In re the Trust of the Thomas Karakash Family Trust and the Ann Karakash Family Trust.

This opinion is nonprecedential except as provided by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
A24-1421

In re the Trust of the Thomas Karakash Family Trust
and the Ann Karakash Family Trust.

Filed August 4, 2025
Affirmed in part, reversed in part, and remanded
Larson, Judge

St. Louis County District Court
File No. 69HI-CV-20-757

Steven M. Sitek, Sitek Law, LLC, Minneapolis, Minnesota (for appellant Peter J.
Karakash)

Kelly M. Klun, Klun Law Firm, P.A., Ely, Minnesota (for respondent John Karakash)

Teresa Felmlee, Rochester, Minnesota (self-represented respondent)

Considered and decided by Bratvold, Presiding Judge; Larson, Judge; and Reilly,
Judge.
∗
NONPRECEDENTIAL OPINION
LARSON, Judge
This appeal arises from litigation over the Karakash Family Trust (the Trust). 1
Under the Trust’s terms, Thomas and Ann Karakash’s three children, appellant Peter

∗ Retired judge of the Minnesota Court of Appeals, serving by appointment pursuant to
Minn. Const. art. VI, § 10.
1 The Karakash Family Trust began as two separate trusts: the Thomas Karakash Family
Trust and the Ann Karakash Family Trust. In 2017, these trusts merged. We refer to the
combined trust collectively as the Karakash Family Trust or the Trust.
2
Karakash, respondent John Karakash, and respondent Teresa Felmlee, are the co-trustees
and sole beneficiaries. The Trust’s sole asset is all the shares of an S -corporation2 that
operates Retreat Lodge Inc. John and his spouse, Shaun Karakash, manage and operate
Retreat Lodge.3 In September 2020, Peter filed this action in his capacity as a beneficiary,
alleging that John and Teresa breached their fiduciary duties to Peter in their administration
of the Trust and operation of Retreat Lodge. Following a bench trial, the district court
denied Peter’s claims and filed an order to show cause why Peter should not be sanctioned
for engaging in frivolous litigation. Peter moved for a new trial, arguing the district court
made legal errors and findings unsupported by the record. Peter also filed a motion to
remove the district court judge. The district court then sanctioned Peter in the amount of
$25,000 and denied both motions.
On appeal, Peter challenges the district court’s posttrial decisions to: (1) deny his
motion for a new trial; (2) impose sanctions; and (3) deny the motion to remove the judge.
Because the district court did not abuse its discretion when it denied the motion to remove,
we affirm in part. But because the district court abused its discretion when it denied Peter’s
motion for a new trial and imposed sanctions, we reverse and remand for further
proceedings not inconsistent with this opinion.

2 An S-corporation “is subject to a pass-through taxation system, under which its earnings
are not taxed at the corporate level. Rather, corporate profits are deemed to pass through
directly to the shareholders on a pro rata basis and are reported on the shareholders’
individual tax returns.” Haefele v. Haefele, 837 N.W.2d 703, 705 (Minn. 2013) (citation
omitted).
3 Because some of the parties and other individuals involved in this appeal share a surname,
we hereinafter use first names.
3
FACTS
A. Formation of the Trust and S-corporation
Retreat Lodge is a resort property located on Lake Vermillion in St. Louis County,
Minnesota. It occupies roughly 25 acres of land and spans 300 feet of shoreline. Retreat
Lodge offers cabin rentals and recreational activities to guests from May to October.
Thomas and Ann purchased Retreat Lodge in 1972 and established it as an S- corporation
in 1996. Thomas and Ann were the original president and vice president of the S-
corporation.
In May 1996, Thomas and Ann established individual trusts, naming Peter, John,
and Teresa as co -trustees and beneficiaries . Each trust owned one-half of the S-
corporation’s shares.
In 2004, John and Shaun began managing Retreat Lodge as a full-time, year-round
position, and received salaries and benefits. In November 2013, Thomas and Ann stepped
down from their respective roles in the S-corporation. In their stead, John was appointed
president, Teresa was appointed vice president, and Shaun was appointed secretary and
treasurer.
Ann died in December 2013, and Thomas died in June 2017. The individual trusts
merged into the Karakash Family Trust upon Thomas’s death. At the time of trial, the sole
asset in the Trust was 100% of the S-corporation’s shares.
4
B. Prior Actions
Peter has initiated litigation against respondents multiple times prior to the present
case. During the current litigation, t he district court took judicial notice of two prior
actions, which are described below.
In April 2016, Peter brought an action against respondents in his capacity as a co-
trustee, seeking an accounting of Ann’s individual trust. In April 2017, the district court
dismissed the action, reasoning that there was “no basis to grant the petition given the legal
right of access afforded to [Peter] as co-trustee.” The district court further noted that there
was no evidence that respondents engaged in impropriety and that all relevant financial
records had been provided to Peter.
In March 2019, Peter filed an emergency petition for writ of mandamus requesting
access to Retreat Lodge’s ledgers under Minn. Stat. § 302A.463 (2024), which requires
corporations to furnish financial statements “[u]pon written request by a shareholder.” The
district court denied Peter’s petition in a May 2019 order. In pertinent part, the district
court determined that John had provided Peter with tax returns, and that this satisfied John’s
obligation under Minn. Stat. § 302A.463 to “furnish certain financial documents” in
response to a written request by a shareholder. The district court also noted that the record
contained evidence that Peter was given “liberal access to financial documents and records
of the business and trusts and . . . unrestricted access to meet and question” Retreat Lodge’s
accounting firm.
5
C. Present Action
In September 2020, Peter initiated this lawsuit in his capacity as a beneficiary
against respondents in their capacities as co- trustees. As relevant to this appeal, Peter
alleged that respondents breached their fiduciary duties to Peter when they violated the
duty of loyalty, duty of impartiality, duty of prudent administration, and duty to inform and
report. Peter requested, among other forms of relief, that the district court direct
respondents “to make a full and complete accounting” of the Trust’s assets for the
preceding six-year period, reimburse the Trust for respondents’ alleged self-dealing, and
provide Peter “in his capacity as a beneficiary . . . full rights to use the Trust[’s] assets.”
1. Answer and Motion to Dismiss
John filed an answer and a counterclaim. In his answer, John pointed to the previous
actions Peter initiated that related to the Trust’s administration wherein the district court
found that Peter “ha[d] been provided with a full and proper accounting.” John also
asserted res judicata as an affirmative defense and filed a motion to dismiss for failure to
state a claim upon which relief can be granted. See Minn. R. Civ. P. 12.02(e). In May
2021, the district court denied John’s motion to dismiss and determined that res judicata
did not apply.4 In ruling on res judicata, the district court noted that this was the first time

