CRIMINAL LAW

JUDICIAL LAW

•  Juvenile: Court not required to adjudicate only least severe delinquency offense. Adjudication was withheld for C.A.R.’s gross misdemeanor drug offense in September 2018. In October 2018, he was charged with fourth-degree sale and third-degree aiding and abetting sale of a controlled substance. C.A.R. pleaded guilty to the amended charge of fifth-degree possession. Disposition was consolidated with a probation violation hearing regarding C.A.R.’s gross misdemeanor case. The district court withheld adjudication in the gross misdemeanor case, but adjudicated C.A.R. delinquent on the felony offense, and C.A.R. appealed.

The district court has broad discretion in determining whether to continue adjudication in a delinquency proceeding. While the court must take “the least drastic step necessary to restore law-abiding conduct,” the “least-dramatic-step requirement does not apply to the question of whether to adjudicate delinquency.” The court of appeals rejected C.A.R.’s argument that a district court abuses its discretion by adjudicating a felony delinquency where a gross misdemeanor delinquency is available to be adjudicated. Here, the record supports the district court’s adjudication of delinquency in C.A.R.’s felony case. In re Welfare of C.A.R., 941 N.W.2d 420 (Minn. Ct. App. 2020), review denied (5/19/2020).

•  Procedure: By pleading guilty, appellant waived issue of whether Minn. Stat. §611.21(a) authorizes payment for out-of-court interpreter services for public defender-client communications. Appellant, who speaks little to no English, was appointed a public defender in his second-degree assault and attempted second-degree murder case. Appellant requested funding under Minn. Stat. §611.211(a) for interpreter services for out-of-court meetings with his attorney, because the public defender’s office did not have funds remaining in its budget. The district court denied his requests. The court of appeals affirmed the district court and, shortly thereafter, appellant pleaded guilty to second-degree assault. A year later, he filed a petition for review.

The Supreme Court is unable to resolve the question of whether a defendant represented by a public defender may request funding under Minn. Stat. §611.21(a) for out-of-court interpreter services to facilitate attorney-client communication, due to appellant’s guilty plea. A valid guilty plea waives all non-jurisdictional defects arising prior to entry of the plea. Appellant does not challenge his guilty plea and there is no evidence of a jurisdictional defect. Appellant’s appeal is dismissed. State v. Cruz Montanez, 940 N.W.2d 162 (Minn. 3/11/2020).

•  Search and seizure: Client files seized from attorney’s office were held in good faith as potential evidence. Attorney K.M. represented M.W. and J.S. in a controlled substance investigation. K.M. allegedly brokered a deal with the police that would allow M.W. to avoid charges by paying a substantial amount of money to the police. M.W. gave that money to K.M. as a cashier’s check made payable to K.M. After M.W. and J.S. retained new counsel, law enforcement launched an investigation into the alleged deal brokered by K.M. A search warrant authorized entry into K.M.’s home, where she also operated her law office. Police seized electronics containing 1,500 to 2,000 of K.M.’s current and former client files.

K.M. filed a motion requesting that the search warrant be declared invalid and that the seized property be returned. The district court ultimately determined that “the seized property [was] being held in good faith as potential evidence in a matter that [was] uncharged at [that] time.” K.M. then filed a petition for a writ of prohibition, again requesting the return of the seized property, but the court of appeals denied the petition.

Both the district court and the court of appeals construed K.M.’s motion before the district court as a motion under Minn. Stat. §626.04, which creates a remedy for the return of property seized by law enforcement with or without a warrant. The Supreme Court finds it reasonable to construe K.M.’s motion in such a manner. 

The Supreme Court also finds that the district court did not err in its application of section 626.04. Section 626.04(a)(1) provides that seized property should not be returned if, among other reasons, it “is being held in good faith as potential evidence in any matter, charged or uncharged.” The district court’s finding that K.M.’s client files fall within section 626.04(a)(1) is supported by the evidence, including sworn testimony and exhibits regarding the ongoing criminal investigation into K.M.’s activities.

The Court limits its decision to the narrow issue under section 626.04, and notes that the many constitutional and privilege issues raised by K.M., the intervenors, and amici can and should be fully litigated in the pending criminal case, or potential civil cases. The Supreme Court also emphasizes that copies of the seized client files should have been immediately returned to K.M. This issue is moot, however, because law enforcement did eventually provide copies to K.M. In re K.M., 940 N.W.2d 164 (Minn. 3/11/2020).

 •  Solicitation: Soliciting a prostitute in public requires proof that the act of solicitation actually occurred in a public location. Respondents were charged with soliciting a prostitute as part of a human trafficking sting. Each of the four respondents texted a fictional prostitute, making arrangements to exchange money for sexual contact, and were arrested at the hotel to which the fictional prostitute directed them. The district court granted respondents’ motions to dismiss for lack of probable cause, finding the record did not establish respondents were in a public place when they solicited prostitution.

The court of appeals interprets Minn. Stat. §609.324, subd. 2(2), which prohibits soliciting prostitution in a public place. This subdivision makes it a gross misdemeanor for a person, acting as a patron and while in a public place, to hire, offer to hire, or agree to hire another to engage in sexual penetration or sexual contact. “Public place” is defined in section 609.324, subd. 12, but the statute does not define “hires,” “offers to hire,” or “agrees to hire.” The court looks to the dictionary definitions of “hire”: “[t]o engage in labor or services of another for wages or other payment” or “[t]o grant the temporary use of services.” 

Here, all of respondents’ solicitation activity—the hiring, offers to hire, or agreements to hire a prostitute—occurred online and via text messages, and their locations at the time of that activity is unknown. Because the state did not prove that respondents’ solicitation activity occurred in a public place, the district court properly dismissed the charges for lack of probable cause. State v. Suspitsyn, 941 N.W.2d 423 (Minn. Ct. App. 3/16/2020).

•  Robbery: Force element of simple robbery is satisfied the moment a defendant uses force to overcome another’s resistance. A wine shop employee observed appellant and another woman put bottles in their handbags. The employee and appellant struggled both inside and outside the store, during which appellant tried to bite the employee, the employee’s shirt and necklace were ripped, and the employee sprained his ankle. The employee was able to recover the bottles of wine from appellant’s handbag and appellant ran away. Appellant was found guilty of simple robbery. The court of appeals sustained her conviction.

The Supreme Court addresses the question of what force is necessary for the offense of simple robbery under Minn. Stat. §609.24. Section 609.24 states: “Whoever… takes personal property from the person or in the presence of another and uses or threatens the imminent use of force against any person to overcome the person’s resistance or powers of resistance to, or to compel acquiescence in, the taking or carrying away of the property is guilty of robbery…” The Court focuses on the italicized portion of section 609.24. The Court finds that “to overcome” functions as an adverb that describes the purpose for using force. Thus, an actor is required to use force for the purpose of overcoming another person’s resistance to the taking or carrying away of property. Rejecting appellant’s argument, the Court notes that the actor’s use or threat of force need not successfully overcome another’s resistance to satisfy the force requirement.

Ultimately, the Court finds sufficient evidence to sustain appellant’s conviction, based on the testimonial evidence of appellant’s struggle with the store employee. State v. Townsend, 941 N.W.2d 108 (Minn. 3/25/2020).

