Criminal Law
JUDICIAL LAW
• Speedy trial: Neither state nor defendant are responsible for delay caused by
covid-19. Appellant was charged in March 2020 with a felony violation of a DANCO. That same month, the Minnesota Supreme Court prohibited the commencement of new jury trials due to covid-19. Trials could commence after July 6, once the court had submitted and received approval of a safety plan. Appellant demanded a speedy trial in May, and trial was scheduled for July 6. However, the trial was delayed until August 3, 77 days after the speedy trial demand, because a covid safety plan had not yet been approved. Trial began on August 3, after which a jury found appellant guilty. He appealed, arguing his speedy trial right was violated.
The Minnesota Court of Appeals finds no violation of appellant’s 6th Amendment right to a speedy trial. The delay in this case of greater than 60 days raises the presumption that a violation occurred. However, the court of appeals notes that the cause of the delay was solely the pandemic. An earlier trial would not have been safe, and the delay was not a deliberate attempt by the state to hamper the defense. Appellant asserted his speedy trial demand throughout the proceedings, but all parties were aware that a safe trial could not occur within the 60-day speedy trial period. Finally, because appellant was already in custody for another, unrelated offense, he was not prejudiced by the delay. Appellant’s conviction is affirmed. State v. Jackson, A21-0126, __ N.W.2d __, 2021 WL 5173146 (Minn. Ct. App. 11/8/2021).
• Evidence: Confession must be corroborated by independent evidence reasonably tending to prove that the offense was committed. Appellant was charged with criminal sexual conduct involving his 13-year-old stepdaughter, C.D. In an interview with police, appellant confessed to sexually abusing C.D., specifically admitting to four incidents, including an act of sexual abuse that occurred while appellant and C.D. were deer scouting. A jury found appellant guilty of five counts of criminal sexual conduct. The Minnesota Court of Appeals reversed appellant’s conviction on the count related to the deer scouting incident. At trial, evidence of appellant’s confession to this incident was introduced, but his confession was not corroborated with other evidence.
Minn. Stat. §634.03 provides, in relevant part, that “[a] confession of the defendant shall not be sufficient to warrant conviction without evidence that the offense charged has been committed…” The Supreme Court considers the meaning of the phrase “evidence that the offense charged has been committed.” The Court finds that section 634.03 is not ambiguous, and that its plain language “requires the State to present evidence independent of a confession that reasonably tends to prove that the specific crime charged in the complaint actually occurred in order to sustain the defendant’s conviction.”
As to the “deer scouting incident” in this case, the charge was based solely on appellant’s confession during a police interview. The state argues that three pieces of evidence corroborate appellant’s confession: C.D.’s testimony regarding other sexual assaults by appellant, C.D.’s testimony about appellant’s sexual assault during duck season, and the general lack of coercion surrounding appellant’s confession. The Court finds this evidence insufficient. Section 634.03’s corroboration requirement cannot be fulfilled simply by introducing evidence of other offenses, especially other offenses that differ significantly in detail. The Court also holds that lack of coercion in obtaining a confession is not independent evidence that the charged offense was committed. The court of appeals’ reversal of appellant’s conviction for the deer scouting incident is affirmed. State v. Holl, A19-1464, 966 N.W.2d 803 (Minn. 11/17/2021).
• Controlled substances: “Sell” includes an offer to sell a prohibited amount of a controlled substance, even if a lesser amount was delivered. While entering a guilty plea to first-degree sale of 10 grams or more of heroin, under Minn. Stat. §152.021, subd. 1(3), appellant admitted selling heroin to an informant four times in a 20-day period. He specifically admitted to offering to sell the informant an aggregate amount of 13 grams of heroin on those four occasions and delivering 8.908 grams. The district court accepted appellant’s guilty plea, but he later moved to withdraw the plea, arguing section 152.021, subd. 1(3), requires proof that 10 or more grams of heroin were actually delivered. The district court denied his motion and the court of appeals affirmed.
Section 152.021, subd. 1(3), prohibits unlawfully selling a total weight of 10 or more grams of heroin on one or more occasions within a 90-day period. Section 152.01, subd. 15a, defines “sell” as “(1) to sell, give away, barter, deliver, exchange, distribute or dispose of to another, or to manufacture; or (2) to offer or agree to perform an act listed in clause (1); or (3) to possess with intent to perform an act listed in clause (1).” The plain language of the definition of “sell” includes offering or agreeing to sell. Inserting this definition into section 152.021, subd. 1(3), the Supreme Court reads the statute as prohibiting unlawfully offering or agreeing to sell a total weight of 10 or more grams of heroin on one or more occasions within a 90-day period.
Because appellant admitted to offering to sell more than 10 grams of heroin, his guilty plea to first-degree sale of heroin was accurate and valid. State v. Fugalli, A19-2007, 967 N.W.2d 74 (Minn. 12/1/2021).
• Wrongfully obtaining public assistance: Proof is required of intent to defeat the purposes of one of the listed public assistance programs. Appellant received over $65,000 in public assistance through multiple county programs. In his applications, appellant repeatedly claimed he had no income or assets, and claimed rent as his only expense. An investigation revealed appellant had earned gambling income, had thousands of dollars in three bank accounts, owned 12 cars, owned a home, and did not pay rent. At trial, appellant claimed he was unaware of mistakes on his applications, and he had no explanation for how false statements were included on multiple applications. A jury found appellant guilty of wrongfully obtaining public assistance, in violation of Minn. Stat. §256.98, subd. 1(1). The court of appeals affirmed.
Section 256.98, subd. 1, identifies various acts or omissions that are considered “theft” if “done with intent to defeat the purposes of sections 145.891 to 145.897, the MFIP program…, the AFDC program…, chapter 256B, 256D, 256J, 256K, or 256L, and childcare assistance programs.” Appellant argued for a “joint” reading of this phrase, while the state argued for a “several” reading. The Supreme Court concludes that the only reasonable interpretation of this section “is that it requires proof that a defendant acted with the ‘intent to defeat the purposes of’ any one or more of the public assistance programs listed” in that section. This is the only interpretation that gives effect to all provisions of the wrongfully obtaining assistance statute.
The Court concludes that the circumstances proved at trial are consistent only with appellant’s guilt. The evidence, viewed in the light most favorable to the verdict, proved beyond a reasonable doubt that appellant acted with intent to defeat the purposes of the aid programs for which he applied. State v. Irby, A20-0375, __ N.W.2d __, 2021 WL 5912899 (Minn. 12/15/2021).
• Restitution: Court must expressly state it considered a defendant’s ability to pay and the record must include sufficient evidence for a court to consider a defendant’s ability to pay. Appellant entered an Alford plea to first-degree arson following a house fire. The presentence report did not contain any information regarding appellant’s income, resources, obligations, or ability to pay restitution. There was also no mention of any of this information at the sentencing hearing. The district court ordered $87,500 in restitution, but, again, the order made no mention of appellant’s ability to pay. A restitution hearing was held, at which the focus was the timeliness of the restitution request. At the hearing, there was no mention or evidence of appellant’s income, resources, or obligations. The court again ordered $87,500 in restitution in an order that did not mention appellant’s ability to pay. The court of appeals affirmed, and the Supreme Court granted review on the sole issues of whether the district court fulfilled its statutory obligation to consider appellant’s ability to pay restitution.
