author: PAGE, Justice.

text:
    Patricia Frances OANES, et al., Appellants, v. ALLSTATE INSURANCE COMPANY, Respondent.
    No. C5-99-704.
    Supreme Court of Minnesota.
    Sept. 14, 2000.

      Robert J. Milavetz, Paul T. Kizilos, David O.N. Johnson, Milavetz Gallop & Milavetz, P.A., Edina, for appellants.
    Jeanne H. Unger, John R. Neve, Rider, Bennett, Egan <& Arundel, Minneapolis, for respondent.
   OPINION

PAGE, Justice.

The court of appeals affirmed dismissal of a suit for underinsured motorist (“UIM”) benefits because it was commenced more than six years after the accident in which the injury occurred. We are asked to determine whether the statute of limitations begins to run on a UIM claim on the date of the accident or at a later time. In the past, we have indicated that the claim accrues and the limitations period commences at the time of the accident that causes the injury. See Weeks v. American Family Mut. Ins. Co., 580 N.W.2d 24, 27 (Minn.1998); O’Neill v. Illinois Farmers Ins. Co., 381 N.W.2d 439, 439 (Minn.1986). Yet we have also held that a UIM claim is not ripe until is has been determined that the tortfeasor is in fact underinsured by settlement or adjudication of the claim against the tortfeasor. See Employers Mut. Cos. v. Nordstrom, 495 N.W.2d 855, 857 (Minn.1993). Because the confluence of these decisions creates the possibility that the statute of limitations could run on a UIM claim before it becomes ripe, we conclude that the better rule is that UIM claims accrue and the statute of limitations begins to run when the UIM claim becomes ripe by settlement or adjudication of the claim against the tortfeasor. We therefore reverse and remand.

On October 7, 1998, appellants, Patricia and Gerald Oanes (collectively “the Oanes”), brought suit in Hennepin County District Court against respondent, Allstate Insurance Company (“Allstate”), seeking to recover UIM benefits under their Allstate policy for a March 18, 1992, automobile accident. Allstate moved for summary judgment, claiming that the Oanes’ claims were time barred. Agreeing with Allstate, the district court granted the motion and dismissed the action. The court of appeals affirmed.

The relevant facts from the record are as follows. Patricia Oanes was injured in a multi-vehicle, chain reaction collision on March 18, 1992, as a result of being rear-ended by a car driven by Jeffrey Giefer. Oanes suffered injuries to her head, neck and back. Oanes, along with her husband, Gerald, first brought a claim against Giefer. That claim was settled on August 12, 1995. In July 1995, before the settlement, the Oanes notified Allstate of their intent to seek underinsured motorist benefits under their Allstate policy. Under the policy, UIM benefits were not recoverable until all tortfeasors’ “limits of liability” had been exhausted by settlement or judgment. Allstate informed the Oanes that their claim was not ripe because they had not pursued a claim to settlement or judgment against Howard Theis, the driver of the car that rear-ended Giefer. As a result, on April 2, 1997, the Oanes commenced an action against Theis’ estate. That action was settled on August 26, 1998.

In a complaint filed on October 7, 1998, the Oanes commenced an action against Allstate seeking to recover UIM benefits. Allstate moved for summary judgment arguing that O’Neill and Weeks establish that the six-year statute of limitations for UIM claims begins to run on the date of the accident causing the injury for which recovery is sought and the Oanes’ action was therefore time-barred because it was commenced more than six years after the date of Patricia Oanes’ injuries. The Oanes responded that the O’Neill-Weeks rule of accrual for UIM claims did not apply because under the language of their Allstate policy, the statute of limitations did not begin to run until the limits of all tortfeasors’ liability had been exhausted by settlement, which did not occur until August 26, 1998, less than six years before they commenced their UIM action. They relied on Sargent v. State Farm Mutual Automobile Insurance Co., 486 N.W.2d 14 (Minn.App.1992), rev. denied (Minn. Aug. 4, 1992), for this policy-language argument. The district court rejected the argument because the language of the Oanes’ policy was different than the policy language in Sargent and dismissed the action. The Oanes made the same policy-language argument in the court of appeals, and as in the district court, the argument was rejected. See Oanes v. Allstate Ins. Co., No. C5-99-704, 1999 WL 886662, at *2 (Minn.App. Oct.19, 1999).

In their petition for review to this court, in addition to the policy-language argument presented to the district court and the court of appeals, the Oanes raised a new issue. For the first time, the Oanes asked the court to address the general issue of when a UIM claim accrues, independent of the specific language in their policy. Specifically, they presented the question of whether this court should reject the O’Neill-Weeks rule that the statute of limitations on a UIM claim begins to run on the date of the accident causing the injuries and instead hold that the statute of limitations for a UIM claim begins to run on the date the insurance contract is breached — that is, when a claim for UIM coverage is denied by the insurer.

I.

The first issue we must address is whether we should consider the claim accrual issue in light of the fact that it was raised for the first time in the petition for review. Generally, issues not raised below will not be considered on appeal. See Thiele v. Stick, 425 N.W.2d 580, 582 (Minn. 1988). This is not, however, an ironclad rule. We have recognized an exception to this rule when the issue “is plainly decisive of the entire controversy on its merits, and where, as in a case involving undisputed facts, there is no possible advantage or disadvantage to either party in not having had a prior ruling by the trial court on the question. Watson v. United Sens. Auto. Ass’n, 566 N.W.2d 683, 687 (Minn.1997) (quoting Holen v. Minneapolis-St. Paul Metro. Airports Comm’n, 250 Minn. 130, 135, 84 N.W.2d 282, 286 (1957)). Here, there are no disputes of fact that affect the purely legal question presented and there is no possible advantage or disadvantage to either party by not having a prior lower court ruling. Although the issue is not decisive of the entire case on the merits, the procedural posture of this case is such that we will entertain the issue. See Minn.R.Civ.App.P. 103.04 (appellate court may “review any other matter as the interest of justice may require”).

The issue the Oanes first raised in their petition for review — when a UIM claim accrues — was pending before this court in another case when the Oanes filed their petition. See Johnson v. State Farm Mut. Auto. Ins. Co., 594 N.W.2d 243 (Minn.App.1999), rev. granted (Minn. Aug. 18, 1999), and rev. vacated and appeal dismissed as moot (Minn.Jan.25, 2000). The Johnsons brought their UIM claim more than six years after the accident causing their injuries but before their claims against the tortfeasor were resolved. In early November 1999, the Johnsons’ claim against the tortfeasor was tried. Based on the jury’s November 9, 1999 verdict, the district court entered an order for judgment for the Johnsons in an amount less than the policy limits of the tortfeasor’s liability insurance coverage. Because the judgment did not exceed his insurance limits, the tortfeasor was not underinsured. On that basis, the insurer in Johnson moved to dismiss the Johnsons' appeal to this court as moot just two days before oral argument. The oral argument took place, but after the appeal period for the underlying tort judgment had passed and the judgment became final, the Johnson appeal was dismissed as moot.

The petition for review in this case came before the court after the Johnson oral argument, but before the final determination that Johnson was moot. In order to preserve the claim accrual issue, we granted review in this case and stayed further proceedings pending final disposition in Johnson. Having dismissed the appeal in Johnson as moot,- we now address the claim accrual issue here.

II.

The substantive question that we must resolve is when an insured’s action against its insurer for UIM benefits accrues and starts the statute of limitations running. Although we have not previously ruled on this issue in this precise context, we have addressed related aspects of the issue. We held that, an action to imply UIM coverage in a policy and then to recover benefits under that implied-in-law coverage accrues on the date of the accident. See O’Neill v. Illinois Farmers Ins. Co., 381 N.W.2d 439, 439 (Minn.1986). Next,we held that because of its tort character, a UIM claim does not survive the death of the injured claimant and in'doing so explained O’Neill as holding that the statute of limitations for a UIM claim begins to run when the accident that caused the injury occurs. See Beaudry v. State Farm Mut. Auto. Ins. Co., 518 N.W.2d 11, 11, 13 (Minn.1994). We then held that a UIM insurer’s subrogation action against the tortfeasor also begins to run on the date of the accident causing the injury. See Hermeling v. Minnesota Fire & Cas. Co., 548 N.W.2d 270, 275 (Minn.1996). Most recently, we held that the statute of limitations for an uninsured motorist (“UM”) claim runs from the date of the accident that causes the injury. See Weeks v. American Family Mut. Ins. Co., 580 N.W.2d 24, 27 (Minn.1998). In reaching that conclusion, we stated that the rule of claim accrual announced in O’Neill was not limited to implied-at-law UIM claims and that our subsequent cases established that “the statute of limitations on a UIM claim begins to run when the accident occurs.” Weeks, 580 N.W.2d at 26 (citation omitted). While we acknowledged in Weeks that in a majority of jurisdictions the statute of limitations for a UIM claim begins to run when the contract -is breached, i.e., when the claim is denied by the insurer, we concluded that there was “no reason to abandon the rationale” adopted in O’Neill. See Weeks, 580 N.W.2d at 27. We reiterated our concern expressed in O’Neill that, if the UIM claim did not accrue until the contract was breached, the UIM claimant would be able to postpone indefinitely the commencement of the limitations period by not submitting the claim. See Weeks, 580 N.W.2d at 26, 27. Thus, in Weeks, we left the reasoning and decision in O’Neill undisturbed and expanded it to cover the accrual of UM claims.

Although none of these cases directly addressed the accrual date of a UIM claim, it is not surprising, especially given our language in Weeks, that the court of appeals and respondent interpret O’Neill and its progeny as establishing that a UIM claim accrues on the date of the accident. The issue before us is whether we should abandon that interpretation of O’Neill-Weeks and adopt the position taken by a majority of jurisdictions that a cause of action for the recovery of UIM benefits accrues not when the injury occurs, but when the insurance contract has been breached. As recently as 1998, we declined to adopt that position. See Weeks, 580 N.W.2d at 27.

Although the O’Neill line of cases appears to establish a rule for accrual of UIM claims, there is another line of our cases that contradicts O’Neül-Weeks by holding that a claim for UIM benefits is not ripe until the underlying tort claim is resolved, either by settlement or judgment. We held that a UIM claimant is required to pursue his or her claim against the tortfeasor to settlement or judgment before seeking UIM benefits from the underinsurer. See Employers Mut. Cos. v. Nordstrom, 495 N.W.2d 855, 858 (Minn.1993). We reasoned that “denying claimants the option of proceeding first with an unmatured underinsurance claim [prior to the conclusion of the underlying tort claim] reduces the likelihood of underin-surance becoming primary coverage, which would be contrary to the designed role of underinsurance and to the underwriting principles on which it is written.” Id. We explained that: “[A] recovery from the tortfeasor’s liability insurance is a non-arbitrable condition precedent to bringing an underinsured claim. Until there has been a recovery from the tortfeasor’s insurer, the claimant’s underinsured claim simply has not matured.” Id. at 857. We held accordingly that, in order to preserve the rights of both the UIM claimant and the UIM carrier, the UIM claimant must first recover from the tortfeasor’s liability insurance before proceeding to arbitration on a UIM claim. See id. at 858. In Washington v. Milbank Ins. Co., 562 N.W.2d 801, 806 (Minn.1997), we reaffirmed that holding.

