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State Digest

Minnesota Lawyer//May 28, 2001

State Digest

Minnesota Lawyer//May 28, 2001



Civil Opinions


Coverage Conversion; No-Fault Act

Where an insurer has paid benefits to an injured passenger under

its liability coverage for injuries caused solely by the negligence of a driver

insured under that policy, also providing underinsured motorist benefits to the

injured passenger from the same policy based on the same negligence would convert

the underinsured motorist coverage into liability coverage.



Lynch v. American Family Mutual Insurance Co. (Court of Appeals) (Minnesota

Lawyer No. SC-89-01)


Uninsured Benefits; Judgments-Not-Binding Clause

A clause in an automobile insurance contract that provides that an

insurer will not be bound by any judgment for damages resulting from a suit

between an insured and an uninsured motorist violates the policy underlying

Minnesota’s No-Fault Automobile Insurance Act and cannot be enforced to bar

payment of uninsured motorist benefits when the insurer had notice of and an

opportunity to participate in the suit resulting in a judgment against the uninsured


Reversed and remanded. Certified question answered in the negative.


Kwong v. Depositors Insurance Co. (Court of Appeals) (Minnesota Lawyer No. SC-90-01)


of Appeals


Civil Opinions


Closely Held Corporation; Unfair Prejudice

to Shareholder-Employee

1. Where a shareholder claims that controlling shareholders

acted in an unfairly prejudicial manner toward him in his capacity as a closely-held-corporation

shareholder in violation of Minn. Stat. sec. 302A.751, subd. 1(b)(3) (1998), a

written agreement between or among the shareholders or between shareholders and

the corporation is not dispositive of shareholders’ reasonable expectations, but

it is presumed to reflect the parties’ reasonable expectations on matters covered

by the agreement.

2. A stock-repurchase agreement that results in a repurchase price that is

lower than the stock’s fair market value does not establish, by reason of the

price disparity alone, a claim for unfairly prejudicial conduct under sec. 302A.751,

subd. 1(b)(3).

3. In addition to a fair return on their capital investment, shareholders

in a closely held corporation commonly expect that ownership in the corporation

will entitle them to employment. Actions by those in control of the corporation

that frustrate a shareholder’s reasonable expectation of continuing employment

constitute unfairly prejudicial conduct within the meaning of the statute, even

though a shareholder is an at-will employee and therefore not wrongfully discharged

in a breach-of-contract or tort sense.

Affirmed in part and reversed and remanded in part.


Gunderson v. Alliance of Computer Professionals, Inc. (Hennepin County) (Minnesota

Lawyer No. CA-571-01)

Domestic Relations

Custody Awarded to Non-Parents

1. A District Court, in its discretion and in accordance with Minn.

R. Civ. P. 24.02, may permit foster parents to intervene in a custody proceeding.

2. Where (1) father, who was 15 years old at the time of the birth, sought

custody of his daughter who had been placed with adoptive parents by the child’s

mother; (2) the adoptive parents have served as the child’s primary caretaker

since birth and have provided excellent care in a loving environment; (3) father

pursued custody at the urging of his mother, failed to attend one-third of the

scheduled visitations, and dropped out of school because of problems with drugs

and alcohol; and (4) numerous, significant, health and safety concerns were

identified in father’s home; the District Court did not abuse its broad discretion

by awarding custody of the child to the adoptive parents because the evidence

clearly demonstrated that the best interests of the child are served by the

award and that the natural parent is unfit to parent the child.

3. The guardian ad litem’s report was properly admitted as a business record

under Minn. R. Evid. 803(6).



J.W., a minor, by and through his mother, D.W. v. C.M., a minor, et al. (Becker

County) (Minnesota Lawyer No. CA-572-01)


No-Fault Priority: Bicyclist / School Bus

The personal no-fault insurer of a bicyclist who collided with a bus

transporting children has priority over the school district to pay no-fault

benefits to the injured bicyclist because a vehicle used to transport children

to school is exempt from the superior priority level established for vehicles

used in the business of transporting persons or property.

Reversed and remanded.


Amco Insurance Co. v. Independent School District #622 (Ramsey County) (Minnesota

Lawyer No. CA-573-01)

Public Law

Annexation of Township to City

1. An administrative law judge appointed by the Office of Administrative

Hearings has the statutory authority to hear, and grant, an annexation petition

brought under Minn. Stat. sec. 414.031 (1998).

2. Under sec. 414.031, subd. 4(i), the presentation of a written plan for

providing governmental services to a newly annexed area is only one factor to

be considered in ordering an annexation; the lack of a written plan does not

prevent annexation.

3. Evidence that it is in the best interests of the local community, the county,

and the state to annex a township is sufficient to support a decision to deny

incorporation of the township into a separate municipal entity in favor of ordering

annexation to a single municipal entity.