Minn. Stat. §611A.045, subd. 1, provides that a court “shall consider… the income, resources, and obligations of the defendant.” The Supreme Court finds that this statutory provision requires the court to affirmatively consider the defendant’s ability to pay when awarding and setting the amount of restitution. To fulfill this mandate, the district court must expressly state, orally or in writing, that it considered the defendant’s ability to pay. Specific findings regarding the defendant’s income, resources, and obligations are not required, but the record must contain sufficient information about these items to allow a district court to consider a defendant’s ability to pay.
The restitution order in this case was insufficient, as it did not expressly state that the district court considered appellant’s income, resources, and obligations. The record is also devoid of any information about appellant’s ability to pay. The court of appeals is reversed, and the case is remanded to the district court. State v. Wigham, A20-0857, __ N.W.2d __, 2021 WL 6057995 (Minn. 12/22/2021).
• Implied consent: Birchfield did not invalidate law allowing an officer to request a PBT with reasonable suspicion a driver was driving while impaired. Appellant’s vehicle was stopped for speeding. Appellant smelled of alcohol and had slurred speech and watery, glassy, bloodshot eyes, leading the state trooper to believe appellant was impaired. Appellant denied drinking alcohol, but the trooper noted several indicators of impairment during field sobriety tests. The trooper asked appellant to submit to a PBT, but appellant refused. Appellant was then arrested for DWI, and his driver’s license was revoked. Despite finding much of the trooper’s testimony at the implied consent hearing was not credible, the district court—finding that the trooper had reason to believe appellant was impaired and that the trooper therefore properly requested a PBT—sustained the license revocation.
The Minnesota Court of Appeals considers whether Minn. Stat. §169A.41, subd. 1, violates the 4th Amendment by allowing an officer to request a PBT based on reasonable suspicion and not probable cause. The court rejects appellant’s argument that Birchfield v. North Dakota, 136 S.Ct. 2160, renders section 169A.41, subd. 1, unconstitutional. Birchfield discussed chemical breath tests, which the court distinguishes from a PBT, which cannot be used to establish any element of a crime and may be refused by a driver with no resulting direct penalty.
Ultimately, the court finds the district court did not err in concluding that a reasonable suspicion existed to support the trooper’s request for a PBT. The court affirms the district court’s decision to sustain the revocation of appellant’s driver’s license. Mesenburg v. Comm’r Pub. Safety, A21-0578, __ N.W.2d __, 2021 WL 6110021 (Minn. Ct. App. 12/27/2021).
• Sentencing: “Convicted of a violation of this chapter” in Minn. Stat. §152.025, subd. 4(a), includes a petty misdemeanor violation of chapter 152. Appellant was convicted of petty misdemeanor possession of marijuana (Minn. Stat. §152.027, subd. 4(a)) in 2005. In 2007, he was convicted of fifth-degree possession of cocaine. In calculating his criminal history score for his 2019 domestic assault conviction, the district court assigned one-half of a felony point for the 2007 conviction, rejecting appellant’s argument that the 2007 conviction should be classified as a gross misdemeanor under the 2016 Drug Sentencing Reform Act (Minn. Stat. §152.025, subd. 4(a)) because his 2005 petty misdemeanor conviction was not a qualifying prior conviction. The court of appeals affirmed.
Under section 152.025, subd. 4(a), a 5th-degree possession offense is a felony, unless the defendant “has not been previously convicted of a violation of this chapter [152],” and other requirements are met. If the requirements are met, the 5th-degree possession offense is deemed a gross misdemeanor for criminal history score calculation purposes.
The statute does not define “convicted” or “violation,” but they are defined elsewhere, and the Supreme Court finds that the definitions apply to chapter 152. Section 609.02, subd. 5, defines “conviction” as a plea of guilty or a verdict or finding of guilty. Section 645.44, subd. 17, defines “violate” as “failure to comply with.” Neither definition distinguishes between criminal and non-criminal offenses or carves out an exception for petty misdemeanors.
Given these definitions, the Court concludes that section 152.025, subd. 4(a), unambiguously includes appellant’s 2005 petty misdemeanor conviction. Appellant was convicted of the petty misdemeanor following the acceptance of his guilty plea, in which appellant admitted to violating chapter 152. Thus, appellant’s 2007 possession conviction was properly counted as a felony. State v. Morgan, A19-1902, __ N.W.2d __, 2021 WL 6133171 (Minn. 12/29/2021).
• 4th Amendment: Pretrial release violation does not constitute criminal activity to support expanding a traffic stop. While appellant was on pretrial release in a DWI and controlled substance case, he was a passenger in a vehicle pulled over by police for failing to properly signal a turn. The officer recognized appellant and was aware he was on pretrial release. The officer smelled alcohol coming from the vehicle and asked the driver if she had been drinking. She said no. The officer then asked the passengers if they had been drinking. Appellant responded affirmatively and admitted a condition of his release was abstaining from alcohol. Appellant then blew 0.03 on a PBT. He was arrested for violating his release conditions. During a search of his person, the officer found shotgun shells in his pocket. Appellant was charged with illegal possession of ammunition. The district court denied appellant’s motion to suppress the shotgun shells, concluding the evidence was found during a valid search incident to arrest. Appellant was convicted after a stipulated facts bench trial. The court of appeals found the expansion of the traffic stop was reasonable and affirmed the district court’s denial of appellant’s suppression motion.
The Supreme Court disagrees, holding that the officer’s investigation into appellant’s non-criminal violation of his pretrial release conditions exceeded the permissible scope and duration of the traffic stop. There is no dispute that appellant was seized when the officer questioned him about his pretrial release conditions. The seizure was warrantless, and, therefore, per se unreasonable. To evaluate the reasonableness of seizures during traffic stops, however, the Court asks whether the traffic stop was justified at its inception by a reasonable articulable suspicion of criminal activity and whether law enforcement’s actions during the stop were reasonably related to and justified by the circumstances that first gave rise to the stop.
After an initially lawful traffic stop, any expansion of the scope or duration of the stop must be justified by a reasonable articulable suspicion of other criminal activity. The Supreme Court applies prior case law holding that a probation violation does not constitute criminal contempt to conclude that a violation of a condition of pretrial release is not a crime. The Court reaffirms that an officer must have reasonable articulable suspicion of conduct that is specifically a crime under Minnesota law, not merely “illegal activity” generally, to expand the scope of a traffic stop.
The court of appeals is reversed, and the case is remanded to the district court with directions to vacate appellant’s conviction and grant his suppression motion. State v. Sargent, A19-1554, __ N.W.2d __, 2021 WL 6133172 (Minn. 12/29/2021).
Samantha Foertsch, Bruno Law PLLC
samantha@brunolaw.com
Stephen Foertsch, Bruno Law PLLC
stephen@brunolaw.com
Employment & Labor Law
JUDICIAL LAW
• FLSA claims; jurisdiction defense not waived; case dismissed. A collective action brought under the Fair Labor Standards Act (FLSA) for overtime pay was properly dismissed by U.S. District Court Judge Paul Magnuson. The 8th Circuit, affirming the lower court’s decision, held that the company did not waive a jurisdictional defense to the claims for certification, and correctly threw out claims with no connection to Minnesota, along with finding that the two claimants in the case were not employees but traveling on their work, and therefore, the company was not obligated to pay for their them. Vallone v. CJS Solutions Group, LLC, 9 F.3rd 861 (8th Cir. 08/18/2021).
• Reinstatement of employee; arbitration award upheld. An arbitrator’s award was upheld on grounds that the arbitrator properly reduced the employee’s discharge or suspension. The 8th Circuit affirmed the lower court decision upholding the arbitration award, on grounds that the arbitrator did not exceed his authority in finding that it was just cause for discipline but not termination. WM Crittenden Operation, LLC v. United Food & Commercial Workers, Local Union 1529, 9 F.4th 732 (8th Cir. 08/16/2021).
