August 1999
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August 1999 |
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Classifieds Letters Display Ads Archives Article Index Aug '99 Issue Latest Issue MSBA Home Page |
 August 1999 at the time of publication. --Ed. |
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In this month's "Notes & Trends": |
Judicial Law Due Process. A high school student whose history grade was reduced to zero for plagiarism asked the Court of Appeals to provide him a full evidentiary hearing before an impartial hearing officer as a matter of due process in Zellman v. I.S.D. No. 2758, 594 N.W.2d 216 (Minn. App. 1999). The grade had been reviewed by the teacher and affirmed by the principal. The superintendent held a hearing and issued written findings that were then affirmed by the school board. The Court of Appeals found this level of due process appropriate for review of one grade on one project in one course. The finding of plagiarism did not establish a protected property or liberty interest in the absence of statutory or contractual protection. Judicial Review. In Pope County Mothers v. MPCA, 594 N.W.2d 233 (Minn. App. 1999), the Court of Appeals determined that the Pollution Control Agency’s decision not to require an environmental impact statement (EIS) for a proposed multi-site feeder pig feed lot was arbitrary and capricious. The court cited as an indication of arbitrariness that the agency issued permits to three finishing sites before the comment period on the need for an EIS expired. The court found that the PCA failed to consider the cumulative environmental effects of the sites and proceeded to a decision even though it lacked the information necessary to ascertain environmental effects arising from hydrogen sulfide emissions. The case was remanded to the PCA for preparation of an EIS. The 1999 legislative session considered many APA-related bills, but only a handful were passed:
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By the Hon. George A. Beck, Minnesota Office of Admin Hearings and Michael J. Ahern, Dorsey & Whitney |
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Civil Litigation Judicial Law No-Fault; Causation. The Minnesota Court of Appeals recently determined that a driver who is injured after exiting his automobile to assist other injured motorists may not recover from his no-fault insurer if the injuries are due to terrain not involved in the accident, as they are not causally connected to the use of a motor vehicle. In early November, Mr. Steinfeldt, his wife, and their son were driving on a divided highway toward LaCrosse, Wisconsin. The roads were icy, and it was dark. Mr. Steinfeldt observed a car traveling in the wrong direction and several cars colliding. He also saw a man running toward the area of the collision. He called out to that man and asked if he needed help, and the man answered affirmatively. Mr. Steinfeldt pulled to the side of the road and exited his vehicle. He began running toward the accident to direct traffic. As he was crossing over the median between the two lanes of traffic, he did not see that the land had become a drop-off from an overpass. Although Mr. Steinfeldt expected to fall about eight feet from the top of the median, he actually fell 50 to 60 feet. He was paralyzed by the fall and remains a paraplegic. Mr. Steinfeldt was insured through AMCO Insurance Company and applied for benefits under his automobile insurance personal injury protection (PIP) endorsement for the injuries he sustained in the accident. AMCO denied the coverage. The Steinfeldts (hereinafter Steinfeldt) filed suit against AMCO. AMCO moved for summary judgment, which was granted. Steinfeldt appealed, alleging that the injuries were out of the use or maintenance of an automobile and therefore should be recovered under Minnesota’s no-fault law. Minn. Stat. §65B.44, subd. 3 (1996). Since the facts of the case were not contested, the Court of Appeals reviewed only the question of law. The court analyzed the facts in conjunction with the three-point test set forth in Continental W. Ins. Co. v. Klug, 415 N.W.2d 877, 878 (Minn. 1987). The first consideration is the extent of the causation between the vehicle and the injury. Id. The second is causation that is less than a proximate cause but more than the vehicle being "a mere situs of the injury." Id. See also North River Ins. Co., 346 N.W.2d 114. The causal connection is met if the "injury is a natural and reasonable incident or consequence of the use of the vehicle." Haagenson v. National Farmers Union Property & Cas. Co., 277 N.W.2d 648, 652 (Minn. 1979). The final consideration is whether the vehicle was being used for transportation purposes at the time of the injury. Continental W. Ins. Co., 415 N.W.2d 878. Steinfeldt argued that this case was like Benike v. Dairyland Ins. Co., 520 N.W.2d 465 (Minn. App. 1994). In Benike, the plaintiff was injured when he was trying to assist another by pulling off live power lines from a vehicle. The court determined that Steinfeldt was not injured by contact with a physical instrumentality directly connected to the accident and, therefore, did not meet the causation requirement. See Progressive Cas. Ins. Co. v. Hoekman, 359 N.W.2d 685 (Minn. App. 1984). AMCO argued, and the court agreed, that there was no causal connection between Steinfeldt’s injuries and a motor vehicle because the injury was "not a natural and reasonable consequence of the use of [a] vehicle, nor was [a] vehicle an active accessory" to the injury. Marklund v. Farm Bureau Mut. Ins. Co., 400 N.W.2d 337, 340 (Minn. 1987) (no causal connection when a driver slips and falls in a parking lot after filling gas and entering the store to pay for it). The court reasoned that, like Marklund, the guardrail and the overpass were not affected by the accident but were part of the "lay of the land" which constitute premises hazards, causally unconnected to the motor vehicle accident. Id. The court stated that while it would like to encourage drivers to assist others who are injured on the roadways, it could not change the no-fault act, which is a statutory creation. Policy decisions are properly for the Legislature, not the courts. Marklund prevents the court from extending the scope of the no-fault act to provide coverage in this case. Steinfeldt v. AMCO Ins. Co., 592 N.W.2d 877 (Minn. App. 1999). |
By Steven J. Kirsch and Kammey M.K. Mahowald, Murnane, Conlin, White & Brandt, PA |
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Criminal Law Judicial Law Involuntary Intoxication: Defense Burden of Proof; Bifurcated Trial. Appellant appeals his murder conviction. Although the trial court allowed the appellant to present expert testimony concerning involuntary intoxication as a result of the simultaneous use of Prozac, alcohol, and methamphetamines, the Supreme Court holds that on review of the record, the appellant did not make a prima facie showing on any element of involuntary intoxication. Hence, he was not entitled to a jury instruction on the same, and the district court abused its discretion by so instructing the jury. The court notes that there are two separate inquiries in an involuntary intoxication defense: (1) a prima facie showing that would entitle a defendant to a jury instruction; and (2) the burden of proof to the trier of fact by a preponderance of the evidence on each element of the defense. Interestingly, this is the first case that presupposes the use of a bifurcated trial in an involuntary intoxication case, similar to the procedure used in a mental illness defense. State v. Brad Alan Voorhees, C6-98-23, 1999 WL 298512 (Minn. 1999). Conspiracy: Separate Offense; Compared with Aiding and Abetting. The appellant had been charged with disorderly conduct and aiding and abetting first degree criminal damage to property. The evidence was that the juvenile was among a group of other juveniles who had thrown dog biscuits at a vehicle. At some point, the appellant admitted to