In re: Ursula E. Nelson Trust under Agreement dated 3/21/2014, as Amended.

This opinion is nonprecedential except as provided by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
A22-1781

In re: Ursula E. Nelson Trust under Agreement dated 3/21/2014, as Amended.

Filed July 10, 2023
Reversed and remanded
Bryan, Judge

Carver County District Court
File No. 10-CV-20-699

Alan I. Silver, James C. Kovacs, Bassford Remele, P.A., Minneapolis, Minnesota; and

Mark R. Bradford, Bradford Andresen Norrie & Camarotto, Bloomington, Minnesota (for
appellants)

Richard C. Landon, Brian A. Dillon, Marya P. Robben, Amy E. Erickson, Lathrop GPM,
LLP, Minneapolis, Minnesota (for respondents)

Considered and decided by Jesson, Presiding Judge; Smith, Tracy M. , Judge; and
Bryan, Judge.
NONPRECEDENTIAL OPINION
BRYAN, Judge
Appellants challenge the district court’s decision invalidating a commercial lease
under theories of undue influence and unconscionability. First, appellants contend that the
district court applied the wrong legal standard for a claim of undue influence. Second, they
argue that the district court applied the wrong legal standard for, and clearly erred in
making factual findings concerning, its determination of unconscionability. We conclude
that although the district court expressly referenced an incorrect legal standard for undue
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influence, it is unclear whether and to what extent the district court actually applied this
standard. We reverse and remand for the district court to reconsider its decision under the
correct legal standard . We also conclude that the district court erred as a matter of both
law and fact when it determined that the lease was unconscionabl e, and we reverse this
portion of the district court’s decision.
FACTS
Ursula Nelson (Ursula)1 passed away on August 23, 2019, survive d by her two
children and four grandchildren. Ursula’s daughter, Caroline Levine, has two sons, Charles
Levine (Charlie) and Michael Levine (collectively, appellants). Ursula’s son, Carl Robert
Nelson, has two children, Abigail Campbell and Neil Nelson ( collectively, respondents).
After Ursula’s death, respondents sought to enforce a trust that she established in 2014.
One of the primary assets of the trust was a 180-acre farm where Ursula resided prior to
her death. In 2018, Ursula (as trustee) agreed to give Charlie and his business, Hemp
Acres, LLC, the right to occupy the 180-acre farm (the Hemp Acres Lease).
On September 3, 2020, respondents filed an action to enforce the trust and invalidate
the Hemp Acres Lease . Respondents a sserted that the Hemp Acres Lease was invalid as
the result of undue influence. The district court heard testimony from Ursula’s children
and grandchildren, two attorneys involved at different points in Ursula’s estate planning,
and two neighboring farmers who had pri or lease agreements with Ursula. 2 The Hemp

1 Some of the individuals involved share a last name, so we use first names when necessary.
2 One of the neighboring farmers testified that he had a few lease agreements with Ursula
over the years to farm her property and that they covered approximately “72 acres” of the
180-acre property and lasted about two years. He testified that he paid between $8,400 and
3
Acres Lease required Hemp Acres to pay the trust $5,000 per year, to pay insurance and
certain expenses, and to be responsible for certain maintenance and upkeep costs. At trial,
Charlie testified that these ex penses total ed approximately $20,000 per year. The trial
evidence also included testimony regarding a series of amendments that Ursula made to
the trust and focused on the involvement of the two attorneys. The parties disputed the
validity of the fourth and fifth amendments to the trust, and they disputed whether the
Hemp Acres Lease resulted from undue influence. The parties did not, however, make any
challenge to the other amendments to the trust or to the validity of the Hemp Acres Lease
during the litigation and trial .
At the conclusion of trial, and after the close of evidence, the district court brought
up unconscionability, asking respondents whether they were seeking to invalidate the
Hemp Acres Lease on the basis of undue influence alone or on al ternative grounds:
Are you arguing on the Hemp Acres Lease for the Court to
consider undue influence only as a reason for finding it invalid?
Or are you arguing lack of consideration, unconscionability? I
mean are there contract principles that you’re go ing to be
arguing as well? Or is this solely an undue influence on the
signing of the [Hemp Acres] lease?

Respondents’ counsel stated that although unconscionability had not yet been raised, in
counsel’s opinion, the Hemp Acres Lease was unconscionable:

$11,160 per year and was not responsible for other expenses. The other neighboring farmer
testified that he rented portions of Ursula’s property between 1996 and 2001 and generally
helped her with repairs and the animals. He testified that they never had a formal
agreement but that, per an oral agreement, he farmed about 70 acres of her property and
paid between $5,600 and $8,400 each year. Apart from this evidence, neither party
presented evidence regarding the value of the farm or what f air lease terms might include.
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I do think that it is unconscionable. I do think that it is—every
credible witness who has testified has testified that it is not a
fair market lease, it’s not an arms -length arrangement. I do
think it is unconscionable. Our primary argument is that it was
procured by undue influence. We will consider other
arguments, Your Honor . . . we have not made those arguments
yet. But it’s a good idea.