•   Double jeopardy: A defendant cannot be convicted and sentenced for possession of both a firearm and ammunition based on possession of a single loaded firearm. During a marijuana sale, appellant put a gun to the victim’s head and demanded his belongings. Afterward, he was apprehended inside a nearby market, where police found a gun hidden behind cans of soup. Appellant was convicted of first-degree aggravated robbery, possession of a firearm by an ineligible person, and possession of ammunition by an ineligible person. He was sentenced on all three counts. 

The court of appeals holds that appellant could only be convicted and sentenced on either possession of a firearm by an ineligible person or possession of ammunition by an ineligible person, because his possession of a firearm and ammunition involved a single course of conduct. 

As part of constitutional double jeopardy protections, Minnesota law prohibits convicting and sentencing a defendant for more than one crime if his conduct is part of the same behavioral incident. Here, appellant’s possession of the loaded gun constitutes more than one offense, but the unlawful conduct was part of the same behavioral incident. However, Minn. Stat. §609.035, subd. 3, provides that “a prosecution for or conviction of a violation of section… 624.713, subdivision 1, clause (2) [possession of a firearm or ammunition by an ineligible person], is not a bar to conviction of or punishment for any other crime committed by the defendant as part of the same conduct.” The question is whether “any other crime” removes the bar against multiple convictions and sentences so appellant can be punished separately for possessing a firearm and possessing ammunition.

Looking to case law, the court of appeals concludes that “any other crime” in section 609.035, subd. 3, refers to a crime other than a violation of section 624.713, subd. 1(2). Thus, appellant cannot be convicted and punished for two unlawful possession offenses for possessing a single loaded firearm. The two unlawful possession counts were different means to commit the same crime. Thus, the possession offenses constituted a single course of conduct—possessing a single firearm loaded with ammunition—and is not subject to multiple convictions and sentences. Reversed and remanded. State v. Nowels, 941 N.W.2d 430 (Minn. Ct. App. 3/30/2020).

•  Sex offender registration: Registration is required for out-of-state conviction if proving out-of-state offense would necessarily prove a violation of a Minnesota offense that requires registration. In 1992, appellant was convicted of sexual battery in California. While incarcerated in Minnesota in 2005, he refused to sign a form registering him as a predatory offender in Minnesota due to his California conviction. From 2005 to 2016, appellant registered intermittently. After his release from prison in 2007, he was intermittently homeless and required to check in at a local police station weekly, but he did not do so. He was charged with failing to register as a predatory offender and the district court found him guilty. The court of appeals found that California’s sexual battery statute is sufficiently similar to Minnesota’s fourth-degree criminal sexual conduct statute to trigger a lifetime registration requirement.

The state argues that appellant is required to register under section 243.166, subd. 6(c). This provision requires the state to prove appellant was convicted in another state of an offense that would be a violation of law described in section 243.166, subd. 1b(a), that appellant is required to register under the laws of California, that appellant failed to register in 2016, and that appellant was living in Minnesota at the time he failed to register. The state contends the California sexual battery conviction would be fourth-degree criminal sexual conduct using force or coercion in Minnesota, which is an offense listed in section 243.166, subd. 1b(a).

To determine whether an out-of-state conviction would be a violation of a Minnesota law under section 243.166, subd. 1b, the Supreme Court holds that an out-of-state conviction would be a violation of a Minnesota offense requiring registration if proving the elements of the out-of-state offense would necessarily prove a violation of that Minnesota law. 

The Supreme Court then compares Minnesota’s fourth-degree criminal sexual conduct using force or coercion with California’s sexual battery offense. The two offenses share three elements: the prohibited touching of similarly defined “intimate parts,” (2) the nonconsensual nature of the touching, and (3) the sexual purpose of the touching. However, the California offense also requires that the victim be unlawfully restrained. The Supreme Court finds that, under California’s case law, a victim may be unlawfully restrained without the defendant using force or coercion to accomplish the sexual contact. Thus, California’s criminal sexual battery offense could be proven without proving a violation of Minnesota’s fourth-degree criminal sexual conduct by force or coercion offense. As such, appellant’s 1992 California conviction did not trigger Minnesota’s registration requirements. State v. Martin, 941 N.W.2d 119 (Minn. 4/1/2020).

•  Deprivation of parenting rights: Intent required by Minn. Stat. 609.26, subd. 1(3), is objective standard focusing on defendant’s actions, rather than defendant’s subjective intent. Respondent and D.E. share a young child. D.E. often did not receive his parenting time, so the district court ordered a parenting time schedule. Respondent failed to follow the order on numerous occasions. She was arrested for and convicted of violating section 609.26, subd. 1(3), which makes it a felony to intentionally “take[], obtain[], restrain[], or fail[] to return a minor child from or to the parent in violation of a court order, where the action manifests an intent substantially to deprive that parent of rights to parenting time or custody.” On appeal, respondent argued the circumstances proven supported a reasonable inference that she did not intend to substantially deprive D.E. of his parental rights. The court of appeals agreed and reversed respondent’s conviction, relying on text messages from respondent to D.E. expressing a willingness to reschedule parenting time and evidence that respondent did not “conceal” the child’s whereabouts from D.E.

The Supreme Court agrees with the state that “manifests an intent substantially to deprive that parent of rights to parenting time or custody” creates an objective standard that does not look to whether the defendant subjectively intended to substantially deprive the other parent of his or her parenting rights. The quoted phrase refers to a condition in which the defendant’s action shows or reveals an objective intent to substantially deprive a parent of parenting time. Section 609.26, subd. 1(3), therefore, does not require that the defendant subjectively intend to substantially deprive the parent of his or her parenting rights.

Even under an objective intent standard, respondent argues the evidence did not establish that her actions manifested an intent to substantially deprive D.E. of parenting time. “Substantially” is not defined in section 609.26, but, based on the common and accepted usage of “substantial,” the Supreme Court holds that section 609.26, subd. 1(3), requires a deprivation of parental rights that is “considerable in importance, value, degree, amount or extent.” The Court further concludes that both qualitative and quantitative factors (nature of days as well as number of days missed) must be examined to determine whether a defendant’s actions show or reveal the necessary objective intent. 

Looking at both the qualitative and quantitative factors here, the Court finds that the only reasonable inference that can be drawn from the circumstances proved is that respondent’s actions show an intent to substantially deprive D.E. of his court-ordered parenting time. Reversed and remanded. State v. Culver, 941 N.W.2d 134 (Minn. 4/1/2020).

•  Sentencing: Appellant entitled to resentencing under amelioration doctrine. Appellant argues he should be resentenced on a first-degree criminal sexual conduct charge, based on recent changes to the sentencing guidelines that would reduce his criminal history score. The district court sentenced appellant to 168 months, the presumptive sentence for a severity level A offense and a criminal history score of two.

When the offense was committed, the sentencing guidelines assigned a custody status point if the offender was discharged from probation but the offense was committed within the initial period of probation pronounced by the court. Appellant received a custody status point under this provision. The guidelines, specifically 2.B.2, were revised in 2019, becoming effective while appellant’s appeal was pending, eliminating this provision. A custody status point is now assigned only if the offender was actually on probation at the time of the offense in question. 

Appellant argues for the application of the amelioration doctrine, which requires that a law that mitigates punishment be applied to acts committed before the law’s effective date, so long as no final judgment has been reached and the Legislature has not explicitly expressed contrary intent. The state argues that a policy statement adopted by the guidelines commission, but without express legislative approval, operates as a statement of intent by the Legislature.