4. Residents of a township do not have a constitutional right to vote either

to affirm or disaffirm an order for annexation.

5. Where a general election was held within a reasonable period of time following

an annexation and voters were able to write in the candidate of their choice,

the constitutional right to elect a particular candidate and obtain a representative

government has not been violated.

6. Where the taxes imposed by the city are proportional to the increased services

to residents of the newly annexed area, the residents’ constitutional

right to due process has not been violated.



McNamara v. Office of Strategic and Long Range Planning (Washington County)

(Minnesota Lawyer No. CA-574-01)

Unlawful Detainer

HUD-Subsidized Housing

1. In an unlawful detainer proceeding in which a landlord seeks to

oust a tenant from HUD-subsidized housing due to the tenant’s material noncompliance

with a term of the lease, the trial court must make a specific finding on the

issue of material noncompliance.

2. If the landlord alleges material noncompliance by reason of the tenant’s

failure to report a change in circumstance, the landlord must prove that the

failure to report was fraudulent, and the standard by which the landlord must

prove fraudulent failure to report is by a preponderance of the evidence.

Reversed and remanded.


Chancellor Manor v. Thibodeaux (Dakota County) (Minnesota Lawyer No. CA-575-01)


Civil Opinions

Attorney / Client Relations

Fee and Stock Purchase Agreements

Where an attorney represented a client who was a minority shareholder in her dispute

with the corporation in which she held shares; the client accepted the attorney’s

proposed fee agreement providing for one-third of the total recovery against the

corporation; the client later entered into a stock purchase agreement whereby

the corporation purchased her stock and her attorney received one-third of each

payment made to her; and, as the final balloon payment neared, the client contested

the attorney’s fees; the District Court did not err in granting the attorney’s

motion for summary judgment because the fee agreement is not ambiguous, and there

are no material fact questions regarding the client’s claims of breach of fiduciary

duty or undue influence.



In Re: John S. Schomburg, P.A. v. Garthe (Wright County) (Minnesota Lawyer No.


Civil Procedure

Court-Initiated Involuntary Dismissal

Where a city resident filed suit alleging several causes of action in a dispute

over his water bill, and he later filed numerous motions which the District

Court characterized as frivolous, failed to respond to discovery requests, and

subpoenaed witnesses to appear at a summary judgment hearing, the District Court

did not err in dismissing the action pursuant to Minn. R. Civ. P. 41.02(a) for

the resident’s violation of the rules of civil procedure and delay of litigation.



Dixon v. City of Minneapolis Water Department (Hennepin County) (Minnesota Lawyer

No. CA-577-01)

Civil Procedure

“Newly Discovered” Evidence Does Not Warrant New Trial

Where the former employer sued his employer claiming that the employer had

reneged on its offer to pay him a guaranteed salary; after a trial on the merits,

the trial court ruled that the employee had failed to establish his claims;

and the employee later moved for a new trial on the basis of newly discovered

evidence, the trial court did not err in denying the motion because the new

evidence was testimony by a former co-employee who had been identified by the

employer during discovery, and reasonable diligence could have produced the

testimony at trial.



Gonzalez v. Imperial Camper Sales, Inc. (Washington County) (Minnesota Lawyer

No. CA-578-01)


Juvenile; Mentally Ill and Dangerous

Where a 15-year-old juvenile suffers from bipolar disorder, intermittent explosive

disorder, conduct disorder, and oppositional disorder; in 1999 the juvenile

attempted to cause serious physical harm to two correctional officers in separate

incidents; and in prior incidents over a span of four years, the juvenile threatened

a mother and child with a butcher knife, assaulted another resident by choking

him and stomping on his legs, and committed an assault on a female staff member;

the District Court did not err by indeterminately committing the juvenile as

mentally ill and dangerous.



In the Matter of the Civil Commitment of: T.L.S. (Hennepin County) (Minnesota

Lawyer No. CA-579-01)


Mentally Ill

Where two psychiatrists diagnosed the proposed patient with bipolar disorder

but did not dispute that he might also have an underlying personality disorder,

and the court-appointed examiner diagnosed the proposed patient with narcissistic

personality disorder, there was clear and convincing evidence that the proposed

patient suffers from bipolar disorder.

Placement at the security hospital as the least restrictive alternative was

also supported by clear and convincing evidence.


In the Matter of: Schottler (Minnesota Lawyer No. CA-580-01)



Where plaintiff farmers delivered kidney beans to a bean processor; the scale

tickets failed to state that the beans were received for storage and the processor

did not issue warehouse receipts; and all three farmers admitted under oath

that their intent when they delivered their beans was to place the beans in

storage; the District Court did not err in determining that the contract between

the parties was a contract for storage and not a contract for cash sale.



