author: PAUL H. ANDERSON, Justice.

text:
    In re the Marriage of Janis Edwards GOTTSACKER, Respondent, v. Gregory Alan GOTTSACKER, Petitioner, Appellant.
    No. C1-02-615.
    Supreme Court of Minnesota.
    July 17, 2003.

      Alan C. Eidsness, Timothy Mulrooney, Henson & Efron, P.A., Minneapolis, MN, for Appellant.
    Susan C. Rhode, Ben M. Henschel, Moss & Barnett, Minneapolis, MN, for Respondent.
   OPINION

PAUL H. ANDERSON, Justice.

In this appeal of a marriage dissolution decree, appellant-husband, Gregory Alan Gottsacker (Gottsacker), seeks review of the lower courts’ determinations that (1) respondent-wife Janis Edwards Gottsacker’s (Edwards) Accumulated Adjustment Account (AAA) in a subchapter S corporation is nonmarital property, and (2) Gottsacker is not entitled to any reimbursement for taxes Edwards paid on the subchapter S corporation’s interest during the marriage. Edwards seeks review of the lower courts’ determination that her ownership interest in another closely held corporation, which interest she purchased with distributions from the subchapter S corporation, is marital property. We affirm.

Gregory Alan Gottsacker and Janis Edwards were married in October 1991. Seven and one-half years later, in May 1999, Edwards petitioned for dissolution of the marriage. Before and during the marriage, Edwards acquired and owned a minority interest in the following three businesses: Edco Products, Inc. (Edco), which produces steel siding; Edcoat Limited Partnership (Edcoat), a metal-coating service company; and Edcoat General Partnership, Inc. (Edcoat General), Edcoat’s general partner. These three businesses are closely held corporations owned primarily by Edwards, her parents, brother, and sister. Edwards acquired Edco shares before she married Gottsacker and continued to acquire shares during the marriage. The Edco stock was a gift from Edwards’ parents to Edwards alone, and both parties agree that the actual Edco shares are nonmarital.

Edco is a subchapter S corporation, which is a pass-through entity, so all corporate income is allocated directly to the shareholders. Therefore, the Edco shareholders are taxed on their personal tax returns for corporate income in proportion to their ownership interest, regardless of whether the income is distributed to them or retained by the corporation. If the income is not distributed to the shareholder and is instead retained by the corporation, it is retained as a corporate asset and the difference between the income on which the shareholder paid taxes and the income that was actually distributed to the shareholder is recorded in an AAA. The AAA is not an account in the sense that it actually holds the retained funds, but the account serves as an accounting tool for recording the taxed but undistributed interests of each shareholder. The AAA shows each shareholder’s basis for previously-taxed income or losses.

Some of Edwards’ Edco interest income was distributed to the parties during their marriage and some if it was retained by the corporation. The parties used the Edco distributions for three purposes: (1) to pay taxes on Edwards’ Edco interest; (2) to acquire Edwards’ interest in Edcoat and Edcoat General; and (3) to supplement their regular income. The distributions that were used to pay the taxes on Edwards’ Edco interest were made to Edwards specifically for that purpose. Each quarter Edco accountants determined Edwards’ tax obligation based on her ownership interest. The corporation mailed her a check for that tax amount, Edwards deposited the check into her account, and she then wrote a check to the IRS to cover the tax obligation. The record indicates that some of the Edco deposits were made into Edwards’ private checking account, while some were made into the parties’ joint checking account. The taxes were always paid with the funds distributed by Edco and were never paid with the parties’ other income or assets.

In 1995, the Edwards family formed the limited liability partnership Edcoat to provide services to Edco. At that time, the family also formed an S corporation, Ed-coat General, to act as a general partner to Edcoat. Edcoat General has a 1 percent interest in Edcoat and the remaining 99 percent limited liability partnership interest in Edcoat is shared between the members of Edwards’ family and key nonfamily members of Edco management. Edwards acquired a 2 percent ownership interest in Edcoat as a gift from her parents, which the parties agree was nonmarital. Edwards acquired an additional 16.33 percent interest in Edcoat, which she purchased with her distributions from Edco. She also used Edco distributions to purchase a 16.67 percent interest in Edcoat General.

Edwards testified that she had no involvement in the planning for the funding or investing in Edcoat. She received distributions from Edco that Edco’s accountants and officers specifically told her to pay over to Edcoat, which she did. Edwards’ understanding was that the Edco distributions were made conditioned upon her payment into Edcoat. Conversely, Gottsacker testified that he and Edwards discussed whether to buy into Edcoat.

Stephen Broz, the accountant for the family’s three companies and also the family’s personal accountant, testified that the business plan for creating the funding for Edcoat required that each of the Edwards’ family members receive a distribution from their Edco interest that they would reinvest into Edcoat. Broz further testified that, for a number of business and tax reasons, this plan for creating Edcoat was chosen over a number of options, including the option of making Edcoat a subsidiary of Edco. Broz testified that Edwards legally could have chosen to retain the distributions from Edco that were intended to be sent to Edcoat; but he stated that if she had done so, the distributions from Edco to Edwards would have ceased and the family would have come up with an alternate plan for funding Edcoat.

After a hearing at which both parties testified and presented expert financial witnesses, a consensual special magistrate concluded that the AAA was analogous to retained corporate earnings. The magistrate stated that such earnings are non-marital “where the underlying stock of the spouse is nonmarital, and where the husband and wife have not expended efforts to enhance the value of the nonmarital stock.” But the magistrate went on to find that Edwards’ acquisition of the Edcoat interests was accomplished with marital funds because the Edco distributions were income from a nonmarital asset. The magistrate said, “This income on a nonmarital asset is marital and as a result the acquisition of interests in Edcoat are marital.”

Based on these and other findings of fact, Edwards was ordered to pay Gott-sacker $401,883 within 60 days and the district court entered a decree of dissolution to that effect. Edwards moved to amend the decree or grant a new trial on a number of grounds, including her request that the court reconsider its failure to apply a lack of marketability discount in determining the value of her Edcoat interest. Gottsacker also moved to amend the decree or for a new trial on a number of grounds. These included his request that the court find the AAA to be marital property or, in the alternative, award him his proportionate share of the marital funds that were used to pay the taxes on the income reflected in the AAA.

The magistrate held a hearing on the parties’ motions for post-decree relief and the earlier decree was amended to apply a discount for lack of marketability to the Edcoat valuation. Edwards’ monetary obligation to Gottsacker was then reduced from $401,883 to $258,325. The amended decree did not specifically address Gott-sacker’s reimbursement request, and instead included a catch-all paragraph stating “[t]hat all other motions of either Party should be denied.”

Gottsacker appealed the decision to treat the AAA as nonmarital property and Edwards appealed the district court’s treatment of her Edcoat interest. The court of appeals affirmed on all issues. The court of appeals held that the AAA was nonmarital property because it is not “income” and, if the AAA is appreciation, it is passive appreciation and is therefore nonmarital. Gottsacker v. Gottsacker, No. C1-02-615, 2002 WL 31655186, at *3 (Minn.App. Nov.26, 2002). The court went on to state that the district court did not abuse its discretion in failing to credit Gottsacker with his share of marital funds used to pay the AAA taxes. It did so on the ground that the district court had no duty to consider the issue because it was not raised at trial. In the alternative, the court of appeals stated that it could not conclude that the district court abused its discretion because the record could have supported a determination that such equitable relief was not warranted. Finally, the court of appeals affirmed the finding that the Edcoat interest was marital property because it was purchased with income from a nonmarital asset, which are marital funds.

Gottsacker petitioned this court for review of the classification of Edwards’ Edco AAA as nonmarital and the denial of his request for reimbursement of taxes paid on the AAA. Edwards petitioned for cross-review of the classification of her Edcoat interest as marital property.

I.

The first issue we must decide is whether the lower courts erred in concluding that Edward’s Edco AAA is a nonmarital asset. Gottsacker argues that the AAA is the “income” from Edwards’ nonmarital interest in Edco and it is, therefore, a marital asset. Alternatively, if we determine the AAA is not income, Gottsacker argues the AAA is the active appreciation of Edwards’ interest in Edco.

The district court has broad discretion when dividing marital property in a dissolution action and will not be reversed absent an abuse of that discretion. Rutten v. Rutten, 347 N.W.2d 47, 50 (Minn.1984) (citing as an abuse of discretion a “clearly erroneous conclusion that is against logic and the facts on record”). Determining whether property is marital or nonmarital, however, is an issue over which we exercise independent review, though deference is given to the district court’s findings of fact. Olsen v. Olsen, 562 N.W.2d 797, 800 (Minn.1997).

It is presumed that all property acquired during the marriage is marital property. Id.; Minn.Stat. § 518.54, subd. 5 (2002). One way to escape the marital property presumption is to show that the property meets one of the enumerated classifications of nonmarital property provided in Minn.Stat. § 518.54, subd. 5. The following classifications are enumerated in the statute: gift, bequest, devise, or inheritance to one but not both spouses; property acquired before the marriage; property acquired after the separation; property excluded by antenuptial agreement; property acquired in exchange for nonmarital property; and “the increase in value of [nonmarital property].” Minn.Stat. § 518.54, subd. 5.

We have divided the last of these nonmarital classifications — an increase in the value of nonmarital property — into active and passive appreciation. See Nardini v. Nardini, 414 N.W.2d 184, 193 (Minn.1987). Active appreciation is marital property while passive appreciation is nonmari-tal. Id. Nardini required us to allocate as marital or nonmarital the interests in a closely held corporation in which the husband and wife were the only shareholders. Id. at 186. The husband had purchased a 50 percent interest in the corporation before the marriage. Id. The district court treated 50 percent of the present value of the corporation as the husband’s nonmari-tal property because the court reasoned that this 50 percent interest represented the asset that the husband had acquired before the marriage, plus the increase in value of that nonmarital asset. Id. at 191. On appeal, we rejected the district court’s reasoning because the statute “does not distinguish between increases in value that occur prior to the marriage and increases that occur during the marriage * * ⅜ and does not distinguish between increases due to the efforts of one or both of the spouses and increases from causes unrelated to the efforts of either of them.” Id. Accordingly, we held that

increase in the value of nonmarital property attributable to the efforts of one or both spouses during their marriage, like the increase resulting from the application of marital funds, is marital property. Conversely, an increase in the value of nonmarital property attributable to inflation or to market forces or conditions, retains its nonmarital character.

