author: G. BARRY ANDERSON, Judge

text:
    Evan BALASURIYA, Appellant, v. Jeffrey BEMEL, d/b/a Triple B Investments, et al., Respondents.
    No. CX-99-2190.
    Court of Appeals of Minnesota.
    Sept. 26, 2000.
    Review Denied Nov. 21, 2000.

      Brian F. Kidwell, Leonard O’Brien Wilford Spencer & Gale, Ltd., St. Paul, for appellant.
    William L. Moran, Nancy A. Proffitt, Murnane, Conlin, White & Brandt, St. Paul, for respondents.
    Considered and decided by SHUMAKER, Presiding Judge, ANDERSON, Judge, and PARKER, Judge.

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

   OPINION

G. BARRY ANDERSON, Judge

The present case is a culmination of a number of state and federal court proceedings between landlord/respondent Triple B Investments, tenani/appellant Evan Balasuriya and his corporation, Sri Lanka Curry House, Inc. On appeal, Balasuriya challenges the determination that Triple B acquired a tenancy interest in the lease, the dismissal of his claims for wrongful exclusion and conversion, and the distribution of funds paid into court. Because the district court did not err by determining Triple B’s status and did not err by dismissing Balasuriya’s claims, we affirm in part. Because the district court erred by awarding Triple B rent, we reverse in part and remand.

FACTS

Appellant Evan Balasuriya is the president of Sri Lanka Curry House, Inc. (“the corporation”), a restaurant in Minneapolis. In 1992, the corporation leased a floor of a building from respondent Triple B Investments for the purpose of opening its restaurant. The lease names as tenants “Evan and Heather Balasuriya, jointly and severally, D/B/A SRI LANKA CURRY HOUSE, INC, a Minnesota Corporation ('Lessee’).” The original lease period was three years. The corporation would later exercise an option extending the lease through April 30,1999.

From 1994 through 1996, the parties had a number of disputes resulting in unlawful detainer actions. Ultimately, the parties entered into a settlement agreement that altered some of the terms of the lease. The agreement was signed by Evan Bala-suriya as “Lessee — Sri Lanka Curry House, Inc. and Evan Balasuriya, individually.”

In 1997, the corporation was the subject of a reorganization proceeding under Chapter 11 of the Bankruptcy Code. The corporation moved to assume the unexpired lease in order to prevent the lease from terminating. The bankruptcy court granted the corporation’s motion, but noted that Balasuriya remained contractually obligated as set forth in the lease and settlement agreement. In April 1998, the bankruptcy court converted the case to a Chapter 7 proceeding and ordered that the corporation cease operation of the restaurant. On April 27, 1998, the bankruptcy court ordered that all locks on the leased premises be changed and that the corporation’s assets be seized.

Eventually, the trustee sought to sell the assets of the corporation, including its interest in the lease. The trustee filed a notice of sale indicating that Balasuriya had offered to buy the assets for $5,000. Triple B filed an objection to the sale and, thereafter, a bidding competition ensued. Balasuriya’s highest bid for the assets was $24,500. That was also the highest cash bid. Triple B’s last bid, which included credit for a waiver of certain claims, was $25,000. On May 21, 1998, the bankruptcy court confirmed the sale of assets to Triple B.

Balasuriya filed a complaint in state district court asserting claims against Triple B for breach of contract, conversion, wrongful exclusion, defamation, and tor-tious interference with prospective business relations. Triple B made a motion for partial summary judgment, essentially seeking a determination that Balasuriya had no interest in the leasehold. Balasuri-ya responded with a motion for the return of possession of the leased premises and personal property. On October 26, 1998, the district court issued an order denying Triple B’s motion and denying Balasuriya’s motion with respect to return of the personal property. The court ruled that Bala-suriya was an individual tenant under the lease and settlement agreement. The court noted that, by virtue of the bankruptcy sale, Balasuriya became a co-tenant with Triple B. The court also recognized that there could be inherent difficulties in decision-making as to how the property should be utilized.

Triple B subsequently filed a motion for a partition by sale. Because Balasuriya had not been allowed access to the property by Triple B, he made a motion to be given keys to the premises. On December 7,1998, the district court issued an interim order directing Triple B to provide Balasu-riya with keys and unrestricted access to the property. Although Balasuriya was given access to the property, Triple B continued to prohibit him from operating his restaurant. On February 9, 1999, the district court ordered a partition sale of the leasehold. Eventually, approximately $60,000 was paid into court as proceeds from the sale of the leasehold and other property.

Triple B moved for summary judgment on all of Balasuriya’s claims. The district court granted the motion in part, dismissing all of the claims except Balasuriya’s claim for conversion of his personal property. A few days later, the district court dismissed the conversion claim as well.

Balasuriya filed a motion seeking distribution to himself of half of the proceeds paid into court. Later, Balasuriya filed a second motion for distribution claiming entitlement to all of the funds and, for the first time, arguing that the sale of the corporation’s interest in the lease to Triple B was invalid. Triple B asserted a claim against the deposited funds for unpaid rent, utility bills, and attorney fees. In response to an objection by Balasuriya as to the procedural propriety of the claims, the district court granted Triple B leave to amend its complaint. Balasuriya’s former and current attorneys also filed motions seeking adjudication of their liens against the escrowed funds.

On August 26 and November 8, 1999, the district court issued orders distributing the sale proceeds. The vast majority of the funds were distributed to Triple B. The court also ordered that the attorneys’ hens attached only to the amount awarded to Balasuriya.

ISSUES

. I. Did the district court err by concluding that Triple B had purchased the corporation’s interest in the lease?

II. Did the district court err by dismissing Balasuriya’s claims for wrongful exclusion and conversion?

III. Did the district court err in its distribution of funds?

ANALYSIS

I.

Balasuriya argues that Triple B was never validly assigned the corporation’s interest in the lease and, thus, never had co-tenant status. More specifically, Balasuriya contends that the bankruptcy trustee did not properly assume the corporation’s lease interest, a prerequisite to assigning that interest to Triple B under the Bankruptcy Code. In his brief, Balasu-riya develops at length the law relating to assumption of unexpired leases under the code. A detailed examination of bankruptcy principles is unnecessary and inappropriate in this appeal, however, because the issue is controlled by res judicata and collateral estoppel.

Res judicata prevents relitigation of all claims actually litigated or which could have been litigated 'in a previous action. Mattson v. Underwriters at Lloyds of London, 414 N.W.2d 717, 719 (Minn.1987). Issues actually litigated and necessarily determined in a prior action are barred under the doctrine of collateral estoppel. Loo v. Loo, 520 N.W.2d 740, 744 n. 1 (Minn.1994). The doctrines of res judicata and collateral estoppel apply to court orders, as well as judgments, when they are final and subject to appeal. Nelson v. Auman, 221 Minn. 46, 48-49, 20 N.W.2d 702, 704 (1945).

The assignment of the corporation’s leasehold interest to Triple B was confirmed by an order of the bankruptcy court and was not appealed. A confirmed sale in bankruptcy transfers legal and equitable title to the purchaser. BAACT Corp. v. Executive Aero, Inc., 312 Minn. 143, 147, 251 N.W.2d 107, 109 (1977). A party may not collaterally attack an order of a bankruptcy court confirming a sale by the trustee. Id. Counsel for Balasuriya, who did not represent him in the bankruptcy proceedings, has marshaled a thorough and detailed critique of the bankruptcy proceedings here, particularly the problems associated with the bid ultimately accepted by the bankruptcy court. Unfortunately for Balasuriya, in the present case, the district court properly concluded that Balasuriya’s arguments regarding the invalidity of the assignment constituted an improper collateral attack on the bankruptcy court’s confirmation order. The bankruptcy court necessarily determined that the assignment was valid and, since Balasuriya apparently elected against an appeal in the bankruptcy proceedings, Ba-lasuriya cannot now argue that it was not.

Balasuriya argues that collateral estoppel does not apply because his role during the bankruptcy proceedings was as an unsuccessful bidder, not a party. But the doctrine of collateral estoppel applies not only to parties to a prior action, but also to their privies. See Reil v. Benjamin, 584 N.W.2d 442, 445 (Minn.App.1998) (person in privity with a party to a prior action collaterally estopped), review denied (Minn. Nov. 17, 1998). Privity must be determined under the individual facts of each case. Johnson v. Hunter, 447 N.W.2d 871, 874 (Minn.1989). In the context of res judicata, privies are nonparties who are so connected with the litigation that the judgment should determine their interests as well as those of the actual parties. Denzer v. Frisch, 430 N.W.2d 471, 473 (Minn.App.1988). Privies include nonparties who control an action and “those whose interests are represented by a party to thb action.” Margo-Kraft Distribs., Inc. v. Minneapolis Gas Co., 294 Minn. 274, 278, 200 N.W.2d 45, 48 (1972) (citation omitted).

As a co-tenant, Balasuriya was in privity with the corporation, at least with respect to the sale of the leasehold in the prior action. His interests were clearly aligned with those of the corporation. Moreover, as president of the corporation, he generally controlled the litigation. Simply stated, Balasuriya was so connected with the bankruptcy that the proceedings should bind him as well. ' See Towle v. Boeing Airplane Co., 364 F.2d 590, 593 (8th Cir. 1966) (controlling stockholders, directors and officers in corporation were sufficiently connected with the corporation to support a finding of privity). Under these circumstances, we cannot allow Balasuriya to collaterally challenge the bankruptcy proceedings solely because he was not an actual party to the action.

II.

Balasuriya challenges the grant of summary judgment on his claim for wrongful exclusion. In reviewing the grant or denial of summary judgment, this court must determine whether any genuine issues of material fact exist and whether the district court erred in its application of the law. Wartnick v. Moss & Barnett, 490 N.W.2d 108, 112 (Minn.1992). The court must view the evidence in the light most favorable to the party against whom judgment was granted. State by Beaulieu v. City of Mounds View, 518 N.W.2d 567, 571 (Minn.1994).

The district court concluded that Balasu-riya and Triple B were co-tenants. Accordingly, Balasuriya contends that he was wrongfully excluded from the premises, first, by being allowed no access for a period and, second, by being prohibited from operating his restaurant after he had been allowed access. The circumstances of this case, where a landlord purchases a co-tenant’s leasehold interest and becomes a co-tenant itself with interests completely adverse to the other tenant, are unique.

