defense and counterclaims, which related to specific regulatory actions taken
by MDA at a particular time.
In the condemnation action, Hartmann also asserted a due-process counterclaim.
Specifically, Hartmann labeled count one of his counterclaims “DEPRIVATION OF LIFE,
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LIBERTY OR PROPERTY WITHOUT DUE PROCESS.” This count asserted that the
MDA’s actions of inspecting Hartmann’s farm, embargoing his products, and ordering him
not to sell certain products and to comply with certain health and safety regulations,
“deprive Hartmann of his constitutional rights guaranteed under the Fifth and Fourteenth
Amendment[s] [to] the United States Constitution in violation of 42 U.S.C. § 1983.” In
the current petition, Hartmann alleges that “[i]nterpretation of the several statutes in such
a way to permit the MDA to regulate, license and control sales of food products raised by
Hartmann impairs Hartmann’s . . . right of due process.” In his briefs in the current action,
Hartmann also alleges due-process violations based on association, privacy, and contract
rights. The due-process issue in the condemnation action was nonspecific, making it
difficult to determine whether these are identical issues. But even if these are the same
issue, collateral estoppel is not applicable because the due-process issue was not actually
litigated and determined in the condemnation action, as described below.
2. Final Adjudication on the Merits
The MDA argues that collateral estoppel applies because the dismissal of
Hartmann’s constitutional claims in the earlier proceeding was with prejudice and thus was
an adjudication on the merits. It is certainly true that in general “a dismissal with prejudice
operates as an adjudication on the merits.” Firoved v. Gen. Motors Corp., 277 Minn. 278,
283, 152 N.W.2d 364, 368 (1967). And such a dismissal may have claim-preclusive effect
in a later action. See State v. Joseph, 636 N.W.2d 322, 327 (Minn. 2001) (applying res
judicata, but not collateral estoppel, to prior involuntary dismissal of claim with prejudice
under Minn. R. Civ. P. 41.02 based on statute of limitations).
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But finality with respect to collateral estoppel is not necessarily the same thing as a
final adjudication on the merits. See Restatement (Second) of Judgments § 13 (1982) (“The
rules of res judicata are applicable only when a final judgment is rendered. However, for
purposes of issue preclusion . . . , ‘final judgment’ includes any prior adjudication of an
issue in another action that is determined to be sufficiently firm to be accorded conclusive
effect.”). Collateral estoppel may apply to an issue decided in a previous action even
though the case never came to a final adjudication on the merits. See, e.g., Robinette v.
Jones, 476 F.3d 585, 588-90 (8th Cir. 2007) (applying collateral estoppel to issues that
were adjudicated in preliminary orders in a prior case even though the prior case was
dismissed without prejudice). Conversely, a final judgment on the merits that did not
actually determine an issue does not support application of collateral estoppel in a later
action. See Hofstad, 376 N.W.2d at 700 (holding that collateral estoppel “operates only as
to matters actually litigated, determined by, and essential to a previous judgment”
(quotation omitted)).
The MDA has identified no Minnesota precedent, nor have we found any, in which
a voluntary dismissal with prejudice under Minn. R. Civ. P. 41.01 resulted in collateral-
estoppel effect in a subsequent legal action. Collateral estoppel focuses on specific facts
or issues that were “actually litigated” and “determined by” a previous decision-maker
even though they appear in a new cause of action. Barth, 761 N.W.2d at 508 (quotation
omitted). In the condemnation action, the validity of Hartmann’s constitutional claims—
apart from his defense to the condemnation based on the Minnesota Constitution—was
simply not finally determined by the district court. Although the district court in the
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condemnation action indicated its skepticism about the constitutional claims, it severed
those claims and never actually finally determined them because Hartmann moved to
voluntarily dismiss them. There is no indication in the record before us that Hartmann
understood that dismissal with prejudice meant that there would be collateral-estoppel
effect with respect to constitutional issues in future actions.
To the extent that Hartmann’s defense based on the right to sell and peddle was
actually litigated in the condemnation action, as explained above, the decided issue was
not identical to the sell-and-peddle issue raised in the current petition. In the condemnation
action, the district court concluded that Hartmann’s right to sell and peddle the products of
his farm without a license did not exempt him from health and safety laws allowing the
MDA to embargo and petition for the condemnation of food found to be adulterated and
misbranded. There was no actual decision on the broader issue Hartmann raises now,
relating to whether and how the right to sell and peddle affects the MDA’s authority to
“regulat[e] raw milk sales” and to “interfer[e] with the private transaction between
Hartmann and his consumers.”
As the MDA correctly observes in its brief, the issue before us is not whether the
constitutional claims for injunctive relief asserted by Hartmann are cognizable but only
whether the district court erred in granting summary judgment on those claims on the basis
of collateral estoppel. Because we conclude that collateral estoppel does not apply to bar
Hartmann’s constitutional claims for injunctive relief, we reverse the district court’s
summary judgment against Hartmann on those claims and remand for further proceedings.
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B. Statutory damages under Minn. Stat. § 626.04
Hartmann argues that the district court erred in granting summary judgment in his
favor in the amount of $68.33 as compensation for the seized property rather than the
$1,265.36 he believes the property was worth. He argues that a genuine dispute of material
fact precludes summary judgment. The MDA did not appeal the award.
Hartmann petitioned for return of seized property pursuant to Minn. Stat. § 626.04.
His petition identified personal property and food items taken in two separate seizures by
the MDA, in Hennepin and Sibley Counties. In a subsequent filing identifying the value
of items taken, Hartmann listed the value of the property taken in those two seizures, as
well as other property he claimed was taken in a seizure in Anoka County. The district
court disregarded the property seized in Anoka County, which represented the majority of
Hartmann’s claimed damages, because it was not within the scope of Hartmann’s petition.
With respect to the remaining property, the district court concluded that, although the
statute does not expressly provide for damages in lieu of the return of property, such a
remedy is equitable. Relying on the values asserted by Hartmann, the district court
awarded statutory damages of $68.33 as compensation for unreturned personal property
but declined to award damages for food items (milk, cheese, ice cream, and eggs), which
Hartmann valued at $102.10. The district court denied compensation for the food items
because it concluded—apparently based on the prior condemnation action—that sale of
that food was unlawful.
We conclude that the district court properly disregarded Hartmann’s claim for
property that was not within the scope of his petition. With respect to the remaining
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property, because the parties did not dispute the nature of the property and the district court
relied on Hartmann’s own valuation of the property, we conclude that the district court
properly determined that there was no genuine issue of material fact. The district court’s
award of $68.33 as compensation for personal property was not erroneous. However, with
respect to its decision to deny compensation for the seized food, the district court relied on
the statutory prohibition against any action to recover the “value of any food, the sale of
which is . . . prohibited by law,” Minn. Stat. § 31.07 (2016), and appears to have relied on
collateral estoppel to determine the food items unlawful. To the extent that this ruling is
based on the district court’s application of collateral estoppel, which we conclude here is
erroneous, its basis for denying compensation for the food items is not well founded.
Whether compensation for the seized food is available and appropriate should also be
addressed on remand.
Reversed and remanded.
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