Justia Minnesota Supreme Court Opinion Summaries

A tenant entered into a lease for an apartment in Minneapolis that was subsidized under the Section 8 project-based voucher program, with the local public housing authority paying most or all of the rent directly to the landlord. After the tenant fell behind on utility payments, her electricity was disconnected, and she and her boyfriend broke into the building’s utility closet to restore power, inadvertently affecting other units. The landlord learned of this breach but continued to accept three months of rental payments from the public housing authority on the tenant’s behalf. Later, the landlord filed an eviction action based on the tenant’s breach of the lease.The Hennepin County District Court dismissed the tenant’s counterclaim regarding the utility shutoff and, following the Minnesota Court of Appeals’ decision in Westminster Corp. v. Anderson, held that the common law doctrine of waiver by acceptance of rent did not apply to rental payments made by a public housing agency. The district court found the tenant had materially breached the lease and did not address her retaliation defense. The Minnesota Court of Appeals affirmed the district court’s rulings on the waiver and breach issues but remanded for consideration of the retaliation defense.The Minnesota Supreme Court reviewed only the waiver issue. It overruled Westminster, holding that the common law rule—whereby a landlord who accepts rent with knowledge of a tenant’s breach waives the right to evict for that breach—applies equally to private and publicly subsidized tenancies. The court clarified that whether a landlord has accepted rent for purposes of this doctrine is a factual question, to be determined by the totality of the circumstances, including the landlord’s conduct after payment. The Supreme Court reversed the court of appeals and remanded for further proceedings. View "Hook & Ladder Apartments, L.P. v. Nalewaja" on Justia Law

Fletcher Properties, Inc. and other appellants own multi-tenant residential properties in Minneapolis. The City of Minneapolis enacted an ordinance prohibiting property owners from refusing to rent to individuals based on requirements of public assistance programs, including Section 8 housing vouchers. Fletcher challenged the ordinance, claiming it violated the Minnesota Constitution’s Takings Clause and was preempted by the Minnesota Human Rights Act (MHRA).The district court initially ruled in favor of Fletcher, finding the ordinance violated due process and equal protection clauses. The court of appeals reversed this decision, and the Minnesota Supreme Court affirmed, remanding the case to address the remaining claims. On remand, the district court granted summary judgment for the City, rejecting Fletcher’s takings and preemption claims. The court of appeals affirmed this decision, leading to the current appeal.The Minnesota Supreme Court reviewed the case and held that the ordinance does not constitute a physical or regulatory taking under the Minnesota Constitution. The court applied the Penn Central factors, concluding that the economic impact of the ordinance, interference with investment-backed expectations, and the character of the government action did not support a finding of a regulatory taking. The court also determined that the ordinance does not effect a physical taking as landlords voluntarily rent their properties and are not compelled to continue doing so.Additionally, the court held that the ordinance is not preempted by the MHRA. The court found no conflict between the ordinance and the MHRA, as the MHRA does not grant landlords an affirmative right to reject voucher holders. The court also concluded that the MHRA does not occupy the field of housing discrimination based on public assistance, allowing for local regulation.The Minnesota Supreme Court affirmed the decision of the court of appeals, upholding the ordinance. View "Fletcher Properties, Inc. vs. City of Minneapolis" on Justia Law

Wells Fargo Bank filed a complaint against Astra Genstar Partnership, LLP, seeking a declaratory judgment related to a property purchased at a foreclosure sale. Wells Fargo requested a declaration that all previously held interests in the property, including Astra's interest, were terminated. Astra filed an answer opposing Wells Fargo's request. The district court granted Wells Fargo's motion for judgment on the pleadings, ruling that any interest Astra had in the property was terminated by the foreclosure sale and the redemption period's expiration. The court administrator failed to notify the parties of the judgment immediately.The district court entered judgment on December 28, 2023, but the parties did not receive notice until March 15, 2024, after the appeal deadline had passed. Astra appealed to the Minnesota Court of Appeals on May 13, 2024. The court of appeals dismissed the appeal, stating it was late under Minnesota Rule of Civil Appellate Procedure 104 and that Rule 14.01(c)(2) of the Minnesota General Rules of Practice for the District Courts did not apply to appellate courts.The Minnesota Supreme Court reviewed the case and concluded that Rule 14.01(c)(2) does not authorize appellate courts to reinstate a late appeal. However, the court determined that the interests of justice warranted reinstating the appeal because the court administrator failed to transmit notice of the judgment as required by Minnesota Rule of Civil Procedure 77.04. The Supreme Court reversed the court of appeals' decision and reinstated Astra's appeal, emphasizing the need to avoid setting a trap for the unwary and to preserve the right to appeal. View "Wells Fargo Bank v. True Gravity Ventures, LLC" on Justia Law

