author: MEIERHENRY, Justice.

text:
    2006 SD 100
    STATE of South Dakota, Plaintiff and Appellee, v. Derrick E. CAROTHERS, Defendant and Appellant.
    No. 23840.
    Supreme Court of South Dakota.
    Argued on Oct. 4, 2006.
    Decided Nov. 15, 2006.

      Lawrence E. Long, Attorney General, Gary Campbell, Assistant Attorney General, Pierre, South Dakota, Attorneys for plaintiff and appellee.
    Sean M. O’Brien, Brookings, South Dakota, Attorney for defendant and appellant.
   MEIERHENRY, Justice.

[¶ 1.] A jury found Derrick E. Caroth-ers (Carothers) guilty of Sexual Contact with a Child Under Sixteen and Criminal Pedophilia. Carothers was subsequently found to be an habitual offender and was sentenced to life in prison. He appeals and raises numerous issues. We affirm.

Background

[¶2.] The charges against Carothers stem from an incident on October 2, 2003 involving the four-year old child, S.T. Car-others had babysat S.T. and her siblings the previous night. He asked to stay with the family one more night and Mother agreed. After the evening meal, Caroth-ers went upstairs to the computer room and engaged in internet chat and masturbation. Soon after Carothers left to use the computer, the child went upstairs to play with some toys. Carothers was alone with the child about an hour. The next morning, the child revealed to her mother what had happened while she was alone with Carothers. The child came into the bathroom where Mother was doing laundry, pushed a stool against the door and locked it. She then told Mother that “he” had touched her in a bad place, indicating her vaginal area and pointed to Carothers’ location in the adjacent dining room.

[¶ 3.] Later that day, Mother took the child to the local medical clinic for an examination. They also met with law enforcement officers at the clinic. The child told law enforcement officers that Caroth-ers had licked her in her vaginal area, placed his hand and fingers on her vaginal area, moved them back and forth a lot of times, and put his hands in her pants. She further indicated that his pants were unzipped and he had licked her, grabbed her, and wanted to kiss her but she did not want to. Later, she also told Mother that Carothers had put a spoon under the door of the bedroom to keep the door closed. Mother subsequently found the spoon on the floor and called law enforcement to collect it and other potential evidence.

[¶4.] Carothers became aware of the child’s accusations and contacted law enforcement through a friend to indicate that he wished to speak to them. He reiterated his willingness to speak to law enforcement after police officers contacted him. Consequently, the officers asked Carothers to accompany them to the station to conduct an interview and Carothers agreed. Prior to beginning the interview, the officers advised Carothers that he was not under arrest and was free to leave at any time. The interview took place in the basement of the police station and lasted approximately 85 minutes.

[¶ 5.] A few days after the incident, the child’s mother took her to A Child’s Voice for an evaluation. As part of the evaluation, the child was interviewed by Colleen Brazil (Brazil), a social worker. During this interview, the child gave Brazil further details of the alleged sexual contact and said that Carothers had warned her not to tell her mother.

[¶ 6.] On November 26, 2003, a grand jury indicted Carothers for three offenses: Sexual Contact with a Child Under Sixteen, Kidnapping, and Criminal Pedophilia. On December 31, 2003, the State filed a notice of intent to offer the child’s statements at trial. The trial court first ruled to admit them under SDCL 19-16-38. However, because of the subsequent United States Supreme Court decision in Crawford, v. Washington, the trial court reversed its prior ruling and concluded that the child’s statements to law enforcement officers and Brazil were inadmissible because the testimonial statements were not subject to cross-examination at the time they were made. 541 U.S. 36, 124 S.Ct. 1354, 158 L.Ed.2d 177 (2004). The State appealed the ruling. We reversed concluding that the statements were admissible because they did not need to be subject to cross-examination at the time they were made if the child was available and subject to cross-examination at trial. State v. Carothers (Carothers I), 2005 SD 16, ¶ 14, 692 N.W.2d 544, 549.

[¶ 7.] A jury subsequently found Car-others guilty of Sexual Contact with a Child Under Sixteen and Criminal Pedophilia. In a separate trial, Carothers was found to be a habitual criminal and was sentenced to life in prison. Carothers appeals and raises several issues.

Analysis and Discussion

Indictment

[¶ 8.] Carothers first claims that the circuit court should have dismissed the indictment against him because of prosecutorial misconduct at the grand jury stage of the proceedings. Carothers specifically claims that the prosecutor improperly introduced evidence of Carothers’ prior criminal record to the grand jury in violation of SDCL 19-12-5 (Fed.R.Evid. 404(b)). The grand jury heard evidence of his prior convictions when Mother testified. In answer to a question by the State’s Attorney about Carothers’ prior record, she answered that she was aware “that [Carothers] had been in prison for grand theft, but that’s the extent that I was told.” Carothers also alleges that the State’s Attorney presented other highly suggestive and misleading testimony. Mother’s testimony appears in the settled record, but the other testimony of which he complains does not. Since we can only review what appears in the settled record, we are limited to reviewing Mother’s testimony. Spenner v. City of Sioux Falls, 1998 SD 56, ¶ 9, 580 N.W.2d 606, 610 (citing Nauman v. Nauman, 336 N.W.2d 662, 664 (S.D.1983)). Additionally, the trial court’s review of an indictment is limited by statute and we review the trial court’s decision to grant or deny a motion to dismiss an indictment under an abuse of discretion standard. State v. Vatne, 2003 SD 81, ¶ 8, 659 N.W.2d 380, 383.

[¶ 9.] Carothers contends that the indictment should have been dismissed under SDCL 23A-8-2(3), which directs the court to dismiss an indictment “[w]hen it does not substantially conform to the requirements of this title.” Carothers claims that a requirement of the title is that the rules of evidence apply to grand jury proceedings. SDCL 23A-5-15. Even though the rules of evidence apply to grand jury proceedings, we have previously said that we “will not inquire into the legality or sufficiency of the evidence upon which an indictment is based.” Vatne, 2003 SD 31, ¶ 14, 659 N.W.2d at 384 (holding that an indictment could not be dismissed based on claim that testimony was hearsay and incompetent) (internal quotations omitted). The rationale for our limited inquiry is that “[a]n indictment returned by a legally constituted and unbiased grand jury, [is] like an information drawn by the prosecutor, [and] if valid on its face, is enough to call for trial of the charge on the merits.” State v. Cameron, 1999 SD 70, ¶ 11, 596 N.W.2d 49, 52 (quoting State v. Hoekstra, 286 N.W.2d 127, 128 (S.D.1979)). “[Neither the Fifth Amendment, nor justice and the concept of a fair trial, require[ ] indictments to be open to challenge on the grounds that there was inadequate or incompetent evidence before the grand jury.” State v. Kleinsasser, 436 N.W.2d 279, 281 (S.D.1989). Because Carothers alleges only evidentiary violations, we conclude that the trial court did not abuse its discretion in refusing to dismiss the indictment.

Admissibility of Child’s Testimony

[¶ 10.] This case originally came before the Court in Carothers I, on the limited issue of whether Crawford v. Washington precluded the admission of the child’s out of court statements to law enforcement and Brazil. 2005 SD 16, ¶ 6, 692 N.W.2d 544, 546. We concluded that under the Confrontation Clause, prior cross-examination was not required for the admission of the child’s hearsay statement if the child is available and subject to cross examination at trial. Id. ¶ 14. We did not review the trial court’s determination of competency nor did we consider Carothers’ argument that the child was unavailable. Id. ¶ 13. Carothers now raises both of these issues, which we consider separately.

1. Competency

[¶ 11.] Carothers argues that the child was not competent to testify. Therefore, he argues that she was unavailable as a witness and the admission of her out of court statements violated his Sixth Amendment Rights. “The determination of the competency of a witness is left in the first instance to the discretionary judgment of the trial court, after informing itself by proper examination.” State v. Guthmiller, 2003 SD 83, ¶ 11, 667 N.W.2d 295, 301 (internal quotations omitted). The trial court’s determination will only be reversed upon a showing of an abuse of discretion. State v. Anderson, 2000 SD 45, ¶ 23, 608 N.W.2d 644, 653 (citation omitted).

[¶ 12.] There is no general rule regarding a child’s inherent reliability nor is there any arbitrary age at which a child is deemed competent to testify. Id. ¶ 24. Instead, the standard for determining whether a child is competent to testify is whether she or he has “sufficient mental capacity to observe, recollect, and communicate, and some sense of moral responsibility.” Id. (internal quotations omitted).

[¶ 13.] The trial court initially determined that the child was competent to testify after hearing testimony on March 25, 2004 pursuant to the State’s motion to introduce hearsay statements made by the victim at trial. The trial judge questioned the child about her knowledge of the difference between a truth and a lie and observed the child testify about her recollection of the incident with Carothers as well as her prior contact with Brazil and law enforcement. In addition, the judge heard testimony from Brazil about her interactions with the child. The State also submitted a video-taped interview of the child conducted by Brazil which demonstrated the child’s knowledge of the difference between a truth and a lie and her ability to recollect and narrate impressions. The trial court subsequently found the child competent to testify and noted that “the observations of the child testifying before the Court indicate[d] that she does understand the difference between what is truth and what is not truth and there [was] consistency relating to the statements.”

[¶ 14.] At trial on May 3, 2005, the trial judge questioned the child outside the presence of the jury and again concluded that the child was competent to testify. He made the following oral finding: “the minor child knows the difference between truth and not truth and meets the basic threshold of competency to testify.” The trial court “is vested with wide discretion in determining competency and on appeal, its ruling is entitled to great weight.” Id. ¶ 23 (citation omitted). Based on our review of the record, the trial court did not abuse its discretion when it found the child competent to testify.

2. Availability

[¶ 15.] After observing the child testify at trial, the trial court concluded that she was available. The trial court affirmed this finding when it denied Car-others’ motion for a new trial where Car-others alleged that “the minor child was unavailable to testify as a witness considering the answers which she gave during her testimony in both direct and cross-examination.” The trial court noted, “[s]ince victim testified, was subject to cross-examination and was available, Defendant’s right of confrontation was satisfied pursuant to Crawford v. Washington and the introduction of hearsay evidence regarding such victim as otherwise authorized by statute didn’t violate Defendant’s constitutional rights.” Carothers argues that the trial court abused its discretion when it concluded that the child was available.