• Noncompete provision nixed; employer terminated agreement. A noncompete and nonsolicitation provision of an employment contract were no longer in effect after the employer terminated the agreement in writing. Reversing the lower court decision, the 8th Circuit held that the employer’s termination of the agreement in writing made the noncompete agreement “inoperable” and that the nonsolicitation provision was too broad in impermissibly prohibiting the employee from accepting unsolicited business from her former clients. Miller v. Honkamp Krueger Financial Services Inc., 9 F.4th 1011 (8th Cir. 08/24/2021).
• Long-term disability; ERISA claim denied. A claim for long-term disability benefits by an employee under the Employee Retirement Income Security Act (ERISA) was rejected. The 8th Circuit upheld a lower court determination that the plan did not abuse its discretion in interpreting the provisions of the policy or in denying the claim. Harris v. Federal Express Corporation Long Term Disability Plan, 856 Fed. Appx. 637 (8th Cir. 08/20/2021) (per curiam).
• Workers’ compensation; noncompliant opiate treatment not compensable. Treatment of an injured employee with opiate mediation that was noncompliant with the long-term opiate treatment protocols promulgated by the Department of Labor and Industry barred compensation under the state’s workers’ compensation system. Reviewing a decision of the Workers’ Compensation Court of Appeals, the Supreme Court held that the employee’s condition did not qualify as a “rare exception” to the treatment parameters developed by the agency. Johnson v. Darchuks Fabrications Inc., 963 N.W.2d 227 (08/18/2021).
• Unemployment compensation; HIPAA violation bars benefits. An employee of a mental health facility who violated the federal HIPAA law concerning privacy of medical records was denied unemployment compensation benefits. Following a decision by an unemployment law judge with the Department of Employment & Economic Development, the court of appeals held that the employee’s access to medical records for “personal reasons” constituted disqualifying “misconduct.” Wilson v. Pines Mental Health Center, Inc., 2021 WL 3722082 (Minn. Ct. App. 08/23/2021) (unpublished).
• Quit after not paid; unemployment denied. An employee who quit after not being paid for 16 days was denied unemployment compensation benefits. The court of appeals upheld the ruling of an unemployment law judge, who initially found in favor of the employee, but reversed that ruling on reconsideration and held that the employee did not to have “good reason” attributable to the employer to justify resigning. Holly v. Cedarock Builders, LLC, 2021 WL 5442549 (Minn. Ct. App. 11/22/2021) (unpublished).
• Quit due to health; no benefits. An employee who quit due to ill health not attributable to the employer also was denied unemployment benefits. The appellate court, agreeing with a ULJ, determined that the employee didn’t satisfy medical-necessity or “good reason” provisions of the unemployment compensation law. Nash v. Mayo Clinic, 2021 WL 5441779 (Minn. Ct. App. 11/22/2021) (unpublished).
• Increased commute; employee entitled to benefits. An employee was entitled to unemployment benefits after he quit because his employers’ change in policy resulted in a 120-mile daily round trip commute, adding some 12-20 uncompensated hours of time each week. The appellate court ruled that the employee had “good reason” caused by the employer to resign. Sirek v. Northwest Respiratory Services, 2021 WL 5441808 (Minn. Ct. App. 11/22/2021) (unpublished).
Marshall H. Tanick, Meyer, Njus & Tanick
mtanick@meyernjus.com
Environmental Law
JUDICIAL LAW
• Minnesota Court of Appeals affirms broad statutory standing under MERA §116B.10. On 12/27/2021, the Minnesota Court of Appeals held that that Minn. Stat. §116B.10, subd. 1, of the Minnesota Environmental Rights Act (MERA) broadly grants standing irrespective of whether a party establishes an injury. The case involved a complaint filed by an environmental group, Northeastern Minnesotans for Wilderness (NMW), under MERA section 116B.10 against the Minnesota Department of Natural Resources (DNR), challenging the adequacy of the DNR’s nonferrous metallic mining rules, Minn. R. ch. 6132, to protect the Rainy River Headwaters (RRH), Boundary Waters, and other natural resources from pollution, impairment, or destruction. Twin Metals, a nonferrous mining company holding federal mineral leases in the RRH, intervened in the case and filed a motion to dismiss NMW’s claim for lack of standing. The district court held that NMW had standing and denied Twin Metals’ motion to dismiss.
In affirming the district court, the court of appeals rejected Twin Metals’ argument that NMW lacked standing because it failed to allege a concrete, particularized, and imminent injury. A party suing on a matter of public interest, the court noted, must show either (1) an injury different from that of the public or (2) express statutory authority to sue. The court concluded that section 116B.10 “unambiguously” confers statutory standing upon any organization with members in Minnesota, a minimal qualification NMW had met; the statute “contains no limiting language requiring that the entity suing must be aggrieved by, interested in, or otherwise injured by the rule.” The court referenced other instances of Minnesota statutes conferring express authority to sue upon plaintiffs even in the absence of actual harm. See, e.g., League of Women Voters v. Ritchie, 819 N.W.2d 636, 645 n.7 (Minn. 2012) (interpreting Minn. Stat. §204B.44 (2010)). Because the court concluded NMW had established statutory standing, it did not address the issue of whether NMW had established a concrete, particularized, and imminent injury. NE Minnesotans for Wilderness v. Minn. Dep’t of Nat. Res., No. A21-0857, 2021 Minn. App. Unpub. LEXIS 1007 (12/27/2021).
• 8th Circuit mandamus order prohibits EPA’s blending policy. In December the United States Court of Appeals for the 8th Circuit granted the Iowa League of Cities’ request for mandamus relief regarding its challenge to the U.S. Environmental Protection Agency’s regulation of blending at municipally owned sewer treatment facilities. “Blending” refers to the practice of channeling surplus wastewater during wet-weather events around a sewer facility’s secondary treatment units (which are typically biological-based processes, sensitive to abrupt increases in flow), treating the diverted wastewater with other (typically non-biological) treatment methods, and blending it with the fully treated wastewater before discharge. The blended discharge must still meet all applicable effluent limitations. In the early 2000s, EPA established a policy that this practice of blending is prohibited; rather, the policy provided, the practice constituted a “bypass”—a temporary exceedance of effluent limitations that is only allowed under EPA regulations when there are “no feasible alternatives.” 40 C.F.R. §122.41(m)(4).
In prior 2013 litigation between EPA and the League before the 8th Circuit, the League argued, among other things, that the practical effect of EPA’s blending policy was to apply effluent limits to individual waste streams exiting a facility’s supplemental treatment unit, prior to blending with the fully treated wastewater and final discharge to the receiving water body; by applying effluent limits to internal treatment processes rather than at “end of pipe,” EPA’s policy exceeded the agency’s authority. The 8th Circuit agreed and vacated the blending rule.
In the current action, the League sought mandamus relief to stop EPA from regulating blending as a prohibited bypass in combined sewer systems. EPA attempted to distinguish its current blending prohibition by noting that the court’s 2013 decision addressed blending in separate sewer systems, and thus was inapplicable to the agency’s blending approach for combined sewer systems. The court flatly rejected this argument—“we did not differentiate [in the 2013 decision] between combined and separate sewer systems”—and opined that “EPA’s sub rosa enforcement of its blending rule and its efforts to resist making its position public appear calculated so as to evade ordinary appellate review.” (Citations omitted.) The court ordered EPA to obey the court’s 2013 mandate and “cease and desist treating blending as a prohibited bypass within the Eighth Circuit.” The court limited its mandate to the 8th Circuit, finding that the League lacked standing to pursue nationwide relief because all its members were located in the 8th Circuit. Iowa League of Cities v. EPA, No. 11-3412, 2021 WL 6102534 (12/22/2021).
