This opinion is nonprecedential except as provided by Minn. R. Civ. App. P. 136.01, subd. 1(c).
STATE OF MINNESOTA IN COURT OF APPEALS A23-0960
Minnesota Citizens Concerned for Life, Inc., Appellant,
vs.
Joint Revocable Trust Agreement of John N. Charais and Sveindis Charais, et al., Respondents.
Filed April 22, 2024 Affirmed in part, reversed in part, and remanded Bratvold, Judge Concurring specially, Connolly, Judge
Beltrami County District Court File No. 04-CV-22-3290
B. Steven Messick, Messick Law, PLLC, Woodbury, Minnesota; and
Nicholas J. Nelson, Pamela Abbate Dattilo, CrossCastle PLLC, Minneapolis, Minnesota (for appellant)
Joseph M. Windler, Jessica Timmington Lindstrom, Tess R. Olinger, Winthrop & Weinstine, P.A., Minneapolis, Minnesota (for respondents)
Considered and decided by Connolly, Presiding Judge; Smith, Tracy M., Judge; and
Bratvold, Judge.
NONPRECEDENTIAL OPINION
BRATVOLD, Judge
Appellant nonprofit corporation challenges the district court’s order dismissing its
complaint with prejudice under Minn. R. Civ. P. 12.02(e) for failing to state a claim upon which relief can be granted. Appellant signed two agreements with the settlor/trustee for
respondent trust; in both agreements, appellant agreed to accept a donation from the trust
and to use the donation for specific purposes. After the settlor/trustee and appellant
executed the agreements, the settlor/trustee wrote two checks from the trust’s bank account.
The next day, the settlor/trustee died. Appellant deposited the checks, but its bank refused
to honor the checks because the trust’s bank account had been closed. Appellant demanded
payment from respondent successor trustee, the settlor/trustee’s son, who refused.
Appellant sued respondents—the successor trustee and the trust—alleging five claims, and
respondents moved to dismiss.
We conclude that, at this early stage of the pleadings, the complaint sufficiently
states a claim upon which relief can be granted for breach of contract, unjust enrichment,
and promissory estoppel. But we also conclude that the complaint fails to state a claim
upon which relief can be granted for breach of fiduciary duty and civil theft. Accordingly,
we affirm in part, reverse in part, and remand.
FACTS
The following summarizes the complaint’s factual allegations, stated favorably to
appellant Minnesota Citizens Concerned for Life Inc. (MCCL) and accepting all facts as
true.
In late January 2022, John N. Charais contacted MCCL, a nonprofit corporation, to
“initiate a donation.” John 1 had been “searching for the appropriate charity to support,”
1 Because John N. Charais and respondent Nicholas J. Charais share the same last name, this opinion will use their first names for clarity. This opinion also refers to “the complaint”
2 saw that MCCL had organized a “March for Life” at the state capitol, and remembered his
late wife’s “deep commitment to the pro-life cause.” At the time, John was the sole trustee
of respondent Joint Revocable Trust Agreement of John N. Charais and Sveindis Charais
(the trust). The trust document named John’s son, Nicholas, as successor trustee and
remainder beneficiary.
John and MCCL had seven or eight phone calls and three in-person meetings to
discuss the donation. John told MCCL that he was selling some properties, including a
farm, and wanted to donate the proceeds to a charity. John stated that he wanted MCCL to
give part of his donation to the Mayo Clinic for cancer research and part to the Catholic
Church in Reykjavík, Iceland, and to use the remainder for MCCL’s “pro-life programs to
protect unborn children.” John asked MCCL to sign agreements confirming the donation
amounts and intended uses “for the purpose of thwarting any potential legal challenge by
his family and to ensure that his wishes were carried out.”
Nicholas accompanied John to a meeting with MCCL on February 3, 2022. “John
expressed his appreciation for the fact that Nicholas was supportive of his determination to
make the donation to MCCL.” At the end of the meeting, John “signed over” to MCCL a
check from his title company for the sale of property. Later, MCCL’s bank informed
MCCL that, “due to the size of the check,” John needed to deposit the sale proceeds into
the trust’s bank account and then issue checks from that account.
when discussing the second amended complaint—the subject of the district court’s dismissal order.
3 On February 10, John and MCCL signed two agreements, both of which were
attached to the complaint. The first agreement stated that MCCL “agree[s] to accept a
donation of $307,571.30” from the trust, will give $100,000 to the Mayo Clinic “for the
purposes of cancer research,” will give $100,000 to the Catholic Church in Reykjavík,
Iceland, and will use the remainder to support its “pro-life programs to protect unborn
children.” 2 The second agreement stated that MCCL “agree[s] to accept a donation of
$533,948.15” from the trust and “commit[s] to using the donation . . . to support pro-life
programs to protect unborn children.” At the end of the February 10 meeting, John tendered
two checks payable to MCCL from the trust’s bank account for $307,571.30 and
$533,948.15, respectively.
