Lindmark v. Saint John's University

Background

Roger M. Lindmark, an alumnus of Saint John’s University (SJU), was involved in two earlier class-action lawsuits. Settlements in those cases resulted in donations to SJU that established the “Lindmark Endowment for Corporate-Business Ethics.” Lindmark and SJU later signed a written Gift Instrument that amended the endowment’s terms. The instrument stated that it was governed by Minnesota’s Uniform Prudent Management of Institutional Funds Act (UPMIFA) and Minnesota law.

Lindmark alleged that SJU mishandled the endowment by failing to supervise two summer student fellows and by using the funds for research unrelated to corporate-business ethics. He also alleged that at least one fellow received a stipend without completing the research project.

Lindmark sued SJU in federal court for breach of contract, breach of the covenant of good faith and fair dealing, breach of fiduciary duty, and conversion. He sought to disband the endowment and recover any undistributed funds. SJU moved to dismiss, arguing that Lindmark lacked standing to challenge the endowment’s administration or enforce the Gift Instrument and that he failed to state a claim for relief.

Related State-Court Proceeding

Before the federal case, SJU petitioned the Stearns County District Court for orders concerning the endowment’s past and future administration and whether it could transfer endowment assets to Lindmark. Lindmark argued that the endowment was a contract rather than a trust or institutional fund.

On December 17, 2018, the Stearns County District Court granted summary judgment for SJU. It held that the endowment was not a contract, but instead was a charitable gift and an institutional fund governed by UPMIFA. The state court also concluded that conditions on the charitable gift could be enforced only by the Minnesota Attorney General. Lindmark appealed that decision to the Minnesota Court of Appeals.

Analysis

The federal court applied collateral estoppel, also called issue preclusion. This doctrine prevents a party from relitigating an issue that was already decided in a different case when the issue is identical, the earlier decision was a final judgment on the merits, the party was involved in the earlier case, and the party had a full and fair opportunity to be heard.

The court found that all four requirements were met. The state and federal proceedings involved the same issues: whether the endowment was a contract, whether it was governed by UPMIFA, and whether only the Minnesota Attorney General had standing under Minnesota law to enforce the Gift Instrument. The state court’s summary-judgment decision was final for issue-preclusion purposes even though Lindmark’s appeal was pending. Lindmark was a party in the state proceeding, had an incentive to litigate the issues, participated in the briefing and hearing, and was not subject to apparent procedural limitations.

Because Lindmark was barred from contesting the legal issues underlying his federal claims, the federal court granted SJU’s motion to dismiss. The court dismissed Lindmark’s complaint with prejudice and directed that judgment be entered.