throwing biscuits, but not at the victim's vehicle. Another person had purchased the biscuits for this purpose. At trial, the trial court found the evidence insufficient to prove that the appellant was guilty of first degree criminal damage to property, but found that the facts supported the "lesser included offense" of conspiracy to commit damage to property. "Conspiracy" was not charged in the petition. Because it is a distinct substantive offense, separate from the offense of the object of the conspiracy, it was fundamental error to convict the appellant of a crime with which he was not charged. Although he had been charged with aiding and abetting, conspiracy is "more than merely aiding and abetting." At the time the judge amended the petition following the close of the evidence, it was too late to defend against the charge of conspiracy. In Re D.W.O., C4-98-1820, 594 N.W.2d 207 (Minn. App. 1999). Double Jeopardy: Finality of Verdict. The appellant went to trial on disorderly conduct and fifth degree assault. After receiving the verdict forms from the foreperson, the trial court discovered that the jury had inadvertently received a copy of the amended complaint that contained prejudicial information. Nonetheless, the court read the verdict forms aloud, which acquitted the appellant of assault yet found her guilty of disorderly conduct. The jurors were polled and answered in the affirmative, after which they were temporarily removed from the courtroom. When the trial court determined that the clerk had inadvertently given the jury a copy of the amended complaint, appellant's counsel moved for a mistrial that was granted. A subsequent motion to bar retrial on the fifth degree assault charge was denied. Held, the appellant may be retried on the assault charge, even though she was acquitted, because the verdict for fifth degree assault never became "final." The court defines "final" as a verdict "such as the court may receive," citing Minn. Stat. §639.17 (1998). The court reasoned that at the time the verdict was received, the trial court knew that it had been tainted, hence it was not a verdict "such as the court may receive." A strong dissent was written. State v. Susan Leroy, CO-98-1247, 594 N.W.2d 193 (Minn. App. 1999). Criminal Sexual Conduct: Incompetent Age; Hearsay. The trial court appropriately admitted out-of-court statements of a three-and-a-half-year-old victim of criminal sexual conduct. The statements were made under circumstances that showed reliability. The statements made to a physician were admissible because they were for the purpose of mental diagnosis. The statements made to an investigating officer were admissible under the prongs of Minn. Stat. §595.02, showing indicia of reliability. State v. Pamela Sue Cole, C1-98-1144, 594 N.W.2d 197 (Minn. App. 1999). Extended Jurisdiction Juvenile: Probation Violation; Findings. If a district court finds that a juvenile offender has violated the terms of his Extended Jurisdiction Juvenile conditions, the court must execute the sentence unless it makes written findings regarding mitigating factors that justify continuing the stay. Minn. Stat. §260.126, subd. 5 (1998). This is the reverse of the adult probation situation, as specified in the leading case on the subject, State v. Austin, 295 N.W.2d 246 (Minn. 1980). Under Austin, it must be shown that an offender intentionally violated probation, and the court must make written findings supporting revocation. Here, the district court appropriately omitted findings and other considerations and simply followed the statute. While on probation, the appellant committed a number of violations, including use of cocaine, a new misdemeanor criminal charge, and failing to appear for sentencing on the new misdemeanor charge. State v. Derrick Eugene Bradley, CO-98-2382, 592 N.W.2d 886 (Minn. App. 1999). Search and Seizure: Mailbox; Third Party. A defendant does not have a legitimate privacy expectation in the mailbox of a third person. In this case, the respondent dropped off some drugs in the mailbox of his informant and was witnessed by the police. People generally know that government officials open mailboxes to deliver the mail. Also, federal law bans obstructing the passage of mail by using a mailbox for purposes other than mail. State v. C1arence Felton Champion, C8-98-2145, 594 N.W.2d 526 (Minn. App. 1999). Search and Seizure: Probation Violation; Exclusionary Rule. While on probation for a third degree controlled substance conviction, the appellant was pulled over for careless driving. During a search incident to the arrest, police found crack cocaine, and he was charged with fifth degree possession. At a suppression hearing, the district court concluded that the arrest was illegal, because careless driving is a misdemeanor warranting only a citation, not arrest. Minn. R. Crim. P. 6.01, subd. 1(1)(a). Hence, the court suppressed the cocaine and dismissed the new felony charge. At a subsequent probation revocation hearing, the district court determined that even though the cocaine had been seized illegally, it was admissible at a probation violation hearing. Held, the evidence obtained during the illegal search was admissible at the probation revocation hearing. There was no evidence that the arresting officer knew that the appellant was on probation and carried out the illegal search in order to obtain evidence. Minnesota is now in line with the U.S. Supreme Court in Pennsylvania Bd. of Probation v. Scott, 118 S. Ct. 2014, 524 U.S. 357 (1998). State v. Quincy Jeffrey Martin, C6-99-145, 1999 WL 366570 (Minn. App. 1999). Search and Seizure: Bailment; Drugs. Police ordered a woman to stop when they saw her concealing an object under her jacket. Instead of stopping, the suspect continued toward an apartment building, approached the appellant, handed him a hair spray can, and attempted to place an object into his pocket. Police immediately intervened and retrieved the object, a marijuana pipe, from his pocket. They then told him that he was free to go, at which point he reached for the hair spray can which he had previously placed on the ground and began to run. He was ordered to stop but was then chased and tackled, causing him to drop the can. A plastic bag containing two pieces of cocaine fell out of the can. For purposes of appeal, the appellant stipulated that he possessed the cocaine. Held, this temporary bailment did not create a reasonable expectation of privacy. This was a concealment of evidence and did not create sufficient possessory interest to establish a protectable privacy interest. State v. Gary Cornaldious Wilson, C7-98-1620, 594 N.W.2d 268 (Minn. App. 1999). Sentence: Restitution; Welfare Fraud. This case delineates restitution calculations in fraudulent overpayment of welfare benefits. The amount of fraudulently obtained AFDC payments ordered to be repaid may not be included as income when determining the amount of overpaid food stamps. Next, the amount of restitution due for welfare fraud is not reduced by unpaid child support. In this case, the appellant had assigned child support payments to the county. State v. Pamela Faye Dalbec, C8-98-1626, 594 N.W.2d 530 (Minn. App. 1999). Firearms: Case; Purse. For purposes of prosecution concerning carrying a pistol, a purse does not qualify as a "case" under Minn. Stat. §624.714, subd. 9(e). That statute creates an exception to the permit requirement, allowing transportation of a firearm if the pistol is "unloaded, contained in a closed and fastened box, gun box, or securely tied package." State v. Phyllis Eugenia Taylor, C5-98-1180, 594 N.W.2d 533 (Minn. App. 1999). Obstructing Legal Process: Avoiding Apprehension; Aiding; Verbal Conduct. The defendant noted that the police were attempting to arrest an individual named Susan Rich. The appellant approached Rich and stated, "The cops are coming to get you." The appellant helped Rich look for a back door to make an escape, stood watch at the front door, and then offered Rich a ride, but this offer was