The district court noted that Triple B’s exclusion of Balasuriya from April 27,1998 through June 5, 1998 (the close of bankruptcy proceedings), was not “wrongful” because it was authorized by the bankruptcy court order. The court implied that the exclusion of Balasuriya may have been wrongful from June 5 to December 7,1998, the date of the court-ordered access. Nevertheless, the court ruled that Balasuriya had failed to establish damages because Triple B, as a co-tenant as opposed to lessor, was entitled to prevent Balasuriya from operating his restaurant on the premises.

The supreme court has recognized that “each cotenant has at all times the right to enter upon and enjoy every part of the common estate.” Petraborg v. Zontelli, 217 Minn. 536, 540, 15 N.W.2d 174, 177 (1944). Citing Petraborg, Balasuriya argues that he was entitled, as a co-tenant, to operate his business on the leased property. But a co-tenant is not entitled to exclude or impair the rights of other co-tenants. Id. The operation of the restaurant would have effectively excluded Triple B and impaired its right as co-tenant. We conclude that Triple B, as a co-tenant, was entitled to prohibit Balasuriya from operating the restaurant and that Balasuriya has no claim for damages as far as the potential loss of income resulting, from the prohibition. As we explain below, however, the exclusion of Balasuriya has important ramifications on Triple B’s ability to demand rent.

Balasuriya also argues that the district court erred by granting summary judgment in favor of Triple B on his conversion of personal property claim.. There is no dispute that Triple B refused to allow Balasuriya to remove personal property from the premises. But the lease, agreed to by Balasuriya, provides that, in the event of a failure to pay rent, the lessee could not remove property from the premises. Given Balasuriya’s failure to pay rent, Triple B’s refusal to allow removal of the property was justified and did not constitute conversion. See Naegele Outdoor Advertising, Inc. v. Minneapolis Community Dev. Agency, 551 N.W.2d 235, 238 (Minn.App.1996) (where possession is held through proper legal channels a conversion claim will not he).

III.

Balasuriya argues that the district court should not have allowed Triple B to amend its pleadings to include counterclaims for the recovery of Balasuriya’s financial obligations to Triple B as lessor. The district court should grant leave for a party to amend its pleadings if justice so requires and the other party will not be prejudiced. Smith v. Woodwind Homes, Inc., 605 N.W.2d 418, 424 (Minn.App.2000). The decision to allow amendment rests within the wide discretion of the trial court and will not be reversed absent an abuse of that discretion. Dennis Simmons D.D.S., P.A. v. Modern Aero, Inc., 603 N.W.2d 336, 338 (Minn.App.1999).

The parties’ relative obligations were at issue throughout the case. Moreover, Ba-lasuriya did not provide any reason to the district court why he would be prejudiced by the amendment and has also failed to establish prejudice on appeal. See Midway Ctr. Assocs. v. Midway Ctr., Inc., 306 Minn. 352, 356, 237 N.W.2d 76, 78 (1975) (to prevail on appeal, appellants must show both error and that error caused prejudice); Minn. R. Civ. P. 61 (harmless error to be ignored). The district court did not abuse its discretion in allowing the amendment of the pleadings.

Balasuriya next argues that, even if Triple B prevailed on its counterclaims, it cannot be awarded its damages from the sale proceeds that were paid into court. But there is no authority for the proposition that funds paid into court by both parties cannot be distributed according to the respective claims of the parties.

We nevertheless conclude that the district court erred in its distribution of the funds. The district court awarded Triple B rent for periods in which Balasu-riya was excluded from access to and use of the premises. The district court’s rationale was that Balasuriya was excluded by Triple B in its capacity as co-tenant and that Triple B could still demand rent under its landlord status, as if it were a separate entity. The district court’s analysis is neither tenable nor fair, but a legal fiction that disregards the true nature of Triple B’s status. We therefore hold that when a landlord, who is also a co-tenant, excludes his co-tenant from access to the leased premises or grants access but refuses to allow the co-tenant to engage in the only permissible use of the premises, the landlord/co-tenant cannot also demand rent. Because the district court erred by awarding rent, we reverse and remand.

DECISION

The district court correctly concluded that Triple B had acquired a tenancy interest in the lease and did not err by dismissing Balasuriya’s claims for wrongful exclusion and conversion. The district court, however, erred by awarding Triple B rent.

Affirmed in part, reversed in part and remanded.

      . Because Triple B has not challenged this determination, we do not analyze this point further and do not disturb the court's ruling.

      . Balasuriya also argues that the liens of his attorneys have priority over Triple B's claims. Balasuriya’s argument on this point is incomprehensible, lacks any citation to legal authority, and we decline to address it. See State v. Modern Recycling, Inc., 558 N.W.2d 770, 772 (Minn.App.1997) (assignment of error based on mere assertion and not supported by argument or authority is waived).


source: Caselaw Access Project

author: KLAPHAKE, Judge

license: Public Domain

text:
    CITY OF RED WING, Minnesota, et al., Respondents, v. ELLSWORTH COMMUNITY SCHOOL DISTRICT, et al., Defendants, Horace Mann Insurance Company, Appellant.
    No. C9-00-549.
    Court of Appeals of Minnesota.
    Oct. 3, 2000.

      William R. Sieben, Sharon L. Van Dyck, Schwebel, Goetz & Sieben, P.A., Minneapolis, for respondents.
    Robert J. McGuire, Jo Ann Strauss, Cousineau, McGuire & Anderson, Chartered, Minneapolis, for appellant.
    Considered and decided by SCHUMACHER, Presiding Judge, KLAPHAKE, Judge, and HALBROOKS, Judge.
   OPINION

KLAPHAKE, Judge

Horace Mann Insurance Company (Horace Mann) appeals from a grant of summary judgment to respondents, who include the City of Red Wing (Red Wing), Duane and Kathy Schuh (the Schuhs), and their minor daughter. The Schuhs’ daughter, a Wisconsin high school student, was injured in a theatre located in Red Wing that had been rented by Peter Dulak, her Wisconsin teacher.

The Schuhs and their daughter brought two personal injury actions: one against Dulak and another against Red Wing, the Ellsworth Community School District (the Wisconsin school district), and Ken D. Smith, a general contractor whom the Schuhs later voluntarily dismissed from this action. The Schuhs also joined with Red Wing and Smith in bringing a separate declaratory judgment action against the Wisconsin school district, Dulak, and insurers Employers Mutual Casualty Company (EMC) and Horace Mann. EMC insured the Wisconsin school district and Dulak, while Horace Mann provided excess insurance to Dulak under a privately purchased policy.

Horace Mann moved for summary judgment, arguing that Wis. Stat. § 893.80(3) (1997) governed Dulak’s liability in the Schuhs’ negligence claim against him and that the EMC policy was primary. The motion was heard in May 1999.

In July 1999, while a decision was pending on the motion, the Schuhs’ attorney informed the district court that the parties intended to settle with EMC for $5,000,000. The settlement further intended to release Dulak from any claim up to $6,000,000 and in excess of $7,000,000, thus limiting Dulak’s exposure to the Horace Mann policy limits. The parties characterized the settlement as a “Loy Release.” See Drake v. Ryan, 514 N.W.2d 785, 789 (Minn.1994) (endorsing settlements pursuant to Loy v. Bunderson, 107 Wis.2d 400, 320 N.W.2d 175 (1982), in which plaintiff releases tortfeasor and primary liability insurer up to limits of coverage, but expressly retains right to pursue claim for additional damages from excess liability insurer).

In August 1999, the district court issued an order consolidating the three actions. The court also issued an order denying Horace Mann’s summary judgment motion and concluding that Wis. Stat. § 893.80 did not apply to these actions under a choice-of-law analysis. The court further concluded that EMC’s commercial general liability policy, with limits of $1,000,000, was primary; EiyiC’s umbrella policy, with limits of $5,000,000, was secondary; and Horace Mann’s policy, with limits of $1,000,000, provided excess coverage over all other policies.

Horace Mann brought a second motion for partial summary judgment to dismiss all tort claims against Dulak, arguing that under Minnesota law, Dulak’s liability is capped at $200,000 and that the Schuhs had settled with Dulak well in excess of that amount. In February 2000, the district court denied Horace Mann’s motion and concluded that under Minn.Stat. §§ 466.04 and 466.06 (1996), the Wisconsin school district’s purchase of insurance waived the liability cap up to $6,000,000 and that the Horace Mann policy was “other collectible insurance” under Minn.Stat. § 466.06.

Horace Mann appeals.

FACTS

On November 11, 1997, the Schuhs’ 16-year-old daughter fell through an open, unguarded trap door on the stage of the T.B. Sheldon Theatre in Red Wing. She struck the cement floor below and is now a quadriplegic.

At the time of her fall, the Schuhs’ daughter was a Wisconsin high school junior. She was taking a theater class, which was taught by Dulak, a Minnesota resident employed by the Wisconsin school district.

In May 1997, Dulak, with the knowledge and approval of the Wisconsin school district, rented the theater for the class production of The Wizard of Oz. The theater is in Red Wing. Dulak signed the theater’s standard rental contract, which required him to obtain up to $1,000,000 in liability coverage to cover losses associated with the use of the theater and to indemnify the theater for any losses for which it or the city might be deemed responsible. The agreement also required Dulak to obtain workers’ compensation insurance in amounts mandated by the State of Minnesota.

At the time of the accident, the Wisconsin school district and Dulak, as its employee, were insured by EMC under two liability policies: the first provided $1,000,000 for bodily injury claims and the second provided $5,000,000 of umbrella liability coverage. Dulak was also insured by Horace Mann under a policy issued to the Wisconsin Education Association Council and National Education Association. The Horace Mann policy provided Dulak with $1,000,000 of liability coverage for losses “sustained by the insured by reason of liability imposed by law for damage caused by an occurrence in the course of the insured’s educational employment activities.”

ISSUES

1. Is Dulak, an employee of a Wisconsin school district, entitled to similar limitations on liability as any employee of a Minnesota school district?

2. Does the Horace Mann policy constitute “valid and collectible insurance” under Minn.Stat. § 466.06?

ANALYSIS

Summary judgment is appropriately granted when no genuine issues of material fact exist and either party is entitled to judgment as a matter of law. Minn. R. Civ. P. 56.03. Statutory construction is a question of law and fully reviewable by this court. Grinnell Mut. Reinsurance Co. v. City of Cokato, 608 N.W.2d 665, 667 (Minn.App.1999).

I.

