This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480A.08, subd. 3 (2000).






Dennis H. Herstein,





Glass Allee, Inc.,



Commissioner of Economic Security,



Filed ­­­June 19, 2001


Poritsky, Judge*


Department of Economic Security

Agency File No. 425500


Dennis H. Herstein, 516 Clover Lane, Golden Valley, MN 55422-5105 (pro se relator)


Glass Allee, Inc., 8014 Highway 55, PMB 143, Golden Valley, MN  55427 (respondent)


Kent E. Todd, Department of Economic Security, 390 North Robert Street, St. Paul, MN 55101 (for respondent Commissioner of Economic Security)


            Considered and decided by Crippen, Presiding Judge, Harten, Judge, and Poritsky, Judge.

U N P U B L I S H E D   O P I N I O N


            Relator Dennis H. Herstein challenges two separate rulings made by the representative of the Commissioner of Economic Security.  Herstein claims that the commissioner’s representative erred in (1) determining that Herstein was disqualified from receiving benefits because he voluntarily quit his former employment, and (2) determining that Herstein failed to file a timely appeal of an administrative decision.  We affirm as to the first issue and, consequently, do not reach the merits of the second issue.


Herstein owned and operated a convenience store located on leased property near a Minneapolis skyway.  The business, called Glass Allee, Inc., was organized as a closely-held S corporation from which Herstein received both wages and profit distributions.  On September 2, 1999, Herstein sold his business and his employment ended.

Herstein applied to receive reemployment insurance benefits from the Minnesota Department of Economic Security.  He received benefits from September 25, 1999, until January 15, 2000, in the amount of $331 per week.  On April 18, 2000, the department mailed Herstein a determination of overpayment in the amount of $5,627.  The stated reasons for this decision were that Herstein had voluntarily quit his previous job, that he had done so without “good reason,” and that only those applicants with a “good reason” for quitting were entitled to benefits.  The department based this decision on an April 2000 interview during which Herstein purportedly stated that he sold his business due to concerns for his daughter’s health rather than the financial condition of his business.

On April 19, 2000, the department sent Herstein a notice of redetermination, this time indicating that he had been entitled to only $241 per month in benefits rather than $331 per month.  The stated reason for this decision was that a recalculation of Herstein’s prior income indicated that he had been entitled to a lesser amount of weekly benefits.

On April 27, 2000, Herstein sent a handwritten response to the department, stating that he had sold the business because of financial reasons and that “[t]his [l]etter constitutes a [f]ormal [a]ppeal.”  Herstein’s April 27 response addressed only the reasons why he sold his business.

            On June 9, 2000, Herstein appeared at a hearing before an unemployment law judge (ULJ) pursuant to the April 18 determination.  The issues at the hearing were (1) whether Herstein quit employment because of a good reason caused by the employer and (2) whether Herstein had been overpaid benefits because of error.  At the hearing, Herstein stated that he sold Glass Allee because business was slow due to lack of tenants occupying the building in which his business was located.  He stated that he had difficulty paying bills and was forced to borrow money from certain of his family members to keep the business afloat.  He also stated that had he not sold the business, the inevitable result would have been bankruptcy.

            The ULJ found that, based on the above-stated testimony, Herstein “did not have any meaningful free-will choice to remain in business.”  The ULJ concluded that Herstein had a “good reason” for quitting his prior position as manager of Glass Allee, Inc.  Accordingly, the ULJ also held that Herstein had not been overpaid benefits from September 25, 1999, through January 15, 2000.

On July 7, 2000, the department sent Herstein another notice of overpayment in the amount of $2,036, based on the April 19 redetermination notice.  Herstein challenged this notice of overpayment by sending a letter received by the department on July 13.  On August 18, 2000, Herstein appeared at a second hearing before a ULJ, pursuant to the April 19 notice, where the main issue was whether the department correctly determined the weekly benefit amount paid to Herstein.  The ULJ determined that Herstein earned $7,775.42 in wages and $9,424.58 in profit distributions from his business during 1998.  Based on this information, and noting that the commissioner failed to send a representative to provide additional information, the ULJ determined that the correct weekly benefit amount was $331 and that Herstein was not overpaid during the relevant period.  The ULJ also concluded that Herstein’s original letter in response to the April 18 communication constituted a timely appeal to the redetermination.