declined. Rich then drove out of town herself and fled police officers at high speeds. Held, this is not obstructing legal process. The appellant's verbal conduct was not directed at the police officers and did not have the effect of physically obstructing or interfering with the officers' apprehension of Rich. The court has previously rejected verbal conduct as within the purview of obstructing legal process, except to the extent that words are "fighting words" or any other words that by themselves have the effect of physically obstructing a police officer. The appellant's acts were directed toward Rich and not toward the police officers. There are no published cases concerning this type of conduct. On the other hand, the state could have charged the appellant with aiding an offender to avoid apprehension or to flee a police officer. "Either of these charges would have reflected the true nature of the conduct alleged . . . ." State v. Kathleen Rose Patch, CX-98-1451, 594 N.W.2d 537 (Minn. App. 1999). Prosecutor Misconduct: "Were they Lying?"; Cross-Examination. In this attempted murder case, the theory of the defense was that the witnesses against him, including the police, had fabricated evidence and were lying. During cross-examination of the defendant, the prosecutor discussed three of the state witnesses and pointedly asked about each: "Was he lying?" Defense counsel made no objections. Absent proper objection, the propriety of the "were they lying" questions will be examined under the plain error rule. Minnesota has no clear law on the propriety of such questions in cross-examination. Other jurisdictions are split. While declining to establish a blanket rule, the Supreme Court held that, under these circumstances, it was not error for the prosecutor to pose the "were they lying" questions on cross-examination. As a general rule, however, such questions have no probative value and are improper and argumentative. State v. James Diandre Pilot, 1999 WL 352985 (Minn. 1999). Necessity Defense: Burden of Proof. The appellant was convicted of DWI/Physical Control. At the time of arrest, she was found seated in a vehicle and parked on a county road with the keys in the ignition but the engine not running. Her dog was also in the car. The arresting deputy knew that the appellant and her boyfriend had a history of domestic abuse, with the appellant being the victim. At the close of trial, the district court judge gave an instruction on the necessity defense, which stated that "the defendant has the burden of proving this defense by the greater weight of the evidence." Held, this instruction does not violate due process of law. It is permissible to require a defendant to shoulder the burden of the defense of necessity in a case such as DWI, which does not require specific intent. In general, however, a defendant cannot be required to shoulder the burden of proof if an offered defense (mitigating circumstances) disproves and negates an element of the crime charged. State v. Cynthia Renee Hage, C1-98-222, 1999 WL 352984 (Minn. 1999). Confrontation Clause: Testimony; Interactive Television. In a prosecution for first degree murder, the prosecution was allowed to present the testimony of a "jailhouse snitch" through interactive television (ITV). The nature of the testimony was that the appellant had confessed to the murder and that he planned to use an intoxication-type defense. The state had made no attempt to subpoena this witness. The court holds that trial judges have the authority to use ITV as an extension of the rules authorizing the use of depositions in criminal cases. See Rule 21.01 and 21.06 of the Rules of Criminal Procedure. Rule 21.04, subd. 2, provides that the "deposition" shall be taken stenographically "unless the court orders otherwise." The court holds that the quality of ITV transmission does not, by itself, deprive the appellant of his right of confrontation. In addition, there is no confrontation clause violation when the ITV testimony is substituted for face-to-face confrontation. The confrontation clause reflects a "preference" for physical confrontation at trial, but it is not an absolute right. "Sometimes the preference must give way to the practical realities and necessities of the case." State v. Jeffrey Edward Sewell, C9-98-16521 (Minn. App. 1999). DWI/Implied Consent: PBT; Articulable Suspicion. Police may not stop a driver based solely upon the results of a prior preliminary breath test (PBT) where there is no other evidence in the record that there were factual prerequisites for requesting the PBT in the first place. Deputy Holland received a dispatch to check on an individual sleeping in the back seat of a car with the engine running. When he arrived, the individual was already being dealt with by Deputy Lang. Holland had no personal contact with Knapp, the appellant. There was no discussion between Holland and Lang about the appellant, other than Holland knowing that the appellant failed a PBT and was told not to drive. Shorty thereafter, Holland saw the appellant drive away, and he stopped the vehicle and arrested the appellant for DWI. The appellant's driving conduct was not improper in any way. Importantly, at the implied consent hearing, Deputy Lang did not testify. Therefore, the record is silent as to what prompted him to administer the PBT test to the appellant. Held, because there was no evidence in the record to support articulable facts for requesting the PBT, the stop cannot be justified. Before a PBT test is given, a peace officer must first have reason to believe from the manner in which a person drives, operates, or controls a vehicle that the person is under the influence. Those foundational facts were missing. Michael Knapp v. Commissioner of Public Safety, CX-98-2163, 594 N.W.2d 239 (Minn. App. 1999). |
By Frederic Bruno, Frederic Bruno & Associates |
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Employment and Labor Law Judicial Law Equal Pay Act Claims. The 8th Circuit Court of Appeals recently rejected a pair of claims of violations of the Federal Equal Pay Act. First, a woman who supervised a large number of employees and oversaw distribution of more than 15,000 packages per day was deemed not similarly situated to male managers who had responsibilities for at least twice as many employees and more packages per day. The woman was paid more than about one-half of the male managers, and her male replacement was paid less than she was. Euerle-Wehle v. UPS, (8th Cir. 1999). In another case, the equal pay claim of a female union organizer that she was paid less than 12 comparable male employees and not given raises was rejected because eight of the 12 males had more experience than the woman. Further, the woman had an unfavorable performance evaluation. Since she quit because of the perceived pay and raise disparities, she was unable to maintain a claim of constructive discharge under the Equal Pay Act. Hutchins v. International Brotherhood, 1999 WL 407670 (8th Cir. 1999). Civil Rights Claims. A pair of claimants lost civil rights claims recently before the 8th Circuit, too. In Scusa v. Nestl, U.S.A., 1999 WL 415439 (8th Cir. 1999), an employee at a manufacturing plant failed to establish a hostile work environment for a sex harassment claim under Title VII of the Civil Rights Act. Although she complained about a number of incidents, none of them, either individually or collectively, was sufficiently "severe" or "pervasive" to impair her employment. The employee also engaged in some of the types of conduct about which she complained. Complaints by employees about a psychological aptitude test that was used for the reduction of force at a power plant did not warrant a finding of racial discrimination under Title VII on behalf of African-American employees. In Euerle-Wehle v. UPS, (8th Cir., 1999) a psychologist testified that the tests were specifically tailored to indicate which workers would be more readily trainable and would work in a safer fashion, and had been used for