Id. at 192.

Applying this holding in Nardini, we determined that over the course of the Nardinis’ 30-year marriage, during which both spouses worked for the closely held corporation and received corporate income in the form of salary, pension plan contributions, and other fringe benefits, the corporation had grown significantly from the husband’s initial $2,500 investment. Id. at 194-95. In fact, at the time of the marriage dissolution, the corporation had retained earnings of $563,598. Id. at 195. We concluded that, as the sole shareholders of the corporation, the retained corporate earnings could be attributed to the efforts of both spouses because those earnings were all generated during the marriage. Id. at 195. Accordingly, we stated that

the nature of income generated through the efforts of the marital partners is not changed by its retention as shareholder equity in a wholly owned corporation. Whether the business be carried on as a family corporation or a partnership or a sole proprietorship, income earned during the marriage, whether distributed or undistributed and reinvested in the business is marital property.

Id. Thus, we held that nearly the entire present value of the corporation should be considered marital property. Id.

In Nardini, we illustrated the principle of active versus passive appreciation with a hypothetical involving a spouse owning shares in a publicly traded corporation. Id. at 193. On the date of the marriage, the wife owned 300 shares worth $25 a share, or $7,500, but at the time of the marriage dissolution, she owned 800 shares worth $40 a share, or $32,000. The increase in the number of shares was the result of (1) a 2 for 1 stock split, which increased the wife’s original 300 shares to 600 shares, and (2) the reinvestment of some of the wife’s cash dividends to purchase 200 additional shares. We then quoted the commissioner’s note to the original draft of the Uniform Marriage and Divorce Act, on which the language of Minn.Stat. § 518.54, subd 5, is largely based, which states, “[t]he phrase ‘increase in value’ used in subsection (b)(5) is not intended to cover the income from property acquired prior to marriage. Such income is marital property. Similarly, income from other non-marital property acquired after the marriage is marital property.” Id. at 193 (quoting Unif. Marriage and Divorce Act § 307 comment at 204 (1970)). Based on this principle, we analyzed the above stock example as follows:

[A] stock dividend or split is nonmari-tal property: a stock dividend or split, the value of which is determined by market forces, does not increase the shareholder’s proportionate ownership interest in the corporation and is not usually regarded as income. Cash dividends, on the other hand, would be considered a return on the investment or income and, therefore, be marital property. Thus, Jane’s 300 original shares and the 300 shares received in the stock split, having a total value of $24,000, would be Jane’s nonmarital property, and the 200 shares purchased by reinvesting dividends and having a present value of $8,000 would be marital property.

Id. at 194 (citation omitted).

The court of appeals has consistently relied on the discussion of this hypothetical from Nardini for the tenet that income received during the marriage, whether from marital or from nonmarital property, is deemed marital property. This idea that income from nonmarital assets was marital property was not articulated for the first time in Nardini; the court of appeals had articulated this premise in earlier decisions. Thus, we conclude that Minnesota courts have established the following method of analyzing interests associated with nonmarital assets. If the interest is classified as “appreciation,” or an increase in the value of the nonmarital asset, it too is nonmarital unless it is classified as “active appreciation” because it is the result of marital effort. If the interest is “income” from the nonmarital asset, it is marital income.

Applying the foregoing analytical framework to the AAA at issue here, the court of appeals articulated two grounds for affirming the district court’s determination that the AAA was not marital income: (1) the earnings retained in the AAA do not constitute income under the definition provided by Minn.Stat. § 518.54, subd. 6 (2002), of “any form of periodic payment to an individual”; and (2) Edwards had no distributive right or substantial control over the AAA and “[t]here is no assurance that her interest in the AAA will ever be distributed.”

Gottsacker asserts that the court of appeals’ analysis is flawed. More specifically, he argues that the court erred in applying the statutory definition for “income” as provided in Minn.Stat. § 518.54, subd. 6. He claims that this definition of income applies only to income as it pertains to support payments. However, the income definition provided in Minn.Stat. § 518.54, subd. 6, follows the introduction of Minn.Stat. § 518.54, subd. 1, which states that the definitions that follow are “[f|or the purposes of sections 518.54 to 518.66.” Minn.Stat. § 518.54, subd. 1 (2002). One of the referenced sections, Minn.Stat. § 518.58, is entitled Division of Marital Property. Minn.Stat. § 518.58 (2002). Therefore, the income definition provided in Minn.Stat. § 518.54 applies to the statutes governing marital property division as well as support payments.

Gottsacker attempts to refute this statutory analysis by relying instead on the way Minnesota courts have defined “income” in the marital property division context and then creates his own definition for income as “value an asset generates during the marriage.” He asserts that, here, the AAA is the product of Edwards’ interest in Edco, relying on the distinction the court of appeals made in Swick that “appreciation is intrinsic to the asset itself, income is a product of the asset.” Swick, 467 N.W.2d at 331. Gottsacker argues that just as stocks can produce dividend payments and rental property can produce rent, corporate shares can produce an AAA.

We do not find Gottsacker’s argument persuasive. He appears to suggest that the distinction of the income as the product of the asset is somehow contradictory to the statutory definition of income as “any form of periodic payment to an individual,” but he fails to articulate the contradiction. Minn.Stat. § 518.54, subd. 6. Further, even if we were to adopt the court of appeals’ Swick definition of income as being somehow distinct from the statutory definition provided in MinmStat. § 518.54, subd. 6, the AAA is not the “product” of Edwards’ interest in Edco in the way that dividends or rental payments are “products.” The AAA is a fund retained by the subchapter S corporation and it is possible that the funds referenced in the AAA will never be distributed.

Gottsacker also claims that the court of appeals erred in likening the AAA to retained earnings and stating that retained earnings are nonmarital property. The court of appeals, in likening the AAA to retained corporate earnings, relied largely on the rationale of Robert v. Zygmunt, in which an earlier panel of that court faced with very similar facts concluded that an AAA was nonmarital. 652 N.W.2d 537 (Minn.App.2002). In finding the AAA to be nonmarital, the court in Robert noted that retained corporate earnings are corporate assets that remain the corporation’s property until severed from other corporate assets and distributed as dividends. Id. at 543.

Gottsacker asserts that this conclusion is erroneous because we stated in Nardini that “income earned during the marriage, whether distributed or undistributed and reinvested in the business, is marital property.” Nardini, 414 N.W.2d at 195. Gott-saeker’s reliance on this language is misplaced. The statement in Nardini upon which he relies was preceded by language that limited the holding to “income generated through the efforts of the marital partners” that is “ret[ained] as shareholder equity in a wholly owned corporation.” Id. This limiting language highlights how most courts that have addressed the issue of retained earnings in closely held corporations have focused their analysis.

Few other states have addressed the issue of how AAA’s or other retained assets of closely held corporations are to be categorized. But we find support for our analytical framework in discussions from other jurisdictions that have addressed the issue either directly or tangentially. The determining factor in these decisions from other jurisdictions tends to be the degree of control the shareholder-spouse can exercise over the corporation and, consequently, the degree of control that shareholder-spouse has in determining when to distribute the retained earnings as shareholder dividends. If the shareholder-spouse is the sole shareholder, for example, a court may view the decision not to distribute the corporate earnings reflected in the AAA as an attempt to shield income from the non-shareholder-spouse and therefore may find the AAA to be income. If the shareholder-spouse is one of many shareholders and has little to no control over deciding when or if to make dividend distributions, treating the AAA as marital property credits the shareholder-spouse with income that may, in fact, never be distributed. This appears to be the rationale that guided the court of appeals in its determination that Edwards’ AAA was nonmarital because it stated, “Edwards did not have a distributive right, or substantial control over, the AAA. There is no assurance that her interest in the AAA will ever be distributed.” Gottsacker, 2002 WL 31655186, at *3.

Gottsacker argues that a Wisconsin Court of Appeals case, Metz v. Keener, 215 Wis.2d 626, 573 N.W.2d 865 (1997), supports his position. He claims that our court of appeals too quickly dismissed the similarity of Metz, in which the Wisconsin Court of Appeals concluded that an AAA in an S corporation was income that was divisible as a marital asset. Gottsacker argues that the Wisconsin court was persuaded by the same facts that are present here: the shareholder-spouse owned the stock, acquired the AAA as income derived from her interest in the stock, and paid taxes on the interest. Our court of appeals distinguished Metz as a case involving a sole shareholder-spouse who acted as the sole manager in the corporation with full distributive rights to the AAA’s retained earnings. We agree that the degree of control exercised by the sole shareholder-spouse in Metz renders the case inapposite.

We conclude that the court of appeals correctly determined that, in this case, the AAA is analogous to retained corporate earnings, the nature of which is best evaluated on a case-by-case basis. This evaluation should follow the tenet that the more control the shareholder-spouse has over the decision to distribute or retain shareholder income, the more likely the court will be to label the AAA income. Here, the district court properly found that Edwards had no such control and we conclude that the court of appeals did not err when it agreed with the district court and concluded that Edwards’ AAA was not income.

II.

Gottsacker next argues that even if the AAA is not viewed as “income,” it constitutes active appreciation and therefore is marital property. He attacks the district court’s treatment of the AAA as passive appreciation and the court’s reliance on Duffey v. Duffey, 416 N.W.2d 830 (Minn.App.), rev. denied (Minn.1988). He suggests that Duffey is inapposite because Duffey dealt with a subchapter C corporation in which the retained earnings at issue had not previously been taxed to the shareholder-spouse as occurs in a subchap-ter S corporation.

In Duffey, the wife argued that the appreciation of the husband’s nonmarital stock value over the course of the marriage was marital because the husband worked for some of the companies at issue. Duffey, 416 N.W.2d at 831. The district court determined that the work the husband had done for the corporations did not “contributed in any material way toward any increase in value in any of the business entities during the marriage,” and the appreciation of the stock was, therefore, passive. Id. at 832-33. Next, the wife argued that when the husband’s interests were combined with the interests of members of his family, he was a controlling shareholder and consequently had control over whether to distribute or retain corporate earnings and the retained corporate earnings were therefore marital property. Id. at 833. The court disagreed: “The distinguishing factor here is the retained earnings were not generated through the efforts of appellant or respondent. Thus, any increase in the value of [the husband’s] stock due to retained earnings is nonmari-tal property.” Id. The court was not persuaded by the argument that the husband had control over fund disbursement and focused instead on marital effort. Thus, it was not, as Gottsacker asserts, the corporate structure that guided the court in Duffey; rather, it was whether the retained earnings, as an increase in the value of the stock, could be attributed to marital effort.