These contradictory lines of cases can put a UIM claimant in an untenable position. The O’Neill-Weeks line tells the claimant that her claim must be brought within six years of the accident causing injury. The Nordstrom line tells her that settlement or adjudication of an action against the tortfeasor is a condition precedent to bringing the UIM claim. But there is no guarantee that the Nordstrom condition precedent will occur before the O’Neill-Weeks six-year statute has run. The disharmony between these two rules of law makes it possible for the statute of limitations on the UIM claim to run, as it did in Johnson and in this case, before it is known whether the tortfeasor is actually underinsured, and therefore, before a UIM claim could have been brought. Since our decision in Weeks, this court has received a number of petitions for review calling our attention to the resulting unfairness to UIM claimants who have paid a premium for UIM coverage and have diligently pursued the tortfeasor, but who are denied the benefit of that coverage through the operation of the two rules.

At the time of our decision in Weeks, the court did not have before it, and therefore did not consider, the interplay between the rule that the statute of limitations for UIM claims begins to run on the date of the accident that caused the claimant’s injuries and the rule precluding a UIM claimant from proceeding with a claim until the underlying tort action has been resolved by settlement or judgment. In fact, our analyses in these two sets of cases has unfortunately proceeded as if on parallel but separate tracks that never intersect; neither line has been addressed in the consideration of the other. But the rules do intersect in real cases, and with potentially disastrous impact. This interplay between the two rules creates the possibility that the statute of limitations may run on a valid UIM claim before the claimant can determine whether the claim exists. That result is inconsistent with our sense of justice and one we cannot abide.

It has been suggested that this undesirable result can be avoided by the approach laid out by the court of appeals in Cattnach v. State Farm Insurance Co., 577 N.W.2d 251 (Minn.App.1998), rev. denied (Minn. June 17, 1998). The appellate court there suggested “that the Cattnachs could have commenced their UIM action within the six-year period and then requested that the trial be stayed until the tort action was either settled or litigated to completion.” Id. at 254. Although this solution provides a vehicle for both rules to remain viable, it does so at a cost. That cost is the invitation to bring litigation, including the attendant burden and expense placed on finite judicial resources as well as on the parties, for cases in which no justiciable controversy currently exists or may ever exist. We decline to extend such an invitation.

Respondent argues that stare de-cisis should preclude abandonment of the O’Neill-Weeks claim accrual rule. The doctrine of stare decisis directs that we adhere to former decisions in order that there might he stability in the law. See Naftalin v. King, 257 Minn. 498, 509, 102 N.W.2d 301, 308 (1960). At the same time, “stare decisis is not an inflexible rule of law but rather a policy of the law.” Johnson v. Chicago, Burlington & Quincy R.R. Co., 243 Minn. 58, 68, 66 N.W.2d 763, 770 (1954). Thus, while we are extremely reluctant to overrule our previous cases, stare decisis does not bind us to unsound principles. “[W]hen a rule, after it has been duly tested by experience, has been found to be inconsistent with the sense of justice or with the social welfare, there should be less hesitation in frank avowal and full abandonment.” Benjamin N. Cardozo, The Nature of the Judicial Process 150 (1921). An early California Supreme Court decision may have stated it best: “[T]he mere fact that an error has been committed is no reason or even apology for repeating it, much less, for perpetuating it.” Hart v. Burnett, 15 Cal. 530, 600-01 (1860). We concluded in Weeks that there was “no reason to abandon the rationale we adopted” in O'Neill. Weeks, 580 N.W.2d at 27. As explained above, a compelling reason is before us now and that reason is sufficient to override stare deci-sis concerns.

Accordingly, we reject the rule that a UIM claim accrues on the date of the accident that causes the injury. We overrule the O'Neill-Weeks line of cases to the extent that they articulate such a rule. We must now decide what is the appropriate alternative accrual event for UIM claims.

While we reject the ONeill-Weeks rule of claim accrual at the time of the accident because of its inconsistency with the Nord-strom rule and its potentially harsh consequences for UIM claimants, we are not unmindful of the concerns we articulated in ONeill and reiterated in Weeks that prompted us to adopt the date of the accident as the accrual date. Our concern in ONeill and Weeks was that, if the accrual date was the date of the breach of the insurance contract, that is, the date the claim was denied, the insured would be able to postpone the operation of the statute of limitations indefinitely. Consistent with this concern, we again decline to adopt the rule that commences the statute of limitations when the contract is breached.

We instead adopt a third option for the time a UIM claim accrues and the statute of limitations begins to run. This option is the date of settlement with or judgment against the tortfeasor. See Wheeler v. Nationwide Mut. Ins. Co., 749 F.Supp. 660, 662 (E.D.Pa.1990) (holding that a UIM claim accrues when insured’s rights have vested, which does not occur until the insured knows that the tortfeasor was an underinsured motorist; citing similar holding with regard to UM claim in Boyle v. State Farm Mut. Auto. Ins. Co., 310 Pa.Super. 10, 456 A.2d 156, 162 (1983)); see also North Carolina Ins. Guar. Ass’n v. State Farm Mut. Auto. Ins. Co., 115 N.C.App. 666, 446 S.E.2d 364, 369 (1994) (holding that the statute of limitations did not commence on UM claim until the tortfeasor’s insurance company was declared insolvent and the UM claimant was then “at liberty to sue”).

Using the date of settlement with or judgment against the tortfeasor as the accrual date for UIM claims is consistent with our Nordstrom decision. The UIM claim will accrue when the condition precedent to raising the UIM claim that we identified in Nordstrom has been satisfied, not before. The statute of limitations will not be triggered until the UIM claim becomes ripe, eliminating the possibility that the limitations period will have run before the claim could be brought.

Designating the date of settlement with or judgment against the tortfeasor as the accrual date for UIM claims is also consonant with our concern expressed in O’Neill and Weeks that the claimant not be enabled to forestall the commencement of the limitations period indefinitely by failing to assert the UIM claim. With the date of settlement or judgment as the accrual date, that cannot happen.

Adopting the date of settlement or judgment as the accrual date protects the interests of both the insured and the insurer. Therefore, we reverse the court of appeals and remand to the district court for further proceedings consistent with this opinion.

Reversed and remanded to the district court.

      . In Sargent, the court of appeals concluded that the language of the insurance policy at issue established a contractual accrual date ihat created an exception to the general rule that a UIM claim accrues at the time of the accident. 486 N.W.2d at 16.

      . Although these citations illustrate that other jurisdictions have applied the accrual rule we adopt to UM as well as UIM claims, the case before us involves only a UIM claim. There are differences between the two types of claims that may have a bearing on the appropriate accrual rule. For example, "[t]he condition precedent for bringing an uninsured motorist claim is different from the underin-sured claim. To bring an arbitration claim for [UM] benefits, the claimant does not have to recover first from the uninsured tortfeasor; the claimant need only show that the tortfea-sor was uninsured.” Nordstrom, 495 N.W.2d at 857 n. 4. Resolution of whether such differences warrant different rules of accrual must await a case that presents the issue in the context of a UM claim. Accordingly, our decision to adopt the date of settlement with or judgment against the tortfeasor as the accrual date for purposes of the running of the statute of limitations is limited to UIM claims.

      . We similarly adopted a rule that accommodated the interests of both the UIM claimant and the UIM insurer in Schmidt v. Clothier, 338 N.W.2d 256 (Minn.1983). In Schmidt, we endorsed a procedure by which a UIM claimant may settle her action against the tortfeasor for the ‘‘best settlement” without forfeiting her UIM benefits by giving notice of the settlement to the underinsurer, which may substitute its check for that of the tortfeasor’s liability insurance company. This process protects both the UIM claimant's ability to settle with the tortfeasor and also the UIM insurer's subrogation interest. The claim accrual rule we approve today is consistent with the Schmidt v. Clothier procedure.

      . Because of our resolution of the question presented with respect to the accrual date for UIM claims, we need not and therefore do not reach the question of whether the language of the Oanes’ insurance policy with Allstate created a contractual accrual date different from the O’Neill-Weeks rule.


source: Caselaw Access Project

author: PAUL H. ANDERSON, Justice.

license: Public Domain

text:
    STATE of Minnesota, Respondent, v. Ryan James REWITZER, petitioner, Appellant.
    No. C4-99-807.
    Supreme Court of Minnesota.
    Sept. 14, 2000.

      Bradford Colbert, Assistant State Public Defender, St. Paul, for appellant.
    Mike Hatch, Minnesota Attorney General, Thomas R. Ragatz, Assistant Attorney General, St. Paul, James R. Olson, Brown County Attorney, New Ulm, for respondent.
   OPINION

PAUL H. ANDERSON, Justice.

Ryan James Rewitzer pleaded guilty to controlled substance crimes in the second, third, and fifth degree for selling, in the course of three separate incidents, a total of 23.8 grams of marijuana and 20.5 grams of mushrooms containing psilocyn. The Brown County District Court then imposed a sentence of 48 months, together with fines and surcharges totaling $273,-600. Rewitzer subsequently filed a petition for postconviction relief with the district court, arguing that the fines violated the Excessive Fines Clauses of the United States and Minnesota Constitutions and that the court abused its discretion when imposing the fines. The postconviction court denied Rewitzer’s petition and the Minnesota Court of Appeals affirmed. We reverse.

In September 1997, the New Ulm police investigated appellant Ryan James Rewit-zer who, at that time, was 18 years old. The police were assisted in their investigation by a friend of Rewitzer’s, who purchased controlled substances from Rewit-zer on three occasions while under police surveillance. The friend purchased 23.8 grams of marijuana on September 10, 1997, 11 grams of mushrooms containing psilocyn on September 21, 1997, and 9.5 grams of mushrooms containing psilocyn on September 22, 1997. Following these transactions, the Brown County Attorney charged Rewitzer with (1) controlled substance crime in the fifth degree in violation of Minn.Stat. § 152.025, subd. 1(1) (1998), for selling the 23.8 grams of marijuana, (2) controlled substance crime in the third degree in violation of Minn.Stat. § 152.023, subd. 1(3) (1998), for selling the 9.5 grams of mushrooms, and (3) controlled substance crime in the second degree in violation of Minn.Stat. § 152.022, subd. 1(3) (1998), for selling the 11 grams of mushrooms.

