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EN BANC CALENDAR

Before the Minnesota Supreme Court

April 2019

SUMMARY OF ISSUES

Summaries prepared by the Supreme Court Commissioner’s Office

Monday, April 1, 2019

Supreme Court Courtroom, State Capitol Building, Second Floor 

Aaron Carlson Corporation, Appellant vs. Neal Cohen et al., Respondents, Stevens Industries, Inc., Respondent – Case No. A18-0100: Appellant Aaron Carlson Corporation (“ACC”) entered into a contract with LSI Corporation of America (“LSI”) for ACC to provide custom woodwork to LSI. In June 2015, LSI canceled the contract, and shortly thereafter, ACC sued LSI. In October 2016, ACC was granted summary judgment against LSI and awarded $445,000 in damages.

Respondents Neal Cohen, Darren Chaffee, CoBe Capital, L.L.C., and CoBe Equities, L.L.C. (collectively “CoBe Respondents”), are in the business of acquiring distressed companies and attempting to return them to profitability. The CoBe Respondents are associated with LSI through a variety of ownership and financing arrangements. Cohen and Chaffee became directors of LSI and the holding company. In January 2016, they sued LSI, alleging that it owed them approximately $5 million and seeking appointment of a receiver over LSI to liquidate it. The district court’s order appointing a general receiver gave the receiver all of the powers and authority of a receiver under Minnesota law, including the right to investigate, pursue, and compromise claims that LSI or the receiver had against any third party, including insiders, directors, officers, and owners. The receiver sold all of LSI’s property and distributed the proceeds of the sales to some of LSI’s creditors, including Cohen and Chaffee, but excluding ACC. ACC then sued the CoBe Respondents and others, seeking to pierce LSI’s corporate veil to satisfy ACC’s judgment against LSI. The district court granted the CoBe Respondents’ summary judgment motion, concluding that the receiver had the power to assert any veil-piercing claims of LSI’s creditors. The court of appeals affirmed.

On appeal to the supreme court, the issues presented are (1) whether under Minn. Stat. § 576.29 (2018), the receiver has the right to assert LSI’s veil-piercing claims, and (2) whether veil-piercing claims can be asserted against a corporation or its shareholders. (Hennepin County)

State of Minnesota, Respondent vs. John Wesley Defatte, Appellant – Case No. A18-0881: Respondent State of Minnesota charged appellant John Wesley Defatte with two counts of domestic assault, alleging that the offenses occurred within 10 years of two previous qualified domestic violence-related offense convictions that arose out of the same behavioral incident. The charges were enhanced to a felony based on Minn. Stat. § 609.2242, subd. 4 (2018), which reads: “whoever violates the provisions of this section or section 609.224, subdivision 1, within ten years of the first of any combination of two or more previous qualified domestic violence-related offense convictions or adjudications of delinquency is guilty of a felony.” Defatte filed a motion to dismiss the felony charges arguing that Minn. Stat. § 609.2242, subd. 4, applies only when the previous convictions arise out of separate behavioral incidents. The district court granted the motion and the State appealed. The court of appeals reversed and remanded for further proceedings.

On appeal to the supreme court, the issue presented is whether Minn. Stat. § 609.2242, subd. 4, applies only when the previous convictions arise out of separate behavioral incidents. (Cass County)

Tuesday, April 2, 2019

Supreme Court Courtroom, State Capitol Building, Second Floor

Jill Hansen, et al., Appellants vs. U.S. Bank National Association, as Special Administrator and Personal Representative of the Estate of Robert J. Hansen, Respondent – Case No. A17-1608: Appellants Jill Hansen and Leif Layman are relatives of Robert J. Hansen, who died in 2009, and beneficiaries of his estate. At the time of Robert Hansen’s death, he had an interest in an agreement to sell certain real property for the development of a sports complex on the property. After Robert Hansen’s death, respondent U.S. Bank National Association and a relative (Robert’s former wife) were appointed as special administrators of the estate. The sale of the real property closed in 2010, and the probate court discharged the special administrators shortly thereafter. But the sports complex was not successful, and as a result, the estate eventually stopped receiving periodic payments from the sale transaction.

In January 2017, appellants filed the current lawsuit, asserting that U.S. Bank breached its fiduciary duty as special administrator by engaging in various types of misconduct that predated the closing and would have avoided damages to the estate. U.S. Bank moved to dismiss the claims as untimely under the 6-year statute of limitations, and the district court granted the motion. The court of appeals affirmed, following the “some damage” rule as set forth in Antone v. Mirviss, 720 N.W.2d 331 (Minn. 2006), and Frederick v. Wallerich, 907 N.W.2d 167 (Minn. 2018), reasoning that appellants, as beneficiaries of the estate, suffered “some damage” at the time the sale closed.