Here, the district court relied on Duffey and held that “retained earnings * * * do not create a marital asset where the underlying stock of the spouse is non-marital, and where the husband and wife have not expended efforts to enhance the value of the non-marital stock.” The court noted that Edwards had no significant role in Edco management and therefore had no ability to force distribution of the AAA funds, and there was no assurance that the funds referenced in the AAA would ever be distributed. The court of appeals agreed that the AAA was not active appreciation because neither spouse contributed to the value of Edco and, therefore, the value of the AAA “arose from the efforts of Edco officers and employees, not through any marital efforts.” Gottsacker, 2002 WL 31655186, at *3.

Gottsacker seeks to refute this conclusion by asserting that the AAA is active appreciation because it resulted from contributions of marital funds to discharge the yearly tax obligations, and appreciation resulting from the contribution of marital funds is “active” appreciation. Gottsacker maintains that Edwards’ interest in the AAA can be attributed not to the efforts of Edco officers, but to the payment of taxes on Edco income directly allocated to Edwards, which taxes were paid with marital funds. We disagree.

The AAA is not active appreciation simply because marital funds were used to pay taxes on the undistributed subchapter S corporate income. Instead, as the court of appeals determined, the AAA is like retained corporate earnings. It is not marital income when the shareholder spouse has little to no control over whether to retain or distribute the earnings, and it is not active appreciation when no marital effort was expended to increase the value of the stock interest. Gottsacker does not dispute that Edwards had and continues to have no control over whether to distribute the funds reflected in the AAA. As both lower courts noted, Edwards may never receive those funds. Moreover, Gottsacker’s arguments do not contradict the lower court’s finding that no marital effort can be said to have increased the value of Edwards’ interest in Edco. Accordingly, we hold that the lower courts did not err when they concluded that Edwards’ Edco AAA is nonmarital property.

III.

Having decided that the lower courts properly characterized the AAA as non-marital property, we must next address Gottsacker’s equitable claim that he is entitled to reimbursement for taxes paid on the AAA during the marriage. Gottsacker asserts that if he is to be denied any interest in the AAA because of its nonmar-ital classification, equity demands that he be reimbursed for his share of the marital funds distributed by Edco to pay the taxes on the AAA funds. He claims that $2,823,248 in marital funds were used to pay these taxes and that he is entitled to reimbursement for half of those funds, or $1,411,624.

Gottsacker raised this argument for the first time in a post-trial motion to the district court. In support of his request for reimbursement, Gottsacker submitted a copy of the parties’ 1998 tax returns and an unnotarized affidavit from his attorney that listed the parties’ tax rates. He submits that this information would have been sufficient for the court to calculate the amount of taxes the parties paid on the AAA. Edwards responds by asserting that we should not review Gottsacker’s request. She claims that because Gottsacker made this argument for the first time in a post-trial motion several months after the court issued its judgment, the claim is barred.

The district court did not address Gott-sacker’s equity claim directly and instead dismissed it in the catch-all paragraph, “all other motions of either Party should be denied.” The court of appeals affirmed the dismissal of Gottsacker’s claim on two grounds. First, it stated that the district court could have dismissed the claim on the procedural ground that it was raised for the first time in a post-trial motion. Second, it noted that the district court “could reasonably have considered” that the Edco distributions used to discharge the tax obligation were made specifically for that purpose and were disbursed to Edwards’ private account from which she wrote the IRS a personal check. Under those circumstances, the court of appeals stated, it would not have been an abuse of discretion to deny Gottsacker’s claim for equitable relief.

Gottsacker asserts that the reason he failed to seek this equitable relief at trial was that he believed the status of the AAA as income “was beyond debate.” We find this argument to be a bit specious given that when this litigation began, no Minnesota court had addressed the proper classification for an AAA, suggesting that the issue was ripe for debate. The court of appeals has consistently held that “[w]hen a party’s post-trial motion is based on a theory of recovery not previously raised, the district court does not abuse its discretion by denying the motion.” Russell v. Fleming, No. C1-99-599, 2000 WL 170012, *3 (Minn.App. Feb.15, 2000); see also Clark v. Clark, 642 N.W.2d 459, 464 n. 1 (Minn.App.2002) (“Generally, arguing an issue in a post-trial motion or on appeal, even one previously raised in the district court, on a theory other than the theory upon which that issue was initially argued to the district court precludes the district or appellate court from addressing the newly raised theory.”).

Even if we accepted Gottsacker’s arguments for why his claim is not barred, we would still conclude that the lower courts properly denied his request for relief on the ground that he failed to submit sufficient evidence to support that request. See Noltimier v. Noltimier, 280 Minn. 28, 29, 157 N.W.2d 530, 531 (1968) (stating that if the record is not sufficient to support review, the appeal may be dismissed). An unnotarized affidavit from a party’s attorney has no evidentiary value. Therefore, in seeking this relief, Gottsacker is essentially asking that we award him over $1 million in equitable relief on the basis of little more than a copy of the parties’ 1998 tax returns. We decline to do so and hold that the lower courts did not err when they denied Gottsacker’s belated claim for equitable relief. Because we determine there was insufficient evidence for this claim, we need not reach the issue of whether the district court could have dismissed this claim on procedural grounds because it was raised for the first time in a post-trial motion.

IV.

The final issue we address is Edwards’ claim that the lower courts erred in finding that her interest in Edcoat, which was acquired with distributions from her shares in Edco, is marital property. In support of her position, Edwards argues that the current rule that income from nonmarital property is marital income is flawed. She argues that this rule favors form over substance and that the better approach would be to consider marital effort in deciding whether such income is marital, just as we do in evaluating whether appreciation of nonmarital property is marital. Here, the intent of the Edwards family was to form a separate corporation in which only Edwards family members and key management personnel would have ownership interests. If the family had attempted to accomplish this goal by making Edcoat a subsidiary of Edco, Edwards’ interest would have remained non-marital. Instead, the family chose to create Edcoat as a separate entity funded with corporate dividends and, as a result of this structural decision, Edwards’ Edcoat interests became marital property. Edwards argues that in deeming the Edcoat interests marital property, she and her family are being penalized for choosing one corporate structure over another.

In Nardini, we explicitly stated that cash dividends are income and, therefore, marital property. Nardini, 414 N.W.2d at 194. Consequently, assets acquired with that marital property are also marital property. Though the Edwards family may regret the corporate structure it chose and while the family may not have fully considered all the consequences of that structure, the district court relied on well-established law in finding that the Edco distributions to Edwards were marital income, the marital income was used to acquire Edcoat ownership interest, and that Edcoat interest is, therefore, marital property. Accordingly, we affirm the lower courts’ determinations that Edwards’ Edcoat interests are marital property.

Affirmed.

BLATZ, C.J., took no part in the consideration or decision of this case.

      . Janis Edwards Gottsacker changed her name during the dissolution proceedings and reinstated her maiden name as her last name. The parties, therefore, will be referred to as "Gottsacker” and "Edwards.”

      . The Edcoat and the Edcoat General interests that Edwards purchased with Edco distributions will hereinafter be referred to as her Edcoat interests.

      . See, e.g., Prahl v. Prahl, 627 N.W.2d 698, 706 (Minn.App.2001) (stating that "[a]s an asset acquired with income generated from a nonmarital asset, shares purchased with reinvested dividends become marital property”); Swick v. Swick, 467 N.W.2d 328, 331 (Minn.App.1991) (stating that "[u]nlike appreciation, income becomes an asset 'acquired during the marriage’ and, as marital property, is divisible between the parties upon dissolution”). See also Wiegers v. Wiegers, 467 N.W.2d 342, 344 (Minn.App.1991) (designating the interest earned from nonmarital certificates of deposit as marital property without explicitly relying on Nardini).

      . See, e.g., Campion v. Campion, 385 N.W.2d 1, 4-5 (Minn.App.1986) (characterizing rental income available from nonmarital apartment building as marital income); Pearson v. Pearson, 363 N.W.2d 337, 339 (Minn.App.1985) (characterizing rental income received annually from nonmarital farm land as marital property).

      . See, e.g., J.D.P v. P.J.H., 399 A.2d 207, 211 (Del.1979) (holding that, in certain situations, retained earnings of a corporation controlled by one spouse may be considered in the calculation of the couple's marital property, and providing a list of factors to consider in making that determination: "consideration of the values which are at stake, whether the increase in retained earnings resulted from a natural enhancement over which the controlling spouse had little or no control, whether such increase resulted from ordinary and necessary business reasons, whether such increase resulted from an intentional purpose by the controlling spouse to prevent earnings from becoming marital property, the impact of any order on other stockholders, on the corporation and on others with an interest in it; the State and Federal tax consequences of any order on each spouse and the corporation”); Swope v. Swope, 122 Idaho 296, 834 P.2d 298, 303 (1992) (restating and following its earlier holdings "that the community has no interest in the retained earnings of a corporation, the stock of which is held as separate property by one of the stockholders, unless the stockholder has sufficient control of the corporation to be able to cause the earnings to be retained”); Hoffmann v. Hoffmann, 676 S.W.2d 817, 827 (Mo.1984) (noting that "[gjenerally, the wife could not claim the retained earnings as marital property, because ' the earnings and profits of a corporation remain its property until severed from other corporate assets and distributed as dividends” but also. recognizing that with closely held corporations, in the determination of whether retained earnings are marital property, "the critical distinguishing factors [are] a controlling interest in the corporation by the owner spouse and substantial control over decisions to distribute corporate earnings” and affirming the lower court's ruling that the retained earnings were not marital property).


source: Caselaw Access Project

author: GILBERT, Justice.

license: Public Domain

text:
    Sharon LANGESLAG, Appellant, v. KYMN INC., a/k/a KYMN Radio, et al., Respondents, Jeff JOHNSON, et al., Defendants.
    No. C7-02-635.
    Supreme Court of Minnesota.
    July 17, 2003.