A dispute arose between a surety bond company, Granite Re, Inc. (Granite), and a creditor bank, United Prairie Bank (UPB), over entitlement to funds held by a receiver in a receivership action. Granite issued payment bonds to Molnau Trucking LLC (Molnau) for public works projects, but Molnau defaulted on both the projects and loans from UPB. The issue was whether Granite or UPB had priority to the bonded contract funds held by the receiver. Granite argued for priority under equitable subrogation, having paid laborers and suppliers, while UPB claimed priority under the UCC, having perfected its security interests in Molnau’s accounts receivable before Granite issued the bonds.The district court granted summary judgment in favor of UPB, recognizing Granite’s equitable subrogation rights but ruling that UPB’s perfected security interest had priority. The court of appeals affirmed, applying a “mistake of fact” standard from mortgage context case law, which Granite did not meet.The Minnesota Supreme Court reviewed the case and held that the “mistake of fact” standard does not apply to performing construction sureties. The court concluded that Granite, as a surety, has the right to equitable subrogation without needing to show a mistake of fact. The court further held that a surety’s right to equitable subrogation is not a security interest subject to the UCC’s first-in-time priority rule. Instead, a performing surety has priority over a secured creditor regarding bonded contract funds.The Minnesota Supreme Court reversed the court of appeals’ decision and remanded the case to the district court for entry of judgment in favor of Granite, allowing Granite to request redistribution of the bonded contract funds. View "In re Receivership of United Prairie Bank v. Molnau Trucking LLC" on Justia Law

Burnsville Medical Building, LLC owns a three-story medical office building in Burnsville, Minnesota. Dakota County assessed the value of the property for 2021 taxes at $8,007,800. The taxpayer challenged this assessment, arguing that it overstated the property's value. The property was 25 years old, with 47,894 square feet of rentable space and an occupancy rate of 90.13 percent. The taxpayer presented an appraisal report by Kelsey K. Hornig, who used both the sales comparison approach and the income capitalization approach to value the property at $7,075,000 and $7,175,000, respectively.The Minnesota Tax Court held a trial and found that the taxpayer's appraisal overcame the prima facie validity of Dakota County's assessment. However, the tax court rejected Hornig's occupancy adjustment under the sales comparison approach, finding her testimony not credible and her adjustments internally inconsistent. The tax court also rejected Hornig's use of effective net rent to calculate potential gross income under the income capitalization approach, determining that the taxpayer did not present sufficient evidence to support reducing potential gross income by tenant improvement allowances or free rent.The Minnesota Supreme Court reviewed the case and affirmed the tax court's decision. The Supreme Court held that the tax court did not err in using market rent rather than effective net rent to calculate the property's potential gross income, as there was no evidence that the tenant improvement allowances or rent concessions were excessive or atypical. The Supreme Court also upheld the tax court's rejection of Hornig's occupancy adjustment, finding no clear error in the tax court's credibility determinations and factual findings. The final valuation of the property was set at $9,300,000. View "Burnsville Medical Building, LLC vs. County of Dakota" on Justia Law

A dispute arose over the authority of the Red Lake Watershed District (the District) to conduct improvement proceedings for Polk County Ditch 39, which lies within the District but under the drainage authority of the Polk County Board of Commissioners. In 2017, landowners filed a petition with the District to improve Ditch 39, aiming to increase its capacity and length to capture overflow from another ditch, Ditch 66. The District accepted the petition and initiated proceedings, but Keystone Township and several landowners challenged the District's order, arguing that the District lacked authority as the ditch was not transferred from the county.The district court granted summary judgment in favor of Keystone, ruling that the District did not have the authority to order the improvement because it had not taken over the ditch from the county. The court of appeals reversed this decision, concluding that the District had the authority to conduct the improvement proceedings and that the proceedings substantially conformed to statutory requirements.The Minnesota Supreme Court reviewed the case and affirmed the court of appeals' decision. The court held that under Minn. Stat. § 103D.625, subd. 4, the District was authorized to conduct improvement proceedings for Ditch 39 without first taking over the ditch from the county. The court also concluded that the District's proceedings conformed to the statutory requirements, despite the involvement of county officials being inconsistent with the Watershed Law. The court rejected Keystone's procedural challenges, including the timeliness of the property owners' report and the final hearing notice, affirming that these did not affect the District's authority to establish the improvement project. View "In the Matter of Keystone Township vs. Red Lake Watershed District," on Justia Law

Renee Vasko challenged her property tax assessment on two grounds: the revocation of her homestead classification and the assessed value of her property. In 2018, McLeod County sent a homestead application to Vasko’s property address, which was returned as undeliverable. The County learned from the City of Lester Prairie that there had been no measurable water use at the property since 2016. Consequently, the County revoked the homestead classification effective January 2, 2019, and assessed the property at $110,100.Vasko filed a petition in the Minnesota Tax Court, disputing the revocation of the homestead classification and the property’s assessed value. She presented evidence, including mail addressed to the property, utility records, and testimony, to establish occupancy and use of the property. Vasko also compared her property’s valuation to five other properties in the City to argue that her home was overvalued. The Tax Court found that Vasko did not occupy and use the property as a homestead in 2019 and upheld the County’s valuation, concluding that Vasko did not provide sufficient evidence to rebut the presumptive validity of the County’s assessment.The Minnesota Supreme Court reviewed the case and affirmed the Tax Court’s decision. The Court held that the Tax Court correctly placed the burden of proof on Vasko to show that the revocation of the homestead classification was unlawful and that the assessed value was incorrect. The Supreme Court found no clear error in the Tax Court’s findings that Vasko did not occupy and use the property as a homestead and that she failed to provide substantial evidence to challenge the County’s valuation. The decision of the Tax Court was affirmed. View "Vasko vs. County of McLeod" on Justia Law