On appeal to the supreme court, the issue presented is whether appellants suffered compensable damages, at the time of the closing of the sale, sufficient to defeat a motion to dismiss. (Hennepin County)

Nonoral: Eddie Hudson, Relator vs. Trillium Staffing and XL Insurance, with Claims Administered by CorVel Corporation, Respondents – Case No. A18-1896: Relator Eddie Hudson settled his claim against respondents for workers’ compensation benefits for a work-related injury in May 2015.  The settlement was approved and an award issued in June 2015.  In 2017, relator filed a petition to vacate the June 2015 settlement, asserting that a substantial and unanticipated change in his medical condition occurred and he could not reasonably have anticipated the change at the time of the settlement.  The compensation judge, on referral from the Workers’ Compensation Court of Appeals (WCCA) for an evidentiary hearing, found that the evidence in support of the petition lacked adequate foundation.  Relator did not appeal the findings made by the compensation judge.  The petition to vacate was referred back to the WCCA for a decision, and the WCCA concluded that the overall circumstances and the evidence presented did not establish good cause to set aside the June 2015 settlement and award.

On appeal to the supreme court, the issue presented is whether the WCCA abused its discretion in denying the petition to vacate the 2015 settlement and award. (Workers’ Compensation Court of Appeals)

Wednesday, April 3, 2019

Supreme Court Courtroom, State Capitol Building, Second Floor

State of Minnesota, ex rel. Antwone Ford, Appellant vs. Paul Schnell, Commissioner of Corrections, Respondent – Case No. A17-1895: Appellant Antwone Ford was convicted of third-degree criminal sexual conduct in 2008 and was sentenced to 36 months in prison with a five-year conditional release term. Ford completed his prison term in February 2015 and was released to the Blue Earth County jail, but the Department of Corrections returned Ford to prison for failing to secure agent-approved housing in the community. Five review hearings were held before a Department of Corrections hearing officer, and each time Ford’s incarceration was extended based on a lack of agent-approved housing in the community. In May 2016, Ford filed a petition for a writ of habeas corpus, seeking release from incarceration. In September 2016, the district court denied Ford’s habeas petition. Ford appealed. The court of appeals reversed and remanded Ford’s case for further development of the record. In February 2017, Ford was released from incarceration. The district court held an evidentiary hearing and granted part of Ford’s habeas petition, ordering the Department of Corrections to resolve Ford’s housing issue or modify his conditions of release. The Department of Corrections appealed. In an unpublished opinion, the court of appeals reversed the district court’s order, finding Ford’s habeas petition moot.

On appeal to the supreme court, the issues presented are (1) whether Ford’s appeal of the hearing officer’s decision to extend his incarceration became moot when he was released from incarceration, (2) what is the proper method for an offender to appeal a quasi-judicial decision made by a hearing officer, and (3) whether the Department’s use of review hearings to extend incarceration for a conditional release violator is constitutional. (Washington County)

In re Petition for Disciplinary Action against Boris A. Gorshteyn, a Minnesota Attorney, Registration No. 0392840 – Case No. A17-1635: An attorney discipline case that presents the question of what discipline, if any, is appropriate based on the facts of the matter.

Thursday, April 4, 2019

Supreme Court Courtroom, State Capitol Building, Second Floor 

Kroll Ontrack, LLC, Relator vs. Commissioner of Revenue, Respondent – Case No. A18-1805: Minnesota provides an exemption from the state’s sales tax for “machinery and equipment used primarily to electronically transmit results retrieved by a customer of an online computerized data retrieval system.”  Minn. Stat. § 297A.68, subd. 5(a) (2018).  Relator Kroll On-Track purchased equipment and machinery for its system, which provides “e-discovery, information management, and data recovery products” that allow law firms, businesses, and government agencies to “assemble, maintain, sort, and search an electronic database of litigation documents.”  Kroll then filed a refund claim with the Department of Revenue for the sales tax paid on the purchases.  The Commissioner of Revenue denied the refund claim.  Kroll appealed to the Minnesota Tax Court, which granted the Commissioner’s motion for summary judgment and denied Kroll’s summary judgment motion, concluding that Kroll’s equipment purchases do not qualify for the statutory exemption. 