In its first summary judgment motion, Horace Mann argued that Dulak’s liability is governed by Wisconsin municipal liability law, which caps any tort damages recoverable against Dulak at $50,000. Wis. Stat. § 893.80(3) (1997); see Linville v. City of Janesville, 184 Wis.2d 705, 516 N.W.2d 427, 433 (1994) (city's purchase of liability insurance in excess of $50,000 does not waive statutory liability cap for municipal tortfeasors); Keefer v. State Farm Fire & Cas. Co., 127 Wis.2d 41, 377 N.W.2d 632, 634 (1985) (plain language of Wisconsin statute limits recovery from governmental employee to statutory amount). In Minnesota, at the time of the accident, a municipality’s tort liability was capped at $200,000 per claimant; this cap did not apply, however, if waived by the purchase of insurance with higher limits. See Minn.Stat. §§ 466.04, subd. 1(1), 466.06 (1996).

Applying a choice-of-law analysis, the district court concluded that an actual conflict existed between Wisconsin and Minnesota law and that sufficient contacts existed with either state so that its laws could be constitutionally applied. The court then examined the five choice-influencing factors, and concluded that the most significant of those factors, the predictability of result, maintenance of interstate order, and advancement of Minnesota’s interests, all favored application of Minnesota law. See Jepson v. General Cas. Co., 513 N.W.2d 467, 470 (Minn.1994).

After submission of their motion papers, the parties reached a settlement patterned after the one in Drake v. Ryan, 514 N.W.2d 785 (Minn.1994). In a letter to the trial court, the Sehuhs’ attorney explained that under the terms of this settlement, the parties released Dulak from any claim up to $6,000,000 and in excess of $7,000,000, thus seeking to limit Dulak’s exposure to the Horace Mann policy limits. In its order denying Horace Mann’s summary judgment motion and concluding that Wisconsin law did not apply, the district court did not specifically address the direct effect of this settlement on its decision.

Horace Mann thereafter brought a second summary judgment motion, arguing that even under Minnesota law, Dulak’s liability was capped at $200,000; that the Wisconsin school district’s purchase of insurance did not waive Dulak’s liability limits, citing Nelson v. House, 402 N.W.2d 639, 641 (Minn.App.1987), review denied (Minn. May 18, 1987); and that the Sehuhs have settled with Dulak well in excess of that cap. Thus, Horace Mann argued, its policy could not be considered “valid and collectible” insurance under the terms of Minn.Stat. § 466.06, so as to waive Dulak’s limited liability cap of $200,000.

In opposition to Horace Mann’s second motion, the Sehuhs argued that Dulak should be treated as any other employee of a private corporation and that “there is no precedent for cloaking a sister state’s municipal employee with Minnesota’s sovereignty.” The Sehuhs further argued that Wisconsin functions as an independent sovereign only within its own borders and upon crossing into Minnesota, it loses its sovereignty and assumes the status of a private corporation.

As support for their position, the Sehuhs cited Nevada v. Hall, 440 U.S. 410, 99 S.Ct. 1182, 59 L.Ed.2d 416 (1979). In that case, California residents, who were injured in California by a negligent employee of the University of Nevada, brought suit in California court. Nevada claimed that its liability was limited to a $25,000 cap, as set out in Nevada statutes. The Supreme Court held that Nevada could not claim immunity from suit in California courts, but that states are free to accord each other immunity or to respect established limits of liability as a matter of comity. Id. at 416, 99 S.Ct. at 1186. The Court upheld the California court’s decision to enforce its own policy of full compensation, noting that in “further implementation of that policy, California has unequivocally waived its own immunity from liability for the torts committed by its own agents and authorized full recovery even against the sovereign.” Id. at 424, 99 S.Ct. at 1190.

Contrary to the Schuhs’ reading of Hall, employees of a sister state do not become private citizens, losing all immunities, once they cross state lines. Rather, “questions of interstate suability must be determined under the law of the forum,” which require a court to examine its own state’s policies and whether “this state would permit itself to be sued if it had engaged in the conduct assigned to [the sister state] in the present action.” Mianecki v. Second Judicial Dist. Ct., 99 Nev. 93, 658 P.2d 422, 424 (1983); see also Struebin v. State, 322 N.W.2d 84, 86 (Iowa 1982) (Iowa permits full compensation, even against the state for negligent maintenance of highways). Thus, the district court properly examined whether Minnesota’s municipal tort liability law, as set out in Minn.Stat. § 466.06, would allow the Schuhs to recover under the Horace Mann policy.

II.

In its order denying Horace Mann’s second summary judgment motion, the district court concluded that the Wisconsin school district’s purchase of $6,000,000 in insurance waived the liability limits for itself and Dulak, that the Wisconsin school district settled with the Schuhs for less than $6,000,000, and that Dulak’s excess Horace Mann policy became other valid and collectible insurance to the amount of the Wisconsin school district’s waiver of $6,000,000. Resolution of this case rests on application of the provisions of Minn.Stat. § 466.06 and the meaning of “valid and collectible insurance.”

A background of municipal tort liability sets the stage for our discussion. In 1962, the supreme court held that the doctrine of sovereign immunity, which excepted the state and its political subdivisions from liability for tortious conduct, was “unjust” and “archaic”; the court prospectively overruled the doctrine with respect to school districts and other subdivisions of the state. Spanel v. Mounds View Sch. Dist., 264 Minn. 279, 292-94, 118 N.W.2d 795, 803-04 (1962); see also Nieting v. Blondell, 306 Minn. 122, 132, 235 N.W.2d 597, 603 (1975) (prospectively abolishing tort immunity of state). The legislature followed each decision by abolishing the defense of sovereign immunity. 1976 Minn. Laws ch. 331, § 33 (enacting Minn. Stat. § 3.736); 1963 Minn. Laws ch. 798, §§ 1-17 (enacting Minn.Stat. §§ 466.01-17).

In each instance, the legislature provided certain exceptions to tort liability, most notably for “discretionary” acts. See Minn.Stat. §§ 3.736, subd. 3 (declaring that state and its employees are not liable for certain types of losses); 466.03 (setting out numerous exceptions in which municipality shall be immune from liability). The legislature also provided for certain monetary limits or “caps” on damages. Minn. Stat. §§ 3.376, subd. 4; 466.04. These limits apply to the liability of a governmental entity and its employees acting within the scope of their employment or in the performance of their duty. Minn.Stat. §§ 3.376, subd. 4; 466.04, subd. la.

These liability limits can be waived under Minn.Stat. § 466.06 (1996), which states in pertinent part:

The governing body of any municipality may procure insurance against liability of the municipality and its * * ⅜ employees * ⅜ * for damages * ⅜ * resulting from its torts and those of its * * * employees * * *, including torts specified in section 466.03 for which the municipality is immune from liability. The insurance may provide protection in excess of the limit of liability imposed by section 466.04. * * * The procurement of such insurance constitutes a waiver of the limits of governmental liability under section 4,66.04. only to the extent that valid and collectible insurance, including where applicable, proceeds from the Minnesota Guarantee Fund, exceeds those limits and covers the claim. The purchase of insurance has no other effect on the liability of the municipality or its employees.

(Emphasis added.) Absent such a waiver, however, district courts are obliged to impose the applicable liability limit “whenever damages exceed the statutory limit.” Snyder v. City of Minneapolis, 441 N.W.2d 781, 788 (Minn.1989) (liability limits of Minn.Stat. § 466.04 construed to be “complete defense to all damages in excess” of $200,000).

The issue here involves whether the Horace Mann policy can be considered “valid and collectible” insurance, so as to be included in the calculation of the extent of the waiver of liability limits. On its face, the phrase “valid and collectible” is ambiguous, because it is susceptible to more than one reasonable interpretation when applied to the facts of this case. See Turna v. Commissioner of Econ. Sec., 386 N.W.2d 702, 706 (Minn.1986). One interpretation allows inclusion of the Horace Mann policy, a liability policy purchased by an employee of a school district, to be included in the calculation of the extent of the waiver; the other interpretation excludes the Horace Mann policy.

When the language of a statute is ambiguous and not “explicit,” we must ascertain the intent of the legislature by considering, among other matters, the “circumstances under which [the law] was enacted,” the “contemporaneous legislative history,” and “[legislative * interpretations of the statute.” Minn.Stat. § 645.16 (1998). In addition, we must read the statute as a whole to “give effect to all its provisions.” Id.

Prior to 1992, Minn.Stat. .§ 466.06 stated:

The procurement of such insurance constitutes a waiver of the limits of governmental liability under section 466.04 to the extent of the liability stated in the policy but has no effect on the liability of the municipality beyond the coverage so provided.

Minn.Stat. § 466.06 (1990). Under this pre-1992 language, a municipality could waive its limits of liability by procuring insurance and the extent of that waiver was based on the coverage provided by “the policy” purchased by the municipality.

In 1992, the legislature amended Minn. Stat. § 466.06 and the language of Minn. Stat. § 3.376, striking the phrase “stated in the policy” and substituting the phrase “valid and collectible insurance.” 1992 Minn. Laws ch. 513, art. 4, §§ 26, 44. These amendments were enacted in response to a decision from this court, Pirkov-Middaugh v. Gillette Children’s Hosp., 479 N.W.2d 63, 68 (Minn.App.1991), in which we held that a hospital had waived its liability limits to the extent of coverage “stated in the policy” it had purchased, even though that insurance was no longer available because the insurer had become insolvent. The supreme court reversed our decision, based on the “plain meaning” of the pre-1992 statute; the court further examined the 1992 amendments and the legislature’s explanation that these amendments were intended to “clarify” and not change existing law. Pirkov-Middaugh v. Gillette Children’s Hosp., 495 N.W.2d 608, 610-11 (Minn.1993) (citing 1992 Minn. Laws ch. 513, art. 4, § 62 (“The amendments in this article to Minnesota Statutes, sections 3.736 * * * and 466.06, are intended to clarify, rather than to change, the original intent of the statutes amended.”)). Given the legislature’s intent to “clarify” and not change existing law by its amendment to Minn. Stat. § 466.06, we must read the current language of Minn.Stat. § 466.06 as consistent with its prior language.