John died the next day, February 11. MCCL deposited the two checks in its bank
account on February 14, and on February 23, the funds were credited to MCCL’s bank
account. On February 25, however, MCCL’s bank informed MCCL that “it could not honor
the funds” because the trust’s bank account “had been closed.” MCCL “learned” that
Nicholas, who became the trustee upon John’s death, “withdrew the funds and closed the
trust’s bank account” after John died. According to the complaint, Nicholas “intentionally
interfered with the trust’s donation to MCCL in order to divert those funds to himself for
his personal use.” MCCL demanded payment of the $841,519.45 from the trust, but
MCCL’s attempts to negotiate its claim failed, and Nicholas “refused to honor and reissue
checks.”
2 John told MCCL that “his late wife was from Reykjavík and that the churches within the diocese were active in promoting the pro-life cause in Iceland.”
4 On November 3, 2022, MCCL sued Nicholas, as trustee, and the trust (collectively,
respondents) for breach of contract, unjust enrichment, promissory estoppel, breach of
fiduciary duty, and civil theft. 3 On November 29, respondents moved to dismiss the
complaint under Minn. R. Civ. P. 12.02(e) for failure to state a claim upon which relief can
be granted. MCCL opposed dismissal.
After a hearing, the district court granted respondents’ motion to dismiss and
dismissed MCCL’s complaint with prejudice. The district court determined, first, that
“there was no gift” because John delivered two checks and did not deliver “the money.”
Second, as to the claim for breach of contract, the district court determined that “no
enforceable contract existed” because “[t]here was no consideration.” Third, the district
court determined that the trust did “not include any gift, donation, or transfer” to MCCL,
that respondents “did not unjustly receive any benefit by closing the account,” and that,
therefore, respondents “did not engage in unjust enrichment.” Fourth, the district court
determined that MCCL did not detrimentally rely on “the promise of money,” and thus, the
“elements of promissory estoppel are not met.” Fifth, because “a contract did not exist,”
the district court stated, “there existed no fiduciary duty,” and respondents “did not breach
any fiduciary duties in this matter.” Sixth, the district court determined that because MCCL
“never had a property interest in the funds, civil theft did not occur.”
MCCL appeals.
3 MCCL also brought a claim for conversion, which the district court dismissed. MCCL does not seek relief on appeal for its conversion claim.
5 DECISION
Appellate courts “review a district court’s dismissal for failure to state a claim de
novo.” Walmart Inc. v. Winona County, 963 N.W.2d 192, 196 (Minn. 2021). Appellate
courts “accept the facts alleged in the complaint as true and construe all reasonable
inferences in favor of the nonmoving party.” Engstrom v. Whitebirch, Inc., 931 N.W.2d
786, 790 (Minn. 2019).
“Minnesota is a notice-pleading state and does not require absolute specificity in
pleading, but rather requires only information sufficient to fairly notify the opposing party
of the claim against it.” DeRosa v. McKenzie, 936 N.W.2d 342, 346-47 (Minn. 2019)
(quotations omitted) (reversing the rule 12.02 dismissal of plaintiff’s complaint because “it
does not appear with certainty that [plaintiff] will be unable to factually support his claims
and request for relief”). A plaintiff’s complaint may plead their case using “broad general
statements that may be conclusory.” Id. at 346. But “a legal conclusion in the complaint is
not binding” on appellate courts. Halva v. Minn. State Colls. & Univs., 953 N.W.2d 496,
501-02 (Minn. 2021) (concluding that allegations in plaintiff’s complaint were “sufficient
to survive a motion to dismiss”).
Under Minn. R. Civ. P. 12.02(e), a defendant may move to dismiss a complaint for
“failure to state a claim upon which relief can be granted.” “A claim is sufficient against a
motion to dismiss for failure to state a claim if it is possible on any evidence which might
be produced, consistent with the pleader’s theory, to grant the relief demanded.” Walsh v.
U.S. Bank, N.A., 851 N.W.2d 598, 603 (Minn. 2014). A court may also consider documents
referenced in a complaint or attached to a complaint. N. States Power Co. v. Minn. Metro.
6 Council, 684 N.W.2d 485, 490 (Minn. 2004). “[A] pleading will be dismissed only if it
appears to a certainty that no facts, which could be introduced consistent with the pleading,
exist which would support granting the relief demanded.” Halva, 953 N.W.2d at 501
(quotation omitted). “And all pleadings shall be so construed as to do substantial justice.”
Id. (quotation omitted).