      Richard A. Beens, Eric John Riensche, Ruth S. Marcott, Felhaber, Larson, Fenlon & Vogt, P.A., Minneapolis, MN, for Appellant.
    Floyd E. Siefferman, Boris Parker, Sali-terman <& Saliterman, P.C., for Minneapolis, MN, for Respondents.
   OPINION

GILBERT, Justice.

Appellant Sharon Langeslag brought this action against her former employer, KYMN Inc., and Wayne Eddy, the principal owner of KYMN. Eddy brought an intentional infliction of emotional distress counterclaim against Langeslag. After a jury trial, Langeslag moved to dismiss Eddy’s counterclaim. The district court denied her motion and submitted the issue to the jury. The jury found that Langes-lag intentionally inflicted emotional distress upon Eddy and awarded him $535,000. Langeslag then moved for judgment notwithstanding the verdict (JNOV), a new trial and remittitur. The court denied her motions. The court of appeals affirmed. We reverse.

KYMN is an AM radio station located in Northfield, Minnesota and is principally owned by Wayne Eddy. In August 1996, Eddy hired Sharon Langeslag for an outside sales position. Eddy and Langeslag had a combative and volatile relationship from the beginning. They both admitted that communication between them frequently resulted in heated arguments and shouting matches. Langeslag also frequently threatened to sue Eddy and KYMN and had difficulty working amicably with other KYMN employees.

The incident that gave rise to Langes-lag’s whistleblower claim occurred in January 1998. Eddy was involved in an incident in KYMN’s parking lot that led to his arrest. Langeslag witnessed a part of the incident, and subsequently gave a statement to the police. Felony charges were brought against Eddy and Langeslag testified against Eddy at his criminal trial in August 1999. Ultimately, Eddy was convicted of a petty misdemeanor. Eddy testified that he was not aware that Langes-lag reported his conduct to police until February 1999.

In April 1998, concerns about Langes-lag’s ability to work well with other employees and her “general overall attitude” were addressed at KYMN’s board meeting. The board minutes of the June 6, 1998 meeting state the following:

Sharon Langeslag: Continued conflicts with other employees, especially [Eddy]. Threatening and insubordinate; Will not take vacation earned; Reiterate to employees to document all problems with Langslag [sic].

Eddy testified that he ceased having weekly sales meetings because Langeslag’s behavior at the meetings was disruptive. In 1997 and again in 1998, Eddy gave Lan-geslag the opportunity to work from her home and offered to provide the necessary office equipment and supplies. Langeslag refused the offer. However, in January 1999, due to escalating tensions, Langeslag began working from home.

Langeslag brought this action against KYMN and Eddy in June 1999. She alleged breach of contract, violation of Minnesota’s whistle-blower statute (Minn. Stat. § 181.932 (2002)), sexual harassment, reprisal, and aiding and abetting in violation of the Minnesota Human Rights Act (MHRA) (Minn.Stat. § 363.03, subd. 1(2), subd. 6 and subd. 7 (2002)), failure to pay wages, assault, intentional interference with contract, retaliation for serving a complaint, violation of Minnesota’s equal pay act (Minn.Stat. § 181 .66 — 181.71 (2002)), wrongful and retaliatory termination, defamation and slander. Eddy counterclaimed, alleging intentional infliction of emotional distress, defamation, and intentional interference with a contractual relationship. On October 28, 1999, Eddy terminated Langeslag, citing her inability to work with other staff members and deficient job performance.

Respondents then moved for summary judgment on all of Langeslag’s claims. The district court granted summary judgment on Langeslag’s claim of retaliation for serving a complaint, but denied summary judgment on the other claims. Lan-geslag withdrew her defamation and slander claims. The district court bifurcated the trial: Langeslag’s whistle-blower and MHRA claims would be litigated before the judge and the remaining claims would be tried before a jury. The jury trial was held first. At the conclusion of Eddy’s case to the jury, Langeslag moved to dismiss Eddy’s intentional infliction of emotional distress, interference with a contract, and defamation counterclaims. The district court denied Langeslag’s motion and submitted the following issues to the jury: Langeslag’s breach of contract claim; and Eddy’s defamation, intentional interference with a contractual relationship and intentional infliction of emotional distress counterclaims. The jury returned a special verdict form finding in favor of Eddy on all issues. Specifically, the jury found that KYMN did not breach its employment contract with Langeslag, Lan-geslag did defame Eddy and/or KYMN Radio, Langeslag did intentionally interfere with KYMN’s contractual relationship, and Langeslag did intentionally inflict emotional distress upon Eddy. The jury awarded Eddy $535,000 in damages for intentional infliction of emotional distress. Langeslag then filed a motion seeking the alternative relief of JNOV, a new trial, or remittitur on Eddy’s three counterclaims, which the court denied.

Next, the district court conducted a bench trial on Langeslag’s whistle-blower and MHRA claims. The court found that Eddy did not violate the whistle-blower statute or the MHRA. Langeslag appealed to the court of appeals challenging the district court’s denial of her motions regarding Eddy’s counterclaims, the district court’s conclusion that Eddy did not violate the MHRA or the whistle-blower statute, and two evidentiary issues. The court of appeals affirmed the district court on all counts. Langeslag v. KYMN, No. C7-02-635, 2002 WL 31370476, at *8-*9 (Minn.App. Oct.22, 2002). Addressing Eddy’s intentional infliction of emotional distress counterclaim the court concluded, “there is evidence to support the jury’s finding that appellant intentionally inflicted emotional distress on respondent Eddy.” Id. at *2.

Langeslag petitioned for review, alleging that the court of appeals erred in concluding that the district court properly submitted Eddy’s counterclaims to the jury, and erred in affirming the district court’s finding that Eddy did not violate the MHRA and whistle-blower statute. We granted review solely on the issue of whether the district court erred in submitting Eddy’s counterclaim for intentional infliction of emotional distress to the jury.

To determine whether the district court erred in submitting Eddy’s intentional infliction of emotional distress counterclaim to the jury, “the same rule is applicable whether the question be raised by motion for a directed verdict or by motion for [JNOV].” Dean v. Weisbrod, 300 Minn. 37, 41, 217 N.W.2d 739, 742 (1974). In considering whether to grant a motion for JNOV, the district court views the evidence in the light most favorable to the nonmoving party and considers “whether the verdict is manifestly against the entire evidence or whether despite the jury’s findings of fact the moving party is entitled to judgment as a matter of law.” Navarre v. S. Washington County Sch., 652 N.W.2d 9, 21 (Minn.2002). The decision to grant JNOV is a matter of law. Therefore, we review de novo the district court’s denial of Langeslag’s motion for JNOV. We must affirm the district court if, “in considering the evidence in the record in the light most favorable to the prevailing party, ‘there is any competent evidence reasonably tending to sustain the verdict.’ ” Id. (citation omitted).

We first recognized the independent tort of intentional infliction of emotional distress in Hubbard v. United Press International, Inc., 330 N.W.2d 428 (Minn.1983). Intentional infliction of emotional distress consists of four distinct elements:

(1) the conduct must be extreme and outrageous; (2) the conduct must be intentional or reckless; (3) it must cause emotional distress; and (4) the distress must be severe.

Id. at 438-39; see also Restatement (Second) of Torts § 46(1) (1965). We have cautioned that intentional infliction of emotional distress is “sharply limited to cases involving particularly egregious facts” and that a “high threshold standard of proof’ is required to submit the claim to a jury. Hubbard, 330 N.W.2d at 439. In examining the record, we doubt that Eddy met his burden of production for any of the elements of this tort. However, as in Hubbard, we need not consider each element because we conclude the lack of evidence of extreme and outrageous conduct and the lack of a causal connection between the conduct and Eddy’s emotional distress dispositive.

Extreme and Outrageous Conduct

Langeslag first argues that she did not engage in extreme and outrageous conduct as defined by this court in Hubbard. Conduct is “extreme and outrageous” when it is “so atrocious that it passes the boundaries of decency and is utterly intolerable to the civilized community.” Hubbard, 330 N.W.2d at 439 (quoting Haagenson v. National Farmers Union Property and Casualty Co., 277 N.W.2d 648, 652 n. 3 (Minn.1979)). Liability for intentional infliction of emotional distress does not extend to “insults, indignities, threats, annoyances, petty oppressions, or other trivialities.” Restatement (Second) of Torts § 46 cmt. d (1965). To qualify as extreme and outrageous, the conduct must lead an average member of the community to exclaim “Outrageous!” Id.

The court of appeals relied on the following conduct to conclude that the evidence supported the jury’s finding that Langeslag’s conduct was extreme and outrageous: (1) On two occasions Langeslag made false reports to the police about Eddy; (2) Langeslag repeatedly threatened Eddy with legal action; and (3) Lan-geslag frequently engaged Eddy in loud workplace arguments. Langeslag argues that as a matter of law this conduct is not extreme and outrageous conduct. We agree.

1. False Police Reports

In January 1999, Langeslag reported to the police that Eddy was “scalping” Minnesota Vikings tickets. Langeslag testified that KYMN sold Vikings tickets in excess of their value and “elaim[ed]” to donate the proceeds to charity. While Eddy admitted to auctioning Vikings tickets over the radio for a price in excess of their face value, he maintained that the proceeds were used for charitable purposes. KYMN had been auctioning items for charity for over 25 years. Langeslag kept the books for these auctions and was aware that the proceeds went to charities. After a brief investigation, the police took no further action.

The second incident took place on January 20, 1999 when Eddy met with Langes-lag in his office to ascertain why she had reported him for scalping. Both parties taped the ensuing conversation. Eddy sat behind his desk. Langeslag sat across from him. The office door was located directly behind Langeslag; it was closed but unlocked. During the conversation Langeslag declared that she was afraid of Eddy and stated several times that she wanted to leave the office. Eddy never indicated that Langeslag was not free to leave; but he did request that she stay. Langeslag called 911 and told the police “I need an officer out to the at KYMN Radio station as soon as possible, please. * * * I want to leave and my employer, who’s Wayne Eddy, won’t let me do that. Yes. I want to leave.”