Appellants’ counsel then orally argued that respondents had waived any challenge to the
Hemp Acres Lease on g rounds of unconscionability. Following the hearing, both
appellants and respondents submitted memorandums and proposed orders. Appellants
again asserted that respondents waived any argument to challenge the Hemp Acres Lease
on the basis of unconscionability. Alternatively, appellants also asserted that the Hemp
Acres Lease was not unconscionable because the terms were commercially reasonable and
both parties benefitted from the agreement.
On October 17, 2022, the district court issued its findings of fact, conclusions of
law, and order. The district court concluded that the Hemp Acres Lease was invalid for
two independent reasons: it was the product of undue influence, and it was unconscionable.
The district court found that both Charlie and one of the estate -planning attorneys exerted
undue influence over Ursula by “elevat[ing] Charlie’s interests above Ursula’s interests,”
and inducing Ursula to enter into the Hemp Acres Lease, whose terms “unreasonably favor
Hemp Acres and Charlie.” The district court also determined that “[t]he Hemp Acres Lease
is unconscionable and, therefore, unenforceable,” emphasizing the fact that the Hemp
Acres Lease “encumbers the entire Farm (including Ursula’s home), for a 20- year period,
and requires rent pay ments of just $5,000 per year.” The district court stated that “[n]o
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person in their right mind would make such a lease, and no honest and fair person on the
other side would accept such a lease.” This appeal follows.
DECISION
We reverse the district court’s decision regarding undue influence and remand for
the district court to apply the proper legal standard under Minnesota law. We also reverse
the district court’s decision regarding unconscionability.
I. Determination of Undue Influence

Appellants argue that the district court applied an incorrect legal standard , which
required them to prove that they did not exert undue influence, rather than requiring
respondents to prove that appellants did exert undue influence. This argument presents a
question of law, which we review de novo. Am. Bank of St. Paul v. City of Minneapolis ,
802 N.W.2d 781, 785 (Minn. App. 2011).
The parties agree that a district court can invalidate a contract if a party was unduly
influenced to enter into the contract. The parties also agree that Minnesota caselaw permits
invalidation of a contract where the evidence presented establishes that influence was
exerted over another and “that the influence was so dominant and controlling of the
influenced party’s mind that, in making the contract, the influence d party ceased to act of
his or her own free will, becoming a mere puppet of the wielder of that influence.” Nelson
v. Holland, 776 N.W.2d 446, 451 (Minn. App. 2009) (quot ing In re Estate of Congdon,
309 N.W.2d 261, 268 (Minn. 1981) (defining undue influence in the context of whether a
party unduly influenced the testator when the testator drafted her will)). In Nelson, this
court enumerated the following factors to determine whether a decedent w as unduly
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influenced to sell a parcel of real property: (1) the influencer’s opportunity to exert
influence over the decedent ; (2) the degree to which the influencer actively participated in
the preparation of the contract transferring the parcel of real p roperty; (3) whether the
decedent and the influencer had a confidential relationship; and (4) whether the contract
terms are unreasonable or unusual. Id. (citing In re Estate of Opsahl, 448 N.W.2d 96, 100
(Minn. App. 1989) (listing undue influence factors in the context of a w hether the
proponents of a will unduly influenced a testator in the drafting of her will).
In this case, the district court analyzed these undue influence factors, but relied on
a New Jersey Supreme Court case, Haynes v. First Nat. State Bank of New Jersey , 432
A.2d 890 (N.J. 1981) . The district court relied on Haynes for the proposition that courts
presume undue influence in certain cases and shift the burden of proof onto the party
opposing a determination of undue influence to rebut that presumption. The Haynes court
held that where a confidential relationship exists and gives rise to “circumstances of a
suspicious character . . . the law raises a presumption of undue influence and the burden of
proof is shifted to the proponent.” Id. at 897.
Appellants argue that the district court erred as a matter of law in relying on Haynes
because Haynes is not binding authority and because Minnesota has not adopted a simil ar
presumption and burden-shifting approach. We agree with appellants. The Haynes case
is not binding legal authority. See Mahowald v. Minn. Gas Co., 344 N.W.2d 856, 861
(Minn. 1984) (recognizing that cases from other jurisdictions are not binding).
Respondents do not cite to any precedential Minnesota case adopting Haynes or the
presumption stated therein, and we are aware of none. In addition, such a presumption
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conflicts with at least one Minnesota supreme court case , Boynton v. Simmons , 194 N.W.
330 (Minn. 1923). In that case, the supreme court reversed a judgment entered after a jury
trial because the district court instructed the jury that “an inference or presumption” of
undue influence was warranted by evidence of the existence of a confidentia l relationship.
Id. at 331. The supreme court reasoned that “the prevailing rule, as announced in the texts,
is that the relation of trust or confidence between the testator and the beneficiary does not
give rise to a presumption and is not prima facie proof of undue influence.” Id. (quotations
omitted). Respondents direct us to no authority overruling or abrogating this decision. In
Boynton, and in other cases since Boynton, Minnesota courts balance various non-
exhaustive factors to determine undue influence , as listed above. Id.; see also Agner v.
Bourn, 161 N.W.2d 813, 818- 19 (Minn. 1968) ; Nelson, 776 N.W.2d at 452. As one of
these factors, courts must consider the existence and abuse of a confidential relationship,
but such a relationship does not create a presumption of undue influence or shift the burden
of proof. Pursuant to these cases, t he burden of proof , at least in Minnesota, remains on
the party asserting undue influence.
The district court explicitly referenced the presumption and burden- shifting
framework of Haynes. I n our review of the district court’s decision, however, we are
unable to determine whether the district court actually applied the presumption or actually
shifted the burden. We note that when analyzing the factor concerni ng Charlie’s
participation in preparing the Hemp Acres Lease, the district court cited Haynes, found that
attorney involved had a “conflict of interest,” and determined that this conflict “g[ave] rise
to a presumption of undue influence, which has not been rebutted by clear and convincing
8
evidence.” As to the other factors, however, the district court’s analysis does not expressly
include a discussion of a presumption or explicitly place a burde n on appellants.3 Because
it is unclear whether and to what extent the district court applied Haynes in its analysis, we
are unable to determine whether and , if so, to what extent the district court erred . See
Sefkow v. Sefkow, 427 N.W.2d 203, 210 (Minn. 1988) (recognizing that “[t]he function of
the court of appeals is limited to identifying errors and then correcting them” and not
“reweighing the evidence and finding its own facts”). Thus, we reverse and remand for
the district court to weigh the evid ence and apply the undue influence factors without
regard to the presumption and burden- shifting framework from Haynes. On remand, the
district court is not permitted to reopen the record . Similarly, the district court is not
permitted to revise its fact ual findings, except as necessary to apply the correct legal
standard as set forth above.
II. Determination of Unconscionability