[¶ 16.] Although a witness may take the stand and testify, the admission of a witness’ prior statements requires a “full and effective cross-examination.” State v. McKinney, 2005 SD 73, ¶ 21, 699 N.W.2d 471, 479 (quoting California v. Green, 399 U.S. 149, 159, 90 S.Ct. 1930, 1935, 26 L.Ed.2d 489, 497 (1970)). This requirement is derived from the Sixth Amendment’s Confrontation Clause, which provides “the accused the right ‘to be confronted with the witnesses against him.’ ” United States v. Owens, 484 U.S. 554, 558, 108 S.Ct. 838, 841, 98 L.Ed.2d 951 (1988). This right is “ ‘generally satisfied when the defense is given a full and fair opportunity to probe and expose [a witness’] infirmities through cross-examination, thereby calling to the attention of the factfinder the reasons for giving scant weight to the witness’ testimony.’ ” Id. (quoting Delaware v. Fensterer, 474 U.S. 15, 21-22, 106 S.Ct. 292, 295, 88 L.Ed.2d 15 (1985)). However, when the witness is a young child, there are additional concerns in satisfying the Confrontation Clause because the child may simply be “too young and too frightened to be subjected to a thorough direct or cross-examination” as envisioned by the Constitution. United States v. Spotted War Bonnet, 933 F.2d 1471, 1474 (8th Cir. 1991) (internal quotations omitted). Therefore, we must determine whether Carothers was afforded full and effective cross-examination.

[¶ 17.] Carothers points to deficiencies in the child’s testimony that, he claims, prevented full and effective cross-examination. First, Carothers contends that the integrity of the child’s testimony was compromised because she stated that she liked the witness assistant. However, Caroth-ers does not point to, nor could we find, any instance in the child’s testimony that was compromised by this relationship. Second, Carothers contends that the child was unable to repeat statements she made earlier and repeatedly answered that she did not know. Based on our review of the record and of the approximately one hundred questions asked on cross-examination, we find only six instances where the child answered that she did not remember. These questions concerned her memory of being a certain age and her ability to remember the content of her prior statements to law enforcement, doctors, and Brazil. He claims that her inability to remember her prior statements makes her unavailable just as a similar inability to remember prior statements made the child witness in State v. McCafferty unavailable. 356 N.W.2d 159, 163 (S.D.1984). The child in McCafferty, however, was not only unable to repeat prior statements, but could not testify to the facts at trial. See id. Her inability to testify to facts at trial was important in the analysis. In making this determination, we distinguished the Eighth Circuit case of United States v. Iron Shell, noting that the nine year old child in Iron Shell had testified to facts which supported her prior statements although she could not repeat her earlier statements. Id. (citing to Iron Shell, 633 F.2d at 87).

[¶ 18.] This distinction is applicable in evaluating the child’s testimony in this case. Like the child in Iron Shell, the child testified to facts which supported her prior statements when she recounted the facts surrounding her sexual contact with Carothers. 633 F.2d at 87. Although she may not have been able to repeat exactly what she told Brazil, police officers or doctors; she did remember speaking to them and responded that she remembered telling Brazil “the truth.” Therefore, she afforded the jury a satisfactory basis for evaluating the truth of her prior statements. While Carothers may not have been satisfied with the child’s testimony, the Constitution “guarantees only ‘an opportunity for effective cross-examination, not cross-examination that is effective in whatever way, and to whatever extent, the defense might wish.’ ” Kentucky v. Stincer, 482 U.S. 730, 739, 107 S.Ct. 2658, 2664, 96 L.Ed.2d 631, 643 (1987) (quoting Fensterer, 474 U.S. at 20, 106 S.Ct. at 294) (emphasis in the original). Thus, we affirm the trial court’s conclusion that the child was available for purposes of cross-examination, satisfying Carothers’ constitutional rights under the Sixth Amendment’s Confrontation Clause. Because we conclude that the trial court did not err in concluding the child was available, we need not address Carothers’ other arguments concerning the child’s testimony and the constitutionality of SDCL 19-16-38.

Admissibility of Defendant’s Statement to Law Enforcement Officers

[¶ 19.] Carothers argues that his statements to law enforcement officers should have been suppressed because he was not given Miranda warnings. The trial court concluded that Carothers was not in custody such as to require the giving of Miranda warnings. Our standard of review is well settled, motions to suppress based on alleged violations of constitutionally protected rights are reviewed de novo. State v. Sweedland, 2006 SD 77, ¶ 12, 721 N.W.2d 409, 412.

[¶ 20.] “Miranda warnings are required whenever a defendant is interrogated while in police custody.” State v. Thompson, 1997 SD 15, ¶ 23, 560 N.W.2d 535, 540. “The test in determining whether Miranda warnings are required ‘is not whether the investigation has focused on any particular suspect, but rather, whether the person being questioned is in custody or deprived of his or her freedom to leave.’ ” State v. Herting, 2000 SD 12, ¶ 9, 604 N.W.2d 863, 865 (quoting Thompson, 1997 SD 15, ¶ 24, 560 N.W.2d at 540). “[T]he initial determination of custody depends on the objective circumstances of the interrogation, not on the subjective views harbored by either the interrogating officers or the person being questioned.” Stansbury v. California, 511 U.S. 318, 323, 114 S.Ct. 1526, 1529, 128 L.Ed.2d 293 (1994). We have said “Miranda warnings are required only where there has been such a restriction on a person’s freedom as to render him ‘in custody.’ ” Thompson, 1997 SD 15, ¶ 23, 560 N.W.2d at 540 (quoting Oregon v. Mathiason, 429 U.S. 492, 495, 97 S.Ct. 711, 714, 50 L.Ed.2d 714, 719 (1977)).

[¶ 21.] Our review of the facts and the taped interview which was submitted to the jury, indicates Carothers was not so deprived of his freedom as to be “in custody” for purposes of Miranda. On the evening of October 3, 2003, Carothers, either personally or through another, contacted law enforcement and said that he wanted to talk to someone about the allegations against him. Consequently, law enforcement officers went to a residence in Brookings where Carothers was present. Carothers again indicated that he wanted to talk to law enforcement and agreed to accompany the officers to the police department.

[¶ 22.] Prior to questioning, the officers advised Carothers that he was not under arrest, that he was free to leave at any time, and that he did not have to answer any of the officer’s questions. Throughout the interview, the tone of the questioning was conversational in nature. No threats or physical force were used to elicit any information. See id. ¶ 28; State v. McQuillen, 345 N.W.2d 867, 870 (S.D. 1984). Although the interview took place behind closed doors, “we have previously held a closed, or even locked, door does not, in and of itself, create a custodial interrogation.” Thompson, 1997 SD 15, ¶ 28, 560 N.W.2d at 541 (citing State v. Darby, 1996 SD 127, ¶26, 556 N.W.2d 311, 319). Thus based on the evidence, the trial court correctly concluded that the officer’s interrogation was noncustodial and did not require prior Miranda warnings.

[¶ 23.] Carothers further claims that his statements should have been suppressed because they were involuntarily made. When examining the vol-untariness of a confession, “we consider the totality of the circumstances, giving deference to the trial court’s factual findings, but performing a de novo review of the record, and making ‘an independent determination of the ultimate issue of vol-untariness.’ ” State v. Tofani, 2006 SD 63, ¶ 30, 719 N.W.2d 391, 399 (quoting State v. Tuttle, 2002 SD 94, ¶ 20, 650 N.W.2d 20, 30). The factors we consider in this inquiry include: “(1) the defendant’s age; (2) the defendant’s lack of education or low intelligence; (3) the absence of any advice to the defendant of [his or her] constitutional rights; (4) the length of detention; (5) the repeated and prolonged nature of the questioning; and (6) the use of physical punishment such as deprivation of food or sleep.” Id. ¶ 30 (internal quotations omitted).

[¶ 24.] Applying the above standards to the facts of this case, we note that Caroth-ers was 28 years of age at the time the questioning took place and that he had a sufficient level of intelligence to understand that he was free to leave at any time. Carothers was not advised of his constitutional rights. The length of the detention was approximately 85 minutes and ended at Carothers’ request. He was not physically punished nor deprived of food or sleep. Although Carothers claimed he had recently had two beers, he did not appear to be under the influence of any alcohol or other drugs. Another factor to consider is a defendant’s prior experience with law enforcement. Tuttle, 2002 SD 94, ¶ 22, 650 N.W.2d at 31. Carothers indicated that he had several prior experiences with law enforcement and the court system and had been released from the Illinois State Penitentiary approximately four months prior to his interview with police. Carothers has made no allegation of any misrepresentation or deception by the police officers during the interview and we find no evidence of such conduct. Based upon the totality of the circumstances, we conclude that the trial court did not err in finding that Carothers’ statements were voluntarily made.

Improper Final Argument and Admissibility of Evidence at Trial

[¶ 25.] Carothers claims reversible error based on a comment made by the State’s Attorney in his closing argument to the jury. Although no objection was made at trial, Carothers claims the comment constituted plain error. Plain error requires the defendant to show “(1) error; (2) that is plain; (3) that affects substantial rights; and (4) that seriously affects the fairness, integrity, or public reputation of judicial proceedings.” State v. Page, 2006 SD 2, ¶ 15, 709 N.W.2d 739, 750 (internal quotations omitted); see also SDCL 23A-44-15. The plain error rule is applied cautiously and we will only invoke our discretion in exceptional circumstances. State v. Nelson, 1998 SD 124, ¶ 8, 587 N.W.2d 439, 443.

[¶ 26.] Carothers alleges that plain error occurred during the State’s Attorney’s closing argument. Carothers takes issue with the State’s Attorney’s reference to a statement Carothers made in his interview with law enforcement officers. The taped interview was introduced into evidence and shown to the jury. In a portion of the interview, Carothers discussed seeing the child lying on the floor of the dining room, rubbing a plastic shovel on her panties. Carothers stated this was abnormal conduct for a little girl. He also stated that the child’s uncle had witnessed the incident and commented on her actions. Although Carothers could not remember the exact words the uncle had used, he stated that it was something like “you little pervert.”

[¶ 27.] Based on this portion of the interview between Carothers and the officers, the State’s Attorney made the following statements in his closing arguments:

In that taped interview on the 3rd of October, and the Defendant was making mention of something about a shovel, and he said, was asked by Lieutenant Miller, “What did he say, [what did] Allan say to [S.T.]?” [Carothers responded] “Well, I don’t know what he said but [something about a] little pervert.” Lieutenant Miller asked, “Was that his words?” [Carothers stated], “No, those are mine.” Ladies and gentlemen, in that house the 1st and 2nd of October, there may have been a pervert, but it was not [S.T.].

