Janet M. Bauch, et al., Appellants,

This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (2018).

STATE OF MINNESOTA
IN COURT OF APPEALS
A18-0586

Janet M. Bauch, et al.,
Appellants,

vs.

City of Pine Island,
Respondent.

Filed April 8, 2019
Affirmed
Reyes, Judge

Goodhue County District Court
File No. 25-CV-17-3262

John G. Hoeschler, John G. Hoeschler, P.A., Eagan, Minnesota (for appellants)

Peter G. Mikhail, Elizabeth C. Brodeen -Kuo, Kennedy & Graven, Chtd., Minneapolis,
Minnesota (for respondent)

Considered and decided by Hooten, Presiding Judge; Reyes, Judge; and Cochran,
Judge.
U N P U B L I S H E D O P I N I O N
REYES, Judge
Landowners appeal the district court’s dismissal of their special-assessment appeal
for lack of personal jurisdiction, arguing that (1) the district court had both personal and
subject-matter jurisdiction over the city; (2) the special assessment is void under the takings

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clause; and (3) the special -assessment-appeal statute is preempted by federal law. We
affirm.
FACTS
On November 21, 2017, the City of Pine Island (the city) passed a resolution
adopting an assessment for the reconstruction of a street within the city. The appellants,
Janet M. Bauch; Elken, a Limited Partnership; Eugene Gutzmer; Church of St. Michael;
and Edward Williams (the landowners), own property along the street. The city approved
special assessments against each of the landowners’ properties. Before the city passed the
resolution, the landowners objected to the assessments in writing.
The landowners appealed the assessment s to the di strict court under Minn.
Stat. § 429.081 (2018) . On December 11, 2017, the landowners’ attorney sent an ema il
with an attachment consisting of the summons, notice of appeal, and appeal of the special
assessment to the city administrator, mayor, and deputy clerk. The email stated, “We trust
that this is in a form acceptable to the city and we understand that electronic service is also
acceptable. If not, please contact me so that we can adjust the form accordingly.” The city
did not agree to receive service via email or otherwise waive proper service.
The city moved to dismiss the appeal for lack of personal jurisdiction due to
insufficient service of process. The district court held a hearing on the motion to dismi ss
on January 30, 2018. That morning , the landowners’ attorney personally served the city
administrator and the deputy clerk of the city, and also left a copy on the mayor’s desk.
The district court granted the city’s motion to dismiss on February 26, 2018 , based
solely on a lack of personal jurisdiction due to the landowners’ failure to comply with the

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service requirement of Minn. Stat. § 429.081. The landowners filed a motion to reconsider
shortly thereafter asking the district court to consider their constitutional claims, which the
district court denied. This appeal follows.
D E C I S I O N
I. The district court properly dismissed the landowners’ appeal under Minn.
Stat. § 429.081 for lack of personal jurisdiction.

The landowners argue that the district court has subject-matter jurisdiction over the
case because Minn. Stat. § 429.081 is a claims -processing rule, not a notice requirement.
The landowners also argue that the district court has personal jurisdiction over the city
because the city had actual notice of the appeal because the la ndowners effectuated
personal service on the city on January 30, 2018. As to personal jurisdiction, w e are not
persuaded.
An aggrieved person can appeal the adoption of a special assessment to the district
court by serving notice upon the mayor or clerk of the municipality within 30 days after
the adoption of the assessment. Minn. Stat. § 429.081. The supreme court has stat ed that
“[t]he appeal in an assessment proceeding initiates a civil action.” Andrusick v. City of
Apple Valley, 258 N.W.2d 766, 768 (Minn. 1977). A civil action commences against a
defendant when the summons is served upon that defendant. Minn. R. Civ. P. 3.01(a).
Because an assessment appeal is a civil action, Minn. R. Civ. P. 4.03 governs service of
process. In re Skyline Materials, Ltd. , 835 N.W.2d 472, 477 (Minn. 2013 ). Service of a
summons upon a municipal or other public corporation shall be made by delivering a copy
to the clerk of the defendant city. Minn. R. Civ. P. 4.03(e)(2). Service of process in a