In addition to proposed changes to the guidelines themselves, the guidelines commission submitted proposed policy modifications to guidelines 3.G.1 that would have the effect of making any future changes to the guidelines prospective only. The Legislature did not take any action on the proposed policy modifications, which the state argues is the equivalent of a statement evincing the Legislature’s intent to abrogate the amelioration doctrine. 

However, the court of appeals rejected this argument, noting that Minn. Stat. §244.09, subd. 11, does not provide for legislative adoption of modifications that do not amend the sentencing grid or result in the reduction of any sentence or in the early release of any inmate. Moreover, the court finds no statement by the Legislature establishing its intent to abrogate the amelioration doctrine with regard to the modification to guideline 2.B.2. The case is reversed and remanded for resentencing in accordance with the modified sentencing guidelines. State v. Robinette, __ N.W.2d __, 2020 WL 1909348 (Minn. Ct. App. 4/2/2020).

Samantha Foertsch
Stephen Foertsch
Bruno Law PLLC


ENVIRONMENTAL LAW

JUDICIAL LAW

•  5th Circuit upholds EPA’s position limiting the scope of Title V reviews. The U.S. Court of Appeals for the 5th Circuit issued a unanimous decision in Environmental Integrity Project (EIP), et al. v. EPA, in which the court deferred to the position recently adopted by the U.S. Environmental Protection Agency (EPA) that when reviewing Clean Air Act (CAA) Title V air emission permits, the agency is not required to reevaluate the substantive validity of underlying Title I preconstruction permits or states’ determinations regarding whether a source was properly classified as “major” or “minor.” 

By way of brief background, Title I of the CAA, passed in 1977, establishes the new source review (NSR) program, which requires operators to obtain a preconstruction permit before building a new facility or modifying an old one. States issue NSR permits through EPA-approved state implementation plans (SIPs). Title I establishes significantly more stringent NSR permit requirements for sources classified as “major” (having the potential to emit 100 tons per year or more of any air pollutant) compared to those that are “minor.” 

Relevant to this case, EPA in 2002 adopted a rule allowing sources to obtain a 10-year plant-wide applicability limitation (PAL) permit. Under a PAL permit, a facility is not required to undergo major NSR for modifications to parts of the facility, so long as overall emissions from the whole facility do not exceed levels specified in the PAL permit. 

Finally, Title V of the CAA, added by Congress in 1990, was designed to provide each source a single operating permit that consolidates all the various requirements from the source’s other air permits, including NSR permits, PAL permits, and applicable state-only requirements, but generally does not add any new substantive requirements. Title V permits have been described as “a source-specific bible for Clean Air Act compliance.” Virginia v. Browner, 80 F.3d 869, 873 (4th Cir. 1996). Like NSR and PAL permits, Title V permits are issued by states, subject to review by EPA. The CAA requires Title V permits to include, among other things, emissions limits, monitoring requirements, and “such other conditions as are necessary to assure compliance with applicable requirements of this chapter, including the requirements of the applicable [SIP].” 42 U.S.C. §7661c(a). 

EPA has defined the key term “applicable requirements” to mean the terms and conditions of the source’s NSR permit(s) as well as “[a]ny standard or other requirement provided for in the applicable [SIP]…” 40 C.F.R. §70.2. EPA originally took the position that the underlying NSR permit defined the universe of “applicable requirements” that must be included in the Title V permit; so long as those terms and conditions were included in the Title V permit, EPA would not “second-guess the results of any State’s NSR program.” EIP v. EPA at 6 (citations omitted). Subsequently, EPA expanded its view, concluding for instance that §70.2 allowed EPA, when reviewing Title V permit reissuances, to evaluate whether the state had properly classified the source as a major or minor source and had properly included all necessary conditions arising under the CAA, EPA regulations, and the SIP. Id. at 6–7. In 2017, however, EPA reverted to its original, more narrow interpretation, issuing an administrative order indicating that in Title V reviews, neither EPA nor state permitting authorities must determine whether the source received the right kind of preconstruction permit. It is enough that the Title V permit reflects the result of the state preconstruction permitting decision. Id. at 7.

The 5th Circuit’s EIP v. EPA decision was the first to test EPA’s most recent interpretation of the scope of Title V reviews, and is thus likely to have nationwide ramifications, including in Minnesota, for facilities seeking reissuances of their Title V permits. The case involved ExxonMobil’s construction of a new ethylene production facility at its Baytown, Texas Olefins plant. The Texas Commission on Environmental Quality (TCEQ) determined that only a minor new-source permit was required, because under the plant’s PAL permit, the construction could occur without exceeding the PAL permit limits. When ExxonMobil subsequently applied to TCEQ to modify the plant’s Title V to incorporate the new minor-source permit, EIP and other environmental groups petitioned EPA to object to the Title V permit, arguing, among other things, that the PAL permit was invalid. EPA denied the petition based upon its recent narrow interpretation of the scope of Title V review. The environmental groups appealed. 

The 5th Circuit deferred to EPA’s interpretation under the Skidmore standard of deference to agency interpretations of ambiguous statutory language, which provides that a court need not apply the broader Chevron analytic framework if the agency’s interpretation is persuasive. Skidmore v. Swift & Co., 323 U.S. 134 (1944). “We find persuasive EPA’s position that Title V lacks a specific textual mandate requiring the agency to revisit the Title I adequacy of preconstruction permits,” the court concluded. The court’s own review of Title V found no “explicit requirement” to this effect, and no language guiding EPA on how it would conduct reviews of NSR permits during Title V reviews; accordingly, the court refused to read into the statute a matter it does not include, noting that “Congress does not hide elephants in mouseholes by altering the fundamental details of a regulatory scheme in vague terms or ancillary provisions.” EIP v. EPA at 13, 15. (citations omitted). Finally, the court emphasized that its decision does not affect the petitioners’ ability to challenge the underlying NSR and PAL permits in other contexts. Environmental Integrity Project (EIP), et al. v. EPA, No. 18-60384 (5th Cir. 5/29/2020). 

LEGISLATIVE ACTION

•  Minnesota bans use of TCE in permitted facilities. On 5/16/2020, Minnesota Gov. Tim Walz signed into law SF 4073—known as the “White Bear Area Neighborhood Concerned Citizens Group Ban TCE Act”—which, subject to limited exceptions, bans the use of Trichloroethylene (TCE), beginning on 6/1/2022, in facilities required to have an air emissions permit from the Minnesota Pollution Control Agency (MPCA). The prohibition will be made enforceable in the air permits of affected facilities or through other enforceable agreements. The law provides a process for small businesses to seek up to one additional year to come into compliance and provides $250,000 in zero-interest loans to assist small businesses in transitioning away from TCE. The MPCA must grant exceptions to the prohibition in three specific situations so long as the Department of Health health-based value (HBV) and health risk limits (HRL) for TCE have been met: (1) use of trichloroethylene in closed systems so that no trichloroethylene is emitted from the facility; (2) holding trichloroethylene or products containing trichloroethylene for distribution to a third party; and (3) a hospital licensed under sections 144.50 to 144.56, or an academic medical facility. The law also allows MPCA to grant variance applications that meet the agency’s variance requirements in Minn. R. 7000.700, and where compliance with the HBV and HRL are demonstrated, by facilities that use TCE solely for research and development purposes, or by facilities that process TCE for waste disposal. 