years in the hiring process by other similarly situated employers. A union-only clause in a school construction contract does not violate the constitutional rights of nonunion employees to freedom of association under the First Amendment. In Hanten v. School District, 1999 WL 437252 (8th Cir. 1999), the court held that the claim by the school district that contractors hire only union labor did not violate First Amendment rights, Due Process or Equal Protection. Discharge Defamation. Statements by an employer that an employee had a "poor attitude" and exhibited "poor work performance" are not defamatory. In Zimmerman v. World Data Products, Inc., 1999 WL 410357 (Minn. App. 1999), the Court of Appeals held that the remarks were too vague and did not relate to "specific" misconduct so as to be actionable. Reemployment Compensation Cases. The Minnesota Court of Appeals upheld denial of reemployment compensation benefits to a pair of employees because of spousal relationships. In Anders v. Filmtec Corp., 1999 WL 410296 (Minn. App. 1999) (unpublished), the court ruled that a machine operator who repeatedly refused to remove a wedding ring worn under a vinyl glove was guilty of "intentional misconduct" and disqualified from receiving reemployment compensation benefits because his actions violated the company’s "no jewelry" safety policy. In Ostrow v. S & H Realty Management, 1999 WL 410344 (Minn. App. 1999), an apartment manager was denied reemployment benefits because she disobeyed a directive from management when she hired her husband to paint the apartment complex, contrary to a company policy against hiring family members. Her conduct was deemed "dishonesty" which disqualified her from reemployment compensation. Student Ineligible for Benefits. An employee who left the workforce to go back to school is not eligible for reemployment compensation benefits. In Saydee v. Tec’nifoam, Inc., 1999 WL 261816 (1999), the appellate court applied the "student exclusion" in the reemployment benefit statute to disqualify an employee from receiving benefits during a hiatus in the school year. The employee quit his job, went back to school and sought benefits after the school year ended. The court held that the student exclusion bars the benefits under these circumstances. |
By Marshall H. Tanick, Mansfield Tanick & Cohen PA |
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Family Law Judicial Law Dependent Social Security Benefit Credit is Retroactive. The Court of Appeals found that the general rule for effect of an overruling opinion is that, absent special circumstances or specific pronouncements by the overruling court that its decision is to be applied prospectively only, the decision is to be given retroactive effect. An ALJ refused to credit social security disability benefits paid to a daughter against arrearages accruing prior to the Holmberg decision. The Court of Appeals found that the court in Holmberg did not state that the decision was to be given prospective effect only and that there were no special circumstances present. It concluded that the decision is to be applied retroactively and directed the ALJ to credit benefits paid against arrearages that accrued while the father's application for disability benefits was pending. Casper v. Casper, C9-98-1781, 593 N.W.2d 709 (Minn. App.1999). Debt Incurred to Purchase Other Half of Business Not Business Expense. The parties stipulated that the husband would pay the wife $306,000 for her share of the family business, satisfy outstanding marital debts, and assume a debt of $223,116 to his parents. To meet these obligations, he borrowed $480,000 from his parents. The trial court refused to consider interest and principal on the new debt in determining his business earnings for calculation of his child support and maintenance obligations. It categorized the debt as personal and held that it was not a debt incurred to produce income but to fund a property award. The Court of Appeals panel majority agreed, deciding that although the debt may have the indirect effect of producing income, the refusal to consider the debt he incurred to satisfy a stipulated property award is consistent both with the principles of equity and with case law. No case law was cited in support of the holding. The dissent used the following phrases: " the decision ignores realities," "it is against logic and the facts on record," "it defies logic," and "it is against logic and sound policy." The judge said that it is not enough to say that the debt may have an indirect effect when the debt has given the husband the right to all of the business income as compared to his previous right to only half of that income. Without question, a portion of his business income is directly related to debt he incurred to purchase the second half of the business. Fulmer v. Fulmer, C6-98-1799, 594 N.W.2d 210 (Minn. App. 1999). No Grandparent Visitation for Seven Years Results in no Future Visits. In a 4-3 reversal of the Court of Appeals (578 N.W.2d 369), the Supreme Court ruled that the maternal grandparents (the Santoros), who had no contact for seven years, were not entitled to future visitation over the objection of the grandchildren. The two children, born in 1983 and 1984, lost their parents in an automobile accident in 1987. The paternal grandparents (the Borgstroms) were appointed guardians in 1987 and adopted the children in 1992. In September 1994, over seven years after the Santoros had last seen their grandchildren, they filed a petition for visitation. After three years of proceedings, including 10 visits between August 1995 and September 1996 followed by cancellation and alleged refusals by the children, the trial court entered its final order. It found that the Borgstroms had actively, vindictively and without reason obstructed any contact whatsoever and that their animosity was unfounded but likely to continue. It concluded that visitation was in the best interests of the children and would not interfere with the parent-child relationship. The Borgstroms appealed. The Court of Appeals ruled that the trial court had not abused its discretion, basing its decision largely on the Borgstroms' interference with contact. The Supreme Court began its analysis with the grandparent visitation statute, which requires the trial court to determine whether visitation is in the best interests of the child and whether it will interfere with the parent-child relationship. The court is required to consider the amount of personal contact between the grandparents and the children before the visitation request is made and the preferences of the child of sufficient age in determining best interests under the statute. The Supreme Court found itself unable to determine where the trial court focused on best interests. It cited two amicus briefs that argued that no findings of fact were made on any relevant best interest factor. It concluded, to the contrary, that the trial court concentrated almost exclusively on the Borgstroms’ conduct. Although the Supreme Court had concern about their conduct in thwarting visitation, it said that it cannot ignore the length of time between contacts by the Santoros in light of the statutory emphasis on the amount of contact. The Court said that one of the strongest justifications for grandparent visitation is to encourage the continuation of lasting bonds and a sense of security for children. However, in this case, forcing visitation will only create a sense of disruption, not security, because the statutory mandate on contact was not followed. In summary, the Supreme Court stated that the purpose of the statute is not to punish or reward adult misbehavior but to serve children's best interests. On this record it is difficult, if not impossible, to see how anything more than an idealized notion of familial love is being served by forcing visitation. Given the trial court's lack of findings in support of its conclusion and the significant period during which there was no relationship with the