Langeslag admitted that Eddy did not physically prevent her from leaving his office. Nevertheless, she testified that “I really was afraid that I would be hurt, I didn’t know what [Eddy] was going to do and as long as I kept * * * talking and asking to leave, I felt I had a chance to get out of this without anything worse happening.” Shortly after calling the police, Lan-geslag left Eddy’s office and the KYMN building before the police arrived. The police responded to the 911 call, and listened to the tape of the conversation, but took no further action. It was after this incident that Langeslag began working exclusively from home.

Langeslag argues that neither of these police reports rise to the level of extreme and outrageous conduct because they were not false. The court of appeals concluded that Langeslag knew that the scalping allegations were baseless and that Eddy did not prevent Langeslag from leaving his office. Although the court of appeals thereby determined that both of Langes-lag’s police reports were false, we need not determine whether Langeslag’s police reports were false in our analysis.

Extreme and outrageous conduct is conduct that is “utterly intolerable to the civilized community.” Hubbard, 330 N.W.2d at 439 (citation omitted). To prevent fictitious and speculative claims we limit this tort “to cases involving particularly egregious facts.” Id. Langeslag reported to the police that Eddy was scalping tickets, and that Eddy would not allow her to leave his office. Even assuming these reports were false and Langeslag knew it, this conduct does not rise to the level of outrage that is “utterly intolerable to the civilized community.” Id. Our conclusion is buttressed by decisions in other jurisdictions reaching similar conclusions. Fuller v. Local Union No. 106, 567 N.W.2d 419, 423 (Iowa 1997) (concluding that the defendant did not engage in extreme and outrageous conduct when he falsely reported to the police that the plaintiff was driving while intoxicated); Holland v. Sebunya, 759 A.2d 205, 212 (Me.2000) (stating that calling the police and having the plaintiff physically removed from a meeting does not constitute extreme and outrageous behavior, even if the removal was not warranted).

Eddy, however, argues that filing false police reports is analogous to an “attempt to extort money by a threat of arrest,” which is conduct the Restatement classifies as extreme and outrageous. See Restatement (Second) of Torts § 46 cmt. e (1965). We disagree; Eddy miseharacterizes the Restatement. Under comment e, a police officer’s attempt to extort money from a person by threatening arrest is extreme and outrageous conduct because the police officer is in a position of authority over the person. Id. Comment e describes a situation where extreme and outrageous conduct arises because the actor is in a position of authority. Id. The facts of this case are distinguishable. Eddy, the party claiming emotional distress, as Langeslag’s employer was in a position of authority over Langeslag. Langeslag had no authority or power over Eddy. Moreover, there is no evidence supporting the allegations that the police reports were made in an attempt to extort money. Thus, Eddy failed to satisfy the “high threshold standard of proof’ for a jury determination of his tort claim. Hubbard, 330 N.W.2d at 439. Consequently, the district court erred in submitting this claim to the jury.

2. Threats to Take Legal Action

Eddy testified that beginning in the fall of 1996, when Langeslag was hired, through her tenure at KYMN, she frequently threatened to sue him. He stated that Langeslag made these threats about “anything” and “insignificant things.” When asked how he handled these threats, Eddy replied that he attempted to avoid doing anything that could cause Langeslag to initiate a lawsuit. Eddy also testified that fear of a lawsuit prevented him from terminating Langeslag. Although Langes-lag denied threatening Eddy with lawsuits, Eddy’s apprehension that Langeslag would bring a lawsuit against him was not unfounded as she ultimately brought the lawsuit involved here. KYMN employees testified that Langeslag stated that Eddy would be financially destroyed by her lawsuit and that she knew how to manipulate the court system.

Even viewing the evidence in the light most favorable to Eddy, Langeslag’s frequent threats to bring a lawsuit do not qualify as extreme and outrageous conduct. While Langeslag’s conduct was unconventional, annoying and may have been intended to harass, threatening to bring a lawsuit in and of itself is not “so atrocious that it passes the boundaries of decency.” Hubbard, 330 N.W.2d at 439 (citation omitted). In fact, an individual’s right to bring a nonfrivolous lawsuit is protected under the Minnesota Constitution. Minn. Const, art. L, § 8. (“Every person is entitled to a certain remedy in the laws for all injuries or wrongs which he may receive to his person, property or character, and to obtain justice freely and without purchase, completely and without denial, promptly and without delay, conformable to the laws.”). Eddy is, in effect, asking this court to create a cause of action against those who threaten to bring litigation. However, Langeslag had a constitutionally protected right to peacefully bring a non-frivolous lawsuit: Action taken to inform Eddy that she intended to do so does not constitute extreme and outrageous behavior. The district court erred in submitting this claim to the jury.

3. Workplace Arguments

Both Langeslag and Eddy admit that they were frequently involved in loud workplace arguments. Eddy testified that Langeslag often used vulgarity and yelled when they disagreed. Langeslag admitted to calling Eddy an “asshole.” When asked if she called Eddy this name more than once she replied, “I sure did.”

Testimony from several KYMN employees confirms that Langeslag commonly initiated workplace arguments with Eddy. One employee testified that “[Langeslag] called [Eddy] just about every unkind name I could think of. Some of the more common ones, asshole, son of a bitch, bastard, very frequently in his presence.” He characterized the relationship between Eddy and Langeslag from 1997 to 1998 as “[v]ery stormy, very combative.” He also stated that it was primarily Langeslag who initiated the arguments. Another KYMN employee testified that the arguments “would typically start out with [Eddy] saying something or asking a question of [Langeslag] about an account and, then it would immediately or very quickly turn into a very loud and aggressive shouting match between her and [Eddy] and in all cases I never saw him initiate it. I only saw [Langeslag] initiate it.”

Eddy also testified that Langeslag invaded his personal space during their frequent confrontations. A KYMN employee testified that Langeslag was aggressive with Eddy: “[m]any times she would charge into his space and get very, very close to him and just look right up into his face within inches of each other and shout at him.” Another employee testified that “[Langeslag] would go toe to toe. She would step up to [Eddy’s] face and yell at him.”

Langeslag argues that her conduct was nothing more than occurs in an everyday workplace argument, which we have found not to be extreme and outrageous in Hubbard and in Leaon v. Washington County, 397 N.W.2d 867 (Minn.1986). In Hubbard, we concluded that employment discipline consisting of verbal and written criticism of an employee’s job performance, the employer requesting the employee’s resignation, and the employer’s statement that the employee “chickenfed] out” of an assignment did not constitute extreme or outrageous behavior. Hubbard, 330 N.W.2d at 433, 439. Accordingly, under Hubbard, an employer’s criticism of an employee’s job performance, even if intended to harass, does not constitute extreme and outrageous behavior.

In Leaon, a deputy sheriff attended a stag party thrown by his co-workers. Leaon, 397 N.W.2d at 869. At the party, events took place that the deputy sheriff felt were inappropriate and caused him distress. He reported the stag party to authorities at work and demanded the names of the people involved. Id. The deputy sheriff was subsequently involved in a “verbal altercation” with two of his coworkers. The deputy sheriff maintained that the co-workers threatened him with physical violence. Id. He also claimed that his supervisor told him “[y]ou are never going to work in law enforcement again.” Id. We held, “[a]s a matter of law” these workplace events do not qualify as extreme and outrageous. Id. at 873.

Hubbard and Leaon do not stand for the principle that workplace arguments can never meet the high threshold of proof necessary to establish extreme and outrageous conduct. Those cases were decided under their unique facts. Thus, we must determine whether, under these particular facts, Langeslag’s conduct meets the high threshold of proof necessary to sustain an intentional infliction of emotional distress claim.

During a 3-year period, Langeslag frequently shouted at Eddy, used vulgar language and invaded his personal space. This conduct is bizarre, unprofessional, and more than an everyday workplace argument. However, this conduct does not satisfy the high threshold of proof required under Hubbard for an intentional infliction of emotional distress claim. Even when considered cumulatively, Lan-geslag’s conduct does not constitute extreme and outrageous conduct “utterly intolerable in a civilized society.” Hubbard, 330 N.W.2d at 440 (citation omitted). Furthermore, as the employer, Eddy is in the position of power and authority over Lan-geslag. Eddy could have terminated Lan-geslag’s employment at any time, and thereby put an end to Langeslag’s offensive conduct and prevented or mitigated his emotional distress. For over 3 years Eddy acquiesced to Langeslag’s behavior. We conclude that under these facts the district court erred in submitting Eddy’s workplace argument claim to the jury and permitting the jury to find that Langes-lag’s behavior was extreme and outrageous.

Severe Emotional Distress

Furthermore, we conclude that Eddy has failed to prove he suffered severe emotional distress as a result of Lan-geslag’s conduct. Just as the plaintiff must meet a high threshold of proof in proving the extreme nature of the conduct, the plaintiff must also meet a high threshold of proof regarding the severity of the mental distress. Hubbard, 330 N.W.2d at 439. We have adopted the Restatement’s definition of severe emotional distress: “The law intervenes only where the distress inflicted is so severe that no reasonable man could be expected to endure it.” Hubbard, 330 N.W.2d at 439. (quoting Restatement (Second) of Torts § 46 cmt. j (1965)). To properly submit an intentional infliction of emotional distress claim to the jury, the emotional distress must be a result of the extreme and outrageous conduct. Restatement (Second) of Torts § 46 cmt. j (1965).

The only evidence introduced during trial supporting Eddy’s claim that he suffered severe emotional distress as a result of Langeslag’s conduct was Eddy’s testimony and his medical records from 1998. The primary evidence of Eddy’s emotional distress was his own testimony that he suffered from several physical side effects as a result of his relationship with Langes-lag. He began to experience “incessant pain” in his stomach and for the first time he began taking antacids to reheve the pain. Eddy also testified that his relationship with Langeslag triggered alpecial ar-eata, a condition that caused his hair to fall out in clumps. Eddy lost 30 to 40 pounds between 1997 and 2001. The stress caused by his relationship with Langeslag also aggravated his eczema and diabetes. Finally, he testified that he was experiencing impotence. Eddy’s physician prescribed an anti-depressant and sleeping pills to help him sleep at night.