Appellants argue that the district court erred in invalidating the Hemp Acres Lease
under the alternative legal grounds of unconscionability because respondents did not timely
raise th is issue before the close of evidence and because appellants did not impliedly
consent to try this issue. In addition, appellants assert that the district court committed both
legal and factual errors in its determination of unconscionability. We reverse the district

3 The parties agree that a clear-and-convincing standard of proof applies , citing cases
applying that standard. See In re Estate of Reay , 81 N.W.2d 277, 280 (Minn. 1957)
(applying clear-and-convincing standard of proof to a party’s action to invalidate a will for
undue influence); Agner, 161 N.W.2d at 818, 821 (applying clear-and-convincing standard
to a party’s action to invalidate a decedent’s transfer of real property prior to death) .
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court’s determination of unconscionability as a misapplication of law and based on clearly
erroneous findings of fact .
As a threshold matter, we are concerned about the district court’s implicit
determination that appellants impliedly consented to a trial regarding unconscionability.
The petition commencing this lawsuit contains no request to invalidate the Hemp Acres
Lease on the basis of unconscionability, and respondents acknowledge that they did not
raise unconscionability until after the close of evidence when prompted by the district
court. In posttrial pleadings, appellants argued that respondents had forfeited a challenge
to the Hemp Acres Lease on unconscionability grounds, but the district court proceeded to
analyze unconscionability without addressing this argument. On appeal, respondents argue
for the first time that appellants impliedly consented to tr y unconscionability.4
“It is fundamental that a party must have notice of a claim against him and an
opportunity to oppose it before a binding adverse judgment may be rendered.” Folk v.
Home Mut. Ins. Co., 336 N.W.2d 265, 267 (Minn. 1983) (citing Truesdale v. Friedman,
132 N.W.2d 854, 864- 65 (Minn. 1965)). A party can, however, consent to an amendment
to the complaint or other pleading by their conduct and “[w]hen issues not raised by the
pleadings are tried by express or implied consent of the pa rties, they shall be treated in all
respects as if they had been raised in the pleadings.” Minn. R. Civ. P. 15.02. To determine
whether a party impliedly consented, we consider the conduct of the parties during the

