Justia Minnesota Supreme Court Opinion Summaries

A business dispute arose between M&M Creative Laminants, Inc. (M&M), a Pennsylvania company, and Cambria Company, LLC (Cambria), a Minnesota company. Cambria manufactures and sells quartz surface products, while M&M sells custom countertops and cabinetry. In 2009, the two companies entered into a business relationship where M&M would purchase finished quartz products from Cambria. In 2017, Cambria terminated the relationship, claiming M&M owed over $180,000 for delivered products. Cambria sued for the unpaid amount, and M&M counterclaimed under the Minnesota Franchise Act, alleging unfair termination practices.The district court granted summary judgment for Cambria on M&M’s counterclaim, ruling that M&M did not pay a franchise fee, a requirement under the Act to qualify as a franchise. The court noted that payments for goods at a bona fide wholesale price are excluded from the definition of a franchise fee. The court of appeals affirmed, agreeing that M&M did not pay a franchise fee and additionally concluded that M&M, being an out-of-state company, was precluded from bringing a claim under the Act.The Minnesota Supreme Court reviewed the case and concluded that the Minnesota Franchise Act does not categorically preclude an out-of-state company from enforcing a claim for unfair practices. However, the court agreed with the lower courts that M&M did not pay a franchise fee. The court found that M&M’s payments to Cambria for finished quartz products were at a bona fide wholesale price and did not include a hidden franchise fee. Therefore, the relationship between M&M and Cambria did not constitute a franchise under the Act. The Supreme Court affirmed the grant of summary judgment for Cambria. View "Cambria Company, LLC vs. M&M Creative Laminants, Inc." on Justia Law

A Wisconsin-based corporation, Uline, Inc., sells industrial and packaging products and employs sales representatives who visit customers in Minnesota. Uline did not pay Minnesota income or franchise taxes for 2014 and 2015, claiming exemption under 15 U.S.C. § 381, which protects certain out-of-state business activities from state taxation. The Minnesota Commissioner of Revenue audited Uline and assessed taxes for those years, arguing that Uline's activities in Minnesota went beyond mere solicitation of orders.The Minnesota Tax Court upheld the tax assessment, finding that Uline's sales representatives engaged in activities beyond solicitation, specifically the preparation of "Market News Notes," which included detailed market research and competitor information. Uline appealed, arguing that these activities were either protected solicitation or de minimis and thus not subject to state taxation.The Minnesota Supreme Court reviewed the case to determine whether Uline's activities created a sufficient nexus with Minnesota to justify the imposition of state taxes. The court found that the preparation of Market News Notes by Uline's sales team went beyond the solicitation of orders because it involved detailed market research that served independent business functions. The court also determined that these activities were not de minimis, as they were regular and systematic, with over 1,600 Market News Notes prepared during the two years in question.The Minnesota Supreme Court affirmed the tax court's decision, holding that Uline's activities in Minnesota were not protected from state income or franchise taxation under 15 U.S.C. § 381 and were not de minimis. Therefore, Uline was subject to Minnesota state taxes for the years 2014 and 2015. View "Uline, Inc. vs. Commissioner of Revenue" on Justia Law

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