Criminal Law
JUDICIAL LAW
• Appeals: Review of denial of a “preliminary application” finding no reasonable probability of relief from a conviction is an appealable order. Appellant was found guilty of second-degree intentional and felony murder and a conviction was entered for the intentional murder charge. In 2023, amendments to the law narrowed the scope of liability for aiding and abetting first- and second-degree felony murder. A provision was also added allowing those previously convicted of those offenses to apply to have their convictions vacated. Appellant filed a “preliminary application” to vacate his convictions, but the application was denied as the district court found he was not adjudicated or convicted of felony murder. The Minnesota Court of Appeals questioned its jurisdiction over appellant’s appeal of the district court’s denial.
To apply for relief under the changed laws, a person must first file a preliminary application and then, if the district court determines the person is eligible for relief, file a petition to vacate their conviction. The law does not provide whether a denial of a preliminary application is appealable. The court of appeals determines that such a denial is a final, appealable order, given that it effectively terminates the applicant’s opportunity to seek relief under the amended law. The court also finds that an appeal of the denial of a preliminary application shall be treated as a denial of postconviction relief. Raisch v. State, A24-0267, 8 N.W.3d 237 (Minn. Ct. App. 6/3/2024).
• Appeals: State may appeal from award of jail credit. The district court revoked respondent’s probation and executed his prison sentence. The state appealed the court’s award of jail credit. The court of appeals holds the state is permitted to appeal an order granting jail credit. Minn. R. Crim. P. 28.04, subd. 1(2), permits the state to appeal “from any sentence imposed or stayed by the district court” in a felony case. The “right to appeal a sentence necessarily includes the right to appeal from any order affecting a component of the defendant’s sentence,” which includes an order affecting the fixed term of a defendant’s imprisonment. The state’s appeal of the district court’s jail credit order is allowed to proceed. State v. Johnson, A24-0245, 8 N.W.3d 243 (Minn. Ct. App. 6/3/2024).
• Procedure: A guilty plea is inaccurate if the defendant’s plea colloquy negates an element of the charged offense. Appellant entered a guilty plea to third-degree criminal sexual conduct using force relating to a woman with whom he shared two children. During the plea colloquy, in stating he understood the potential for future charges to be enhanced, appellant said, “I never raped my baby momma, so it will never happen again.” He otherwise laid a factual basis for the plea by answering leading questions from his attorney, but no follow-up questions were asked regarding the denial statement. Appellant’s plea was accepted, and he was sentenced to 153 months in prison. The court of appeals found his plea was valid and affirmed his conviction.
Appellant argues his plea was inaccurate because his denial statement negated an element of the offense. An accurate plea must be supported by a sufficient factual basis—that is, the record must contain sufficient evidence to support a conclusion that the defendant is guilty. The use of leading questions to develop a factual basis is discouraged but does not, on its own, invalidate a guilty plea. A factual basis is inadequate if the defendant makes statements negating an element of the offense, unless the statement is subsequently withdrawn or corrected, or the plea is otherwise rehabilitated.
Third-degree criminal sexual conduct using force requires proof that the defendant engaged in non-consensual sexual penetration with another person using force. Appellant clearly stated he did not commit “rape,” effectively asserting he did not commit third-degree criminal sexual conduct. His responses to his counsel’s subsequent leading questions did not sufficiently rehabilitate his plea, and he was never asked to clarify or retract his statement. Reversed and remanded to permit appellant to withdraw his guilty plea. State v. Jones, A21-1713, 7 N.W.2d 391 (Minn. Sup. Ct. 6/5/2024).
• Firearms: No due process violation when a defendant is charged with violating an amended statute after he was informed of his obligations under a prior version. Appellant was placed on probation in 1998 after pleading guilty to third-degree assault, a “crime of violence.” When discharged from probation in 2000, the discharge order informed him he was not entitled to possess firearms for 10 years, consistent with the then-existing version of Minn. Stat. §624.713, subd. 3. In 2003, this statute was amended to impose a lifetime firearm possession prohibition for those convicted of a crime of violence. In 2021, appellant was arrested and found to be in possession of a firearm. He ultimately pleaded guilty to unlawful possession of a firearm. He filed a postconviction petition challenging the conviction, but his petition was denied.
The Minnesota Court of Appeals first finds that appellant’s conviction did not violate his due process rights. The district court’s 2000 order accurately informed appellant of his obligations and accurately reflected the law at that time. The 2003 amendments did not impose immediate punitive consequences but merely exposed him to potential future violations of section 624.713. Ignorance of the law is no defense and appellant had seven years to discover his lifetime firearm prohibition before it took effect, giving him sufficient notice.
The court also finds appellant’s guilty plea was valid, as he waived all rights and admitted to all necessary elements of a violation of section 624.713. The denial of appellant’s postconviction petition is affirmed. Underwood v. State, A23-1524, 8 N.W.3d 655 (Minn. Ct. App. 6/10/2024).
• 4th Amendment: Apartment door handle and lock are within curtilage. Law enforcement obtained a warrant to swab the exterior handle and lock of appellant’s apartment door. The swab detected the presence of cocaine and MDEA, and police used the swab test results to obtain a warrant to search the interior of the apartment. Large amounts of cash, controlled substances, firearms, and drug paraphernalia were seized from the apartment. The district court denied appellant’s motion to suppress evidence obtained from the searches, finding that, although probable cause did not support the warrant to swab the door handle and lock, police did not need a warrant because the handle and lock were not within the home’s curtilage and the swab was supported by reasonable, articulable suspicion. Appellant was convicted of a possession offense after a stipulated facts trial.