[¶ 28.] Viewed in context, the State’s Attorney was merely referring to evidence already heard by the jury. Therefore, the context of the State’s Attorney’s comment in addition to its singular reference does not rise to the level of misconduct and needs no further analysis. Cf. State v. Smith, 1999 SD 88, 599 N.W.2d 344 (finding nonprejudicial misconduct where prosecutor repeatedly called defendant a “monster,” “pervert,” “child molester,” “sexual predator,” and a “tyrant”).

[¶ 29.] The remaining issues raised by Carothers pertain to the habitual offender proceeding. Carothers argues that the court erred in admitting Exhibits 4, 5, 7, 9 and 10, which resulted in unfair prejudice and the presentation of cumulative evidence. We review a trial court’s evidentiary ruling under an abuse of discretion standard. State v. Jolley, 2003 SD 5, ¶ 5, 656 N.W.2d 305, 307. Under this standard, “we do not determine whether we would have made a like decision, only whether a judicial mind, considering the law and the facts, could have reached a similar decision.” Id.

[¶ 30.] Exhibits 4, 5, and 7 consist of information relating to Carothers’ three prior convictions alleged in the habitual offender information. These exhibits included a cover sheet attesting to the accuracy of the attached fingerprint card, the fingerprint card, and the penitentiary entrance record for each conviction, including two photographs of Carothers.

[¶ 31.] The fingerprint card in Exhibit 4 showed the final disposition of Carothers’ burglary conviction, which Car-others contends was irrelevant to the prosecution’s burden of proof. Under the habitual offender statutes, the prosecution has the burden of providing sufficient evidence of identity. See State v. Loop, 422 N.W.2d 420, 424 (S.D.1988); SDCL 22-7-11. In meeting this burden, certified fingerprint cards are deemed admissible without providing an evidentiary foundation. SDCL 22-7-11. Even though the information on the fingerprint card repeated the final disposition of Carothers’ burglary conviction and may have been cumulative, the card was relevant to proving Carothers was an habitual criminal. “Whether the probative value of relevant evidence has been substantially outweighed by danger of unfair prejudice due to its cumulative nature is within the discretion of the trial court.” State v. Devall, 489 N.W.2d 371, 375 (S.D.1992). Consequently, we cannot say that the trial court abused its discretion.

[¶ 32.] Carothers also argues that providing two sets of photographs in Exhibits 5 and 7 was excessive. However, the photographs established identity, a question of fact for the jury which had to be established beyond a reasonable doubt. Stuck v. Leapley, 473 N.W.2d 476, 479 n. 4 (S.D.1991). Providing the jury with a photograph for each conviction established that the “Derrick E. Carothers” before the jury was the same “Derrick E. Carothers” who had been convicted of each crime. Accordingly, we conclude that the trial court did not abuse its discretion in admitting Exhibits 4, 5, and 7.

[¶ 33.] Exhibit 9 consisted of a Knox County, Illinois, information charging Carothers with aggravated battery and criminal damage to state property while incarcerated as well as the judgment relating to those charges. Exhibit 10 was an Illinois Verification of Incarceration listing Carothers’ convictions in that state. Car-others asserts that including both Exhibit 9 and 10 was prejudicial and unnecessary.

[¶ 34.] Under SDCL 22-7-9, “only one prior conviction arising from the same transaction may be considered” in determining the number of defendant’s prior convictions. Exhibit 9 was provided to illustrate that the battery and criminal damage charges listed in Exhibit 10 arose from a separate transaction than the other charges listed in Exhibit 10. Therefore, the trial court did not abuse its discretion in admitting Exhibits 9 and 10.

[¶ 35.] Carothers next argues that the trial court erred in ordering him to exhibit his tattoos to the jury. We have previously held that when identity is at issue, a defendant may be required to show his tattoo without violating his right against self-incrimination. State v. Knoehe, 515 N.W.2d 834, 839 (S.D.1994). A description of Carothers’ tattoos was provided in an Illinois prison document included in the State’s exhibits. While Carothers contends that displaying his tattoos to the jury was prejudicial because fingerprints and photographs had already been submitted into evidence, the cumulative nature of the evidence is within the sound discretion of the trial court. Devall, 489 N.W.2d at 375. Therefore, we conclude that the trial court did not abuse its discretion in ordering Carothers to display his tattoo to the jury.

[¶ 36.] Carothers also claims that the trial court abused its discretion concerning the number of his prior convictions that were submitted to the jury in the habitual offender trial. He contends that providing the jury with all of his prior convictions resulted in unfair prejudice. He cites no authority for this argument, and we conclude that the trial court did not abuse its discretion in the number of prior convictions it submitted to the jury.

[¶ 37.] Finally, Carothers claims that the trial court erred by not instructing the jury to determine if his prior convictions were crimes of violence or felonies under South Dakota or United States law. His arguments have no merit since both issues involve questions of law that are decided by the court rather than questions of fact decided by the jury. See State v. Stuck, 434 N.W.2d 43, 47 (S.D.1988) (finding that the determination of whether an offense is a felony is not a question of fact for the jury but a matter of law predetermined by the legislature and applied by the judiciary); SDCL 22-7-8 (enhancing sentences when there are three or more felony convictions in addition to the principal felony if one of the prior felonies was a crime of violence); SDCL 22-1-2(9) (defining “crime of violence”).

[¶ 38.] Accordingly, we affirm on all issues.

[¶ 39.] GILBERTSON, Chief Justice, and SABERS, KONENKAMP, and ZINTER, Justices, concur.

      . A Child's Voice examines children who are possible victims of physical or sexual abuse. Children are interviewed to gather a history for the physician or other medical provider in order for them to diagnose and treat the child.

      . SDCL 19-16-38 provides:
      A statement made by a child under the age of ten, or by a child ten years of age or older who is developmentally disabled as defined in § 27B-1-18, describing any act of sexual contact or rape performed with or on the child by another, or describing any act of physical abuse or neglect of the child by another, or any act of physical abuse or neglect of another child observed by the child making the statement, not otherwise admissible by statute or court rule, is admissible in evidence in criminal proceedings against the defendant or in any proceeding under chapters 26-7A, 26-8A, 26-8B, and 26-8C in the courts of this state if: (1) The court finds, in a hearing conducted outside the presence of the juty, that the time, content, and circumstances of the statement provide sufficient indicia of reliability; and
      (2) The child either:
      (a) Testifies at the proceedings; or
      (b) Is unavailable as a witness.
      However, if the child is unavailable as a witness, such statement may be admitted only if there is corroborative evidence of the act.
      No statement may be admitted under this section unless the proponent of the statement makes known his intention to offer the statement and the particulars of it, including the name and address of the declar-ant to the adverse party sufficiently in advance of the trial or hearing to provide the adverse party with a fair opportunity to prepare to meet the statement.


source: Caselaw Access Project

author: LARSON, Justice.

license: Public Domain

text:
    HARVEY’S CASINO, Appellant, v. Beverly ISENHOUR, Appellee. Ameristar Casinos Council Bluffs, Inc. and Gab Robins, Appellants, v. Amanda A. Davis, Appellee. Ameristar Casinos Council Bluffs, Inc. and Gab Robins, Appellants, v. Helen Falanga, Appellee.
    No. 04-1910.
    Supreme Court of Iowa.
    Dec. 8, 2006.
    William D. Gilner and Scott A. Lauten-baugh of Nolan, Olson, Hansen & Lauten-baugh, LLP, Omaha, NE, for appellant Harvey’s Casino.
    John B. Morrow and Tiernan T. Siems of Erickson & Sederstrom, P.C., Omaha, NE, and Michael J. Obradovieh, Omaha, NE, for appellants Ameristar Casinos Council Bluffs, Inc. and Gab Robins.
    Jacob J. Peters of Peters Law Firm, P.C., Council Bluffs, for appellees.
   LARSON, Justice.

Three workers’ compensation claimants, Amanda Davis, Helen Falanga, and Beverly Isenhour, claimed benefits for injuries sustained while employed on riverboat casinos in Council Bluffs. The Workers’ Compensation Commissioner ruled that the commission had subject matter jurisdiction to award benefits, and the district court agreed. The court of appeals reversed, holding that the claimants were “seamen” working on vessels for which the Federal Jones Act provided exclusive benefits. We affirm the court of appeals decision, reverse the district court, and remand.

I.Facts and Prior Proceedings.

Amanda Davis and Helen Falanga were injured while employed on the Ameristar Casino Riverboat in Council Bluffs as a slot machine attendant and “banker,” respectively. Beverly Isenhour was a floor host on Harvey’s Casino Riverboat in Council Bluffs. All three claimed injuries sustained in their employment and filed workers’ compensation claims under Iowa Code chapter 85 (2001). The three claims were eventually consolidated, and the district court, on judicial review, affirmed the Workers’ Compensation Commissioner’s ruling that the commission had jurisdiction to award benefits because the claims were not preempted by the Jones Act. The basis for the district court’s ruling was that the claimants were not seamen and the riverboat casinos were not vessels as required for coverage under the Jones Act. The court of appeals reversed, ruling that the Workers’ Compensation Commission lacked jurisdiction to award benefits, based largely on a Supreme Court case decided after the district court’s ruling— Stewart v. Dutra Construction Co., 543 U.S. 481, 125 S.Ct. 1118, 160 L.Ed.2d 932 (2005). On this further review, the claimants argue that the court of appeals erred in relying on Stewart because that case is distinguishable.

II. Standard of Review.

Our review of agency action is for correction of errors at law. Gates v. John Deere Ottumwa Works, 587 N.W.2d 471, 474 (Iowa 1998). Review is governed by Iowa Code section 17A.19. This court is bound by the factual findings made by the agency if those findings enjoy substantial support on the record made before the agency. Id. This court will liberally construe Iowa’s workers’ compensation statutes for the benefit of the injured employee. Caterpillar Tractor Co. v. Shook, 313 N.W.2d 503, 505-06 (Iowa 1981).

III. Resolution.

Under Iowa Code section 85.1(6), if an injured worker is covered by a compensation statute enacted by Congress, the worker is not covered by Iowa’s workers’ compensation law. In this case, Harvey’s and Ameristar argue that the injured employees are covered by the Federal Jones Act, which provides in relevant part:

Any seaman who shall suffer personal injury in the course of his employment may, at his election, maintain an action for damages at law, with the right of trial by jury, and in such action all statutes of the United States modifying or extending the common-law right or remedy in cases of personal injury to railway employees shall apply.

