                          This opinion will be unpublished and
                          may not be cited except as provided by
                          Minn. Stat. § 480A.08, subd. 3 (2012).

                               STATE OF MINNESOTA
                               IN COURT OF APPEALS
                                     A14-0509

                                     City of Hopkins,
                                        Appellant,

                                            vs.

                                      Chris Stroner,
                                      Respondent.

                                Filed November 17, 2014
                                 Affirmed as modified
                                     Larkin, Judge

                               Anoka County District Court
                                File No. 02-CV-13-5955


Marylee A. Abrams, Tiffany L. Schmidt, Abrams & Schmidt LLC, Arden Hills,
Minnesota (for appellant)

Joseph A. Kelly, Kevin M. Beck, Kelly & Lemmons, P.A., Little Canada, Minnesota (for
respondent)


         Considered and decided by Peterson, Presiding Judge; Hudson, Judge; and Larkin,

Judge.

                         UNPUBLISHED OPINION

LARKIN, Judge

         Appellant city challenges the district court’s dismissal of its action seeking a

declaration that it is not financially responsible for invoices submitted by two individuals
who served as panel members at a hearing under the Veteran’s Preference Act. Because

appellant did not include those individuals as defendants in its declaratory-judgment

action, the action did not present a justiciable controversy and the district court lacked

jurisdiction.   We therefore affirm the summary dismissal of appellant’s declaratory-

judgment action, but we modify the dismissal so that it is without prejudice.

                                         FACTS

       Respondent Chris Stroner is an honorably discharged veteran who worked for

appellant City of Hopkins as a sergeant in its police department. After the city notified

Stroner of its intent to terminate his employment, Stroner challenged the termination

under the Veteran’s Preference Act (VPA), Minn. Stat. § 197.46 (2012). In accordance

with the VPA, Stroner and the city each appointed an individual to serve on a panel that

would hear Stroner’s case, and their appointees chose a third panel member. The city

selected Scott Nadeau, Stroner selected Terry Bartz, and Nadeau and Bartz selected

Richard Miller. Nadeau’s employer paid for his time on the panel, so he served without

charge, but Bartz and Miller invoiced the city $37,312.50 and $58,425.29, respectively,

for their services.

       Miller e-mailed the city regarding payment of the invoices. Miller noted that the

city had indicated that it “was not obligated to pay” half of his invoice or any of Bartz’s

invoice. The city responded with a request for an itemized accounting. Miller complied

and informed the city that he “fully expect[s] to be paid, in full, by the City in the near




                                             2
future, as do the other panel members that may have fees and expenses owing to them, as

we have fulfilled our contractual obligation.”1

       Eight days later, the city filed a complaint for declaratory relief, seeking a

declaration that it “is not financially responsible for paying any of the invoice of . . .

Bartz” and that it “is responsible for only paying half of the invoice of . . . Miller.” The

city attached the invoices from Bartz and Miller to its complaint and alleged that the

invoices request the city to “make full payment” for the services. But the city did not

include Bartz and Miller as defendants. Instead, the city identified Stroner as the sole

defendant, even though the city did not request a declaration regarding Stroner’s financial

responsibility for the invoices.

       Stroner moved to dismiss under Minnesota Rule of Civil Procedure 12.02(e) for

failure to state a claim upon which relief can be granted. Stroner submitted exhibits in

support of his motion, including two orders from the Minnesota Office of Administrative

Hearings and position papers from the League of Minnesota Cities and Minnesota

Counties Insurance Trust, which generally opined that the “employer is responsible for

all costs of the [VPA] hearing process.”          The city opposed Stroner’s motion and

submitted affidavits from John Baker, a partner in a law firm that specializes in veterans’

issues, and Marylee Abrams, an attorney who has represented veterans under the VPA.

The affidavits expressed the attorneys’ beliefs that the employer and employee are

responsible for the cost of the panel members they appoint and that the veteran may be


1
 Although Miller referred to a “contractual obligation,” the parties agree that there is no
contract or agreement specifying that the city would pay the panel members’ fees.

                                             3
responsible for half the cost of the third panel member. Later, the city asked the court to

disregard Abrams’s affidavit, and Baker contacted the district court and requested that his

affidavit be withdrawn from the court file.

       The district court considered the parties’ submissions and therefore treated

Stroner’s motion as one for summary judgment.2 In ruling on the motion, the district

court noted that the VPA “is completely silent as to which party is responsible for the

costs of a veteran’s preference hearing” and that there is “no published case law directly

on point.”   The district court considered another section of the VPA, Minn. Stat.

§ 197.481, subd. 5 (2012), and the materials submitted by Stroner and concluded that,

“[t]aken together, these non-binding authorities provide persuasive authority that the

employer is responsible for the entire cost of a veteran’s preference hearing.” The district

court therefore dismissed the city’s declaratory-judgment action. But the district court

did not order the city to pay Bartz’s and Miller’s invoices.

       The city requested reconsideration, arguing that the district court “lacked authority

to dismiss a declaratory judgment complaint under a Minn. R. Civ. P. 12 motion treated

as a summary judgment motion” and that the city “was not provided a reasonable

opportunity to present all material made pertinent to a Rule 56 motion.” The district

court denied the city’s request. The city appeals.



2
  “If, on a motion asserting the defense that the pleading fails to state a claim upon which
relief can be granted, matters outside the pleading are presented to and not excluded by
the court, the motion shall be treated as one for summary judgment and disposed of as
provided in Rule 56, and all parties shall be given reasonable opportunity to present all
material made pertinent to such a motion by Rule 56.” Minn. R. Civ. P. 12.02.