In November 1997, Rewitzer pleaded guilty to the three charges under a plea agreement whereby the state agreed to recommend that his sentences for the three charged offenses be concurrent. Rewitzer, in turn, agreed that he would not contest civil forfeiture proceedings brought by the state to seize his safe, all his cash, and his 1987 Mazda RX7. The district court accepted Rewitzer’s plea, ordered a presentence investigation, and scheduled a sentencing hearing.

The presentence investigation report revealed that Rewitzer had no adult criminal record and three offenses on his juvenile record. The juvenile offenses were: (1) sale of a controlled substance in 1995, (2) discharge of a dangerous weapon in 1993, and (3) shoplifting in 1993. With regard to Rewitzer’s use of controlled substances, the report stated that he had attended treatment in the spring of 1995. The report further stated that when Rewitzer was asked why he did not stop abusing controlled substances after treatment he stated

that he doesn’t feel he has a chemical dependency problem because he didn’t actively use drugs. What he enjoyed the most was selling the drugs for money. He states he is very money oriented and that is why he had so much cash at home because he likes to feel the money in his hands and look at it and count it.

The corrections officer making the report recommended that Rewitzer be sentenced to serve concurrently a stayed sentence of 12 months and 1 day for the fifth-degree offense, a stayed sentence of 33 months for the third-degree offense, and an executed sentence of 48 months (with 32 months in prison and 16 months on supervised release) for the second-degree offense.

The presentence report noted that the minimum fines for controlled substance crimes in the fifth, third, and second degree are, respectively, $3,000, $75,000, and $150,000, Nevertheless, the corrections officer recommended that Rewitzer be fined the statutory minimum of $3,000 for the fifth-degree offense, a reduced fine of $7,000 for the third-degree offense, and a reduced fine of $10,000 for the second-degree offense.

At the sentencing hearing and prior to announcing the sentence, the district court stated:

I think the most telling thing in the Presentence Investigation report is when Mr. Rewitzer said that he doesn’t think he has a dependency problem because he didn’t actively use the drugs, what he enjoyed the most was selling the drugs for money. He likes the feel of money in his hands, to look at it and count it.
* * * [T]he fines, the mandatory fines are the people of Minnesota, through the legislature, telling people like you, Mr. Rewitzer, that you’re not going to make money from selling drugs. There are very significant financial penalties that go with this business of selling drugs, and that’s going to be your punishment for a lot longer than boot camp or even the prison sentence I impose; and that is a legislative issue, not a judicial issue. Those are mandatory minimum fines. They could be waived or reduced, it’s true; but a young man like you who has had all the advantages, all the support, all of the ability to earn money, you can help support this big machine that has to spend a lot of my taxpayer’s money and everybody in this room to try and catch people like you who want to profit from the sale of drugs ⅜ * *.

Following this statement, the district court sentenced Rewitzer to serve the length of time recommended in the presen-tence report. The court then determined the appropriate fines to impose. Under Minnesota statutes, the maximum fines allowed for controlled substance crimes in the fifth, third, and second degree are, respectively, $10,000, $250,000, and $500,000. See Minn.Stat. §§ 152.025, subd. 3(a); 152.023, subd. 3(b); 152.022, subd. 3(b) (1998). Minnesota Statutes § 609.101, subd. 3(a) (1998) states that “[njotwithstanding any other law, when a court sentences a person convicted of a controlled substance crime * ⅜ *, it must impose a fíne of not less than 30 percent of the maximum fine authorized by law

Using this statutory formula to arrive at the minimum fines for Rewitzer’s offenses, the court imposed a $3,000 fine for the fifth-degree offense, a $75,000 fine for the third-degree offense, and a $150,000 fine for the second-degree offense. These fines totaled $228,000. In addition to these fines, the court imposed $45,600 in surcharges pursuant to Minn.Stat. § 609.101, subd. 1(a) (1996). Rewitzer’s fines and surcharges totaled $273,600.

In February 1999, Rewitzer brought a postconviction petition asking the district court to vacate or decrease the fines imposed, or stay a portion of the fines. The postconviction court denied the petition, stating:

Sentencing courts have been under a great deal of pressure and criticism for not following the sentencing mandate through the Minnesota legislature. Although this court firmly believes that the sentencing court should have discretion to tailor a sentence to fit the crime and the particular defendant, it seems beyond the belief of this court, which is also the sentencing court, that the court could be found to have abused its discretion and/or to have violated the constitution by following the statutory mandate.

Rewitzer filed an. appeal with the court of appeals, arguing that the $273,600 in fines imposed by the district court violated the Excessive Fines Clauses of the United States and Minnesota Constitutions. The court of appeals affirmed, holding that these fines were not excessive. The court of appeals reasoned that while the district court may reduce fines under Minnesota Statutes, it is not required to do so. See State v. Rewitzer, 1999 WL 1216598, at *2 (Minn.App. Dec.21, 1999). The court of appeals noted that the district court “carefully scrutinized [Rewitzer’s] previous criminal history and his strong financial motivation for selling drugsf,] * * * did not credit [Rewitzer’s] promise to reform, and found that previous judicial leniency had done nothing to rehabilitate him.” Id. The court of appeals reasoned that the fines were “proportionately severe” because drugs are one of the greatest problems in the United States, and the gravity of the offenses was increased by Rewit-zer’s profit motive, enjoyment of earning money by selling drugs, recidivism, and regularity in his drug dealing. Id. at *2-3. The court further reasoned that the $273,600 in fines and surcharges do not impose any immediate hardship because Rewitzer is paying the amount in monthly installments of $70 and because he is young, employed, and has long-term future earning potential. See id. at *3. On appeal to this court, Rewitzer again argües that the fines imposed by the district court violate the Excessive Fines Clauses of the United States and Minnesota Constitutions. After receiving Rewitzer’s brief, the state moved to strike material in the brief and appendix. We did not dispose of this motion prior to oral argument.

I.

We first address the state’s motion to strike. The state argues that certain documents in Rewitzer’s brief and appendix are outside the record on review and should not be considered. The challenged material refers to and contains various Minnesota and federal sentencing statistics. These statistical compilations are public record and the state did not contest the submission of similar-material in the courts below. As we previously stated in In re Estate of Turner, “we see no reason why a party may not submit * * * a report to us as part of its brief when we could refer to such a report in the course of our own research, if we were so inclined.” 391 N.W.2d 767, 771 (Minn.1986). Accordingly, the state’s motion to strike is denied.

II.

We begin our analysis of the substantive issue that Rewitzer raises by noting that it is necessary to address this issue in two steps. First, we review Minn.Stat. § 609.101, subd. 3(a), the statute upon which the district court relied in imposing the contested fines, to determine whether it is constitutional on its face. Second, if the statute is constitutional on its face, then we focus our review on how the district court applied section 609.101, subd. 3(a) in order to determine whether such application was constitutional.

When we subject the fines in this case to an Excessive Fines Clause analysis, we must first decide whether section 609.101, subd. 3(a) establishes mandatory minimum fines for controlled substance offenses. In considering Rewitzer’s petition for postconviction relief, the district court implied there could be no abuse of discretion in imposing the contested fines because the fines were legislatively mandated mínimums. Likewise, the court of appeals and the state also classify the fines as “mandatory mínimums.” In contrast, Rewitzer does not characterize the fines as mandatory mínimums. Rather, he argues that section 609.101, subd. 3(a) was unconstitutionally applied.

As previously noted, Minnesota statutes establish maximum fines for controlled substance crimes. See, e.g., Minn.Stat. §§ 152.025, subd. 3(a); 152.023, subd. 3(b); 152.022, subd. 3(b). Section 609.101, subd. 3(a) further provides that “[n]otwithstand-ing any other law, when a court sentences a person convicted of a controlled substance crime * ⅜ ⅜, it must impose a fine of not less than 30 percent of the maximum fine authorized by law * * However, Minn.Stat. § 609.101, subd. 5(b) (1997 Supp.) also provides:

If the defendant qualifies for the services of a public defender or the court finds on the record that the convicted person is indigent or that immediate payment of the fine * ⅞ * would create undue hardship for the convicted person or that person’s immediate family, the court may reduce the amount of the minimum fine to not less than $50.

This language demonstrates that while the aforementioned controlled substance offenses carry minimum fines, the district court has broad discretion to impose significantly lower fines if it makes specific findings that immediate payment of the fine would create undue hardship for the convicted person. See Minn.Stat. § 609.101, subd. 5(b). Thus, even though section 609.101, subd. 3(a) purports to mandate minimum fines, the apparent strictness of that direction is obviated by subdivision 5(b), which permits courts to reduce the fine to not less than $50. We conclude that it is a misnomer to refer to the minimum fines suggested in section 609.101, subd. 3(a) as “mandatory minimums,” and therefore the statute does not on its face violate the Excessive Fines Clauses of either the United States or Minnesota Constitutions.

III.

Having concluded that section 609.101, subd. 3(a) does not establish mandatory minimum fines, we must direct our review to whether the district court’s application of the statute violated the Excessive Fines Clauses. Resolution of this issue requires interpretation of a constitutional provision. See U.S. Const, amend. VIII; Minn. Const, art. I, § 5. This raises a legal question that we review de novo. See In re Blilie, 494 N.W.2d 877, 881 (Minn.1993); State Farm Ins. Cos. v. Seefeld, 481 N.W.2d 62, 64 (Minn.1992).

Both the United States and Minnesota Constitutions protect individuals from excessive fines. See U.S. Const, amend. VIII; Minn. Const, art. I, § 5. We have stated that “[a] large discretion is necessarily vested in the legislature to impose penalties sufficient to prevent the commission of an offense, and it would have to be an extreme case to warrant the courts in holding that the constitutional limit has been transcended.” State v. Rodman, 58 Minn. 393, 402, 59 N.W. 1098, 1100 (1894); see also State v. Moilen, 140 Minn. 112, 115, 167 N.W. 345, 346 (1918). Aside from these general comments regarding legislative discretion, we have never substantively applied the Excessive Fines Clause. Therefore, the issue presented here is one of first impression for our court.

Similarly, for many years, the most that the United States Supreme Court did was to define the Excessive Fines Clause as a limit on government power to “extract payment, whether in cash or in kind, ‘as punishment for some offense.’ ” Austin v. United States, 509 U.S. 602, 609-10, 113 S.Ct. 2801, 125 L.Ed.2d 488 (1993) (quoting Browning-Ferris Indus. v. Kelco Disposal, 492 U.S. 257, 265, 109 S.Ct. 2909, 106 L.Ed.2d 219 (1989) (emphasis added)). More recently, however, the Supreme Court applied the Excessive Fines Clause in United States v. Bajakajian, 524 U.S. 321, 327, 118 S.Ct. 2028, 141 L.Ed.2d 314 (1998). Accordingly, we look to Bajakaji-an for guidance on how to apply the Excessive Fines Clause in this case.