46 App.U.S.C. § 688(a).

Harvey’s and Ameristar argue that the employees were “seamen” under this act, and therefore the Workers’ Compensation Commission lacked subject matter jurisdiction to award benefits. The term “seaman” is not defined in the Jones Act, apparently because it was believed to be a term of art with an established meaning under general maritime law. Stewart, 543 U.S. at 487, 125 S.Ct. at 1123, 160 L.Ed.2d at 941. Congress, however, provided some guidance in 1927 when it enacted the Longshore and Harbor Workers’ Compensation Act (LHWCA), which provides compensation to land-based maritime workers, but excludes from its coverage “a master or member of a crew of any vessel.” 33 U.S.C. § 902(3)(G). This exception has been described as “a refinement of the term ‘seaman’ in the Jones Act .... ” McDermott Int’l, Inc. v. Wilander, 498 U.S. 337, 347, 111 S.Ct. 807, 813, 112 L.Ed.2d 866, 877 (1991). The Supreme Court has articulated two “essential requirements” for seaman status under the Jones Act:

First, ... “an employee’s duties must ‘contribut[e] to the function of the vessel or to the accomplishment of its mission.’ ”...
Second, and most important for our purposes here, a seaman must have a connection to a vessel in navigation (or to an identifiable group of such vessels) that is substantial in terms of both its duration and its nature.

Chandris, Inc. v. Latsis, 515 U.S. 347, 368, 115 S.Ct. 2172, 2190, 132 L.Ed.2d 314, 337 (1995) (quoting McDermott Int’l, 498 U.S. at 355, 111 S.Ct. at 817, 112 L.Ed.2d at 882). Therefore, in order to be a “seaman,” the employee must have a substantial connection to a “vessel,” and the employee must contribute to the function of the vessel or to the accomplishment of its mission. The Court further explained:

The fundamental purpose of this substantial connection requirement is to give full effect to the remedial scheme created by Congress and to separate the sea-based maritime employees who are entitled to Jones Act protection from those land-based workers who have only a transitory or sporadic connection to a vessel in navigation, and therefore whose employment does not regularly expose them to the perils of the sea.

Chandris, 515 U.S. at 368, 115 S.Ct. at 2190, 132 L.Ed.2d at 337.

“If it can be shown that the employee performed a significant part of his work on board the vessel on which he was injured, with at least some degree of regularity and continuity, the test for seaman status will be satisfied.”

Id. at 368-69, 115 S.Ct. at 2190, 132 L.Ed.2d at 337-38 (quoting IB A. Jenner, Benedict on Admiralty § 11a, at 2-10.1 to 2.11 (7th ed. 1994)). The following rule of thumb was established:

A worker who spends less than about 30 percent of his time in the service of a vessel in navigation should not qualify as a seaman under the Jones Act.

Id. at 371, 115 S.Ct. at 2191, 132 L.Ed.2d at 339.

Stewart involved a claim by a worker injured while on board a dredge called the “Super Scoop,”

from which a clamshell bucket is suspended beneath the water. The bucket removes silt from the ocean floor and dumps the sediment onto one of two scows that float alongside the dredge. The Super Scoop has certain characteristics common to seagoing vessels, such as a captain and crew, navigational lights, ballast tanks, and a crew dining area. But it lacks others. Most conspicuously, the Super Scoop has only limited means of self-propulsion. It is moved long distances by tugboat.... It navigates short distances by manipulating its anchors and cables. When dredging the Boston Harbor trench, it typically moved in this way once every couple of hours, covering a distance of 30-to-50 feet each time.

543 U.S. at 484-85, 125 S.Ct. at 1121-22, 160 L.Ed.2d at 939^0. Stewart was working on the barge as a marine engineer when he was injured. He sued under the Jones Act, and the principal issue discussed by the Supreme Court was whether the Super Scoop was a “vessel” under federal statutes. The Court noted that the federal statutory definition of vessel

requires only that a watercraft be “used, or capable of being used, as a means of transportation on water” to qualify as a vessel. It does not require that a watercraft be used primarily for that purpose.

Id. at 495, 125 S.Ct. at 1128, 160 L.Ed.2d at 946 (quoting 1 U.S.C. § 3). The Stewart Court specifically rejected the reasoning of DiGiovanni v. Traylor Brothers, Inc., 959 F.2d 1119 (1st Cir.1992), which held that a watercraft was not a vessel under the Jones Act because its primary purpose was not navigation or commerce, and it was not in actual transit at the time of the claimant’s injury. Stewart, 543 U.S. at 495, 125 S.Ct. at 1127-28, 160 L.Ed.2d at 946. As explained in Stewart, 1 U.S.C. § 3 requires only that a watercraft be capable of being used as a means of transportation and does not require that transportation be the primary purpose for operating the craft. Also, the Court ruled that the watercraft need not be in motion at the time of injury because “a watercraft [does not] pass in and out of Jones Act coverage depending on whether it was moving at the time of the accident.” Id. at 495-96, 125 S.Ct. at 1128, 160 L.Ed.2d at 946-47. The Court in Stewart noted that the Super Scoop dredge was not only “capable of being used” to travel the water — it was actually being used for that purpose. 543 U.S. at 495, 125 S.Ct. at 1128, 160 L.Ed.2d at 946.

We held in Hayden v. Ameristar Casino Council Bluffs, Inc., 641 N.W.2d 723 (Iowa 2002), that Jones Act preemption claims must be evaluated with the aid of a factual record because jurisdictional issues such as this involve mixed questions of law and fact. Further, claims of “seaman” status are usually hotly contested. Id. at 724-25. The parties in this case made a record regarding the nature of the watercraft, and it is not disputed that the riverboats were capable of, and did, ply the waters of the Missouri River approximately 200 hours per year as required by Iowa’s gaming laws.

A seaman under the Jones Act must be a member of the crew and must contribute to the function of the vessel or to the accomplishment of its mission. Chandris, 515 U.S. at 376, 115 S.Ct. at 2194, 132 L.Ed.2d at 317. It is undisputed that the mission of these riverboats was to provide gambling for its patrons and that these claimants contributed to that function. Applying the rationale of Stewart, we hold these claimants were “seamen” and the workers’ compensation commission was therefore without subject matter jurisdiction to award benefits.

We affirm the decision of the court of appeals, reverse the judgment of the district court, and remand for dismissal of the workers’ compensation claims.

DECISION OF COURT OF APPEALS AFFIRMED, JUDGMENT OF

DISTRICT COURT REVERSED, CASE REMANDED,

All justices concur except HECHT and APPEL, JJ., who take no part,

      . We reject the claimant’s argument that Stewart’s definition of vessel is inapposite in this case on the ground that Stewart was decided under the LHWCA and not the Jones Act. The Supreme Court made it clear in Stewart that the term ''vessel" was interchangeable under both statutes. Id. at 491-92, 125 S.Ct. at 1125, 160 L.Ed.2d at 944.


author: TOUSSAINT, Chief Judge.

text:
    In the Matter of a COMMISSION INVESTIGATION OF ISSUES GOVERNED BY MINNESOTA STATUTES, SECTION 216A.036.
    No. A06-336.
    Court of Appeals of Minnesota.
    Dec. 12, 2006.

      Douglas A. Kelley, Steven E. Wolter, Kelley Wolter, P.A., Minneapolis, MN, for relator Gregory Scott.
    Mike Hatch, Attorney General, P. Kenneth Kohnstamm, Assistant Attorney General, St. Paul, MN, for respondent Minnesota Public Utilities Commission.
    Considered and decided by TOUSSAINT, Chief Judge; WRIGHT, Judge; and ROSS, Judge.
   OPINION

TOUSSAINT, Chief Judge.

Relator Gregory Scott appeals from respondent Minnesota Public Utilities Commission’s order denying his motion for reconsideration, arguing that the employment-restriction statute, Minn.Stat. § 216A.036 (2004), (1) did not apply to his employment; (2) is unconstitutionally vague as applied to him, and (3) did not authorize a penalty in the absence of scienter and in light of relator’s reliance on the advice of counsel. Because the statute unambiguously and constitutionally prohibited relator’s employment and because the commission did not abuse its discretion by imposing a penalty for relator’s violation of the statute, we affirm.

FACTS

Relator’s employment as commissioner with respondent began on August 29, 1997. After meeting with Integra Telecom, Inc., on April 8, 2004, relator initiated communications with Integra regarding employment. On or about May 4, 2004, Integra obtained a legal opinion stating that it was permissible for Integra to interview relator and to reimburse him for travel expenses to the interview. Relator wrote a letter of resignation dated May 11, 2004, to the Minnesota Governor effective at the end of the day May 18, 2004. On May 18, relator, from his office at the commission, spoke with Integra about compensation and benefits; three days later, he accepted a written offer of employment with Integ-ra.

About two weeks after relator resigned from the commission, an anonymous email requested an investigation of relator’s communications and employment with Integra. On June 30, 2004, the commission requested that the Commissioner of Employee Relations investigate possible statutory and rule violations arising out of Integra’s employment of relator. An investigator conducted the investigation, obtained attorney general opinions, and submitted a report.

After comments were solicited on the investigator’s report, the commission met and issued findings, conclusions, and an order. The commission concluded that relator had violated the Commission’s Code of Conduct, the Minnesota Rules, and the employment-restriction statute, Minn. Stat § 216A.036(a). The commission also ordered relator to pay a civil penalty of $2,500 as provided by Minn.Stat. § 216A.086(d) but imposed no penalty on Integra. Relator moved for reconsideration, which the commission denied.

On this certiorari appeal, relator challenges the commission’s determination that he violated section 216A.036(a) and its assessment of a penalty pursuant to section 216A.036(d).

ISSUES

1. Did the commission err in its conclusion that Integra’s affiliate was “subject to rate regulation” under the employment-restriction statute, Minn.Stat. § 216A.036 (2004)?

2. Is the employment-restriction statute unconstitutionally vague as applied to relator?

3. Did the commission abuse its discretion in assessing a penalty for relator’s violation of the employment-restriction statute?

ANALYSIS

I.

The parties dispute whether the employment-restriction statute, Minn.Stat. § 216A.036 (2004), is ambiguous. The statute states:

A person who serves as ... a commissioner of the Public Utilities Commission ... shall not, while employed with or within one year after leaving the commission ... accept employment with, receive compensation directly or indirectly from, or enter into a contractual relationship with an entity, or an affiliated company of an entity, that is subject to rate regulation by the commission.

Id. The statute does not specifically define the phrase “subject to rate regulation by the commission,” which relator argues is capable of more than one reasonable interpretation.

Statutory construction is a question of law, which this court reviews de novo. Brookfield Trade Ctr., Inc. v. County of Ramsey, 584 N.W.2d 390, 393 (Minn.1998). If the language of the statute is unambiguous, we apply its plain meaning. Minn. Stat. § 645.16 (2004). When a statute does not expressly define a term, but the term is defined in a related statute, the statutes are in pari materia and should be construed together. State v. Kolla, 672 N.W.2d 1, 7 (Minn.App.2003).