Thus, Minn.Stat. § 466.06 and its waiver apply only to a school district’s purchase of insurance; any private insurance purchased by a school district employee cannot be used to calculate the total extent of that waiver. This interpretation is consistent with the pre-1992 language of Minn. Stat. § 466.06 and with case law that interprets Minn.Stat. § 466.06 as dealing only with a municipality’s ability to waive its liability limits. See Nelson, 402 N.W.2d at 641 (municipality’s tort immunity not waived when employee purchased private liability insurance); see also Cairl v. State, 323 N.W.2d 20, 26-27 (Minn.1982) (purchase of professional liability insurance by state employee did not constitute waiver of immunity). This interpretation also protects municipal employees by limiting their exposure to the liability limits set out in Minn.Stat. § 466.04, while still requiring the municipality to indemnify those employees found liable and not covered by privately purchased insurance. See Minn. Stat. § 466.07 (1998); Grinnell, 603 N.W.2d at 667 (municipal employees not entitled to indemnification under Minn. Stat. § 466.07, for amounts covered by employees’ private insurance). Finally, this interpretation furthers the legislative purposes behind the establishment of these limits on tort liability, which have been characterized as the “‘protection of the fiscal integrity and financial stability’ of state government.” Pirkov-Middaugh, 495 N.W.2d at 611 (citing Lienhard v. State, 431 N.W.2d 861, 867 (Minn.1988)).

DECISION

Dulak’s purchase of private, excess insurance through Horace Mann is not “valid and collectible insurance” that can be considered when determining the extent of the Wisconsin school district’s waiver of its liability limits. Because Dulak’s liability is limited to $200,000 and because the parties here have settled well in excess of that limit, the Horace Mann policy is not “valid and collectible” insurance under Minn.Stat. § 466.06.

The district court’s denial of Horace Mann’s second motion for summary judgment is therefore reversed.

Reversed.

      . This liability limit has been raised to $300,000, for claims arising from acts or omissions taking place on or after January 1, 1998. See 1997 Minn. Laws ch. 210, §§ 3, 4, 5.

      . Even under a choice-of-law analysis, the threshold issue is whether application of one state’s law over another is "outcome determinative” or creates an actual conflict. Jepson v. General Cas. Co., 513 N.W.2d 467, 469 (Minn. 1994). Thus, if Minnesota law would not allow recovery from Horace Mann under the facts of this case, and it is undisputed that Wisconsin law would not allow recovery, then the choice-of-law analysis ends here and we need not consider the remaining choice-of-law factors. See Richie v. Paramount Pictures Corp., 544 N.W.2d 21, 29-30 (Minn.1996) (where no actual conflict exists between Minnesota and New York law, court "need not reach issue of which law should be applied").


author: RANDALL, Judge.

text:
    STATE of Minnesota, Respondent, v. Wende Borg THOMPSON, Appellant.
    No. C7-99-2003.
    Court of Appeals of Minnesota.
    Oct. 3, 2000.

      Mike Hatch, Attorney General, and Clayton M. Robinson, Jr., St. Paul City Attorney, John H. Stechmann, Assistant City Attorney, St. Paul, for respondent,
    John M. Stuart, State Public Defender, Sharon E. Jacks, Assistant Public Defender, Minneapolis, for appellant.
    Considered and decided by RANDALL, Presiding Judge, HARTEN, Judge, and HALBROOKS, Judge.
   OPINION

RANDALL, Judge.

Appellant challenges her convictions of fifth-degree assault, obstruction of legal process, and disorderly conduct. Appellant argues that the district court violated her due-process right to a fair trial by excluding a statement she made to police and limiting her testimony. Appellant also argues that she was sentenced for multiple offenses arising out of the same behavior. We reverse and remand.

FACTS

Appellant Wende Borg Thompson’s children sold newspapers for the Pioneer Press and were supervised by Steven Um-land. According to Thompson, she became concerned about Umland’s relationship with her 13-year-old daughter and called Umland’s supervisor to complain. One week after her complaint, Umland appeared at Thompson’s house to deliver her children’s last paychecks. An altercation took place, and Thompson struck Umland in the face, resulting in a cut in his lip.

Umland called the police and two officers responded. They knocked on Thompson’s door, but she refused to speak to them or leave her house. A struggle ensued. The officers physically restrained Thompson and escorted her to the squad car. Sometime after Thompson’s arrest, she made the statement, “That punk has been having relations with my daughter,” to another officer.

Thompson was charged with fifth-degree assault, obstruction of legal process, and disorderly conduct. At the pretrial hearing, the state brought a motion in limine to suppress Thompson’s statement to the police and her testimony regarding her belief that Umland was having sexual relations with her daughter. The district court suppressed the evidence, deciding that the evidence was inflammatory, irrelevant, and unrelated to any legally recognized defense. After a jury trial, Thompson was convicted on all charges. This appeal followed Thompson’s sentencing.

ISSUES

1. Was appellant denied her due-process right to a fair trial because the district court suppressed her statement to police and precluded her from testifying about her motive for hitting the victim?

2. Did the district court err by imposing separate sentences on appellant’s fifth-degree assault and disorderly conduct convictions?

ANALYSIS

I. Evidentiary Issues

Thompson asserts that she was deprived of her due-process right to a fair trial because the district court suppressed her statement to police and precluded her from testifying about her motive for hitting Umland. We agree.

The Due Process Clauses of the United States and Minnesota Constitutions mandate that criminal defendants be treated with fundamental fairness. State v. Richards, 495 N.W.2d 187, 191 (Minn. 1992). This standard of fairness requires that criminal defendants be “ ‘afforded a meaningful opportunity to present a complete defense.’ ” Id. (quoting California v. Trombetta, 467 U.S. 479, 485, 104 S.Ct. 2528, 2532, 81 L.Ed.2d 413 (1984)). The Minnesota Supreme Court has deemed “it fundamental that criminal defendants have a due-process right to explain their conduct to a jury.” State v. Brechon, 352 N.W.2d 745, 751 (Minn.1984) (emphasis added) (citation omitted). Criminal defendants have a due-process right to give the jury an explanation of their conduct even if their motive is not a valid defense. State v. Rein, 477 N.W.2d 716, 719 (Minn.App. 1991), review denied (Minn. Jan. 30, 1992).

In State v. Wiltse, 386 N.W.2d 315, 316 (Minn.App.1986), review denied (Minn. June 30, 1986), the defendant was charged with violating an order for protection by entering the complainant’s home. The district court granted the state’s motion to suppress the defendant’s testimony explaining his actions leading to the criminal charge. Id. at 317. In reversing, this court stated that when an essential element of a crime turns on the presence of a defendant, “it is difficult to imagine” circumstances under which the defendant could be prevented from explaining his presence to the jury. Id. at 318. This court went on to hold that a defendant has the right to present evidence explaining the reasons for his presence at the scene of the alleged crime and deprivation of that right is reversible error. Id.; see also State v. Blank, 352 N.W.2d 91, 92 (Minn.App.1984) (recognizing long-established rule that provocative statements do not, by themselves, constitute defense to assault but some latitude should be allowed, at least in cross-examination by defendant, to show circumstances that led to assault), review denied (Minn. Sept. 20, 1984).

As in Wiltse, the district court here improperly excluded the evidence Thompson wanted to submit to explain her conduct. The district court suppressed this evidence because the court determined it was “inflammatory,” “irrelevant,” and “unconnected to any articulable, legally recognized defense.” We disagree with the district court’s suppression of the evidence that Thompson sought to introduce. It was not inflammatory or irrelevant. It was the reason Thompson, a woman, tried to hit Umland, a man. Also, we disagree with the district court’s determination that the evidence was “unrelated to any legally recognized defense.” This is not the test for the defendant’s constitutional right to present a case. Every single occurrence in the chain of events leading up to a crime does not have to be “a legally recognized defense,” any more than every piece of evidence, direct or circumstantial, that the state wishes to offer in a criminal case, has to be by itself “a legally recognized crime.” A case by the state may contain hundreds or thousands of small pieces of evidence which, standing alone, do not come close to constituting a crime, but each may be relevant and admissible because they form part of a lengthy chain showing the defendant committed a crime. This is similar to a criminal defendant’s constitutional right to present a defense. The defendant is also entitled to put in a chain, short or long, of evidence that he hopes will convince the jury of his case.

Thompson has an absolute right to tell the jury why she acted with aggression toward Umland. The weight and credibility of this evidence, if any, is for the jury, not the district court. The record does not show this was a bench trial. Rein makes it clear that defendants have a due process right to explain reasons for their conduct, even if the explanation is not' a perfect defense. See Rein, 477 N.W.2d at 719:

A district court cannot “edit” a conversation involving a defendant. It is the jury’s duty to weigh the evidence, not the court’s. See State v. Brocks, 587 N.W.2d 37, 42 (Minn.1998) (recognizing jury in best position to evaluate credibility of witnesses and weigh evidence, and therefore its verdict must be given due deference); see also Blank, 352 N.W.2d at 92 (observing “[ljawsuits are not tried in a vacuum”). As we noted in Blank, the district court can instruct the jury at the close of the case that provocative statements may not justify an assault. See Blank 352 N.W.2d at 92 (recognizing district court may instruct jury at close of case that “mere words do not justify an assault”). But in criminal cases, unlike civil cases, the district court cannot take the case away from the jury and direct a verdict for the prosecution.

The district court’s exclusion of this evidence substantially prejudiced Thompson. See State v. Post, 512 N.W.2d 99, 102 (Minn.1994) (stating where reasonable possibility verdict might have been different if evidence had been admitted, erroneous exclusion of evidence is prejudicial). Without the excluded information, the jury did not receive a complete picture of the incident and, as Thompson’s counsel asserted during the pretrial, the jury may have inferred Thompson was a “crazy woman who just assaults people” for no good reason. The prosecutor compounded, the district court’s error by stating in her opening and closing sentences that Thompson had “no good reason at all in- the presence of her two children to punch another individual.” The state’s conduct here bordered on unethical.- The state moved in chambers- to exclude Thompson’s- reason for hitting Umland, and had that motion granted. Then the state stood up in front of the jury and argued that “Thompson had no reason to do what she did.” . In fact, the prosecutor knew Thompson’s reason (might disagree with it, but still knew it!) because she had just gotten done “keeping it from the jury.” We conclude the district court denied Thompson her due-process right to a fair trial by excluding the statement she made to the police and, limiting her testimony as to her conversation with the police.

II. Sentencing

Thompson also asserts that because her convictions for fifth-degree assault and disorderly conduct arose from the same behavioral incident, her sentence for disorderly conduct must be vacated. Our resolution on the evidentiary issue makes it unnecessary to decide Thompson’s challenge to her sentence. We note, however, that if on retrial, Thompson is again convicted of disorderly conduct and fifth-degree assault and/or obstruction of legal process, the district court must determine whether the disorderly conduct conviction arose from the same behavioral incident as the fifth-degree assault and/or obstruction of legal process. See Minn. Stat. § 609.035, subd. 1 (1998) (stating if conduct constitutes more than one offense, person may be punished for only one offense); State v. Butterfield, 555 N.W.2d 526, 530 (Minn.App.1996) (recognizing whether offense is part of same behavioral incident is-factual determination), review denied (Minn. Dec. 17, 1996).