In June 1994, Hosep Bajakajian was leaving the United States from the Los Angeles International Airport when customs inspectors discovered that he was carrying $357,144 in currency. See id. at. 324, 118 S.Ct. 2028. Bajakajian was charged with violating a federal statute requiring that persons transporting more than $10,000 in currency from the United States report that they are doing so. See Bajakajian, 524 U.S. at 325, 118 S.Ct. 2028 (citing 31 U.S.C. § 5316(a)(1)(A) (1994)). Federal statutes further provided that “[t]he court, in imposing sentence on a person convicted of an offense in violation of section * 5316, * shall order that the person forfeit to the United States any property, real or personal, involved in such offense * See Bajakajian, 524 U.S. at 325, 118 S.Ct. 2028 (quoting 18 U.S.C. § 982(a)(1) (1994)). Therefore, the federal grand jury indicted Bajakajian on a separate count seeking forfeiture of the $357,144 seized from him. See id.

Bajakajian pleaded guilty to the first count, and a bench trial was held on the separate count seeking forfeiture, after which the district court found that the entire amount of $357,144 was subject to forfeiture because it was “involved in” the offense. Id. at 325-26, 118 S.Ct. 2028. However, the court went on to determine that full forfeiture would be “extraordinarily harsh,” “grossly disproportionate to the offense in question,” and therefore would violate the Excessive Fines Clause. Id. at 326, 118 S.Ct. 2028. Accordingly, the court ordered forfeiture of $15,000, three years probation, and a $5,000 fine. See id.

On appeal, the Ninth Circuit Court of Appeals affirmed, holding that the forfeiture statute violated the Excessive Fines Clause. See id. at 327, 118 S.Ct. 2028. The Supreme Court granted certiorari. See id. After concluding that a forfeiture constituted a fine for the purposes of the Excessive Fines Clause, the Court acknowledged that it had not previously articulated a standard for determining whether a fine is excessive. See id. at 334, 118 S.Ct. 2028. However, the Court stated that “[t]he touchstone of the constitutional inquiry under the Excessive Fines Clause is the principle of proportionality: The amount of the forfeiture must bear some relationship to the gravity of the offense that it is designed to punish.” Id. (citing Austin, 509 U.S. at 622-23, 113 S.Ct. 2801).

The Supreme Court then formulated a standard for evaluating the constitutionality of a fine under the Excessive Fines Clause by relying on its case law interpreting the Cruel and Unusual Punishments Clause. See Bajakajian, 524 U.S. at 336, 118 S.Ct. 2028. Specifically, the Court adopted the standard of gross dispropor-tionality as articulated in Solem v. Helm, 463 U.S. 277, 288, 103 S.Ct. 3001, 77 L.Ed.2d 637 (1983), and held that a fine is unconstitutionally excessive if it is grossly disproportional to the gravity of the offense. See Bajakajian, 524 U.S. at 336, 118 S.Ct. 2028. In Solem, the Court provided three factors to consider in determining proportionality. (1) the gravity of the offense and the harshness of the penalty, (2) comparison of the contested fine with fines imposed for the commission of other crimes in the same jurisdiction, and (3) comparison of the contested fine with fines imposed for commission of the same crime in other jurisdictions. See Solem, 463 U.S. at 290-92, 103 S.Ct. 3001.

Applying this test to the facts before.it in Bajakajian, the Supreme Court first noted that Bajakajian’s offense was purely a reporting offense. See Bajakajian, 524 U.S. at 337, 118 S.Ct. 2028. Therefore, Bajakajian could have transported the money legally if he had reported it. See id. The Court further noted that Bajaka-jian’s violation was not related to any other illegal activity and that, under the Federal Sentencing Guidelines, the maximum fine was $5,000. See id. at 338, 118 S.Ct. 2028. Finally, the Court concluded that the harm to the government was minimal. See id. at 339, 118 S.Ct. 2028. The Court therefore held that full forfeiture of the $357,144 would violate the Excessive Fines Clause. See id. at 344,118 S.Ct. 2028.

Under the Supreme Court’s decision in Bajalcajian, we must examine the Solem factors in order to determine whether the district court violated the Excessive Fines Clause when it imposed the fines against Rewitzer. The district court assessed fines and surcharges against Rewitzer in the amount of $273,600 for three controlled substance crimes. This amount was comprised of fines of $3,000, $75,000, and $150,000 for the fifth-, third-, and second-degree offenses, respectively. The amount also included $45,600 in surcharges.

The first Solem factor compares the gravity of the offense with the severity of the fine. The court of appeals, in holding that the contested fines were not excessive, relied almost exclusively on the Supreme Court’s recognition that drug offenses pose a serious threat to individuals and society. See Rewitzer, 1999 WL 1216598, at *2. More specifically, the court of appeals stated that drug use and distribution is one of the greatest problems affecting the health and welfare of our population. Id. Both the district court and the court of appeals also relied on certain aggravating factors, including Rew-itzer’s juvenile record and his profit motive. Id. at *3. While we concur with the Supreme Court’s recognition that drug offenses are serious, the Excessive Fines Clause limits the amount of punishment that can be meted out for these offenses. We note that the fines and surcharges imposed on Rewitzer were 1,368 times greater than the value of the drugs involved. We further note that at Rewit-zer’s current rate of repayment, it will be well over 300 years before his fines are paid off. These disparities, at a minimum, suggest a lack of proportionality in Rewit-zer’s sentence.

The second Solem factor compares Rew-itzer’s fines with fines imposed for the commission of other crimes in Minnesota. Our discussion of this factor begins with Rewitzer’s least serious offense. Minnesota Sentencing Guidelines classify controlled substance crimes in the fifth degree as a level 2 offense. See Minn.Stat. Ann. § 244 app. at 556 (West 1998). Numerous other crimes are classified as level 2 offenses, all of which have statutorily prescribed maximum fines. See generally id. at 555-65. Most level 2 offenses carry maximum fines of $10,000. See, e.g., Negligent Fires — Damage Exceeds $10,000, MinmStat. § 609.576, subd. 1(b)(3) (1996) .($5,000 maximum fine); Defeating Security on Realty — $2,500 or less, Minn.Stat. § 609.615 (1996) ($10,000 maximum fine); Check Forgery — $200-$2,500, Minn.Stat. § 609.631, subd. 4(3)(a) (1996) ($10,000 fine).

Minnesota statutes provide a maximum $250,000 fine for a third-degree controlled substance crime and a maximum $500,000 fine for a second-degree controlled substance crime. See Minn.Stat. §§ 152.023, subd. 3(b); 152.022, subd. 3(b). Under Minnesota Sentencing Guidelines, these offenses are classified, respectively, as a level 6 offense and a level 7 offense. See MinmStat. Ann. § 244 app. at 556. Of the other offenses classified as level 7, the highest maximum fine is $50,000 for unsafe release during a kidnapping. See id. at 559; Minn.Stat. § 609.25, subd. 2(2) (1998). The maximum fines for the other level 7 offenses range from $20,000 to $35,000. Therefore, the fines imposed on Rewitzer were substantially higher than the fines authorized for other similarly ranked offenses.

The third and final Solem factor compares the contested fines with fines imposed for commission of the same crimes in other jurisdictions. Under Federal Sentencing Guidelines, Rewitzer’s offenses are level 6 offenses. See U.S. Sentencing Guidelines Manual § 2D1.1 (1998). The recommended fine for a level 6 offense is between $500 and $5,000. See id. § 5E1.2. Under this recommended range, the most that Rewitzer could have been fined for his three offenses was $15,000. See id. Further, in examining the sentencing statutes for similar drug offenses in other states, we have determined that most states do not impose mandatory minimum fines and have maximum fines that are less than the fines imposed here.

Based on our analysis of the Solem factors, we conclude that the fines and surcharges that the district court imposed on Rewitzer were disproportionately harsh when compared with (1) the gravity of his offenses, (2) the fines that can be imposed for other same-level offenses in Minnesota, and (3) the fines imposed for the same offenses in other jurisdictions. We also conclude that these fines and surcharges create an undue hardship for Rewitzer. See Minn.Stat. § 609.101, subd. 5(b). Therefore, we hold that the district court improperly sentenced Rewitzer because the fines and surcharges imposed by the court violated the Excessive Fines Clauses of the United States and Minnesota Constitutions.

Reversed and remanded for proceedings consistent with this opinion.

      . At the time of the plea agreement, Rewit-zer's Mazda was worth approximately $2,400 and he had approximately $2,000 in his checking and savings account. At sentencing, Rewitzer's attorney clarified that the checking and savings accounts had been closed, with the contents having been spent for attorney fees.

      . After his sentencing, Rewitzer was accepted into the Challenge Incarceration Program, which is also referred to as "boot camp.” After being released from prison, he began working at a job that paid $8.00 an hour.

      . Minnesota Statutes § 609.101, subd. 1(a) has since been repealed. See Act of Apr. 6, 1998, ch. 367, Art. 8, § 26, 1998 Minn. Laws 756. Subdivision 1 provided that if a sentence for a felony "includes payment of a fine of any amount, including a fine of less than $100, the court shall impose a surcharge on the fine of 20 percent of the fine.” Minn.Stat. § 609.101, subd. 1 (1996).

      . According to the Minnesota Bureau of Criminal Apprehension, one pound of marijuana generally sells for between $800 and $3,000 and one pound of mushrooms is worth approximately $1,000. Rewitzer was convicted for selling 23.8 grams of marijuana and a total of 20.5 grams of mushrooms. Therefore, the street value of the drugs sold in this case was most likely less than $200.

      . See generally Minn.Stat. Ann. § 244 app. at 555-65. Level 7 offenses include: Minn.Stat. §§ 609.20(3)-(4) (first-degree manslaughter); 609.205(1) (second-degree manslaughter-culpable negligence); 609.21, subds. l(l)-(2), 3(l)-(2) (criminal vehicular homicide and injury-death); 609.228 (great bodily harm caused by drug distribution); 609.245 (aggravated robbery); 609.25, subd. 2(2) (kidnapping-unsafe release); 609.2664(3) (first-degree manslaughter of an unborn child); 609.2665(1) (second-degree manslaughter of an unborn child); 609.343, subd. 1 (c)-(i), (h), subd. 2 (second-degree criminal sexual conduct); 609.344, subd. l(c)-(d), (g)-(k), subd. 2 (third-degree criminal sexual conduct); 609.377 (malicious punishment of a child— great bodily harm); 609.487, subd. 4(a) (fleeing police officer resulting in death); 609.561 (first-degree arson); 609.582, subd. l(b)-(c) (first-degree burglary with weapon or assault) (1998).