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manner that is not authorized by rule 4.03 is ineffective. Tullis v. Fed. Mut. Ins. Co., 570
N.W.2d 309, 311 (Minn. 1997).
“[S]ervice of pr ocess is the means by which a court obtains personal jurisdiction
over a defendant. . . .” McCullough & Sons, Inc. v. City of Vadnais Heights, 883 N.W.2d
580, 590 (Minn. 2016) (McCullough I). Jurisdiction is a “threshold issue” that must be
addressed prior to addressing the merits of a case. State v. Eibensteiner, 690 N.W.2d 140,
149 (Minn. App. 2004) . Whether service of process is effective, and therefore, whether
personal jurisdiction exists , is a question of law that we review de novo. Cox v. Mid -
Minnesota Mut. Ins. Co., 909 N.W.2d 540, 547 (Minn. 2018).
The landowners failed to comply with the service -of-notice requirements of Minn.
Stat. § 429.081 because the rules governing service of process do not provide for email
service. Moreover, when the landowners did eventually effect personal service, it was
outside the 30-day timeframe specified in the statute. A party must strictly comply with
statutory service requirements in order for the district court to acquire jurisdiction. Skyline
Materials, 835 N.W.2d at 477.1 Here, the landowners did not properly serve the city under
the statute, and as a result, the district court lacked personal jurisdiction.

1 We note that this use of the word “jurisdiction” has been somewhat imprecise. In Skyline
Materials, the supreme court used the term “subject -matter jurisdiction” to refer to the
inadequate service of process involved in that case, but it later clarified in McCullough I
that Skyline Materials did not actually involve subject-matter jurisdiction. McCullough I,
883 N.W.2d at 592 n.3 (“We are skeptical, however that the isolated references to subject-
matter jurisdiction in Skyline Materials were anything more than an oversight on our part.
After all, Skyline Materials did not purport to overrule our long line of decisions treating
insufficient service of process as a defect relating to personal jurisdiction , not subject -
matter jurisdiction.”). Therefore, as the supreme court clarified in McCullough I ,
insufficient service of process deprives the district court of personal jurisdiction.

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The landowners rely on McCullough I to argue that their failure to technically
conform to service requirements does not divest the district court of subject -matter
jurisdiction. But this argument by the landowners focuses on subject -matter jurisdiction,
which is not at issue here.
The landowners briefly argue that the email provided the city with actual, timely
notice of the appeal adequate for the district court to acquire personal jurisdiction over the
city. But the supreme court recently clarified in Jaeger v. Palladium Holdings, LLC that
Minnesota law does not recognize an actual-notice exception to the service-of-notice rules.
884 N.W.2d 601, 609 (Minn. 2016) (citing Minn. R. Civ. P. 4.03) (“By using the word
‘shall’ to describe its requirements, Rule 4.03 mandates strict compliance with its terms.”).
Therefore, delivery by email does not al low the landowners to overcome their failure to
abide by the requirements of Minn. Stat. § 429.081.2 As a result, the district court properly
dismissed the landowners’ special-assessment appeal.

2 The landowners rely on Vernco, Inc. v. Twp of Manyaska, Martin Cty. , which held that,
in a special-assessment appeal, service of notice was sufficient to confer jurisdiction on the
district court when the plaintiff left a copy at the home of the township clerk with his
mother, despite that being an impermissible method of service. 290 N.W.2d 443, 444
(Minn. 1980). But the supreme court has since stated that, even in cases of substitute
service at a defendant’s residence, strict compliance with rule 4.03 is required. Jaeger, 884
N.W.2d at 609. Moreover, this is not at issue here because the landowners did not attempt
to effect service on a residence, nor did they attempt to comply with rule 4.03.

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II. Because the landowners did not comply with Minn. Stat. § 429.081, the district
court cannot hear their takings-clause claim.

The landowners assert that the special assessment violates the takings clause of the
state and federal constitutions. They argue that, because they eventually effected personal
service on the city, even if this court affirms the dismissal of the statutory claims, their
separate takings-clause claim still stands. We are not persuaded.
First, we note that the district court did no t consider the merits of the l andowners’
takings-clause claim. This court generally will not consider matters not decided by the
district court. Thiele v. Stich, 425 N.W.2d 580, 582 (Minn. 1988). In addition, the record
before us lacks sufficient information for us to conduct a meaningful review of this claim.
The issue here is whether the landowners can circumvent the requirements of
section 429.081, despite their failure to comply with its service requirements, allowing
their takings-clause claim to pr oceed. The Minnesota Legislature expressly created the
right for an aggrieved person to appeal the adoption of a special assessment to a district
court in Minn. Stat. § 429.081 , which states, “[a]ll objections to the assessment shall be
deemed waived unle ss presented on such appeal.” In 1978, the legislature added the
following language to the section: “T his section provides the exclusive method of appeal
from a special assessment levied pursuant to this chapter.” The supreme court commented
on this addi tion, stating that the amendment “clarifies the legislature’s intent that the
statutory appeal procedures be the exclusive method of appeals from special assessments.”
Krahl v. Nine Mile Creek Watershed Dist., 283 N.W.2d 538, 545 (Minn. 1979).