TCE is a nonflammable, colorless liquid that has been primarily used as a solvent to remove grease from metal parts. It has also been a frequent ingredient in adhesives, paint removers, typewriter correction fluids, and spot removers. Exposure to TCE has been linked to various adverse health effects, ranging from headaches, dizziness, and sleepiness for minor exposure to heart and liver impacts and even death for more prolonged or greater exposure. See www.atsdr.cdc.gov. 

ADMINISTRATIVE ACTION

•  EPA finalizes rule updating CWA 401 certification requirements. On 6/1/ 2020, the U.S. Environmental Protection Agency (EPA) published the final rule to update and clarify substantive and procedural requirements for water quality certification under Section 401 of the Clean Water Act (CWA). 40 C.F.R. §121. EPA reviewed and proposed changes to Section 401 in response to Executive Order 13868 (4/10/2019), “Promoting Energy Infrastructure and Economic Growth,” which directed the agency to determine whether the section’s regulations and guidance should be updated or clarified.

Section 401 prohibits a federal agency from issuing a permit or license to conduct activity that may result in any discharge into waters of the United States unless the state or authorized tribe in which the proposed discharge would occur certifies that the discharge complies with applicable state water quality requirements. Furthermore, Section 401 allows states to input conditions upon the certification of the project if it determines the project will have a negative impact on the water quality within the state.

The final rule updates and addresses many substantive and procedural requirements for Section 401 certification. Most notably, the final rule narrows the scope of Section 401 certification to be based on the potential for a project to result in actual point source discharge into waters of the United States, rather than the overall activity of which the discharge is a part. In addition, the final rule clarifies that the scope of Section 401 certification must comply with “water quality requirements,” defined as “applicable provisions of section 301, 302, 303, 306, and 307 of the Clean Water Act and state or tribal regulatory requirements of point source discharges into waters of the United States.” This means, for example, that a state’s consideration of broader issues such as air emission or transportation effects as part of the section 401 review process would exceed the final rule’s scope. 

Another notable change clarifies procedures regarding the period in which a state or tribe must issue or waive certification. The final rule requires that states act on a certification request within a “reasonable period of time” and specifies that the action on a certification request must not take longer than one year. The rule does not allow for the “reasonable period of time” to be stopped or tolled and specifies that if the state does not take action during the reasonable period of time, the state’s certification is waived. The final rule will become effective 60 days after the publication in the Federal Register. Docket ID: EPA-HQ-OW-2019-0405. 

Jeremy P. Greenhouse The Environmental Law Group, Ltd.
Jake Beckstrom Vermont Law School, 2015
Erik Ordahl Flaherty & Hood, P.A. 
Audrey Meyer University of St. Thomas School of Law, J.D. candidate 2020


FAMILY LAW

JUDICIAL LAW

•  Court considers a party’s refusal to file a joint income tax return in equitably dividing marital property. At the end of their 20-year marriage, husband and wife tried issues relative to property division and spousal maintenance to the district court. Among the disputes was whether wife should contribute toward $10,384 in additional tax debt that husband incurred as a result of wife electing a married-separate filing status. Based on testimony from the parties’ tax consultant, the district court deducted $10,384 from the property awarded to husband (effectively requiring wife to reimburse husband for half that amount). Wife appealed on several grounds, arguing inter alia the district court abused its discretion with respect to this tax liability.

While reversing the district court in several respects, the Minnesota Court of Appeals affirmed the treatment of husband’s additional tax liability. Citing wife’s fiduciary obligations under Minn. Stat. §518.58, subd. 1a, the appellate court reasoned the court was authorized to compensate husband to the extent wife’s filing status amounted to dissipation without his consent. The court of appeals further acknowledged that while federal law authorized wife to file separately, prior unpublished opinions permitted district courts to account for a party’s decision to file separately as part of the property division. See Toso v. Toso, No. A12-1033 (Minn. Ct. App. 6/17/2013) (assigning a tax liability to a party who refused to file jointly despite being ordered to cooperate with a joint return); Tiedke v. Tiedke, No. A18-1492 (Minn. Ct. App. 8/5/2019) (recognizing that assignment of a tax liability may be appropriate, with proper proof). 

Notably, the court of appeals reversed the district court on several other grounds, including improperly calculating husband’s net income and expenses, attributing income to wife without support in the record, and double-counting homeowner’s insurance proceeds that were both awarded as a separate asset and needed to return the home to its appraised value. In re the Marriage of Aufenthie v. Aufenthie, No. A19-0883 (Minn. Ct. App. 6/8/2020).

•  Court may refuse to grant an order for protection where the respondent’s actions are deemed “reasonable self-defense.” Wife sought an order for protection following an incident in the family home. After an argument about the end of their marriage escalated, husband began recording the argument on his phone. Wife tried to take husband’s phone, leading husband to “slap” wife’s hand and wife to “punch” husband in the leg. The argument intensified and, with the parties’ daughter looking on, wife “attacked husband unprovoked” leading husband to grab wife, take her to the kitchen, and bring her to the kitchen floor where he held her for 20 seconds. Wife immediately reported the matter to law enforcement and husband was arrested. After granting an ex parte emergency order, the district court received testimony from eight witnesses and ultimately dismissed the order for protection petition following a hearing. Crediting husband’s testimony and discounting wife’s, the district court reasoned that “if all that [it] heard testimony about was [husband] doing those actions that would constitute assault.” But the court declined to only “consider evidence just in a vacuum,” finding that husband’s actions were reasonable self-defense. Wife appealed, arguing the district court misapplied the definition of “domestic abuse” in Minn. Stat. §518B.01. 

The court of appeals affirmed, relying heavily on the Minnesota Supreme Court’s 2018 decision in Thompson v. Schrimsher. 906 N.W.2d 495 (Minn. 2018). Consistent with Thompson, the appellate court acknowledged that considering an order for protection petition requires two steps. First, the district court must determine whether domestic abuse occurred as defined by statute. Second, the district court is then permitted to examine “all relevant circumstances” to determine whether an order for protection should issue. Here, the court of appeals held that the district court did precisely that, acknowledging that husband’s actions did amount to domestic abuse, but declining to issue an order based on the totality of the circumstances, including what it believed to be husband’s “reasonable self-defense.” The appellate court also noted that the absence of a self-defense exception in the Domestic Abuse Act did not preclude the district court from placing husband’s actions in context. In re the Matter of Sobiech v. Sobiech, No. A19-1928 (Minn. Ct. App. 6/8/2020).

Michael Boulette

Barnes & Thornburg LLP


FEDERAL PRACTICE

JUDICIAL LAW

•  Diversity jurisdiction; amount in controversy. Where the plaintiffs brought three defamation claims, each of which sought “in excess of $20,000” plus unspecified punitive damages, and the defendants removed the action, asserting that “a reasonable fact finder might conclude the damages are greater than the requisite amount,” the 8th Circuit ordered supplemental briefing on the amount in controversy question and ultimately concluded that the amount in controversy requirement was met based on a “reasonable reading of the value of the rights being litigated.” Turntine v. Peterson, 959 F.3d 873 (8th Cir. 2020). 

