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From the Bench: Issuing Revenue Bonds—Election Required?

MUNICIPAL BONDS
Election requirement
The city’s economic development authority (EDA) and Pace Development entered into a development agreement under which the EDA agreed to purchase real property from Pace “for the purpose of constructing and thereafter leasing to the city a multipurpose municipal facility.” The EDA planned to demolish the existing structure, construct a city hall and public safety facility, and sell three lots for private commercial development. The EDA issued revenue bonds in the amount of approximately $22.5 million to purchase the property. The bonds were secured by a lease with the city.

VoteThe city received a citizen petition requesting a vote on the bonds but did not act on it. Some taxpayers sued the city and its EDA, claiming that Minnesota Statutes, section 475.521 contains an election requirement and that this statute is the exclusive authority for issuing bonds for capital improvements like the construction of a city hall and public safety facility. The city and its EDA argued that the EDA has authority to issue revenue bonds under Minnesota Statutes, section 469.103, and that this statute does not contain an election requirement. The district court held that the EDA was authorized to issue the revenue bonds without holding an election. The Minnesota Court of Appeals affirmed and held that Minnesota Statutes, section 475.521 does not provide the exclusive procedure for issuing bonds used to finance the construction of public facilities, and that an EDA has authority under Minnesota Statutes, section 469.103 to issue revenue bonds to finance capital improvements without holding an election. Lakes Area Business Ass’n v. City of Forest Lake, N.W.2d (Minn. Ct. App. 2014).

GOVERNMENTAL IMMUNITY
Official immunity
Hennepin County Sheriff ’s Deputy Majeski was responding to an emergency when his vehicle struck Vassallo’s vehicle after Majeski drove through a stop sign without stopping. Vassallo sued, claiming Mejeski was negligent. Majeski and the county moved for summary judgment, claiming entitlement to official immunity and vicarious official immunity respectively because Majeski’s driving conduct while responding to the emergency was discretionary. Vassallo argued that immunity did not apply because Majeski failed to comply with ministerial duties in state statute and county policy.

State statute requires the driver of an emergency vehicle to “slow down” and to “proceed cautiously” past a controlled intersection and to “sound its siren or display at least one lighted red light to the front” when approaching a controlled intersection. County policy requires a driver of an emergency vehicle to “drive with due regard for the safety of all persons” and to use “both red lights and siren … when responding to an emergency.” Majeski initially had both his vehicle’s siren and lights activated, but turned off the siren before entering the intersection where the accident occurred because he did not want to alert the alleged suspects of his presence.

The district court held that official immunity and vicarious official immunity applied. The Minnesota Court of Appeals reversed and held that there was a fact question regarding whether Majeski slowed down and proceeded cautiously through the stop sign. The Court of Appeals reasoned that this fact question must be resolved before it could be determined whether official immunity applied. The Minnesota Supreme Court reversed the Court of Appeals’ decision, and held that official immunity and vicarious official immunity applied, concluding that Majeski did not violate any ministerial duty created by statute or county policy. The Supreme Court noted that in analyzing the applicability of official immunity, a court must first determine whether a particular duty is discretionary or ministerial, and that only if the duty is ministerial is it proper to consider whether there was compliance with it. Vassallo v. Majeski, N.W.2d (Minn. 2014). Note: LMC filed an amicus brief in the county’s support.

PUBLIC NUISANCE STATUTE
Temporary injunction
The city served the Last Place on Earth (LPOE), a business selling synthetic alternatives to controlled substances, with a notice of maintaining a public nuisance. Neighboring businesses Last Place on Earthcomplained of people congregating and loitering around LPOE. Police received calls that LPOE customers were blocking sidewalks and access to surrounding businesses; were engaging in loud, belligerent, and violent conduct; and had vomited, urinated, and defecated near buildings surrounding LPOE. The city filed a summons and complaint and filed for temporary injunctive relief under the public nuisance statute. The LPOE filed an answer and counterclaim, asserting that it had not violated the statute and that the statute is unconstitutionally vague. The district court granted a partial temporary injunction, and required the LPOE to pay for two police officers to be present at the LPOE during its operating hours, including one hour before opening to one hour after closing. The LPOE appealed, and the Minnesota Court of Appeals affirmed, holding that the district court had not abused its discretion, that there was ample evidence in the record of public nuisance behavior, and that it would not address the constitutional argument because it had not been argued to or considered by the district court. City of Duluth v. 120 East Superior Street, No. A13-0027 (Minn. Ct. App. 2013) (unpublished decision).

FORFEITURE LAW
Motor vehicle exemption
Nielson was arrested, and pleaded guilty to driving while impaired. The county sought to forfeit his vehicle under a statute that authorizes the forfeiture of a motor vehicle if it was used in the commission of certain driving offenses. Nielson argued that he was entitled to receive a portion of his forfeited vehicle’s value under a statute that limits the enforcement of judgments by designating certain property including: “[o]ne motor vehicle to the extent of a value not exceeding $2,000” as “not liable to attachment, garnishment, or sale on any process, issued from any court.” The conciliation court agreed with Nielson, and entered judgment in his favor in the amount of the motor vehicle exemption. The district court reversed and held that the motor vehicle exemption did not apply. The Minnesota Court of Appeals affirmed the district court’s decision. The Minnesota Supreme Court affirmed the Court of Appeals’ decision, reasoning that the two statutes conflict with each other and that the more specific and more recently adopted forfeiture statute should prevail over the more general motor vehicle exemption statute. The Supreme Court also held that the Minnesota Constitution does not require application of the motor vehicle exemption. Nielsen v. 2003 Honda Accord, 840 N.W2d 821 (Minn. 2013).

WORKERS’ COMPENSATION BENEFITS
Causal connection
Dykhoff fell and injured herself while attending a required training session at her employer’s general office. Her job was a desk position, and she typically wore casual clothes to work. She was instructed to wear “dress clothes” for the training session. Dykhoff was wearing a dress shirt, dress pants, and shoes with two-inch wooden heels when she fell while walking to a conference room. There was no debris on the floor where she fell, and the floor was shiny but was not wet or slippery. Dykhoff filed a claim for workers’ compensation benefits. The Workers’ Compensation Act provides that benefits must be provided “in every case of personal injury or death of an employee arising out of and in the course of employment without regard to the question of negligence.”

The workers’ compensation judge dismissed Dykhoff’s claim, holding that she had not demonstrated that her injury was caused by an increased risk related to her work activity or environment that heightened the likelihood of an injury beyond the level of risk experienced by the general public.

The Workers’ Compensation Court of Appeals (WCCA) reversed and held that Dykhoff was entitled to benefits under the “work-connection balancing test.” The Minnesota Supreme Court reversed the WCCA’s decision, and held that Dykhoff was not entitled to benefits because she had not satisfied the “arising out of ” employment requirement. Furthermore, the Supreme Court reasoned that the WCCA had erred in applying a balancing test that gave greater weight to the “in the course of ” employment requirement to conclude that Dykhoff had established a causal connection between her employment and her injury. Instead, the Supreme Court concluded that the required causal connection can only be satisfied “if the employment exposes the employee to a hazard that originates on the premises as a part of the working environment, or … peculiarly exposes the employee to an external hazard whereby he is subjected to a different and a greater risk than if he had been pursuing his ordinary and personal affairs.” Dykhoff v. Xcel Energy and CCMSI, 840 N.W.2d 821 (Minn. 2013).

Written by Susan Naughton, research attorney with the League of Minnesota Cities. Contact: snaughto@lmc.org or (651) 281-1232.

Read the May-June 2014 issue of Minnesota Cities magazine

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