## Facts

- Hoang Minh Ly purchased Kim Nystrom’s restaurant business for approximately $90,000.
- During negotiations, Nystrom made misrepresentations about the restaurant’s monthly profits and the condition of the restaurant and its inventory.
- After the sale, the restaurant did not generate profits, and the parties later discussed canceling the contract.
- Ly sued for common-law fraud and for violation of the Minnesota Consumer Fraud Act (CFA), Minn. Stat. § 325F.69, subd. 1, and sought attorney’s fees under Minn. Stat. § 8.31, subd. 3a.
- The trial court found common-law fraud and awarded damages (approximately the difference between actual value and price paid), but rejected the CFA claim and denied attorney’s fees, reasoning the CFA was limited to misrepresentations made to a large number of consumers.
- The court of appeals affirmed.

## Issues

1. Whether the Minnesota Consumer Fraud Act applies to a one-on-one sale of a restaurant business, or instead is limited to misrepresentations made to a large number of consumers.
2. Whether a plaintiff who proves a CFA violation may recover attorney’s fees under Minn. Stat. § 8.31, subd. 3a without showing that the lawsuit conferred a public benefit beyond the parties’ private dispute.

## Decision

- The Minnesota Supreme Court reversed in part and affirmed in part.
- The court held the CFA can apply to a single transaction and is not confined to misrepresentations disseminated to many consumers.
- The court held attorney’s fees under Minn. Stat. § 8.31, subd. 3a require a showing that the action benefited the public, and that requirement was not met on these facts.
- The denial of attorney’s fees was affirmed.

## Legal Principles

- The Minnesota Consumer Fraud Act, Minn. Stat. § 325F.69, subd. 1, is construed broadly and can reach deceptive practices in individual consumer transactions, not only mass-market conduct.
- A transaction may qualify under the CFA when the misrepresentation occurs “in connection with” the sale of merchandise and the purchaser is functioning as a consumer rather than engaging in resale.
- Attorney’s fees under Minn. Stat. § 8.31, subd. 3a are available only when the private action serves a public benefit consistent with the attorney general’s consumer-protection enforcement role.
- An isolated dispute aimed primarily at redressing a private wrong, without evidence of broader impact or deterrence, generally does not satisfy the public-benefit requirement for fees.

## Conclusion

The court held that the Minnesota Consumer Fraud Act can apply to one-on-one consumer transactions, but it limited attorney’s-fee recovery under the Private Attorney General Statute to cases that demonstrably benefit the public, affirming the denial of fees where the suit addressed only an isolated private transaction.


Ly v. Nystrom, 615 N.W.2d 302 (Minn. 2000)