Finally, we note that Thompson has already served her 20-day sentence. The interests of justice require that she not receive any additional sentence if she is convicted on retrial. See State v. Holmes, 281 Minn. 294, 302, 161 N.W.2d 650, 655-56 (1968) (holding where defendant granted new trial on appeal, district court may not impose greater sentence after subsequent conviction than original sentence imposed). Thus, on remand to the district court, we suggest the court consider the issue of mootness and judicial economy before proceeding.

DECISION

The district court denied Thompson her due-process right to present a complete defense by suppressing a statement she made to the police and limiting her testimony.

On remand, if there is another trial and Thompson is convicted, the district court must not impose separate sentences for convictions arising out of a single behavioral incident.

Reversed and remanded.

      . The record is not clear about Thompson's sentence. The district court judge first sentenced Thompson to a general sentence of one year in the Ramsey County Workhouse but suspended that sentence for probation and 20 days in the workhouse. At a subsequent hearing, the district court stated that it intended to execute 20-day sentences for the disorderly conduct and obstruction-of-legal-process convictions and run them concurrently with the 20-day executed sentence for fifth-degree assault. The district court then went off the record to discuss the matter with Thompson's counsel, however, and no change in Thompson’s sentence was made on the record. Despite this, the parties agree that Thompson received separate, concurrent sentences.

      . The state asserts that because Thompson failed to object at trial to the prosecutor’s comment in her opening and closing statement that Thompson had "no good reason” to hit Umland, Thompson forfeited her right to challenge those statements on appeal. See State v. Odenbrett, 349 N.W.2d 265, 269 (Minn.1984) (recognizing appellate courts do not address issues not adequately raised nor considered below). Thompson does not contend, however, that the prosecutor’s statements should have been stricken. Instead, she argues that the district court erred by limiting her testimony and excluding a statement she made to the police. She challenged these evidentiary rulings when the state brought a motion in limine to suppress her statement to the police and exclude her testimony explaining why she struck Umland. Thus, Thompson has not waived the eviden-tiary issue she raises on appeal.


author: SHUMAKER, Judge.

text:
    In the Matter of the WELFARE OF S.J.D., Child.
    No. C5-99-2016.
    Court of Appeals of Minnesota.
    Oct. 10, 2000.

      John M. Stuart, State Public Defender, Charlann Winking, Assistant Public Defender, Minneapolis, for appellant.
    Mike Hatch, Attorney General, and Susan Gaertner, Ramsey County Attorney, Mark Nathan Lystig, Assistant County Attorney, St. Paul, for respondent.
    Considered and decided by SHUMAKER, Presiding Judge, ANDERSON, Judge, and FOLEY, Judge.

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

   OPINION

SHUMAKER, Judge.

Appellant S.J.D. challenges a district court order denying his motion to withdraw his waiver of a certification hearing. Because we find that his waiver was knowing, voluntary, and intelligent, we affirm.

FACTS

The state filed a delinquency petition in juvenile court charging 17-year-old S.J.D. with first-degree and third-degree assaults. The petition alleged that, on June 5, 1999, S.J.D. and others were “raging,” that is, drinking alcohol, acting crazy, and beating up anyone who walked by them. In that condition, S.J.D. and the others beat two men, stripped their clothes off, and left the men lying unconscious in the dirt. The state also filed a motion to certify S.J.D. for adult prosecution.

S.J.D. appeared in juvenile court with his attorney on June 18,1999, and requested a hearing on the certification motion. The court ordered a psychological examination and a certification study and set the matter for hearing.

On the certification hearing date, S.J.D. appeared with his attorney who stated that S.J.D. “would like to waive the certification hearing and have his matter transferred to adult court.” The court inquired of S.J.D. as to his understanding of his rights and the consequences of a waiver of certification. S.J.D.’s attorney reviewed with him on the record his written waiver of a certification hearing. The attorney noted that, on the previous day, she had reviewed the waiver with S.J.D. and his mother, father, and grandfather. The attorney then asked and S. J.D. answered:

Q. And so you are pretty satisfied that you have looked at this just about every way there is to look at it and this is a decision that you want to make; right?
A. Yes.

The court accepted S.J.D.’s waiver, ordered his certification, and transferred the matter to district court.

When the case reached the district court, S.J.D. appeared with a new attorney and moved to withdraw his waiver of certification. The district court sent the matter back to the juvenile court for a hearing on the motion. At that hearing S.J.D. acknowledged his prior waiver, admitted meeting with his previous attorney several times, and admitted knowing that both his probation officer and a court-appointed psychologist who examined him recommended that S. J.D. be certified to be tried as an adult.

S.J.D.’s attorney argued that the waiver had not been knowing, intelligent, voluntary, and informed. He noted that S.J.D. has an IQ of 77, which makes him “borderline retarded,” and that this mental deficiency, coupled with the threat that the state would add new charges, prevented the waiver from being knowing, intelligent, voluntary, and informed. The attorney also made an offer of proof that a family practice physician who examined S.J.D. would testify that S.J.D. has organic brain damage from fetal alcohol syndrome, is very vulnerable, and should not be certified to be tried as an adult.

The juvenile court denied S.J.D.’s motion to withdraw his waiver of certification and S.J.D. appeals that ruling.

ISSUE

Did the district court abuse its discretion in denying appellant’s motion to withdraw his waiver of a certification hearing?

ANALYSIS

The rules of juvenile procedure govern the procedure for all delinquency matters in the juvenile courts. Minn. R. Juv. P. 1.01. The rules do not provide for a motion to withdraw a waiver of a certification hearing. A juvenile may appeal a certification order, but must do so within 30 days from the date of certification. Minn. R. Juv. P. 21.03, subds. 1(A)(1), 2(A). Once a certification order is issued, the jurisdiction of the juvenile court is terminated. Minn. R. Juv. P. 18.07, subd. 1.

S.J.D. concedes that he did not bring his motion to withdraw his waiver within the time for appealing a certification order. He also concedes that the juvenile rules are silent as to motions to withdraw a waiver of a certification hearing, but argues that such a right should exist. S.J.D. asks this court to create a new juvenile court procedure, which we cannot do. The task of extending existing law falls to the supreme court or the legislature. Tereault v. Palmer, 413 N.W.2d 283, 286 (Minn.App.1987), review denied (Minn. Dec. 18, 1987); see also Minn.Stat. § 480.0595 (1998) (stating that “[t]he supreme court shall promulgate rules to regulate the pleadings, practice, procedure and the forms thereof in juvenile proceedings in all juvenile courts of the state * * * .”). Although we agree that it would be helpful to have a rule that sets standards for withdrawal of a waiver of a certification hearing in appropriate cases, this court, as an error-correcting court, is without authority to create such a rule. Lake George Park, L.L.C. v. IBM Mid-America Fed. Credit Union, 576 N.W.2d 463, 466 (Minn.App.1998), review denied (Minn. June 17, 1998).

Despite the fact that a motion to withdraw a certification waiver is not expressly authorized by the juvenile procedure rules, in the interests of justice we have considered S.J.D.’s argument that his waiver was not knowing, voluntary, intelligent, or informed.

A juvenile court’s decision to certify a child for adult prosecution will not be reversed unless the court’s findings are so erroneous as to constitute an abuse of discretion. In re Welfare of S.J.G., 547 N.W.2d 456, 459 (Minn.App.1996), review denied, (Minn. Aug. 6, 1996) (quotation omitted).

It is presumed that a proceeding involving an offense committed by a child will be certified if:
(1) the child was 16 or 17 years old at the time of the offense; and
(2) the delinquency petition alleges that the child committed an offense that would result in a presumptive commitment to prison under the sentencing guidelines and applicable statutes * * *. If the court determines that probable cause exists to believe the child committed the alleged offense, the burden is on the child to rebut this presumption by demonstrating by clear and convincing evidence that retaining the proceeding in juvenile court serves public safety.

Minn.Stat. § 260.125, subd. 2a (1998).

S.J.D. was charged with first-degree assault in violation of Minn.Stat. §§ 609.221, subd. 1; 609.05 (1998), and third-degree assault in violation of MinmStat. §§ 609.223; 609.05 (1998), both of which would result in a presumptive prison sentence. He was 17 years old at the time of the offenses. Therefore, the presumption of certification applied, and the burden of proving that public safety would be served by retaining the proceeding in juvenile court was on him.

However, a juvenile may waive his right to a certification hearing and his right to present evidence to rebut a presumption of certification. Minn. R. Juv. P. 18.04, subd. 1(C). Such a waiver must be knowingly, voluntarily, and intelligently made on the record after the child is informed of his right to a certification hearing by counsel. Id.; Minn.Stat. § 260.155, subd. 8(a) (1998). The validity of a waiver depends on the particular facts and circumstances surrounding the case, including the defendant’s background, experience, and conduct. State v. Richards, 456 N.W.2d 260, 264 (Minn.1990). In determining whether a child has knowingly, voluntarily, and intelligently waived his right to a certification hearing, the court looks at the totality of the circumstances, including the presence of the child’s parents, the child’s age, maturity, intelligence, education, experience, and the ability of the child to comprehend the proceedings and consequences. Minn. R. Juv. P. 18.04, subd. 1(C).

S.J.D. argues that his waiver was not voluntary because the state offered an alleged plea bargain which was, in fact, illusory. The state agreed that if S.J.D. waived certification the state would allow him to plead guilty to the two assault counts, with a double departure from the guidelines sentence for the first-degree assault conviction. The state said that if he refused to waive certification, the complaint would be amended to add charges of kidnapping and attempted murder. Such a plea bargain does not make S.J.D.’s waiver involuntary. See, e.g., State v. Ecker, 524 N.W.2d 712, 719 (Minn. 1994) (holding that threat to prosecute fully a defendant if he does not plead guilty is constitutional); Sykes v. State, 578 N.W.2d 807, 813 (Minn.App.1998) (finding nothing improper about statement by state that it will fully prosecute if there is no plea agreement because state is merely pointing out its legal authority to prosecute defendants who plead not guilty and go to trial), review denied (Minn. July 16, 1998), cert. denied, 525 U.S. 1055, 119 S.Ct. 619, 142 L.Ed.2d 558 (1998).