4 Following the decision on the motion to dismiss, this case was reassigned to a different
judge.
6
Peter had brought claims against respondents in his capacity as a beneficiary, such that the
parties in this action were not identical to the parties in the prior actions.
2. Discovery
In October 2021, Peter filed a motion to compel discovery. In his accompanying
memorandum, Peter stated that respondents had not produced any documents responsive
to his discovery requests. John opposed the motion, arguing the only documents relevant
to the Trust were Retreat Lodge’s tax returns, which had been provided.
In November 2021, Peter served a subpoena on the Trust’s accounting firm,
demanding a deposition and the production of certain documents. John filed a motion to
quash the subpoena, arguing that discovery had closed, the subpoena sought irrelevant and
privileged documents, and the subpoena was inappropriate given that the motion to compel
had not yet been decided. At a December 2021 hearing, Peter indicated that the accounting
firm had responded and provided the requested documents. And, following the hearing,
both parties filed correspondence with the district court indicating that John had agreed to
provide certain documents. Accordingly, the district court filed a March 2022 order
deferring its ruling on the motion to compel.
In July 2023, Peter filed correspondence with the district court explaining that John
continued to be noncompliant with discovery. Following a discovery conference, the
district court issued an order directing John to produce certain documents. In August 2023,
Peter filed additional correspondence with the district court, again contending that John
had failed to comply with discovery. The district court issued an order directing John to
produce the requested documents. In September 2023, Peter filed further correspondence
7
with the district court, again contending that John had failed to comply with discovery and
requesting that the district court order John to produce certain documents. John filed
responsive correspondence, arguing that the requested documents were outside of the scope
of authorized discovery. John ultimately produced nearly 3,000 pages of documents within
a month before trial.
3. Bench Trial

A bench trial took place on November 6-7, 2023. The district court heard testimony
from Teresa, Shaun, John, Peter, and an accountant from the Trust’s accounting firm.
Evidence was elicited at the trial regarding: (1) respondents’ use of Retreat Lodge’s funds;
(2) Peter’s access to financial information; and (3) Peter’s ability to use the Retreat Lodge
property. The following summarizes the evidence submitted in those three areas and is
viewed in the light most favorable to the district court’s decision. See Woehrle v. City of
Mankato, 647 N.W.2d 549, 551 (Minn. App. 2002) (noting that, when reviewing a motion
for a new trial, we view the evidence in a light most favorable to the verdict), rev. denied
(Minn. Sept. 17, 2002).
The following evidence was offered regarding respondents’ use of Retreat
Lodge’s—and, therefore, the Trust’s—funds. Peter offered as an exhibit a “beneficial-
gains summary” prepared from the nearly 3,000 pages of documents respondents disclosed
within a month before trial. The beneficial-gains summary summarized documentation
showing that respondents used Retreat Lodge’s funds to pay for meals and entertainment,
hotel stays, fishing tournament fees, car insurance, and clothing, among other items. The
accountant agreed that many of these expenses were “necessary and ordinary business
8
expense[s]” and therefore tax-deductible under Internal Revenue Service (IRS) standards.
The accountant described other expenses in the beneficial-gains summary as “de minimis
employee gift[s],” again applying an IRS tax standard that allows “employees [to] receive
a certain gift from the entity that’s deemed appropriate as being de minimis.” Teresa,
Shaun, and John generally testified to their belief that the expenses in the beneficial-gains
summary were appropriate. But Shaun admitted that she occasion ally made personal
purchases with Retreat Lodge’s funds. And when asked whether he keeps the Trust’s
property separate from his personal property, John expressed that “it’s tough to divide,”
especially during the summer, because operating Retreat Lodge is “a lifestyle.”
The following evidence was offered regarding Peter’s access to Retreat Lodge’s
financial information. Peter testified that, when he attended trustee meetings, respondents
refused to discuss Retreat Lodge’s financial information with him. Peter also testified that
respondents either ignored his requests for an accounting or told him to pay for an
accounting himself. Peter described respondents as directing him to go to the Trust’s
accounting firm to review Retreat Lodge’s financial information. But when he did so, the
staff either showed him minimally useful information, such as tax returns or “a ledger that
ha[d] single line items on it,” or did not have the information he sought. Peter confirmed
that he had received Retreat Lodge’s tax returns for 2016 through 2020. Teresa described
her view that Peter is only entitled to Retreat Lodge’s tax returns and explained that she,
otherwise, denies his requests for financial information. John likewise testified that Peter
only has access to Retreat Lodge’s tax returns and is, otherwise, denied access to Retreat
Lodge’s financial information.
9
The following testimony was elicited regarding Peter’s ability to use Retreat Lodge.
Peter testified that he had not stayed at Retreat Lodge since 2012 and that his requests to
do so have either been rejected or met with no response. Teresa admitted that Peter is not
permitted to use the lake home, which doubles as Retreat Lodge’s office, “because of all
the angst that is between the family.” And John likewise testified that Peter cannot
currently stay at Retreat Lodge, but Teresa can.
At the end of trial, the district court instructed the parties to submit posttrial written
memoranda. In his posttrial memorandum, Peter focused on his role as a beneficiary and
made specific arguments about how the record evidence demonstrated that respondents, as
co-trustees, had violated their fiduciary duties, including the duty of loyalty, duty of
impartiality, duty of prudent administration, and duty to inform and report. John’s posttrial
memorandum asserted that respondents had administered the Trust in all the beneficiaries’
best interests and in accordance with Ann’s and Thomas’s intent.
In a March 2024 order, the district court denied Peter’s breach-of-fiduciary-duty
claims.5 When deciding Peter’s claims with respect to the duty of prudent administration
and duty to inform and report, the district court repeatedly referred to respondents’ legal
obligations to Peter as a co -trustee, rather than as a beneficiary.6 The district court also