Administrative Action
• Overview of EPA and the Corps’ proposed interim definition of WOTUS. In December the Environmental Protection Agency (EPA) and the U.S. Army Corps of Engineers proposed an “interim rule” defining “Waters of the United States” (WOTUS). The definition of WOTUS is significant because it prescribes the reach of federal jurisdiction under the Clean Water Act (CWA), including the NPDES and 404 permit programs. Recall that a set of 1986 rules defining WOTUS had been subject to numerous fractured interpretations by the Supreme Court of the United States, including the Court’s decision in Rapanos v. United States, 547 U.S. 715 (2006). In that case Justice Scalia, in a plurality opinion, articulated a jurisdictional test that the CWA extends only to waters that are “relatively permanent, standing or continuously flowing” or to wetlands that are immediately adjacent to such waters. But Justice Kennedy, in a partially concurring opinion, said federal “jurisdiction over wetlands depends upon the existence of a significant nexus between the wetlands in question and navigable waters in the traditional sense.”
During the Obama era, EPA adopted a new definition of WOTUS, incorporating the broader “significant nexus” approach of Justice Kennedy in Rapanos. That definition was repealed by the Trump EPA and replaced by the Navigable Waters Protection Rule (NWPR), which found CWA jurisdiction primarily under Justice Scalia’s more narrow “relatively permanent” standard. In August and September, federal district courts in both Arizona and New Mexico vacated the NWPR. Subsequently, EPA and the Corps announced that they would stop implementing NWPR and rely on the 1986 rule.
The agencies’ new proposed interim rule is based on the 1986 rule but also codifies aspects of the Rapanos decision, including both the “relatively permanent” and “significant nexus” tests. In short, the proposed rule would interpret WOTUS to include:
- traditional navigable waters, interstate waters, the territorial seas, and their adjacent wetlands;
- most impoundments of WOTUS;
- tributaries to traditional navigable waters, interstate waters, the territorial seas, and impoundments that meet either the relatively permanent standard or the significant nexus standard;
- wetlands adjacent to impoundments and tributaries, that meet either the relatively permanent standard or the significant nexus standard; and
- “other waters” that meet either the relatively permanent standard or the significant nexus standard.
The agencies plan to eventually replace this interim rule with a permanent rule defining WOTUS. 86 Fed. Reg. 69372 (12/7/2021).
Jeremy P. Greenhouse, The Environmental Law Group
jgreenhouse@envirolawgroup.com
Jake Beckstrom, Vermont Law School, 2015
jbmnusa@gmail.com
Erik Ordahl, Barna, Guzy & Steffen
eordahl@bgs.com
Federal Practice
JUDICIAL LAW
• 9 U.S.C. §4; Motion to compel arbitration; disputed issued of fact. Where the defendant removed an action and moved to compel arbitration, the district court denied the motion, and the defendant appealed, the 8th Circuit held that because material facts relating to the arbitration agreement were disputed, the district court should have held a trial in accordance with 9 U.S.C. §4. Duncan v. Int’l Markets Live, Inc., ___ F.4th ___ (8th Cir. 2021).
• Fed. R. Civ. P. 60(b)(1); attorney’s lack of diligence; no excusable neglect. Affirming a district court’s denial of a motion for reconsideration that it had treated as a Fed. R. Civ. P. 60(b)(1) motion, the 8th Circuit found that an attorney’s “lack of diligence” did not constitute “excusable neglect” for purposes of Rule 60(b)(1). United States v. Mills, 18 F.4th 573 (8th Cir. 2021).
• Declaratory judgment act; claims moot; no actual controversy. Where the plaintiff sought a declaratory judgment that its rights had been violated but sought no damages, the 8th Circuit found that the plaintiff sought “nothing more than a judicial pronouncement that its constitutional rights were violated,” and affirmed the district court’s dismissal of the action for lack of subject matter jurisdiction. Regional Home Health Care, Inc. v. Becerra, 19 F.4th 1043 (8th Cir. 2021).
• 28 U.S.C. §1442(a)(1); federal officer removal rejected; other grounds for removal waived. Where plaintiffs filed separate cases in Iowa state courts arising out of the covid-related deaths of workers at meat processing plants; the defendants removed the cases on the basis of federal officer removal, alleging that they were “acting under” federal direction when they continued their operations in the early month of the pandemic; the district court rejected the grounds for removal and remanded the actions to the Iowa courts; and the defendants appealed, the 8th Circuit rejected defendants’ argument that they were performing “a basic governmental task or operating pursuant to a federal directive” and affirmed the district court’s remand order.
The 8th Circuit also determined that the defendants had waived their alternative argument for federal question removal where they limited their argument to a footnote and failed to submit supplemental authority that might have supported that argument even after the Supreme Court issued a decision that would have permitted the 8th Circuit to consider that argument. Buljic v. Tyson Foods, Inc., ___ F.4th ___ (8th Cir. 2021).
• Abuse of discretion in discovery irrelevant absent evidence of harm. The 8th Circuit declined to reach the plaintiff’s argument that the district court had abused its discretion in a series of discovery-related decisions, finding that the plaintiff had failed to establish any harm arising from those decisions. Tilghman v. Allstate Prop. & Cas. Ins. Co., ___ F.4th ___ (8th Cir. 2022).
• Redactions for non-responsiveness again found to be improper. Magistrate Judge Docherty followed a number of previous decisions in the District of Minnesota and recently held that otherwise relevant documents produced in discovery cannot be redacted for non-responsiveness or irrelevance. Target Corp. v. ACE Am. Ins. Co., ___ F. Supp. 3d ___ (D. Minn. 2021).
• Service of process on a registered agent; time for removal. Distinguishing service on a registered agent from service on a statutory agent, Judge Wright granted the plaintiff’s motion to remand where the defendant did not remove the case within 30 days of service on its registered agent. RedWind Renewables, LLC v. Terna Energy USA Holding Corp., 2021 WL 5769308 (D. Minn. 12/6/2021).
• Sanctions; local counsel; L.R. 83.5(d)(2)(a); reconsideration denied. In December 2021, this column noted an award of sanctions by Judge Wright against plaintiff’s counsel jointly and severally.
More recently, plaintiff’s local counsel sought leave to file a motion for reconsideration of that order, arguing that they should not be liable for the attorney’s fee award because of the “narrow scope of their responsibilities as local counsel.”
Judge Wright rejected that request, finding that Local Rule 83.5(d)(2)(A) required local counsel to “participate in the preparation and presentation of the case,” local counsel’s name had appeared on all of the submissions related to the sanctionable conduct, and to the extent that counsel had not participated in the preparation of those papers, counsel’s lack of participation “demonstrate[d] an intentional or reckless disregard” of their duties under the local rule. Niazi Licensing Corp. v. St. Jude Medical S.C., Inc., 2021 WL 5371159 (D. Minn. 11/18/2021).