The court of appeals reverses, finding the door handle and lock were within appellant’s home’s curtilage, emphasizing that the door handle and lock are physically attached to and indivisible from the home, are part of the enclosure to the home, and are primarily used to enter, exit, or exclude others from the home—actions limited to the tenant, the landlord, or invitees of the tenant. Thus, a warrant was required to search the lock and handle via swabbing. As the parties do not contest the district court’s finding that the warrant for the swab lacked probable cause, appellant’s conviction is reversed. State v. McNeal, A23-1037, 7 N.W.3d 837 (Minn. Ct. App. June 10, 2024).
• DWI: State not required to prove at trial probable cause for DWI if police had a valid search warrant. Prior to appellant’s trial for first-degree test refusal, appellant’s motion to suppress evidence was denied after the district court found police had probable cause to arrest appellant for suspected DWI. He was ultimately found guilty after police obtained a warrant for a blood or urine sample and he refused to submit to a test. Appellant argues the district court should have instructed the jury it was their duty to determine whether police had probable cause to believe appellant was driving while under the influence.
The model jury instruction on test refusal asks the jury to determine whether police had probable cause to believe the defendant drove while under the influence. However, the Minnesota Court of Appeals finds this model instruction conflicts with the test refusal statute, which does not require an additional finding of probable cause beyond that required to support the search warrant. The court clarifies that at trial for test refusal under Minn. Stat. §169A.20, subd. 2(2), the state does not have to prove beyond a reasonable doubt that police had probable cause to believe the defendant was driving while impaired if there was a valid search warrant for a blood or urine test supported by probable cause. State v. Torrez, A23-0902, 8 N.W.3d 674 (Minn. Ct. App. 6/10/2024).
• Postconviction: Noor and Coleman did not announce new rules of law. Appellant was convicted of third-degree depraved mind murder in 2011. He petitioned for postconviction relief in 2023, arguing his conviction must be reversed under the 2021 Coleman and Noor decisions. His petition was denied after the district court found these cases were not new interpretations of law. The court of appeals finds appellant’s petition is time-barred, as it was filed beyond the two-year time limit and no exception applies. Neither Coleman nor Noor announced new rules of law. Rather, they both merely clarified and reaffirmed precedent on the mental state element of depraved mind murder. Appellant also did not provide any reasons why the interests of justice require consideration of his untimely petition. The district court did not err in denying his petition. Heard v. State, A23-1511, 8 N.W.3d 662 (Minn. Ct. App. 6/10/2024).
• Double jeopardy: Elements of MN and ND fleeing-a-peace-officer offenses are not identical. Appellant was involved in a hit-and-run vehicle crash in Grand Forks, North Dakota. Appellant fled North Dakota deputies, eventually driving into East Grand Forks, Minnesota. He was charged and convicted of fleeing a peace officer in North Dakota. He was later charged with the same offense in Minnesota and the district court denied his motion to dismiss the charge under Minn. Stat. §609.045. He was convicted after a stipulated facts trial.
Section 609.045 provides that, if an act in Minnesota constitutes a crime under Minnesota’s laws as well as those of another jurisdiction, a conviction of the crime in the other jurisdiction bars prosecution in Minnesota only if the elements of both law and fact are identical. The court of appeals agrees with the district court that the elements of law and fact are not identical in this case. North Dakota’s fleeing statute does not criminalize fleeing within Minnesota and vice versa. Minnesota’s statute also requires proof the defendant knew or reasonably should have known they were fleeing a peace officer, which is not required in North Dakota. Appellant’s conduct in each state also independently supported criminal charges in each state—the facts of his conduct in Minnesota were not essential to prove his guilt in North Dakota and vice versa. Appellant’s conviction is affirmed. State v. Bear, A23-1657, 2024 WL 3241731 (Minn. Ct. App. 7/1/2024).
• Sentencing: “Probation” in sentencing guidelines applies to conditions under a stay of adjudication following a guilty plea to a felony. Appellant was found guilty of first-degree criminal sexual conduct in 2021. At the time he committed the offense, he was under court-ordered conditions under a stay of adjudication following his guilty plea to a 2016 felony theft offense. In sentencing appellant for the criminal sexual conduct offense, the district court included in appellant’s criminal history score one custody status point. The Minnesota Court of Appeals affirmed the district court. The Supreme Court also affirms.
The sentencing guidelines direct the courts to assign one custody point if, among other conditions, at the time the current offense was committed, the offender was on probation after entry of a guilty plea for a felony. Minn. Sent. Guidelines 2.B.2.a. The Court determines “probation” as used in this sentencing guideline describes court-ordered supervised conditions imposed without adjudication of guilt, such as, for example, when a stay of adjudication is ordered. “Entry of a guilty plea” is also held to mean pleading guilty on the record, not the acceptance of a guilty plea.
Here, appellant entered a plea of guilty to a felony theft on the record. The district court stayed adjudication and imposed conditions. Appellant was still subject to those conditions when he committed criminal sexual conduct. The district court properly assigned one custody status point. State v. Woolridge Carter, A22-0164, 2024 WL 3589190 (Minn. Sup. Ct. 7/31/2024).
• Self-defense: Duty to retreat applies to a claim of self-defense asserted against a charge of second-degree assault-fear. Appellant was charged with second-degree assault-fear with a dangerous weapon. While on a light rail platform, he began to argue with a woman. One of two men with her walked toward appellant and the woman with a knife. Appellant then brandished a machete and the man put his knife away. The other man then aggressively walked toward appellant. Instead of walking away, appellant moved toward the woman, pointing the machete at her and yelling. He also lunged at the second man. At his court trial, appellant claimed self-defense, but the district court found he failed to exercise a reasonable opportunity to retreat. The court of appeals affirmed.
“Reasonable force” may be used against another to “resist an offense against the person.” As the issue was not raised by the parties, the Supreme Court first assumes, without deciding, that “force” as used in the self-defense statute includes threats of force. While not part of the statute, the Court has added the duty to retreat to the self-defense defense, with only one exception, when a person is in their home. The policy interests behind the duty to retreat include avoiding potentially deadly confrontations.