Santoros, the Court held that the trial court abused its discretion in ordering visitation. Petition of Santoro, C7-97-1526, 578 N.W.2d 369 (Minn. 1999). Dissolution Attorney not Required to Represent Client in Domestic Abuse. The father brought two Domestic Abuse Act proceedings pro se on advice of his counsel in a parallel dissolution proceeding. Both were dismissed for procedural reasons. The mother appealed and alleged that Rule 11 required the father's dissolution counsel to represent him in the domestic abuse proceedings. She also alleged that she was entitled to notice of the father's intent to seek an Order for Protection. The Court of Appeals found that Rule 11 did not include a requirement that a party be represented by an attorney in a parallel proceeding or that a party be represented by an attorney at all. It also noted that the Domestic Abuse Act has its own statutory notice procedures and a provision that "a finding by the court that there is a basis for issuing an ex parte OFP constitutes a finding that sufficient reasons exist not to require notice under applicable court rules governing applications for ex parte relief." The trial court found such a basis in each proceeding, and that both orders stated that an emergency existed and notice was waived. The Court of Appeals concluded that neither the father nor his dissolution counsel was required to notify the mother of the petition for ex parte order. It considered and denied the mother's requests for costs and attorney fees. Whalen v. Whalen, C9-98-1764, 594 N.W.2d 277 (Minn. App. 1999). Acquisition via Exchange of Stock is Sale. The husband was awarded the stock of two family corporations subject to the wife's lien of $9.85 million for her half of the stock. The lien was payable at $1 million per year and the balance was due within 30 days of a sale. The court reserved jurisdiction only over the husband's payment of the lien. A major national corporation acquired the companies through a stock exchange. The trial court found the acquisition was a sale and ordered the husband to pay the lien balance within 30 days. The Court of Appeals affirmed the sale ruling because the concept of a sale reasonably assumes the acquisition of something of value. The husband objected to payment within 30 days of the date of acquisition, which was January 2, 1998. He argued that the shares he received were not liquid until February 1, 1999, because they were not registered until January 2, 1999. The court said that there was nothing in the decree that limits the definition of sale in that manner. Finally, the husband challenged the trial court's award of interest on the lien. The court responded that the limited jurisdiction retained by the trial court allowed it to issue orders as necessary to effect prompt payment of the property settlement; that language is broad enough to authorize the trial court to order interest to ensure prompt payment. The wife requested attorneys fees on appeal on the basis of delay of the proceedings. The Court of Appeals stated that although it could not conclude that the appeal was necessarily taken merely to delay payment, it could conclude that the husband unreasonably contributed to the length and expense of the proceeding, warranting an award of reasonable attorneys fees. Vlahos v. Redmond, C2-98-1878, 594 N.W.2d 272 (Minn. App. 1999). |
By the Hon. Eugene L. Kubes, Referee Judge, 2nd District Ret. |
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Federal Practice Judicial Law Orders Imposing Sanctions are not Collateral Orders Subject to Immediate Appeal. In Cunningham v. Hamilton County, 119 S. Ct. 1915 (1999), Cunningham, an attorney who represented the plaintiff in a federal action, was sanctioned by a magistrate judge pursuant to Fed. R. Civ. P. 37(a)(4) after failing to comply with numerous discovery orders. The district court affirmed the sanctions order. Shortly thereafter, Cunningham was disqualified as plaintiff's counsel because she was a material witness in the case. Although the underlying action was still pending in the district court, Cunningham sought to appeal the sanctions order to the 6th Circuit, but the 6th Circuit (with one dissent) dismissed the appeal for lack of jurisdiction. Because of a split in the circuits on the appealability of orders imposing Rule 37 sanctions, the Supreme Court granted certiorari. Noting that a decision is ordinarily not final "unless it ends the litigation on the merits and leaves nothing for the court to do but execute the judgment," the Court rejected Cunningham's argument that the sanctions order was among the small group of "collateral orders" that are reviewable, despite their lack of finality, because they are "conclusive," they "resolve important questions separate from the merits," and they are "effectively unreviewable on appeal from the final judgment in the underlying action." In rejecting this argument, the Court suggested that review of a sanctions order will almost never be "completely separate" from the merits of the underlying action, because the sanctions order often will be "inextricably intertwined" with the merits of the action. The Court further noted that unlike some other orders, a sanctions order will not be "effectively unreviewable" on appeal from the final judgment. In a brief concurrence, Justice Kennedy noted that mandamus might be available in situations where a district court refused to stay enforcement of the sanction order pending appeal, resulting in an "exceptional hardship" to the sanctioned attorney. Though this opinion dealt only with the appealability of orders imposing sanctions under Fed. R. Civ. P. 37, it is likely that it will apply with equal force to sanctions imposed under Fed. R. Civ. P. 11, 28 U.S.C. §1927 and/or a court's inherent powers. Accordingly, it is probable that Cunningham has effectively overruled a long line of 8th Circuit decisions holding as a "general proposition" that sanctions orders against counsel are immediately appealable. See, e.g., Hill v. St. Louis University, 123 F.3d 1114 (8th Cir. 1997) (sanctions for violation of Model Rules of Professional Conduct; Crookham v. Crookham, 914 F.2d 1027 (8th Cir. 1990) (Rule 11 sanctions). Federal Courts Cannot Freeze Assets Under Fed. R. Civ. P. 65. In Grupo Mexicano de Desarollo, S.A. v. Alliance Bond Fund, Inc., 119 S. Ct. 1961 (1999), Grupo issued unsecured notes, which were guaranteed by four of Grupo's subsidiaries. Alliance and several other investment funds purchased $75 million of the notes. After Grupo fell behind on the payments due on the notes, the investors accelerated the notes and filed suit in the Southern District of New York. Alleging that Grupo was either insolvent or on the brink of insolvency, plaintiffs sought a preliminary injunction barring Grupo from transferring any of its remaining assets. After first granting a temporary restraining order, the district court eventually issued a preliminary injunction barring Grupo from "dissipating, disbursing, transferring, conveying, encumbering or otherwise distributing or affecting" certain of its assets. After the 2nd Circuit affirmed the preliminary injunction, Grupo petitioned for certiorari, claiming that Fed. R. Civ. P. 65 did not authorize the sweeping preliminary injunction issued by the district court. Examining more than 200 years of the federal courts' equity jurisdiction, Justice Scalia found that because the relief granted by the district court was "historically unavailable from a court of equity," the district court had erred in issuing a preliminary injunction barring Grupo from disposing of its assets prior to judgment. Justice Ginsburg, writing for four dissenters, argued that an injunction of this type was within the equity jurisdiction of the federal courts. This decision appears to severely limit the options available to unsecured creditors suing in the federal courts. Other Decisions of Note. In Bailey v. Runyon, ___ F. Supp. 2d ___, 1999 WL 336066 (D. Minn. 1999), Judge Doty slashed an $85,740 