Minnesota Supreme Court, 1982 A jury verdict in an unlawful detainer action collaterally estops a civil rights commission from relitigating the same racial discrimination claim.

A jury verdict in an unlawful detainer action collaterally estops a civil rights commission from relitigating the same racial discrimination claim.

Ellis v. Minneapolis Commission on Civil Rights
Minnesota Supreme Court · Decided May 28, 1982 · Otis
319 N.W.2d 702; 1982 Minn. LEXIS 1580 (North Western Reporter, Second Series)

Outcome: Reversed for appellant.

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Ellis v. Minneapolis Commission on Civil Rights

What happened

The facts of the case, in plain language.

The jury in the unlawful detainer action returned a verdict on July 26, 1976, restoring possession to Ellis after a 4-day trial in which the discriminatory eviction defense was specifically raised through jury instruction.

By vacating the duplex before a formal judgment was entered, the tenants acquiesced in the verdict, and the time to modify the verdict had passed by the date of the commission's hearing.

Raymond Smith filed a discrimination charge with the Minneapolis Commission on Civil Rights alleging violations of ordinances prohibiting discrimination in rental of real property.

The unlawful detainer proceeding, though ordinarily summary, involved counsel for both parties, a 4-day jury trial, and extensive evidence on the discriminatory eviction defense.

What the court decided

Native American tenants were evicted by their landlord following a jury trial in municipal court where the jury rejected their racial discrimination defense. The tenants then filed a complaint with the Minneapolis Commission on Civil Rights, which found discrimination. The district court affirmed. The landlord appealed, arguing collateral estoppel barred the commission from relitigating the discrimination issue. The Minnesota Supreme Court agreed. All four elements of collateral estoppel were satisfied: the issue was identical, a final judgment existed (the jury verdict, which the tenants acquiesced in by vacating), the parties were the same, and the tenants had a full and fair opportunity to litigate in the municipal court proceeding given the 4-day jury trial and extensive evidence.

  1. Collateral estoppel bars a civil rights commission from relitigating a racial discrimination issue already decided by a jury in a prior unlawful detainer proceeding when all four elements—identical issue, final judgment, same parties, and full and fair opportunity to be heard—are satisfied. (*705)
  2. A jury verdict not yet reduced to formal judgment satisfies the final-judgment element of collateral estoppel where the losing party acquiesced in the verdict and the time to challenge or modify it has passed.
  3. An unlawful detainer proceeding affords a full and fair opportunity to litigate a discriminatory eviction defense, for collateral estoppel purposes, where the proceeding was in fact non-summary—involving counsel for both parties, a multi-day jury trial, and extensive evidence on the discrimination claim.

How the court reached its decision

The court's reasoning, step by step.

Whether the four elements of collateral estoppel were satisfied so as to bar the Minneapolis Commission on Civil Rights from relitigating the racial discrimination issue decided by jury verdict in the prior unlawful detainer action. The discrimination issue raised before the commission was identical to the discriminatory-eviction defense expressly litigated through a specific jury instruction in the unlawful detainer action, satisfying element one. The parties were the same, satisfying element three. The Smiths acquiesced in the verdict by vacating the duplex before formal judgment was entered, and the time to challenge the verdict had passed by the date of the commission's hearing, satisfying element two under recognized exceptions to the formal-judgment rule. Although unlawful detainer proceedings are ordinarily summary, this particular proceeding involved counsel for both parties, extensive preparation time, a four-day jury trial, and full evidentiary presentation on the discriminatory eviction defense, satisfying element four. All four elements of collateral estoppel were satisfied; the commission was precluded from relitigating the discrimination issue, and the district court's order affirming the commission's findings was reversed and remanded with directions to vacate.

Whether a jury verdict in an unlawful detainer action, absent a formal judgment of record, constitutes a final judgment on the merits for collateral estoppel purposes. The Smiths vacated the duplex before any formal judgment was entered, constituting clear acquiescence in the verdict. Additionally, the time in which to challenge and modify the verdict had expired before the date of the commission's hearing. The jury verdict satisfied the final judgment requirement through both the acquiescence exception and the lapse-of-time exception to the general rule requiring formal judgment.

Key quotes from the opinion

Notable passages from the opinion, in the court's own words.

