Opinion
Civil No. 03-6173 (PAM/RLE)
May 20, 2004
MEMORANDUM AND ORDER
This matter is before the Court on Defendants' Motion for Partial Summary Judgment. For the reasons that follow, Defendants' Motion is granted.
BACKGROUND
The facts involved in this Motion are not in dispute. Defendants Lutheran Association of Missionaries and Pilots, Inc. and Donald Johnson (collectively, "LAMP-US") seek summary judgment on Plaintiff Lutheran Association of Missionaries and Pilots, Inc.'s ("LAMP-Canada") claims for (1) breach of a fiduciary duty; (2) breach of contract; and (3) promissory estoppel. LAMP-US claims that Alberta, Canada's two-year statute of limitations bars LAMP-Canada's claims. LAMP-Canada maintains that Minnesota's six-year statute of limitations permits LAMP-Canada's claims.
The Court requested supplemental briefing specifically limited to the issue of whether Alberta's statute of limitations was substantive or procedural in nature for purposes of the choice-of-law analysis. LAMP-Canada's supplemental brief submitted, for the first time, that the Court should consider Wisconsin's statute of limitations in its choice-of-law analysis. This argument is outside the scope of the Court's request, and will not be considered.
LAMP-US also seeks summary judgment on LAMP-Canada's Consumer Fraud Act claim. Minn. Stat. § 325 F.69 prohibits the "act, use, or employment by any person of any fraud, false pretense, false promise, misrepresentation, misleading statement or deceptive practice, with the intent that others rely thereon in connection with the sale of any merchandise. . . ." LAMP-US contends that the solicitation of charitable contributions is not "merchandise," and that this claim must be dismissed. LAMP-Canada argues that the solicitation of charitable contributions falls within the scope of the statute.
DISCUSSION
A. Standard of Review
Summary judgment is appropriate if no genuine issue of material fact exists, such that the moving party is entitled to judgment as a matter of law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). The Court must view the evidence in favor of the nonmoving party and give that party the benefit of all justifiable inferences. Id. at 250. The burden of demonstrating that there are no genuine issues of material fact rests on the moving party. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). The nonmoving party must set forth specific facts sufficient to raise a genuine issue of fact for trial. Id. at 324.
B. Statute of Limitations: Choice of Law
In diversity cases, the Court should apply the choice-of-law principles of the forum state. Indep. Sch. Dist. No. 197 v. W.R. Grace Co., 752 F. Supp. 286, 298 (D. Minn. 1990). The Court must initially determine whether the choice of one state's law over the other will determine the outcome of the case. Myers v. Gov't Employees Ins. Co., 225 N.W.2d 238, 241 (Minn. 1974). In the instant case, the laws of Minnesota and Canada differ to such an extent that the choice of one over the other is outcome-determinative. If Minnesota law applies, LAMP-Canada's claims against LAMP-US are timely. If Canadian law applies, LAMP-Canada's claims against LAMP-US may be untimely.
LAMP-Canada argues that the Court need not engage in a choice-of-law analysis because, in Minnesota, statutes of limitations are procedural, not substantive. See In re Daniel's Estate, 294 N.W. 465, 469 (Minn. 1940). If the law at issue is procedural, the Court simply applies the forum state's law and does not proceed to the choice-of-law analysis.Davis v. Furlong, 328 N.W.2d 150, 153 (Minn. 1983). There is no dispute that Canada considers its statutes of limitations to be substantive.Tolofson v. Jensen, [1994] 3 S.C.R. 1022 (¶¶ 73-89). Thus, this case is on all fours with the Court's recent decision in Fee v. Great Bear Lodge of Wisconsin Dells. L.L.C., Civil File No. 03-3502, 2004 WL 898916 (D. Minn. Apr. 9, 2004) (Magnuson, J.). In Fee, the Court determined that "when one state characterizes its law as procedural and another state characterizes its law as substantive, courts should engage in the [choice-of-law] analysis when determining which law to apply." Therefore, because Minnesota regards its statutes of limitations as procedural while Canada regards such statutes as substantive in nature, comity dictates that the Court engage in the choice-of-law analysis.
The choice-of-law analysis entails consideration of five factors: (1) predictability of result; (2) maintenance of interstate order; (3) simplification of the judicial task; (4) advancement of the forum's governmental interests; and (5) the better rule of law. Milkovich v. Saari, 203 N.W.2d 408, 412 (Minn. 1973) (citing Robert Leflar, Choice-Influencing Considerations in Conflict Law, 41 N.Y.U. L.Rev. 267 (1966)). As an initial matter, the Court must examine whether application of either forum's law would violate due process. Danielson v. Nat'l Supply Co., 670 N.W.2d 1, 6-7 (Minn.Ct.App. 2001). Specifically, there must be a "substantial connection with the total facts and the particular issue being litigated." Nesladek v. Ford Motor Co., 876 F. Supp. 1061, 1068 (D. Minn. 1994) (Kyle, J.).
LAMP-US insists that the facts and claims at issue in this Motion have insufficient contacts with Minnesota. Although the alleged wrongful conduct occurred in Canada, counsel for LAMP-US first threatened litigation claiming violations of both Minnesota statutory and common law in 2000. Individual defendant Donald Johnson resides in Minnesota. LAMP-US solicited donations from Minnesota residents and also operates a website available to Minnesota residents. Although the relationship between the facts and claims in this Motion and Minnesota is tenuous, LAMP-US itself originally contemplated litigation under Minnesota law and cannot now claim unfair surprise that the case is venued here. In the aggregate, the Court finds that the application of Minnesota law to this case is not so arbitrary and fundamentally unfair as to violate due process. See Nesdalek, 876 F. Supp. at 1068.