• Fed. R. Civ. P. 11; sanctions; “utterly frivolous” claims. Finding that an attorney’s claims for “Vexatious Litigation, Unbridled Violation of Ethic Rules and Abuse of Legal/Court Process” against counsel who had represented prevailing plaintiffs in a malpractice suit against the attorney or acted as an expert witness in that action were “utterly frivolous” and brought “for an improper purpose,” Judge Schiltz imposed Rule 11 sanctions against the plaintiff and awarded those defendants attorney’s fees and costs in an amount to be determined. Igbanugo v. Minn. Office of Lawyers Prof. Resp., 2021 WL 5216904 (D. Minn. 11/9/2021), appeal docketed (8th Cir. 12/10/2021).
• Fed. R. Civ. P. 23(g)(3); motion to appoint interim class counsel granted despite objection. Despite the defendant’s argument that appointment of interim class counsel was “premature” because only one action was pending and there was no “rivalry or uncertainty” among class counsel, Judge Frank found “no downside” to appointment of counsel and granted plaintiffs’ Rule 23(g)(3) motion. Chen v. Target Corp., 2021 WL 6063632 (D. Minn. 12/22/2021).
• Motion to amend scheduling order; prejudice; relevant factors. Granting in part and denying in part the plaintiff’s motion to amend a scheduling order, Magistrate Judge Docherty found that the scheduling of other cases was not “prejudice” that warranted denial of the motion, and that prejudice “must be prejudice originating within the case at bar, not prejudice arising from another case.” Marks v. Bauer, 2021 WL 6050309 (D. Minn. 12/21/2021).
• Request for award of attorney’s fees slashed. Criticizing plaintiff’s counsel for excessive hourly rates, “blatant over-charging of hours,” vague billing entries, and block billing, Judge Magnuson reduced the fee request by two-thirds, awarding less than $100,000 on a request for almost $300,000 in fees. Lamplighter Village Apartments LLP v. City of St. Paul, 2021 WL 5888532 (D. Minn. 12/13/2021).
• Younger abstention; attempt to rely on exceptions rejected. Rejecting the plaintiff’s attempt to rely on the “patently and flagrantly unconstitutional” and “bad faith” exceptions to Younger abstention, Chief Judge Tunheim dismissed the action without prejudice on the basis of Younger abstention, and declined to consider whether the claims stated a claim for purposes of Fed. R. Civ. P. 12(b)(6). Marohn v. Minn. Bd. of Architecture, Eng’g, Land Surveying, Landscape, Architecture, Geoscience and Interior Design, 2021 WL 5868194 (D. Minn. 12/10/2021).
• Local rules amendments. Relatively minor changes to L.R. 7.1(d)(3)-(4) took effect on 1/1/2022. In addition, L.R. 7.1(f)(1)(C) was amended to make clear that tables of contents and tables of authorities do not count toward the word and line limits in L.R. 7.1(f)(1).
Josh Jacobson, Law Office of Josh Jacobson
joshjacobsonlaw@gmail.com
Intellectual Property
JUDICIAL LAW
• Patents: Local counsel liable for attorneys’ fees award. Judge Wright recently denied local counsel’s motion for leave to file a motion for reconsideration of the court’s 10/25/2021 order granting in part defendant St. Jude Medical S.C., Inc.’s motion for attorneys’ fees. In its 10/25 order, the court awarded St. Jude’s reasonable attorneys’ fees and costs pursuant to 35 U.S.C. §285 and 28 U.S.C. §1927 for unreasonable and vexatious litigation after the court’s October 2019 claim construction order. Local counsel moved under Local Rule 7.1(j) for leave to file a motion for reconsideration, contending there were compelling reasons local counsel should not be held liable for the award of attorneys’ fees. Motions for reconsideration are limited to correcting manifest errors of law or fact or to presenting newly discovered evidence. A motion for reconsideration cannot be employed to repeat arguments previously made, introduce evidence or arguments that could have been made, or tender new legal theories for the first time. The court found local counsel did not present any newly discovered evidence but instead argued that they should not be held liable for the award of attorneys’ fees because of the narrow scope of their responsibilities as local counsel. The court rejected this argument, citing Local Rule 83.5(d)(2)(A), which requires local counsel to “participate in the preparation and presentation of the case.” Additionally, the court found local counsel should have made such arguments when the plaintiff first opposed St. Jude’s fees motion. Niazi Licensing Corp. v. St. Jude Med. S.C., Inc., No. 17-cv-5096 (WMW/BRT), 2021 U.S. Dist. LEXIS 222960 (D. Minn. 11/18/2021).
• Patent: Ordinary observer test for design patent infringement. Judge Tostrud recently granted defendant KMDA, Inc.’s motion for summary judgment of noninfringement of plaintiff Pro-Troll Inc.’s design patent for a fishing lure. Pro-Troll owns U.S. Design Patent No. D516,663, entitled “Fishing Lure,” which issued on 3/7/2006 and expired on 3/7/2020. Pro-Troll filed the action in July 2020, and KMDA moved for summary judgment. A design patent protects the novel, ornamental features of the patented design. As with infringement of utility patents, infringement of a design patent requires a two-step process: claim construction (determining the meaning and scope of the patent claims asserted to be infringed) and comparing the accused device to the properly construed claims. Infringement of a design patent is not determined by breaking down an accused device into elements and comparing those elements to corresponding limitations in a claim. Rather, a court must apply the “ordinary observer test.” This test examines whether—in the eye of an ordinary observer, giving such attention as a purchaser usually gives—two designs are substantially the same. Relying on the statement of patentability from a prior reexamination of the patent-in-suit, the court found that an ordinary observer familiar with the prior art would focus on characteristics dissimilar between the patented design and the accused product. Thus, despite the similarities between the patented design and the accused design, the court found an ordinary observer would not be deceived into purchasing the accused product believing it was the patented design. Pro-Troll Inc. v. Proking Spoon Ltd. Liab. Co., No. 20-cv-01576 (ECT/LIB), 2021 U.S. Dist. LEXIS 241269 (D. Minn. 12/17/2021).
Joe Dubis, Merchant & Gould
jdubis@merchantgould.com
Real Property
JUDICIAL LAW
• Challenging a city’s revocation of a conditional use permit. A city was reasonable when it revoked a conditional use permit (CUP) after a company impermissibly expanded the use of the original property by changing the nature and scope of its use. In Croix Holdings, LLC, the case centers on a dispute between appellant Croix Holdings, LLC and respondent City of Newport over the use of properties owned by Croix Holdings. The 1986 CUP allowed camper trailer sales where sales of this nature were not allowed under the city’s zoning ordinance. After the city revoked the CUP for one property and ordered Croix Holdings to cease its nonconforming use of its other property, Croix Holdings filed a declaratory judgment action in the district court. The city moved for summary judgment, and the district court granted the city’s motion. On appeal, Croix Holdings argued that the district court erred in granting the city’s summary judgment motion.
The court noted that while the 1986 CUP could have been more explicit about the nature of the original permitted use, the CUP was expressly conditioned on that use remaining the same. Croix Holdings stipulated that there are no genuine issues of material fact and therefore, there was no factual dispute that Imperial Camper applied for the CUP so that it could sell nonmotorized campers on the lot. The court therefore rejected Croix Holdings’ argument that the city unreasonably went beyond the plain language of the CUP in determining that multi-dealer auto sales was a “change of use” from camper sales. Croix Holdings failed to show that the city’s decision to revoke the 1986 CUP was arbitrary and capricious. Because the city had a legally sufficient basis to determine that Croix Holdings substantially changed the use of the original property in both nature and scope, and the record supported that basis, the court held the city’s decision to revoke the CUP was not unreasonable. Thus, the district court did not err in granting summary judgment in favor of the city. Croix Holdings, LLC v. City of Newport, No. A21-0630, ___N.W.2d ___, 2021 WL 5999561 (Minn. Ct. App. 12/20/2021).