•  Punitive damages; due process. Where a jury awarded the plaintiff just over $20,000 in compensatory and incidental damages and also awarded $5.8 million in punitive damages, the district court reduced the punitive damage award to $500,000 on due process grounds, and both sides appealed the punitive damages ruling, the 8th Circuit affirmed the district court’s ruling, finding the original $5.8 million award to be “grossly excessive,” while finding that $500,000 was reasonable. Adeli v. Silverstar Automotive, Inc., ___ F.3d ___ (8th Cir. 2020). 

•  First-filed; stay; intervention; Fed. R. Civ. P. 24(a); adequacy of representation. Where two nearly identical putative class actions were filed, a settlement was reached in the second-filed action, the first-filed plaintiff’s motion to intervene in or stay the second-filed action was denied, and the first-filed plaintiff appealed, the 8th Circuit held that the first-filed plaintiff did not meet the requirements for intervention because his interests were adequately represented, and that it lacked pendent appellate jurisdiction to consider his appeal of the denial of the motion to stay. Swinton v. SquareTrade, Inc., ___ F.3d ___ (8th Cir. 2020). 

•   Fed. R. Civ. P. 15; claim not appearing in complaint. Where the plaintiff’s complaint asserted only two claims, and she attempted to advance a third claim in opposition to the defendants’ motion to dismiss, the 8th Circuit held that it would not allow the plaintiff to pursue the new claim on appeal where she had failed to seek to amend her complaint pursuant to Fed. R. Civ. P. 15. Doe v. Parson, ___ F.3d ___ (8th Cir. 2020). 

•   Removal; remand; multiple cases. Where the defendants removed an action brought by a Minnesota corporation on the basis of diversity jurisdiction and the plaintiff moved to remand, Judge Wright found that one defendant had not met his burden to rebut the presumption that he remained domiciled in Minnesota as of the date the action was commenced. Accordingly, plaintiff’s motion to remand was granted. Blattner Energy, Inc. v. Jones, 2020 WL 2848181 (D. Minn. 6/2/2020). 

Granting the plaintiff’s motion to remand, Judge Nelson noted in a footnote that a Minnesota action that has been commenced but not yet filed can be removed. However, the opinion makes no mention of 28 U.S.C. §1446(d)’s requirement that a copy of the notice of removal be filed with the clerk of the state court. TallBear v. Soldi Inc., 2020 WL 2490047 (D. Minn. 5/14/2020). 

Judge Tostrud held that defendants’ attempt at removal was improper when they had received a copy of the complaint but had not yet been served with the complaint, meaning that the action had not yet been “commenced” as required by 28 U.S.C. §1441(a). Accordingly, the action was remanded. Metivier v. Deutsche Bank Trust Co. Ams., 2020 WL 2215725 (D. Minn. 5/7/2020). 

•  Fed. R. Civ. P. 15; Minn. Stat. §549.191; punitive damages. Magistrate Judge Wright joined the “large majority” in the District of Minnesota in finding that motions to amend to add a claim for punitive damages are governed by Fed. R. Civ. P. 15(a) rather than Minn. Stat. §549.191. Hamilton v. FranChoice, Inc., 2020 WL 2191219 (D. Minn. 5/6/2020). 

•  First-filed rule; compelling circumstances exception. Chief Judge Tunheim found “red flags” that warranted denial of the first-filed plaintiff’s motion to dismiss the second filed case in the District of Minnesota, where the first-filed plaintiff was “on notice” that an action was about to be filed by the first-filed defendant, the first-filed action consisted primarily of declaratory judgment claims, and the first-filed plaintiff had acted in “bad faith” in seeking more time to respond to a letter and then filing his lawsuit. Brand Advantage Group, Inc. v. Henshaw, 2020 WL 1891772 (D. Minn. 4/16/2020). 

•  Fed. R. Civ. P. 41(a)(2); motion for voluntary dismissal denied. After Magistrate Judge Schultz recommended the dismissal of certain defendants and claims but also recommended that the plaintiff be permitted 30 days to replead those claims, and the plaintiff responded by filing a motion for voluntary dismissal pursuant to Fed. R. Civ. P. 41(a)(2), Judge Davis denied the Rule 41(a)(2) motion, finding that the matter had been pending for more than a year and that granting the motion would “allow Plaintiff to avoid the consequences of the Court’s ruling on Defendant’s motion to dismiss.” C.H. Robinson Worldwide, Inc. v. Traffic Tech, Inc., 2020 WL 2490030 (D. Minn. 5/14/2020). 

•  Sanctions; multiple cases. Magistrate Judge Schultz ordered plaintiff’s counsel to pay more than $14,000 in attorney’s fees and expenses for “contravening court orders” and her “lack of candor” to the court. Rolandson v. Ethicon, Inc., 2020 WL 2086279 (D. Minn. 4/30/2020). 

While declining to impose “dispositive sanctions,” Magistrate Judge Menendez ordered defendants and their counsel to pay more than $66,000 in attorney’s fees plus additional attorney’s fees in an amount to be determined for their violation of multiple discovery orders and counsel’s “vexatious conduct.” Mgmt. Registry, Inc. v. A.W. Cos., 2020 WL 1910589 (D. Minn. 4/20/2020). 

Adopting a report and recommendation by Magistrate Judge Menendez, Chief Judge Tunheim cited both Fed. R. Civ. P. 37(b)(2) and inherent powers in ordering plaintiff and/or his counsel to pay more than $19,500 in attorney’s fees and costs for their failure to comply with a discovery order and their “abuse of the discovery process.” Darmer v. State Farm Fire & Cas. Co., 2020 WL 1550725 (D. Minn. 4/1/2020). 

Josh Jacobson
Law Office of Josh Jacobson 


IMMIGRATION LAW

JUDICIAL LAW

•  Courts may review factual challenges to a CAT order. On 6/1/2020, the United States Supreme Court reversed the 11th Circuit Court of Appeals when it found that while 8 U.S.C. §§1252(a)(2)(C) and (D) preclude judicial review of a noncitizen’s factual challenges to a “final order of removal,” they do not preclude judicial review of factual challenges to an order denying relief under the Convention Against Torture (CAT). The Court found that a CAT order (a form of relief protecting noncitizens from removal to a country where they would likely face torture) is distinct from a “final order of removal” that concludes a foreign national is deportable or orders his/her deportation under 8 U.S.C. §1101(a)(47)(A). “An order granting CAT relief means only that, notwithstanding the order of removal, the noncitizen may not be removed to the designated country of removal, at least until conditions change in that country.” Notwithstanding this finding, the Court noted that judicial review of factual challenges to CAT orders are highly deferential, subject to the substantial evidence standard. That is, findings of fact are conclusive unless a reasonable adjudicator is compelled to conclude otherwise. The Court deferred a decision on the applicability of its holding to statutory withholding of removal under 8 U.S.C. §1231(b)(3)(A) to another day (i.e., preventing the removal of a noncitizen to a country where the noncitizen’s “life or freedom would be threatened” because of the noncitizen’s “race, religion, nationality, membership in a particular social group, or political opinion.”). Nasrallah v. Barr, 590 U.S. ____, No. 18-1432, slip op. at 8, 13 (2020). https://www.supremecourt.gov/opinions/19pdf/18-1432_e2pg.pdf 