Here, the absence of a definition of “subject to rate regulation by the commission” in Minn.Stat. § 216A.036 does not render the statute ambiguous. Words and phrases lacking express statutory definitions are construed according to their “common and approved usage.” Minn.Stat. § 645.08(1) (2004). Phrases must also be read in context. See id. (stating that construction of statute should not be “repugnant to the context of the statute”).

It is clear from a reading of the entire statute that it applies only to those individuals who exercise official authority to regulate companies and that it affects their employment only with companies “subject to rate regulation” by respondent. A public utilities commissioner is uniquely aware of the commission’s powers and rate-regulation authority. See N. States Power Co. v. Minn. Pub. Util. Comm’n, 414 N.W.2d 383, 386 (Minn.1987) (noting that commission is “certainly most equipped” to determine whether commissioners’ contacts constitute conflicts of interest and what impact contacts might have on commission’s work). Minn.Stat. § 216A.036 unambiguously states that a commissioner’s employment with a rate-regulated company is restricted.

Relator contends that the respondent’s enabling statutes, which authorize respondent to regulate public utilities, do not plainly authorize respondent to rate regulate Integra’s affiliate Scotb-Rice. It is undisputed that Scott-Rice was approved by respondent as a company with an alternative form of regulation. Companies may petition respondent for approval of an “alternative regulation plan,” which, if approved by respondent, “must provide that the recurring and nonrecurring rates or prices that may be charged by a telephone company for price-regulated services are no higher than the approved rate or prices on file with the commission for those services on the date of the filing of the plan.” Minn.Stat. § 237.762 (2004). This alternative form of regulation is referred to as “lessened rate regulation.” Minn.Stat. § 237.765 (2004). These statutes make the commissioners responsible for approving plans for alternative forms of regulation that set rates to be charged for certain services and that must not allow rates higher than those previously approved by respondent. We conclude that the plain language of these statutes demonstrates that companies approved as alternative forms of regulation are subject to rate regulation by respondent.

Relator also argues that the legislature did not intend to restrict employment in companies not “actively” or broadly regulated by respondent. The canons of statutory construction prohibit this court from adding words to a statute to “supply that which the legislature purposefully omits or inadvertently overlooks.” Goplen v. Olmsted County Support & Recovery Unit, 610 N.W.2d 686, 689 (Minn.App.2000) (citation omitted). Relator’s sources for these qualifying adverbs are conflicting legal opinions and the commissioners’ discussions, which described the legislative history, not the statutory language, as confusing. Respondent found that a “careful examination of the statutes delineating the Commission’s authority over independent and small telephone companies [including ScotWRice] demonstrates that their rates are subject to regulation by the Commission.” Only after respondent concluded that the statutes demonstrated that Scotb-Rice was subject to rate regulation, did it note that “Minn.Stat. § 216A.036 is complicated enough to have sent readers to the legislative history, which is ambiguous enough to have cast doubt on its meaning.” The statutes might be “complicated,” but the legislation uses the phrase “rate regulation,” which is not ambiguous.

The unambiguous statutory language supports the commission’s decision that Integra’s affiliate, Scotb-Rice, fell within the entities “subject to rate regulation by the commission” and that relator’s employment with Integra violated Minn. Stat. § 216A.036.

II.

Relator contends that the employment-restriction statute is unconstitutionally vague as applied to him.

The constitutionality of a statute presents a question of law, which we review de novo. State v. Wright, 588 N.W.2d 166, 168 (Minn.App.1998), review denied (Minn. Feb. 24, 1999). Laws are presumed to be constitutionally valid. Minn.Stat. § 645.17(8) (2004); Associated Builders & Contractors v. Ventura, 610 N.W.2d 293, 299 (Minn.2000). Courts have a duty to uphold legislative enactments as reasonably certain when possible, and should “resort to all acceptable rules of construction to discover a competent and efficient expression of the legislative will.” State v. Suess, 236 Minn. 174, 180, 52 N.W.2d 409, 414 (1952). The court’s power to declare a statute unconstitutional should be exercised “with extreme caution and only when absolutely necessary.” State v. Fingal, 666 N.W.2d 420, 423 (Minn.App.2003), review denied (Minn. Oct. 21, 2003).

The void-for-vagueness doctrine requires that statutes define an offense “with sufficient definiteness that ordinary people can understand what conduct is prohibited and in a manner that does not encourage arbitrary and discriminatory enforcement.” Kolender v. Lawson, 461 U.S. 352, 357, 103 S.Ct. 1855, 1858, 75 L.Ed.2d 903 (1983) cited in State v. Newstrom, 371 N.W.2d 525, 528 (Minn.1985). For the same reasons the employment-restriction statute is unambiguous, we conclude that it was sufficiently specific to provide relator with notice that entities approved for alternative forms of regulation are “rate regulated” by respondent and that employment with Integra was prohibited. The statute is not unconstitutionally vague.

III.

The employment-restriction statute authorizes a penalty of not more than $10,000 per violation. Minn.Stat. § 216A.036(d). Nevertheless, relator argues that respondent abused its discretion by imposing a $2,500 penalty against him and no penalty against Integra.

The imposition of a sanction lies within the discretion of an agency. In re Haugen, 278 N.W.2d 75, 80 n. 10 (Minn. 1979). A sanction “must not exceed what is necessary to protect the public and to deter such conduct in the future.” Matter of Ins. Agents’ Licenses of Kane, 473 N.W.2d 869, 878 (Minn.App.1991), review denied (Minn. Sept. 25,1991).

Relator cites no authority, and we are aware of none, that requires respondent to apply the same penalty to both the company and the commissioner when the employment-restriction statute is violated. Although an unreasonably severe and drastic penalty would be an abuse of discretion, the $2,500 fine was neither severe nor drastic. See Kane, 473 N.W.2d at 877-78 (remanding sanction of revocation of insurance agents’ licenses as too severe and drastic, particularly in light of sanction against company, that was “in effect little more than a slap on the wrist”). The fine was on the lower end of permissible sanctions, and the record does not establish that it impacted relator drastically. Thus, the $2,500 penalty was within respondent’s discretion.

Relator also argues that respondent refused to consider scienter and relator’s reliance on the advice of counsel and therefore its penalty was arbitrary and capricious. Although “some element of scienter is required” to impose a penalty, id. at 877, the record shows that respondent considered relator’s culpability when it specifically assessed a penalty “significantly below the statutory maximum.” Respondent recognized that relator made a choice benefiting him personally rather than erring “on the side of caution” and avoiding possible damage to the “public confidence in the integrity of the Commission.” The record also supports respondent’s finding that relator “acted on the basis of his own legal analysis,” not a legal opinion. Respondent considered relator’s alleged reliance on a legal opinion and determined it was not reasonable because relator did not obtain an independent legal opinion, commenced inquiries with Integra before Integra obtained an opinion, and never read Integra’s legal opinion prior to taking employment with Integra. Therefore, respondent did not abuse its discretion in assessing the $2,500 penalty for violating the statute.

DECISION

The phrase “subject to rate regulation by the commission” in the employment-restriction statute, Minn.Stat. § 216A.086 (2004), is unambiguous and not unconstitutionally vague as applied to relator. Respondent did not err in its determination that relator violated the statute and did not abuse its discretion by imposing a penalty below the statutory maximum.

Affirmed.

      . On June 9, 2004, the commission had requested that the Minnesota Attorney General investigate the matter, but that office referred the commission to the Commissioner of Employee Relations.

      . Relator does not cite Minnesota authority recognizing the defense of reliance on the advice of counsel under the circumstances presented. Minnesota has "recognized that good-faith reliance on the advice of professionals is a defense to a specific intent crime.” State v. Jacobson, 681 N.W.2d 398, 404 (Minn.App.2004), aff'd. 697 N.W.2d 610 (Minn.2005). The employment-restriction statute, however, does not contain a specific-intent element, and relator does not argue that it does.


author: RANDALL, Judge.

text:
    CITY OF MINNEAPOLIS, Appellant, v. AMES & FISCHER CO. II, LLP, Respondent, Capitol Indemnity Corp., Respondent, and Ames & Fischer Co. II, LLP, Respondent, v. City of Minneapolis, et al., Appellants.
    No. A05-2316.
    Court of Appeals of Minnesota.
    Dec. 12, 2006.

      Charles N. Ñauen, William A. Gengler, Gregory J. Myers, Loekridge Grindal Ñauen, P.L.L.P., Minneapolis, MN; and Jay M. Heffern, Minneapolis City Attorney, Peter Ginder, Assistant City Attorney, Minneapolis, MN, for appellants City of Minneapolis and Minneapolis Community Development Agency.
    Steven J. Weintraut, Mark Thieroff, Sie-gel, Brill, Greupner, Duffy & Foster, P.A., Minneapolis, MN, for respondent Ames & Fischer Co. II, LLP.
    David H. Gregerson, Siira B. Gunder-son, Gregerson, Rosow, Johnson & Nilan, Ltd., Minneapolis, MN, for respondent Capitol Indemnity Corporation.
    Considered and decided by PETERSON, Presiding Judge; RANDALL, Judge; and KALITOWSKI, Judge.
   OPINION

RANDALL, Judge.

This is an appeal from an order denying a motion for summary judgment by appellant city and agency to dismiss respondent’s tort claims and counterclaims based on statutory and vicarious official immunity. Appellants sued respondent Ames & Fischer Co. II, LLP for breach of contract for its failure to make certain payments arising out of a parking ramp construction project, and respondent counterclaimed and sued alleging misrepresentation and related claims regarding projected cash flow from the parking ramp. Appellants argue their decisions and conduct, set forth in the counterclaims, related to making and sharing the projections, are discretionary and, thus, are protected by statutory and vicarious official immunity. Respondent argues that appellants are responsible for their decisions and their conduct, claiming appellants sued for breach of contract and, thus, respondent has a right to defend on the merits.

We agree that respondent has a right to defend appellants’ claims on the merits, but reverse the denial of appellants’ motion to dismiss respondent’s counterclaims. Respondent’s counterclaims do sound in tort and, thus, statutory and official immunity are available to appellants, but only as to respondent’s counterclaims. We reverse.