The machete was a dangerous weapon, or a device designed as a weapon and capable of producing death or great bodily harm. Brandishing such a weapon with an intent to cause fear in another of immediate bodily harm or death escalates the situation. When retreat is reasonably possible, such escalation serves no public policy interest. Thus, the Court “narrowly extend(s)” the duty to retreat to persons claiming self-defense when they committed the felony offense of second-degree assault-fear with a dangerous weapon.
The Court also finds the evidence was sufficient to show appellant had a reasonable opportunity to retreat before he brandished the machete. State v. Blevins, A22-0432, 2024 WL 3588487 (Minn. Sup. Ct. 7/31/2024).
Samantha Foertsch
Bruno Law PLLC
samantha@brunolaw.com
Stephen Foertsch
Bruno Law PLLC
stephen@brunolaw.com
Employment & Labor Law
JUDICIAL LAW
• Vaccine refusal; lawsuit may proceed. In one of three recent covid-related vaccinations cases from Minnesota, a health care employee who was required to wear a medical-grade mask and additional protective gear despite having received a grant for a religious exemption from a covid vaccination mandate saw their lawsuit for religious discrimination revived by the 8th Circuit Court of Appeals. Reversing a dismissal by former U.S. District Court Judge Wilhemina Wright, the appellate court held that the case was actionable based on “disparate treatment” and remanded to the district court. Cole v. Group Health Plan, Inc., 105 F.4th 1110 (8th Cir. 2024).
• ADA claim; call-in dispute. An employee is entitled to pursue her claim of violation of the Americans with Disabilities Act (ADA) arising out of her termination due to failing to call in her absence from work. The 8th Circuit reversed a dismissal on grounds of a disputed fact issue as to whether a diabetic incident prevented her from complying, despite a dissent from Judge David Stras of Minnesota, who saw no basis for “disability discrimination in this record.” Huber v. Westar Foods, Inc., 106 F.4th 725 (8th Cir. 2024).
• Retaliation suit; no actionable workplace claim. A city employee’s lawsuit for wrongful termination due to retaliation for expressing criticism of the municipality’s hostile workplace was dismissed. The 8th Circuit upheld summary judgment on grounds that there was no evidence of a “severe or pervasive” hostile workplace underlying his complaints. Daly v. City of DeSoto, ___ F.4th ___ 2024 WL 3193934 (8th Cir. 2024).
• Service dog; accommodation claim rejected. A pharmacy employee who prevailed at trial for her employer’s failure to accommodate her by allowing a service dog in non-sterile areas of the facility lost on appeal. The 8th Circuit reversed the denial of a post-trial motion for judgment of dismissal on grounds that the claimant did not identify any benefits or privilege that an accommodation would have provided her that she did not already enjoy. Howard v. City of Sedalia, 103 F.4th 536 (8th Cir. 2024).
• Vicarious liability; public sector unit. A public sector body may be vicariously liable for the conduct of its employee committing sexual assault and harassment. Affirming a ruling of the Minnesota Court of Appeals, which had reversed a lower court dismissal, the Minnesota Supreme Court held that the Department of Corrections is subject to suit arising out of a correction officer’s wrongful behavior toward an incarcerated inmate because the complaint alleged that the conduct was related to the officer’s duties and took place within a work-related time and place. Sterry v. Minn. Dept. of Corrections, 8 N.W.3d 224 (Minn. 2024).
• PTSD granted; expert testimony adequate. Expert testimony by licensed psychologists adequately supported a determination of post-traumatic stress disorder (PTSD), entitling a City of Minneapolis employee to workers compensation benefits. The Workers Compensation Court of Appeals affirmed the ruling of a compensation judge who made the award. Peterson v. City of Minneapolis, No. WC23-6527 (W.C.C.A. 6/28/2024).
• Disability discrimination; evidence excluded. A statement submitted by an employer to contest unemployment compensation benefits is not admissible in a civil lawsuit for disability discrimination. The Minnesota Court of Appeals affirmed a determination by the Becker County District Court that the employer’s stated reason for not accommodating the employee’s disability is inadmissible under Minn. Stat. §268.19. McBee v. Team Industries, Inc., 2024 WL 3241181 (Minn. App. 7/1/2024) (nonprecedential).
• Unemployment compensation; not available to work. A woman who was unwilling to work a slightly modified overnight shift was denied unemployment benefits. The court of appeals affirmed the decision of an unemployment law judge (ULJ) with the Department of Employment & Economic Development (DEED), which found that she was not “available for suitable employment” under Minn. Stat. §268.085, subd. (3), (4), (5), because her new work shift posed a conflict with her responsibilities for caring for her young grandchildren. Lemke v. ABLE, Inc., 2024 WL 3250479 (Minn. App. 7/1/2024) (nonprecedential).
Marshall H. Tanick
Meyer, Njus & Tanick
mtanick@meyernjus.com
Federal Practice
JUDICIAL LAW
• Fed. R. Civ. P. 11; notice; severe sanctions; standard of review. Where a district court sua sponte issued an Order to Show Cause related to Rule 11 sanctions and contempt against a law firm, denied the law firm’s multiple requests for a bill of particulars so that it would know what it was accused of, imposed severe sanctions Rule 11 sanctions against both the law firm and its named counsel, and the law firm and the attorney appealed, the 8th Circuit found that the usual abuse of discretion standard had to be applied with “particular strictness” because the sanctions were imposed sua sponte and because it was “more severe than most,” and determined that the district court had erred by failing to identify counsel’s allegedly objectionable conduct and failing to provide “clear notice” as to the form of the potential sanction.