•  Lack of evidence supporting a claim of persecution based on opposition to joining gang. On 5/28/2020, the 8th Circuit Court of Appeals found the Board of Immigration Appeals’ denial of asylum to the Salvadoran petitioner, claiming persecution on account of his opposition to becoming a member of the Mara 18 gang, was supported by substantial evidence in the record. “Although the Mara 18 gang may have some political motivations, the record here supports a finding that Prieto-Pineda was harassed for refusing to provide rides, not for any political opposition to the gang.” Prieto-Pineda v. Barr, No. 19-1347, slip op. (8th Cir. 5/28/2020). https://ecf.ca8.uscourts.gov/opndir/20/05/191347P.pdf 

•  No persecution on account of social group membership composed of family members of son kidnapped and murdered by drug cartel. On 4/23/2020, the 8th Circuit Court of Appeals held substantial evidence supported the Board of Immigration Appeals’ determination that the Mexican petitioner did not suffer past persecution or have a well-founded fear of future persecution on account of membership in a social group consisting of “immediate family members” of her son. “In any case, Meza failed to present any evidence to suggest that this alleged persecution of [her son] Alberto was on account of his family relationship, ‘as opposed to the fact that, as [a business owner], [he was an] obvious target[] for extortionate demands.’ Cambara-Cambara v. Lynch, 837 F.3d 822, 826 (8th Cir. 2016).” Meza Cano v. Barr, No. 19-1506, slip op. (8th Cir. 4/23/2020). https://ecf.ca8.uscourts.gov/opndir/20/04/191506P.pdf 

•   No persecution based on membership in the social group, “individuals with schizophrenia exhibiting erratic behavior.On 3/9/2020, the 8th Circuit Court of Appeals upheld the Board of Immigration Appeals’ denial of the petitioner’s application for asylum based on his claim that he was a member of the particular social group, “individuals with schizophrenia who exhibit erratic behavior.” The court concluded “the evidence that the Mexican government persecutes certain mentally-ill citizens on account of group membership is not so substantial as to compel remand.” Perez-Rodriguez v. Barr, No. 18-3269, slip op. (8th Cir. 3/9/2020). https://ecf.ca8.uscourts.gov/opndir/20/03/183269P.pdf

ADMINISTRATIVE ACTION

•  President Trump suspends entry of certain Chinese national students. On 5/29/2020, President Trump signed a proclamation suspending entry of certain Chinese nationals seeking entry into the United States on a J or F visa to study or carry out research in the United States (with the exception of those students seeking to pursue undergraduate study) who either receive funding from or are currently employed by, study at, or conduct research at or on behalf of, or have been employed by, studied at, or conducted research at or on behalf of, an entity in the People’s Republic of China (PRC) that implements or supports the PRC’s ‘‘military-civil fusion strategy.” The suspension does not apply to the following: 

any lawful permanent resident of the United States;

(ii) any alien who is the spouse of a United States citizen or lawful permanent resident;

(iii) any alien who is a member of the United States Armed Forces and any alien who is a spouse or child of a member of the United States Armed Forces;

(iv) any alien whose travel falls within the scope of section 11 of the United Nations Headquarters Agreement or who would otherwise be allowed entry into the United States pursuant to United States obligations under applicable international agreements;

(v) any alien who is studying or conducting research in a field involving information that would not contribute to the PRC’s military-civil fusion strategy, as determined by the Secretary of State and the Secretary of Homeland Security, in consultation with the appropriate executive departments and agencies (agencies);

(vi) any alien whose entry would further important United States law enforcement objectives, as determined by the Secretary of State, the Secretary of Homeland Security, or their respective designees, based on a recommendation of the Attorney General or his designee; or

(vii) any alien whose entry would be in the national interest, as determined by the Secretary of State, the Secretary of Homeland Security, or their respective designees.

The proclamation went into effect on 6/1/2020 at 12:00pm (EDT). 85 Fed. Reg., 34,353-55 (6/4/2020). https://www.govinfo.gov/content/pkg/FR-2020-06-04/pdf/2020-12217.pdf 

•  Liberian Refugee Immigration Fairness (LRIF): An update. On 4/20/2020, U.S. Citizenship and Immigration Services (USCIS) announced additional instructions regarding eligibility requirements for applicants (and their family members), grounds of inadmissibility, and the filing and adjudication of permanent residence applications—all based on the Liberian Refugee Immigration Fairness provision of the National Defense Authorization Act for Fiscal Year 2020 that was signed into existence on 12/20/2019. The application period runs to 12/20/2020. Further information about LRIF and the process may be found at the webpage set up by USCIS. https://www.uscis.gov/green-card/other-ways-get-green-card/liberian-refugee-immigration-fairness

R. Mark Frey
Frey Law Office



REAL PROPERTY

JUDICIAL LAW

•  Tax court affirmed. Medline, the owner of a 300,000 square foot warehouse, appealed a tax court decision that reduced $15 million valuations for two years by $274,000 and $315,000. The tax court rejected the county’s appraiser’s opinion concerning the highest and best use of the property, but then relied on other portions of his analysis. The Supreme Court held that doing so was not erroneous given that the usage opinion did not fatally damage his other opinions and the court did not overly rely on any of his opinions. Of the comparable sales relied on by the parties’ appraisers, the tax court chose four comparable sales and did not rely on the property owner’s primary comparable, a sale that occurred after the valuation date. The Supreme Court held that the tax court’s decision not to rely on one sale, particularly when it explained that all post-valuation-date sales were entitled to less weight and did not demonstrate that it improperly refused to consider that sale. The tax court also refused to use the property owner’s capitalization rate and instead applied two different rates closer to that offered by the county. The Supreme Court held that the capitalization rate analysis was not erroneous because it was within the range used by the parties’ competing experts. The Supreme Court also rejected other arguments by the property owner, holding that the tax court’s decisions were within its discretion. Medline Indus., Inc. v. County of Hennepin, 941 N.W.2d 127 (Minn. 2020) (https://mn.gov/law-library-stat/archive/supct/2020/OPA191420-040120.pdf). 

•  County’s decision denying conditional use permit application affirmed. An owner of a five-acre parcel on Long Lake in Hubbard County sought a conditional use permit to build and operate a 14-site RV park. After receiving materials from the applicant, a county staff report listing prior environmental violations on the property, a report and testimony from the DNR with recommendations to avoid lake-bottom damages and aquaculture damage, and public testimony in opposition to the application, the County Planning Commission voted 3-2 to recommend approval of the CUP, with 22 conditions. The County Board of Commissioners, however, voted 3-2 to deny the application. On appeal, the landowner asserted that the board erred in denying the application on the basis of its alleged lack of compatibility with adjacent land uses when such a standard was not stated within the shoreland management ordinance and that the use was not incompatible given the planned placement of the RVs and a boundary fence. The owner also alleged that the county erred in finding that the lake was not suited to the proposed use and was unable to accommodate it, and that the decision unlawfully interfered with his riparian rights. 

The court of appeals affirmed, holding that the county was able to consider adjacent uses of land even though the ordinance did not include such a standard and that sufficient evidence supported the county’s finding of incompatible land uses. Further, it held that adequate evidence supported the county’s findings concerning the likely impacts of the proposed use on the lake. Finally, it held that the county’s decision to deny the application despite the owner’s riparian rights was not arbitrary and capricious because the ordinance did not prohibit the building of a dock on the property and the denial of the application was based on reasonable concerns relating to the likely impacts of the proposed use on the lake. Matter of Bolton, No. A19-1208, 2020 WL 211073 (Minn. App. 5/4/2020).