5 The district court also denied respondents’ counterclaim. Respondents do not challenge
the district court’s decision to deny the counterclaim on appeal.
6 For example, the district court found: “[Peter] fails in his claim that he has not been
provided and had access to all financial records necessary to undertake his duties as
Trustee”; “[Peter] has been provided beyond . . . what is required for him to carry out his
duties as a Trustee”; “[Peter] was provided sufficient records . . . to ensure he was allowed
to meet his fiduciary duties and perform his work as Trustee”; “Peter[’s] . . . demands for
a full financial audit were not made in good faith and not made as a result of a colorable
10
failed to make any specific findings of fact or conclusions of law regarding Peter’s duty-
of-loyalty and duty-of-impartiality claims. Broadly, the district court determined that Peter
did “not bring[] the present action as the result of any legitimate claim of a breach of
fiduciary duty” and, instead, brought the claim “to harass, intimidate, and frustrate
[respondents] and their attempts to effectively administer the Trust and its holdings.” The
district court also issued an order to show cause against Peter sua sponte, asserting that
sanctions may be appropriate because Peter “frivolously asserted claims and unfounded
positions.”
4. Posttrial
On March 29, 2024, as amended on April 5, 2024, Peter filed a motion for a new
trial and a motion to remove the judge.
7 For the new-trial motion, Peter argued the district
court reached incorrect legal conclusions when it analyzed his claims in his role as a co-
trustee rather than as a beneficiary. Peter also raised numerous factual findings he argued
were unsupported by the record. For the motion to remove, Peter argued the judge should
remove themself from the case because both the judge and their spouse were social-media
“friends” with John’s counsel, and the judge’s order demonstrated “unwarranted and
extreme vitriol towards [Peter].” Peter attached a screenshot of John’s counsel’s social -
media page to support the motion.