S.J.D. also argues that because of his limited intellectual functioning, as evidenced by the psychological report of Dr. Roger Carten, his waiver was not intelligently made. However, Dr. Carten concluded that: (1) psychological tests administered to S.J.D. suggest that while he has limited cognitive abilities, he is not so mentally deficient as to exclude him from the court process; (2) while his mental deficiencies may impair his ability to participate in his own defense, he has the capacity to do so; and (3) S.J.D. understands the charges against him and the possible consequences.

In addition, evidence in the record shows that S.J.D.’s attorney discussed his rights and the waiver with him, his parents, and his grandfather. S.J.D. initialed each statement in the waiver form explaining his rights. At the hearing, S.J.D. was thoroughly questioned by the court and his attorney about his understanding of his rights and the effect of waiving them. Although he had a new attorney in district court, he made no allegations that he received ineffective assistance of counsel in juvenile court. He makes no such allegations on appeal. We conclude that S.J.D.’s waiver was knowing, voluntary, and intelligent.

DECISION

The district court did not abuse its discretion in concluding that S.J.D.’s waiver of his right to a certification hearing was knowing, voluntary, and intelligent.

Affirmed.


author: SHUMAKER, Judge

text:
    Yinsog RHEE, et al., Appellants, v. GOLDEN HOME BUILDERS, INC., Respondent, Does 1 through 5, inclusive, Defendants. Golden Home Builders, Inc., Defendant and Third-Party Plaintiff, v. Alan Henderson, d/b/a Progressive Stucco, Defendant and Third Party Defendant.
    No. C4-00-376.
    Court of Appeals of Minnesota.
    Oct. 10, 2000.

      Robert L. Weiner, Minneapolis, MN (for appellants)
    Gregory A. Lang, Gregory A. Lang, P.A., Minnetonka, MN (for respondent)

      Considered and decided by SHUMAKER, Presiding Judge, ANDERSON, Judge, and PARKER, Judge.

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

   OPINION

SHUMAKER, Judge

The owners of a newly constructed home observed leakage from the floors and windows during heavy rains. They complained to the builder, who made repeated assurances that the defect would be repaired and tried unsuccessfully for several years to repair the problem.

When the owners sued the builder, the district court allowed the builder, without prior notice to the owners, to amend the answer so as to assert a statute-of-limitations defense. The court then granted summary judgment, ruling that the statute of limitations had expired before the owners initiated their lawsuit. The court rejected the owners’ arguments that equitable estoppel applied and that some repairs were in fact improvements that triggered new limitations periods. The owners appealed.

FACTS

Appellants Yinsog and Kyung Rhee bought a newly constructed home from respondent Golden Home Builders, Inc., in December 1993. In the spring of 1994, the Rhees discovered water leaking through the walls and floors during heavy rains and they notified Golden.

Golden assured the Rhees that the problem would be fixed. Beginning in the spring of 1994 and continuing until 1998, Golden made numerous unsuccessful repair attempts and repeatedly told the Rhees that eventually the problem would be solved.

Because the leakage continued despite the repair efforts, the Rhees initiated a lawsuit against Golden on December 3, 1998. Golden answered but did not raise the statute of limitations as a defense. Golden impleaded the stucco subcontractor, Alan Henderson d/b/a Progressive Stucco. Henderson asserted the statute of limitations as a defense.

Golden and Henderson moved for summary judgment. At the October 11, 1999, motion hearing, Golden orally moved to amend its answer to assert a statute-of-limitations defense. The Rhees objected, arguing that they had no notice that Golden would make the motion and no opportunity to prepare a response, and that the motion was untimely and prejudicial.

The district court granted Golden’s motion to amend and then granted summary judgment in favor of Golden and Henderson on the ground that the statute of limitations had expired prior to the commencement of the action. The court also ruled that estoppel did not apply, saying

[appellants] here were well aware of the failure of the repair efforts before the statute of limitations period expired. Further, [appellants] were aware after assurances of repair were given that the water leakage continued. Estoppel is not appropriate in this situation.

Finally, the court ruled that the repairs done by Golden and Henderson from 1996 to 1998 did not trigger a new statute of limitations period. The Rhees appeal from summary judgment.

ISSUES

1. Does the district court abuse its discretion by allowing a party to amend its answer so as to assert an affirmative defense that disposes of the action, when the motion to amend is oral and without prior notice, and when the opposing party is not allowed a reasonable opportunity to respond?

2. Homeowners complained of.a defect in their home that caused water leakage. The home builder made many attempts to repair the defect and repeatedly assured the homeowners that it would be remedied. The homeowners contend that they relied on the builder’s assurances and conduct and failed to initiate a lawsuit within the limitations period. Have the homeowners raised a genuine issue of material fact as to whether the builder is equitably estopped from asserting a statute-of-limitations defense?

3. Does a court make a factual finding by ruling that a builder’s efforts to remedy a construction defect were “repairs” rather than “improvements”?

ANALYSIS

Amendment of Answer

The statute of limitations is an affirmative defense. Minn. R. Civ. P. 8.03. An affirmative defense must be pleaded specifically and the failure to do so results in a waiver of the defense. Melbo v. Rinn, 280 Minn. 72, 75, 157 N.W.2d 842, 845 (1968). Pleadings may be amended to assert an affirmative defense. Rehberger v. Project Plumbing Co., 295 Minn. 577, 578, 205 N.W.2d 126, 127 (1973); Wagner v. Schwegmann’s S. Town Liquor, Inc., 485 N.W.2d 730 (Minn.App.1992), revieio denied (July 16, 1992). Ordinarily, amendments to pleadings should be freely granted except when prejudice would result to the other party. Fabio v. Bellomo, 504 N.W.2d 758, 761 (Minn.1993). We will not reverse a decision to allow the amendment of a pleading absent a clear abuse of discretion. Warrick v. Giron, 290 N.W.2d 166, 169 (Minn.1980).

Minn. R. Civ. P. 15.01 authorizes the court to allow an amendment to the pleadings “when justice so requires.” The rule gives no time limit for bringing or responding to a motion to amend pleadings. But Minn. Gen. R.P. 115.04(a) requires 14 days’ advance notice to the opposing party.

No motion shall be heard until the moving party serves a copy of [the appropriate papers] on the other party * * * at least 14 days prior to-the hearing * * *.

Minn. Gen. R.P. 115.04(b) contemplates a response to the motion and sets time limits for serving and filing responsive papers.

Although the district court has discretion to modify the time limits in rules 115.04(a) and (b), here the court simply allowed Golden to ignore the rules altogether. Without prior notice, the Rhees had only an opportunity to fashion whatever impromptu response 'they could to a motion that would dispose of the entire lawsuit. We 'believe the Rhees were unfairly prejudiced by the court’s failure to enforce the rules under these circumstances and that the court abused its discretion by allowing Golden to amend its answer. Golden is not foreclosed from moving to amend, but the matter must be remanded for further proceedings in accordance with the rules.

Estoppel

Under MinmStat. § 541.051, subd. 1(a), a lawsuit alleging a construction defect must be brought within two years after the claimant discovers, or, .with reasonable diligence, should have discovered an injury sufficient to entitle him to maim tain an action. Greenbrier Village Condominium Two Ass’n v. Keller lnv., Inc., 409 N.W.2d 519, 524, (Minn.App.1987). There is no dispute that the Rhees discovered substantial leakage in the, spring of 1994. But a builder may be estopped from asserting the bar of-the statute of limitations if his conduct satisfies, the elements of equitable estoppel:

1. There must be conduct — acts, language or silence — amounting to a, representation or a concealment of material facts. 2. These facts must be known to the party, estopped * * ■*. 3. The truth concerning these facts must be unknown to the -other party claiming the benefit of estoppel, at ■ the time. when such conduct was done, and at the time when it was acted upon by him. 4. The conduct must be done with the intention, or at least with the expectation, that it will be acted upon by the other party, or under such circumstances that it is both natural and probable that it will be so acted upon * * ⅜. 5. The conduct must be relied upon by the other party, and, thus relying, he must be led to act upon it. 6. He must in fact act upon it in such a manner as to change his position for the worse * * *.

Lunning v. Land O’Lakes, 303 N.W.2d 452, 457 (Minn.1980) (emphasis and quotation omitted).

The district court granted summary judgment against the Rhees on the issue of equitable estoppel. On an appeal from summary judgment, we ask two questions: (1) whether there are any genuine issues of material fact and (2) whether the district court erred in its application of law. State by Cooper v. French, 460 N.W.2d 2, 4 (Minn.1990) (citation omitted).

When a party allegedly responsible for remedying a defect in real property makes assurances or representations that the defect will be repaired, that party may be estopped from asserting a statute-of-limitations defense if the injured party reasonably and detrimentally relied on the assurances or representations. Hydra-Mac, Inc. v. Onan Corp., 450 N.W.2d 913, 919 (Minn.1990); Mutual Serv. Life Ins. Co. v. Galaxy Builders, Inc., 435 N.W.2d 136, 140—41 (Minn.App.1989), review denied (Minn. Apr. 19, 1989). “Estoppel depends on the facts of each case and ordinarily presents a question for the jury.” Brenner v. Nordby, 306 N.W.2d 126, 127 (Minn.1981). The application of equitable estoppel is a question of fact unless only one inference can be drawn from the facts. Rice St. VFW, Post 3877 v. City of St. Paul, 452 N.W.2d 503, 508 (Minn.App. 1990). We hold that the facts here do not compel only a single inference but rather present a genuine issue of whether or not Golden is equitably estopped from asserting a statute-of-limitations defense. Summary judgment on this issue was inappropriate.

The district court’s relied on The Rivers v. Richard Schwartz/Neil Weber, 459 N.W.2d 166, 170 (Minn.App.1990), review denied (Oct. 25, 1990), in granting the summary judgment motion. Such reliance is misplaced because in that matter the facts did not support the application of equitable estoppel. As to some of the parties there was no evidence that any assurances had been given. Id. at 170. As to the remaining party, there had been an assurance that repairs would be made but then five years elapsed with continuing defects but without further assurances or repair efforts. Id. Here, it is undisputed that Golden made repeated assurances and repair efforts from the time the Rhees discovered the defect until a few months before they filed the lawsuit.

New Statute of Limitations Period

The Rhees contend that some of Golden’s work after discovery of the leakage amounted to improvements rather than repairs and any improvement would trigger a new statute of limitations period under Minn.Stat. § 541.051, subd. 1 (1996). The district court ruled that the “repairs” done between 1996 and 1998 did not start the running of a new limitations period. Implicit in the court’s conclusion is a factual finding that all of the work was repairs rather than improvements. Summary judgment

should be employed only where it is perfectly clear that no issue of fact is involved, and that it is not desirable nor necessary to inquire into facts which might clarify the application of the law.