•  Anti-transfer provision in contract for deed triggered by TODD. Husband and wife Krumries sold their family farm on a contract for deed to their then-son-in law Jeffrey Woodard. The contract contained an anti-transfer provision. Twenty-four years later, shortly before he died, Jeffrey signed a transfer-on-death deed transferring his interest in the contract to his son, Skyler. Krumries served a notice of cancellation. Skyler brought suit, seeking to enjoin the cancellation of the contract for deed. Skyler lost on summary judgment. On appeal, he argued that the TODD did not violate the anti-transfer clause, that it was not a material breach, that the Krumries did not follow the statutory procedure for cancellation, and that equity supported his claims. In affirming the district court, the court of appeals held that a TODD is a transfer of an interest in the property, and that the contract for deed was breached. It held further that the breach was material, noting that the anti-transfer provision was one of only two additions to a standard contract for deed form. The court found that the Krumries had complied with the statutory cancellation procedure, even though the default could not be cured, and that the equities did not need to be considered when a written contract controls. Woodward v. Krumrie, A19-0800, 2020 WL 996746 (Minn. App., 3/2/2020) (unpublished).

•  Drainage appeal dismissed due to service attempted by a party. Landowners (including Timothy Gieseke) sought to appeal an order by the Nicollet County Drainage Authority regarding improvements to a drainage ditch. Minn. Stat. §103E.091 requires service on the county auditor. Timothy Gieseke personally handed the notice of appeal to an administrative support employee, who then handed the notice to her supervisor, J.K, who acts as the county auditor. J.K. signed a document captioned “Admission of Service.” The county later moved to dismiss the appeal for insufficient service of process, which was granted. The court of appeals affirmed. It noted that the rules of civil procedure apply to a drainage action, and that Rule 4.02 does not allow a party to serve a summons or other process. It held that the admission of service document merely reflected that J.K. had received the notice of appeal, and not that she waived the requirement that a non-party must serve such a notice. As Timothy Gieseke was a party to the drainage appeal, the court held that his attempt at personal service was not effective. Gieseke v. Nicollet County Drainage Authority, A19-0955, 2020 WL 1129962 (Minn. App., 3/9/2020).

Julie N. Nagorski
Patrick C. Summers
DeWitt LLP


TAX LAW

JUDICIAL LAW

•  Scrutiny of conservation easements continues; regulation upheld. According to the Nature Conservancy, “conservation easements are one of the most powerful, effective tools available for the permanent conservation of private lands in the United States.” Conservation easements permit landowners to retain most rights of private ownership but limit certain types of use or development on the land. When the limitations on the use of the land create a public benefit—for example, if the easement protects natural habitats or preserves land for public recreational or educational use—the private landowner might be entitled to a tax deduction under Section 170(f)(3)(B)(iii). The nonprofit Land Trust Alliance estimates that more than 50 million acres of land in the United States are protected by some type of land trust—and over 1 million of those protected acres are in Minnesota. (Land Trust Alliance, 2015 National Land Trust Census Report.)  

Despite the popularity of these easements, some taxpayers took advantage of the tax benefit by grossly overestimating the value of the conservation easement. The Service took notice. In recent years, the Service has stepped up scrutiny of conservation easements and has added abusive easements to its list of “Recognized Abusive and Listed Transactions.’ E.g., Notice 2017-10, Listing Notice—Syndicated Conservation Easement Transactions; see also I.R.S. Notice 2017-10, 2017-4 I.R.B. 544; Recognized Abusive and Listed Transactions, Internal Revenue Serv., https://www.irs.gov/businesses/corporations/listed-transactions (last updated 1/31/2020).

One such conservation easement dispute drew two opinions: in the first opinion, Judge Holmes addressed the dispute without passing on the validity of a disputed regulation. Oakbrook Land Holdings, LLC, William Duane Horton, Tax Matter Partner v. Comm’r, TCM (RIA) 2020-054 (T.C. 5/12/2020). Holmes began by observing that “[i]n recent years the Commissioner has attacked a popular form of charitable contribution—the donation of conservation easements.” In addition to pursuing the gross overvaluations, Holmes explained that the Commissioner “has… launched three sorties—all predicated on the requirement that such easements be “perpetual”—that he hopes will cause more widespread casualties: an attack on the power of donor and donee to change the terms of the easement after its contribution; an attack on the retained right of the donor to add improvements to the property described in the easement; and an attack on a clause commonly found in easements… that divides between donor and donee future hypothetical proceeds from a future hypothetical extinguishment of the easement in a way that he claims violates one of his regulations.”

In this opinion in the Oakbrook case, Holmes wrestles with the last of these sorties by parsing the language of Regulation 1.170A-14(g)(6)(ii), Tennessee property law, and the language of the deed granting the easement. Ultimately, the court denied “any deduction for Oakbrook’s donation of the conservation easement because the provisions in the Deed violated the extinguishment-proceeds clause in the regulation.” The court did not, however, sustain the penalty that the commissioner assessed, reasoning that the taxpayer’s position was reasonable and the taxpayer in good faith relied “on what he saw as the safety of form language that echoed the PLR.”

The legitimacy of Reg. 1.170A-14(g)(6) is addressed in the related opinion, Oakbrook Land Holdings, LLC v. Comm’r, 154 T.C. No. 10, 2020 WL 2395992 (5/12/2020). The majority upholds the regulation as properly promulgated and valid under the Administrative Procedure Act and further holds that the construction of Code Section 170(h)(5) as set forth in sec. 1.170A-14(g)(6), Income Tax Regs., is valid under Chevron. Judge Toro concurred in the result but would not have reached the question of the regulation’s validity because “applying the text of the statute to the terms of the easement before us suffices to resolve the dispute before the Court.” Judge Holmes, who wrote for the court in the other Oakbrook opinion, dissents here. Judge Holmes laments: “I fear that our efforts to clear cut and brush hog our way out of the volume of conservation-easement cases we have to deal with has left us a field far stumpier than when we began.”  See also Woodland Prop. Holdings, LLC v. Comm’r, T.C.M. (RIA) 2020-055 (T.C. 2020) (holding that the conservation purpose underlying the easement at issue was not “protected in perpetuity” as required by section 170(h)(5)(A) and granting the commissioner’s motion for partial summary judgment).

For an example of a conservation easement case focused on valuation dispute, see Johnson v. Commissioner, T.C.M. (RIA) 2020-079 (T.C. 2020), in which the court reduced the value of a conservation easement from a claimed $610,000 to $372,919.

•  Commissioner intentionally violated scheduling order; court grants appellants attorney’s fees and other expenses. In an appeal of an order to pay individual income tax penalty and interest, the parties submitted a proposed scheduling order that was fully adopted by the court on 12/3/2018. The scheduling order provided in part that the exhibit list must specify all exhibits that a party reasonably foresees introducing, and the exhibit lists had to be filed no later than 7/31/2019. The order further addressed circumstances in which the order could or could not be modified. In part, the order states that extensions or continuances will not be granted except by written motion supported by an affidavit showing good cause. The order cautioned that substitution of counsel does not create any right to a continuance of any deadline. 

Six weeks after the parties timely filed a joint exhibit list and supplemental stipulation of facts, the commissioner filed an amended commissioner’s separate exhibit list containing 27 additional exhibits and comprising approximately 300 pages of material. The amended list was not accompanied by a written motion to amend the scheduling order. Appellants filed a motion in limine asking the court to exclude the commissioner’s untimely exhibits, arguing that the commissioner violated the scheduling order and admittance of the evidence would be prejudicial. The commissioner responded by trying to shift the burden to appellants, stating that they failed to demonstrate that the late-filed exhibits were irrelevant or inadmissible. The commissioner made no acknowledgement of violating the scheduling order. 