The parties stipulated to the admission of Eddy’s medical records. The evidence in the medical records connecting Langes-lag’s conduct to Eddy’s physical symptoms of stress, however, is negligible. In March 1998, Eddy completed a “Current Visit Information” form indicating that he was experieneing a “work-related” “unusually stressful situation.” A medical record dated March 25, 1998 states that Eddy was under “[h]igh. stress recently in his daily activities.” A dermatology medical record, dated April 16, 1998 provides that, “In the past month [Eddy] has had a severe flare of his itching rash.” The record also states, “He says he is under a lot of stress and wonders if stress may be playing a role in this itching rash.” .

We conclude that Eddy’s medical records fail to establish that Langeslag’s conduct caused severe emotional distress in Eddy. In fact, these records are from the spring of 1998, a time shortly after Eddy’s arrest in a criminal matter. These symptoms could have been caused by events surrounding the criminal matter just as easily as by Langeslag’s conduct. In addition, Eddy’s symptoms could not have been a result of the two police reports because Langeslag did not make the reports until 1999. Finally, the medical records reflect that Eddy’s eczema, diabetes and impotence were preexisting conditions and there is no evidence establishing that these preexisting conditions were specifically aggravated by Langeslag’s conduct. Accordingly, the jury should not have been permitted to find that the conduct caused Eddy’s emotional distress.

Eddy’s claim involves allegations of complex medical issues and issues of causation, possibly from multiple sources. In such a situation, testimony from the individual making the claim and inconclusive medical records are not sufficient to establish a causal connection between the conduct and the emotional distress. See Hubbard, 330 N.W.2d at 440 (holding that depression, high blood pressure, skin rash, and stomach disorders did not constitute severe emotional distress when medical evidence of the plaintiffs injuries was missing from the record and that despite the plaintiffs testimony, he never missed work, or saw a doctor because of his problems). The appropriate method of proving the severity and causation of emotional distress is through medical testimony. In addition, other than general allegations of pain and suffering, Eddy failed to submit any probative evidence in support of an award of $535,000 in damages for intentional infliction of emotional distress. The record lacks any evidence of economic damages such as past or future lost wages, lost income, medical expenses, or any similar damage element. For the above reasons, we hold that the district court erred in submitting Eddy’s intentional infliction of emotional distress counterclaim to the jury.

Reversed and remanded to the district court for entry of judgment in accordance with this opinion.

      . Langeslag's complaint also included claims against two KYMN employees, which were dismissed in part by Langeslag and in part by the district court.

      . Both parties and the court of appeals refer to this as a motion for directed verdict.

      . Langeslag withdrew her common law wrongful termination claim and her equal pay act claim. The district court dismissed her assault and interference with a contract claims.

      . The jury also awarded Eddy/KYMN $100,000 in damages for the defamation claim, and $75,000 to KYMN in damages for the intentional interference of contractual relationship claim.

      . Langeslag denies initiating contact with the police to report the alleged ticket scalping claiming instead that a police officer approached her about the situation. However, as the district court concluded, police records indicate that Langeslag contacted police to report the alleged ticket scalping.

      . Minnesota Statutes § -609.805, subd. 2 (2002), provides that whoever intentionally "[s]ells or offers to sell a ticket to an event at a price greater than that charged at the place of admission or printed on the ticket” is guilty of a misdemeanor.

      . Lawyers and litigants are still bound by rules that prevent frivolous litigation. See, e.g., Minn. R. Civ. P. 11.02. and 11 .03; Minn. R. Prof. Conduct 3.1.

      . Eddy included two doctors on his witness list, but the district court did not allow the doctors to testify because Eddy did not in-elude them on- the witness list in a timely manner as required by the court's discovery deadline.

      . Our holding here does not overrule our recent holding in Navarre, where we addressed emotional distress damages resulting from a violation of a statutory right. Navarre, 652 N.W.2d at 29.


author: HUDSON, Judge.

text:
    STATE of Minnesota, Respondent, v. Brandon Nathaniel SLETTEN, Appellant.
    No. C0-02-1500.
    Court of Appeals of Minnesota.
    July 3, 2003.

      Mike Hatch, Attorney General, St. Paul, and Doug Johnson, Washington County Attorney, Michael C. Hutchinson, Assistant County Attorney, Stillwater, for respondent.
    Daniel S. Adkins, Richard A. Sand, Richard Sand & Associates, St. Paul, for appellant.
    Considered and decided by KLAPHAKE, Presiding Judge, WILLIS, Judge, and HUDSON, Judge.
   OPINION

HUDSON, Judge.

Appellant challenges his. conviction for second-degree controlled substance crime. Specifically, he contests the district court’s finding that he lacked standing to challenge the warrantless entry of police/law enforcement personnel into a hotel room where appellant was located and where controlled substances were recovered. Appellant further claims that the state waived the issue of standing or, in the alternative, that he has “automatic standing” under Article I, Section 10 of the Minnesota Constitution because he was charged with a possessory offense.

First, we conclude that the state adequately preserved the issue of standing and that appellant waived the issue of “automatic standing.” Second, based on Minnesota law at the time of the district court’s ruling, the district court properly determined that appellant did not have a reasonable expectation of privacy, and he could not, therefore, challenge the search under the Fourth Amendment of the United States Constitution or the Minnesota Constitution. Third, we address the Minnesota Supreme Court’s recent decision in In re Welfare of B.R.K., 658 N.W.2d 565 (Minn.2003), where the court held that a short-term social guest in a home had a reasonable expectation of privacy sufficient to challenge a warrantless search of that home. We conclude, however, that the facts here are more similar to those in Minnesota v. Carter, 525 U.S. 83, 119 S.Ct. 469, 142 L.Ed.2d 373 (1998), and hold that appellant was not a short-term social guest; rather, he was on the premises for the purpose of conducting business transactions. Accordingly, even under B.R.K., appellant did not have a reasonable expectation of privacy under the Fourth Amendment of the United States Constitution or the Minnesota Constitution to challenge the search of the hotel room, and we affirm the district court’s order in its entirety, including appellant’s conviction.

FACTS

On November 27, 2000, officers from the Minnesota Department of Corrections Fugitive Apprehension Unit and other law enforcement personnel searched several rooms at the Country Inn & Suites in Forest Lake, Minnesota, for a parole violator. The hotel desk attendant told the officers that room 235 was experiencing heavy foot traffic, and that a man resembling the suspect had been seen visiting the room. Based on this information, officers approached the door and knocked. The man who answered immediately tried to slam the door shut, and officers heard someone yell from inside the room, “It’s the cops!” The officers forced their way into the room after one of the officers saw a man inside who resembled the suspect. As it turned out, the man was appellant, not the parole violator. Officers, however, observed appellant throw a baggie of what appeared to be marijuana to the floor. While the officers were in the hotel room, appellant’s cell phone rang. An officer answered it without identifying himself as law enforcement, but appellant yelled in the background “Police. Police. It’s the cops.”

During the subsequent search, officers seized approximately eight grams of a substance containing methamphetamine in individually-packaged containers, four grams of what appeared to be marijuana, two marijuana pipes, a butane torch, a digital scale, a cell phone, a date book, and $850 in cash. Appellant and two others who were in the room were arrested. Upon questioning, each of the three men admitted that none had planned to spend the night in the hotel room, and that a woman from Wisconsin had rented the room for them in her name. She was not present and they were unsure of her whereabouts. Co-defendant Christopher Hudella told one of the officers he went to room 235 to “get high” and did so after he received a “freebie” of methamphetamine from appellant, as Hudella had done earlier in the week. Officers verified that a woman named Bobbi Jo Denver had rented the room. Appellant was searched incident to his arrest and had two room cards in his pocket, but neither opened room 235.

The state charged appellant with second-degree controlled substance crime, in violation of Minn.Stat. § 152.022, subds. 1(1) and 3 (2000). The district court granted appellant’s motion to suppress the methamphetamine and drug paraphernalia obtained from the hotel room, and dismissed the complaint. The district court found that the search was unreasonable and in violation of the Fourth Amendment because the officers did not have sufficient probable cause or the requisite exigent circumstances to justify warrantless entry into the hotel room. The state appealed, based on the district court’s failure to make a finding as to appellant’s standing and expectation of privacy in the hotel room. Although the state raised the issue of appellant’s standing for the first time in its post-omnibus memorandum, this court concluded that the state sufficiently preserved the issue for appellate review, and that the district court erred by failing to make proper findings on the issue of appellant’s standing. State v. Sletten, No. C3-01-184, 2001 WL 641740, at *2-*3 (Minn.App. June 12, 2001). This court remanded the case for the district court to make those findings. Id.

On remand, the district court held an evidentiary hearing. Contrary to his statement on the night he was arrested, appellant testified that he did intend to spend the night in the hotel room with his friend Josh. Appellant could not remember Josh’s last name, but he stated that Josh was Denver’s boyfriend. At oral argument, appellant’s counsel claimed that appellant did not want to be associated with the methamphetamine or drug paraphernalia found in the hotel room, so he did not reveal his true intentions at the time of his arrest. The district court found that appellant’s testimony lacked credibility, particularly in light of the state’s rebuttal testimony that appellant told officers on the night that he was arrested that he did not plan to spend the night in room 235. The district court concluded that appellant lacked standing to challenge the search of the hotel room. This appeal followed.

ISSUES

I. Did the state adequately preserve the . issue of standing?

II. Did appellant waive the issue of “automatic standing?”

III. Did the district court properly determine that appellant had no reasonable expectation of privacy in the hotel room and therefore could not claim the protection of the Fourth Amendment to challenge the search of the room?

ANALYSIS

I

In his brief, appellant contends that, notwithstanding this court’s earlier decision in State v. Sletten, No. C3-01-184, 2001 WL 641740 (Minn.App. June 12, 2001), the state waived the standing issue by failing to raise it at the omnibus hearing before the district court. As a threshold matter, in subsequent appeals, when litigating substantially similar issues, parties are bound by the “law of the case.” See, e.g., State v. Bentley, 231 Minn. 531, 540-41, 45 N.W.2d 185, 191 (1950) (holding “law of the case” prevented re-examination of court’s earlier decision involving same legislative authority, same flood control project, same action of executive council, and same constitutional right to damages); State v. Harrington, 504 N.W.2d 500, 503 (Minn.App.1993) (holding appellants precluded from attacking validity of restraining order on appeal because of failure to appeal validity of order which now stood as “law of the case”), review denied (Minn. Sept. 30, 1993). At oral argument, appellant’s counsel conceded that this court’s previous holding regarding the state’s preservation of the standing issue is the law of the case, and he is bound by it. Sletten, 2001 WL 641740, at *2.