• Clarifying when consideration is required in a deed. Consideration is required to support a contract for deed. In TC Investment Group, LLC, a son-in-law, along with two of the decedent’s grandchildren, formed TC Investment Group, LLC to purchase the decedent’s property after having suffered a heart attack a few months before her death. The decedent and her grandson executed a contract for deed for the sale of the property, and three days later, decedent executed a warranty deed in fulfillment. The grandson did not pay for the property and the decedent died 10 days after executing the warranty deed. After the decedent’s estate was entered into probate, the attorney for the estate filed a notice of lis pendens. Soon after, the grandson executed a warranty deed conveying the property to TC Investment. TC Investment did not pay for the property. In this appeal from the district court’s order granting title of the disputed property to the estate, TC Investment argued that (1) the district court erred by invalidating the first conveyance of the property for lack of consideration; (2) the notice of lis pendens on the property was invalid; and (3) the district court erred by determining that its prior decision bound appellant’s claims under the doctrines of res judicata and collateral estoppel. TC Investment relied on Brandes v. Hastings, 203 N.W. 430, 431 (Minn. 1925), which held deeds are valid conveyances without consideration. The court noted subsequent case law limits Brandes’s holding. The court clarified that no consideration is necessary in a quitclaim deed and that if there is no consideration, then the quitclaim deed operates like a gift and constitutes a valid conveyance. The court added that the deed at issue was a warranty deed, and as such, Brandes does not apply. The court held the contract for deed, like any contract, required consideration. Neither party disputed the fact that the grandson did not pay any of the contracted sales price, and as such, the contract for deed was not supported by any consideration, rendering it invalid. Because the issue of consideration was dispositive, the court did not address the other two issues of the notice of lis pendens and res judicata and collateral estoppel bars. TC Investment Group, LLC v. King, No. A21-0531, ___N.W.2d.___, 2021 WL 5173770 (Minn. Ct. App. 11/8/2021).
Mike Pfau, DeWitt LLP
mjp@dewittllp.com
Tax Law
JUDICIAL LAW
• District court and tax court hold overlapping jurisdiction in innocent spouse claim. Alice Coggin and her late husband had been married over 50 years before his death. They each owned 50% of an S Corp, and Ms. Coggin learned shortly before her husband’s death that he had made untimely tax payments—or in some cases, partial or no payments—on behalf of the couple for several tax years. On the advice of her attorney, Ms. Coggin filed individual Forms 1040 for tax years 2001-09 on which she reported her 50% shares of the income from the S corporation. On those returns she elected “married filing separately” status. The separate returns for years 2001-07 reported that Ms. Coggin was entitled to refunds for those years. These returns did not mention Section 6015 and did not claim innocent spouse status. Ms. Coggin’s filings in district court—where she sought tax refunds for years 2001-07 after they were denied by the Service—similarly did not mention innocent spouse. The United States sought summary judgment in the district court on the refund claims for 2001-07, and it counterclaimed in seeking judgment against Ms. Coggin for remaining balances due for years 2002-09.
The district court granted the government’s motion for summary judgment as to tax years 2001-07 and ordered that the government’s counterclaims for tax years 2008 and 2009 would proceed to trial. At the same time, the district court stated that it “has not evaluated and makes no ruling on whether the innocent spouse exception relieves Ms. Coggin of liability from the defendant’s counterclaim for [tax], penalties and interest.”
A few months after that order, Ms. Coggin finally raised the innocent spouse issue when she submitted a Request for Innocent Spouse Relief to the IRS and then a few days later moved to stay the proceeding with the district court, “until such time as [her] request for Innocent Spouse Relief… has been fully processed in the Internal Revenue Service and, as may be applicable, litigated in the United States Tax Court.” The district court stayed the case pending resolution of the innocent spouse defense.
Although Ms. Coggin did not receive a notice of final determination of relief or other communication from the IRS regarding her request for innocent spouse relief, she received through counsel a letter from the United States Department of Justice (Tax Division) denying her claim. She cited that denial in her tax court petition. The commissioner challenged the tax court’s jurisdiction and moved to dismiss Ms. Coggin’s petition on that basis.
The tax court began its analysis by articulating its limited jurisdiction. By statute, Congress gives the tax court jurisdiction over innocent spouse claims, and Congress also sets up a statutory framework for those claims. That framework contains a limitation: The tax court loses its jurisdiction where “a suit for refund is begun by either individual filing the joint return pursuant to section 6532.” The tax court interpreted this limitation to mean that “[w]here... a District Court acquires jurisdiction in a suit for refund, it acquires jurisdiction over the entire liability for that tax year including the taxpayer’s claim for recovery of any internal revenue tax alleged to have been erroneously or illegally assessed or collected. Accordingly, [the commissioner’s] motion to dismiss for lack of jurisdiction will be granted as to years 2001-07.”
On the other hand, since neither Mr. Coggins nor Ms. Coggins had paid the full amounts due in 2008 and 2009, the district court did not claim to (and the tax court noted it likely could not attain) “refund jurisdiction.” The tax court reasoned that the statutory framework “does not address this overlap in jurisdiction.” On the basis of comity, and the tax court’s understanding of the intention of the district court’s “anticipa[tion] that we will proceed in considering Ms. Coggin’s innocent spouse relief claim to the extent of our jurisdiction,” the tax court denied the commissioner’s motion with respect to Ms. Coggin’s claims for years 2008 and 2009. Coggin v. Comm’r, No. 21580-19, 2021 WL 5827338 (T.C. 12/8/2021).
• Taxpayer entitled to return even though IRS rejected it because of potential identify theft. Taxpayer James Willetts overpaid his 2014 taxes by about $1500. The Service did not dispute the overpayment but argued that Mr. Willetts failed to file a refund claim within the statutory period, and he therefore lost out on his chance for a credit or a refund. The lead-up to this dispute was not straightforward. Mr. Willetts requested an extension to file his 2014 taxes. That was granted, but Mr. Willetts did not file by the extended deadline; instead, in April of 2018, Mr. Willetts sent a Form 1040, U.S. Individual Income Tax Return, to the Service. The commissioner documented a Form 1040 for 2014 in his internal records but rejected it as a return because of potential identity theft. By statute, Mr. Willetts had three years –or until 10/15/2018—to submit a claim for the overpayment. That 2014 return, if filed within the statutory period, would constitute a claim for the $1500 refund. The Service argued, though, that since the Form 1040 was rejected as a return, Mr. Willetts did not claim his refund.
Applying the test from Beard v. Commissioner, 82 T.C. 766 (1984), aff’d, 793 F.2d 139 (6th Cir. 1986), the tax court determined that the Form 1040 that Mr. Willetts mailed on 4/14/2018 constituted a properly filed return. Furthermore, the court held that the return was “filed” because “[a] valid return is deemed filed on the day it is delivered, regardless of whether it is accepted by the Commissioner.” The commissioner’s concern about identity theft is an important one, but it did not render the return unfiled. Mr. Willetts, the court concluded, was entitled to his overpayment credit or refund. Willetts v. Comm’r, No. 19160-19S, 2021 WL 5446438 (T.C. 11/22/2021).
• Fiduciary fundamental to self-directed IRA; unfettered control over IRA asset amounts to distribution. Self-directed IRAs permit investors to sock money away for retirement in assets beyond stocks and bonds. For example, through a self-directed IRA an investor can hold precious metals, real estate, and even cryptocurrencies. Like all IRAs, though, self-directed IRAs are subject to requirements that, if violated, subject the holder to adverse tax treatment.