On appeal to the supreme court, the issue presented is whether Kroll Ontrack’s e-discovery system makes cumulated information equally available and accessible to all customers of the system and thus is an “online data retrieval system” eligible for the capital-equipment exemption from sales tax.  (Minnesota Tax Court)

Monday, April 8, 2019

Courtroom 300, Minnesota Judicial Center 

In re Petition for Disciplinary Action against Bobby Gordon Onyemeh Sea, a Minnesota Attorney, Registration No. 0282807 – Case No. A17-1548: An attorney discipline case that presents the question of what discipline, if any, is appropriate based on the facts of the matter.

 

Nonoral: Darren Paul Odell, Appellant vs. State of Minnesota, Respondent – Case No. A19-0059: Appellant Darren Odell was convicted of first-degree murder in 2008 for killing his father and sentenced to life in prison. Odell appealed the district court’s finding that he failed to prove the affirmative defense of mental illness. The supreme court affirmed. State v. Odell, 676 N.W.2d 646 (Minn. 2004).

In 2018, Odell filed a postconviction petition challenging the district court’s assessment of expert testimony related to his mental illness defense. Odell also claimed that he received ineffective assistance from both his trial counsel and his appellate counsel. The district court denied Odell’s petition.

On appeal to the supreme court, the issue presented is whether the postconviction court abused its discretion in denying Odell’s petition for relief. (Anoka County)

Tuesday, April 9, 2019

Humboldt High School, Saint Paul, Minnesota

State of Minnesota, Respondent vs. Ricky Darnell Waiters, Appellant – Case No. A18-1116: Appellant Ricky Waiters was indicted for first-degree murder and attempted first-degree murder based on allegations that he fired gunshots outside of a bar in Winona that killed one adult male and injured another. Waiters was charged with first-degree murder under Minn. Stat. § 609.195, subd. 3 (2018), for committing an intentional homicide during a drive-by shooting. During closing arguments, the prosecutor told the jurors to “look at the evidence” and not “let emotions” affect their decision. The jury found Waiters guilty and he was sentenced to life in prison. In responding to special interrogatories, the jurors concluded that Waiters intentionally discharged a firearm toward a person or an occupied building, but did not intentionally discharge a firearm toward an occupied vehicle.

On appeal to the supreme court, the issues include (1) whether the State presented sufficient evidence to prove that appellant recklessly fired gunshots at a building, and (2) whether the prosecutor engaged in reversible misconduct during closing arguments. (Winona County)

Wednesday, April 10, 2019

University of Minnesota Law School, Minneapolis, Minnesota

Minnesota Sands, LLC, Appellant vs. County of Winona, Minnesota, Respondent – Case No. A18-0090: Between 2011 and 2012, appellant Minnesota Sands acquired the rights to several leases with landholders in respondent Winona County to mine silica sand to be processed and used in hydraulic fracturing for oil and natural gas (“fracking”). Minnesota Sands did not immediately apply for a conditional use permit, but another company did in 2012 and the application was approved. In 2016, the County amended its zoning ordinance to change the treatment of sand mining. The amended ordinance imposes a county-wide ban on operations involving “industrial minerals,” but operations involving “construction minerals” remain a conditional use. The definition of “industrial minerals” specifically refers to “silica sand . . . used in industrial applications, but excludes construction minerals,” and the amendment’s definition of “silica sand” refers to sand used for fracking. The definition of “construction minerals” includes “gravel and sand that is produced and used for local construction purposes. . . .”

Minnesota Sands sued the County, alleging that the amended ordinance violates the Takings Clauses of the Minnesota and United States Constitutions and the dormant Interstate Commerce Clause of the United States Constitution. The district court granted the County’s motion for summary judgment and dismissed Minnesota Sands’ claims. A divided panel of the court of appeals affirmed. On the Commerce Clause issue, the court of appeals reasoned that the ordinance did not favor in-state interests over out-of-state interests, and because Minnesota Sands had no interest in mining construction minerals, it had no standing to challenge the use of the word “local” in the ordinance’s definition of construction minerals. On the Takings Clause issue, the court of appeals concluded that Minnesota Sands had no right to mine under the leases because it failed to fulfill a condition precedent of the leases and/or apply for a conditional use permit. Because Minnesota Sands had no right to mine, the court of appeals concluded that it had no compensable property interest and therefore no taking occurred.

On appeal to the supreme court, the issues presented are (1) whether the County’s ordinance violates the Commerce Clause, and (2) whether the County has “taken” mineral rights belonging to Minnesota Sands and thus owes compensation under the Minnesota and United States Constitutions. (Winona County)