request for attorney fees in a Title VII action to $2,000 where plaintiff's counsel failed to acknowledge controlling authority on the issue of attorney fee awards, failed to establish the basis for his hourly rate, billed 20.45 hours to "trial preparation" in a single day, filed papers containing numerous spelling and grammatical errors, appeared "unprepared and disorganized" at trial, and obtained an award for only nominal damages. To add insult to injury, counsel failed to include any information concerning expenses incurred. Accordingly, Judge Doty did not award any expenses. In KK Motors, Inc. v. Brunswick Corp., 1999 WL 246808 (D. Minn. 1999), Magistrate Judge Erickson granted defendants' request to stay all proceedings relating to the merits of plaintiffs' antitrust claims pending the 8th Circuit's decision on an appeal by the same defendants from an adverse jury verdict in the Eastern District of Arkansas, but denied defendants' request to stay any determination of class certification issues pending resolution of that appeal. In Ceridian Corp. v. SCSC Corp., 38 F. Supp. 2d 1113 (D. Minn. 1999), Judge Kyle adopted the Report and Recommendation of Magistrate Judge Mason, which in turn noted in dicta that post-judgment garnishment efforts fall within the scope of the court's supplemental jurisdiction under 28 U.S.C. §1367. |
By Josh Jacobson, The Law Offices of Josh Jacobson, PA |
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Juvenile Law Judicial Law Termination of Parental Rights; Statutory Requirements. The Court of Appeals agreed with Blue Earth County that under Minn. Stat. §260.191, subd. 3b(a) (1998), only the options of returning the child to her mother or terminating her mother's parental rights were applicable under the facts of the case when the child, M.H., had been in out-of-home placement for over one year. Nevertheless, the Court of Appeals affirmed the district court and found that the district court properly exercised its inherent judicial discretion by ordering the continuation of foster care placement until the child's mother completed certain conditions precedent to the child's return, despite the statutory requirement to determine the permanent status of a child not later than 12 months after the child is placed out of the home of the parent. Even though M.H. had been in out-of-home placement for over one year, there was no clear and convincing basis for termination, and immediate, unconditional return of M.H. to her mother would not serve the child's welfare. In the Matter of the Welfare of M.H., Child, CI-9802245, 1999 WL 410315 (Minn. App. 1999). Definition of Misdemeanor; Enhancement to Delinquency Status. The Court of Appeals reversed the district court and concluded that a violation of Duluth, Minn., Legislative Code §34-4(b)(1984)(obstructing a police officer) was not a misdemeanor level offense and could not be enhanced to a delinquency adjudication under Minn. Stat. §260.015, subd. 21(c)(3) (1998), even though the youth was adjudicated delinquent in St. Louis County for felony possession of stolen property and placed on probation in June of 1998, ran away from home in September of 1998 in violation of probation, and five days later, fled from Duluth police officers when they attempted to apprehend him, because a violation of a city ordinance is only punishable by a fine of up to $700 with no possibility of imprisonment. Because imprisonment is not a possible punishment, violation of the ordinance is not a crime and, therefore, not a misdemeanor. In the Matter of the Welfare of M.H., Child, CI-9802245, 1999 WL 410315 (Minn. App. 1999). Termination of Parental Rights; Child with Special Needs. The Minnesota Court of Appeals upheld 16-year-old B.A.P.'s termination of her parental rights to D.T.O., a child with special needs, pursuant to a finding that the county complied with the reasonable efforts requirements in Minn. Stat. §260.012 (c) (1998). Even though B.A.F. visited the child regularly and maintained regular contact with both social services and the foster parents, the Court of Appeals found that B.A.F. had refused to work with public health nurses, refused to participate in services to aid D.T.O.'s development, refused to attend school despite offered alternatives, and had not changed her violent behavior. In the Matter of the Welfare of D.T.O., Child, Cl-98-2102, 1999 WL 431093 (unpublished)(Minn. App. 1999). |
By Nathalie S. Rabuse, Walling & Berg, PA |
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Tax Law Judicial Law Minnesota Income Tax. Nonresident, who performs managerial and administrative services for his employer, rather than to individual clients, in Minnesota for several days out of a calendar year is not subject to Minnesota income tax for that portion of his salary attributable to the work performed in Minnesota. His salary is not "personal or professional services" within the meaning of Minn. Stat. Section 290.17, subd. 2(a)(1), is not assignable to Minnesota and is not subject to Minnesota income tax. Benda v. Girard, No. C2-98-763, 592 N.W.2d 452 (Minn. 5/13/99). Minnesota Sales Tax Imposed on Purchase of "Private Communication Service". The Minnesota Tax Court ruled that furnishing a "private communication service", as defined in 26 U.S.C. 4252(d), is a "sale" under Minn. Stat. 297A.01, subd. (3)(f), and is therefore subject to Minnesota sales tax. Kavouras Inc. v. Commissioner of Revenue, No. 6958, 1999 WL 200682 (Minn. T.Ct. 3/17/99). Commissioner’s Order Based on IRS Audit May Be Refuted. Where the Department of Revenue did not make an independent Minnesota audit and where the taxpayer presented evidence that he did not agree with the federal adjustments, the taxpayer was allowed to present evidence to refute the adjustments the Department of Revenue made to his Minnesota income tax returns based on the IRS audit. Groth v. Commissioner of Revenue, No. 6909, 1999 WL 333420 (Minn. T.Ct. 5/24/99). Collateral Estoppel Applied to Responsible Officer. The Minnesota Tax Court applied collateral estoppel to preclude a responsible officer from relitigating a 1997 decision of the Tax Court that found the defunct corporation liable for its willful failure to comply with a wage levy on an employee who was delinquent in his state tax obligations. Wilson v. Commissioner of Revenue, No. 6918, (Minn. T.Ct. 5/5/99). Minnesota Order Triggering Tax Court Appeal Period. An order that starts the appeal time for a taxpayer in the Minnesota Tax Court is not separate and distinct from an order of the Commissioner notifying the taxpayer of an assessment, and therefore, the taxpayer’s motion for summary judgment was granted. The audit report did not start the 60-day appeal period under Minn. Stat. §271.06, subd. 1 and did not constitute an "order of assessment" under Minn. Stat. §289A.37, either. Thayer v. Commissioner of Revenue, No. 6960, 1999 WL 200679 (Minn. T. Ct. 3/23/99). Real Estate Action for Refunds Allowed to Proceed as Class Action. After 2.5 years of litigation by commercial property owners (which produced 12 lawsuits in district courts, seven cases in the Minnesota Tax Court and five appeals, including two to the Minnesota Supreme Court), two district court opinions recently authorized the cases to move forward. Both courts determined that the statute of limitations of one year in Chapter 278 was not the sole remedy for the mistakes of the county tax officials in applying a lower commercial property tax under Minn. Stat. §276.19 as an "overpayment". If Minn. Stat. §278 had applied, most of the class action's claims would be barred by its one-year statute of limitations. One court also authorized the cases to move forward as a class action. The underlying issue relates to county tax officials not applying a lower commercial property tax enacted by the Minnesota Legislature in 1981. Programmed Land Inc., et al. v. Patrick O'Conner, in his Capacity as Treasurer and Auditor for Hennepin County, No. 98-10713, 98-10715 (Henn. D. Ct. 4/19/99) and Harold Christen