      . Minnesota sentencing statistics indicate that in the year Rewitzer was sentenced, 2,127 defendants were sentenced for felony level drug offenses. Approximately 33 percent of these defendants were not fined, and fewer than 40 defendants received a fine in excess of $50,000. Only three defendants received fines greater than $100,000, one of which was later stayed. Both of the two remaining defendants, including Rewitzer, were sentenced by the same district court judge.


author: K.A. Blatz Chief Justice

text:
    Renee A. BARLAU, Relator, v. PRUDENTIAL INSURANCE COMPANY, et al., Respondents.
    No. C8-00-1174.
    Supreme Court of Minnesota.
    Oct. 2, 2000.
    Duane E. Arndt, Kathryn K Smith, Arndt & Benton, P.A., Minneapolis, for relator.
    Kenneth B. Huber, John G. Ness & Associates, Minneapolis, for respondents.
   ORDER

Based upon all the files, records and proceedings herein,

IT IS HEREBY. ORDERED that the decision of the Workers’ Compensation Court of Appeals filed June 14, 2000, be, and the same is, affirmed without opinion. See Minn. R. CivApp. P. 136.01, subd. 1(b).

BY THE COURT:

K.A. Blatz Chief Justice


author: Paul H.Anderson Associate Justice

text:
    Dale SOLEM, Relator, v. COLLEGE OF ST. SCHOLASTICA, Self-Insured/Administered by Berkley Administrators, Respondent, and Blue Cross/Blue Shield of Minnesota, Duluth Building Trades Health and Welfare Fund, Intervenors.
    No. C3-00-1177.
    Supreme Court of Minnesota.
    Oct. 3, 2000.
    Robert C. Falsani, Eric W. Beyer, Fal-sani, Balmer, Peterson & Quinn, Duluth, for Relator.
    James A. Wad, Johnson, Killen & Seiler, P.A., Duluth, for respondent-intervenors.
   ORDER

Based upon all the files, records and proceedings herein,

IT IS HEREBY ORDERED that the decision of the Workers’ Compensation Court of Appeals filed June 27, 2000, be, and the same is, affirmed without opinion. See Minn. R. CivApp. P. 136.01, subd. 1(b).

BY THE COURT:

Paul H.Anderson Associate Justice


author: Alan C. Page Associate Justice

text:
    In Re Petition for DISCIPLINARY ACTION AGAINST Kelly P. CALLAHAN, an Attorney at Law of the State of Minnesota.
    No. C4-00-1608.
    Supreme Court of Minnesota.
    Oct. 5, 2000.
   ORDER

The Director of the Office of Lawyers Professional Responsibility has filed a petition for disciplinary action alleging that respondent Kelly P. Callahan committed professional misconduct warranting public discipline. Specifically, the petition alleges that respondent neglected a client family’s personal injury cases, failed to respond to discovery, failed to appear at a motion hearing, and failed to communicate information about the hearing to his clients; neglected another client’s personal injury case, failed to settle or initiate a lawsuit within the statutory limitations period, and failed to communicate with the client; and failed to cooperate with the disciplinary investigation for eight months and misled the Director regarding the second neglected personal injury case. The alleged misconduct violates Minn. R. Prof. Conduct 1.1, 1.3, 1.4, 3.2, 8.1(a)(1), 8.1(a)(3), and 8.4(d).

Respondent admits the facts stated in the petition and admits his conduct violated the Rules of Professional Conduct, waives his rights pursuant to Rule 14, Rules on Lawyers Professional Responsibility (RLPR), and has entered into a stipulation with the Director wherein they jointly recommend that the appropriate discipline is an indefinite suspension from the practice of law and payment of $900 in costs pursuant to Rule 24, RLPR.

This court has independently reviewed the file and approves the jointly recommended disposition.

IT IS HEREBY ORDERED that respondent Kelly P. Callahan is immediately indefinitely suspended from the practice of law and must pay $900 in costs pursuant to Rule 24, RLPR. Respondent may petition for reinstatement at any time, but shall comply with the petition and hearing provisions of Rule 18(a) through (d), RLPR. Respondent shall also successfully complete the professional responsibility portion of the bar examination and satisfy the continuing legal education requirements, both pursuant to Rule 18(e), RLPR, before he may be reinstated.

BY THE COURT:

Alan C. Page Associate Justice


author: LANSING, Judge

text:
    STATE of Minnesota, Respondent, v. Michael James COOK, Appellant.
    No. C6-00-458.
    Court of Appeals of Minnesota.
    Sept. 12, 2000.
    Review Denied Nov. 21, 2000.

      Mike Hatch, Attorney General, Robert A. Stanich, Assistant Attorney General, St. Paul, and Patrick A. Oman, Mower County Attorney, Austin, for respondent.
    John M. Stuart, State Public Defender, Cathryn Y. Middlebrook, Assistant Public Defender, Minneapolis, for appellant.
    Considered and decided by LANSING, Presiding Judge, SCHUMACHER, Judge, and KLAPHAKE, Judge.
   OPINION

LANSING, Judge

Michael Cook appeals from his sentence for a criminal-sexual-conduct conviction, asserting that the district court erred by imposing a ten-year conditional release period under Minn.Stat. § 609.109, subd. 7 (1998). The district court did not err by imposing the statutory ten-year conditional release, and we affirm Cook’s sentence.

FACTS

In December 1996, Michael Cook’s stepdaughter reported that he had been sexually abusing her. Following an investigation, the state charged Cook with two counts of first-degree criminal sexual conduct under Minn.Stat. § 609.342, subd. 1(1) (1996), and one count of second-degree criminal sexual conduct under Minn.Stat. § 609.343, subd. 1(a) (1996). On October 9, 1998, pursuant to a plea agreement, Cook pleaded guilty to fourth-degree criminal sexual conduct under Minn.Stat. § 609.345, subd. 1(b) (1996).

The court sentenced Cook to 36 months, followed by a ten-year conditionál release because he had a prior 1988 conviction for intrafamilial sexual abuse under a now-repealed statute. On January 6, 2000, Cook moved for a sentencing correction under Minn. R.Crim. P. 27.03, which provides that the court may at any time correct a sentence that is not authorized by law. Cook asserted that the ten-year conditional-release period was not authorized by Minn.Stat. § 609.109, subd. 7 (1998), because his prior 1988 conviction did not qualify to increase the conditional-release period to ten years. The court denied Cook’s motion, and this appeal followed.

ISSUES

I. Did the district court err by imposing a ten-year conditional release under Minn.Stat. § 609.109, subd. 7 (1998), based on Cook’s prior conviction under Minn.Stat. § 609.3642 (repealed 1985)?
II. Does Cook state a cognizable claim for relief from the conditions of his confinement?

ANALYSIS

The district court has jurisdiction at any time to correct a sentence that is not authorized by law. Minn. R.Crim. P. 27.03, subd. 9. A motion for correction is addressed to the district court’s discretion and will be reversed on appeal only when discretion is not properly exercised and the sentence is unauthorized by law. State v. Stutelberg, 435 N.W.2d 632, 633-34 (Minn.App.1989); see also United States v. Kadota, 757 F.2d 198, 199 (8th Cir.1985), cert. denied, 474 U.S. 839, 106 S.Ct. 120, 88 L.Ed.2d 98 (1985) (identifying standard for review as abuse of discretion in appeal from denial of motion under Fed.R.Civ.P. 35, the federal counterpart to Minn. R.Crim. P. 27.03, subd. 9). A criminal sentence that is contrary to the requirements of the applicable sentencing statute is unauthorized by law. State v. Humes, 581 N.W.2d 317, 319 (Minn.1998).

I

A court sentencing a person for conviction of certain sex crimes must also place that person on conditional release following completion of the sentence. Minn.Stat. § 609.109, subd. 7 (1998). The length of the conditional-release period depends upon the number and nature of any prior convictions:

[W]hen a court sentences a person to prison for a violation of section 609.342, 609.343, 609.344, or 609.345, * * * the person shall be placed on conditional release for five years * * * *. If the person was convicted for a violation of one of those sections a second or subsequent time, * * * the person shall be placed on conditional release for ten years ⅜ * * *.

Id.; see Humes, 581 N.W.2d at 319 (holding that conditional release is mandatory under statute).

Now codified in the sentencing section of the criminal statutes, the identical conditional-release requirement was codified in the criminal-sexual-conduet sections before 1998. See Minn.Stat. § 609.346, subd. 5 (1996) (repealed by 1998 Minn. Laws ch. 367, art. 6, § 16). The conduct underlying (look’s conviction was reported in 1996, and thus conditional release should have been imposed under Minn.Stat. § 609.346, subd. 5, instead of its successor,' Minn.Stat. § 609.109, subd. 7. But both. Cook and the district court addressed the issue with reference to section 609.109, subdivision 7, and, because the 1998 recodification effected no substantive change, we refer to section 609.109, subdivision 7, as well.

The district court found that Cook’s prior conviction for intrafamilial sexual abuse under section 609.3642 (repealed 1985) increased the length of the conditional-release period to ten years. Cook maintains that because this prior conviction is not specifically enumerated in this statute, his current conviction is his “first” under this statute and the five-year conditional-release period applies.

Our analysis begins with the history of these interrelated statutes. Before 1985, the Minnesota Statutes treated intrafamilial sexual abuse separately from criminal sexual conduct that did not involve a familial relationship. See Minn.Stat. §§ 609.364-.3644 (1984) (proscribing first-through fourth-degree intrafamilial sexual abuse). In 1985, the legislature repealed the intrafamilial-sexual-abuse statutes. 1985 Minn. Laws ch. 286, § 24. .At the same time, the legislature added penalties to the criminal-sexual-conduct statutes for sexual penetration or sexual contact by an actor who has a significant relationship to the complainant. 1985 Minn. Laws ch. 286, §§ 14-18 (currently codified at Minn. Stat. § 609.341-.345 (1998)). Significant relationships include parent-child and stepparent-child relationships. Minn.Stat. § 609.341, subd. 15 (1998). The legislature stated that the purpose of the amendments was to merge the crimes of intrafamilial sexual abuse and criminal sexual conduct. 1985 Minn. Laws ch. 286 (preamble); State v. Robinson, 476 N.W.2d 896, 900 (Minn.App.1991), aff'd as modified, 480 N.W.2d 644 (Minn.1992).