Bursch Farms, Inc. v. Circle C. Seeds, Inc. (Norman County) (Minnesota Lawyer

No. CA-581-01)

Debtor / Creditor

Judgment Debtor’s Bail Released to Creditor

Where the corporate agent for a judgment debtor violated an order for disclosure

and was subsequently charged with contempt, arrested on a bench warrant, and

posted cash bail, the bail constituted an asset that could be used to satisfy

the judgment even though the merits of the contempt accusation were not adjudicated.



Diem Design, Inc. v. Sabri (Hennepin County) (Minnesota Lawyer No. CA-582-01)

Domestic Relations

Child Custody by Default Judgment; Abuse Allegations

Even though the trial court properly entered a default disslution judgment

against wife who had failed to participate in discovery and several hearings,

the court erred by awarding husband sole physical and legal custody of the children

where the trial court failed to address allegations that husband has been abusive

toward the children.

Affirmed in part and remanded in part.


In Re the Marriage of: Wittstruck v. Wittstruck (Mille Lacs County) (Minnesota

Lawyer No. CA-583-01)

Domestic Relations

Nonmarital Nature of Home, Employment Settlement

Where an appraiser testified as to the value of real property, owned by wife

prior to the marriage, on which the parties built their marital home, and the

District Court determined that the parties had contributed on a two-to-one basis

to the construction of the marital home because $9,000 from the sale of wife’s

trailer and $18,000 net profit from the sale of husband’s home had been put

into the home, the Court’s findings supporting the property division are supported

by the record.

The Court also did not err in concluding that 10% of husband’s compensation

for a back injury was a marital asset where an unspecified portion of the settlement

covered an employment claim.



In Re the Marriage of: Washenesky, f/k/a Henschel v. Henschel (Carlton County)

(Minnesota Lawyer No. CA-584-01)


Injured Employee’s Personal Circumstances

Where an employee sued his employer after he developed bilateral flexor tenosynovitis,

a condition with symptoms resembling those of carpal-tunnel syndrome, and the

employer’s expert testified that psychosocial risk factors, such as marital

dissatisfaction and interpersonal relationship problems can be associated with

the employee’s condition, the District Court did not err by excluding evidence

that the employee had sought treatment for herpes and scheduled and canceled

an appointment to discuss a vasectomy because the expert did not explain how

a causal connection exists between psychosocial risk factors and the employee’s




Gordon v. Burlington Northern and Santa Fe Railway Co. (St. Louis County) (Minnesota

Lawyer No. CA-585-01)


Slip and Fall on Golf-Cart Path

Where a golfer slipped and fell on a golf-cart path surfaced with used conveyor

belts; the golfer was aware before beginning play that the golf course was very

hilly; and the golfer fell at the fourth hole and was already aware of the surface

and hilly nature of the path; the District Court did not err in granting summary

judgment for the golf course because the golf course had no duty to warn the

golfer of a danger which was known or obvious.

Summary judgment on the issue of negligence per se was also proper.



Schneider v. Lanesboro Golf & Country Club (Fillmore County) (Minnesota

Lawyer No. CA-586-01)


Workplace Injury; Worker’s Compensation

Where (1) decedent was killed by a forklift operated by a co-worker, and (2)

the forklift operator was paid by an employment service, but (3) the waste management

company for which both the decedent and the forklift operator worked had hired

the forklift operator and controlled the means and manner of his performance,

the trustee for decedent’s heirs is not barred by the workers’ compensation

exclusivity provision from filing a common law tort claim against the employment

service, but the negligence claim cannot survive summary judgment because no

relationship exists to hold the employment service vicariously liable for the

forklift operator’s actions.

There is also no evidence of gross negligence which would permit the trustee

to pursue a tort remedy against the waste management company, and under the

parties’ agreement, the employment service need not indemnify the waste management

company for the workers compensation benefits it paid.

Affirmed in part, reversed in part.


C1-00-1680, C7-00-1814 Montano v. ASAP Employment Services, Inc. (Hennepin County)

(Minnesota Lawyer No. CA-587-01)

Unemployment Insurance

Voluntary Quit

Where the employer testified that she received a report that a nursing assistant

had verbally abused and threatened an employee, that when discussing the incident

the nursing assistant began yelling and arguing, and that the nursing assistant

stated several times that she quit, the commissioner’s representative did not

err in concluding that the employee voluntarily quit her job and is not qualified

for unemployment benefits even though the nursing assistant testified that she

had been fired.

In addition, the evidence supports the representative’s finding that the employee

did not have good reason to quit due to harassment and discrimination.