MCCL’s brief to this court challenges the district court’s rule 12.02(e) dismissal of
its claims for breach of contract, unjust enrichment, promissory estoppel, breach of
fiduciary duty, and civil theft, arguing that its complaint “alleges facts supporting each
element” of these claims. We begin by noting that we have reorganized the issues to first
consider MCCL’s threshold argument that the complaint alleges John “made a completed
and enforceable gift” to MCCL. We then address MCCL’s contract claim and alternative
equitable claims for unjust enrichment and promissory estoppel. 4 We finally consider
MCCL’s claims for breach of fiduciary duty and civil theft.
I. MCCL’s complaint fails to allege facts sufficient to state a claim for an enforceable gift.
MCCL contends that the trust “made a completed and enforceable gift” to MCCL
when John expressed his intent to make a gift from the trust and delivered the checks to
4 MCCL’s claims for unjust enrichment and promissory estoppel are pleaded in the alternative to its breach-of-contract claim. See Martens v. Minn. Mining & Mfg. Co., 616 N.W.2d 732, 746 (Minn. 2000) (describing promissory estoppel as an equitable doctrine that “implies a contract in law where none exists in fact” (quotation omitted)); Hommerding v. Peterson, 376 N.W.2d 456, 459 (Minn. App. 1985) (“[A]n action for unjust enrichment is not based on the contract, but is a quasi-contractual agreement implied by law.”).
7 MCCL. 5 The elements of a gift are “(1) delivery, (2) intention to make a gift on the part of
the donor, and (3) absolute disposition by [the donor] of the thing which he intends to give
to another.” Oehler v. Falstrom, 142 N.W.2d 581, 585 (Minn. 1966). The supreme court
has referred to absolute disposition as “surrender of control and dominion.” Cooney v.
Equitable Life Assurance Soc’y of U.S., 51 N.W.2d 285, 288 (Minn. 1952); see also
Stribling v. Fredericks, Clark & Co., 219 N.W.2d 93, 95 (Minn. 1974) (describing the third
element of an inter vivos gift as “unconditional surrender of future dominion and control
by the donor over the property so delivered”).
MCCL’s complaint alleges that John, as trustee, tendered two checks from the
trust’s bank account as a donation or a gift to MCCL; John and MCCL signed two
agreements discussing the donation and directing how MCCL should use the donation;
MCCL deposited the checks; and MCCL’s bank informed MCCL that it “could not honor
the funds” because the trust’s bank account “had been closed.”
The district court determined that “there was no gift” because “the delivery of the
checks does not constitute delivery of the money.” On appeal, MCCL argues that the
complaint alleges facts establishing “absolute disposition of the funds by John” because
although “payment was stopped on the checks before they were cashed,” Nicholas closed
5 MCCL’s brief to this court argues that the complaint alleges facts “sufficient to establish that an enforceable contract existed as a . . . gift” and thus that “the district court’s decision should be overturned on [MCCL’s] cause of action for breach of contract.” But a gift is distinct from a contract. See Deli v. Hasselmo, 542 N.W.2d 649, 656 (Minn. App. 1996) (“[C]onsideration is what distinguishes a contract from a gift.”), rev. denied (Minn. Apr. 16, 1996). Still, we consider whether MCCL’s complaint alleges sufficient facts to state a claim for an enforceable gift because MCCL asserts the gift as a preface to its other claims.
8 the trust’s bank account and refused to honor the checks, not John. Respondents argue that
“there was no absolute disposition” because the “funds were never completely transferred”
and “the trustee retained a power of revocation over the funds,” citing Laura Baker School
v. Pflaum, 30 N.W.2d 290 (Minn. 1947). MCCL responds that Laura Baker School is
“distinguishable” because “there was no written contract between the donor and the
school[,] . . . no mutual promises,” and “it was the donor herself who cancelled the checks
she issued to the school.”
In Laura Baker School, the defendant donated by mailing a check of $5,000 payable
to the school, but “[b]efore the check was presented to the bank for payment defendant
stopped payment.” 30 N.W.2d at 290-91. The school sued, and the district court granted
judgment for the school on the pleadings. Id. at 290. On appeal, the supreme court
considered whether the delivery of the check was a valid inter vivos gift. Id. at 291. The
supreme court determined that “there was an intention to make a gift, a delivery of the
check to the donee, and acceptance by the donee.” Id.
The supreme court concluded, however, that “[t]here was not an absolute disposition
by the donor of the gift which she intended to give plaintiff. The donor had the power of
revocation, which she exercised before the check was presented to the bank for payment.”
