Justia Minnesota Supreme Court Opinion Summaries

The case revolves around the beneficiaries of a trust established by John Demskie, the founder of Remote Technologies, Inc. (RTI). The trust's principal asset was John Demskie’s 90 percent ownership interest in RTI. After his death in 2016, the beneficiaries alleged that U.S. Bank, the sole trustee, became the controlling shareholder of RTI and took actions that severely diminished the value of RTI and frustrated their reasonable expectations as owners of beneficial interests in RTI. The beneficiaries brought claims against U.S. Bank for breach of fiduciary duty and unfairly prejudicial conduct under the Minnesota Business Corporation Act, seeking damages and a buy-out of their interests in RTI.The district court granted U.S. Bank's motion for judgment on the pleadings, ruling that the beneficiaries could not bring a shareholder action against U.S. Bank under the Minnesota Business Corporation Act because the allegations in the complaint were not sufficient to establish that either the beneficiaries or U.S. Bank were shareholders of RTI. The court of appeals affirmed the dismissal of both claims.The Minnesota Supreme Court affirmed in part and reversed in part. The court held that the beneficiaries sufficiently pleaded the shareholder status of U.S. Bank under the notice pleading standard, reversing the dismissal of their breach-of-fiduciary-duty claim. However, the court was evenly divided on the issue of whether owners of beneficial interests in a corporation may initiate an action for a buy-out of their interests, affirming the decision of the court of appeals dismissing their claim for buy-out relief. The case was remanded to the court of appeals for further proceedings. View "Demskie vs. U.S. Bank National Association" on Justia Law

This case involves Alliance Housing Incorporated and North Penn Supportive Housing LLC, collectively known as Alliance, Minnesota nonprofits operating to create, own, and operate affordable housing for low and very low-income people. Alliance owns several properties in Minneapolis, which are used exclusively as private residences for tenants whose incomes are 30–50 percent of the area median income. Alliance provides some supplies and cleaning services to various units but does not occupy the properties. In late 2018, Alliance applied for tax exemption for all its properties in assessment year 2020. The Minneapolis City Assessor denied the applications. Alliance then filed a property tax petition for the assessment year 2020, payable in 2021, claiming that its properties were tax-exempt. The tax court concluded that the properties owned by Alliance were exempt from property taxes.The State of Minnesota in Supreme Court held that for purposes of qualifying for tax exemption under Article X, Section 1, of the Minnesota Constitution, an institution of purely public charity with a purpose of providing housing for low-income individuals uses its real property in furtherance of its charitable purpose when it leases its property to its intended beneficiaries for personal residence. The court found that when the very purpose of an Institution of Purely Public Charity (IPPC) is to own and operate real property in a charitable manner for private residence, the exclusive residential occupancy of the property by the clients of the IPPC does not defeat the constitutional requirement that property be used to further a charitable purpose. Therefore, the tax court did not err in finding that Alliance’s properties are used for the tax-exempt purpose of providing affordable housing to low-income tenants. The decision of the tax court granting property tax exemptions to Alliance’s properties was affirmed. View "Alliance Housing Incorporated vs. County of Hennepin" on Justia Law

The Supreme Court affirmed the decision of the Minnesota Tax Court affirming the assessment of the Commissioner of Revenue assessing tax on an apportioned share of Cities Management, Inc.'s (CMI) income from the sale of the S corporation, holding that the income from the corporation's sale was apportionable business income.CMI, which did business in Minnesota and Wisconsin, and its nonresidential partial owner filed Minnesota tax returns characterizing the sale of CMI's goodwill as income that was not subject to apportionment by the State under Minn. Stat. Ann. 290.17. The Commissioner disagreed and assessed tax on an apportioned share of the corporation's income from the sale. The tax court affirmed. The Supreme Court affirmed, holding that CMI's income did not constitute "nonbusiness" income under section 290.17, subd. 6 and may be constitutionally apportioned as business income. View "Cities Management, Inc. v. Commissioner of Revenue" on Justia Law

The Supreme Court affirmed the judgment of the court of appeals affirming the district court's judgment concluding that Tennis Sanitation, LLC breached the contract between the parties and that, as a result of the breach, Vermillion State Bank suffered $1.92 million in damages, holding that the court of appeals did not err.Tennis repudiated an alleged oral contract it negotiated with Vermillion for its purchase of certain assets, including garbage trucks and customer routes, of a trash collection business in bankruptcy. After Tennis's repudiation, Vermillion sold the assets to another company at a significantly lower price. Vermillion then sued Tennis for breach of contract. The district court entered judgment for Vermillion. The court of appeals affirmed. The Supreme Court affirmed, holding that hybrid contract involving goods and non-goods should be interpreted based on the predominant purpose of the contract. View "Vermillion State Bank v. Tennis Sanitation, LLC" on Justia Law