But rather than remanding the action, the 8th Circuit found that counsel had been sufficiently punished already, and simply vacated the sanctions order. In re: Sanford Law Firm, 106 F. 4th 706 (8th Cir. 2024).
• Inherent powers sanctions; attorney barred from delivering closing argument; no abuse of discretion. The 8th Circuit found that a district court had not abused its discretion in barring defendants’ lead counsel from delivering closing argument where the attorney’s conduct had been at issue during three years of litigation, the attorney had been warned during trial that he might have to “stand down” and “sit in the second chair,” and the closing argument was delivered by counsel with 12 years of experience who had examined a witness at trial. RightCHOICE Managed Care, Inc. v. Hosp. Partners, Inc., ___ F.4th ___ (8th Cir. 2024).
• Fed. R. Civ. P. 23(h); “reasonable” attorney’s fees; abuse of discretion. Where the parties reached a $350 million settlement in a data breach class action after only a few months; class counsel sought a fee award of $78.75 million, which was 22.5 percent of the settlement fund; objections were filed to the fee application; and the district court performed a “lodestar crosscheck,” which produced a lodestar of $8.17 million, which meant that counsel was seeking a fee multiplier of 9.6, the 8th Circuit held that the district court had abused its discretion in awarding an “unreasonable” fee and acknowledged that it had previously described a multiplier of 5.3 as “high” in Rawa v. Monsanto Co. (934 F.3d 862 (8th Cir. 2019)), but also failed to offer any firm guidance regarding the upper limits of an acceptable multiplier. In Re: T-Mobile Customer Data Sec. Breach Litig., ___ F.4th ___ (8th Cir. 2024).
• Fed. R. Civ. P. 10(a); Doe plaintiffs; standard of review. In November 2023, this column noted Judge Blackwell’s denial of adult plaintiffs’ motion to proceed as Doe plaintiffs in an action against a local school district.
Affirming Judge Blackwell’s ruling on this issue and deciding several issues of first impression in the circuit, the 8th Circuit held that “a party may proceed under a fictitious name only in those limited circumstances where the party’s need for anonymity outweighs countervailing interests in full disclosure,” and that district courts’ rulings on this issue are to be reviewed for abuse of discretion. Cajune v. Indep. Sch. Dist. 194, 2023 WL 5348833 (D. Minn. 8/21/2023), aff’d, 105 F.4th 1070 (8th Cir. 2024).
• Fed. R. Civ. P. 37(c)(1); no abuse of discretion in refusal to consider affidavits from undisclosed witnesses. Affirming an award of summary judgment to the defendant on an ADA claim, the 8th Circuit found no abuse of discretion in Judge Tostrud’s refusal to consider affidavits from three of the plaintiff’s co-workers, where those individuals were not identified in the plaintiff’s Rule 26 disclosures or in his answers to interrogatories. Goosen v. Minn. Dep’t of Transp., 105 F.4th 1034 (8th Cir. 2024).
• Fed. R. App. P. 4(a)(5)(A); extension of time to appeal; no abuse of discretion. Distinguishing its decision in Dill v. Gen. Am. Life Ins. Co. (525 F.3d 612 (8th Cir. 2008)), the 8th Circuit found that a district court did not abuse its discretion in granting plaintiffs’ motion for an extension of time to appeal pursuant to Fed. R. App. P. 4(a)(5)(A), where the district court “took into account all relevant circumstances” and found excusable neglect. Petrone v. Werner Enters., Inc., 105 F.4th 1043 (8th Cir. 2024).
• Arbitration; waiver. In July 2023, this column noted Chief Judge Schiltz’s order finding that the defendants had waived their right to enforce a contractual arbitration clause.
The 8th Circuit recently affirmed that order, applying a two-part test which focused on whether the party knew of its right to arbitrate and acted inconsistently with that right, and finding that the defendants had at least constructive knowledge of their right to arbitrate and that they failed to move promptly to assert their right to arbitrate. In re Pawn Am. Consumer Data Breach Litig., 2023 WL 3375712 (D. Minn. 5/11/2023), aff’d, ___ F.4th ___ (8th Cir. 2014).
• Filing of notice of appeal while post-trial motions are pending; issues waived. Where the plaintiff lost her jury trial, filed pro se post-trial motions under Fed. R. Civ. P. 59 and 60, and then filed a Notice of Appeal pro se that claimed to appeal the “final judgment” in the case, the district court later denied her post-trial motions, the Notice of Appeal was not amended, appellate counsel appeared for the plaintiff, and the plaintiff’s opening brief challenged the denial of her post-trial motions, the 8th Circuit found that it lacked jurisdiction over her attempt to appeal from the denial of her post-trial motions. Hairston v. Wormuth, 107 F.4th 867 (8th Cir. 2024).
• Denial of request for preliminary injunction as the law of the case. Where the plaintiffs sought a preliminary injunction, that motion was denied by Judge Tostrud and the denial was affirmed by the 8th Circuit, the district court then granted the defendants’ motion for summary judgment and denied the plaintiffs’ motion for partial summary judgment based on the same evidence that had been before the court initially, and the plaintiffs appealed, the 8th Circuit held that because the parties had not presented any “materially different” evidence than what was before it on the first appeal, the outcome was dictated by the law of the case doctrine. Minnesota RFL Republican Farmer Labor Caucus v. Moriarty, ___ F.4th ___ (8th Cir. 2024).
• Declaratory judgment; dismissal of first-filed federal action; no abuse of discretion. Where insurers of a man who pled guilty to sex crimes filed a federal declaratory judgment action against his victims, seeking a declaration that they did not have a duty to defend or indemnify him in a tort action; the victims later filed a state court action seeking a declaration that the insurers had a duty to defend and indemnify him; the victims moved to dismiss the federal action; the district court exercised its “broad discretion” in dismissing the federal action in favor of the parallel state court action under so-called Wilton/Brillhart abstention; and the insurers appealed, the 8th Circuit affirmed, finding that the district court had not abused its “unique and substantial discretion” when it dismissed the action. EMCASCO Ins. Co. v. Walker, ___ F.4th ___ (8th Cir. 2024).
