Knox v. Impact MHC Management, LLC

Background

Marcie Knox, Cheryl Skaj, Janet Eich, and Bradley Bandas, who are tenants of the Sartell Mobile Home Park, brought a putative class action under Minnesota law. They alleged that the park defendants failed to maintain the sewage system, charged residents inaccurately for water and sewage use, and pressured residents to sign new leases containing allegedly illegal and oppressive terms. The defendants removed the case from Minnesota state court under the Class Action Fairness Act.

David Reynolds and Frank Rolfe moved to dismiss all claims against them for lack of personal jurisdiction and failure to state a claim. The Impact Defendants moved to dismiss various claims. The court applied the standards for personal jurisdiction, failure to state a claim, and the heightened pleading requirement for fraud claims.

Reynolds and Rolfe

The court held that the complaint did not plead with enough detail how, when, or through what communications Reynolds and Rolfe personally participated in the alleged lease-related fraud. The complaint also did not provide facts supporting alter-ego liability; alleging that the defendants used several limited liability companies showed only interconnectedness, which was insufficient by itself.

The court concluded that the fiduciary shield doctrine barred personal jurisdiction over Reynolds and Rolfe. It also denied the plaintiffs’ request for jurisdictional discovery because they had not shown existing connections between Reynolds and Rolfe and the alleged misconduct. Reynolds and Rolfe’s motion to dismiss was granted. Counts 1 and 2 against them were dismissed without prejudice.

Impact Defendants’ Motion

The Impact Defendants’ motion was granted in part and denied in part. The court accepted the plaintiffs’ concession that Count 4 should be dismissed against Impact MHC and that the complaint did not adequately plead a duty-to-warn theory. The court allowed the sewage-related breach-of-contract claim to proceed based on alleged violations of the implied covenants of habitability. It held that the six-year limitations period applied and dismissed Counts 4 through 7 without prejudice to the extent they sought liability for conduct outside that period.

The court allowed the Minnesota Environmental Rights Act claim to proceed, but ruled that Minnesota Rule 4630.0800, subpart 2, could not serve as an environmental-quality standard under the specific MERA provision relied on by the plaintiffs. The court rejected the argument that the claim was moot because the Impact Defendants no longer owned or operated the park, explaining that continuing sewage problems could support prospective remediation. The court also noted that any future injunction would need to avoid directly conflicting with the Minnesota Pollution Control Agency settlement concerning the September 2021 sewage backup at Knox’s property.

The court dismissed the negligence claims of Skaj, Eich, and Bandas without prejudice because they did not allege particularized injuries. Knox’s negligence claim could proceed based on alleged violations involving safe water supply, sewage backflow, and groundwater pollution, but not based on the riser-pipe-height regulations or the statutory notification requirement to the Minnesota Pollution Control Agency and affected members of the public. The court allowed the private-nuisance claims of all four plaintiffs to proceed, finding that the alleged recurring sewage problems were sufficient at the pleading stage. It also allowed all four plaintiffs’ claims under Minnesota manufactured-home-park standards to proceed, including the claims of Skaj, Eich, and Bandas based on threatened injury.

Utility Billing and Lease Claims

The court dismissed without prejudice the plaintiffs’ request for injunctive relief against the Impact Defendants under Count 3 because they no longer owned the park and therefore lacked the authority to remove the meters or establish a new billing system. The utility-billing claim otherwise remained listed as proceeding against the park defendants.

The court dismissed Knox’s and Eich’s fraud claims without prejudice because they did not sign the new leases and conceded that they could not show reliance. The fraud claims of Skaj and Bandas against the Impact Defendants remained. The court held that the requested declaration concerning the enforceability of Skaj’s and Bandas’s new leases was an appropriate form of relief.

The Minnesota Deceptive Trade Practices Act claim was dismissed without prejudice because injunctive relief was moot against the former park owners, and the named plaintiffs had not alleged that any of them qualified for the statute’s additional penalty for harm to a senior citizen or disabled person. Knox’s Minnesota Consumer Fraud Act claim remained because she alleged that she sought legal advice in response to the defendants’ statements, which could constitute an injury. Eich’s Consumer Fraud Act claim was dismissed without prejudice because she did not allege how she was injured.

Finally, the court dismissed Knox’s and Eich’s claims under Minnesota’s manufactured-home-park rule statute without prejudice because they did not sign the new leases and therefore did not allege that the new lease terms were being enforced against them. Skaj’s and Bandas’s claims under that statute remained.

Disposition

The court granted Reynolds and Rolfe’s motion to dismiss. It granted in part and denied in part the Impact Defendants’ motion to dismiss. The dismissed claims and theories were dismissed without prejudice, while the remaining claims could proceed as identified in the court’s chart and order. Judge Laura M. Provinzino signed the order on May 2, 2025.