4 Given our decision reversing the dis trict court’s determination of unconscionability on
the merits, we need not determine whether there are any important distinctions between the
analysis applicable to forfeiture and the analysis applicable to trial by implied consent.
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litigation or trial. Folk, 336 N.W.2d at 267-68; Roberge v. Cambridge Cooperative
Creamery Co. , 67 N.W.2d 400, 403 (Minn. 1954) (“[C]onsent to try an issue outside the
pleadings cannot be implied where the evidence is pertinent to issues actually made by the
pleadings.”); see also, e.g., Buller v. A.O. Smith Harvestore Prod., Inc., 518 N.W.2d 537,
542 (Minn. 1994) (noting that we review a dis trict court’s finding that a party impliedly
consented to litigate or try a nonpleaded issue for clear error). Based on our review of the
record, we are concerned that appellants’ trial conduct does not indicate consent to a trial
on unconscionability. Even assuming, however, that the district court did not err in making
the implicit determination that appellants impliedly consented to a trial on the issue of
unconscionability, we conclude that the district court erred as a factual and legal matter
when it determined that the Hemp Acres Lease was unconscionable.
A contract is unconscionable if it is one that no person “not under delusion would
make on the one hand” and no honest and fair person “would accept on the other.” In re
Estate of Hoffbeck , 415 N.W.2d 447, 449 (Minn. App. 1987) (quoting Hume v. United
States, 132 U.S. 406, 411 (1889)), rev. denied (Minn. Jan. 28, 1988). Inadequate
consideration is only sufficient to establish unconscionable contract terms if it is “so great
as to shock the conscie nce.” Peterson v. Holiday Recreational Indus., Inc., 726 N.W.2d
499, 505-06 (Minn. App. 2007), rev. denied (Minn. Feb. 28, 2007). Where “[b]oth parties
obtained real and tangible benefits from the execution of [a] contract,” we generally
conclude that a contract is not unconscionable. Overholt Crop Ins. Serv. Co., Inc. v.
Bredeson, 437 N.W.2d 698, 702 (Minn. App. 1989) (holding an employment contract was
not unconscionable where the employee received income and the employer received the
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employee’s work product). The question of unconscionability relates to the time that the
parties entered into the contract and not to conduct that occurs afterwa rds. Hoffbeck, 415
N.W.2d at 449. We review the district court’s underlying factual findings regarding
unconscionability for clear error, but we review a determination that a contract is
unconscionable de novo. Id.
We conclude that the district court er red as a matter of law for two reasons. First,
the district court addressed whether the contract terms were reasonable, concluding that
“[t]he Hemp Acres Lease is unconscionable because the terms of the Lease unreasonabl y
favor Hemp Acres and Charlie.” A s noted above, however, to be properly characterized
as unconscionable, a contract must be more than merely unreasonable; the contract terms
must be so unreasonable as to shock the conscience. Peterson, 726 N.W.2d at 505. Second,
the district court’s analysis compared the terms of the Hemp Acres Lease to the terms of
prior leases, d isregarding several clear differences. For example, none of the previous
leases that the district court considered were entered into between Ursula and a family
member, cf. id. at 505-06 (concluding that “[i]t is not a ‘shock to the conscience’ that a
business would be transferred from grandmother to granddaughter for $1, which would be
considered inadequate consideration in other circumstances”), and none of previous lessees
had made any—much less significant —investments in the property. Likewise, none of the
prior leases required the lessee to pay the expenses that were required in the Hemp Acres
Lease. We also observe that in addition to these differences, none of the previous lessees
were also the sole devisee of the property at the time the leases were agreed to. The parties
agree that at the time of the execution of the Hemp Acres Lease , Charlie was the sole
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beneficiary of the property being leased , and they do not dispute the validity of the
amendment to the trust that was effective at that time. The district court erred by analyzing
the prior leases to determine unconscionability because these prior leases are not
comparable to the Hemp Acres Lease. For these reasons, the district court did not correctly
apply the law regarding unconscionability.
We also conclude that the district court’s underlying factual findings were clearly
erroneous for two reasons. First, the district court found that the value of the Hemp Acres
Lease to Ursula was “just $5,000 per year.” While it is correct that Hemp Acres agreed to
pay rental income of $5,000, t he evidence presented indicates that the value of the lease
included more than the rent. The lease terms included requirements that Hemp Acres pay
certain expenses and maintenance, which Charlie estimated to be around $20,000 per year.
The district court clearly erred when it did not attribute any value to these lease terms.
Second, the record does not include any evidence regar ding the fair market value of a
comparable lease. Appellants correctly question the factual findings of the district court in
light of an absence of an appraisal, a valuation, or any expert testimony concerning what
lease terms might reasonably be agreed to in a hypothetical, fair-market negotiation. In the
absence of such evidence, the record does not support the factual findings underlying the
determination that the Hemp Acres Lease was un conscionable.
Reversed and remanded.