• Motion to stay discovery pending decision on motion to strike denied. Where defendants moved to strike plaintiffs’ class allegations, and then moved to stay all discovery pending resolution of their motion to strike, Magistrate Judge Foster found that defendants could not establish “good cause” to stay discovery where the motion to strike, even if successful, would not dispose of all, or even substantially all, of plaintiffs’ claims. Tjaden v. Brutlag, Trucke & Goherty, P.A., 2024 WL 3046478 (D. Minn. 6/18/2024).
• 28 U.S.C. §1292(b); motion to certify interlocutory appeal denied. Chief Judge Schiltz denied defendants’ motion to certify the partial denial of their motion to dismiss under 28 U.S.C. §1292(b), finding that defendants “ha[d] not come close” to meeting their “heavy burden.” Dionicio v. U.S. Bancorp, 2024 WL 2830693 (D. Minn. 6/4/2024).
• 28 U.S.C. §1404(a); motion to transfer putative class action granted. Where only six of ten named plaintiffs in a consolidated putative antitrust class action resided in Minnesota, the convenience of non-party witnesses favored transfer, and the locus of operative facts was not in Minnesota, Judge Menendez found that the “usual deference afforded” to the Minnesota plaintiffs’ choice of forum was “diminished,” and granted the defendants’ motion to transfer the consolidated action to the Southern District of New York. In Re Eyewear Antitrust Litig., 2024 WL 2956631 (D. Minn. 6/12/2024).
Josh Jacobson
Law Office of Josh Jacobson
joshjacobsonlaw@gmail.com
Probate & Trust
JUDICIAL LAW
• Minn. Stat. §501C.1004 governs trust beneficiary’s right to reimbursement of attorney fees from trust property. The trustee of a trust petitioned the court to authorize a six-figure project relating to a nearly 300-acre parcel owned by the trust. One of the settlors opposed the petition. The district court ultimately denied the trustee’s petition and ordered “the trustee” to pay the opposing settlor’s attorneys’ fees. After the opposing settlor submitted an affidavit summarizing its attorneys’ fees, the district court found the fees to be reasonable and directed a successor trustee to pay the opposing settlor’s fees from the trust. The non-opposing settlor appealed, arguing, among other things, that the district court failed to apply the common law standard for determining whether a beneficiary is entitled to attorneys’ fees from the trust. The Minnesota Court of Appeals disagreed. In its published opinion, the court noted: “The legislature has instituted a broad, different standard…” Because the relevant statute, Minn. Stat. §501C.1004, changes rather than mirrors the common law standard for attorneys’ fees for beneficiaries and third parties, the statute applies. The court of appeals recognized that its result differs from the result reached in Lund ex rel. Revocable Tr. of Lund v. Lund. However, it noted that in Lund, the Court found no conflict between the trust code and common law, unlike here. Therefore, the court of appeals “expressly [held] that section 501C.1104, not the common law, governs a beneficiary’s ability to recover attorney fees from trust assets.” In re Jorgenson Family Tr. Agreement dated Mar. 12, 2001, __ N.W.3d __, No. A23-1627, 2024 WL 3490660 (Minn. Ct. App. 7/22/2024).
Jessica L. Kometz
Bassford Remele
jkometz@bassford.com
State Appellate Practice
MN SUPREME COURT
• Notable decision: Tort of negligent selection of independent contractor recognized under Minnesota law. A unanimous Minnesota Supreme Court recognized a new common law tort for the “negligent selection of an independent contractor” relying on Section 411 of the Restatement (Second) of Torts (1965), but developing its own formulation of the new cause of action and expressly recognizing a duty of care on the part of employers who select an independent contractor. To state a claim for the tort of negligent selection of the independent contractor, the claimant must allege that the “principal (1) breached their duty to exercise reasonable care in selecting competent and careful contractor, and (2) that this breach of duty caused the claimant’s physical harm.” The duty of care “will vary depending on the circumstances, but is lower when the work at issue requires little skill and imposes little risk. In contrast, a higher duty is imposed when the work requires special training or skill to perform properly and imposes a high risk of danger if done improperly.” As to how this new framework applies to the instant case, the Supreme Court was evenly divided on the issue, and as a result, the Minnesota Court of Appeals affirmance of the district court’s summary judgment decision was allowed to stand. Pedro Alonzo, et al. v. Richard Menholt, et al., (Minn. 7/10/2024).
• Notable decision: Doctrine of temporary frustration of purpose, as defined in the Restatement (Second) of Contracts §269, exists under Minnesota law. A unanimous Minnesota Supreme Court recognized the doctrine of temporary frustration of purpose delineated in the Restatement (Second) of Contracts §269 as a justification for nonperformance of a contract in a case involving a tenant who defaulted on rental payments during the covid-19 pandemic. The tenant, a fitness center, suspended payments during the pandemic and later paid back rent after being confronted with an eviction action. The tenant later sued the landlord, alleging that the rent payments should have been excused by the temporary frustration of purpose doctrine. The Minnesota Supreme Court determined that the party asserting temporary frustration of purpose must establish three elements: “(1) the party’s principal purpose in entering the contract is substantially frustrated; (2) without their fault; (3) by the occurrence of an event, the nonoccurrence of which was a basic assumption on which the contract was made.” And emphasized that “temporary frustration of purpose only suspends the asserting party’s duty, rather than discharging all remaining duties to perform…. Once the frustration has ended, full performance is required unless the ‘materially more burdensome’ standard is met.” The “materially more burdensome” standard, which would excuse performance altogether, is “more than inconvenience or increased costs” and has been permitted only in “unique and severe conditions.” The Court also assumed, without deciding, that “a party may bring an affirmative claim for breach of contract based on temporary frustration of purpose” but determined that the tenant had failed to establish a genuine issue of material fact to satisfy the “materially more burdensome” standard. Fitness International, LLC v. City Center Ventures, LLC, (Minn. 7/24/2024).
