3-2102-9659-3

STATE OF MINNESOTA

OFFICE OF ADMINISTRATIVE HEARINGS

FOR THE MINNESOTA DEPARTMENT OF REVENUE

 

In the Matter of Aaron Klabal; County of Hennepin,                                   Claimant Agency, v. Miroslav and MaryAnn Klabal,                                    Respondents.

ORDER DENYING MOTION FOR SUMMARY JUDGMENT

            This matter is before the Administrative Law Judge on a Motion for Summary Judgment filed by Claimant Agency County of Hennepin.  John M. March, Assistant County Attorney, Hennepin County Attorney’s Office, 2000 Government Center, Minneapolis, Minnesota 55487, appeared on behalf of Claimant County of Hennepin.  Thomas A. Foster, Attorney at Law, Foster, Waldeck, Lind & Gries, Ltd., 2300 Metropolitan Centre, 333 South Seventh Street, Minneapolis, Minnesota 55402, appeared on behalf of Respondents Miroslav and MaryAnn Klabal.

            On July 7, 1995, County of Hennepin (hereinafter also referred to as the “County”) filed a Motion for Summary Disposition pursuant to Minn. Rules pt. 1400.5500K and Minn. Rules Civ. P., Rule 56, along with an accompanying memorandum.  On July 26, 1995, Respondents Miroslav and MaryAnn Klabal (“Respondents”) filed a responsive memorandum opposing the motion.

            Based upon all of the files, records, and proceedings herein, and for the reasons set forth in the accompanying memorandum, the Administrative Law Judge makes the following:

ORDER

1.         Claimant Hennepin County’s Motion for Summary Disposition is hereby DENIED. 

2.         A trial of the merits of contested substantive issues shall commence on September 22, 1995 at the Office of Administrative Hearings beginning at 9:30 a.m.  If this date is inconvenient for the parties, they will jointly decide on another future date in consultation with Ms. Nancy Thomas, Office of Administrative Hearings Docket Clerk.

3.         As an alternative to a trial of factual matters, the Judge encourages the parties to stipulate facts and submit any legal issues to the Judge for consideration.  If the parties choose this alternative, they will jointly decide a briefing schedule.

Dated this 24th day of August, 1995.

 

                                                                             

s/ Allen E. Giles

ALLEN E. GILES

Administrative Law Judge

 

MEMORANDUM

This matter arises under the Minnesota Revenue Recapture Act, Minn. Stat. ch. 270A (1994) (hereinafter also referred to as the “Act”). Hennepin County (Claimant Agency) seeks to collect a debt it asserts is the liability of the Respondents through setoff against a tax refund due to Respondents.  However, before Hennepin County can take advantage of the statutory setoff procedure authorized by the Act, the Respondents must have proper notice and an opportunity to contest the financial obligation being asserted by the County. 

Hennepin County gave Respondents notice as required by Minn. Stat. § 270A.08, except the notice was not served upon Respondents’ attorney.  That section requires that Respondents make a request in writing within 45 days of the notice if they intend to challenge the debt being asserted by Hennepin County.  The Klabals failed to make a request within the 45-day period.  Respondents submitted a written request for a hearing on April 1, 1995, approximately 90 days after the date of the notice.  Hennepin County has moved for summary judgment on the basis that the request for hearing is untimely and, therefore, the Judge has no jurisdiction to consider the substantive claims being asserted by the Klabals.  The Klabals assert that summary judgment is not appropriate because Hennepin County failed to serve the notice on their attorney who Hennepin County knew was representing them in connection with this matter.

The Administrative Law Judge is empowered by Minn. Rules pt. 1400.5500K and 1400.6600 to rule on contested cases by summary disposition in accordance with the standards established under Minnesota Rules of Civil Procedure, Rule 56.  Summary disposition is appropriate where the pleadings, admissions, affidavits  and other documents on file “show that there is no genuine issue as to any material fact and that either party is entitled to judgment as a matter of law.”  Minn. R. Civ. P. 56.03, Sauter v. Sauter, 70 N.W.2d 351, 353 (Minn. 1955).  A genuine issue is one which is not sham or frivolous and a material fact is a fact whose resolution would affect the result or outcome of the case.  Highland Chateau, Inc. v. Minnesota Department of Public Welfare, 356 N.W.2d 804, 808 (Minn. Ct. App. 1984). 

Upon review of the argument of the parties, the Judge has determined that Hennepin County’s Motion for Summary Judgment must be denied for the following reasons:

            The Motion for Summary Disposition must be denied because service of the notice is inadequate.  The rules of procedure of the Office of Administrative Hearings and the Minnesota Rules of Civil Procedure require that when a party is represented by counsel, service must also be made upon counsel.  Minn. Rules pt. 1400.8604, subp. 4 states, in relevant part, as follows:

 

If a party has notified other parties that he/she will be represented

by an attorney, all communications shall be directed to that attorney.

 

            Similarly, Minnesota Rules of Civil Procedure, Rule 5.02 states, in relevant part, as follows:

 

Whenever under these rules, services required or permitted to be made upon a party represented by an attorney, the service shall be made upon the attorney unless service upon the party is ordered by the court.

 

            It appears that counsel for the Klabals made several written communications to Hennepin County.  Hennepin County knew that Respondents were being represented by an attorney and, therefore, should have also served the notice of claim upon the Klabals’ attorney.

 

             Summary disposition is also inappropriate because Respondents’ attorney informed Hennepin County that they intended to challenge the underlying financial obligation. Minn. Stat. § 270A.09 requires Hennepin County to initiate a hearing when it has received “written notice of a debtor’s intention to contest the claim.”  At the time Hennepin County mailed the notice to the Klabals, it knew that the Klabals, as represented by their attorney, challenged the underlying basis for the financial obligation. Minn. Stat. § 207A.09 suggests a reasonable legislative goal of avoiding implementation of the revenue recapture process where the underlying financial liability is unsettled. For this reason, it is appropriate to have a hearing on the merits of this contested obligation.

 

            The purpose of Minn. Stat. § 270A.08 is to provide due process to debtors.  This provision assures that debtors have access and an opportunity to challenge a claim being asserted by an agency.  Because the notice to Respondents is insufficient, section 270A.08 would have  required a corrected notice.  The legislative goal of having the revenue recapture process apply only to settled claims is suggested by languange contained in section 270A.08 subd. 2(B) which authorizes a debtor who challenges the sufficiency of notice to also have a hearing on the merits of the claim regardless of the outcome of the notice question.  Consistent with the legislative policy identified, the substantive claim being asserted by the must be settled.  Summary disposition is inappropriate.

 

                                                                                                AEG