Donnay v. Boulware, 275 Minn. 37, 45, 144 N.W.2d 711, 716 (1966) (citation omitted). We hold that there exist genuine issues of material fact as to the proper characterization of the remedies attempted by Golden and Henderson. Summary judgment was inappropriate on this issue.

DECISION

The district court abused its discretion by allowing an amendment of an answer without requiring prior notice and an opportunity for the opposing party to prepare to respond.

The district court erred by granting summary judgment when genuine issues of material fact exist as to the applicability of equitable estoppel and the distinction between repairs and improvements.

Reversed and remanded.


author: CRIPPEN, Judge

text:
    Robert T. LUND, Respondent, v. Adam G. SOUTHAM, Appellant.
    No. C7-00-579.
    Court of Appeals of Minnesota.
    Oct. 10, 2000.

      Bricker Lavik, A. Minnie Alexander, Dorsey & Whitney, L.L.P., Minneapolis, for respondent.
    Todd M. Johnson, Johnson Law Group L.L.P., Minnetonka, for appellant.
    Considered and decided by PETERSON, Presiding Judge, CRIPPEN, Judge, and WILLIS, Judge.
   OPINION

CRIPPEN, Judge

Granting a summary judgment to respondent Robert Lund in his suit on a $65,000 note, the trial court determined that appellant Adam Southam could not introduce evidence of respondent’s failure to perform a promise allegedly constituting consideration for the note. Because the court erred in determining that the purported promise of respondent modified the note, and because appellant’s parol evidence is not otherwise inadmissible, we reverse the summary judgment and remand the case for further proceedings.

FACTS

In 1994, the parties entered into a joint enterprise that required capital contributions from each of them. The next year, after appellant Southam withdrew from involvement in the business, respondent Lund asserted that appellant remained liable for his share of cost in financing the business. In the course of settling their differences, appellant gave respondent a $65,000 note, the subject of the present litigation.

Appellant admits that he executed the note in question. Before the trial court, he disputed the claim that respondent’s right to recover financing costs was consideration for the note, claiming that respondent’s contributions were offset by the value of stock transferred to him. Both in trial-court proceedings and on appeal, Southam claims that the note was given in exchange for an unperformed promise of respondent to execute a separate written agreement transferring to appellant the intellectual-property rights of their joint enterprise. The note merely states that appellant’s agreement was given in exchange “for value received.”

Appellant’s note recites that it cannot be modified by an oral agreement:

This Promissory Note shall not be deemed or construed to be modified, amended, rescinded, cancelled or waived, in whole or in part, except by written instrument signed by both parties hereto.

The trial court determined that this language, together with the parol-evidence rule, precluded admission of appellant’s evidence that respondent promised to transfer property rights. The court refused to consider this evidence and concluded that appellant’s prior indebtedness to respondent was the consideration for his note. Finding no cause to question the sufficiency of this consideration, the court granted respondent a summary judgment on his note claim.

ISSUE

Did the trial court err in refusing to consider evidence that respondent breached a promise to transfer property and that this promise constituted the consideration for appellant’s note?

ANALYSIS

Summary judgment is proper and should be granted when the pleadings, depositions, answers to interrogatories, admissions on file, and affidavits, if any, submitted “show that there is no genuine issue as to any material fact and that either party is entitled to a judgment as a matter of law.” Minn. R. Civ. P. 56.03. In reviewing a grant of summary judgment, this court determines whether there are any genuine issues of material fact and whether the lower court erred in its application of the law. Lubbers v. Anderson, 539 N.W.2d 398, 401 (Minn.1995). Construction of the contract of the parties is a matter of law that this court reviews de novo. Turner v. Alpha Phi Sorority House, 276 N.W.2d 63, 66 (Minn.1979). Similarly, the application of the parol-evi-dence rule, premised on an examination of the contract, presents a question of law. St. Louis Union Trust Co. v. United States, 617 F.2d 1293, 1300 (8th Cir.1980) (determining application of the parol-evi-dence rule a question of law); Seifert v. Mutual Benefit Life Ins. Co., 203 Minn. 415, 422, 281 N.W. 770, 773-74 (1938) (declaring rule on parol evidence a matter of substantive law, not a rule of evidence).

The parties do not dispute the rule of law permitting the receipt of either party’s parol evidence to show the consideration for a contractual obligation stated in an instrument that makes a “mere recital” that value was received. Adams v. Reliance Acceptance Co., 187 Minn. 209, 211, 244 N.W. 810, 811 (1932) (permitting obligor on assignments, given “for value received” or for “a valuable consideration,” to prove promise to pay certain sum); Albert Lea College v. Brown, 88 Minn. 524, 528-29, 93 N.W. 672, 673 (1903) (permitting obligee’s parol evidence of consideration given for note that stated consideration merely as “for value received”). See generally R.E. Heinselman, Annotation, “Contractual” Consideration as Regards Parol-evidence Rule, 100 A.L.R. 17 (1936) (citing authorities for the principle and distinguishable cases where attempt is made to alter recital of specific consideration). In circumstances like these, because a mere recital is not contradicted by proof of the actual consideration, there is no cause for application of the rule against modification of a contract by parol evidence. Flower v. King, 189 Minn. 461, 466, 250 N.W. 43, 45 (1933); Adams, 187 Minn, at 211, 244 N.W. at 811; cf. Jimmerson v. Troy Seed Co., 236 Minn. 395, 400-02, 53 N.W.2d 273, 277-78 (1952) (distinguishing the rule permitting evidence of consideration furnished; finding error in trial court’s admission of obligor’s proof that employee made promises other than the necessarily implied promise to make sales needed to earn commissions he sought to recover).

Making no reference to the rule permitting proof of consideration in circumstances like these, the trial court reached an incorrect conclusion, reciting the general rule against admission of parol evidence and pointing to the note language permitting modification only by a written instrument. The contract language constitutes no more than a recitation of the parol-evidence rule. Proof of consideration, upon the mere recitation that it was received, does not constitute alteration of the contract. Because the court’s refusal to consider appellant’s parol evidence contradicts an established proposition of law, we reverse and remand for further proceedings on the conflicting claims of the parties.

Respondent Lund presents an argument not addressed by the trial court, that appellant’s parol evidence was precluded because his note contained more than a mere recital of consideration. Respondent directs our attention to language found in the integration clause, which states:

This Promissory Note is the entire agreement between the parties with respect to the subject matter herein, represents the entire indebtedness of Sout-ham to Lund and shall supersede all prior Promissory Notes or understandings between the parties whether written or oral.

Respondent contends that this statement acknowledges that appellant’s prior indebtedness is the consideration for his note, making contrary evidence inadmissible under the parol-evidence rule. See Jimmerson, 236 Minn, at 400-02, 53 N.W.2d at 277-78 (applying parol-evidence rule to exclude proof of consideration other than that necessarily implied by written agreement).

Respondent’s argument rests on a misinterpretation of the legal meaning of the language he recites. The integration clause speaks generically of other debts, notes, or agreements of the obligor, rendering them invalid, and does not state the existence of actual debts that are replaced by the note. Respondent furnishes no authority — and there is none — suggesting that a standard declaration against the validity of other agreements constitutes an acknowledgement that such an agreement actually exists.

Respondent also observes that appellant’s proposed evidence — that respondent agreed to execute a transfer of intellectual property rights in exchange for appellant’s note — includes a proposed transfer document containing a recital that appellant was providing consideration for the transfer other than his $65,000 note; the proposed document states that the transfer is in exchange for appellant’s claim for services rendered to the joint enterprise. Because the trial court refused to consider appellant’s evidence, it did not reach this question or others that will likely arise upon development of a more complete record. Nothing in this opinion is intended to judge the merits of positions taken by the parties upon remand.

Finally, appellant advances the more general argument that the trial court erred by holding that appellant’s alleged pre-existing debt was the consideration for his note. This disputed trial-court decision included factual determinations that the pre-existing debt existed, that it comprised half of the financing cost for the parties’ joint enterprise, and that it amounted to more than $65,000. Appellant’s trial-court arguments included the contention that respondent’s financial contributions were offset by the value of corporate stock taken by him. Upon remand following correction of the trial court’s holding on appellant’s evidence, the consideration issue must be reexamined.

DECISION

Because the trial court erroneously disregarded appellant’s evidence on the nature of the consideration supporting his note to respondent, the court’s summary judgment cannot stand.

Reversed and remanded.

      . In reviewing cases appellant cites in favor of admitting parol evidence, respondent observes that many of these decisions deal with ambiguous contract language or contracts that otherwise are not fully integrated. This recitation takes nothing from the authority for the proposition demonstrated, for example, in Albert Lea College. Acknowledging this line of authority, respondent asserts that the principle does not apply in this case but does not dispute the rule.

      . Respondent does not argue that an integration clause, because it declares a final agreement of the parties, alters the doctrine permitting parol evidence to show consideration of a contract that merely recites value received. See Restatement (Second) of Contracts § 218(2) (1981) (declaring consideration evidence admissible "even though the parties have reduced their agreement to a writing which appears to be a completely integrated agreement").


author: PETERSON, Judge.

text:
    Eric J. JENSON, Employee, WBC Construction, Relator, v. DEPARTMENT OF ECONOMIC SECURITY, Respondent.
    No. C4-00-40.
    Court of Appeals of Minnesota.
    Oct. 17, 2000.
    Stephen F. Rufer, Pemberton, Sorlie, Rufer & Kershner, P.L.L.P., Fergus Falls, for relator.
    Tracy Mitchell, Mitchell Law Office, Ltd., Elbow Lake, for employee.

      Kent E. Todd, Department of Economic Security, St. Paul, for respondent.
    Considered and decided by LANSING, Judge, KLAPHAKE, Judge, and PETERSON, Judge.
   OPINION

PETERSON, Judge.

Relator WBC Construction challenges the determination of the representative of the Commissioner of Economic Security that an employer-employee relationship existed between WBC Construction and Eric J. Jenson and all other construction workers who performed services for WBC Construction according to the provisions of a partnership agreement. We affirm.