“Collateral estoppel precludes the relitigation of issues which are both identical to those issues already litigated by the parties in a prior action and necessary and essential to the resulting judgment.”
Definition of collateral estoppel — *704
“(1) the issue was identical to one in a prior adjudication; (2) there was a final judgment on the merits; (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.”
Four-factor test for collateral estoppel —
“exceptions to that general rule have been recognized "where the parties have acquiesced in the verdict" and "where, through the lapse of time or other cause, a motion for a new trial or arrest of judgment cannot be granted."”
Exceptions to the requirement of a formal judgment —
“In this unique fact situation, respondent Smith has had a full and fair opportunity to litigate the discriminatory eviction issue in the unlawful detainer action.”
Full and fair opportunity despite summary nature of unlawful detainer —

Cases the court relied on

Earlier decisions the court cited as authority for its ruling.

  • Victory Highway Village, Inc. v. Weaver (480 F.Supp. 71 (D.Minn. 1979)) — Supplies the four-element collateral estoppel test—identical issue, final judgment on the merits, same parties or privity, and full and fair opportunity to be heard—that the court adopts and applies to bar the commission from relitigating the discrimination issue.
  • Miller v. Simons (239 Minn. 523, 59 N.W.2d 837 (Minn. 1953)) — Establishes exceptions to the general rule that a verdict does not estop until reduced to formal judgment, specifically acquiescence in the verdict and lapse of time foreclosing post-verdict motions, both of which the court applies to find finality here.
  • Hauser v. Mealey (268 N.W.2d 803 (Minn. 1978)) — Cited for the foundational definition of collateral estoppel as one of two aspects of res judicata, precluding relitigation of issues identical to those already litigated and necessary to the prior judgment.
  • Brooks Realty, Inc. v. Aetna Insurance Co. (268 Minn. 122, 128 N.W.2d 151 (Minn. 1964)) — States the general rule that a verdict does not operate as estoppel until it becomes a formal judgment, from which the court departs by applying the acquiescence and lapse-of-time exceptions recognized in Miller v. Simons.
  • Staples v. Zinn (302 Minn. 149, 223 N.W.2d 415 (Minn. 1974)) — Cited as Minnesota Supreme Court authority supporting the collateral estoppel elements applied by the court in this case.

Full opinion

The complete text of the court's opinion as published.

Opinion

OTIS, Justice.

This is an appeal from the denial of landlord Andrew Ellis’ alternative motions for rehearing, remand or amendment of an order of the district court affirming the determination of the Minneapolis Commission on Civil Rights that Ellis had racially discriminated against his Native American tenant, Raymond Smith. The issues raised are whether the commission is collaterally es-topped from litigating the issue of discrimination because of a prior jury verdiet in an unlawful detainer proceeding, whether the decision of the commission is supported by substantial evidence, and whether respondent Smith is entitled to the award of additional attorneys’ fees. We conclude that the decision in the unlawful detainer proceeding collaterally estops the commission from subsequently litigating the same issue. It is therefore unnecessary to reach the other issues raised. We reverse and remand with instructions to vacate the decision of the commission based on the principles contained herein.

Raymond Smith and his wife, Edith Bush Smith, Native Americans, were tenants in the lower half of a duplex located in southeast Minneapolis. On May 8, 1976, they were served with a conditional notice of termination by their landlord, Andrew Ellis. When the Smiths failed either to vacate the duplex or to execute a rental agreement by July 1,1976, Ellis filed an unlawful detainer complaint in Hennepin County Municipal Court. Following a 4-day jury trial, the jury returned a verdict on July 26, 1976, restoring possession of the property to Ellis. The defense of racial discrimination in violation of Minneapolis ordinances was specifically raised through a jury instruction.

In addition, Raymond Smith filed a charge of racial discrimination with the Minneapolis Commission of Civil Rights, alleging that Ellis had violated Minneapolis Ordinance §§ 945.040(e)(3), which prohibits discrimination in the rental of real property and furnishing of facilities or services therewith, and 945.040(k)(2), 1 which prohibits the use of any form of application or device whatsoever to facilitate discrimination. A public hearing was held on May 16, 1978, before a three-member panel of the Minneapolis Commission on Civil Rights; the commission found that Andrew Ellis had discriminated against his Native American tenant, Raymond Smith. Following a lengthy procedural history, which included an appeal to this court, 2 the commission’s findings were affirmed by the district court on February 17, 1981.

Arguing that the commission was collaterally estopped from relitigating the issue of discriminatory eviction because of the adverse jury verdiet in the unlawful detain-er action, Ellis moved the court alternatively for a rehearing of the matter, for amendment of the court order to reverse the Findings and Order of the commission, or for remand of the matter to the commission for further hearing. Smith also moved for additional attorneys’ fees. All motions were denied. Ellis appeals from the denial of his motions; respondent Smith also requests review, under Minn.R.Civ.App.P. 106, of the denial of his motion.