Taxpayers Andrew and Donna McNulty researched self-directed IRAs and decided to invest in them. Mr. McNulty, a plant manager, invested in American Eagle coins (AE) and real estate, while Mrs. McNulty, an RN, invested in American Eagle coins. Both taxpayers directed assets held in their IRAs to invest in single-member limited liability companies (LLC), and Mrs. McNulty was the manager of the LLC to which she directed her investments. The issues surrounding Mr. McNulty’s IRA were generally resolved in the commissioner’s favor, which left the court facing the commissioner’s claims that Mrs. McNulty received taxable distributions from her IRA.
Mrs. McNulty funded her IRA through direct transfers from two qualified retirement accounts and did not report any part of these transfers as gross income. She then instructed the custodian to transfer the purchase price of the membership interests from the IRA to the single-member LLC’s bank account. In turn, Mrs. McNulty, as the LLC’s manager, had the LLC use almost all of the funds to purchase AE coins from Miles Franklin, Ltd., an authorized coin dealer. The funds to purchase the coins were transferred from the LLC’s bank account to Miles Franklin. Mrs. McNulty took physical possession of the coins, which she kept in a safe in the home she shared with Mr. McNulty. In compliance with the requirements of the custodian, Mrs. McNulty provided a yearend valuation of the assets, which the custodian reported to the commissioner. On audit, the commissioner determined that Mrs. McNulty received taxable distributions upon their receipt of the AE coins equal to the cost of the coins.
Mrs. McNulty and the commissioner disagreed about whether Mrs. McNulty met several of the many requirements of Section 408, but for purposes of this decision, the tax court homed in on one: Who can have physical possession of the AE coins purchased with IRA funds? In addressing this question, the court emphasized the importance of a qualified custodian or trustee, which the court termed “fundamentally important to the statutory scheme of IRAs.” IRA owners cannot have unfettered command over the IRA assets because such access violates this fundamental principle. A contrary holding “would make permissible a situation that is ripe for abuse and that would undermine the fiduciary requirements of section 408.” Because Mrs. McNulty had unfettered control over the coins, she had taxable distributions from her IRA when she received physical custody of the AE coins irrespective of her status as the LLC’s manager. McNulty v. Comm’r, No. 1377-19, 2021 WL 5371215 (T.C. 11/18/2021).
• 11th Circuit weighs in on conservation easement saga; IRS reading of conservation easement extinguishment reg is invalid and violates the APA. In Hewitt v. Comm’r of IRS, the circuit court reversed a tax court decision and held that a regulation affecting conservation easements is arbitrary and capricious under the Administrative Procedure Act (APA) and thus is invalid. In this decision, the court addressed “whether §1.170A-14(g)(6)(ii), as interpreted by the Commissioner to prohibit the subtraction of any amount of proceeds attributable to post-donation improvements to the easement property in the event of judicial extinguishment, is procedurally valid under the APA where: (1) one commenter… made specific comments raising the improvements issue as it relates to extinguishment proceeds and recommended deletion of the provision; (2) six other organizations submitted comments criticizing or urging caution as to the regulation; and (3) Treasury failed to specifically respond to any of those comments, instead simply stating that it had considered ‘all comments.’” Citing extensively to the dissenting opinions of Judges Toro and Holmes in the case the lower court deemed controlling, the 11th Circuit held that Treasury had failed. “Simply put,” the court declared, the comments received were “significant and required a response by Treasury to satisfy the APA’s procedural requirements. And the fact that Treasury stated that it had considered ‘all comments,’ without more discussion, does not change our analysis, as it does not enable us to see [the commentor’s] objections and why [Treasury] reacted to them as it did.” Hewitt v. Comm’r of IRS, No. 20-13700, ___ F.4th__ 2021 WL 6133999 (11th Cir. 12/29/2021) (internal quotations omitted).
• “Assessor’s office slipped one by me:” Court denies county’s motion to dismiss for petitioner’s failure to comply with mandatory disclosure rule. On behalf of St. Peter Hospitality, LLC, Rodney Lindquist filed a property tax petition alleging that the estimated market value of the subject property located in St. Peter was unequally assessed when compared with other properties. In January 2021, Nicollet County sent Mr. Lindquist a letter stating that he may be required to provide data on the property pursuant to Minn. Stat. §278.05, subd. 6, Minnesota’s mandatory disclosure rule. Mr. Lindquist provided the required data for the year of the assessment date but failed to provide information for the year prior to the assessment date. In July 2021, the county assessor emailed Mr. Lindquist solely requesting that he confirm that he was not open for business the year prior to the assessment date. Mr. Lindquist responded that “we opened July-August 2019.”
The county subsequently filed a motion to dismiss for the petitioner’s failure to disclose the required information, stating that it did not receive information for the year prior to the assessment date. Mr. Lindquist filed a response stating that he misunderstood the assessment date and that he honestly believed he filed the proper information required by statute. Additionally, he stated that in his reply email, he stated, “I am not aware of anything else but please let me know if I am missing anything.” Mr. Lindquist stated he trusted he would hear back if something was missing and took the county’s silence as acceptance.
In cases where the petitioner contests the valuation of income-producing property, to be in compliance with the mandatory disclosure rule, the petitioner must provide specified information to the county assessor no later than August 1 of the taxes payable year. See Minn. Stat. §278.05, subd. 6. Failure to submit the required documentation will result in an automatic dismissal of the petition unless an exception applies. One such exception is if the petitioner “was not aware of or informed of the requirement to provide the information.” Id., subd. 6(b)(2). If the petitioner proves that it was unaware of the requirements, the petitioner has an additional 30 days to provide the information from the time it became aware.
In informing a petitioner of the requirement to provide the required information, a county does not need to reproduce the contents of the subdivision verbatim. However, when it is clear that the petitioner does not understand the meaning of the statute but made a good faith effort to comply with its requirements, “the petitioner is ‘not aware of or informed of the requirement’ according to the plain language of the statute,” and has an additional 30 days to provide the information.
The county asserted that its January letter to the petitioner constituted a notice of the requirement to provide information concerning income-producing property to the county assessor. The court stated that generally, a letter referring to the required statute is sufficient, but Mr. Lindquist demonstrated his lack of understanding of the terms used in the statute, and, since he is not an attorney, nor was St. Peter Hospitality represented by counsel, he was deemed unaware of the requirement. The court denied the county’s motion to dismiss and allowed an additional 30 days for St. Peter Hospitality to submit the required information.
In addition to denying the county’s motion to dismiss, the court provided that “not later than thirty days after [this] date…, St. Peter Hospitality LLC must file an affidavit with this court stating whether it is a single-member LLC or not.” “The purpose is to determine St. Peter Hospitality’s compliance with Minnesota Administrative Rule 8610.0010(D) (2019), which provides that a lawyer must represent a limited liability company, with the exception of a single-member limited liability company, which may appear through its sole member.” Following the dismissal, Mr. Lindquist filed a membership roster with the court that included seven members. In a subsequent order, the court directed St. Peter Hospitality to be represented by licensed legal counsel no later than 1/5/2022. Lindquist v. Nicollet Co., 2021 WL 5504203 (MN Tax Court 11/15/21); Lindquist v. Nicollet Co., 2021 WL 6133338 (MN Tax Court 12/23/2021).
• Session Law 74 includes petitions filed both in the district court and the tax court. Petitioner Timber New Ulm filed a property tax petition on 12/31/2020 challenging the 2019 assessment for property located in New Ulm. The petition was filed using Minnesota Tax Court Form 7 and checked the box on that form for the “Regular Division” of the tax court.