FACTS

In 1995, Eric J. Jenson began working as a construction laborer for Trendsetters Construction Co., which was a partnership owned by Dennis Westrom and his two sons, Torrey and Trevor Westrom. Trevor Westrom was the managing partner and had the right to control the means and manner of the construction workers’ performance, including the authority to control (1) when, where, and how the work was to be performed; (2) the number of hours worked and what time of day the work would begin and end; (3) the worker’s hourly wage; and (4) the discharge of workers.

On April 1, 1996, Trevor Westrom met with Trendsetters’ construction workers, including Jenson, and presented the W B C Worker Built Company Construction Partner Agreement, which was a partnership agreement for a new company, relator Worker Built Company (WBC) Construction. The only partner identified in the partnership agreement was Trevor Wes-trom, who was named as senior partner. Jensen and several other construction workers each signed a separate copy of the partnership agreement. Under the agreement, upon paying five dollars, each construction worker was entitled to a one-percent ownership interest in WBC for the purpose of furnishing his labor and ability at a contract rate that would be determined based on an average 45-hour work week. The partnership agreement stated that the one-percent partners would be reimbursed on a square-foot basis determined by the bid for each project but that draws would be taken at a rate of $1.50 per unit of project time. Any excess project income was to be divided among partners who worked full time and completed the project based on each partner’s hourly contribution. The agreement required partners who voluntarily quit to give a two-week notice to avoid possible penalties and provided that the partnership could purchase equipment or property only upon a unanimous vote of approval by the partners. The partnership agreement also provided that:

The senior partner has all rights to admit or dismiss anyone at anytime, based on qualifications, policies, conduct, workmanship, and partnership agreement. He also will establish each and all partners [sic] reimbursement amount along with deciding and bid[d]ing and signing all project contracts. He will establish and administer all policies.
The senior partner is authorized to handle all banking. Banking to include checking account and all checks and transactions for company. The senior partner will handle all job bids, proposals, and acceptances.

Following the creation of WBC Construction, and until Jenson voluntarily quit, WBC only contracted to provide labor for projects that Trendsetters Construction Co. lined up as a general contractor. Jen-son and the other construction workers were paid bi-weekly based on the number of hours they worked and a rate determined by Trevor Westrom.

In March 1999, respondent Department of Economic Security issued a determination that an employer-employee relationship existed between WBC Construction and Jenson and the other laborers who provided similar services under the partnership agreement. The department determined that WBC was required to make contributions to the reemployment insurance fund with respect to wages paid to Jenson and the other laborers. WBC appealed the department’s determination. Following a hearing, a reemployment insurance judge affirmed the department’s determination. WBC appealed to the Commissioner of Economic Security. The commissioner’s representative issued a decision affirming the reemployment insurance judge’s determination. The commissioner’s representative concluded:

Trevor Westrom dba WBC Construction is a liable employer subject to the provisions of the Minnesota economic security law. Trevor Westrom dba WBC Construction has had an employment relationship with Eric J. Jenson and any other construction worker who has performed services subject to the provisions of the WBC WORKER BUILT COMPANY Construction Partner Agreement referenced herein. Trevor Westrom dba WBC Construction shall be assigned the tax rate for new employers in the construction industry.

ISSUE

Was there an employment relationship between WBC Construction and the construction workers who performed services pursuant to the W B C Worker Built Company Construction Partner Agreement?

ANALYSIS

1. Existence of Employment Relationship

An employer must make contributions to the reemployment insurance fund with respect to wages paid for employment. Minn.Stat. § 268.06, subd. 1 (1996).

“Employment” means:
(1) Any service performed * * * by;
(d) any individual who is a servant under the law of master and servant or who performs services for any employing unit, unless such services are performed by an independent contractor.

Minn.Stat. § 268.04, subd. 12(l)(d) (1996).

“Employing unit” means any individual or type of organization, including any partnership * * * which has or subsequent to January 1, 1986, had in its employ one or more individuals performing services for it.

Minn.Stat. § 268.04, subd. 9 (1996).

Whether a worker is an employee or an independent contractor involves a mixed question of law and fact. Once the controlling facts are determined, the question whether a person is an employee becomes one of law.

Lakeland Tool & Eng’g, Inc. v. Engle, 460 N.W.2d 349, 352 (Minn.App.1990) (citations omitted).

Citing Pederson v. Pederson, 229 Minn. 460 39 N.W.2d 893 (Minn.1949), WBC argues that Jenson cannot be considered an employee of WBC because he was a partner in WBC and a partner is not considered an employee of a partnership. WBC contends that the commissioner’s representative erroneously focused its consideration on whether Jenson was an employee or an independent contractor rather than determining whether he was a partner. We disagree.

The issue in Pederson was whether Ped-erson, a partner who was injured while performing services for the partnership, was an employee of the partnership for purposes of the workers’ compensation act. Id. at 462, 39 N.W.2d at 894. The court acknowledged that “the great weight of authority is that a partner is not an employe of a partnership.” Id. But the court then applied the tests laid down in independent contractor-employee cases to the facts before it and concluded that the partnership was not an employer as to Peder-son “since indicia of an employer-employe relationship, on which liability attaches, do not exist.” Id. at 465, 39 N.W.2d at 896. The court explained that although there are instances where a partnership is regarded as an entity,

it would violate sensible rules of statutory construction to hold that in the case at bar the * * * partnership is an entity as an employer of Pederson, where the partnership agreement between Peder-son and [the other partner] has not created the incidents of the relationship of employer and employe.

Id. at 466-67, 39 N.W.2d at 897. The court concluded, “this contract of partnership did not create the relation of employ-' er-employe.” Id. at 467, 39 N.W.2d at 897. The court did not conclude that a partner could never be an employee of a partnership.

The Pederson court’s reasoning indicates that a partner can be an employee of a partnership, and that it is appropriate to apply the law of master and servant to determine whether a partnership agreement has created an employer-employee relationship between a partnership and a partner. The commissioner’s representative determined that under the law of master and servant, Jenson and the other one-percent partners were employees of Trevor Westrom dba WBC Construction.

The factors applied under the law of master and servant to distinguish an employee from an independent contractor are:

“(1) The right to control the means and manner of performance; (2) the mode of payment; (3) the furnishing of material or tools; (4) the control of the premises where the work is done; and (5) the right of the employer to discharge. In determining whether the status is one of employee or independent contractor, the most important factor considered in light of the nature of the work involved is the right of the employer to control the means and manner of performance.”

Speaks, Inc. v. Jensen, 309 Minn. 48, 50-51, 243 N.W.2d 142, 144 (1976) (quoting Guhlke v. Roberts Truck Lines, 268 Minn. 141, 143, 128 N.W.2d 324, 326 (1964)).

“ * ⅜ * The distinction between an employee and an independent contractor may be said to consist largely in the difference between one who undertakes to achieve a given result under an arrangement with another who has authoritative control over the manner and means in which and by which the result shall be accomplished and one who agrees to achieve a given result but is not subject to the orders of another as to the method or means to be used. While the right to terminate the arrangement is an important factor in determining the relationship of the parties, it alone is not conclusive.”

Id. at 51, 243 N.W.2d at 145 (quoting Geerdes v. J.R. Watkins, Co., 258 Minn. 254, 262, 103 N.W.2d 641, 646 (I960)). The label parties give to their relationship is not determinative; the relationship is determined by law. Id. (citing Edelston v. Builders & Remodelers, Inc., 304 Minn. 550, 229 N.W.2d 24 (1975)).

The WBC Construction partnership agreement gave Trevor Westrom, as senior partner, authority to “establish and administer all policies.” Because he had authority to establish and administer all policies, Trevor Westrom had control over the premises where the work was done and authoritative control over the manner and means by which partners aceom-plished a given result. By delegating to Westrom the authority to establish and administer all policies, the one-percent partners became subject to Westrom’s orders regarding the method or means of performance and all other matters. In addition, the partnership agreement explicitly gave Trevor Westrom authority to dismiss any employee.

WBC contends that the commissioner’s representative’s decision implies that WBC was a sham partnership. WBC argues that the key to determining that it is a valid partnership is that profits were shared among the partners. But even if WBC is a valid partnership, the mode of payment is only one of the factors used under the law of master and servant to determine whether an employment relationship exists. Other factors, including the most important factor, the right to control the means and manner of performance, indicate that Jenson was an employee of WBC.

• The commissioner’s representative’s determination that an employment relationship existed between WBC Construction and Eric J. Jenson and all other construction workers who performed services for WBC Construction according to the terms of the construction partnership agreement was not erroneous.

2. Credibility Determinations

WBC argues that the commissioner’s representative’s findings are erroneous because Jenson’s testimony at the August 3, 1999, hearing before the reemployment insurance judge contradicted the testimony he provided in a December 16, 1998, deposition. We defer to the commissioner’s representative’s credibility determinations. Portz v. Pipestone Skelgas, 397 N.W.2d 12, 14 (Minn.App.1986). “A decision regarding the credibility of witnesses rests within the discretion of the Commissioner, and the testimony should not be reweighed on appeal.” Youa True Vang v. A-l Maintenance Serv., 376 N.W.2d 479, 482 (Minn.App. 1985) (citation omitted). Because the record contains evidence reasonably tending to support the factual findings of the commissioner’s representative, we will not disturb those findings on appeal.

3. Scope of Award

WBC argues that even if Jenson was an employee of WBC, there is insufficient evidence in the record from which the commissioner’s representative could have concluded that the other construction workers who signed the partnership agreement were also employees of the partnership. We disagree.

The record reflects that the other construction workers each signed a copy of the partnership agreement to form WBC. Because the partnership agreement gave Trevor Westrom the right to control the means and manner of the other workers’ performance, the right to control the premises where the other workers worked, and the right to discharge workers, the commissioner’s representative did not err by determining that the other workers who signed the partnership agreement also had an employment relationship with WBC.

DECISION

Because the terms of the partnership agreement gave Trevor Westrom authority to control the means and manner by which the one-percent partners performed services for WBC, the right to control the premises where the one-percent partners worked, and the right to discharge the one-percent partners, Jenson and the other one-percent partners were employees of WBC.

Affirmed.

      .We apply the 1996 statute because it was in effect when the relevant services were performed. Minn.Stat. § 268.06, subd. 1 (1996), has been renumbered as Minn.Stat. § 268.051, subd. 1.1997 Minn. Laws ch. 66, § 79.

      . Minn.Stat. § 268.04, subd. 12(l)(d) (1996), has been repealed. 1998 Minn. Laws ch. 265, § 46.

      . Minn.Stat. § 268.04, subd. 9 (1996), has been repealed. 1998 Minn. Laws ch. 265, § 46.