II

Appellant contends that because he was charged with a possessory offense, he has “automatic standing” under Article I, Section 10, of the Minnesota Constitution to challenge the search. He further claims that the “automatic standing” issue has not been resolved by Minnesota courts and this court should take the opportunity to do so here. It is true that this court did not reach the “automatic standing” issue in two recent cases. See, e.g., State v. Wilson, 594 N.W.2d 268, 271 (Minn.App.1999) (declining to consider “automatic standing” argument for failure to raise it before district court), review denied (Minn. Aug. 18, 1999); State v. Reynolds, 578 N.W.2d 762, 765 (Minn.App.1998) (declining to consider “automatic standing” because on facts of case defendant did not possess cocaine, thus making the question moot). But in State v. Robinson, 458 N.W.2d 421, 423 (Minn.App.1990), review denied (Minn. Sept. 14, 1990), we held that “[a] charge of possession no longer gives a defendant “automatic standing”” (citations omitted). In any event, because appellant did not raise this issue before the district court, he did not preserve the issue for consideration on appeal. Therefore, we decline to reach the issue on the merits.

Ill

Appellant also argues that he was an overnight guest in the hotel room and had a reasonable expectation of privacy in the room sufficient to challenge the warrant-less entry and search. Additionally, appellant contends that even as a mere social guest, he was legitimately on the premises and had the requisite reasonable expectation of privacy to invoke the protection of the Fourth Amendment. We disagree.

The Fourth Amendment guarantees “[t]he right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures.” U.S. Const, amend. IV. “[T]he Fourth Amendment protects people, not places.” Katz v. United States, 389 U.S. 347, 351, 88 S.Ct. 507, 511, 19 L.Ed.2d 576 (1967). Thus, the Fourth Amendment is a personal right and an individual must invoke its protections. Minnesota v. Carter, 525 U.S. 83, 88, 119 S.Ct. 469, 473, 142 L.Ed.2d 373 (1998). An individual may invoke the protection of the Fourth Amendment by showing

that he personally has an expectation of privacy in the place searched, and that his expectation is reasonable; i.e., one that has “a source outside of the Fourth Amendment, either by reference to concepts of real or personal property law or to understandings that are recognized and permitted by society.”

Carter, 525 U.S. at 88, 119 S.Ct. 469, 472, 142 L.Ed.2d 373 (quoting Rakas v. Illinois, 439 U.S. 128, 143 n. 12, 99 S.Ct. 421, 430 n. 12, 58 L.Ed.2d 387 (1978)).

While social guests may enjoy an expectation of privacy on the premises they are visiting under limited circumstances, business guests do not. See, e.g., Carter, 525 U.S. at 91, 119 S.Ct. at 474 (short-term business guest lacks legitimate expectation of privacy). Likewise, a guest who is merely permitted on the premises is not entitled to Fourth Amendment protection like an overnight guest, or like a guest with long-standing ties to the premises. Minnesota v. Olson, 495 U.S. 91, 100, 110 S.Ct. 1684, 1690, 109 L.Ed.2d 85 (1990) (overnight guest entitled to Fourth Amendment protection). See, e.g., Carter, 525 U.S. at 91, 119 S.Ct. at 473-74 (recognizing distinction between overnight guest and social guest “merely ‘legitimately on the premises’ ”); Reynolds, 578 N.W.2d at 765 (standing of social guest also based on one’s “long-term connection to the premises” or “storing personal property on the premises”).

While a hotel guest may be protected under the Fourth Amendment from unreasonable searches and seizures, that right is not absolute; a hotel guest must first show a legitimate privacy interest. See, e.g., State v. Perkins, 588 N.W.2d 491, 492 (Minn.1999) (holding Fourth Amendment protection not triggered unless aggrieved party demonstrates legitimate privacy interest).

Finally, because the district court made findings of fact concerning appellant’s standing, we must accept those factual findings unless clearly erroneous. State v. Lindholm, 557 N.W.2d 601, 602 (Minn.App.1996), review denied (Minn. Feb. 26, 1997). We do not conclude that a finding of fact is clearly erroneous when that finding is reasonably supported in the record. State v. Danh, 516 N.W.2d 539, 544 (Minn.1994). Finally, “[w]eighing the credibility of the witnesses is the exclusive province of the factfinder.” State v. Miranda, 622 N.W.2d 353, 358 (Minn.App.2001) (citation omitted).

1. Fourth Amendment Analysis Pre-B.R.K.

First, we must determine whether appellant exhibited an actual subjective expectation of privacy in the hotel room and second, whether that expectation is reasonable. See Katz, 389 U.S. at 361, 88 S.Ct. at 507 (Harlan, J., concurring). Although the district court did not directly address this point, there is little doubt that appellant exhibited an actual subjective expectation of privacy in the hotel room. He was in a hotel room with the door closed and locked. He and the others attempted to keep the police out as they forced entry into the room. Based on these actions, we conclude that appellant demonstrated an actual subjective expectation of privacy in the hotel room.

We next consider whether appellant’s expectation of privacy is reasonable, i.e., one that is recognized by society. The district court found that appellant was not a registered occupant of room 235, and he did not intend to spend the night in that room. Co-defendant Hudella told investigators that he went to room 235 to get methamphetamine from appellant, as he had done earlier in the week. Based on these facts, the district court found that appellant “was clearly using the room for the purpose of using and/or selling marijuana and methamphetamine.” The district court specifically rejected appellant’s claim that he planned to spend the night in room 235 with his friend Josh, whose last name he could not recall, and Josh’s girlfriend. The district court concluded that appellant “did not have a reasonable expectation of privacy in the hotel suite and therefore has no standing to challenge the police entry into the room.”

In affirming the district court’s determination, we underscore the fact that while appellant may have legitimately been on the premises, as previously mentioned, he was not a registered guest in the hotel room. Denver had rented the room in her name, and neither of the room keys found in appellant’s pocket opened room 235. “The question of whether a person is legitimately on the premises is too broad to measure fourth amendment rights.” Overline v. Comm’r of Pub. Safety, 406 N.W.2d 23, 26 (Minn.App.1987). Rather, the focus is on whether the individual “can claim fourth amendment protection, even though the interest may not be a recognizable property interest at common law.” Id. Appellant may have been a guest in room 235, but on this record, he has failed to demonstrate that he was the guest of Denver whose social relationship, if any, with appellant was not readily apparent from the record. Moreover, there is no evidence in the record that Denver gave appellant permission to stay in the room even as a social guest. To the extent appellant claims that he was Josh’s guest, that claim is equally without merit since he did not even know Josh’s last name. Notably, neither Josh nor Denver were , present at the time of police entry to room 235.

We acknowledge that hotel guests are protected under the Fourth Amendment from unreasonable searches and seizures. But that right is not absolute and hotel guests must still show a legitimate privacy interest. State v. Ward, 580 N.W.2d 67, 70 (Minn.App.1998). Here, appellant suggests he was a typical hotel guest. But common experience reveals that most hotel guests formally register and “check in” with the hotel and have operable keys to the room. Alternatively, if not registered in their own name, hotel guests generally can identify by name the persons with whom they are staying, or can demonstrate that they were invited to the room and have some cognizable relationship to the person who invited them. Like the defendant in Carter, appellant’s relationship with his ostensible hosts — Denver and Josh — was extremely attenuated, and accordingly, he did not have a legitimate expectation of privacy.

Although there is some evidence in the record that appellant was using drugs as well as selling them, the record nevertheless supports the district court’s finding that the main purpose for appellant’s visit was to engage in drug transactions. Co-defendant Hudella reported to police that appellant cut and weighed the methamphetamine in the hotel room, and that he (Hudella) had received two “freebies” from appellant in three days’ time. Moreover, while appellant had small amounts of controlled substances on his person, officers found a majority of the methamphetamine (8.3 grams) packaged individually for sale. Like the defendants in Carter, appellant had a “fleeting and insubstantial” connection to the hotel room which, from the record, was nothing more than a convenient processing station for the packaging and distribution of drugs. Thus, what little expectation of privacy he may have had was extinguished in light of the commercial nature of his visit. See Carter, 525 U.S. at 91, 119 S.Ct. at 474; B.R.K., 658 N.W.2d at 575. At oral argument, appellant’s counsel characterized appellant’s presence in the hotel room as a “friendly” visit, in light of the fact that no money changed hands. But as the state correctly noted, the definition of “sell” within the meaning of Minn.Stat. § 152.01, subd. 15a (2000), does not require money to complete a transaction. See id. (defining “sell” as “to give away, barter, deliver, exchange, distribute, or dispose of to another * * *”).

To date, engaging in commercial transactions involving brief visits to the premises is not a privacy interest society is prepared to recognize as reasonable or legitimate. See, e.g., State v. Carter, 596 N.W.2d 654, 656 (Minn.1999) (holding short-term business guests engaged in illegal drug transactions lack legitimate expectation of privacy). The district court’s findings that appellant did not have a reasonable expectation of privacy in the hotel room and therefore had no standing to challenge the search are amply supported in the record and we will not disturb them.

2. Fourth Amendment Analysis Post-B.R.K.

At oral argument, appellant’s counsel contended that even if appellant was not an overnight guest, he is entitled to Fourth Amendment protection under the Supreme Court’s recent decision in B.R.K. because he was legitimately on the premises as a short-term social guest. We reject this argument.

In B.R.K., the Supreme Court addressed the privacy interest of a short-term social guest in a private home. B.R.K., 658 N.W.2d at 572-73. We recognize that the district court did not have the benefit of B.R.K. when it reached its decision. But we conclude that nothing in B.R.K dictates a different result because the facts here are fundamentally different from those in B.R.K. Unlike B.R.K., appellant was not a short-term social guest with a reasonable expectation of privacy under the Fourth Amendment of the United States Constitution or the Minnesota Constitution.