Id. The supreme court reasoned that the “delivery of a check is not a delivery of money,
but the delivery of an order” and that the “rule in most jurisdictions appears to be settled
that the donor’s check, prior to acceptance or payment by the bank, is not the subject of a
valid gift.” Id. at 291-92. Because the “defendant, the donor, did not part finally with
dominion over the gift in question and exercised her power of revocation before the check
9 was presented to the bank for payment,” the supreme court determined that “delivery of
the check was not a valid gift inter vivos.” Id. at 292. Thus, the supreme court reversed
with directions to enter judgment for the defendant. Id.
We agree with MCCL that Laura Baker School is factually distinct because there
was no written agreement between the donor and the school, there was no promise about
how the funds would be used, and the donor revoked payment of the check. Still, these
factual distinctions do not affect our analysis. MCCL’s complaint fails to allege any facts
for which evidence could be introduced consistent with the third element of an enforceable
gift—absolute disposition of the property given by the donor. MCCL alleges only that John
delivered two checks. A check is not money but merely an order for a bank to pay. Id. at
291. John’s delivery of the checks to MCCL did not surrender control and dominion over
the trust funds. See Cooney, 51 N.W.2d at 288. Because the trustee had the power to revoke
payment, as did the defendant in Laura Baker School, the trust did not make an enforceable
gift to MCCL.
MCCL contends that the rule in Laura Baker School does not apply here because
Nicholas’s closing of the trust’s bank account was a “third party’s unlawful interference.”
We reject this claim for two reasons. First, the complaint alleges that Nicholas was trustee
at the time he closed the trust’s bank account, so he was not a “third party.” Second, MCCL
cites no legal authority in support of its position that a check from a trust’s bank account
may not be revoked by a trustee before payment by the bank. The district court therefore
did not err by concluding that MCCL’s complaint fails to allege facts sufficient to state a
claim for an enforceable gift.
10 II. MCCL’s complaint alleges facts sufficient to state a breach-of-contract claim.
MCCL contends that its complaint alleges facts sufficient to state a claim for breach
of contract under both traditional contract rules and charitable-subscription caselaw. “The
elements of a breach of contract claim are (1) formation of a contract, (2) performance by
plaintiff of any conditions precedent to his right to demand performance by the defendant,
and (3) breach of the contract by defendant.” Lyon Fin. Servs., Inc. v. Ill. Paper & Copier
Co., 848 N.W.2d 539, 543 (Minn. 2014) (quotation omitted). Contract formation requires
an offer, acceptance, and consideration. Com. Assocs., Inc. v. Work Connection, Inc.,
712 N.W.2d 772, 782 (Minn. App. 2006).
We begin by considering whether MCCL’s complaint alleges facts sufficient to state
a claim for breach of contract under traditional contract law. The district court dismissed
MCCL’s breach-of-contract claim because the complaint failed to allege facts showing
consideration. The district court reasoned that MCCL’s “agreement to distribute some
funds to other organizations is not a detriment to [MCCL] because those funds were never
intended for [MCCL].” In its brief to this court, MCCL argues that it “made certain
commitments to John in exchange for the donation” and that “[t]hose mutual promises,
made at the time the contracts were executed, are sufficient to establish consideration.”
Respondents argue that, “in order for consideration to exist, there has to be a resulting
benefit or detriment incurred” and that “MCCL failed to allege any benefit incurred by the
trust or trustee or any detriment to MCCL.” In its reply brief, MCCL reiterates its theory
that the parties’ “promises alone are sufficient to establish consideration.”
11 We address MCCL’s argument that the complaint alleges consideration because the
two agreements include “mutual promises.” “A bilateral contract is one in which there are
mutual promises between two parties to the contract; each party being both a promisor and
a promisee.” Hartung v. Billmeier, 66 N.W.2d 784, 789 (Minn. 1954) (quoting
Restatement (First) of Contracts § 12 (1932)); see Welsh v. Barnes-Duluth Shipbldg. Co.,
21 N.W.2d 43, 47 (Minn. 1945) (providing that, for a bilateral contract to exist, “there must
be reciprocity of obligation; that is, that each party should receive from the other an
enforceable promise for the one he gave in exchange”). It is well established that “[s]uch
[mutual] promises . . . are a sufficient consideration for each other.” Koehler & Hinrichs
Mercantile Co. v. Ill. Glass Co., 173 N.W. 703, 704 (Minn. 1919).