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In addition to reviewing the special assessment in a section 429.081 appeal, a district
court may also review constitutional claims, contract -related claims, or any other claims
regarding the special assessment. See David E. McNally Dev. Corp. v. City of Winona, 686
N.W.2d 553, 558 (Minn. App. 2004) (addressing both of the landowner’s claims under
Chapter 429: an unconstitutional -takings claim and his claim that the city failed to
recognize the entire area benefitted by the improvements) . When a district court re views
whether a special assessment adopted by the council of a municipality exceeds the special
benefits to the property, it reviews whether an unconstitutional taking has occurred.
Buettner v. City of St. Cloud, 277 N.W.2d 199, 203 (Minn. 1979). The statutory framework
provided in Chapter 429, in effect, implements these constitutional protections provided
by the takings clause. See Schumacher v. City of Excelsior, 427 N.W.2d 235, 239 (Minn.
1988) (noting there is a “constitutionally permissible assessm ent ceiling” when a special
benefit is conferred upon a property owner (quotations omitted)).
Under Chapter 429, the landowner may submit all objections to the proposed special
assessment before the municipal council. Sievert v. City of Lakefield , 319 N.W.2d 43, 44
(1982); accord Chard Realty, Inc. v. City of Shakopee, 392 N.W.2d 716, 720 (Minn. App.
1986). But if a landowner fails to timely appeal the council’s adoption of a specific
assessment as is required by Chapter 429, the landowner cannot maintain a suit attacking
the special assessment in a separate proceeding because, by statute, the landowner has
waived all objections to the special assessment. Sievert, 319 N.W.2d at 44. In Sievert, the
supreme court declared that the legislature, in adopting the appeal process set forth in
Chapter 429, intended that there was to be “no other avenue of contesting special

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assessments.” Id. In Sievert, a developer recovered against the city based upon a contract
claim for damages relating to the amounts of the allegedly wrongfully levied assessment.
In reversing the judgment for damages against the city, the court held that while this claim
was a claim for monetary damages rather than a vacation of the assessment, “[t]his
difference in requested relief is . . . insufficient to transform the essence of the suit,” which
was a challenge to the special assessment. Id.
Here, using the same analysis, the landowners have waived their objections to the
city council’s adoption of the special assessments against them, including any
constitutional challenges. Because they failed to comply with the procedural requirements
of section 429.081, they cannot directly challenge the special assessments under the guise
that they have a separate constitutional claim independent of their challenge to the
assessments.
The landowners argue that McCullough & Sons v. City of Vadnais Heights , 905
N.W.2d 878 (Minn. App. 2017) ( McCullough II) requires us to remand this case to a llow
their constitutional claim to proceed. In McCullough II, this court affirmed the district
court’s grant of summary judgment to the city on the landowner’s section 429.061 and .081
claims due to the landowner’s failure to comp ly with the notice requirements of section
429.061. Id. at 883. But with respect to the landowner’s separate constitutional challenges
to section 429.061, which were not considered by the district court, this court remanded
for the district court’s further consideration. Id. at 884.
However, we conclude that McCullough II is not controlling here. First, in
McCullough I , the original question was whether the district court had subject-matter

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jurisdiction to hear the case because the landowners failed t o comply with the written -
objection requirement in Minn. Stat. § 429.061. McCullough I, 883 N.W.2d at 584. The
supreme court determined that the written -objection requirement of section 429.061 was
not a jurisdictional requirement but a claims-processing rule, and therefore, it did not divest
the district court of subject-matter jurisdiction. Id. at 589-90. But here, an entirely different
question is before us: whether the district court had personal jurisdiction over the city,
which it did not because the landowners did not properly serve the city within the
timeframe required by section 429.081 . Second, in McCullough II , the landowner
challenged the constitutional validity of the written -objection requirement in section
429.061 and raised several othe r claims “that the special -assessment process is
unconstitutional.” 905 N.W.2d at 884. Here, the landowners argue that their “separate”
constitutional claim was that the special assessment itself constituted an unconstitutional
taking. These arguments a re not analogous. Therefore, we affirm the district court’s
dismissal of any constitutional challenges to the special assessment.
III. The landowners’ preemption claim is not properly before this court.

The landowners argue that federal law preempts the statutory requirements of Minn.
Stat. § 429.081 because the special assessment involves their federal constitutional rights .
The landowners did not raise this issue to the district court until their motion in opposition
to the city’s motion to dismiss. Moreover, the district court did not address this claim.
Thiele, 425 N.W.2d at 582. Therefore, we decline to address the landowners’ preemption
argument.
Affirmed.