IN THE NORTH DAKOTA SUPREME COURT
|McColl Farms, LLC.,||)|
|)||Supreme Court No. 20130053|
|Plaintiff and Appellant,||)|
|)||Pembina County No.:|
|Aaron McColl, (deceased),||)|
|Lisa Rae Pflaum,||)|
|f/k/a Lisa Rae McColl,||)|
|Defendant and Appellee.||)|
APPEAL FROM THE DISTRICT COURT,
PEMBINA COUNTY, NORTH DAKOTA
NORTHEAST JUDICIAL DISTRICT
THE HONORABLE M. RICHARD GEIGER, PRESIDING
REPLY BRIEF OF APPELLANT
|DEWAYNE JOHNSTON (ND ID # 05763)|
|ATTORNEY FOR APPELLANT|
|JOHNSTON LAW OFFICE|
|221 SOUTH 4TH STREET|
|GRAND FORKS, ND 58201|
|Ph. (701) 775-0082|
TABLE OF CONTENTS
|Table of Authorities...¶1|
|Law and Argument.¶2|
|I. PRIVITY DID NOT EXIST BETWEEN|
|AARON MCCOLL AND MCCOLL|
|II. AARON MCCOLL IS NOT|
|III. AARON MCCOLL WAS NOT REPRESENTED BY|
|aTTORNEY JAMES HOVEY DURING DIVORCE ACTION ...¶7|
[¶1]TABLE OF AUTHORITIES
|Drinkall v. Movius State Bank, 11 N.D. 10, 88 N.W. 724, 727 (1901)....¶2|
|Erickson v. North Dakota State Fair Ass'n of Fargo, 54 N.D. 830, 211 N.W. 597, 599 (1926).¶2|
|Hofsommer v. Hofsommer, 488 N.W.2d 380 (N.D. 1992). ¶¶4, 5|
|Kovarik v. Kovarik, 2009 ND 82, 765 N.W.2d 511, 521..¶2|
|Meyer v. Hawkinson, 2001 ND 78, ¶ 20, 626 N.W.2d 262. ¶2|
|N.D. Cent. Code Ann. § 9-08-02...¶2|
|46 Am.Jur.2d Judgments, § 532 (1969)..¶4|
LAW AND ARGUMENT
I. PRIVITY DID NOT EXIST BETWEEN AARON MCCOLL AND MCCOLL FARMS, LLC.
[¶2] Appellee, Lisa Pflaum "Pflaum" argues that Appellant, McColl Farms, LLC "McColl Farms" was barred from pursuing its claims against her because it was in privity with Aaron McColl "Aaron" and Aaron had his day in court during the parties divorce, therefore, res judicata and collateral estoppel would apply. Essentially, Pflaum argues that McColl Farms had a stake in the divorce through Aaron. McColl Farms has a right to pursue its claims against Pflaum independent of any contract that may exist between Pflaum and Aaron -- Appellee erroneously contends that the divorce can somehow resolve ownership of property that those contracting do not own or were begotten illegally.
All contracts which have for their object, directly or indirectly, the exempting of anyone from responsibility for that person's own fraud or willful injury to the person or property of another, or violation of law, whether willful or negligent, are against the policy of the law.
N.D. Cent. Code Ann. § 9-08-02. It is clear that Appellee asserts she her actions are untouchable because the parties divorced. Pflaum, however, wrote nearly four-hundred checks totaling $55,360.22 from the checking account in 2008 when her and Aaron's combined income was around $67,000 pre-tax. Pflaum also wrote checks totaling $55,360.22 in 2008 from the joint account and exercised over 100 ACH debits totaling $45,537.57 for a grand total of $100,897.79. D. 21-25. Further, Pflaum states in her Affidavit that her paychecks were deposited into a different account, meaning that she believed that Aaron's approximate $50,000/year salary was the only means of income for the account she was making her numerous expenditures from. D.64. McColl Farms was not a party to the divorce, and McColl Farms' claims exist outside of the divorce action. A court should not allow a party to engage in illegal actions or when it does leave them where it finds them. Justice Maring dissent in Kovarik v. Kovarik, 2009 ND 82, 765 N.W.2d 511, 521 citing Erickson v. North Dakota State Fair Ass'n of Fargo, 54 N.D. 830, 211 N.W. 597, 599 (1926); Drinkall v. Movius State Bank, 11 N.D. 10, 88 N.W. 724, 727 (1901); Meyer v. Hawkinson, 2001 ND 78, ¶ 20, 626 N.W.2d 262. The divorce action has been irrelevant to the case in regard to the substantive law and recovery of McColl Farms and Aaron ceased to be a party in this action at his untimely death.
[¶3] Pflaum incorrectly asserts that McColl Farms is precluded from asserting financial claims against the Defendant due to res judicata and collateral estoppel because McColl Farms is Aaron McColl's privy. McColl Farms is not in privity with Aaron, and therefore, is not barred by collateral estoppel.