concern he had as a Trustee”; and “[Peter] asserted his actions were in furtherance of his
duties as Trustee even though the clear record demonstrates that is a false assertion.”
(Emphasis added.)
7 Peter also brought a motion to change venue, but he does not challenge the district court’s
decision on that motion on appeal.
11
The district court held a hearing on the order to show cause on July 9, 2024.
Respondents did not take a position at the hearing. Thereafter, the district court imposed a
$25,000 sanction against Peter, primarily on the basis that his claims were frivolous. In
deciding to sanction Peter, the district court focused on the previous litigation between the
parties regarding the administration of the Trust, asserting that Peter “ha[d] continued to
pursue litigation of nearly identical claims after previous Courts ha [d] found his claims
[were] without merit.”
On August 29, 2024, the district court denied Peter’s posttrial motions. In its order
denying Peter’s motion for a new trial, the district court concluded that, based on the
evidence received at trial, respondents did not breach their fiduciary duties. The district
court also determined that, notwithstanding whether its March 2024 order “referred to
[Peter] as a Trustee or a Beneficiary, . . . [Peter] was provided with more than sufficient
financial data.” In denying Peter’s motion to remove, the district court reasoned that any
social-media connection between the judge and John’s counsel was not sufficient to require
disqualification.
Peter appeals.
DECISION
On appeal, Peter challenges the district court’s posttrial decisions following the
bench trial. Specifically, Peter contests the district court’s decisions to: (1) deny his
motion for a new trial; (2) sanction Peter; and (3) deny the motion to remove the judge.
We address Peter’s arguments in turn below.
12
I.
Peter argues the district court abused its discretion when it denied his motion for a
new trial. We review a district court’s decision to deny a motion for a new trial for an
abuse of discretion. See Christie v. Est. of Christie¸ 911 N.W.2d 833, 838 (Minn. 2018).
“A district court abuses its discretion when its decision is based on an erroneous view of
the law or is inconsistent with the facts in the record.” In re Otto Bremer Tr.,
2 N.W.3d 308, 319 (Minn. 2024) (quotation omitted). When applying the abuse- of-
discretion standard, we review the district court’s factual findings for clear error and its
legal determinations de novo. See Rasmussen v. Two Harbors Fish Co., 832 N.W.2d 790,
797 (Minn. 2013).
A district court may grant a party’s new-trial motion on any one of seven available
grounds, including— as relevant here—where the “decision . . . is not justified by the
evidence, or is contrary to law.” Minn. R. Civ. P. 59.01(g). When a party files a motion
for a new trial following a bench trial, “the [district] court may open the judgment if one
has been entered, take additional testimony, amend findings of fact and conclusions of law
or make new findings and conclusions, and direct entry of a new judgment.” Minn. R. Civ.
P. 59.01. The district court must also determine whether the weight of the evidence
supported the initial decision. See Clifford v. Geritom Med, Inc., 681 N.W.2d 680, 686
(Minn. 2004) (“[A] motion for a new trial gives a district court the opportunity to correct
errors without subjecting the parties to the expense and inconvenience associated with an
appeal.”).
13
On appeal, Peter argues the district court abused its discretion when it denied his
motion for a new trial because the district court made both legal errors and clearly
erroneous factual findings.
A. Legal Errors
Peter asserts that the district court legally erred when it denied the motion for a new
trial because it conflated his role as a co-trustee with his role as a beneficiary. Beneficiaries
and trustees have distinct roles and duties under Minnesota law. Beneficiaries are
individuals who “ha[ve] a present or future beneficial interest in a trust” or who, “in a
capacity other than that of trustee, hold[] a power of appointment over trust property.”
Minn. Stat. § 501C.0103(c) (2024). Trustees are responsible for “prudently manag[ing]
trust assets in light of the settlor’s intent and the beneficiary’s interests.” In re Trs. Created
by Hormel, 504 N.W.2d 505, 512 (Minn. 1993), rev. denied (Minn. Oct. 19, 1993). And
trustees owe various duties to beneficiaries , including the duty of loyalty, duty of
impartiality, duty of prudent administration, and duty to inform and report. See Minn. Stat.
§§ 501C.0801-.0804, .0813 (2024); In re Revocable Tr. of Margolis, 731 N.W.2d 539, 545-
46 (Minn. App. 2007). “A violation by a trustee of a duty the trustee owes to a beneficiary
is a breach of trust.” Minn. Stat. § 501C.1001(a) (2024).
Respondents agree that there is a legal difference between a trustee and a
beneficiary. But respondents contend that— because Peter held both roles (co- trustee and
beneficiary)—the district court’s conflation of the two concepts was not prejudicial. We
disagree. When a party holds multiple roles with respect to a trust, the role the plaintiff
asserts in the complaint governs the applicable law. For example, in Warren v. ACOVA,
14
Inc., we recently concluded that—despite an individual holding multiple roles related to a
trust—the individual lacked standing to bring a specific claim because she filed her
complaint in her role as a beneficiary. 21 N.W.3d 218, 253 (Minn. App. 2025), petition
for rev. filed (Minn. May 7, 2025). The same is true for this case—Peter filed his complaint
in his capacity as a beneficiary, which determined the scope of the claims that he could
allege and the law that applied to those claims.
Accordingly, we agree with Peter that it was a legal error when the district court
failed to evaluate his claims based on his role as a beneficiary. Because, for the reasons
below, this legal error pervaded the district court’s analysis, we conclude the district court
abused its discretion when it denied the motion for a new trial on this basis.
1. Duty to Inform and Report
Beginning with the duty to inform and report, trustees owe beneficiaries a duty of
full disclosure. Lund ex rel. Revocable Tr. of Lund v. Lund, 924 N.W.2d 274, 284 (Minn.
App. 2019), rev. denied (Minn. Mar. 27, 2019). “It is the trustee’s duty to disclose to the
beneficiary fully, frankly, and without reservation all facts pertaining to the trust.” Leraan
v. Aftenro Soc’y (In re Enger’s Will), 30 N.W.2d 694, 701 (Minn. 1948). Minnesota law
outlines a trustee’s duty to inform and report to beneficiaries regarding the administration
of the trust:
A trustee shall keep the qualified beneficiaries of an
irrevocable trust reasonably informed about the administration
of the trust and of the material facts necessary to protect their
interests. Unless unreasonable under the circumstances, a
trustee shall promptly respond to a beneficiary’s request for
information related to the administration of an irrevocable
trust.
15
Minn. Stat. § 501C.0813(a).
Here, the district court’s legal conclusions regarding the duty to inform and report
show the district court made its determination with a focus on Peter’s role as a co -trustee
rather than as a beneficiary. The district court concluded:
6. [Peter] fails in his claim that he has not been provided
and had access to all financial records necessary to undertake
his duties as Trustee. . . . Further, this information was readily
accessible to [Peter] and he did not need his fellow Trustees to
provide the information to him.

7. [Peter] has been provided beyond what is required for
him to be assured Retreat Lodge is being operated in a prudent
and reasonable manner, and of what is required of him to carry
out his duties as a Trustee.

. . . .

11. [Peter] was provided sufficient records to account
for the Trust’s assets, to ensure he was allowed to meet his
fiduciary duties and perform his work as Trustee, and to ensure
the property held by the Trust and the administration of the
Trust was all done pursuant to the law and in a financially
prudent manner.

. . . .

28. . . . Most concerning is that [Peter] centered his
claims on the allegation that he was deprived financial records
and information he needed as Trustee, which he knew was not
true and would not be supported by the clear and well-
documented evidence. . . .

29. [Peter] intentionally asserted frivolous claims that
were made in bad faith. He asserted his actions were in
furtherance of his duties as Trustee even though the clear
record demonstrates that is a false assertion.

(Emphasis added.)

16
Accordingly, the district court legally erred when it decided the duty-to-inform-and-
report claim without considering the financial information respondents, as trustees, must
provide in response to Peter’s reasonable requests as a beneficiary.
2. Duty of Prudent Administration
With regard to the duty of prudent administration, “[a] trustee shall administer the
trust as a prudent person would, by considering the purposes, terms, and distribution
requirements of the trust and all relevant circumstances.” Minn. Stat. § 501C.0804. In
doing so, the trustee must “exercise reasonable care, skill, and caution.” Id.
Here, the district court’s legal conclusions regarding the duty of prudent
administration again reflect that the district court made its determination with a focus on
Peter’s role as a co-trustee rather than as a beneficiary. The district court concluded:
13. . . . John . . . has allowed the fullest measure of
disclosure on the operations of Retreat Lodge and its financial
information through the years of his operating it and has
complied with all requests for information as required under
the law and to ensure the Trustees could perform their duty to
accurately account for their administration of the Trust. Not
acquiescing to the expense and the burden an audit would place
on Retreat Lodge – particularly in the absence of any excessive
debt or credible allegations of fraud, waste, or mismanagement
– was a prudent and informed decision by [respondents].