Here, the parties signed two agreements in which MCCL “agree[s] to accept a
donation” from the trust and “commit[s] to using the donation” in specific ways—either
passing the donation on to other organizations or using it in its own programs. Neither
agreement includes a promise by John or the trust. Because MCCL is the only party making
promises in the two agreements, we conclude that the agreements lack consideration. See,
e.g., Hartung, 66 N.W.2d at 789 (concluding that there was no bilateral contract because
only plaintiff made a promise). Because both agreements lack the consideration necessary
to form a binding bilateral contract, MCCL’s complaint fails to state a claim for relief under
traditional contract law. 6
6 In the interest of being thorough, we note that the two agreements are not unilateral contracts. As explained in Hartung, “[w]hen a promise is . . . accepted by performance of the designated act or forbearance, the promisor’s offer is converted into a unilateral contract which comes into being the moment the act or forbearance has been fully
12 Next, we consider MCCL’s alternative argument that its complaint alleges a
breach-of-contract claim based on “the charitable subscription standard for enforcement of
a charitable donation,” citing Albert Lea College v. Brown’s Estate, 93 N.W. 672 (Minn.
1903), and Horan v. Keane (In re Stack’s Estate), 204 N.W. 546 (Minn. 1925).
Respondents argue that these cases are “distinguishable” because “the suits were to enforce
a promissory note—not a check” and that MCCL has not alleged facts showing that MCCL
“became responsible for any conditions on the basis of [John’s] attempted donation.” 7 The
district court did not address the charitable-subscription caselaw cited in MCCL’s district
court submission.
We first summarize the charitable-subscription caselaw cited in MCCL’s brief. 8 In
Albert Lea College, a member of the college’s board of trustees executed and delivered to
performed.” Id. Here, MCCL does not claim that the two agreements are unilateral contracts. MCCL has consistently claimed that the agreements are bilateral contracts and may not shift to a new theory on appeal. See Thiele v. Stich, 425 N.W.2d 580, 582 (Minn. 1988) (stating that a party cannot “obtain review by raising the same general issue litigated below but under a different theory”). Second, MCCL’s complaint does not allege facts showing either that the two agreements included a promise by John or the trust or that MCCL accepted any promise by fully performing the act specified in the offer. 7 Respondents also argue that the Uniform Commercial Code (UCC) “governs the enforceability of negotiable instruments, including the checks at issue in this matter” and that, under the UCC, “[r]espondents have an absolute defense to enforcement of the checks . . . because the checks were issued without consideration.” MCCL responds that “[r]espondents’ arguments confuse whether [MCCL] is seeking to enforce checks versus written contracts.” We agree with MCCL that the UCC provisions on enforcing negotiable instruments do not govern our analysis of whether MCCL’s complaint stated a claim for breach of contract regarding the two agreements between John and MCCL. 8 The charitable-subscription caselaw specifically discusses consideration and breach-of-contract claims. We observe, however, that in Stack’s Estate, the supreme court appeared to comment favorably on the connection between charitable-subscription caselaw
13 the college a “promissory note” payable to the college for $2,500 “to be used as an
endowment.” 93 N.W. at 672. The college accepted the note, but the board member died
before paying the note. Id. The college filed a claim against the estate for payment of the
note, and after a trial, the district court ordered judgment for the college. Id. at 672-73.
The supreme court affirmed, determining that “a sufficient consideration [was]
shown to support the agreement.” Id. at 675. The supreme court observed that the college
“depended for its support, and to enable it to carry out its purposes, upon donations of
philanthropists, and other charitably disposed persons.” Id. The supreme court reasoned
that, by accepting delivery of the promissory note, the college “thereby assumed the
obligations imposed by the terms of the promise; and upon the strength of this promise,
and others, were enabled to continue the purposes of the college, when, without it, it would
have been necessary that they suspend operations and dissolve the corporation.” Id. The
supreme court concluded that it had “no difficulty holding that a sufficient consideration is
shown to support the agreement.” Id.
In Stack’s Estate, the decedent executed a promissory note of $5,000 payable to a
college. 204 N.W. at 546. The college had “created a fund to aid poor boys in getting an
education,” and the “decedent became interested” in the fund and “executed the note”
payable to one of the college trustees. Id. “In soliciting [other] contributions, decedent’s
gift was frequently mentioned to induce others to make similar gifts.” Id. Relying on these
donations, “the trustees added largely to the buildings and equipment of the college and
and promissory estoppel but then added, “We shall not stop to consider the logic of the courts in their search for consideration in this class of cases.” 204 N.W at 547.
14 broadened the field of instruction.” Id. “[N]o attempt to collect” on the decedent’s note
occurred during his lifetime. Id. On behalf of the college, the trustee brought a claim against
the decedent’s estate. Id. After a trial, the probate court and the district court determined
that the trustee had a valid claim against the decedent’s estate. Id. at 548.
The supreme court affirmed, noting that “the principal question is whether there was
a consideration for the note.” Id. at 547. The supreme court stated that Albert Lea College
provided “sufficient authority for the conclusion that payment of the decedent’s note can
be enforced.” Id. The supreme court determined that “a subscription is valid and
enforceable, although no consideration passed to the promisor at the time of his promise,
if, in reliance on the promise, the promisee incurred liabilities or expended money in
furtherance of the purposes of the subscription or became responsible for the performance
of the conditions imposed by the subscriber.” Id.