[¶4] "[P]rivity exits if a person is 'so identified in interest with another that he represents the same legal right.' " Hofsommer v. Hofsommer, 488 N.W.2d 380, 384 (N.D. 1992) (quoting 46 Am.Jur.2d Judgments, § 532 (1969)). "Fundamental fairness underlies any determination of privity." Id.
The strict rule that a judgment is operative, under the doctrine of res judicata, only in regard to parties and privies, is sometimes expanded to include as parties, or privies, a person who is not technically a party to a judgment, or in privity with him, but who is, nevertheless, connected with it by his interest in the prior litigation and by his right to participate therein, at least where such right is actively exercised by prosecution of the action, employment of counsel, control of the defense, filing of an answer, payment of expenses or costs of the action, the taking of an appeal, or the doing of such other acts as are generally done by parties.
Id. (emphasis added). Although Aaron has a one-fourth interest in McColl Farms, McColl Farms was not a party to and did not have a right to participate in Pflaum's and Aaron's divorce action. Further, Aaron is not so identified in the interest of McColl Farms that he represents the same legal right as McColl Farms; therefore, privity does not exist between McColl Farms and Aaron. It should be noted that Appellee has not filed a cross appeal regarding the Court's finding that no privity existed between McColl Farms and Aaron McColl.
[¶5] Pflaum relies on Hofsommer v. Hofsommer Excavating, Inc., in support of her position; however, key differences between that case and the case at hand exist. In Hofsommer, Mr. Hofsommer was the sole owner of Hofsommer Excavating, Inc. and therefore, it was found to be his privy. Id. at 384. In the case at hand, Aaron is not the sole owner of McColl Farms. Instead, Aaron is a minority interest holder with a one-fourth interest. Also, in Hofsommer, the North Dakota Supreme Court ruled that res judicata barred Ms. Hofsommer's claim because she could have, and should have, brought forth her claim during the divorce action, but did not. Id. at 385. In the case at hand, McColl Farms could not have brought this claim as part of the divorce action. First of all, McColl Farms was not a party to the suit and had no standing. Secondly, McColl Farms was unaware of the theft at the time of the divorce stipulation and did not know that a claim was necessary.
II. AARON MCCOLL IS NOT AN APPELLANT.
[¶6] Aaron McColl is not an appellant and Aaron is not arguing anything from the grave. Appellant, McColl Farms, argues that Aaron's case was procedurally dismissed. Aaron's case had a negative impact on its case as the district court could not see past the divorce judgment and imputed its feelings on McColl Farms. D.113. McColl Farms, Aaron, and their attorney were looped into one making it impossible to discern what portion was due to Aaron's conduct or simply because of the divorce. The district court found:
The evidence shows that [Aaron] attempted to avoid the responsibilities of his divorce judgment and then use this action to do so further and burdening Lisa Pflaum with significant legal fees. Again, that is evident from the pleadings themselves. McColl Farms, LLC, was willing to participate in that wrongful endeavor. Plaintiffs' legal counsel created the legal arguments that lacked a legal foundation and lacked factual basis for them, and finally agreed to go forward with the action. Given the participation of all three of these entities and at the level described to emaciate from Lisa Pflaum's divorce judgment the benefits and property to which she was entitled, all three should be jointly and severally responsible.
(D.140: 5-6). McColl Farms did not initiate this action in order to "collaterally attack the divorce judgment of Aaron McColl and Lisa Pflaum." Id. at 4. McColl Farms merely sought accountability and compensation from Pflaum for the money she stole, whether directly or through her spending. If the divorce is connected to McColl Farms claims it is only because Pflaum was awarded, in the divorce action, assets that were acquired through stolen money. After Aaron's claims were dismissed and the only claim left remaining was conversion, the divorce judgment became irrelevant to the case entirely. McColl Farms should not have been held jointly and severally responsible for Aaron's sanctions. Further, sanctions should not have been assessed against Aaron at all, or applied to him or his estate, or applied to McColl Farms because the appropriate substitution under N.D.R.Civ.P. 25 was never made.
III. AARON MCCOLL WAS NOT REPRESENTED BY aTTORNEY JAMES HOVEY DURING DIVORCE ACTION:
[¶7] The Appellee incorrectly cites the attorney's for record for Aaron and Pflaum during their divorce action. In reality, Aaron was represented by Attorney Darcie Einarson of Grafton and Pflaum by Attorney James Hovey of Grand Forks, now a District Court Judge. See Appellee's Brief, ¶1. The fact should be inconsequential and irrelevant to any action concerning McColl Farms but in any event was misstated by the Appellee.
Respectfully submitted this 7th day of June, 2013.
|JOHNSTON LAW OFFICE|
|/s/ DeWayne Johnston|
|DeWayne Johnston (ND ID #05763)|
|221 South 4th Street|
|Grand Forks, ND 58201|
|Ph.(701) 775-0082/Fax (701) 775-2230|
|Attorney for Appellant|