14. Beyond the unnecessary cost and burden it would
place on the business, John . . . made a wise business decision
as Peter[’s] . . . demands for a full financial audit were not made
in good faith and not made as a result of a colorable concern
he had as a Trustee.

(Emphasis added.)
17
Accordingly, the district court legally erred when it decided the duty-of-prudent-
administration claim without considering Peter’s role as a beneficiary, rather than as a co-
trustee.
3. Duty of Loyalty
Trustees also owe beneficiaries a duty of loyalty. Lund, 924 N.W.2d at 284. The
duty of loyalty instructs that “[a] trustee shall not place the trustee’s own interests above
those of the beneficiaries.” Minn. Stat. § 501C.0802(a). “[N]o rule is more fully settled
than that which forbids a trustee’s dealing with himself in respect to trust property[.]” Perl
v. First & Am. Nat’l Bank (In re Anneke’s Tr. ), 38 N.W.2d 177, 179 (Minn. 1949)
(quotation omitted); see also Janke v. Espenson (In re Janke’s Est.), 258 N.W. 311, 313
(Minn. 1935) (noting trust assets are not “to be used in developing or furthering [a trustee’s]
business enterprises”). “[A] trustee cannot purchase or deal in the trust property for his
own benefit or on his own behalf, either directly or indirectly.” Malcolmson v. Goodhue
Cnty. Nat’l Bank, 272 N.W. 157, 160 (Minn. 1936). “[T]here is no ‘de minimis defense’
to whether self- dealing violates the duty of loyalty.” Bremer, 2 N.W.3d at 320.
Beneficiaries need not show fraud to establish a breach of the duty of loyalty stemming
from self-dealing and “no excuse can be offered by the trustee to justify such transactions.”
Id. (quotation omitted).
Here, despite Peter’s unrebutted evidence regarding the use of Retreat Lodge’s
funds for John’s and Shaun’s personal use, the district court did not make any factual
findings or legal conclusions regarding the duty of loyalty. Accordingly, the district court
legally erred when it failed to decide Peter’s duty-of-loyalty claim.
18
4. Duty of Impartiality
Regarding the duty of impartiality, “[i]f a trust has two or more beneficiaries, the
trustee shall administer the trust impartially, giving due regard to the beneficiaries’
respective interests.” Minn. Stat. § 501C.0803. In other words, trustees must “manage the
trust with equal consideration for the interests of all beneficiaries.” In re G.B. Van Dusen
Marital Tr., 834 N.W.2d 514, 521 (Minn. App. 2013) (quotation omitted), rev. denied
(Minn. June 26, 2013).
Again, despite Peter’s claim that respondents breached the duty of impartiality and
uncontradicted testimony that respondents currently exclude Peter from the Retreat Lodge
property, the district court failed to make any legal conclusions regarding whether
respondents’ conduct violated the duty of impartiality to Peter as a beneficiary.
Accordingly, the district court legally erred when it failed to decide Peter’s duty-of-
impartiality claim.
5. Conclusion – Legal Errors
For these reasons, we conclude the district court legally erred when it determined
that it did not matter whether the district court “referred to [Peter ] as a Trustee or
Beneficiary.” The record shows that, by failing to consider Peter’s role as a beneficiary,
the district court either applied an incorrect legal standard or failed to consider
appropriately alleged claims. On this basis, the district court abused its discretion when it
denied his motion for a new trial.
19
B. Clearly Erroneous Factual Findings
Peter also challenges a number of the district court’s factual findings that he argues
are clearly erroneous. Broadly, Peter challenges the district court’s findings regarding his
access to financial information and respondents’ alleged improprieties. Peter raised these
issues in his motion for a new trial and asserts that the district court abused its discretion
when it denied his motion on this basis.
As set forth above, we review the district court’s factual findings for clear error. A
district court’s findings “are clearly erroneous when they are manifestly contrary to the
weight of the evidence or not reasonably supported by the evidence as a whole.” In re Civ.
Commitment of Kenney, 963 N.W.2d 214, 221 (Minn. 2021) (quotation omitted) ; see also
Bremer, 2 N.W.3d at 319 (applying Kenney to a trust case). When reviewing for clear
error, we defer to the factfinder’s credibility determinations. Sefkow v. Sefkow,
427 N.W.2d 203, 210 (Minn. 1988). We also view the evidence in the light most favorable
to the district court’s findings. Vangsness v. Vangsness, 607 N.W.2d 468, 472 (Minn. App.
2000). Indeed, “[a] district court’s denial of a new-trial motion must stand unless it is
manifestly and palpably contrary to the evidence, viewed in the light most favorable to the
verdict.” Woehrle, 647 N.W.2d at 551 (quotation omitted).
While it is a rare case that we conclude a district court’s findings are not reasonably
supported by the evidence as a whole, here we agree with Peter that some of the district
court’s findings are unsupported by the record and, therefore, clearly erroneous. We
discuss those findings below.
20
1. Financial Information
Peter first contends the district court made clearly erroneous findings with respect
to his access to financial information. As set forth above, in his role as a beneficiary, Peter
was entitled to be kept “reasonably informed about the administration of the trust and of
the material facts necessary to protect [his] interest[].” Minn. Stat. § 501C.0813(a). Peter
challenges the following findings regarding his access to Retreat Lodge’s—and thereby the
Trust’s—financial information: 8
39. As evidenced in the emails in 2015, [Peter] has been
afforded the opportunity to conduct and further inspect or audit
the operations, but that he would be responsible for the cost.

. . . .