1. Predictability of Result
This "factor applies `primarily to consensual transactions where the parties desire advance notice of which state law will govern in future disputes.'" Danielson, 670 N.W.2d at 7 (quoting Medtronic. Inc. v. Advanced Bionics Corp., 630 N.W.2d 438, 454 (Minn.Ct.App. 2001)). Defendant Donald Johnson is a Minnesota resident, and thus it is predictable that he is subject to Minnesota law. Moreover, the fact that LAMP-US originally contemplated litigation in Minnesota as early as November 2000 certainly indicates that LAMP-US had notice that Minnesota laws might apply. However, all of the alleged wrongful conduct occurred in Canada, and LAMP-US is a Wisconsin corporation. At the time the parties signed the contract that allegedly governed their relationship, LAMP-Canada was a Canadian corporation and LAMP-US was a Wisconsin corporation. The Court finds that this factor is neutral.
2. Maintenance of Interstate Order
This factor requires that the Court examine if applying the law of one state would "manifest disrespect for the sovereignty" of the other state. Danielson, 670 N.W.2d at 8. Here, applying Minnesota law indicates disrespect for Canadian law, while applying Canadian law indicates disrespect for Minnesota law.
This factor also requires that the state whose laws are applied have sufficient contacts with the facts in issue. Even though this factor often merges with the preliminary due process inquiry, this factor requires a more "substantial connection with the total facts and the particular issue being litigated." Milkovich, 203 N.W.2d at 412. As the Court already discussed, the link between Minnesota and the claims at issue in this Motion are weak. The alleged wrongdoing occurred in Canada between a Canadian corporation and a Wisconsin corporation. The fact that a Minnesota resident was allegedly involved does not mean that Minnesota has a substantial connection with the case. Although the Court disagrees with LAMP-US's assertion that LAMP-Canada is forum-shopping, the Court concludes that the maintenance of interstate order favors the application of Canadian law.
3. Simplification of the Judicial Task
The Court can apply either the law of Alberta, Canada, or the law of Minnesota. Although the Court is more familiar with Minnesota law, the lack of familiarity does not preclude the Court's ability to apply Canadian law. This factor is also neutral.
4. Advancement of the Forum's Governmental Interest
This factor requires the Court to consider not only Minnesota's governmental interest in the application of Minnesota law, but also Canada's public policy. See Gate City Fed. Sav. Loan Ass'n v. O'Connor, 410 N.W.2d 448, 451 (Minn.Ct.App. 1987). "This factor is designed to assure that Minnesota courts do not have to apply rules of law that are inconsistent with Minnesota's concept of fairness and equity." Danielson, 670 N.W.2d 8.
Minnesota's interest is advanced if Minnesota law is applied, because it allows LAMP-Canada to proceed with its claims. Because LAMP-Canada alleges that a Minnesota resident breached his fiduciary duty to LAMP-Canada, Minnesota arguably has an interest in ensuring that its citizens comply with Minnesota law. Conversely, Canada's policy of preventing stale claims and encouraging prompt litigation is reflected in its two-year statute of limitations. The early stages of this litigation began in November 2000, and LAMP-Canada waited to file this lawsuit until May 2003. Moreover, the claims at issue involve a Wisconsin corporation and a Canadian corporation, and the actual alleged wrongdoing occurred in Canada. The Court finds that the this factor favors the application of Canadian law.
5. The Better Rule of Law
This consideration has been given "no significant weight" by the Minnesota Supreme Court. Lommen v. East Grand Forks, 522 N.W.2d 148, 152, 153, a 4 (Minn.Ct.App. 1994). This Court should not presume to determine whether a six-year or two-year statute of limitations is the "better" rule of law. This factor is not relevant to the Court's consideration.
6. Conclusion
In the aggregate, the Milkovich factors support a conclusion that Canadian law applies. Thus, LAMP-Canada's claims for breach of fiduciary duty; breach of contract; and promissory estoppel, are barred by the statute of limitations. Moreover, because the only claim asserted against Defendant Donald Johnson is for breach of fiduciary duty, he must be dismissed.
C. Consumer Fraud Act
LAMP-US contends that this claim should be dismissed because the solicitation of charitable contributions is not "merchandise" under the statute. Minn. Stat. § 325 F.69, subd. 1. The Consumer Fraud Act defines "merchandise" to include: "any objects, wares, goods, commodities, intangibles, real estate, loans or services." Minn. Stat. § 325 F.68, subd. 2. LAMP-Canada maintains that donors are purchasing "services" or "intangibles" for the individuals to whom LAMP-US ministers. (Pl.'s Mem. in Opp'n at 13.)
The Consumer Fraud Act is to be construed broadly. The purpose is to protect the consumer in commercial situations. LAMP-Canada contends that the donor contributes money in exchange for LAMP-US's performance of commercial services in its ministry to others. The Court disagrees. Rather, the Court finds that charitable donations are not the sale of services or intangibles, and thus are not "merchandise" under the Consumer Fraud Act. See Del Tufo v. Nat'l Republican Senatorial Committee, 591 A.2d 1040, 1042 (N.J.Super. Ch. 1991) (interpreting the New Jersey Consumer Fraud Act and finding that political fund-raising was not within the scope of the statute because it was not "commercial goods nor commercial services"). Therefore, this claim must be dismissed.
CONCLUSION
Accordingly, based on all the files, records and proceedings herein, IT IS HEREBY ORDERED that:
1. Defendants' Motion for Partial Summary Judgment (Clerk Doc. No. 84) is GRANTED;
2. Counts IV, V, VI and VIII are DISMISSED from the Complaint; and
3. Defendant Donald Johnson is DISMISSED from this action.