Fukar v. Richfield Health Center (Department of Economic Security) (Minnesota

Lawyer No. CA-588-01)


Criminal Opinions

Fleeing Officer/Causing Death

Specific Crime Governs over Felony Murder


Where death accidentally resulted from defendant’s fleeing from a police officer

in a motor vehicle, defendant’s actions cannot be prosecuted as felony-murder

with fleeing a peace officer in a motor vehicle as the predicate felony because

fleeing a peace officer in a motor vehicle causing death is a more specific crime

than felony-murder predicated on the felony of fleeing a peace officer in a motor


Where a death is already an element of an aggravated offense, as it is here,

the felony-murder statute serves no purpose other than to ratchet up the permissible




Minnesota v. Craven (Hennepin County) (Minnesota Lawyer No. CA-589-01)


Criminal Opinions


No Need for Examination

Even though defendant attempted suicide several months before

trial and was taking medication during trial, the postconviction court did not

err in concluding that his due process rights were not violated by the failure

to conduct a Rule 20 competency examination where (1) the psychiatrist who treated

defendant after his suicide attempt stated defendant was “relatively stable” at

the time of discharge; (2) defendant’s attorney testified that he and defendant

specifically discussed a rule 20 examination, but that defendant did not want

to undergo such an evaluation and that his attorney did not believe defendant

needed one; and (3) defendant participated in his defense and did not exhibit

any irrational behavior during trial.

Defendant’s claim of ineffective assistance of counsel also fails.



Minnesota v. Haselow (Lake County) (Minnesota Lawyer No. CA-590-01)

Driving and Alcohol

Right to Counsel Vindicated

Where a driver was given access to a telephone and called his father,

who was an attorney, and the officers allowed the driver to wait 30 minutes

from the end of his telephone call before he took a breath test, the driver’s

limited right to counsel was vindicated even though the driver’s father did

not have the opportunity to speak to his father in person before the breath


Further, where the driver never requested an additional test, his attorney

never arranged for a second test, and there is no evidence that the police denied

him the right to a test, the District Court did not err in finding that the

right to an additional test had been waived.



Newquist v. Commissioner of Public Safety (Hennepin County) (Minnesota Lawyer

No. CA-591-01)


Lay Witness’s Opinions

Where defendant was charged with fourth-degree assault for throwing

urine at a correctional officer, lay testimony by the assaulted officer and

two other correctional officers was sufficient to prove that the fluid in question

was urine because the lay witnesses were competent to give opinion evidence

rationally based on their perceptions as humans. Scientific testing and expert

testimony were unnecessary.



Minnesota v. Killian (Washington County) (Minnesota Lawyer No. CA-592-01)

Ineffective Assistance

Tactical Decision to Argue Accident

Where (1) during a dispute between defendant and her husband, husband

entered the home and a few moments later defendant discharged the gun she was

holding and struck her husband in the leg; (2) from the beginning, including

the 911 call made at the scene, defendant maintained that the shooting was an

accident; and (3) at trial, defense counsel pursued accident rather than self-defense

modified for accident as the most viable defense; the evidence supports the

postconviction court’s finding that defendant received effective assistance

of counsel at trial.

In addition, even if defendant could show her attorney’s representation was

deficient, the record does not support a reasonable conclusion that the outcome

of the trial would have been different had there been a self-defense instruction.



Gustafson v. Minnesota (Itasca County) (Minnesota Lawyer No. CA-593-01)


Scales Recording Requirement Not Violated

Where defendant asked the interrogating officer to stop the recording

the interrogation; the officer informed defendant that his off-the-record statements

could be used against him and warned defendant that he would continue taking

notes during the time the recorder was off; and defendant verbally confirmed

the off-the-record discussion when the recording resumed; we conclude that Scales

recording requirement was not substantially violated because the two recorded

segments of the interview, combined with other circumstances, allowed the court

to accurately evaluate the facts underlying the defendant’s statement.



Minnesota v. Chang (Ramsey County) (Minnesota Lawyer No. CA-594-01)


Withdrawal Permitted

Where the plea agreement called for a stayed 48-month sentence and

a stay of imposition of sentence for a probationary period, the stay of imposition

was later revoked after several probation violations, and the District Court

sentenced defendant to 58 months in prison and five years of supervised release

after incarceration, defendant is entitled to withdraw his guilty plea because

the plea agreement neither contemplated a prison term greater than 48 months

for both counts of criminal sexual conduct, nor the mandatory five-year conditional

release period.

Reversed and remanded.


Minnesota v. Pozzi (Scott County) (Minnesota Lawyer No. CA-595-01)


Defendant Assisted Person Who Stole Drugs

Where three witnesses testified that defendant held a knife to the

victim’s throat, threatened to harm everyone in the room, and ordered his acquaintance

to take the money and drugs, there was sufficient evidence to support defendant’s

conviction of aggravated robbery even if defendant was convicted for his assistance

to others and not as the sole offender.

Because the use of a written jury questionnaire is not mandatory, and the

trial court did not restrict defendant’s attorney on oral questioning of the

jury panel regarding potential racial bias, the trial court did not abuse its

discretion in denying the use of a written questionnaire.

Affirmed in part, reversed in part, and remanded.


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