• Notable petition for review granted: Court to consider priority to receivership assets between surety and secured lender. The Supreme Court has agreed to decide a dispute over receivership assets for a defunct construction company between competing creditors—a secured lender and a surety who agreed to provide performance bonds on certain projects—involving the standard for equitable subrogation and the priority between a secured lender and a surety. The secured lender obtained a judgment of $3.75 million against the debtor after the debtor defaulted on a series of loans secured by collateral and perfected by the secured lender. The district court appointed a limited receiver to identify and administer the distribution of the debtor’s assets. The debtor’s surety, who issued performance bonds and paid over $700,000 to various parties, made a claim against the receivership assets. On cross motions for summary judgment as to whether the secured lender or the surety was entitled to $500,000 in receivership assets, the district court ruled in favor of the secured lender. The surety appealed. The court of appeals affirmed, finding that (1) the surety could not establish the elements of equitable subrogation and (2) even if the surety could meet the elements of equitable subrogation, summary judgment was appropriate because the lender “retained priority over any interest that Granite could have acquired by equitable subrogation” due to its “first-in-time” and perfected security interest. The Supreme Court granted review of the following issues: 1) What is the appropriate standard for evaluating whether a surety or other party is entitled to equitable subrogation after discharging the obligations of another? (2) Does a surety making payment under a payment or performance bond have an equitable right to remaining contract funds that takes priority over the rights of a third-party lender, regardless of the timing of UCC filings? In re the Receivership of United Prairie Bank vs. Molnau Trucking LLC, et al., Granite Re, Inc. – A23-1478, review granted 8/6/2024.
MN COURT OF APPEALS
• Notable precedential decision: Six-year statute of limitations for actions “for damages based on sexual abuse” applies based on conduct underlying particular action, rather than the specific claims alleged. The Minnesota Court of Appeals reversed the dismissal of false imprisonment claims on statute of limitations grounds, finding that Minn. Stat. §541.073, subd. 2(a)’s six-year statute for any “action for damages based on sexual abuse” applied to the action, despite the fact that the complaint labeled the claim as false imprisonment. The court of appeals determined that the district court erred in concluding that Minn. Stat. §541.07’s two-year statute of limitations required dismissal of the false imprisonment claim, finding that the “six-year statute of limitations under Minn. Stat. §541.073, subd. 2(a), for ‘[a]n action for damages based on sexual abuse’ does not depend on the elements of the particular claims asserted in that action.” The court also found that to hold otherwise would result in various claims arising out of the same sexual abuse to be subject to different statutes of limitations and “because a party is precluded from splitting claims arising out of the same factual circumstances, such an approach would effectively deprive Doe of the longer statute of limitations for any of her claims.” Doe 271 v. Pyfferoen, A23-1338 (Minn. Ct. App. 7/15/2024).
• Notable precedential decision: Coach entitled to official immunity, school district entitled to vicarious immunity, because coach engaged in discretionary duties that required independent judgment in supervising practice. The Minnesota Court of Appeals reversed the district court’s denial of summary judgment on official immunity grounds for a school district, based on personal injury claims resulting from a third-grade softball practice. The court determined that a softball coach—and by extension, the school district that employed her—was entitled to official immunity for discretionary duties related to the supervision of softball practice. The court of appeals found that the coach exercised her discretion—and did not merely perform ministerial tasks—by “deciding where to locate practice stations and how many to set up, how many players to have at each station based on their age and ability, and where to locate the coaches so they could provide sufficient supervision for the softball practice.” In determining that immunity extended from the coach to the school district itself, the panel noted that “[f]ailure to extend the doctrine of official immunity under these circumstances would place stifling attention on the role of coaches, which in turn would disincentivize persons from holding those positions.” Kendrick v. Walker-Hackensack-Akeley ISD #113, A23-1918 (Minn. Ct. App. 8/5/2024).
• Notable nonprecedential decision: City council member’s harassment restraining order vacated. The court of appeals reversed the issuance of a restraining order entered in favor of a city council member against a constituent, based on statements made at a city council meeting. The court found that the statements made at the city council meeting did not meet the definition of “repeated incidents of intrusive or unwanted acts, words, or gestures” such that they satisfied the “harassment” definition in Minn. Stat. §609.748, subd. 1(a)(1) and did not discuss whether the remarks were protected by the 1st Amendment. Judge Connolly dissented, explaining that the comments at the meeting—made at multiple times, both in private and during the public meeting—satisfied the definition of “repeated incidents.” Judge Connolly also concluded that these statements would not fall under the protection of the 1st Amendment because they qualified as unprotected “fighting words” and/or “true threats.” In re: Rainville v. Forcia, A23-1450 (Minn. Ct. App. 7/22/2024).
