Benson v. Family Tree Corporation, Inc.

Background

John Benson and Brian Benson, representing themselves, brought claims against Ann Kemske and Jon Kemske involving ownership of mineral rights and related transfers and deeds. The amended complaint asserted fraud, conversion of property, and declaratory relief. The requested declaration would have stated that the property was owned as an undivided interest and that a conveyance without the consent of all owners was legally invalid.

The matter came before the district court on the defendants’ objections to a magistrate judge’s June 2, 2020 Report and Recommendation. The objections concerned whether res judicata—also called claim preclusion, a rule that prevents a party from pursuing claims that were raised or could have been raised in an earlier case—barred the claims against the defendants.

Objections to the Report and Recommendation

The Bensons argued that the defendants’ objections were served late. The court found that the objections were filed within the applicable 14-day deadline. Although the service on Brian Benson might have occurred as much as two days late, the deadline was not jurisdictional, and the Bensons did not show prejudice. The court therefore considered the objections and changed the analysis concerning res judicata.

Res Judicata Analysis

The court applied North Dakota law because the law of the court that entered the first judgment governs the claim-preclusion analysis. Under that law, res judicata applies when there was a final decision on the merits by a court with authority to decide the case, the two cases involve the same parties or their legal successors, the later claims were raised or could have been raised earlier, and the cases involve the same causes of action.

The court found that the earlier North Dakota action had ended in a final decision on the merits and that all four parties in the federal case had participated in that action. It also found that both cases concerned the same mineral rights and the validity of related transactions, including the 1990 deed to Thomas Benson, a statement of mineral interest recorded in 2005, and the 2010 deed from Ann Kemske to Family Tree Corporation, Inc.

The court concluded that the Bensons knew the relevant facts and could have asserted their fraud, conversion, and declaratory-judgment claims against the Kemskes in the North Dakota action. John Benson had expressly reserved the right to amend the pleadings to assert claims against them before the North Dakota trial, but the Bensons did not do so. The court stated that their decision not to bring those claims earlier did not avoid claim preclusion.

The court further concluded that the earlier action and the federal lawsuit were based on the same underlying facts and required much of the same evidence. The requested declaration also directly conflicted with the North Dakota judgment concerning ownership of the mineral rights and was therefore barred.

Disposition

The court adopted in part and modified in part the Report and Recommendation dated June 2, 2020. It granted the defendants’ motion to dismiss and dismissed the matter with prejudice. The court ordered that judgment be entered accordingly.