In State v. Robinson, this court held that a conviction under the repealed intra-familial-sexual-abuse statute constituted a “previous sex offense conviction[ ] under section 609.342, 609.343, or 609.344” and thus triggered a mandatory 37-year minimum sentence under Minn.Stat. § 609.346, subd. 2a (Supp.1989). 476 N.W.2d at 900. The court reasoned that the offenses of the intrafamilial-sexual-abuse statute had been merged into the criminal-sexual-conduct statute; that statutes concurrently repealed and reenacted without substantial amendment are construed as continued in active operation; and that “[a]ll rights and liabilities incurred under the earlier law are preserved and may be enforced.” Id. (citing Minn.Stat. § 645.37 (1990)). Thus, the court concluded that convictions under Minn.Stat. § 609.3642, just as convictions under sections 609.342-.344, triggered the mandatory minimum. Id.

The sentencing issue in Robinson is parallel to the sentencing issue in this case and the same rationale should apply. Thus we hold that Cook’s conviction for intrafamilial sexual abuse under Minn.Stat. § 609.3642 triggers the ten-year conditional-release period of Minn.Stat. 609.109, subd. 7. Although Minn.Stat. § 609.109, subd. 7, does not include a specific reference to MinmStat. § 609.3642, the conduct underlying such a conviction is now proscribed by sections that are enumerated. The legislature merged section 609.3642, without interruption, into the criminal-sexual-conduct statutes and expressed its intent that convictions under the former statute should be treated as convictions under the successor criminal-sexual-conduct statutes! To otherwise construe the statute would promote an absurd result because prior convictions for intrafamilial sexual abuse under the amended criminal-sexual-conduct statute would trigger the ten-year conditional release, but convictions for the same conduct under the old intrafamilial-sexual-abuse statute would not. See Minn.Stat. § 645.17(1) (1998) (legislature does not intend an absurd result).

Cook argues that interpreting section 609.109, subdivision 7, to exclude prior convictions under section 609.3642 does not promote an absurd result, but rather enforces a legislative intent to impose a time limit for convictions to trigger the ten-year conditional-release period. We are not persuaded by this argument. First, there is no rationale for interpreting the statute to impose a time limit on intrafamilial-sexual-abuse convictions but not on other criminal-sexual-conduct convictions. Further, under Cook’s construction of the statute, the age of prior convictions that could trigger the ten-year conditional-release period would change every year. For instance, in 1986, one year after the intra-familial-sexual-abuse offense was merged into the criminal-sexual-conduct statutes, only convictions less than one year old could trigger the ten-year conditional-release period. But now, 15 years after the merger, convictions up to 15 years old would trigger the same conditional-release period. There is no evidence that this was the legislature’s intent.

II

Cook also challenges, by pro se supplemental brief, the conditions of his incarceration. The state has moved this court to strike Cook’s brief, arguing that it contains material outside the record. The record on appeal consists of “papers filed in the trial court, the offered exhibits, and the transcript of the proceedings, if any.” Minn. R.Crim. P. 28.02, subd. 8. Cook’s brief deals entirely with conditions of his incarceration that were not part of the sentencing record. Thus, we grant the state’s motion to strike Cook’s supplemental brief.

Even if we considered the material, however, Cook has not stated a cognizable claim for relief from this court. Cook asserts that a public risk monitoring program has prevented him from obtaining work-release status and that his participation in that program was not included in his sentence. But the Commissioner of Corrections, not the sentencing court, is responsible for determining the conditions of a prisoner’s incarceration. See Minn. Stat. § 609.105, subd. 2 (1998) (providing that Commissioner shall “prescribe reasonable conditions and rules for [prisoners’] employment, conduct, instruction, and discipline within or without the facility”); State v. Burdick, 355 N.W.2d 176, 178 (Minn.App.1984) (holding that sentencing court does not have authority to require chemical dependency program during incarceration). Cook has not alleged that the Commissioner has exceeded statutory authority or that the Commissioner’s decision to impose public risk monitoring violates Cook’s constitutional or statutory rights. Cf. Nicolaison v. Erickson, 425 N.W.2d 597, 598-99 (Minn.App.1988) (holding that Corrections policy denying a prisoner a work assignment did not violate the Minnesota constitution or statutes), review denied (Minn. Aug. 24,1988).

DECISION

Because a conviction under the former intrafamilial-sexual-abuse statute, Minn. Stat. § 609.3642 (repealed 1985), does trigger a ten-year conditional-release period under Minn.Stat. § 609.109, subd. 7 (1998), the district court did not err by imposing the ten-year conditional release as part of Cook’s sentence, and we accordingly affirm the sentence.

Affirmed; motion granted.


author: HALBROOKS, Judge

text:
    Jesse Lee BROWN and Ronald J. Bergeron on behalf of themselves and all others similarly situated, et al., Appellants, v. The STATE of Minnesota, Respondent.
    No. C6-00-587.
    Court of Appeals of Minnesota.
    Sept. 19, 2000.
    Review Denied Nov. 21, 2000.

      John A. Cochrane, Cochrane & Bresna-han, St. Paul, MN; and Hugh V. Plunkett, III, Robert K. Shelquist, Plunkett, Schwartz, Peterson, P.A., Minneapolis, MN; and Ronald I. Meshbesher, Anthony J. Nemo, Meshbesher <& Spence, Ltd., Minneapolis, MN (for appellants).
    Mike Hatch, Attorney General, Patricia A. Sonnenberg, Assistant Attorney General, St. Paul, MN; and Michael V. Ciresi, Roberta B. Walburn, Gary L. Wilson, Robins, Kaplan, Miller & Ciresi, L.L.P., Minneapolis, MN (for respondent).
    Considered and decided by RANDALL, Presiding Judge, HARTEN, Judge, and HALBROOKS, Judge.

       PAGE, GILBERT, JL, took no part in the consideration or decision of this case.

   OPINION

HALBROOKS, Judge

Appellants challenge the district court’s granting of respondent’s motion to dismiss their declaratory judgment class action for failure to state a claim. They also challenge the district court’s imposition of sanctions in this case. Because the district court did not err in dismissing the action but did abuse its discretion in imposing sanctions, we affirm the dismissal and reverse the imposition of sanctions.

FACTS

This litigation arises in the aftermath of the State of Minnesota’s (“state”) multi-billion-dollar settlement of its claims against multiple entities involved in the manufacturing and marketing of cigarettes (“tobacco defendants”). The state asserted several causes of action against the tobacco defendants including various antitrust and consumer fraud claims. The state and the tobacco defendants settled the case on May 18, 1998, after all of the evidence had been introduced at trial but before the case went to the jury. As a result of the settlement, the tobacco defendants agreed to pay the state approximately $6.17 billion. The tobacco defendants agreed to pay $1.31 billion in periodic payments between September 1998 and January 2003, as well as an estimated $4.8 billion in future payments.

On July 17,1998, appellants filed a class-action lawsuit in Hennepin County District Court seeking a declaratory judgment and a portion of the settlement proceeds. The putative class representatives represent approximately 70,000 Minnesota residents who allege to have suffered smoking-related illnesses for which the state paid medical expenses under the state’s medical-assistance and general-assistance programs. Appellants contend that, although they did not pay for the medical expenses they incurred, the medical-assistance and general-assistance statutes provide that any third-party liability claim is “shared” or jointly owned by appellants and the state. Both parties agree that the settlement precludes individual medical-assistance and general-assistance recipients from asserting claims against the tobacco defendants for state-paid medical expenses. Appellants contend, however, that they are entitled to a share of the settlement proceeds obtained by the state. This claim is based on the fact that the medical-assistance and general-assistance statutes contain formulae to be used to allocate recoveries from third parties between the state and individual recipients for claims brought pursuant to those statutes.

The state filed a motion to dismiss appellants’ complaint for failure to state a claim upon which relief could be granted and a motion for sanctions. Appellants opposed these motions and filed a motion for partial summary judgment. The district court heard arguments on all of the motions and filed an order granting the state’s motion to dismiss appellants’ complaint, granting the state’s motion for sanctions, and denying appellants’ motion for partial summary judgment. But the district court requested that the parties provide additional submissions on the issue of sanctions and held a second hearing on that issue. On August 17, 1999, the district court reaffirmed its decision to impose sanctions and ordered each of the three law firms involved in the litigation to pay $5,000 to the state. This appeal follows.

ISSUES

1. Does appellants’ complaint set forth a legally sufficient claim for relief?
2. Did the district court abuse its discretion when it imposed sanctions against appellants’ attorneys?

ANALYSIS

1. Motion to dismiss

When reviewing a dismissal for failure to state a claim on which relief can be granted, an appellate court must only determine whether the complaint sets forth a legally sufficient claim for relief. Geldert v. American Nat’l Bank, 506 N.W.2d 22, 25 (Minn.App.1993), review denied (Minn. Nov. 16, 1993). It is immaterial whether the plaintiff can prove the facts alleged in the complaint. Juster Steel v. Carlson Cos., 366 N.W.2d 616, 619 (Minn.App.1985). A complaint should only be dismissed for failure to state a claim if it appears to a certainty that no facts consistent with the pleading exist that support granting the relief demanded. Brakke v. Hilgers, 374 N.W.2d 553, 555 (Minn.App.1985). Although the district court typically may not consider documents other than the complaint without converting the motion into one for summary judgment, an exception to this rule exists if the complaint refers to a document and the document is central to the claims alleged. In re Hennepin County 1986 Recycling Bond Litig., 540 N.W.2d 494, 497 (Minn.1995).

In this case, the district court did rely on one or more documents that were filed in connection with the tobacco litigation. The documents, prepared by respondent in the tobacco litigation, were referenced in appellants’ complaint. The district court appropriately relied on the documents in addition to the complaint and appellants do not challenge the court’s consideration of these documents.

A. Express declaration of rights

Appellants contend that the district court’s decision to analyze this case through the lens of a motion to dismiss created a procedural defect requiring reversal. Appellants’ complaint seeks a declaratory judgment pursuant to Minnesota’s version of the Uniform Declaratory Judgments Act. Minn.Stat. §§ 555.01-16 (1998). Appellants contend that they are entitled to an actual declaration of the respective rights of the putative class members and the state and that any right to actually receive a portion of the settlement proceeds is collateral to the declaratory judgment. See Minn.Stat. § 555.01 (providing that the court’s declaration may be either affirmative or negative in form and effect). The question, therefore, is whether the district court’s dismissal of appellants’ complaint based on the ultimate relief sought, i.e., a portion of the tobacco settlement, operates as a declaration of their rights.

