Supreme Court Digest: Aug. 5, 2026

Civil

Construction

Mechanics’ Liens

This case concerned a contractor’s entitlement to attorney fees and costs in a mechanic’s lien foreclosure action arising from the construction of a new home. In 2019, appellant hired respondent contractor as a general contractor to build her home in Medina. Near the end of the construction project, appellant alleged unresolved issues with the construction and began withholding payments to the contractor. The contractor then initiated a lawsuit, seeking to enforce its mechanic’s lien on appellant’s property and asserting a breach of contract claim against appellant. Appellant counterclaimed for breach of contract and negligence. A jury awarded damages to appellant on her negligence claim and to the contractor on its breach of contract claim. After the jury verdicts, the District Court considered the mechanic’s lien foreclosure action. Appellant asserted the common law doctrine of recoupment as a defense to the mechanic’s lien. She argued that the amount of the lien should be reduced by the amount of damage caused by the contractor’s negligent construction, as represented by the jury’s damages award for her negligence claim. The District Court rejected the recoupment defense and found that the contractor had a valid mechanic’s lien in the amount of the jury’s damages award for the contractor’s breach of contract claim. But the District Court determined that the value of the mechanic’s lien was fully offset by the jury’s damages award for appellant’s negligence claim. Notwithstanding this determination, the District Court awarded the contractor attorney fees and costs under Minn. Stat. § 514.14—which provides for attorney fees to the prevailing party in a mechanic’s lien proceeding—because it determined that the offset of the award did not void the lien. Coleman appealed to the Court of Appeals, and the Court of Appeals affirmed.

The Supreme Court held that, when the amount of damage caused by a contractor’s negligent construction of a home exceeds the amount of that contractor’s mechanic’s lien for the home, the homeowner’s defense of recoupment eliminates the lien, and the lien cannot serve as the basis for an award of attorney fees and costs to the contractor under Minn. Stat. § 514.14 in a mechanic’s lien enforcement action. Reversed and remanded.

A24-1548 Sustainable 9, LLC v. Coleman (Court of Appeals)

Insurance

Appraisals

Insureds own property that sustained storm damage and was insured under a policy issued by insurer. Relevant here, the insurance policy provided that either party may demand appraisal if they disagreed on the value of the property or extent of the loss. The opposing party would then have 20 days within which to respond to the demand by selecting an appraiser. Separately, the policy also included a limitations period provision that required any lawsuit against insured to be brought within two years of the date on which the loss occurred. Four days before the two-year limitations period was set to expire, insureds filed insurance claims for the storm damage to its property and demanded that insurer toll the limitations period. Two days before the limitations period expired, insureds demanded appraisal. The day the limitations period expired, and exactly two years after the loss, insureds sued insurer, asserting claims for declaratory judgment and breach of contract based on allegations that insurer had not agreed to insureds demands for tolling or appraisal. The District Court granted insurer’s motion to dismiss the complaint for failing to state a claim upon which relief can be granted and for lack of subject matter jurisdiction because of the absence of a justiciable controversy. The Court of Appeals affirmed in part and reversed in part.

The Supreme Court held that (1) an insured does not establish a justiciable controversy sufficient to support a declaratory judgment claim by alleging only that it demanded appraisal and tolling of the limitations period and that the insurance company had not agreed to either demand, when the insurance company was not yet obligated to respond; (2) an insured does not establish a justiciable controversy sufficient to support a breach-of-contract claim by alleging that an insurance company’s future denial of an appraisal demand or future refusal to pay an appraisal award would breach the insurance policy. Affirmed in part, reversed in part.