Minnesota Rules of Civil Procedure 16.06 authorizes a court to sanction a party for failing to abide by a scheduling order. The rule states, in part, that if a party fails to obey a scheduling or pretrial order, in lieu of or in addition to any other sanction, the court shall require the party to pay reasonable expenses incurred due to noncompliance with this rule.

On 1/3/2020, the court heard appellants’ motion in limine. Ruling from the bench, the court found that the commissioner intentionally violated the scheduling order without substantial justification and awarded the appellants $32,465 in attorney fees and $301 in other expenses. Mark L v. Comm’r, 2020 WL 2478861 (Minn. Tax Court 5/7/20).

•  Court lacks authority to waive statutory deadlines; petitioner application denied. Petitioner Thumper Pond, a Brainerd resort, filed a petition contesting the assessed value of real property located in Otter Tail County. The application for permission to continue with prosecution without payment of the tax was due on 5/6/2020. Thumper Pond filed the application on 5/7/2020. Thumper Pond asserts that paying the first half of taxes would impose an undue hardship on the resort since it has been closed since March 17, 2020 due to the covid-19 pandemic. Thumper Pond requested that the court waive the statutory filing requirements.

Minn. Stat. §278.03, subd. 1 states, in relevant part, that the petitioner may apply to the court for permission to continue prosecution without payment if there is probable cause to believe that the property may be held exempt from the tax levied or that the tax may be determined to be less than 50 percent of the amount levied, and that it would place hardship upon the petitioner to pay the taxes due.

When the Legislature wishes the court to have authority to waive notice and filing requirements, it expressly grants it by statute. The statute grants no such authority and, the court has previously ruled that failure to timely serve a section 278.03 application deprives the court of jurisdiction to entertain that application. 

Because Thumper Pond’s section 278.03 application was not timely filed and served, and because the court cannot waive the statutory filing deadlines, Thumper Pond’s application to continue prosecution without payment of tax was denied. Thumper Pond Resort v. Otter Tail Cty, 2020 WL 2564892 (Minn. Tax Court 5/13/20).

•  Commissioner incorrectly interprets clause requiring non-corporate taxpayers to file as corporations. Appellants own and operate taconite mines near Hibbing and Eveleth. Due to their mining activities, appellants were required to pay the occupation tax imposed by Minn. Stat. §298.01, subd. 4 (2012), and each timely filed returns with the state for the tax years ending 12/31/2012 and 12/31/2013. The parties agreed that for occupation tax purposes, appellants were entitled to federal percentage-depletion deductions as provided in I.R.C. §§611-14 (2012). The parties disagreed over the interpretation of several statutes. Minn. Stat. §298.01, subd. 4’s directive that the occupation tax be “determined in the same manner as” Minnesota’s corporate franchise tax required appellants, which are not corporations, to be treated as such and to reduce their deduction amounts by 20% under I.R.C. §291(a)(2) (2012). In computing taxable income, appellants each claimed a federal percentage-depletion deduction without applying the 20% reduction. The commissioner audited appellants’ occupation tax returns and applied the 20% reduction to their percentage-depletion deductions. Appellants timely appealed and moved for summary judgment. The commissioner opposed appellants’ motion and asserted that she was entitled to judgment as a matter of law.

Minn. Stat. §298.01, subd. 4 imposes an occupation tax on persons in the business of mining or production of taconite. By statute, the occupation tax is determined in the same manner as the tax imposed by the corporate franchise tax—by measuring taxable income.

The commissioner argued that because the occupation tax is determined in the same manner as the corporate franchise tax, all persons subject to the occupation tax are deemed to be corporations, and therefore, appellants must recompute their federal percentage-depletion deductions as if they were corporations. Appellants argued that the commissioner ignored the plain language of the IRC, which expressly applies only in the case of a corporation. 

The court considered the meaning of the disputed clause, analyzed the differences between corporate franchise and occupation taxes, and concluded that appellants need not recompute their federal percentage-depletion deductions, and granted appellants’ motion for summary judgment. Hibbing Taconite Co v. Comm’r, 2020 WL 2843472 (Minn. T.C. 5/27/20). 

Morgan Holcomb
Sheena Denny
Mitchell Hamline School of Law


 TORTS & INSURANCE

JUDICIAL LAW

•  Defamation; legislative immunity. Defendant, who serves as a state representative for Minnesota District 66B, which includes part of the City of Saint Paul, sent a letter to the new mayor of Saint Paul, Mayor Melvin Carter. The letter was written on defendant’s official letterhead from the Minnesota House of Representatives, but the letter was marked “**PERSONAL AND CONFIDENTIAL**.” In the letter, defendant wrote about a variety of topics, including general references to “the upcoming legislative session” and “lobbying” issues but without any specificity. The letter goes on to comment on the city attorney’s office, stating that the office’s decisions are often subject to great public scrutiny. He noted that he was “surprised” by the mayor’s “choice for City Attorney.” Defendant contends that the plaintiff had a “track record of integrity questions and management problems” and suggested that plaintiff is not the right person for such an important position. Defendant then requested four types of information specifically about plaintiff before closing the letter by stating: “Mayor Carter, this is a personal letter from me to you. I have not copied it to any member of the press or even to the Saint Paul Delegation, as I am hoping we can resolve it internally.” After plaintiff filed suit for defamation, defendant moved to dismiss the complaint, asserting legislative immunity under the speech or debate clause of the Minnesota Constitution, Minn. Const. art. IV, §10, and under the legislative immunity provision in Minn. Stat. §540.13 (2018). The district court denied defendant’s motion to dismiss based on legislative immunity, and the court of appeals affirmed.

The Minnesota Supreme Court affirmed the decisions of the district court and the court of appeals. The first question for the Court was whether the speech or debate clause of the Minnesota Constitution or Minn. Stat. §540.13 grants legislative immunity to defendant for the statements made in his letter to Mayor Carter. Looking to federal case law for guidance, the Court indicated that immunity is applicable “[i]f it is determined that Members are acting within the ‘legitimate legislative sphere[.]’” However, immunity does not apply to “activities that are casually or incidentally related to legislative affairs but not a part of the legislative process itself.” The Court held that the letter at issue “is not protected legislative activity under the Minnesota Constitution’s Speech or Debate Clause” because it does not fall “within the sphere of legitimate legislative activity.” In support of its conclusion, the Court noted that the letter was sent “at a time when the Legislature was not in session,” “nothing in the letter indicates that [defendant] was acting pursuant to his duties as a legislator,” that defendant “effectively disclaims any connection to legislative activity when he writes that he hopes he and the mayor can resolve the matter ‘internally,’” and that “the thrust of the letter is clearly personal.” The Court went on to hold that while Minn. Stat. §540.13 extends broader immunities than the speech or debate clause, it did not protect the statements at issue because they were made in defendant’s personal capacity and not connected to his legislative duties. Olson v. Lesch, No. A18-1694 (Minn. 5/27/2020). https://mn.gov/law-library-stat/archive/supct/2020/OPA181694-052720.pdf 

Jeff Mulder
Bassford Remele