We begin our analysis by noting that “[p]roperty used for commercial purposes is treated differently for Fourth Amendment purposes from residential property.” Minnesota v. Carter, 525 U.S. 83, 90, 119 S.Ct. 469, 474, 142 L.Ed.2d 373 (1998). One holds a lesser expectation of privacy in commercial premises than in a home. New York v. Burger, 482 U.S. 691, 700, 107 S.Ct. 2636, 2642, 96 L.Ed.2d 601 (1987). In Carter, the seminal case in Minnesota, an Eagan police officer looked through a gap in closed window blinds to see defendants packaging cocaine in an apartment. Carter, 525 U.S. at 85, 119 S.Ct. at 471. The United States Supreme Court held that the defendants had no expectation of privacy because they “were obviously not overnight guests, but were essentially present for a business transaction and were only in the home for a matter of hours.” Id. at 90, 119 S.Ct. at 473. The Court explained that the

purely commercial nature of the transaction engaged in here, the relatively short period of time on the premises, and the lack of any previous connection between respondents and the householder, all lead us to conclude that respondents’ situation is close to that of one simply permitted on the premises.

Id. at 91, 119 S.Ct. at 474.

In B.R.K, the Minnesota Supreme Court held that a short-term social guest is entitled to Fourth Amendment protection when the two-part analysis set forth in Katz is satisfied: (1) an individual demonstrates an actual subjective expectation of privacy in the home; and (2) society is willing to recognize that expectation as reasonable. B.R.K. 658 N.W.2d at 571 (citing Katz, 389 U.S. at 361, 88 S.Ct. at 516 (Harlan, J., concurring)). B.R.K., a minor guest attending a party at a friend’s house, hid in the basement when two sheriffs deputies arrived at the home to investigate a report of an underage drinking party. Id. at 568. The deputies entered the home through an unlocked door, without a warrant, and found B.R.K., the party’s host B.A.O., and two other teenagers hiding behind the furnace. Id. When questioned by the deputies, B.R.K. admitted to consuming alcohol and tested positive for alcohol consumption. Id.

Following a trial, the district court found that B.R.K. lacked a reasonable expectation of privacy and did not have standing to challenge the warrantless entry or search. Id. at 570. This court affirmed the district court, noting that while B.R.K. may have demonstrated a subjective expectation of privacy, it was not a reasonable one. In re B.R.K., No. C7-01-1466, 2002 WL 1050385, at *2 (Minn.App. May 28, 2002). The Supreme Court reversed ■this court, holding that not only did B.R.K. demonstrate a subjective expectation of privacy when he sought to conceal his presence in the home, that expectation was reasonable because he had a previous social relationship with the host, and remained at the home with the host’s consent for a purely social gathering. B.R.K., 658 N.W.2d at 576. The court observed that there are many occasions on which people visit the home of another without spending the night such as holiday gatherings and dinner parties; and that “[l]ike an overnight visit, entering the home of another for a short-term social visit is also ‘a longstanding social custom that serves functions recognized as valuable by society.’ ” Id. (citing Minnesota v. Olson, 495 U.S. 91, 98, 110 S.Ct. 1684, 1689, 109 L.Ed.2d 85 (1990)).

The court took great pains to square its decision with Carter, noting that Carter does not stand for the proposition that only overnight guests have a reasonable expectation of privacy in their host’s home. B.R.K., 658 N.W.2d at 574-75. The court noted that Carter did not specifically address a defendant’s expectation of privacy in terms of their status as social guests, because the focus was on the commercial nature of the defendant’s presence in the apartment. Id. at 575. The court concluded that “ * * * only after taking into account the lesser expectation of privacy individuals have in commercial property did the [Carter] court conclude that the defendants lacked a reasonable expectation of privacy in the apartment.” Id.

Applying B.R.K., we conclude that appellant has demonstrated an “actual subjective expectation of privacy” in room 235, because appellant plainly attempted to exclude police from the hotel room. But we do not believe that expectation is one that society is willing to recognize as reasonable. B.R.K., 658 N.W.2d at 571. Thus, we decline appellant’s invitation to extend him Fourth Amendment protection under B.R.K. We do so for two reasons: (1) appellant’s nexus to the hotel room and his hosts is nebulous at best; and (2) appellant’s presence in the hotel room was primarily for commercial purposes.

At oral argument, appellant’s counsel attempted to distance appellant from Carter and vigorously argued that this case is on all fours with B.R.K. Appellant’s counsel stressed the fact that B.R.K specifically recognized the privacy interest of short-term guests who do not stay overnight. We find no merit in this argument. First, appellant’s contention that he had a substantial nexus to the hotel room and his hosts is strained. Appellant maintains that he was a guest of his friend, Josh, whose last name he could not remember, and Josh’s girlfriend, Denver, who rented the room for them. In an apparent attempt to establish some social nexus with Denver, appellant’s counsel claimed at oral argument that appellant was with Denver when she rented the room; but this contention is unsupported in the record. Furthermore, Denver was not present at the time of the search. More importantly, appellant makes no claim that he had any previous social relationship with Denver, or that he even knew her prior to the day in question. Likewise, nothing in the record suggests appellant had a significant social relationship with Josh.

The facts in B.R.K. are readily distinguishable. There, B.A.O. specifically consented to B.R.K.’s continued presence in B.A.Ol’s home for the party. Equally important, B.A.O. and B.R.K. were friends and thus had a previous social connection with one another. Moreover, after the party was over, B.A.O. “engaged in social interaction with [B.R.K.] when they sat in the basement talking and watching television.” B.R.K., 658 N.W.2d at 574. Finally, the court noted that B.A.O. shared his privacy interest with B.R.K. by allowing B.R.K. to participate in locking the doors, turning off the lights, and hiding behind the furnace. Id. Here, appellant was in a hotel, not a private home, and had no previous relationship or social connection to Denver. Nor is there any evidence in the record that she invited him to the hotel room or consented to his presence in the hotel room. Indeed, Denver was not even present at the time of the search. Thus, not only did she fail to engage in any social interaction with appellant, she was not there to “share his privacy interest” in keeping the police at bay. Simply put, knowing a friend of a friend who rents a hotel room does not satisfy the “social nexus” set forth in B.R.K. Id. at 575 (non-overnight guests with “social nexus” to owner may enjoy reasonable expectation of privacy).

Second, as B.R.K recognizes, those engaged in commercial transactions do not enjoy the same high degree of privacy as those present in a home or a similar social setting. Id. Appellant’s visit to the hotel room was primarily commercial in nature' — -he was there to sell marijuana and methamphetamine. As the court stated in B.R.K:

In Carter, the Court * * * focused its analysis on the commercial nature of the defendants’ presence in the home. Accordingly, only after taking into account the lesser expectation of privacy individuals have in commercial property did the Court conclude that the defendants lacked a reasonable expectation of privacy in the apartment. The animating 'principle behind Carter is that an individual’s expectation of privacy in commercial premises is less than an individual’s expectation in a private residence ⅜ ⅜ ⅜ ⅛

Id. (emphasis added).

Appellant’s counsel asserted at oral argument that appellant’s expectation of privacy in the hotel room was greater than that of the defendants in Carter because, in Carter, a police officer was able to observe illegal activity through a gap in the blinds, and here, the officers had to make a forced entry into the hotel room to observe the illegal activity. Carter, 525 U.S. at 83, 119 S.Ct. at 470. This distinction is meaningless. In any event, the defendants in Carter, as the defendant here, did not have a sufficient expectation of privacy to challenge the warrantless entry, search or seizure. See id. at 91, 119 S.Ct. at 474.

A defendant who cannot demonstrate a legitimate expectation of privacy relating to the area searched or the item seized will not have standing to contest the legality of the search or seizure.

State v. Richards, 552 N.W.2d 197, 204 (Minn.1996) (citation omitted).

Because we conclude that the facts of the instant case are more like Carter than like B.R.K., we reject appellant’s argument that he was a short-term social guest in room 235 and hold that because appellant did not have a reasonable expectation of privacy in the room, he cannot claim the protection of the Fourth Amendment of the United States Constitution or the Minnesota Constitution. Accordingly, his conviction stands.

DECISION

The state preserved the issue of standing by raising it in its post-omnibus memorandum. Appellant waived his “automatic standing” claim by failing to raise it in district court. The district court’s factual findings, and its ultimate legal conclusion that appellant lacked standing to challenge the search, are amply supported in the record and not clearly erroneous. Finally, because appellant was not a short-term social guest in the hotel room, but rather present for the purpose of selling marijuana and methamphetamine, his expectation of privacy is not a reasonable one, and he cannot invoke the protection of the Fourth Amendment or the Minnesota Constitution to challenge the search.

Affirmed.

      . While the record indicates there were several pieces of luggage in the hotel room, it is unclear to whom they belonged. At oral argument, appellant’s counsel claimed that the luggage belonged to appellant.

      . Investigators also learned that the three men had rented other rooms at Country Inn & Suites earlier in the week, thus explaining the two "blank” room cards in appellant’s possession at the time of his arrest.

      . Prior to 1980, federal courts allowed a criminal defendant charged with a possessory offense "automatic standing." See, e.g., Jones v. United States, 362 U.S. 257, 264-65, 80 S.Ct. 725, 732-33, 4 L.Ed.2d 697 (1960) (holding defendant charged with possession aggrieved by unlawful search and seizure). Jones was subsequently overruled by United States v. Salvucci, 448 U.S. 83, 100 S.Ct. 2547, 65 L.Ed.2d 619 (1980).

      . Neither the district court nor the parties addressed B.R.K. in the district court or in their appellate briefs, as B.R.K. was not decided until April 3, 2003, five days before oral arguments on this appeal.

      . In Carter, Justice Kennedy’s concurrence described respondents' visit as follows:
      In this case respondents have established nothing more than a fleeting and insubstantial connection with Thompson's home. For all that appears in the record, respondents used Thompson’s house simply as a convenient processing station, their purposes involving nothing more than the mechanical act of chopping and packaging a substance for distribution. There is no suggestion that respondents engaged in confidential communications with Thompson about their transaction. Respondents had not been to Thompson's apartment before, and they had left it before their arrest.

        Carter, 525 U.S. at 102, 119 S.Ct. at 479 (Kennedy J., concurring).