Pat O’Neill
Larson King, LLP
phoneill@larsonking.com
Sam Schultz
Larson King, LLP
sschultz@larsonking.com
Tax Law
JUDICIAL LAW
• First impression: Interplay of deferral and installment rules. On their 2002 returns, several taxpayers elected under Sec. 1042 to defer recognition of the approximately $4 million in gains each received from the sale of stock to an ESOP. In exchange for the stock, the taxpayers received promissory notes, the first payment under which was made in 2003. In 2003, the taxpayers reported that they had purchased sufficient qualified replacement property to defer recognition of the gain on the 2002 sale. Also in 2003, the taxpayers sold their QRP; the sale of QRP triggers a recapture of the previously deferred gain. The court was faced with determining “the interplay of ESOP income deferral provisions of section 1042—which generally permits an electing taxpayer to defer recognition of realized gain on the sale of stock to an employee stock ownership plan (ESOP), provided he acquires qualified replacement property (QRP) within a specified period—and section 453—which dictates, unless the taxpayer affirmatively elects not to have the provision apply, that the gain from any disposition of property, where at least one payment is to be received after the close of the taxable year in which the disposition occurs, shall be taken into account under the installment method, which generally defers gain until the year or years when payment is received.” Ultimately, the court agreed with the taxpayers’ contention that “because they disposed of their stock in installment sales, they are entitled to recognize any gains on the sales—no longer shielded by section 1042—under the installment method.” The taxpayers were required to recognize gains for 2003 in the proportion of the payment each received in 2003 which the gross profit on the sale bears to the total contract price. Berman v. Comm’r, No. 202-13, 2024 WL 3424032 (T.C. 7/16/2024).
• First impression: Canada-US Income Tax Treaty. The tax court addressed another question of first impression, which, as articulated by the court, was “whether we have jurisdiction to review an IRS denial of a hearing request regarding collection of taxes pursuant to a mutual collection assistance request (MCAR) made by Canada under the [Canada-US Income Tax] Treaty.” The jurisdictional question arose after Canada asked the United States to assist in the collection of approximately $200,000 in taxes owed by J.E. Ryckman. Ms. Ryckman received a notice of federal tax lien stating the liability. She requested a collection due process hearing, which the revenue officer denied because Ms. Ryckman’s “procedural rights to restraining collection under U.S. law through a CDP hearing… are treated as lapsed or exhausted.” The revenue officer indicated, though, that Ms. Ryckman could request review under a different process. Ms. Ryckman then filed a petition with the tax court asserting that the commissioner erred in denying the hearing. She asked the court to remand for a statutory hearing. The commissioner moved to dismiss for lack of jurisdiction. In a 7-6 opinion, the court held that it did not have jurisdiction under the Canada-US Income Tax Treaty. A concurrence emphasized the constitutional requirement of adherence to a treaty negotiated and enacted by the Legislature, and the limited role of the tax court, which is to faithfully interpret the text of the treaty. The dissent posited that the treaty and the procedural safeguards Ms. Ryckman sought to enact could be read in harmony, and that under such a harmonized reading, Ms. Ryckman would prevail. J.E. Ryckman v. Comm’r, No. 750-21L, 2024 WL 3618184 (T.C. 8/1/2024).
• vDeduction disallowed and 40% penalty upheld in “urban version of the conservation easement tidal wave.” The tax court seemed to have little patience for a claimed conservation easement in a case involving the renovation of a historic office building in downtown Cleveland, Ohio. The building was renovated into luxury apartments. Historic preservation tax credits from the National Park Service and the State of Ohio helped finance the renovation. In what the court characterized as an attempt to “gild the lily,” the development partnership then claimed a $22.6 million charitable contribution deduction on the theory that it had relinquished valuable development rights. The court described that purported relinquishment of rights as a “chimerical concept ginned up solely to support a wildly inflated appraisal.” The court sustained the commissioner’s disallowance of the charitable contribution deduction and his imposition of a 40% penalty for a gross valuation misstatement. Corning Place Ohio, LLC v. Comm’r, T.C.M. (RIA) 2024-072 (T.C. 2024).
• Tax court’s income capitalization process not erroneous. The Minnesota Supreme Court affirmed the tax court in a valuation dispute involving the Tamarack Village Shopping Center in Woodbury. The Supreme Court addressed two issues, both involving the tax court’s income capitalization approach to valuing the properties. First, the reviewing court affirmed the lower court’s decision not to use an effective rent calculation when estimating the properties’ value. Next, the Court held that the tax court did not err when it declined to reduce the value of one of the properties to account for lease-up costs due to the property’s above-market vacancy rate. Tamarack Vill. Shopping Ctr., LP v. Cnty. of Washington, ___ N.W.3d ___, No. A23-1419, 2024 WL 3588762 (Minn. 7/31/2024).
• Property tax: Uptown VFW qualifies for preferred tax rate. Resolving cross-motions for summary judgment in favor of the taxpayer, the tax court held that the Uptown VFW qualified for a lower tax rate since it is a “nonprofit community service oriented organization.” As karaoke-loving tax attorneys might guess, the VFW spans three tax parcels: a parking lot, a community room, and a restaurant. The VFW sought special classification for the parcels. The county argued that the parcels could not be classified independently, and in the alternative that even if independent categorization was appropriate, the VFW did not meet other statutory requirements for the preferred classification. The court began by determining that the three parcels may be classified separately, because the statutory scheme “plainly contemplates a split-classification” and “the supreme court authorizes a split classification when the statute calls for one.” The court then went on to determine that the parking lot, community room and restaurant all qualified for the preferential classification. (For our karaoke-loving colleagues, it’s on Monday nights at the Uptown VFW.) James Ballentine Post 246, VFW U.S. v. Cnty. of Hennepin, No. 27-CV-21-13987, 2024 WL 3434933 (Minn. T.C. 7/16/2024).