The facts of Albert Lea College and Stack’s Estate are similar to those in MCCL’s
complaint, which alleges that the parties signed the two agreements, the trust “delivered”
$841,519.45 to MCCL “in exchange for” MCCL’s promise to deliver specified amounts to
the Mayo Clinic and the Catholic Church in Reykjavík and to use the remainder for
MCCL’s own “work on pro-life programs to protect unborn children.” The complaint also
alleges that delivery of the checks “perfected the contract[s],” MCCL “relied on” the trust’s
funds, and MCCL was “disadvantaged” when respondents “breached the contract[s]” by
“closing” the trust’s bank account, “thereby cancelling the checks.”
If we accept the facts alleged in MCCL’s complaint as true, MCCL relied on the
promised funds and either “incurred liabilities” to further the promises or “became
15 responsible” for performing “the conditions imposed” by the trust’s donation. Id. MCCL
accepted the trust’s donation and the accompanying conditions as stated in the two
agreements. At this early stage of the proceedings, we must assume that MCCL can offer
evidence in support of its charitable-subscription claim as those requirements are set out in
Albert Lea College and Stack’s Estate. Accordingly, MCCL’s complaint alleges facts
sufficient to state a claim for breach of contract under the charitable-subscription caselaw.
We thus reverse the district court’s dismissal of this claim.
III. MCCL’s complaint alleges facts sufficient to state an alternative claim for unjust enrichment.
MCCL argues that the district court erred by dismissing its unjust-enrichment claim.
“To establish an unjust enrichment claim, the claimant must show that the defendant has
knowingly received or obtained something of value for which the defendant in equity and
good conscience should pay.” ServiceMaster of St. Cloud v. GAB Bus. Servs., Inc.
544 N.W.2d 302, 306 (Minn. 1996) (quotation omitted). “[U]njust enrichment claims do
not lie simply because one party benefits from the efforts or obligations of others . . . .”
First Nat’l Bank of St. Paul v. Ramier, 311 N.W.2d 502, 504 (Minn. 1981). “Rather, the
plaintiff must show that the defendant was enriched illegally or unlawfully or in a manner
that is morally wrong.” Herlache v. Rucks, 990 N.W.2d 443, 450 (Minn. 2023) (quotation
omitted). 9
9 The supreme court recently granted review on the issue: “What factors should be reviewed when determining a statement is either immoral or illegal to meet the standards for an unjust enrichment claim?” Heplf v. Meadowcroft, No. A22-1706, 2023 WL 5341094 (Minn. App. Aug. 21, 2023), rev. granted (Minn. Nov. 28, 2023).
16 The district court dismissed MCCL’s unjust-enrichment claim, stating that
respondents “did not unjustly receive any benefit” because the “plain language of the trust
does not include any gift, donation or transfer to” MCCL. The district court determined
that respondents were “not required to honor the checks” and “did not unjustly receive any
benefit by closing the [trust’s bank] account.” On appeal, MCCL argues that the district
court erred when it “ignored [MCCL’s] allegations that John agreed to, and in fact,
tendered payment to [MCCL], and that Nicholas—who was fully aware of the contracts
between John and [MCCL]—wrongfully retracted said payment for the purpose of keeping
the proceeds himself.” Respondents argue that Nicholas “did not unjustly receive any
benefit by fulfilling his duties as trustee and closing the decedent’s trust account” because
it was “his duty . . . to secure trust assets” and “he was free to administer the trust as he
saw fit.”
If we accept the allegations in MCCL’s complaint as true, as we must under rule
12.02(e), then John issued MCCL two checks from the trust’s bank account and, after
John’s death, Nicholas closed the trust’s bank account before the bank made payment on
the checks. As also alleged in MCCL’s complaint, Nicholas “intentionally interfered” with
John’s donation to MCCL “in order to divert [the trust’s] funds to himself for personal
use.” Finally, MCCL’s complaint alleges that Nicholas is “the sole beneficiary of the trust.”
We conclude that MCCL’s complaint sufficiently states a claim for unjust
enrichment because the complaint alleges facts such that “it is possible on any evidence
which might be produced consistent with [MCCL’s] theory, to grant the relief demanded.”
Walsh, 851 N.W.2d at 603. Based on these allegations, we must accept as true that MCCL
17 could offer evidence that Nicholas interfered with John’s donation to MCCL and, by
closing the trust bank account, was “enriched illegally or unlawfully or in a manner that is
morally wrong.” Herlache, 990 N.W.2d at 450. Thus, the district court erred by dismissing
MCCL’s alternative claim for unjust enrichment.