FACTS

This appeal arises out of a contract dispute between respondent Ames & Fischer Company II, LLP, and appellants Minneapolis Community Development Agency (MCDA) and the City of Minneapolis (the city). Respondent company was formed for the sole purpose of owning and leasing the John Deere Building, located in the Minneapolis warehouse district. After the building was purchased in 1989, respondent began renovating the building to attract additional tenants. During the course of the renovation project, respondent realized that the lack of adequate parking nearby restricted the needs of the customer desiring office space in the area. To solve its dilemma, respondent wanted to build a parking ramp next to the John Deere Building. Because a privately owned, tax-paying parking ramp was not economically feasible, respondent determined that it needed a publicly-owned, tax-exempt parking ramp. Respondent began lobbying the city and the MCDA for an agreement under which it would finance construction of a parking ramp. Under the proposed agreement, respondent would build and then sell the parking ramp to the city, which would sell bonds to finance the purchase. The bonds would, in turn, be repaid from net parking revenues from the ramp and tax-increment financing revenues generated by respondent’s renovation of the John Deere Building.

While negotiating with respondent, the city and the MCDA analyzed whether the proposed parking ramp project was consistent with the city’s goals and plans for the warehouse district, what the parking needs were in the area, and whether the project was economically feasible. This process is reflected in the MCDA’s 10th Avenue North & Washington Avenue North Redevelopment Plan & Tax Increment Finance Plan (the plan). Pursuant to the plan, the MCDA authorized the use of tax increment revenue to help fund the parking ramp project. The objective was

to facilitate the rehabilitation and commercial reuse of the historic John Deere building, and other loft manufacturing buildings located in the Warehouse Riverfront District, by providing a needed public parking facility for employee and customer parking in the area. The public purpose that will be achieved by the implementation of these plans include blight remediation, historic preservation, and the development of needed public parking facilities.

As part of the parties’ discussions and consideration of the parking ramp project, the MCDA provided respondent with several spreadsheets showing projected revenues, expenses, and debt service for the proposed ramp for the years 2000 through 2006. The projections were “made for the purpose of estimating debt service coverage and cash flow,” and were used by the city and the MCDA in “determining whether it was reasonable and feasible to issue general obligation bonds to purchase the Parking Ramp from [respondent].” The projections were also reviewed by two of respondent’s accountants, and relied upon by respondent in determining whether to go forward with the project. Although the various financial assumptions underlying the various projections differed, respondent claims that each set of projections provided by MCDA showed the parking ramp operating at an annual surplus within a few years, with sufficient revenue to pay off the bonds within 30 years.

Relying on the projections provided by the MCDA, respondent entered into a contract with the MCDA on September 28, 1999, to build the parking ramp (the “contract”). Under the contract, respondent initially financed and constructed a 640-stall parking ramp adjacent to and connected with the John Deere Building. Upon completion of construction, the city purchased the parking ramp from respondent with the proceeds from $10.8 million in general obligation parking revenue bonds (the bonds). Respondent also entered into a management agreement to operate the parking ramp.

Pursuant to the contract, respondent guaranteed payment of the parking ramp costs and payment of the bonds. Section 5.03 of the contract states that respondent will obtain a security bond “in an amount sufficient to pay for the estimated, annual debt service for the Bonds and the Parking Fund Loan and the estimated annual operating costs for the Parking Facility.” The contract further states that the security bond

will provide that it shall be payable to the City, upon presentation to the underwriter of the Security Bond in the event the sum of the parking revenues generated by the Parking Facility and the Tax Increment revenue generated by the Minimum Improvements [to the John Deere Building] are not equal to or in excess of the sum of the annual debt service for the Bonds, the Parking Fund Loan and the operating cost for the Parking Facility as determined by the City and reviewed by [respondent].

Based on the terms of the contract, respondent obtained a security bond from the surety Capitol Indemnity Corporation (Capitol) in the amount of $375,904 in March 2004.

The parking ramp has operated at a net loss every year since it opened in September 2000. The City initially notified respondent in December 2002, that there was a shortfall in the amount of $364,978. Respondent answered by requesting more information. Over the next 18 months, the city accommodated respondent’s requests for additional information and provided updates of the shortfall with a detailed analysis of the parking ramp revenues and expenses. Based on that information, respondent determined that the actual expenses and revenues differed substantially from the projected expenses and revenues initially provided by the MCDA.

By October 2004, a shortfall in net revenues in excess of $2.5 million had accumulated. The city provided notice, as required by the contract, that it intended to draw on the security bond and sue for the balance unless respondent satisfied the shortfall. Respondent disputed the shortfall and refused to pay. The city subsequently presented the security bond to surety Capitol for payment. Respondent responded by demanding that Capitol not honor the city’s request. Capitol obliged and has not made payment to the city.

In November 2004, the city brought suit against respondent and Capitol, alleging breach of contract and seeking to recover on the security bond and to enforce respondent’s guarantee to cover all shortfalls related to the parking ramp. Respondent answered and counterclaimed, asserting tort claims for fraudulent misrepresentation, negligent misrepresentation, breach of an implied warranty, promissory estop-pel, breach of an implied covenant of good faith and fair dealing, and for a declaratory judgment. Shortly thereafter, respondent commenced a parallel action against the city and the MCDA, asserting claims identical to its counterclaims. The two actions were consolidated into this action.

Following consolidation, the parties engaged in several rounds of written discovery. During this period, respondent purportedly learned that the city and the MCDA failed to provide respondent with significant information that cast doubt on the financial feasibility of the parking ramp project and the validity of the information that the city and MCDA had provided. According to respondent, the city and the MCDA had prepared other sets of projections using assumptions the city and MCDA viewed as more realistic. These projections, which respondent claims were not provided to them, showed the proposed parking ramp losing money. Respondent claimed that the city and the MCDA withheld this information, despite having a general policy and practice of sharing all financial feasibility information with developers. Thus, as a result of the evidence gathered during discovery, respondent sought to amend its complaint and answer and counterclaims to add several additional claims and factual allegations to support those claims.

In September 2005, the city and the MCDA moved for summary judgment on all of respondent’s tort claims on a variety of grounds, including statutory and official immunity. However, before the city’s and the MCDA’s memorandum of law in support of the summary judgment motion was due, respondents sent to the city and the MCDA, two draft proposed amended answers and counterclaims. The first proposed draft added: (1) several new affirmative defenses; (2) new allegations regarding “omitted material information;” (3) an entirely new claim for reckless misrepresentation; and (4) new requested remedies of contract cancellation and/or termination. The second proposed draft, sent a few days later, focused on new allegations that the MCDA made misrepresentations “that there was demand for the use of the Parking Ramp in the area in general” even though the MCDA “had reached the conclusion that there was not any demand for the use of the Parking Ramp in the area in general.”

Because the city and the MCDA concluded that respondent’s proposed amendments lacked merit, the city and the MCDA declined to consent to respondent’s motion to amend. The city and the MCDA subsequently filed their summary judgment brief addressing respondent’s original allegations and claims. Shortly thereafter, respondent filed its motion to amend. The new motion to amend contained a new affirmative defense, failure to mitigate, and also contained extensive new allegations regarding misrepresentations as to the basis for the projections and nondisclosures. A few days later, respondent filed an amended motion to amend that proposed to add two more new claims, joint enterprise and breach of fiduciary duty. At the same time, respondent filed its opposition to the city and the MCDA’s summary judgment motion, which essentially abandoned the original claims and focused primarily on respondent’s proposed new allegations and claims.

In November 2005, the district court denied in part and granted in part the city and the MCDA’s motion for summary judgment. The district court also denied in part and granted in part respondent’s motion to amend the answer and counterclaims and complaint. The city and the MCDA (collectively the “appellants”) appealed the district court’s order to the extent it denied the motion for summary judgment dismissing the tort claims based on immunity.

ISSUE

Did the district court err in concluding that appellants are not entitled to statutory or vicarious official immunity?

ANALYSIS

On appeal from summary judgment, an appellate court determines “whether there are genuine issues of material fact and whether the district court erred in applying the law.” Watson v. Metro. Transit Comm’n, 553 N.W.2d 406, 411 (Minn.1996). The reviewing court views the evidence in the light most favorable to the nonmoving party and resolves any doubts as to the existence of an issue of material fact against the moving party. Nord v. Herreid, 305 N.W.2d 337, 339 (Minn.1981).

Respondent initially contends that appellants excluded from the scope of their motion for summary judgment immunity defenses to claims arising out of alleged misrepresentation as to the basis for the projections. Respondent argues that because appellants must establish an entitlement to immunity as to each tortious act alleged by respondent, and because appellants excluded from the scope of their motion for summary judgment the alleged misrepresentation as to the basis for the projections, the district court could have properly denied summary judgment on this ground alone.

We disagree. The record reflects that appellants asserted statutory and official immunity defenses to all pleaded and proposed tort claims, including claims arising out of alleged misrepresentations as to the basis for the projections. In their memorandum in support of their motion for summary judgment, appellants asserted that “[t]o the extent [respondent] has adequately pled and raised genuine issues of material fact with respect to any tort claims, all of which are based on alleged misrepresentations, the claims nevertheless must be dismissed as barred by discretionary and official immunity.” Although appellants’ summary judgment memorandum focused primarily on respondent’s original claims, appellants’ summary judgment reply brief asserted that “if the [district] court were inclined to consider [respondent’s] new claims at this time, [appellants] have identified numerous fatal legal deficiencies that would justify dismissal or summary judgment,” citing and incorporating by reference the arguments made in appellants’ brief in opposition to the motion to amend at pages 4 through 26. In their brief in opposition to the motion to amend, at page 26, appellants asserted that “[e]ven if the proposed amendments stated viable claims, they would be barred by discretionary and official immunity.” The record demonstrates that appellants specifically asserted statutory and official immunity defenses to respondent’s proposed new allegations and counterclaims, and appellants’ immunity defense is properly before this court.

Appellants argue that their decisions and conduct pertaining to the making and sharing of the projections are protected by statutory and vicarious official immunity. “The applicability of immunity is a question of law, which this court reviews de novo.” Meier v. City of Columbia Heights, 686 N.W.2d 858, 863 (Minn.App. 2004), review denied (Minn. Dec. 14, 2004).

Municipalities are generally liable for the torts of their employees if the tort is committed within the scope of employment. Nusbaum v. County of Blue Earth, 422 N.W.2d 713, 718 (Minn.1988). But under statutory immunity, municipalities are immune from liability for “[a]ny claim based upon the performance or the failure to exercise or perform a discretionary function or duty, whether or not the discretion is abused.” MinmStat. 466.03, subd. 6 (2004). The purpose of statutory immunity is to protect the legislative and executive branches from judicial second-guessing of certain policy-making activities through the medium of tort actions. Nusbaum, 422 N.W.2d at 718. Thus, it is important for courts to focus on the idea that statutory immunity seeks to protect policy-based decisions and to prevent the impairment of effective government. Id. at 719.