8 The parties do not argue that there is a legal distinction between the Trust’s financial
information and Retreat Lodge’s financial information. From our independent review, it
appears that “[w]hen the assets of a trust include stock . . . in a closely held business entity,
many cases have held that beneficiaries of the trust are entitled to information about the
business entity, especially when the trustee is an officer or director of the entity or . . .
controls the entity.” 17 Alan Newman et al., The Law of Trusts and Trustees § 962, at 73
(3d ed. 2010); see also In re Estate of Voice, 35 Misc. 2d 225, 227 ( N.Y. Sur. Ct. 1962)
(“Since the trustees control the corporation by reason of the stock held by the trust added
to the stock held by them personally, they can be compelled to disclose the details of the
corporation’s activities. Since an examination of the corporate activities is proper, the
production of relevant and material books and records of the corporation upon such
examination is also proper.” (citations omitted)); In re Estate of Schlegel, 16 A.D.2d 745,
745-46 (N.Y. App. Div. 1962) (holding that beneficiary had right to financial information
about corporation where trust “contain[ed] over 40% of the stock” in that corporation and
one trustee “occupie[d] a dual capacity” as trustee and corporate director). But some courts
have reached a different decision. Newman, supra, at 74-75. For the purposes of this case,
because (1) there is no precedential case law on point; (2) the parties assume that Retreat
Lodge’s financial information is the Trust’s financial information; (3) the record shows
that this is a closely held business entity where the Trust’s trustees are also officers in the
S-corporation, and (4) the record indicates that only Retreat Lodge has any financial
information, we conclude that Retreat Lodge’s financial records are the Trust’s financial
records.
21
41. For over, at minimum, ten-plus years, Peter . . . has
continually been provided financial information, tax records,
and notice of annual Trustee meetings. He also has been
provided access and opportunity to obtain additional financial
information from Retreat Lodge’s accountants to ensure he is
afforded the opportunity to inspect and review all documents
related to the business operations and its financials.

. . . .

44. Prior to the present action, Peter . . . was provided
extensive financial records, tax records, and operational
records of Retreat Lodge and the Trust through prior Court
actions. Letters for attorneys at the time were submitted as
exhibits in the present matter. The letters discussed the claims
and positions at the time and financial records that have or have
not been exchanged. The parties all referenced these Court
actions at trial in support or defense of their positions and
indicated no objection to the Court taking judicial notice of
[them].

. . . .

67. Teresa . . . , through the years, has attempted to
provide Peter . . . with the information he requests, and the
exhibits received at trial demonstrate her attempts to include
Peter . . ., acknowledge his demands, provide him documents,
and provide his access to the specific information he requests.

. . . .

69. Peter . . . was provided more financial information
and had access to more financial information than was needed
to perform his duties . . . as Trustee. His claims that he did not
have the required financial information to act as Trustee or that
information was hidden from him are not credible.

The evidence submitted at trial does not support the district court’s finding that
“Peter . . . has continually been provided financial information.” Teresa admitted at trial
that she “rejected” Peter’s requests for information about Retreat Lodge’s operations
22
because “as a Trustee/Beneficiary that is not a concern.” She explained that Peter has “no
need” for financial information about Retreat Lodge so long as “the land and the buildings
are being maintained and the business is thriving.” John’s testimony likewise indicated
that Peter did not have access to Retreat Lodge’s financial information, as he described
providing Peter with anything more than Retreat Lodge’s tax returns as “just a hassle.”
Indeed, John testified that Peter had been provided only with Retreat Lodge’s tax returns
since 2015. And although John stated that Peter could have come to Retreat Lodge to
review the financial information, John also testified that when Peter did come for that
purpose, he refused to give Peter access to “the books.” Moreover, Shaun and Teresa both
described their view that, since the May 2019 order, Peter was only entitled to Retreat
Lodge’s tax returns.
Further, Teresa indicated in her testimony that any inadequacies in the information
provided to Peter had been cured because Peter was provided extensive financial
information as part of “this litigation.” But the duty to disclose information to a beneficiary
is not triggered by litigation. See Lund, 924 N.W.2d at 284. Further, the record reflects
that, even during litigation, Peter had to file numerous motions to compel in order to obtain
relevant financial information before trial. Thus, the record evidence does not support the
district court’s findings that Peter has been provided extensive financial information.
2. Alleged Self-Dealing and Lack of Prudent Administration
Peter also contends the district court made clearly erroneous findings regarding
respondents’ self-dealing and prudent administration of the Trust’s assets. As set forth
above, “no rule is more fully settled than that which forbids a trustee’s dealing with himself
23
in respect to trust property.” Perl, 38 N.W.2d at 179 (quotation omitted). “[T]here is no
‘de minimis defense’ to whether self-dealing violates the duty of loyalty.” Bremer, 2
N.W.3d at 320. Further, a trustee must “administer the trust as a prudent person would, by
considering the purposes, terms, and distribution requirements of the trust and all relevant
circumstances.” Minn. Stat. § 501C.0804. This requires the trustee to “exercise reasonable
care, skill, and caution.” Id.
Peter specifically challenges the following findings:
43. Peter . . . has never specifically alleged improprieties
or fraud in Retreat Lodge’s operations other than the recent
examples he provided in Exhibit 37. His general assertion is
that his siblings personally benefit from the operations of
Retreat Lodge to his and other beneficiaries’ detriment. His
claims have never been supported with credible factual
allegations or even minimal support that any fraud or other
improprieties exist. From the previous Court actions Peter . . .
brought or was involved in regarding the Trust, Retreat Lodge,
and his parents’ estate plans, it is evident his real concern is not
the operations of Retreat Lodge but rather the manner his
parents structured the Trust and the operations of Retreat
Lodge.

. . . .

46. Peter[’s] . . . own review of the business records did
not reveal an[y] waste, fraud, or misappropriation. It revealed
that the business is growing, profitable and acting in
accordance with parents’ directives and applicable tax laws.