A24-1915 CVC Invs. LLP v. State Farm Fire & Cas. Co. (Court of Appeals)

Receivers

Immunity

The doctrine of quasi-judicial immunity generally protects a court-appointed receiver from lawsuits based on actions taken by the receiver within the scope of the receivership. At issue in this case was the application of quasi-judicial immunity to allegations that a receiver committed misconduct by acting at the direction of a party and with an improper motive. At the outset of foreclosure proceedings involving a property in downtown Minneapolis, appellant was the property’s tenant, and respondent was the court-appointed receiver over the property. After an unsuccessful attempt to remove respondent from the receivership in the foreclosure proceedings, appellant sued respondent directly, alleging two claims: negligence and breach of fiduciary duty. The District Court dismissed the negligence claim based on quasi-judicial immunity, but it did not dismiss the claim for breach of fiduciary duty. Respondent appealed, and the Court of Appeals reversed.

The Supreme Court held that quasi-judicial immunity applies to acts within the scope of a court-appointed receiver’s appointment, even when the receiver is alleged to have acted at the direction of a party and with an improper motive. Affirmed.

A24-1535 Seven Acquisition LLC v. Williams (Court of Appeals)

Shareholder Suits

Standing

This appeal arose from a 2018 lawsuit initiated by appellant related to the sale and reorganization of her family’s company. Appellant was a beneficial owner of shares in a closely held pharmaceuticals company. Appellant’s father and brother—the family respondents—were also beneficial owners of shares in the company. In 2017, family-respondents sold part of the company and reorganized the company’s remaining assets into a new company. Appellant and family respondents remained beneficial owners of the newly formed company. Appellant’s lawsuit alleged several claims against family respondents, the new company, and the family trustee. One of these claims sought a buyout of her shares in the new company under Minn. Stat. § 302A.751, which authorizes “an action by a shareholder” against a corporation. Months after the conclusion of a court trial, and while the District Court had the case under advisement, family respondents raised the argument that appellant lacked “statutory standing” to bring her claims under § 302A.751 because she was a beneficial owner of new company shares and not a shareholder. The District Court ruled in favor of appellant on some of her claims, including one of her claims for relief under § 302A.751. As to that claim, the District Court ordered new company to make redemption payments to appellant’s trusts, and it ordered new company to wind down its operations and make final distributions to shareholders. The District Court determined that it did not need to address the family respondents’ standing argument, concluding that the type of relief it granted did not implicate a recent decision. Appellant and respondent appealed, and the Court of Appeals determined that appellant did not have standing to bring the § 302A.751 claims and respondents did not waive the argument.

The Supreme Court held that (1) because appellant had injury-in-fact standing, whether she was a “shareholder” for the purpose of her shareholder action does not implicate her standing to sue, but instead implicates the legal sufficiency of her claims; and (2) the respondents forfeited any argument that the appellant’s complaint failed to state claims upon which relief can be granted. Reversed and remanded.

A24-0450 Warren v. ACOVA, Inc. (Court of Appeals)

Unemployment Benefits

Timeliness

Appellant filed an administrative appeal from respondent Department of Employment and Economic Development (DEED)’s determination that appellant was is ineligible for unemployment benefits. An unemployment law judge (ULJ) dismissed appellant’s appeal as untimely. Appellant conceded that his appeal was late under the statutory deadline in Minn. Stat. § 268.101, subd. 2(f), but argues that the ULJ should have considered his explanation for the late appeal before dismissing the appeal.

The Supreme Court held that an applicant’s appeal from a determination of ineligibility for unemployment benefits that is filed after the statutory deadline in § 268.101, subd. 2(f), must be dismissed as untimely by an unemployment law judge under § 268.105, subd. 1a(c) (2022), who does not have discretion to consider the applicant’s explanation for the late appeal. Affirmed.

A24-1583 Oslund v. Paint Genie, Inc. (Court of Appeals)

Orders

Attorney Discipline

Public Reprimand

Ryan M. Pacyga was publicly reprimanded.

A25-1610 In re Pacyga

Attorney Discipline

Public Reprimand

Richard S. Stempel was publicly reprimanded.

A25-1458 In re Stempel

Attorney Discipline

Suspension

John E. Buchholz was suspended from the practice of law with no right to petition for reinstatement for six months.

A25-0405 In re Buchholz