In separate appeals, the commissioner’s representative reversed the decisions of both ULJs.  In the first appeal, the representative noted that the policy of the department was that when an owner of a business sells his business, the owner is not entitled to receive unemployment benefits unless (1) the owner can establish that going out of business was the most reasonable course of action, (2) the business will not continue to operate under new ownership, and (3) the business owner files a notification of business termination with the department.  The commissioner’s representative found that Herstein’s business continued under a new name after Herstein sold it.  The commissioner’s representative also determined that Herstein sold the business for personal and financial reasons, not because of imminent insolvency of the business itself.  Thus, the commissioner’s representative reinstated the original determination that Herstein must repay $5,627 to the department, the total of the overpayments received by Herstein.

In the second appeal, the commissioner’s representative determined that Herstein failed to file a timely appeal of the department’s redetermination of April 19, 2000, and therefore the department’s redetermination should be reinstated.  Appeals to this court followed.


This court reviews the decision of the commissioner’s representative, not that of the ULJ.  Tuff v. Knitcraft Corp., 526 N.W.2d 50, 51 (Minn. 1995).  The standard of review is whether there is reasonable support in the evidence to sustain decisions of the commissioner or the commissioner’s representative, rather than the decision of the ULJ.  Id. at 51.  While the commissioner’s factual findings are viewed in light most favorable to the decision below, the commissioner’s conclusions of law are not binding on a reviewing court.  Soussi v. Blue & White Serv. Corp., 498 N.W.2d 316, 317-18 (Minn. App. 1993).

1.         Voluntary Quit

The question as to whether an employee voluntarily quit or was discharged is one of fact, and the representative’s finding on this issue will not be reversed if the evidence in the record reasonably tends to support it.  Gonsior v. Alternative Staffing, Inc., 390 N.W.2d 801, 805 (Minn. App. 1986), review denied (Minn. Aug. 27, 1986).

Under the applicable statute, an employee is said to have “quit” his employment “when the decision to end the employment was, at the time the employment ended, the employee’s.”  Minn. Stat. § 268.095, subd. 2 (2000).  In general, “[a]n applicant who quit employment shall be disqualified from all unemployment benefits.” Id., subd. 1 (2000).  One exception to the general rule occurs when “the applicant quit the employment because of a good reason caused by the employer.”  Id., subd. 1(1).  After determining that an otherwise eligible employee is disqualified from benefits because of a “quit,” the employee bears the burden of proving that his employment was terminated for a good reason attributable to the employer.  McDonnell v. Anytime Temporaries, 349 N.W.2d 339, 341 (Minn. App. 1984).  Here, there is no dispute that Herstein voluntarily ended his employment.  Thus, the burden shifts to him to show that the “quit” was for a “good reason.”

In Erb v. Comm’r of Econ. Sec., 601 N.W.2d 716 (Minn. App. 1999), the relator owned and managed her own business from March 1991 until August 1997, incurring approximately $300,000 in debts during that period.  Id. at 717.  The relator’s accountant advised her to sell the business in order to avoid bankruptcy.  Id.  Following this advice, the relator terminated her own employment with the company and sold it.  Id.  Thereafter, the relator applied for and received reemployment benefits from the department.  Id.  Later, however, the department determined that the relator was disqualified from receiving benefits and would have to repay the benefits previously received.  Id.  We held that the relator voluntarily terminated her position and she did not demonstrate “good cause” for doing so despite the potential bankruptcy.  Id. at 719.

            The present case is similar to Erb in many respects.  Here, as in Erb, Herstein may have had some financial difficulties in running his business.  And as in Erb, Herstein sold his business to a new owner who continued to operate it under a new name.  The commissioner’s findings that Herstein voluntarily made a choice to sell his business are reasonably supported by evidence in the record, including (1) Hersteins’s statement he sold the business due to a concern for his daughter’s health; (2) the business was not being foreclosed and there were no liens; and (3) the fact that new owner continued the business.  We conclude that the commissioner’s representative was correct in ruling that Herstein failed to sustain his burden that he quit for a good reason caused by his employer.  Thus, the commissioner’s representative correctly held that Herstein must repay benefits overpaid by the department.

2.         Timely Appeal

Because of our decision reinstating the department’s original determination that Herstein was not entitled to any benefits during the relevant period, the question concerning the amount of benefits is moot.  Thus, we need not reach the issue as to whether Herstein filed a timely appeal of the department’s second redetermination.



* Retired judge of the district court, serving as judge of the Minnesota Court of Appeals by appointment pursuant to Minn. Const. art. VI, § 10.