The doctrine of res judicata has two separate aspects — r(l) merger or bar; and (2) collateral estoppel. 3 Hauser v. Mea- *704 ley, 268 N.W.2d 803, 806 (Minn. 1978). Collateral estoppel precludes the relitigation of issues which are both identical to those issues already litigated by the parties in a prior action and necessary and essential to the resulting judgment. See 1B J. Moore & T. Currier, Moore’s Federal Practice ¶ 0.443[1] (2d ed. 1948). The application of collateral estoppel is appropriate where:

(1) the issue was identical to one in a prior adjudication; (2) there was a final judgment on the merits; (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.

Victory Highway Village, Inc. v. Weaver, 480 F.Supp. 71, 74 (D.Minn. 1979). See Staples v. Zinn, 302 Minn. 149, 152, 223 N.W.2d 415, 417 (1974); Schwalich v. Guenther, 282 Minn. 504, 506, 166 N.W.2d 74, 77 (1969).

The requirements for the application of collateral estoppel are satisfied by the present fact situation. The issue in the unlawful detainer action—as raised by the defense of discriminatory eviction and reflected in the jury instruction on the same 4 —is identical with the issue raised by the alleged violations of the civil rights ordinance. Moreover, the parties are clearly the same.

Respondent Smith attacks the application of collateral estoppel by noting that because no formal judgment was entered in the unlawful detainer action, there is no final judgment. While, as a general rule, a verdict does not operate as an estoppel until it becomes a judgment, see, e.g., Brooks Realty, Inc. v. Aetna Insurance Co., 268 Minn. 122, 128 N.W.2d 151 (1964); Smith v. Smith, 235 Minn. 412, 51 N.W.2d 276 (1952), exceptions to that general rule have been recognized “where the parties have acquiesced in the verdict” and “where, through the lapse of time or other cause, a motion for a new trial or arrest of judgment cannot be granted.” Miller v. Simons, 239 Minn. 523, 527, 59 N.W.2d 837, 839 (1953).

By vacating the duplex before a formal judgment was entered, the Smiths clearly acquiesced in the verdict. Moreover, the time in which to challenge and modify that verdict had passed by the date of the commission’s hearing.

The major thrust of respondent Smith’s argument focuses on the contention that the limited issues for determination in an unlawful detainer action, along with the summary nature of the proceedings, prevent the unlawful detainer action from being a “full and fair” opportunity to adjudicate the issue of discriminatory eviction based on race. 5

This particular unlawful detainer proceeding was not summary in nature, however. Both parties were represented by counsel. Respondent Smith had significantly more time to prepare a response than is typical in an unlawful detainer action. The matter was tried to a jury over a 4-day period. Respondent Smith was allowed to introduce extensive evidence regarding his defense of discriminatory eviction. Although his right to discovery was admittedly limited, See MC Rule 81.001, respondent has failed to indicate how this limitation encumbered his ability to present fully his position. In this unique fact situation, respondent Smith has had a full and fair opportunity to litigate the discriminatory eviction issue in the unlawful detainer action. 6

*705 Accordingly, the decision of the district court is reversed and remanded with directions to vacate the findings of the commission based upon the principles contained herein.

1

. Minneapolis Ordinance § 940.040(e)(3) has been renumbered 139.40(e)(3) and Minneapolis Ordinance § 940.040(k)(2) has been renumbered 139.40(k)(2).

2

. In Ellis v. Minneapolis Commission on Civil Rights, 295 N.W.2d 523 (Minn. 1980), the matter was remanded to the district court for failure to honor an affidavit of prejudice. The present issues on appeal were expressly not decided in that case. Id. at 524.

3

.Collateral estoppel has also been referred to as “estoppel by verdict,” Howe v. Nelson, 271 Minn. 296, 135 N.W.2d 687 (1965) and, as “issue preclusion,” Hauser v. Mealey, 263 N.W.2d 803 (Minn. 1978).

4

.The following jury instruction was given at respondent Smith’s request: “It would be prohibited discrimination under the Minnesota Human Rights Act and the Civil Rights Ordinance of the City of Minneapolis if the landlord’s attempt to terminate the tenancy by serving upon the tenant a notice to quit if the landlord’s action was motivated by the fact that the tenant was a native American. Then you should find for the Defendants.”

5

. The position of respondent Smith appears to be inconsistent. At the unlawful detainer action, he urged and won adoption of a specific jury instruction regarding discriminatory eviction which thus forced the jury to decide the very issue he now claims the court was incapable of deciding.

6

. It is important to point out that the court was not called upon to consider the propriety of raising this defense in an unlawful detainer proceeding.

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