This alleged procedural defect is similar to one of the issues addressed in Ketterer v. Independent Sch. Dist. No. 1, 248 Minn. 212, 79 N.W.2d 428 (1956). In Ketterer, the appellant argued “that the court abused its discretion in dismissing the action instead of making a declaration in his favor or any declaration at all.” Id. at 227, 79 N.W.2d at 439. The supreme court, however, held that:

The judgment dismissed the plaintiffs complaint. Plaintiff argues that the judgment is defective in that it did not declare the rights of the parties. The judgment in better form should have declared the rights of the parties in conformity with findings and conclusions of law. The declaration may be either affirmative or negative in form and effect. However, since the court’s findings of fact, conclusions of law, and order for judgment resulting in a dismissal herein operates as an adjudication upon the merits, the failure to declare the rights of the parties on the state of the record in this case is, we think, here without prejudice and not reversible error.

Id. at 228-29, 79 N.W.2d at 440 (citations omitted).

Like Ketterer, the district court in this case did not expressly declare the respective rights of the parties, but its findings, conclusions, and order do operate as an adjudication of the merits. While an express declaration of the parties’ rights may have been preferable, the district court effectively declared that the appellants have no right to any portion of the tobacco settlement by operation of the medical- and general-assistance statutes discussed below.

B. Allocation formulae

“[S]ome recovery theory must underlie a declaratory judgment demand.” Vrieze v. New Century Homes, Inc., 542 N.W.2d 62, 67 (Minn.App.1996). In this case, appellants’ two-count complaint asserts statutory claims under the Minnesota medical-assistance and general-assistance programs as the basis for recovery. See Minn.Stat. §§ 256B.042, subd. 5; 256B.37, subd. 4; 256D.03, subd. 8(f) (1998). Contrary to the appellants’ repeated assertions, however, the state did not proceed in the tobacco litigation in a representative capacity or assert claims that were derivative to those of the medical- and general-assistance recipients. Rather, the state brought a direct action against the tobacco defendants for the damages sustained by the state. Those claims did not implicate the medical- and general-assistance statutes. In other words, the state’s lawsuit was outside the scope of these statutes. For this reason alone, we could affirm the district court dismissal.

Nonetheless, a fair reading of the settlement agreement does give some weight to the appellants’ arguments. The settlement agreement releases the tobacco defendants from liability for state-paid medical expenses, i.e., expenses paid by the medical- and general-assistance programs. Therefore, although the state’s complaint in the tobacco litigation did not seek damages pursuant to these statutes, any claim the state may have had for these damages was settled at the conclusion of the litigation. See Minn.Stat. §§ 256B.042, subd. 3 (authorizing the state to take actions to enforce its medical-assistance lien or pursue an independent action against a third party “that may be liable” to the recipient); 256B.37, subd. 2 (authorizing the state to join or institute a civil action to enforce its medical-assistance subrogation rights); 256D.03, subd. 8(d) (authorizing state to institute or join a civil action to enforce its general-assistance subrogation rights). But even if the pleadings in the tobacco litigation and the instant case did not support the district court’s dismissal, the medical- and general-assistance statutes do not provide an avenue for the appellants to obtain a portion of the state’s settlement.

This court interprets statutes de novo, and we need not defer to the district court’s interpretation. Sorenson v. St. Paul Ramsey Med. Ctr., 457 N.W.2d 188, 190 (Minn.1990). The three statutes at issue in this case contain nearly identical language and provide formulae for allocating recoveries obtained from third parties who are liable for medical- and general-assistance expenses paid by the state. Under each of these statutes, attorney fees and costs incurred by the party who obtained the recovery are paid first. Minn. Stat. §§ 256B.042, subd. 5; 256B.37, subd. 4; 256D.03, subd. 8(f). Next, the state is reimbursed to the extent of its expenditures on behalf- of the medical- or general-assistance recipient out of the remaining proceeds. Minn.Stat. §§ 256B.042, subd. 5; 256B.37, subd. 4; 256D.03, subd. 8(f). Finally, the recipient is entitled to retain any recovery in excess of the state’s expenditures or, at a minimum, one-third of the recovery. Minn.Stat. §§ 256B.042, subd. 5; 256B.37, subd. 4; 256D.03, subd. 8(f).

Both parties agree on several important facts. First, the state’s settlement precludes individual medical- and general-assistance recipients from pursuing claims for past or future health care costs covered by the state’s medical- or general-assistance programs. Second, the state’s settlement does not preclude individual medical- or general-assistance recipients from pursuing claims against the tobacco defendants for other damages, e.g., pain and suffering or lost wages. Finally, had the state not brought its suit and had the putative class members made recoveries from the tobacco defendants on their own, the class members would have been entitled to at least one-third of the recovery after attorney fees and costs were paid.

The central issue in this case is whether any portion of the state’s recovery is subject to distribution to individual smokers pursuant to the allocation formulae contained in the medical- and general-assistance statutes. The district court concluded that the statutes do not provide a basis for the putative class to proceed with its claim. We agree.

Minnesota, as mandated by the federal Medicare act, requires all recipients of medical assistance to assign to the state any claim they may have against third parties for the medical expenses paid by the state. 42 U.S.C. § 1396k(a)(l)(A); MinmStat § 256B.056, subd. 6. General-assistance recipients are required to make a similar assignment. MinmStat. § 256D.03, subd. 3a. In other words, subsequent to the assignment, the legal right to recover the medical expenses paid by the state from third parties belonged solely to the state.

Appellants contend that as a result of the tobacco settlement the state divested them of a right to pursue the tobacco defendants for past and future medical expense. But they currently have the same rights they had prior to the tobacco settlement. They have a right to bring a claim for damages against the tobacco defendants, but they do not have a right to retain the damages representing the state-paid medical expenses. They relinquished their interest in those expenses when they made the assignment to the state. As a result of the assignment, it is clear that the recovery-allocation statutes do not provide appellants with a basis for obtaining a portion of the state’s tobacco settlement.

The three statutes at issue in this case all provide that the state is to be fully reimbursed for the payments it made on behalf of the individual recipients. The medical-assistance statutes provide that “[t]he full amount of medical assistance paid to or on behalf of the person as a result of the injury must be ⅜ * * paid to the state” before the individual retains any of the recovery. Minn.Stat. §§ 256B.042, subd. 5; 256B.37, subd. 4. The general-assistance statute contains nearly identical language. Minn.Stat. § 256D.03, subd. 8(f).

Nonetheless, there are instances when the state will not be fully reimbursed. For example, if the net recovery, i.e., the recovery less attorney fees and costs, is less than the payments made by the state, the state will not recoup all of its payments. Also, if reimbursing the state in full would result in the individual recipient receiving less than one-third of the net recovery, the state’s reimbursement is limited.

The provision in each of these three statutes allowing a minimum of one-third recovery by the individual recipient who pursues a liable third party serves two purposes. First, it provides that individual recipient with an incentive to pursue a claim. If the individual recipient pursues the liable third party, the state need not expend its limited resources in an effort to recoup its payments. Second, allowing the individual recipient to retain a portion of any recovery made by that individual is recognition that the individual will typically have claims against the third party for more than just medical expenses. For example, the individual will likely have a claim for pain and suffering and possibly one for lost wages or earning capacity. The state is entitled to the first dollar of any recovery regardless of how that recovery is classified by the parties. See State, Dep’t of Human Servs. v. Bengston, 506 N.W.2d 38, 39-40 (Minn.App.1993) (providing that state may satisfy its interest out of recipient’s settlement regardless of how that settlement is characterized by the recipient), review denied (Minn. Nov. 16, 1993). But the legislature has made a policy decision that the individual recipient should be permitted to retain a portion of any recovery that he or she successfully pursues. In this case, appellants did not pursue the tobacco defendants and have not lost their causes of action for their own alleged injuries.

Based on our interpretation of the recovery-allocation statutes, we agree with the district court’s dismissal of appellants’ complaint. These statutes do not provide a basis for appellants to obtain a portion of the state’s tobacco settlement. Although the district court should have provided the parties with an express declaration of their rights, its findings, conclusions and order have this effect. The recovery-allocation statutes relied on by appellants do not confer on them any rights that would allow them to obtain a portion of the state’s tobacco settlement. Appellants’ complaint does not set forth a legally sufficient claim for relief and it was not error for the district court to order the dismissal.

2. Sanctions

Appellate courts will not disturb a district court’s decision to impose sanctions under Minn. R. Civ. P. 11 unless the district court abused its discretion. Uselman v. Uselman, 464 N.W.2d 130, 145 (Minn.1990). “But courts should construe rule 11 somewhat narrowly to avoid deterring legitimate or arguably legitimate claims.” Conant v. Robins, Kaplan, Miller & Ciresi, L.L.P., 603 N.W.2d 143, 150 (Minn.App.1999) (citing Uselman, 464 N.W.2d at 142), review denied (Minn. Mar. 14, 2000).

In this case, the district court imposed $5,000 in Sanctions against each of the three law firms representing the putative class. The district court identified as its bases for imposing the sanctions that the premise of appellants’ lawsuit was “monumentally” wrong and there was not a “shred of evidence to support bringing it.” It also indicated at the hearing that it hoped to deter additional attempts by others to obtain a portion of the settlement. Contrary to the district court’s position, we do not conclude that appellants’ lawsuit was completely frivolous. The recovery-allocation statutes are not absolutely clear and there are no Minnesota cases establishing that these statutes bar medieal- and general-assistance recipients from pursuing a portion of the state’s recovery.

Appellants’ lawsuit did not lack all objective reasonableness, Although the district court correctly determined that appellants did not state a claim upon which relief could be granted, we conclude that appellants’ novel claims were brought in good faith. See Minn. R. Civ. P. 11 (providing that parties are permitted to submit pleadings that contain good faith arguments for the extension or modification of existing law). The state would not have incurred the medical- and general-assistance expenses for smoking illnesses without the members of the putative class. Further, the medical- and general-assistance statutes do provide for an allocation between the recipient and the state in at least some situations where a recovery is made from a third party. In light of this, we hold that the district court abused its discretion in sanctioning appellants’ attorneys.

DECISION

The state’s settlement in the tobacco litigation is not subject to the recovery-allocation formulae contained in MinmStat. §§ 256B.042, subd. 5 (1998); 256B.37, subd. 4 (1998); and 256D.03, subd. 8(f) (1998). The district court’s dismissal of appellants’ class-action lawsuit was appropriate, but the district court’s imposition of sanctions against appellants in this case was an abuse of discretion. Appellants did not ultimately prevail .on their claim, but it cannot be said that they failed to assert claims that were, at a minimum, arguably legitimate at the time they were made.

Affirmed in part and reversed in part.