Again, the record does not support the district court’s findings that Peter had not
provided “even minimal support” to show impropriety and that Peter’s review of the
business records “did not reveal an[y] waste, fraud, or misappropriation.” Peter submitted
into evidence the beneficial-gains summary, which categorized respondents’ alleged
24
improper uses of Retreat Lodge’s funds to pay for personal expenses. Peter then examined
the witnesses using this beneficial-gains summary, which elicited Shaun’s admission that
she occasionally made personal purchases with Retreat Lodge’s funds. And w hen asked
about co-mingling the Trust’s assets with his personal assets, John expressed that “it’s
tough to divide,” especially during the summer, because operating Retreat Lodge is “a
lifestyle.” Further, when asked about the expenses listed in the beneficial-gains summary,
the accountant testified that the expenses were “necessary and ordinary business
expense[s]” or “de minimis employee gift[s].” But, in doing so, the accountant admitted
that he was applying IRS tax standards—not trust law. 9 Accordingly, the record evidence
does not support the district court’s findings that Peter had not provided “even minimal
support” to show impropriety and that Peter’s review of the business records “did not reveal
an[y] waste, fraud, or misappropriation.”
3. Exclusion from Retreat Lodge
Peter also disputes the district court’s broad findings regarding the lack of
impropriety on the ground that he has been excluded from the Retreat Lodge property. In
this regard, we also agree with Peter that the district court’s finding that “Peter . . . has

9 The IRS tax standards provide that a company “shall” exclude “de minimis fringe” from
gross income. I.R.C. § 132(a)(4) (2018); see also 26 C.F.R. § 1.132 -6(e) (2024) (listing
examples of “de minimis fringe benefits”). The duty of loyalty does not include this kind
of exception to the actions of a trustee. Bremer, 2 N.W.3d at 320 (“[T]here is no ‘de
minimis defense’ to whether self-dealing violates the duty of loyalty.”). The IRS tax
standards also permit a company to deduct certain “ordinary and necessary” business
expenses. See I.R.C. § 162(a) (2018). But an expense satisfying the standard for deduction
is not the same as a trustee prudently administering the trust. “A trustee shall administer
the trust as a prudent person would, by considering the purposes, terms, and distribution
requirements of the trust and all relevant circumstances.” Minn. Stat. § 501C.0804.
25
never specifically alleged improprieties . . . in Retreat Lodge’s operations” lacks support
in the record. As explained above, trustees must “manage the trust with equal consideration
for the interests of all beneficiaries.” Van Dusen, 834 N.W.2d at 521 (quotation omitted).
And all the parties agree that Peter has been fully prevented from using Retreat Lodge’s
property for years.
4. Conclusion – Factual Findings
For these reasons, we conclude the district court made clearly erroneous findings.
Even when viewed in the light most favorable to the verdict, the district court’s findings
regarding Peter’s access to Retreat Lodge’s financial information and respondents’ alleged
improprieties are not supported by the record evidence. On this basis, the district court
abused its discretion when it denied Peter’s motion for a new trial.
C. Conclusion
In sum, for the reasons stated above, we conclude the district court abused its
discretion when it denied Peter’s motion for a new trial. Accordingly, we reverse and
remand for further proceedings not inconsistent with this opinion. On remand, the district
court shall have discretion to make amended findings of fact on the existing record or to
reopen the record. If the district court amends its findings of fact on the existing record, it
shall make any necessary adjustment to its conclusions of law and judgment. If the district
court reopens the record, it shall have discretion to proceed as it sees fit, up to and including
a new trial—in whole or in part—as it deems necessary. See Minn. R. Civ. P. 59.01. If
the district court reopens the record, it shall make any necessary adjustments to its findings
of fact, conclusions of law, and judgment.
26
II.
Peter next challenges the district court’s decision to impose sanctions under Minn.
Stat. § 549.211, subd. 2 (2024). 10 We review the district court’s decision to impose
sanctions for an abuse of discretion. Cole v. Star Trib., 581 N.W.2d 364, 370 (Minn. App.
1998). As set forth above, “[a] district court abuses its discretion when its decision is based
on an erroneous view of the law or is inconsistent with the facts in the record.” Bremer,
2 N.W.3d at 319 (quotation omitted).
An attorney presenting pleadings or motion papers to the district court certifies that:
(1) the claims are “not being presented for any improper purpose, such as” harassment;
(2) the claims are supported “by existing law or by a nonfrivolous argument” to change the
law; (3) “the allegations and other factual contentions have evidentiary support or . . . are
likely to” after further investigation or discovery; and (4) “the denials of factual contentions
are warranted on the evidence or . . . reasonable based on a lack of information or belief.”
Minn. Stat. § 549.211, subd. 2; Minn. R. Civ. P. 11.02. Sanctions are not appropriate where
a party had “an objectively reasonable basis for pursuing a factual or legal claim.” Uselman
v. Uselman, 464 N.W.2d 130, 142-43 (Minn. 1990).
A district court may impose sanctions against an attorney or a party who violates
the pleading requirements. Minn. Stat. § 549.211, subd. 3; Minn. R. Civ. P. 11.03. “The