v. Thomas Novak, in his Capacity as Treasurer and Auditor of Dakota County, No. 19-C4-97-9320, (Dakota D.Ct. 4/12/99). Connecticut Tax on Undistributed Income of Resident Trusts Constitutional. Connecticut's tax on the undistributed taxable income of a testamentary trust, which is considered a resident trust by virtue of the fact that the testator was a Connecticut domiciliary, and an inter vivos trust, which is treated as a resident trust because of the Connecticut domicile of the settlor and the beneficiary, does not violate the Due Process or Commerce Clause of the U.S. Constitution. Chase Manhattan Bank v. Gavin, No. ___ S.C. 15875, 249 Conn. 172 (Conn. 6/1/99). Amount Paid on Employee’s Termination Held Non-Excludable Severance Pay. Payment received by an insurance company employee pursuant to a settlement agreement upon termination of his employment is not excludable from gross income as compensation for personal injury, but is taxable as severance pay. Pipetone v. United States, No. 98-3624, 1999 WL 384164 (7th Cir. 6/14/99). Payments under Property Settlement Agreement Held Division of Marital Assets. Spouses' property settlement agreement, despite failure to mimic statutory language, contains unambiguous language designating husband's monthly payments as a division of marital assets and not spousal support, and thus payments are not alimony. Estate of Goldman v. Commissioner, No. 183-97, 112 T.C. No. 21, 1999 WL 349318 (6/1/99). CIA Agent’s Illegal Espionage Income Received in Years Deposited in Bank. CIA agent, convicted of selling classified information to the Soviet Union, received illegal espionage income not in 1985 when a Soviet agent informed him the money was set aside for him, but in subsequent years when various amounts were actually received or deposited in his bank account. Ames v. Commissioner, No. 14031-96, 112 T.C. No. 20, 1999 WL 339317 (U.S. T. Ct. 5/28/99). Penalty Assessed Against Corporate Officer for Unpaid Use Tax Held Not Dischargeable in Bankruptcy. Penalty liability of former president of non-defunct corporation, for use tax that corporation failed to pay on purchase of airplane from out-of-state seller, will not be discharged in bankruptcy. In re Stoecker, debtor, No. 98-3590, 1999 WL 353010 (7th Cir. 6/2/99). Tax Fraud Conviction Upheld Despite Failure to Submit Materiality Instruction to Jury. The U.S. Supreme Court rules it was a harmless error by the trial court in failing to submit for jury decision the question of whether omission of more than $5 million in income during two tax years constituted material false statements. The Court's decision addresses a conflict among the federal courts of appeal as to whether, and under what circumstances, the omission of an element from the judge's charge to the jury can be harmless error. The Court affirms the conviction of taxpayer on tax fraud charges, although it remands consideration of related bank, wire, and mail fraud charges to a lower court. Neder v. U.S., No. 97-1985, 119 S.Ct. 1827 (U.S. S. Ct. 6/10/99). State Courts Recognize Indemnification Claim for Federal Withholding Trust Fund Taxes. Pre-1996 federal court decisions ruling out federal right of contribution or indemnification against other responsible persons for federal employee withholding trust fund taxes do not preclude contract claims for contribution or indemnification in state courts. Lostoco v. D'Eramo, No. A99A0253, 1999 WL 330313 (Ga. App. 5/26/99). Period for Filing Wrongful Levy Suit not Subject to Equitable Tolling. Nine-month limitations period for commencing a suit for wrongful tax levy is not extended by equitable tolling. Gothenburg State Bank & Trust Co. v. United States, No. 7098CV5026, (D.Ct. Neb. 4/9/99). Subsidiary Without Employees or Property Located in State Lacks Taxable Presence. Maryland could not impose its corporate income tax on the taxpayer, a provider of international telecommunications services, based on the presence in the state of an affiliate. Even though the taxpayer was part of an affiliated group of corporations that constituted a unitary business, the taxpayer did not have nexus with Maryland, and so could not be taxed by the state. MCI International Telecommunications Corp. v. Comptroller of the Treasury, No. C-96-0028-01, 1999 WL 322702 (Md. T.Ct. 4/26/99). U.S. Supreme Court Upholds Privilege or Occupation Tax Alabama County Imposed on Federal Judges. The U.S. Supreme Court upheld the validity of an Alabama county privilege or occupation tax as applied to the salaries of federal district court judges. The case concerned two jurisdictional issues. First, the Court ruled that the case was properly removed from Alabama courts to the federal district court, and second, the Tax Injunction Act did not bar federal court jurisdiction of the case. On the merits of the case, the Court held that the doctrine of intergovernmental tax immunity did not apply since there was no "discrimination against the [federal] employee because of the source of the pay or compensation." Jefferson County, Ala. v. Acker, No. 98-10, 119 S.Ct. 2069 (U.S. 6/21/99). 7701(a)(3) -- "Corporation" Defined. The general rule that an LLC's members are not responsible for employment taxes incurred by the LLC does not apply to a single-member LLC unless the LLC elects to be treated as an association taxable as a corporation under Treas. Reg. §301.7701-3(a). Absent such an election, the LLC is disregarded as an entity separate from its owner under Treas. Reg. §301.7701-3(b)(1). Therefore, the sole member of single-member LLC bears personal responsibility for delinquent employment taxes incurred by LLC. C.C.A. 199922053. Fraud Penalty due to Actions of an Employee. In a Field Service Advice (FSA), the IRS ruled that a public corporation can be held liable for a civil tax fraud penalty when a high-level employee, acting within the scope of his or her employment, fraudulently creates tax benefits for the corporation through pre-arranged trades. FSA 1999-1035-A (April 16, 1999). IRS Storing Power-of-Attorney Information in First-Ever Universally Accessible Database. The IRS is now storing taxpayer power-of-attorney information in a universally accessible database for the first time. The universal database will allow taxpayers to file their power of attorney forms at any service center handling their tax matter. The new system will allow instant access to the data by IRS employees regardless of their location. I.R. -1999-48. Costs of Smoking Cessation Programs Deductible as Medical Expense. The costs of smoking cessation programs and prescription drugs designed to alleviate nicotine withdrawal can be deducted as a medical expense by itemizers. However, the cost of over-the-counter medications such as nonprescription nicotine patches and gum will not be tax deductible. Rev. Rule 99-28. Exempt Organizations Urged to Comply with New Disclosure Rules. The IRS issued the long-awaited final regulations regarding the requirement for tax exempt organizations to disclose certain documents for public inspection. The regulations become effective on June 8, 1999. T.D. 8818 and I.R.-1999-53. IRS 6531: Statute of Limitations for Criminal Proceedings. The chief counsel's office found that, although there is a split of authority among the federal circuit courts as to whether the statute of limitations for criminal actions is jurisdictional or whether it is an affirmative defense that may be waived, the majority of the circuits have held that the statute of limitations is not a jurisdictional bar but rather is a waivable defense. The decision to enter into an agreement with the defendants to waive the statute of limitations rests with the district director. C.C.A. 199923058. Regulations Would Clarify Reporting Payments to Attorneys. The IRS has proposed regulations relating to the reporting by payors of gross proceeds paid to attorneys on behalf of their clients and by certain other payors, such as defendants in lawsuits and their insurance companies and agents, under IRC Section 6045(f). The proposal reflects changes to the law made by the Taxpayer Relief Act of 1997 (P.L. 105-34). The IRS has requested comments on the proposal. Statute of Limitations for Refund Claim Based on "Financial Disability". The IRS issued guidance on the requirements to toll the statute of limitations on a refund claim when a taxpayer has suffered a "financial disability". Rev. Proc. 99-21. Summary of Minnesota Omnibus Tax Bill. The Omnibus Tax Bill for 1999 - H.F. 2420 - contained numerous provisions on Minnesota taxes. Article 1: Sales Tax Rebate. Provides a $1.25 billion sales tax rebate to be paid by the Department of Revenue to taxpayers without application. Directs the Department to begin paying rebates by August 1, 1999. Article 2: Income and Franchise Taxes. Major changes include:
Article 3: Federal Update. Updates the Minnesota provisions for individual and corporate income tax, the property tax refund, and the estate tax provisions for federal changes in the Internal Revenue Code. Article 4: Sales and Use Tax: Makes several minor changes and clarifications to sales tax administration, including allowing construction materials suppliers the option of using a different accounting method for sales tax and income tax purposes. Exempts a number of items from the sales and use tax including the following:
Modifies the general law that applies when there is an imposition of local sales tax to require the following:
Makes modifications to the 1998 law allowing St. Cloud and other cities to impose a variety of local taxes to fund the Central Minnesota events center. Allows the cities of New Ulm and Proctor to impose a one-half percent sales tax. ABA Multidisciplinary Practice Panel Urges Approval of Nonlawyer Affiliations. The ABA should modify its model Rules of Professional Conduct to permit lawyers to form multidisciplinary practices (MDPs) with nonlawyers and share legal fees with them, according to a report released by the ABA Commission on Multidisciplinary Practice. This would mean, for example, that accounting or "professional service" firms could include, as partners or employees, lawyers who would provide legal services to the firms' customers. However, lawyers in MDPs offering legal services would continue to be bound by the same ethical rules as lawyers in traditional law firms, including imputation-of-knowledge standard, conflict of interest rules, and the exercise of independent professional judgment. Full text of the recommendations and report issued by the ABA Commission on Multidisciplinary Practice is available on the Internet at http://www.abanet.org |
By Jerome A. Geis, Briggs and Morgan |
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Torts & Insurance Judicial Law Insurance: Business use Exclusion. Scheibel purchased insurance from Illinois Farmers Insurance Company (Farmers) to cover his private passenger car. There was a clause in the policy excluding liability coverage for the car "while used in employment by any person whose primary duties are the delivery of products or services." Scheibel's son began working as a pizza delivery driver after his father secured the policy, working 25-30 hours per week. He spent about 75 percent of his time delivering pizzas, performing other duties with the balance of his time. The son collided with Eull, and Scheibel filed a claim for liability coverage. Farmers denied the claim. Farmers initiated a declaratory judgment action against Eull, the Scheibels, and the pizza shop. The trial court found the exclusion ambiguous and against public policy. The Minnesota Court of Appeals reversed and remanded. It found that using the car for pizza delivery increased the risk of an accident beyond that anticipated in a private vehicle and that the courts should interpret insurance policies consistent with reasonable expectations. The appellate court found it "beyond the reasonable expectations of private vehicle policyholders to expect coverage" for commercial use. The appellate court found the exclusion not so broad as to foreclose coverage, and noted that any change in the law would need to come from the Minnesota Supreme Court. Illinois Farmers Insurance Company v. Eull et al, C3-99-54, 594 N.W.2d 559 (Minn. App. 1999). Defamation: Fair-Report Privilege. On March 10, 1998, McDaniel spoke out at a Crookston City Council meeting, stating that the "kids [of Crookston] got problems and it'd help if we could get Mr. Moreno to quit dealing drugs out of the back of his police car." Moreno is a Crookston police officer. On March 23, 1998, the Crookston Daily Times published a story reporting the accusation. Moreno sued McDaniel and the paper in defamation. The complaint alleged that the newspaper published false and defamatory statements with malice. The district court granted the motion of the newspaper for judgment on the pleadings, finding the report a fair and accurate report of a public proceeding. Moreno asserted that a showing of malice could defeat the "fair-report" privilege. The Minnesota Court of Appeals reversed the trial court, which relied on the Restatement of Torts (Second)(1977). Section 611 provides that "the privilege exists even though the publisher himself does not believe the defamatory words he reports to be true and even when he knows them to be false." The court, citing Jadwin v. Minneapolis Star & Tribune Co., 367 N.W.2d 476 (Minn. 1985), ruled that malice is relevant to the fair-report privilege and that the qualified privilege can be defeated by a showing of common law malice. The case was thus remanded to the trial court. Moreno v. Crookston Times Printing Co., et al, C6-98-2421, 594 N.W.2d 555 (Minn. App. 1999). Disability Policy: Incontestability Provision. In September 1985, Kersten purchased a disability policy from Minnesota Mutual Life Insurance Company (Minnesota Mutual). Eight years later, Kersten sustained injuries in an automobile accident and collected benefits from November 1993 to September 1995 when Minnesota Mutual concluded that Kersten's disability ended. Kersten sued Minnesota Mutual in 1997. The trial court concluded that Kersten was collaterally estopped from claiming a disability caused by the 1993 accident because in 1996 arbitrators in a no-fault proceeding determined that Kersten was entitled to no further damages. Kersten claimed that he remained disabled from a psychological condition independent of the accident. The trial court held that the condition was not covered because it preexisted the purchase of the policy in 1995 and because Kersten presented no evidence about the condition and how it affected him when benefits were terminated. Kersten appealed from a summary judgment award. The Minnesota Court of Appeals reversed and remanded. It found that a disability policy must contain an incontestability provision consistent with Minn. Stat. §62A.04, subd. 2. Moreover, where applicable, the statute precludes denial of coverage premised on a sickness that purports to exclude preexisting conditions. The appellate court found a genuine issue of material fact as to whether Kersten had a psychological disability in October 1995 and thus reversed and remanded for trial. Kersten v. Minnesota Mutual Life Insurance Company, C6-98-2080, 594 N.W.2d 263 (Minn. App. 1999). Statute of Limitations: UIM Claim. On March 13, 1992, Johnson was allegedly injured in an automobile accident when Skaja's vehicle struck her. Johnson sued Skaja and the driver in December 1997 and January 1998. Johnson had $50,000 in UIM coverage and sued State Farm, Johnson's carrier, six years and 52 days following the accident. The trial court dismissed the UIM claim. The Minnesota Court of Appeals affirmed, even though the underlying tort claims were pending. It ruled that the limitations period on a UIM claim begins to run on the date of the accident, not the date the insurer denies the insured's claim. Johnson v. State Farm Insurance Company, C1-98-2276, 594 N.W.2d 243 (Minn. App. 1999). |
By Thomas C. Baudler and Lee A. Bjorndal, Baudler, Baudler, Maus & Blahnik |