The case involves the valuation of two commercial properties in a Woodbury shopping center for tax purposes. The taxpayer, Tamarack Village Shopping Center, LP, challenged Washington County’s initial assessments of the properties, arguing that the tax court should have used an effective rent calculation to account for tenant improvement allowances and deducted lease-up costs due to an above-market vacancy rate.The tax court heard testimony from the taxpayer’s real property asset manager, the taxpayer’s expert appraiser, and the County’s expert appraiser. The tax court largely accepted the County’s appraiser’s opinions and rejected the taxpayer’s appraiser’s opinions. The tax court’s final value conclusions increased the properties’ assessed market values over the county assessor’s initial valuations. The taxpayer appealed, contending that the tax court erred in its analysis by not using an effective rent calculation and by not deducting lease-up costs.The Minnesota Supreme Court reviewed the case. The court held that the tax court did not err in declining to use an effective rent calculation because the taxpayer’s tenant improvement allowances were typical of the market. The court also found that the tax court did not clearly err in declining to deduct lease-up costs from the property’s indicated value to account for its above-market vacancy rate, as the taxpayer failed to show that such a deduction was required. The court affirmed the tax court’s decision, upholding the increased assessed market values of the properties. View "Tamarack Village Shopping Center, LP vs. County of Washington" on Justia Law

Fitness International, LLC ("Fitness") entered into a lease agreement with City Center Ventures, LLC ("City Center") for a property in Hopkins, Minnesota, where Fitness operated a health club. Due to executive orders during the COVID-19 pandemic, Fitness was mandated to close its business for approximately 3.5 months in 2020. Fitness sought to recover the rent paid during these closure periods, arguing that the doctrine of frustration of purpose excused its obligation to pay rent during the mandatory closure.The Hennepin County District Court granted summary judgment in favor of City Center, concluding that Fitness's obligation to pay rent was not excused. The Minnesota Court of Appeals affirmed, noting that Fitness cited no binding authority allowing the doctrine of frustration of purpose to establish a breach-of-contract claim. The court of appeals also determined that the mandatory COVID-19 closures did not prohibit all permitted uses of the property, thus not substantially frustrating the lease's purpose.The Minnesota Supreme Court reviewed the case to consider the doctrine of frustration of purpose. The court recognized that the Restatement (Second) of Contracts §§ 265 and 269 provide appropriate frameworks for analyzing claims of permanent and temporary frustration of purpose, respectively. However, the court did not decide whether the doctrine could be used affirmatively for a breach-of-contract claim. Instead, it concluded that even if Fitness could pursue such a claim, the obligation to pay rent was only suspended, not discharged, during the temporary frustration. Since Fitness did not establish that paying rent after the closure would be materially more burdensome, the court affirmed the lower courts' decisions, denying Fitness's claim for rent recovery.The Minnesota Supreme Court affirmed the decision of the court of appeals, holding that Fitness's obligation to pay rent was merely suspended during the temporary frustration and not discharged. View "Fitness International, LLC v. City Center Ventures, LLC" on Justia Law

David Hepfl and Jodine Meadowcroft had a complex romantic history, including two marriages and divorces. After their second divorce, they reconciled in 2016 and decided to build a cabin on Meadowcroft's property, which she had retained as nonmarital property. Hepfl paid for the construction and furnishing of the cabin, as well as additional structures like a dock and outhouse. Their relationship ended again in October 2020, and Meadowcroft obtained an Order for Protection (OFP) against Hepfl. Hepfl then filed a civil action alleging unjust enrichment to recover the cabin and its associated fixtures and furnishings or reasonable payment.The district court ruled in favor of Hepfl, concluding that Meadowcroft would be unjustly enriched if she retained the cabin and its associated items without compensating Hepfl. The court found that Hepfl had no intention of gifting the cabin to Meadowcroft and that his contributions were made with the expectation of shared use. Meadowcroft's motion for amended findings was denied, and she was ordered to pay Hepfl for the construction costs and return or compensate for the additional items.The Minnesota Court of Appeals affirmed the district court's decision, agreeing that Meadowcroft's retention of the cabin would result in unjust enrichment. The court noted that Hepfl's contributions were made with the expectation of shared use and that Meadowcroft's actions induced him to make these expenditures.The Minnesota Supreme Court reviewed the case and affirmed the lower courts' decisions. The court held that Hepfl did not need to show that Meadowcroft engaged in morally wrongful conduct to succeed in his unjust enrichment claim. Instead, it was sufficient that Meadowcroft's retention of the cabin and its associated items would be inequitable under the circumstances. The court emphasized that unjust enrichment claims between former partners in a cohabitating, marriage-like relationship should focus on the equities of the situation rather than the conduct of the parties. View "Hepfl v. Meadowcroft" on Justia Law