10 The district court cited Minn. Stat. § 549.211, subd. 2 , in its order to show cause.
Accordingly, it appears to have awarded sanctions under Minn. Stat. § 549.211, subd. 2,
although it does not cite that statute or Minn. R. Civ. P. 11 in its sanctions order. But the
relevant provisions of Minn. Stat. § 549.211 (2024) and rule 11 are, at least for our purposes
here, identical. Accordingly, some of the case law referenced in this section discusses
sanctions in the context of rule 11.
27
[district] court should impose the least severe sanction necessary to” deter the offending
actions “and may also consider the presence or absence of bad faith in determining an
appropriate sanction.” Uselman, 464 N.W.2d at 145. The purpose of a sanctions award
“is to penalize only the filing of clearly meritless claims, not the advancement of losing but
arguably merited claims or theories.” In re Adoption of T.A.M., 791 N.W.2d 573, 579
(Minn. App. 2010).
We conclude the district court abused its discretion when it sanctioned Peter on the
ground that he brought frivolous claims. Primarily, the district court found Peter’s claims
were frivolous because of his prior lawsuits against respondents. But, unlike the present
action, Peter did not bring any of the past lawsuits in his capacity as a beneficiary. In 2016,
Peter brought an action against respondents in his capacity as a co-trustee. And in 2019,
he brought his claim in his capacity as a shareholder. Further, respondents filed a
dispositive motion earlier in the proceedings, making a substantially similar argument—
res judicata precluded Peter’s claims because of the prior lawsuits. The district court
denied that motion precisely because Peter brought this lawsuit in his role as a beneficiary.
See Collins v. Waconia Dodge, Inc., 793 N.W.2d 142, 145 (Minn. App. 2011) (quotation
omitted), rev. denied (Minn. Mar. 15, 2011) (“A party who survives [a dispositive motion]
with the major claims intact should not be subject to sanctions after trial predicated on these
surviving claims.”). In addition, even if Peter ultimately loses his claims, for the reasons
highlighted above, Peter advanced “arguably merited claims or theories” regarding
respondents’ alleged breaches of fiduciary duties. T.A.M., 791 N.W.2d at 579.
28
Accordingly, we conclude that the district court abused its discretion when it
imposed sanctions because Peter’s claims were not frivolous. We therefore reverse the
district court’s sanctions order.
III.
Peter finally challenges the district court’s decision to deny his motion to remove
the judge on the basis that the record shows that the judge appeared to be biased against
Peter. We review the district court’s decision to deny a motion to remove for an abuse of
discretion. Haefele v. Haefele, 621 N.W.2d 758, 766 (Minn. App. 2001), rev. denied
(Minn. Feb. 21, 2001). Again, “[a] district court abuses its discretion when its decision is
based on an erroneous view of the law or is inconsistent with the facts in the record.”
Bremer, 2 N.W.3d at 319 (quotation omitted).
A judge who has presided at a motion or other proceeding “may not be removed
except upon an affirmative showing that the judge . . . is disqualified under the Code of
Judicial Conduct.” Minn. R. Civ. P. 63.03. “A judge shall disqualify [themself] in any
proceeding in which the judge’s impartiality might reasonably be questioned . . . .” Minn.
Code Jud. Conduct Rule 2.11(A). This includes circumstances wherein “[t]he judge has a
personal bias or prejudice concerning a party or a party’s lawyer.” Id. (A)(1). “A judge
should disclose on the record information that the judge believes the parties or their lawyers
might reasonably consider relevant to a possible motion for disqualification, even if the
judge believes there is no basis for disqualification.” Id. cmt. 5. We presume that a judge
properly discharged their duties. Hannon v. State, 752 N.W.2d 518, 522 (Minn. 2008).
29
Peter first argues the district court abused its discretion when it denied the motion
on the basis that the judge, and their spouse, were “friends” on social media with John’s
counsel. We find our recent nonprecedential decision helpful to resolving this question.
See Fideldy v. Schumacher, No. A22-1795, 2023 WL 4772009, at *1 (Minn. App. July 25,
2023), rev. denied (Minn. Oct. 25, 2023).11
In Fideldy, the appellant “posted comments on social media” about the respondent
and the respondent’s supervisor, prompting the respondent to petition for a harassment
restraining order (HRO). Id. The district court judge made comments at the evidentiary
hearing indicating that they knew two people mentioned in the posted comments but
granted the HRO. Id. at *1-2. The appellant subsequently filed a motion to remove the
district court judge, arguing that they failed to disclose a conflict of interest. Id. at *1. The
district court judge denied the appellant’s motion. Id. On appeal, we determined that the
district court judge did not abuse their discretion when they denied the motion because the
record supported that the district court judge had not shown bias. Id. at *2. We reasoned
that “just because the judge knew those two individuals [did] not mean that the judge had
a bias against [the appellant].” Id. We also noted that district court judges are “bound to
know” the many people they interact with in their courtrooms, including attorneys, but that
we nevertheless presume that judges have discharged their duties properly. Id.
We conclude this case is analogous to Fideldy. Like Fideldy, just because the judge
may know John’s counsel does not mean that the judge had bias against Peter. And in

11 This case is nonprecedential and, therefore, not binding. We cite nonprecedential cases
as persuasive authority only. See Minn. R. Civ. App. P. 136.01, subd. 1(c).
30
smaller legal communities in particular, judges are “bound to know” the attorneys that
frequently appear in their courtrooms. Id. But even so, at the show-cause hearing, John’s
counsel asserted that she does not know the judge personally, despite their social- media
connection. The screenshots Peter included in support of his motion do not contradict this
statement, as John’s counsel’s social-media page indicated that the judge and their spouse
were but two of her 2,300 total social-media “friends.” The record therefore supports the
district court’s determination that Peter failed to show bias.
Peter argues second that the outcome of the bench trial and the judge’s tone in orders
following their decision show an appearance of bias. But prior adverse rulings do not
constitute bias. See Olson v. Olson, 392 N.W.2d 338, 341 (Minn. App. 1986). And Peter
does not specifically point to anything in the record to support his contention that the judge
showed “hostility” as opposed to simply disagreeing with his position. See Schoepke v.
Alexander Smith & Sons Carpet Co., 187 N.W.2d 133, 135 (Minn. 1971) (“An assignment
of error based on mere assertion and not supported by any argument or authorities in
appellant’s brief is waived and will not be considered on appeal unless prejudicial error is
obvious on mere inspection.”).
For these reasons, we conclude the judge did not abuse their discretion when they
denied the motion to remove.
Affirmed in part, reversed in part, and remanded.