IV. MCCL’s complaint alleges facts sufficient to state an alternative claim for promissory estoppel.
MCCL argues that the district court erred in its analysis of its other alternative
equitable claim. Promissory estoppel “requires proof that 1) a clear and definite promise
was made, 2) the promisor intended to induce reliance and the promisee in fact relied to
his or her detriment, and 3) the promise must be enforced to prevent injustice.” Martens,
616 N.W.2d at 746. “The promise must be such that it might reasonably induce the
promisee’s action or inaction.” Meriwether Minn. Land & Timber, LLC v. State,
818 N.W.2d 557, 567 (Minn. App. 2012) (quotation omitted). This court has “required that
there be some detriment in fact in order to show that a putative promisee’s reliance has
been detrimental.” Id. at 568.
The district court dismissed MCCL’s promissory-estoppel claim based on the
second element, reasoning that MCCL “did not make any action or inaction to its detriment
after receiving the promise of money from” John. On appeal, MCCL argues that its
complaint alleges facts sufficient to show that MCCL relied on John’s promises and
donation. Respondents disagree, arguing that MCCL pleaded only “a legal conclusion” and
“did not plead how it relied on [John’s] payment, or what actions it took in such reliance.”
18 As a notice-pleading state, Minnesota requires only that the pleading contain
“information sufficient to fairly notify the opposing party of the claim against it.” Walsh,
851 N.W.2d at 605 (quotation omitted); see also DeRosa, 936 N.W.2d at 346 (stating that
Minnesota law permits “the pleading of broad general statements that may be conclusory”
(quotation omitted)). Legal conclusions in the complaint, however, do not bind us. Halva,
953 N.W.2d at 501. But the supreme court has held that where a word may have a nonlegal,
factual meaning, “to liken [the plaintiff’s] use of the word . . . to a legal conclusion would
run counter to the rule that [courts] are to liberally construe pleadings in favor of the
pleader.” Walsh, 851 N.W.2d at 607 n.3.
MCCL’s complaint alleges that John gave MCCL two checks totaling $841,519.45
as orders to pay on the trust’s bank account. In exchange, MCCL committed to using the
funds as provided in the two agreements. MCCL deposited the checks in its bank, and the
bank credited the funds to MCCL’s account. The bank later informed MCCL that it “could
not honor the funds.” MCCL’s complaint alleges that it “relied on the promise” of the funds
and was “disadvantaged because [it] relied on said promise.”
We liberally construe MCCL’s complaint allegations in its favor. See id. We
conclude that under Minnesota’s notice-pleading standard, MCCL’s complaint alleges
sufficient facts such that it could produce evidence consistent with its promissory-estoppel
theory and gain the requested relief. See id. at 603. Thus, the district court erred by
dismissing MCCL’s alternative claim for promissory estoppel.
19 V. MCCL’s complaint fails to allege facts sufficient to state a claim for breach of fiduciary duty.
MCCL contends that the district court erred in dismissing its claim for breach of
fiduciary duty because respondents owe fiduciary duties to MCCL, which has standing as
a third-party beneficiary to pursue relief. The elements of a breach-of-fiduciary-duty claim
are (1) the existence of a fiduciary duty; (2) a breach of that duty; (3) causation; and
(4) damages. Hansen v. U.S. Bank Nat’l Ass’n, 934 N.W.2d 319, 327 (Minn. 2019).
The district court dismissed MCCL’s breach-of-fiduciary-duty claim on the first
element, determining that “there existed no fiduciary duty.” On appeal, MCCL concedes
that it is “not asserting it is a beneficiary” of the trust. MCCL argues that it may nonetheless
pursue a breach-of-fiduciary-duty claim because it “was a third-party beneficiary of the
trust agreement,” citing Restatement (Second) of Contracts § 302. 10 (Emphasis omitted.)
Respondents argue that they “did not owe any fiduciary duty to MCCL because it is not a
beneficiary of the trust, and the ‘third-party beneficiary’ doctrine does not apply” because
“there is no recognized trust doctrine, statute, or case law that supports MCCL’s third-party
beneficiary theory in the trust context.”
10 Section 302 provides: Unless otherwise agreed between promisor and promisee, a beneficiary of a promise is an intended beneficiary if recognition of a right to performance in the beneficiary is appropriate to effectuate the intention of the parties and either (a) the performance of the promise will satisfy an obligation of the promisee to pay money to the beneficiary; or (b) the circumstances indicate that the promisee intends to give the beneficiary the benefit of the promised performance. Restatement (Second) of Contracts § 302 (1981).
