Minneapolis, Minn. (September 11, 2025) - Minneapolis Partner Larina Alton obtained an appellate reversal for her client in a precedent-setting case before the Minnesota Supreme Court. The case, Doug Hoskin v. Josh Krsnak, et al., number A23-1275, involved complex allegations of economic duress and fiduciary abuse between longtime business partners amid the financial turmoil of the COVID-19 pandemic. When Ms. Alton's client, Hoskin, was allegedly coerced into transferring his assets to Krsnak under threat of financial ruin, his efforts to hold his partner accountable were initially blocked by courts that ruled his claims were barred by the very contractual releases he claimed he was forced to execute against his will.
Specifically, during the COVID-19 pandemic, their company, Interstate Parking Company, LLC (IPC), needed a capital loan to survive. Krsnak, who was on the board of the bank offering the loan, allegedly told Hoskin he would "get it taken care of." Krsnak then threatened that, if Hoskin did not sell Hoskin's assets to him on the terms and prices he required, Krsnak would undermine the loan. He threatened: "I'm not going to get the Main Street [Loan] unless we get this done, Doug. If you don't sell to me along the lines and prices that we are discussing now, IPC would be in a world of hurt if they don't get that loan." Feeling he had "no choice," Hoskin signed the five transfer agreements "under duress."
Hoskin's complaint included ten counts, including fraudulent nondisclosure, fraudulent misrepresentation, breach of fiduciary duty, and a request for a declaratory judgment that the agreements were unenforceable due to duress. Krsnak and JT Manager moved to dismiss the complaint, citing releases in the transfer agreements that they argued barred Hoskin's claims. The district court dismissed the complaint and awarded costs and attorney fees to Krsnak and JT Manager. The court of appeals affirmed, concluding that the releases barred Hoskin's claims because his complaint did not include facts sufficient to invalidate the releases.
At the urging of Ms. Alton, the Minnesota Supreme Court reversed the lower courts' decisions. For the first time in the state of Minnesota, the Minnesota Supreme Court held that claims of economic duress – where the harm pleaded to have been caused by a threat is financial – are not categorically barred as a defense. The court also held that a plaintiff's complaint does not need to anticipate and rebut a potential affirmative defense to survive a motion to dismiss. The court noted that this aligns with Minnesota's "notice-pleading" standard, which requires only a "short and plain statement of the claim". The court specifically overruled older cases, Zimmermann v. Benz and Wallner v. Schmitz, that were based on an outdated "code-pleading" standard and required a heightened pleading burden. Dismissal is only appropriate if the allegations in the complaint, when construed in the plaintiff's favor, "establish an unrebuttable defense." In this case, Hoskin did not "plead himself out of court" because his complaint, which alleges duress and fraud, claimed that the transfer agreements and the releases they contained were not voluntarily executed.
The court also reversed the award of costs and attorney fees to Krsnak and JT Manager.