Official immunity is distinct from statutory immunity. In contrast to statutory immunity, official immunity determines whether individuals used discretion on an operational, rather than a policy-making, level. Pletan v. Gaines, 494 N.W.2d 38, 40 (Minn.1992); Riedel v. Goodwin, 574 N.W.2d 753, 758 (Minn.App. 1998), review denied (Minn. Apr. 30, 1998). Official immunity protects a government employee “from fear of personal liability that might deter independent action.” Janklow v. Minn. Bd. of Exam’rs for Nursing Home Adm’rs, 552 N.W.2d 711, 715 (Minn.1996) (citation omitted). For example, official immunity has often been employed to protect police, and vicariously their municipalities, when they use discretion to make an independent decision while in the line of duty. See State by Beaulieu v. City of Mounds View, 518 N.W.2d 567, 571 (Minn.1994).

We start our analysis by noting that both parties spend the bulk of their arguments on governmental immunity. This was not necessary. Here, the city sued respondent for breach of contract. “Generally, sovereign immunity does not apply to contractual obligations.” McDonough v. City of Rosemount, 503 N.W.2d 493, 497 (Minn.App.1993) (emphasis added), review denied (Minn. Sept. 10, 1993); see Schroeder v. St. Louis County, 708 N.W.2d 497, 503 (Minn.2006) (stating that governmental immunity protects governmental entities from tort actions)-, 10A Eugene McQuillan, The Law of Municipal Corporations 29.119 (3d ed. rev. vol. 1990) (stating that governmental immunity does not apply to contract actions). The issue of immunity only arose tangentially because respondent, as part of its defense to the city’s breach of contract claim, counterclaimed with various tort theories. An examination of the heart of respondent’s defense to the breach of contract case and the thrust of its counterclaims shows them to be virtually identical in theory. Respondent does not deny this. Thus, the end point of our decision is that the city is entitled to immunity on respondent’s counterclaims, but that in no way impedes respondent’s right to defend against the city’s breach of contract action. If part of respondent’s defense looks similar to its now dismissed counterclaims based on tort, it is of no consequence. As stated above, a municipality is never entitled to the defense of immunity on a pure contract action, and this is a contract action.

Respondent claims two primary defenses to the city’s lawsuit: (1) the city intentionally withheld negative information while providing favorable information to induce the deal, and (2) the city intentionally gave respondent favorable projections of expenses and income knowing (according to respondent) that they were flawed. Under contract principles, mutual acceptance is essential. See Mattice v. Minn. Prop. Ins. Placement, 655 N.W.2d 336, 344 (Minn.App.2002) (stating that the basic elements of a contract are offer, acceptance, and consideration), review denied (Minn. Mar. 18, 2003). Respondent alleges there was no mutual acceptance because they were intentionally misled and improperly induced to enter the contract.

The argument by appellants that respondent had the right to hire their own consultants and that respondent should have acted with due diligence is a good argument — for trial. This is simply a summary judgment motion. With appreciated candor, appellants concede that some of their arguments rebutting respondent’s claims are that the most logical inference to be drawn from documents in the record is that respondent cannot prove its claims. They agree that on a motion for summary judgment, the non-moving party gets the favorable inference. See Fabio v. Bellomo, 504 N.W.2d 758, 761 (Minn.1993) (stating that on review from summary judgment, all reasonable inferences favor the non-moving party).

In handling respondent’s proposed amendments, the district court granted some of the proposed amendments while denying others. This was a proper exercise of the district court’s broad discretion. See id. (stating that it is well-established that a district court has broad discretion to grant or deny leave to amend a complaint). This broad discretion is particularly important when you have a complex case, such as this one, and the need for resolution is important. See Bebo v. Delander, 6B2 N.W.2d 732, 741 (Minn.App.2001) (stating that “the liberality to be shown in the allowance of amendments to pleadings depends in part upon the stage of the action and in a great measure upon the facts and circumstance of the particular case”), review denied (Minn. Oct. 16, 2001). Here, the district court’s order and accompanying memorandum granting relief to respondent primarily discussed fact issues and reduced its decision denying the city statutory and official immunity to one sentence with no discussion. It is apparent that the district court found, as we do, that statutory immunity and official immunity are not at issue; this is a contract case and there are material fact issues in dispute. However, it makes a cleaner record if respondent’s counterclaims, sounding in tort, are dismissed, because to the extent that they might have any viability as a counterclaim, the city enjoys statutory and official immunity.

The essential facts here are that respondent wanted to build a parking ramp for its business. If respondent owns it, there will be property taxes to pay. If the city buys it, those taxes disappear. For the city to buy it, it must issue bonds, putting taxpayers at risk. To cover that risk, the city required respondent to agree to cover any shortfall. At the time of the hearing, the shortfall was approximately $2.5 million, and both sides agree that there has been a demand and a refusal. When the city sued for the balance, respondent essentially counterclaimed to cover itself. Put another way, respondent counterclaimed in an effort to preserve its defenses in the contract action. In the context of the case, respondent’s counterclaim is a defense tactic because the purpose was to preserve respondent’s ability to present its defenses to the contract action on the merits. At oral argument, respondent readily conceded that it had no claim for any independent monetary damages outside of its desire to avoid liability for appellants’ claimed monetary damages in the breach-of-contract suit.

To the extent that the district court’s denial of appellants’ motion for summary judgment keeps alive respondent’s alleged counterclaims, that denial as to the counterclaims is reversed, and respondent’s counterclaims are dismissed.

Our decision does not affect in any way respondent’s ability to attempt to prove as a defense to the breach of contract its two salient claims, which, as we set out above, are (1) appellants intentionally did not provide negative information, and (2) appellants intentionally offered projections on income and expenses that they knew were flawed. Both sides agree that the record shows during the negotiations the concept of free sharing of information by appellants. Appellants claim that does not mean they have to submit every single document on every other study of a ramp (the city has bought and leased close to a dozen other ramps). Those are trial issues. Both sides have every opportunity to prove their own due diligence during negotiations. Discovery is still open.

DECISION

Immunity is a defense to a tort action. This is a contract action. We reverse the district court’s denial of appellants’ motion for summary judgment as to respondent’s counterclaims, and dismiss the counterclaims. We emphasize that our decision in no way affects respondent’s ability to attempt to prove, as a defense to the breach of contact, its claims. Respondent’s claims are that appellants’ own actions prevented it from prevailing on the contract issue. Respondent can present its defenses even when respondent’s defense parallels its dismissed tort counterclaims.

Reversed and remanded.


author: MINGE, Judge.

text:
    ENTERPRISE COMMUNICATIONS, INC., Relator, v. DEPARTMENT OF EMPLOYMENT ECONOMIC DEVELOPMENT, Respondent.
    No. A05-2513.
    Court of Appeals of Minnesota.
    Dec. 19, 2006.

      Richard S. Eskola, Columbia Heights, MN, for relator.
    Linda A. Holmes, Lee B. Nelson, St. Paul, MN, for respondent.
    Considered and decided by MINGE, Presiding Judge; LANSING, Judge; and KLAPHAKE, Judge.
   OPINION

MINGE, Judge.

In an earlier proceeding, relator employer challenged the initial qualification of a former employee for unemployment benefits, and we upheld the grant of benefits. Subsequently, relator objected to the eligibility of the former employee for continuing unemployment benefits. Relator then challenged the unemployment tax-rate increase assigned to it by the respondent Department of Employment and Economic Development (DEED), claiming that DEED improperly continued to pay benefits to that employee and that DEED should not have included those benefits in computing relator’s employment experience rating. Relator now appeals the unemployment law judge’s (ULJ) decision to uphold the tax rate in addition to the ULJ’s failure to act on the eligibility dispute. Relator also appeals the denial of certain discovery and subpoena requests and asserts that it was denied a fair hearing due to improper ex parte communications. Because this court upheld the initial employee benefit determination, because DEED’S calculation of relator’s rate properly recognizes the cost of benefits actually paid, because the review of the tax rate is limited to computation errors, and because there is no evidence of a computation error, we affirm the tax-rate determination. However, because the employee’s ongoing eligibility for benefits was not previously before this court and because DEED apparently has not acted on relator’s claim that the employee lost eligibility for benefits, we reverse and remand that issue for further proceedings. Because of our rulings on the tax rate and the remand, appellant’s discovery, subpoena, and ex parte claims are not relevant to the tax-rate proceeding, but should be considered in any subsequent proceeding on eligibility.

FACTS

Nancy Garrison worked as a part-time consultant for relator Enterprise Communications, Inc.-from September 1997 until January 28, 2004, when she was laid off because her job assignment at Imation Corporation ended. Garrison established an unemployment benefit account effective February 15, 2004. Relator challenged DEED’S decision to grant benefits. In an unpublished opinion, Enter. Commc’ns, Inc. v. Garrison, No. A04-1554, 2005 WL 1545314, at *1 (Minn.App. July 5, 2005), review denied (Minn. Sept. 20, 2005), this court affirmed the ULJ’s decision that Garrison was qualified to receive benefits. DEED paid Garrison unemployment benefits for the last three quarters of 2004.

At various times in 2005, relator contacted DEED, claiming that Garrison had not inquired about work as required by law and that she had not maintained her eligibility for benefits. Ultimately, relator raised its eligibility objection with DEED in accordance with DEED directions. Relator contacted DEED’S customer response unit, alleging the “incorrect paying of benefits to ... Garrison.... ” Relator also filed an online, unemployment-benefits fraud report. The record does not indicate that DEED acted on relator’s eligibility objection.

On December 7, 2004, DEED sent relator a notice of its unemployment tax-rate increase, reflecting the benefits Garrison received as part of relator’s experience rating. Based on the unemployment benefits paid, and relator’s taxable wages paid, the department determined relator’s 2005 unemployment insurance tax rate to be 3.46%. Relator filed a notice of protest of its assigned rate, citing “preparation errors.” Upon reconsideration, DEED determined that the tax rate was “correctly assigned in accordance with Minnesota law,” and affirmed the rate.

Relator disputed the affirmation notice and a de novo hearing was held before a ULJ. Relator claimed that DEED improperly charged its experience rating for benefits paid to Garrison and that DEED should recover improperly paid benefits. In preparing for the hearing before the ULJ, relator sought discovery of DEED records in Garrison’s file and requested subpoenas to compel attendance of witnesses. DEED rejected the discovery requests, the ULJ refused to issue subpoenas. The ULJ concluded that the tax rate had been properly computed and that the previous decision of this court precluded it from making determinations regarding Garrison’s continuing eligibility. It appears that DEED did not act on the continuing eligibility claim because, like the ULJ, it concluded this court’s prior decision precluded it from doing so.