The Supreme Court reversed the decision of the court of appeals affirming the judgment of the district court concluding that a receiver should bring a piercing-the-corporate-veil claim against the shareholders of the corporate entity that the receiver controls, holding that the receiver in this case did not have the power to bring the veil-piercing claims.Aaron Carlson Corporation, one of the creditors of the now-defunct LSI Corporation of America, Inc. (LSI), sought to pierce the LSI corporate veil and recover from Respondents. The district court concluded that the corporation's claims should have been brought by a receiver that had been appointed in a lawsuit that Respondents had filed against LSI. In that suit, the receiver had sold LSI's assets and repaid some of LSI's creditors. The court of appeals affirmed. The Supreme Court reversed, holding (1) the receiver did not have the power to bring veil-piercing claims; and (2) therefore, the corporation's claims against the shareholders did not represent an impermissible collateral attack on the receivership and were not barred by res judicata. View "Aaron Carlson Corp. v. Cohen" on Justia Law

The Supreme Court affirmed in part and reversed and remanded in part the court of appeals’ reversal of the district court’s grant of Company’s motion to dismiss Shareholder’s class action challenge to a merger transaction. The district court concluded (1) some claims were derivative, rather than direct, and were therefore subject to the demand and pleading requirements of Minn. R. Civ. P. 23.09; and (2) Shareholder failed to comply with Rule 23.09. The court of appeals reversed with the exception of one claim, concluding that most of the claims were direct, and therefore, Rule 23.09 did not apply. The Supreme Court clarified the test for distinguishing between direct and derivative claims and held that the district court did not err in dismissing some claims but erred in dismissing others. View "In re Medtronic, Inc. Shareholder Litigation" on Justia Law

In 1999, Yik Lo created H.K.D. Lo, Inc. Yik and his wife, Yau Lo, operated several restaurants through H.K.D., the last of which they sold in 2005. In approximately 2004, Yik and Yau’s son, Kee Lo, opened a restaurant called Jun Bo that Kee operated through H.K.D. In 2011, Yik and Yau formally dissolved H.K.D. In 2012, the Commissioner of Revenue assessed Yik personally liable for sales taxes owed by H.K.D. in the amount of $91,019. Yik appealed. The tax court concluded that Yik was not personally liable for H.K.D.’s unpaid tax debt because Yik was not a person who had “control of, supervision of, or responsibility for” filing H.K.D.’s tax returns or paying H.K.D.’s taxes. The Supreme Court reversed, holding that because Yik funded H.K.D., signed checks on its behalf, had a fifty percent stake in the company, and delegated day-to-day control of the business to someone else, Yik had control over H.K.D.’s tax obligations, despite the fact that Kee demanded and exercised authority over Jun Bo’s daily operations. View "Lo v. Commissioner of Revenue" on Justia Law

Madison Equities, Inc. brought an action against Robert Crockarell for repayment of an overdue promissory note. Crockarell filed a separate action against Madison Equities and others alleging that Madison Equities filed suit against Crockarell on the note to interfere with Crockarell’s business interests. The district court granted summary judgment to Madison Equities on the promissory note claim but ordered a stay of entry of judgment pending meditation in Crockarell’s business-related action. Madison Equities petitioned the court of appeals for a writ of mandamus to compel the district court to vacate the stay. The court of appeals denied the petition. The Supreme Court reversed and issued a writ of mandamus ordering the district court to vacate the stay, holding that Madison Equities was entitled to the writ where the district court did not have authority to order the stay, Madison Equities suffer a public harm that was specifically injurious to it, and Madison Equities did not have any other adequate remedy in the ordinary course of law. View "Madison Equities, Inc. v. Crockarell" on Justia Law

Relator challenged several personal liability assessments that the Commissioner of Revenue made against him based on unpaid petroleum and sales taxes owed by Twin Cities Avanti Stores, LLC (Avanti). On appeal, Relator asserted that the tax court erred by granting summary judgment to the Commissioner because (1) there were disputed, material questions of fact regarding his personal liability for the unpaid petroleum and sales taxes, and (2) the court abused its discretion in not allowing additional discovery to explore an estoppel defense. The Supreme Court reversed the tax court's grant of summary judgment in favor of the Commissioner and remanded for a trial, holding that there was a material dispute of fact whether Relator had the requisite control over the company's finances to be held personally liable for Avanti's tax liability. View "Stevens v. Comm'r of Revenue" on Justia Law

Appellants were trustees of eight family trusts. After stock of closely-held corporation belonging to the trusts was fractionalized in a reverse stock split and Appellants were forced to accept cash in exchange for their shares, Appellants brought suit against the corporation. The district court dismissed all of Appellants' claims. The court of appeals affirmed. The Supreme Court affirmed, holding (1) the valuation of the stock was not the product of common law fraud; (2) Minn. Stat. 302A.471 does not provide for dissenters' rights in the event of a reverse stock split; (3) Appellants were not entitled to equitable relief under Minn. Stat. 302A.751 because the corporation did not frustrate Appellants' reasonable expectations as shareholders; (4) merely conducting an involuntary redemption of Appellants' stock at a fair price, without more, did not constitute a breach of fiduciary duty; and (5) the district court did not err in determining the fair value of Appellants' stock when it adopted a valuation that relied in part on asset value. View "U. S. Bank N. A. v. Cold Spring Granite Co." on Justia Law