• Jurisdiction: Taxpayer rights advocate correspondence not an appealable order. A taxpaying couple owed several years’ worth of taxes and accrued interest. The couple pursued relief from payment or collection by submitting an offer in compromise, which Revenue declined. That correspondence from Revenue informed the couple of the right to request review by the Taxpayer Rights Advocate (TRA), but it did not inform the couple that decisions of the TRA are final and unappealable. The couple pursued relief through the TRA, and the TRA also denied relief. The court noted, and the commissioner acknowledged, that “correspondence between DOR and [the taxpayer] [did] not convey in writing to the taxpayer that decision of the TRA [were] final and unappealable.” The taxpayers attempted to appeal the unfavorable TRA letter to the Minnesota Tax Court. Despite the commissioner’s failure to inform the taxpayers of the limits of their rights under the TRA process, the tax court held that it lacked jurisdiction to hear the appeal. The court granted summary judgment to the commissioner and held that it would not “address the merits of the [couple’s] claims regarding the actions of TRA or Collections.” According to its website, the vision of the Taxpayer Rights Advocate Office is to ensure that “[t]axpayers understand and are aware of their rights and have equitable access to exercise them.” Nass v. Comm’r of Revenue, No. 9643-S, 2024 WL 3418699 (Minn. T.C. 7/15/2024).
• Property tax: Location, location, location—and timing; buy-and-hold investment appropriate for downtown parking lot valuation. The owner of a downtown parking lot and the county agreed that the parking lot should—at least eventually – be developed. The county asserted that the time was ripe for development on the tax assessment date. The property owner argued that development should wait until there was sufficient demand for development—a 10-year time horizon at least. The tax court was tasked with determining whether the property was appropriately valued as continued operation as a parking lot (a buy-and-hold investment) or more appropriately valued as a site for immediate development. It held the former: The parking lot was appropriately valued as a buy-and-hold investment. In reaching this conclusion, the tax court emphasized the importance of market analysis. The highest and best use determination does not stand alone. Rather, the determination is “the logical end of a spectrum of market analysis procedures, running from [1] the study of a property’s market area, through [2] more detailed marketability studies into [3] the financial analysis of alternative [uses]..., and finally [4] to the... formal conclusion of [a] highest and best use, [b] the timing of that use, and [c] the most probable buyer.” Brian P. Short, Tr. of the 1995 Irrevocable Trusts A through G of Marion D. Short, Petitioner, v. Cnty. of Hennepin (quoting The Appraisal of Real Estate 305 (15th ed. 2020)). Finding no recorded evidence that immediate development was a feasible alternative use on the valuation date, the court held that the highest and best use was for continued interim use as a surface parking lot. The court then valued the parking lot as an investor would, ultimately using a discounted cash flow valuation approach and holding that such an approach (and including a reversion) reliably values the subject as a property suitable for future development that must be operated with an income-producing interim use pending development feasibility. The court reduced the assessed value from just over $10 million to just under $4 million. Brian P. Short, Tr. of the 1995 Irrevocable Trusts A through G of Marion D. Short, Petitioner, v. Cnty. of Hennepin, No. 27-CV-22-3628, 2024 WL 3588956 (Minn. T.C. 7/30/2024).
• Property tax; impact of covid-19 on market value. In this tax appeal concerning the market value of an income-producing Edina office property, the court addressed the impact of the covid-19 pandemic on the property’s market value. The effects of the pandemic impacted numerous aspects of the court’s market value analysis, including vacancy and collection loss; market capitalization rate; and comparable sales. Ultimately, the court increased the assessed value for one tax year and decreased the assessed value for another tax year. OCC Prop. 2, LLC v. Cnty. of Hennepin, No. 27-CV-21-4795, 2024 WL 3505038 (Minn. Tax 7/18/2024).
Morgan Holcomb
Mitchell Hamline School of Law
morgan.holcomb@mitchellhamline.edu
Torts & Insurance
JUDICIAL LAW
• Negligent selection of an independent contractor. Plaintiff’s semi-truck was struck by the truck of an independent contractor after it crossed the center line. The independent contractor had a suspended license and an active felony arrest warrant, as well as multiple DWI convictions and recent speeding infractions. Plaintiff sued defendant, a farming operation that hired an independent contractor to haul sugar beets, who, in turn, had hired the at-fault driver as an independent contractor, for negligent selection of an independent contractor. The district court granted defendant’s summary judgment motion, holding that while a claim for negligent selection of an independent contractor existed, there was no genuine issue of material fact as to defendant’s alleged negligence. The court of appeals held that Minnesota does not recognize the tort of negligent selection of an independent contractor and affirmed.
The Minnesota Supreme Court granted review on two issues: whether the tort of negligent selection of an independent contractor exists under the common law of Minnesota, and whether the district court erred in granting defendant’s summary judgment motion. As to the first issue, the Court held that the tort of negligent selection of an independent contractor does exist under Minnesota common law. The Court recognized the tort for the first time because: (1) the tort, found in the Restatement (Second) of Torts, was the natural extension of the torts of negligent hiring in the employment context and negligent credentialing; (2) the claim has been recognized in a majority of other common law states; and (3) recognizing the tort did not create tension with other applicable law. The Court held that to prevail on such a claim, “a claimant must establish that the principal (1) breached their duty to exercise reasonable care in selecting a competent and careful contractor, and (2) that this breach of duty caused the claimant’s physical harm.” The Court went on to note that “what amounts to ‘reasonable care’—turns on the circumstances of each individual case… [and] ‘[c]ertain factors are important’… includ[ing] (1) ‘the danger to which others will be exposed if the contractor’s work is not properly done,’ and (2) ‘the character of the work to be done—whether the work lies within the competence of the average [person]’ or requires special skill and training.” Finally, the Court noted that a plaintiff must establish that “the harm at issue ‘result from some quality in the contractor which made it negligent for the employer to entrust the work to [them].’”
As to the second issue—whether the district court erred in granting defendant’s summary judgment motion—the Court was evenly divided. As a result, summary judgment in favor of defendant was affirmed. Alonzo v. Menholt, No. A22-1796 (Minn. 7/10/2024). https://mn.gov/law-library-stat/archive/supct/2024/OPA221796-071024.pdf
Jeff Mulder
Bassford Remele
jmulder@bassford.com