Relator submitted a request for reconsideration, and the ULJ affirmed the decision. This certiorari appeal followed.

ISSUES

I. Did the ULJ err in concluding that relator’s tax rate is correct?
II. Did the ULJ err in refusing to consider relator’s challenge to Garrison’s continuing eligibility for unemployment benefits?
III. Did the ULJ err in failing to issue subpoenas?
IV. Was relator prejudiced by DEED’S refusal to grant access to documents?
V. Was relator prejudiced by improper ex parte communication by the ULJ?

ANALYSIS

When reviewing a ULJ’s decision, this court may affirm, remand for further proceedings, or reverse or modify

if the substantial rights of the petitioner may have been prejudiced because the findings, inferences, conclusions, or decision are:
(1) in violation of constitutional provisions;
(2) in excess of the statutory authority or jurisdiction of the department;
(3) made upon unlawful procedure;
(4) affected by other error of law;
(5) unsupported by substantial evidence in view of the entire record as submitted; or
(6)arbitrary or capricious.

Minn.Stat. § 268.105, subd. 7(d) (Supp. 2005). A reviewing court must view the ULJ’s findings in the light most favorable to the decision. White v. Metro. Med. Ctr., 332 N.W.2d 25, 26 (Minn.1983). But, an appellate court exercises its independent judgment with respect to questions of law. Ress v. Abbott Nw. Hosp., Inc., 448 N.W.2d 519, 523 (Minn.1989).

I.

The first issue is whether the ULJ erred in concluding that relator’s tax rate is correct. Relator contends that its rate is incorrect because the rate includes benefits that were improperly paid to an ineligible employee, and raises an issue on the merits as to Garrison’s eligibility. Consequently, we must initially address the issue of whether the merits of a former employee’s eligibility are properly raised in a challenge to a tax-rate determination.

DEED uses the unemployment benefits it pays to calculate the former employer’s future tax rate. Minn.Stat. § 268.047, subd. 1 (2004). But, under a safe harbor provision, benefits that are “determined overpaid” are not used in computing the tax rate. Id., subd. 2(8) (2004). An overpayment results when an applicant is held to be “disqualified or ineligible for unemployment benefits.... ” Minn.Stat. § 268.101, subd. 6 (2004). The commissioner must ensure “the proper payment of unemployment benefits-” Minn.Stat. § 268.069, subd. 2 (2004).

The relevant statutes establish the procedure for eligibility determination issues. An employer has the opportunity to raise eligibility issues “in a manner prescribed by the commissioner.... ” Minn.Stat. § 268.101, subd. 1(b) (Supp. 2005). DEED must “determine any issue of eligibility raised by an employer....” Id., subd. 3(a) (2004). DEED must then send “a determination of eligibility or a determination of ineligibility” to both the former employee and the employer. Id., subd. 3(a), (b) (2004). DEED’S “determination of eligibility or ... ineligibility” is final unless an appeal is filed within 30 calendar days after being sent. Id., subd. 3(d) (2004).

The statutes establish a separate procedure for tax-rate appeals. DEED is authorized by statute to review tax rates for “computation or assignment” errors upon an employer’s filed protest. Minn.Stat. § 268.051, subd. 6(c) (Supp. 2005). “Computation” refers to the calculation of an employer’s experience rating. Id., subd. 3 (2004). “Assignment” refers to the tax-rate assignment for new employers. Id., subd. 5 (2004). Unlike the eligibility statute, the tax-rate statute does not require that the benefit recipient receive notification. Compare id., subd. 6(c) with Minn.Stat. § 268.101, subd. 3(a). Upon a timely appeal, a ULJ holds a de novo hearing. Minn.Stat. § 268.105, subd. 1(a) (Supp. 2005). Upon a writ of certiorari, the court of appeals then reviews the ULJ’s decision. Id., subd. 7(a) (Supp. 2005). Again, there is no requirement that the benefit recipient be notified.

Because there are separate review processes for eligibility and tax rates, because the recipient of benefits is not notified of or allowed to participate in the tax-rate review proceeding, and because that participation is essential for a fair eligibility determination, we conclude that the tax-rate hearing was an inappropriate forum to determine relator’s claims that Garrison was ineligible for unemployment benefits.

This leaves the question of whether the ULJ erred in determining whether relator’s tax rate is correct. When reviewing relator’s rate, DEED considered only the existence of computation errors because relator is not a new employer. Upon receiving relator’s dispute of its tax-rate assignment, DEED affirmed the rate as correct. A review of the tax-rate hearing transcript reveals that relator presented no evidence tending to show a computation error. Rather, relator focused on Garrison’s alleged noncompliance with statutory reporting requirements and alleged ineligibility to receive unemployment benefits. We conclude that the ULJ did not err in finding that DEED correctly calculated relator’s 2005 tax rate.

II.

The second issue is whether the ULJ, and apparently DEED, erred in concluding that this court’s previous decision precludes further inquiry into Garrison’s eligibility and in not considering relator’s challenge to that eligibility. In this court’s 2005 review of ECI’s claims, we determined whether “Garrison was qualified to receive unemployment benefits....” Enter. Commc’ns, Inc., File No. A04-1554, 2005 WL 1545314, at *1 (Minn.App. July 5, 2005), review denied (Minn. Sept. 20, 2005). We applied Minn.Stat. § 268.095 (Supp.2003), which pertains to an applicant’s initial disqualification to receive benefits. This court neither cited to nor applied the portions of Minn.Stat. § 268.085 that concern continuing eligibility for benefits. Relator now challenges Garrison’s continuing eligibility. This court’s previous decision does not preclude a determination of Garrison’s ongoing eligibility to receive unemployment benefits, so long as that issue is appropriately raised.

The record discloses that relator raised an issue of eligibility with DEED in accordance with instructions given to relator by a DEED employee. See Minn.Stat. § 268.101, subd. 1(b). DEED can determine eligibility issues regarding an applicant’s “failfure] to provide ... requested information on an issue of eligibility” if those issues are raised within two years of a benefit account’s establishment. Id., subd. 3(c) (2004). Relator claims that Garrison has not inquired about employment opportunities with relator and questions whether Garrison has reported her failure to inquire to DEED. Garrison established her benefit account on February 15, 2004. On August 2, 2005, relator filed an electronic fraud report detailing its .eligibility concerns. Relator’s requests for an eligibility determination were timely. Although it was not appropriate for the ULJ to consider this eligibility issue in conjunction with the tax-rate appeal, it appears that relator had more generally challenged Garrison’s eligibility and that DEED has not acted on relator’s eligibility requests as Minn.Stat. § 268.101, subd. 8(a) requires. The apparent unwillingness of DEED to act on relator’s objection to eligibility was evident at the time of the tax-rate hearing. We conclude, under the circumstances, that this apparent refusal to act was effectively a denial.

Relator urges that we decide the eligibility question without remand. But, because the issue was not considered below, because Garrison has not participated in consideration of the issue, and because the factual record is not fully developed and an agency decision has not been made, this court will not determine Garrison’s eligibility to receive unemployment benefits. See Ntamere v. Decisionone Corp., 673 N.W.2d 179, 182 (remanding for further development of the record). Thus, we reverse and remand with instructions for DEED to consider the eligibility issue.

III.

The next issue is whether the ULJ erred in failing to issue subpoenas for tax-rate hearing testimony. A ULJ “may ... issue subpoenas to compel the attendance of witnesses and the production of documents and other personal property considered necessary as evidence in connection with the subject matter of an evidentiary hearing.” Minn.Stat. § 268.105, subd. 4 (2004). The ULJ may deny a subpoena request “if the testimony or documents sought would be irrelevant, immaterial, or unduly cumulative or repetitious.” Minn. R. 3310.2914, subp. 2 (2005).

Because of the limited nature of the tax-rate proceeding, the evidence relator sought was not relevant, and we affirm the subpoena decision with respect to that proceeding. However, upon remand on eligibility, the ULJ should consider any subpoena requests according to the above-cited standards.

IV.

The fourth issue is whether relator was prejudiced by DEED’S failure to grant access to documents. Parties to a ULJ hearing are entitled to “reasonable access to department data necessary to represent themselves properly....” Minn. R. 3310.2913 (2005). As this rule indicates, access to DEED records is not absolute.

Because of the limited nature of the tax-rate proceeding, the evidence relator sought was not relevant, and we affirm the document-request decision with respect to that proceeding. However, upon remand on eligibility, DEED should consider relator’s requests for documents under the appropriate standard.

V.

The final issue is whether improper ex parte communication by the ULJ prejudiced relator. The rules governing ULJ hearings prohibit ex parte communication between the ULJ and any party:

Private communication between a[ULJ] assigned to an appeal and one or more of the parties to an appeal, in the absence of the other parties to the appeal, is forbidden if it relates to the substance of the matter at issue. Private communication is to be avoided even when it does not relate to the subject matter of the appeal if it would create the appearance of impropriety.

Minn. R. 3310.2923 (2005). Appellate courts will reverse a case in which improper ex parte communication occurs. See, e.g., Meinzer v. Buhl 66 C & B Warehouse Distrib., Inc., 584 N.W.2d 5, 7 (Minn.App.1998) (overturning reemployment insurance judge’s decision when a tape recording of the hearing demonstrated that the judge and opposing party “discussed some pieces of evidence and laughed” when Meinzer left the room).

Relator’s allegations of improper ex parte communications do not appear directed at the tax-rate issue, but rather the eligibility question. Accordingly, we do not further consider this issue except to note that we assume that the ULJ and DEED will maintain their traditional adherence to proper hearing standards upon remand.

DECISION

Although the ULJ erred in its determination that this court’s previous decision regarding qualification for unemployment benefits precludes any review of ongoing eligibility, a tax-rate hearing is not the proper proceeding to review an eligibility issue and we affirm its tax-rate determination. DEED is required to consider relator’s challenge to eligibility. This court declines to consider an employer raised eligibility determination until DEED has fully considered the issue. Relator’s subpoena, discovery, and ex parte issues are not relevant to the tax-rate matter, but may become relevant in a subsequent eligibility proceeding.

Affirmed in part, reversed in part, and remanded.

      . "[W]here administrative inaction has precisely the same impact on the rights of parties as denial of relief, and agency inaction is tantamount to final agency action,” a court may review the inaction. 2 Am.Jur.2d Administrative Law § 444 (2004).