“On August 10, 2021, the County filed a motion to dismiss on the ground that the petition was untimely. The County argued that the Minnesota legislature, in response to the COVID-19 pandemic, extended the deadline for property tax petitions filed in the district court but did not similarly extend the deadline for property tax petitions filed in the tax court.” Because the tax court recently considered this question in WMH Prop. Owner LLC v. Cnty. of Hennepin, Nos. 27-CV-20-6274 & 27-CV-21-4306, 2021 WL 4312988 (Minn. T.C. 9/9/2021), “the court requested that the parties submit supplemental briefs that addressed the court’s ruling in that case.”
Minnesota Statutes chapter 278 provides the “taxpayer a choice of forum: the taxpayer may ‘have the validity of the claim, defense, or objection determined by the district court of the county in which the tax is levied or by the Tax Court.’” Regardless of the forum chosen, a chapter 278 petition must be filed on or before April 30 of the year in which the tax becomes payable. Minn. Stat. §278.01, subd. 1(c). Failure to timely file and serve a petition deprives the tax court of jurisdiction to hear the matter. See Kmart Corp. v. Cnty. of Clay, 711 N.W.2d 485, 488-90 (Minn. 2006).
However, in response to the covid-19 pandemic, the Minnesota Legislature continued to extend the filing deadline for petitions concerning property taxes. Specific to taxes payable in 2020, the Legislature enacted Session Law 74, which extended certain statutory deadlines as follows. In relevant part, the governor’s Executive Order 20-01 authorized extensions for 60 days after the end of the peacetime emergency or 2/15/2021, whichever is earlier.
“In WMH, [the tax court] addressed the effect that Session Law 74 had on chapter 278 property tax petitions and held that, under the plain meaning of the statute, Session Law 74 extended the deadlines in all district court proceedings, including chapter 278 petitions filed in the district court.” The court did not, however, address whether Sessions Law 74 included deadline extensions for chapter 278 petitions filed in the tax court because the petitioner in WMH filed claims in both the district court and the tax court. The court in WHM held that at a minimum, the petitioner’s district court was timely filed and did not address whether the tax court petition was also timely.
In the current matter, the county argued that petitioner’s failure to file a petition in the district court deprives the tax court of jurisdiction in this matter. The tax court disagreed with the county’s assertion, stating that “it merely requires the court to decide the question left unanswered in WMH—whether Session Law 74… also extended the filing deadline for chapter 278 petitions in the tax court.”
Session Law 74 states that “[t]he running of deadlines imposed by statutes governing proceedings in the district and appellate courts... is suspended[.]” Act of Apr. 15, 2020, ch. 74, art. 1, §16. The court concluded that Session Law 74 plainly refers to deadlines imposed by chapter 278 and could not rationalize any reason why the Legislature would create a deadline for the district court involving the same claims and property subject that would not also apply to deadlines if filed in the tax court. Because the court determined that Session Law 74 suspended deadlines for the both the district court and the tax court, it denied the county’s motion to dismiss, concluding that petitioner’s claim was timely. Timber New Ulm Properties LP v. Brown Co., 2021 WL 5856123 (MN Tax Court 12/7/2021).
• Court declines to take judicial notice on newly proffered evidence. This matter pertains to Allina’s property tax petition for its 2017 property assessment. Over the last few years, the court has issued several orders in relation to this matter. Relevant to the current order, in 2021, the county filed an amended witness and exhibit list, and noted that it intended to introduce an expert report through an expert witness. Allina moved the court to exclude the expert testimony, arguing that it was late notice. The court concluded that the expert testimony was actually the county’s case-in-chief evidence, and that the county would not be permitted to admit evidence through the back door of rebuttal evidence, since the court previously denied the county’s continuance request. See Allina Health Sys. v. Cnty. of Washington, No. 82-CV-18-2029, 2021 WL 3040976, at *1 & n.6 (Minn. T.C. 7/13/2021). Following the trial, the parties submitted post-trial briefs where the county, for the first time, proffered 16 exhibits attached to a declaration of Stuart Campbell. The county cited to its declaration and the newly proffered exhibits in its post-brief. Allina moved to strike the county’s declaration and the county sought leave to file a motion asking the court to take judicial notice of its declaration and new exhibits.
“A court shall take judicial notice if requested by a party and supplied with the necessary information.” Minn. R. Evid. 201(d). “A judicially noticed fact must be one not subject to reasonable dispute in that it is either (1) generally known within the territorial jurisdiction... or (2) capable of accurate and ready determination by resort to sources whose accuracy cannot reasonably be questioned.” Id. at 201(b). Minnesota courts have traditionally limited judicial notice of adjudicative facts to situations incapable of serious dispute. See State ex rel. Remick v. Clousing, 205 Minn. 296, 301, 285 N.W. 711, 714 (1939).
The county argued that the new exhibits “establish facts ‘capable of accurate and ready determination by resort to sources whose accuracy cannot reasonably be questioned.’” Allina opposed the invocation of judicial notice, stating that the facts asserted by the county in its motion are in dispute. Allina also argued that the county’s declaration and exhibits are inadmissible hearsay.
In its analysis of the county’s request of the court to take judicial notice of numerous facts, the court declined to take judicial notice because the facts were subject to reasonable dispute, conflicting evidence was given at trial, and the court had previously declined to take judicial notice of facts contained in documents that were not admitted as evidence during trial. See Menard, Inc. v. Cnty. of Washington, No. 82-CV-14-1681 et al., 2017 WL 5617456, at *3 n.19 (Minn. T.C. 9/11/2017). Allina Health System v. Washington Co., 2021 WL 6119471 (MN Tax Court 12/20/2021).
Morgan Holcomb , Mitchell Hamline School of Law
morgan.holcomb@mitchellhamline.edu
Sheena Denny, Mitchell Hamline School of Law
sheena.denny@mitchellhamline.edu
Torts & Insurance
JUDICIAL LAW
• Insurance: resident-relative exclusion is enforceable. A two-year-old resided with his grandparents. After the child suffered injuries from a dog in his grandparents’ home, his father filed a claim with his parents’ insurer. The insurer denied coverage because of a “resident-relative exclusion,” which excluded coverage for: “‘bodily injury’ to ‘you,’ and if residents of ‘your’ household, ‘your’ relatives and person(s) under the age of 21 in ‘your’ care or in the care of ‘your’ resident relatives.” Parents then filed suit. While the parents agreed that the exclusion applied on its face, the parents claimed that the exclusion was void as a violation of public policy. The district court rejected plaintiffs’ argument and granted insurer’s motion to dismiss for failure to state a claim. The court of appeals affirmed.
The Minnesota Supreme Court affirmed. The thrust of the plaintiffs’ argument was that the abolition of intrafamilial tort immunities was meant to permit injured parties to recover through insurance funds, and that resident-relative exclusions should be invalidated as an attempt to circumvent the abolition of those immunities. The Court disagreed, noting that “abolishing judicially created immunities is fundamentally different than requiring insurers to provide coverage for resident-relatives that their insureds injure.” The Court reasoned that while both sides presented compelling arguments in favor and against such exclusions, the question of their enforceability was best left to the Legislature. Poitra v. Short, LLC, No. A20-0491 (Minn. 11/24/2021). https://mn.gov/law-library-stat/archive/supct/2021/OPA200491-112421.pdf
Jeff Mulder, Bassford Remele
jmulder@bassford.com