A recent case before the Minnesota Court of Appeals was important because it affirmed the right to sue a Minnesota city, township, or other municipality.

In the case, Washington County sued the City of Oak Park Heights, claiming that the City had overcharged the county for water and sewer services. The County’s claim, in legal terms, was unjust-enrichment.

The City claimed that the court did not have authority to hear the case. Or in legal terms, the City claimed that the court did not have subject-matter jurisdiction over the county’s unjust-enrichment claim.

The court ruled that the court did have jurisdiction to hear the claim and that the City could be liable:

This ruling is especially important in light of cities’ increasing involvement in private sector activities.

These days, cities are more involved in areas traditionally occupied by the private sector. Examples include

  • skate parks,
  • art centers,
  • swimming pools,
  • health centers, and
  • other operations that enhance community life.

This ruling preserves the right of citizens and businesses to sue cities in activities normally conducted by the private sector.

The critical language in this case is that cities “should have the same rights and be subject to the same liabilities as private corporations or individuals.”

Here are important quotes from the court ruling:

A district court is a court of general jurisdiction, with the power “to determine justiciable controversies regarding claims of statutory or common-law rights.” Anderson v. Cnty. of Lyon, 784 N.W.2d 77, 80 (Minn. App. 2010), review denied (Minn. Aug. 24, 2010); see also Minn. Stat. § 484.01, subd. 1 (2010) (stating that district courts “shall have original jurisdiction in . . . all civil actions”). However, an exception to the broad jurisdiction of the district court exists when an action implicates a quasi-judicial decision of an executive body of less-than statewide jurisdiction. Anderson, 784 N.W.2d at 81 (citing Tischer v. Hous. & Redev. Auth., 693 N.W.2d 426, 429 (Minn. 2005)). Such a decision is reviewable only by writ of certiorari in this court. Id. at 81.

The city argues that the district court lacks subject-matter jurisdiction because the county’s claim implicates the city’s quasi-judicial decision to deny the county’s refund request. It is undisputed that the city is an executive body within the meaning of Tischer.

. . . .

And when a city engages in proprietary activities, “it should have the same rights and be subject to the same liabilities as private corporations or individuals.” Id. at 62, 129 N.W. at 160. This includes liability for a range of civil claims, including tort, contract, and equitable claims. See Knutson Hotel Corp. v. City of Moorhead, 250 Minn. 392, 396, 84 N.W.2d 626, 629 (1957) (permitting a customer of a city’s sewer service to bring suit in district court to recover “a payment made for a service which was not received”).

But as cases like Crookston and Keever demonstrate, when executive bodies make decisions in the context of proprietary conduct, such as the refund denial involved here, they act as any other business, with the same rights and responsibilities, and cannot reasonably be viewed as engaged in governmental conduct. See Keever, 113 Minn. at 60, 129 N.W. at 159 (framing the issue as whether the city’s operation of a waterworks was “a governmental function” or the city acting as a “private or corporate” entity); Youngstown Mines Corp. v. Prout, 266 Minn. 450, 473, 124 N.W.2d 328, 344 (1963) (stating that “when [the state] descends to the level of those with whom it associates and interests itself in any property and proprietary rights as distinguished from governmental prerogatives, it subjects itself to the same liability as any other litigant”).

Because these non-governmental decisions do not implicate separation-of-powers concerns, there is no reason to exclude them from the district court’s jurisdiction. See Willis v. Cnty. of Sherburne, 555 N.W.2d 277, 282-83 (Minn. 1996) (concluding that common-law defamation claim against executive body was subject to district court’s jurisdiction because it did not involve inquiry into a discretionary decision and, therefore, did not implicate separation-of-powers concerns). To do so would infringe on the rights of parties that conduct business with a city.

I also wonder if the city’s conflict of interest in deciding its own liability was a factor in the court’s decision.

You can read the entire case here: County of Washington v. City of Oak Park Heights, No. 82-CV-10-4198 (Minn. Ct. App. July 18, 2011).