20 We agree with respondents. A trustee owes fiduciary duties to trust beneficiaries.
In re Revocable Tr. of Margolis, 731 N.W.2d 539, 545 (Minn. App. 2007). A beneficiary
is a person that “has a present or future beneficial interest in a trust, vested or contingent,”
or, “in a capacity other than that of trustee, holds a power of appointment over trust
property.” Minn. Stat. § 501C.0103(c) (2022). MCCL’s complaint does not allege that it is
a beneficiary of the trust; in fact, MCCL alleges that Nicholas is the “sole beneficiary” of
the trust. As a result, MCCL lacks standing to assert a claim against respondents for breach
of fiduciary duty.
We are not persuaded that the third-party-beneficiary doctrine applies here. MCCL
cites no caselaw applying the third-party-beneficiary doctrine to trusts. Rather, MCCL cites
a contract case in which the supreme court “adopted the intended beneficiary approach”
from the Restatement (Second) of Contracts. Cretex Cos. v. Constr. Leaders, Inc.,
342 N.W.2d 135, 139, 141 (Minn. 1984) (determining that subcontractors were not
intended third-party beneficiaries under a construction contract between a general
contractor and a property owner). “[T]he task of extending existing law falls to the supreme
court or the legislature, but it does not fall to this court.” Tereault v. Palmer, 413 N.W.2d
283, 286 (Minn. App. 1987), rev. denied (Minn. Dec. 18, 1987). Thus, we decline to extend
the third-party-beneficiary doctrine to trusts. Accordingly, we affirm the district court’s
order dismissing MCCL’s claim for breach of fiduciary duty.
VI. MCCL’s complaint fails to allege sufficient facts to state a civil-theft claim.
Under Minnesota law, a “person who steals personal property from another is civilly
liable to the owner of the property.” Minn. Stat. § 604.14, subd. 1 (2022). This court has
21 interpreted the civil-theft statute to mean that a person steals by “wrongfully and
surreptitiously tak[ing] another person’s property for the purpose of keeping it or using it.”
TCI Bus. Cap., Inc. v. Five Star Am. Die Casting, LLC, 890 N.W.2d 423, 431 (Minn. App.
2017).
The district court dismissed MCCL’s civil-theft claim, determining that MCCL
“never had a property interest in the funds” because the “money in this matter was never
transferred to” MCCL. On appeal, MCCL argues that its complaint “allege[s]
facts . . . sufficient to establish that [MCCL] had a legitimate claim of entitlement to the
funds promised and tendered by John.” Respondents contend that MCCL “never had a
property interest in the funds” because “the funds were never deposited into MCCL’s bank
account.”
MCCL’s complaint alleges that it deposited two checks drawn on the trust’s bank
account and that MCCL’s bank credited the funds to MCCL’s account but later informed
MCCL that it “could not honor the funds because” the trust’s “bank account had been
closed.” MCCL’s complaint alleges that Nicholas withdrew the funds from the trust’s bank
account and closed the account, “making it impossible for the checks to be honored.”
We conclude that MCCL’s complaint fails to allege facts sufficient to show that the
trust’s bank account—or a portion of the funds in that account—was the personal property
of MCCL. As the supreme court has stated, “[t]he delivery of a check is not a delivery of
money, but the delivery of an order.” Laura Baker School, 30 N.W.2d at 291. And MCCL’s
complaint specifically alleges that the trust’s checks were not “honored,” meaning no
payment was made on the checks. Thus, MCCL cannot offer any evidence showing the
22 funds in the trust’s bank account were MCCL’s personal property. Because MCCL’s
complaint alleges that MCCL never received the funds from the trust, the complaint fails
to allege facts showing a property interest in the trust’s bank account. Accordingly, the
district court properly dismissed MCCL’s civil-theft claim. 11
In sum, MCCL’s complaint alleges facts sufficient to state claims for relief in breach
of contract, unjust enrichment, and promissory estoppel, but fails to allege facts sufficient
to state claims for relief in breach of fiduciary duty and civil theft. Thus, we affirm in part,
reverse in part, and remand.
Affirmed in part, reversed in part, and remanded.
11 Because we conclude that the trust funds were not MCCL’s personal property, we need not address MCCL’s arguments that the complaint alleges Nicholas stole the funds.
23 CONNOLLY, Judge (concurring specially)
I completely agree with the majority opinion, including the section of the opinion
affirming the dismissal of the breach of fiduciary duty claim in this lawsuit because MCCL
was not a beneficiary of the trust. At oral argument before this court, respondent’s counsel
informed the court that there is a separate probate proceeding relating to this trust in
Hennepin County. I write separately to make clear that our decision on the breach of
fiduciary duty claim in this appeal is not intended to have any bearing on that proceeding.
CS-1