      . Subsequent to oral argument on this matter, respondent’s counsel provided the court and appellants’ counsel with a copy of State of California v. Superior Court, 99 Cal.Rptr.2d 735, 2000 WL 1231390, an August 31, 2000 decision from the California Court of Appeals. While the California, court’s opinion comments specifically on the Minnesota district court’s order in this case and reaches the same result we do, the California court’s decision is not dispositive and does not serve as a basis for our decision.


author: HARTEN, Judge DORIS O. HUSPENI, Judge

text:
    ILLINOIS FARMERS INSURANCE COMPANY, Respondent, v. The LEAGUE OF MINNESOTA CITIES INSURANCE TRUST, Appellant.
    No. C9-00-499.
    Court of Appeals of Minnesota.
    Sept. 19, 2000.

      Joseph G. Twomey, Hansen, Dordell, Bradt, Odlaug & Bradt, PLLP, St. Paul, MN (for respondent).
    Mark J. Condon, Johnson & Condon, P.A., Minneapolis, MN (for appellant).
    Considered and decided by TOUSSAINT, Chief Judge, HARTEN,-Judge, and HUSPENI , Judge.

       Retired judge of the Minnesota Court of Appeals, serving by appointment pursuant to Minn. Const, art. VI, § 10.

   OPINION

HARTEN, Judge

A bookmobile patron injured by falling from a stationary bookmobile brought an action against respondent, her insurer, for No-Fault benefits. A district court found respondent liable. Respondent then brought this action against appellant, the bookmobile’s insurer, for reimbursement pursuant to Minn.Stat. § 65B.47, subd. 1 (1998). The district court found appellant liable to respondent. • Because we hold that a stationary bookmobile is not a vehicle being used in the business of transporting persons or property within the meam-ing of Minn.Stat. § 65B.47, subd. 1, we reverse and remand with directions that the district court order summary judgment for appellant.

FACTS

Beatrice Sandefur was injured when she alighted from a stationary bookmobile owned by the City of Rochester and insured by appellant League of Minnesota Cities Insurance Trust. Sandefur sued her insurer, respondent Illinois Farmers Insurance Company, for No-Fault benefits. The district court determined that respondent was liable because Sandefur’s injuries arose out of the use of a motor. vehicle. Respondent did not appeal from this determination but stipulated to judgment for $25,000 in settlement of the No-Fault claim.

¡Respondent then sued appellant for reimbursement of the $25,000 pursuant to Minn.Stat. § 65B.47, subd. 1 (1998), providing that -if an accident occurs “while the vehicle is being used in the business of transporting persons or property” the vehicle’s insurer is security for the injured party’s No-Fault benefits. - The parties brought cross-motions for summary judgment. The district court determined that, at the time of Sandefur’s injury, the bookmobile was in the business of transporting persons and property and ordered judgment for respondent.

ISSUE

Was the bookmobile being used in the business of transporting, persons and property within the meaning of Minn.Stat. § 65B.47, subd. 1 (1998)?

ANALYSIS

“Insurance coverage issues are questions of law for the court.” State Farm Ins. Co. v. Seefeld, 481 N.W.2d 62, 64 (Minn.1992) (citation omitted). Statutory construction is a question of law that this court reviews de novo. Sorenson v. St. Paul Ramsey Med. Ctr., 457 N.W.2d 188, 190 (Minn.1990).

Minn.Stat. § 65B.47, subd. 1 (1998) provides:

In case of injury to the driver or other occupant of a motor vehicle, if the accident causing the injury occurs while the vehicle is being used in the business of transporting persons or property, the security for payment of basic economic loss benefits is the security covering the vehicle * * *.

The district court concluded that the bookmobile was “being used in the business of transporting persons or property” when the accident occurred. None of the three cases construing Minn.Stat. § 65B.47, subd. 1, supports that conclusion.

Dakota Fire Ins. Co. v. Hartford Fire Ins. Co., 558 N.W.2d 524 (Minn.App.1997) held that a van rented from a transportation service company to transport students on a field trip was “being used in the business of transporting persons or property” when an accident occurred on the field trip. Id. at 526.

Regardless of whether [the transportation service company] supplied the driver (or saw to other details of the transport), the van was being used in the business of transporting people when the accident occurred. ⅜ * *
* * * *
This case falls more clearly within the statutory meaning of “being used in the business of transporting persons or property.” Especially when considering the rationale behind the statute — requiring those in the transportation business to bear the risks as a cost of business— it makes sense that the van would be considered to be in use in the business of transporting persons.

Id. at 526-27 (footnote omitted). Dakota Fire is clearly distinguishable; in the instant case, no income stream derived from use of the bookmobile. Moreover, holding a bookmobile liable for No-Fault benefits to an injured patron would not achieve the statutory purpose of “requiring those in the transportation business to bear the risks * * *[.]” Id., (emphasis added).

Peterson v. Colonial Ins. of California, 493 N.W.2d 152, 153 (Minn.App.1992) held that “a motor vehicle being used for undercover police work is not being used in the business of transporting persons or prop-

The fact that a vehicle is used in connection with a person’s occupation is insufficient by itself to make this provision applicable. The use to which the vehicle is being put must be the business of transporting persons or property. This implies more than transporting a driver, or a driver’s companion. That is a tangential connection between the use of the motor vehicle and a person’s occupation. Such a tangential connection is all that is present here.
We hold the vehicle involved in this accident was not being used in the business of transporting persons or property. The ear was being used in undercover police work, not a transportation business.

Id. at 154-55 (footnotes omitted). The bookmobile here was being used as a library; like the car in Peterson, it was not being used in a transportation business.

Home Mutual Ins. Co. v. Snyder, 356 N.W.2d 780 (Minn.App.1984) held that the statute applied to a truck used by a farmer to deliver potatoes. “[The farmer] was clearly using the truck in the business of transporting potatoes to his outlets in Iowa.” Home Mutual, 356 N.W.2d at 785. As is Dakota Farmer, Home Mutual is readily distinguishable. Here, the bookmobile was not transporting books to retail outlets, nor was any income derived from its operation.

See also Mutual Service Casualty Ins. Co. v. Wilson Township, 603 N.W.2d 151, 153-54 (Minn.App.1999) (construing “in the business of’ in an insurance policy as a phrase “commonly understood to refer to a commercial enterprise or activity”), review denied (Minn. Mar. 14, 2000); Minn.Stat. § 645.08(1) (1998) (“Words and phrases are construed * according to their common and approved usage * * *.”). The bookmobile was not a commercial enterprise or activity; its revenue was fines for overdue books; citizens did not pay to use it; neither the bookmobile nor its associated library system made a profit. The bookmobile was not in the business of transporting persons or property as that phrase is construed according to common and approved usage.

DECISION

The Rochester bookmobile was not a vehicle being used in the business of transporting persons or property within the meaning of Minn.Stat. § 65B.47, subd. 1. Appellant is not the security for Sandefur’s No-Fault benefits and, upon remand, is entitled to summary judgment accordingly.

Reversed and remanded.

DORIS O. HUSPENI, Judge

(concurring specially).

I agree with the majority that the bookmobile was not a vehicle being used in the business of transporting persons or property within the meaning of Minn.Stat. § 65B.47, subd. I. I write separately only to identify a second, independent basis for reversal, in the event further appellate review calls into question the basis relied upon by the majority.

Before both the district court and this court, appellant has argued that Sande-fur’s injury did not arise out of the maintenance or use of a motor vehicle. Respondent concedes that, despite an earlier, unappealed, trial court ruling to the contrary in the action between Sandefur and respondent, appellant may raise this issue in the present action between these two insurers. In the interest of fully addressing all issues raised, I would reach the question of whether Sandefur’s injury arose out of the maintenance or use of a motor vehicle, and answer that it did not.

As noted in Marklund v. Farm Bureau Mut. Ins. Co., 400 N.W.2d 337 (Minn.1987), when addressing the policy goals of the no-fault act, “costs of injuries causally resulting from motoring activities should be allocated to the automobile reparation insurance system.” Id. at 341. It follows, I submit, that those injuries not resulting from motoring activities should be compensated from other sources. As the majority notes, the bookmobile here was being used as a library. Sandefur’s accident occurred in a library. The fact that the library “moved” before and after the accident is immaterial. There is absolutely no connection between the injury suffered and the operation or use of the bookmobile as a motor vehicle. The injury arose out of an unfortunate fall occurring in a stationary structure; a library.

Finally, appellant’s argument that the injury here did not arise out of the maintenance or use of a motor vehicle is strongly supported by abundant caselaw. See Classified Ins. Corp. v. Vodinelich, 368 N.W.2d 921 (Minn.1985) (surviving father of two children killed by carbon monoxide exhaust fumes when mother committed suicide in her car not entitled to no-fault benefits); Waldbillig v. State Farm Mut. Auto. Ins. Co., 321 N.W.2d 49 (Minn.1982) (injury sustained while attempting to start equipment on a trailer not covered under no-fault insurance); St. Paul Fire and Marine Ins. Co. v. Sparrow, 378 N.W.2d 12 (Minn.App.1985) (injury sustained in trailer being used as a concession stand not covered under no-fault insurance), review denied (Minn. Jan. 23,1986).

The litigation between Sandefur and her insurer is at an end. She has been compensated for her injury. The cost of that compensation should not, however, be borne by appellant in this case. Appellant prevails, I believe, not only because the bookmobile was not a vehicle being used in the business of transporting persons or property, but because the injury did not arise out of the maintenance or use of a motor vehicle.

      . Appellant raises a second issue on appeal, arguing that because Sandefur's injury did not arise out of the maintenance or use of a motor vehicle, she was not entitled to No-Fault benefits from respondent. A district court previously determined that Sandefur’s injury did arise out of the maintenance or use of a motor vehicle and that she was entitled to No-Fault benefits from respondent. Respondent did not appeal from that determination. Because our determination of the section 65B.47, subd. 1, issue is dispositive, even assuming appellant's second issue is viable, we need not address it.

      . In Continental Western Ins. Co. v. Klug, 394 N.W.2d 872 (Minn.App.1986), this court determined that an incident had not arisen out of the maintenance or use of a motor vehicle. Having so declared, we found it unnecessary to address the issue of whether that incident was '‘accidental.” Id. at 877. Upon further review, the supreme court reversed this court, ruling that the incident did, in fact, arise out of the maintenance or use of a motor vehicle. Continental Western Ins. Co. v. Klug, 415 N.W.2d 876, 878-79 (Minn.1987). The supreme court then remanded to this court the issue of whether the incident was an "accident” within the meaning of the statute. Id. at 879. Arguably, had this court addressed both prongs of the test for coverage (was it an accident, and did it arise out of the maintenance or use of a motor vehicle), remand could have been avoided.