                                              4
                                       DECISION

         The Uniform Declaratory Judgments Act gives courts, “within their respective

jurisdictions,” the power to “declare rights, status, and other legal relations.” Minn. Stat.

§ 555.01 (2012). But the act “does not, by itself, confer jurisdiction on a court over the

action.” Hoeft v. Hennepin Cnty., 754 N.W.2d 717, 722 (Minn. App. 2008), review

denied (Minn. Nov. 18, 2008).         “If the parties to a declaratory action present no

justiciable controversy, the court is without jurisdiction to declare rights.” Cincinnati Ins.

Co. v. Franck, 621 N.W.2d 270, 273 (Minn. App. 2001).

         “Because an underlying justiciable controversy is essential to a court’s exercise of

jurisdiction, the court may always raise the issue on its own motion.” Id. “Determining

whether a justiciable controversy exists, and thus whether a district court has jurisdiction

over a declaratory-judgment action, is a question of law, which we review de novo.”

Hoeft, 754 N.W.2d at 722-23. We therefore begin our analysis by determining whether

the city’s declaratory-judgment action, as pleaded, presents a justiciable controversy.

         A justiciable controversy exists if a declaratory action “(1) involves definite and

concrete assertions of right that emanate from a legal source, (2) involves a genuine

conflict in tangible interests between parties with adverse interests, and (3) is capable of

specific resolution by judgment rather than presenting hypothetical facts that would form

an advisory opinion.” Onvoy, Inc. v. ALLETE, Inc., 736 N.W.2d 611, 617-18 (Minn.

2007).

         “When declaratory relief is sought, all persons shall be made parties who have or

claim any interest which would be affected by the declaration, and no declaration shall


                                              5
prejudice the rights of persons not parties to the proceeding.” Minn. Stat. § 555.11

(2012). This statutory requirement is “consonant with but broader than” the joinder

requirement in Minnesota Rule of Civil Procedure 19, which sets forth factors for

determining whether a party is indispensable. Unbank Co., LLP v. Merwin Drug Co.,

Inc., 677 N.W.2d 105, 108 (Minn. App. 2004). Failure to join an interested party is a

“fatal defect” in a declaratory-judgment action. Id. at 107.

          This court has held that a declaratory-judgment action does not present a

justiciable controversy when all persons potentially affected by the action are not made

parties to the action. Cincinnati, 621 N.W.2d at 275-76. We have also held that a

declaratory-judgment action lacked justiciability because a nonparty had an interest in the

underlying controversy and issuing a decision on the action would affect that interest

“without providing a full opportunity to litigate the issue or a full adjudication of the

[non-party’s] rights.” Unbank, 677 N.W.2d at 108.

          In this case, Bartz and Miller invoiced the city, demanding payment for their

services. They did not invoice Stroner, and the record does not suggest that they seek

payment from Stroner. Miller e-mailed the city that he “fully expect[s] to be paid, in full,

by the City in the near future, as do the other panel members that may have fees and

expenses owing to them.” (Emphasis added.) The city filed its declaratory-judgment

action eight days later, seeking to limit its financial obligations to Bartz and Miller. On

this record, the genuine conflict in tangible interests is between the city and Bartz and

Miller.     The city’s failure to include Bartz and Miller as defendants defeats the




                                             6
requirement that the controversy involve a concrete assertion of legal rights between

adverse parties. See Onvoy, 736 N.W.2d at 617-18.

       We recognize that the dismissal does not necessarily prejudice the financial

interests of Bartz and Miller. However, a decision that the city is not responsible for their

invoices was possible in the district court and is possible on appeal. And such a decision

would affect their interests. For that reason, Bartz and Miller are interested parties who

must be included in the city’s declaratory-judgment action. See Minn. Stat. § 555.11

(“[A]ll persons shall be made parties who have or claim any interest which would be

affected by the declaration, and no declaration shall prejudice the rights of persons not

parties to the proceeding.”). Because the city failed to include them as defendants, the

city’s declaratory-judgment action did not present a justiciable controversy. See Unbank,

677 N.W.2d at 109 (affirming the dismissal of a declaratory-judgment action for failure

to join a necessary party); Cincinnati, 621 N.W.2d at 276 (vacating a declaratory

judgment because the action lacked justiciability).

       Under this court’s precedent, dismissal of the action is appropriate. Unbank, 677

N.W.2d at 109 (“[T]he district court did not err in dismissing [the] action . . . for its

failure to join” a material party.). However, because such a dismissal does not reach the

merits of the controversy, it is without prejudice.         See Minn. R. Civ. P. 41.02(c)

(providing that a dismissal for lack of jurisdiction does not operate as an adjudication on

the merits); Unbank, 677 N.W.2d at 109 (“[W]e note that the dismissal for failure to join

. . . and the attendant lack of justiciability did not constitute an adjudication on the merits.

Consequently, the dismissal should not be designated as dismissal with prejudice.”).


                                               7
       We therefore affirm the district court’s summary dismissal of the city’s

declaratory-judgment action on the ground that the city’s action did not present a

justiciable controversy between adverse parties, but we modify the dismissal to be

without prejudice. Because the district court lacked jurisdiction to decide the action, we

do not address the city’s arguments regarding the merits of the district court’s decision.

       Affirmed as modified.




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