919 N.W.2d 831
Minn. Ct. App.2018Background
- ACC (judgment creditor) provided custom woodwork to LSI; LSI breached and ACC obtained a $444,646.48 judgment against LSI after LSI failed to defend.
- Cohen and Chaffee (CoBe defendants) held loan rights enabling them to seek a receivership; a general receiver (BGA) was appointed over LSI and given broad powers under Minn. Stat. § 576.29 and the court's order.
- The receiver notified creditors (including ACC), sold LSI assets (some to Stevens), filed a final report, and the court approved final distribution and discharged the receiver; ACC did not object to or appeal the final report.
- ACC later sued the CoBe defendants seeking to pierce LSI’s corporate veil to reach their assets for ACC’s LSI judgment; the district court granted summary judgment to the CoBe defendants.
- ACC appealed, arguing (1) the receiver lacked authority to assert or settle a creditor’s veil-piercing claim because that claim belonged to ACC, and (2) its later suit was not an impermissible collateral attack on the receivership.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a court-appointed receiver in a general receivership may assert or settle a creditor’s veil-piercing claims that relate to receivership property | ACC: Veil-piercing claim belongs to ACC, not LSI; receiver lacked authority to assert/settle it | CoBe: Receivership statute and court order authorize receiver to pursue claims relating to receivership property, including veil-piercing against insiders | Held: Receiver has authority under Minn. Stat. § 576.29 and the court’s order to assert creditor veil-piercing claims that relate to receivership property |
| Whether ACC’s post-receivership veil-piercing suit is an improper collateral attack on the receivership | ACC: Suit is against CoBe personally and not an attack on the receivership orders | CoBe: ACC received notice, appeared, could have objected or asked receiver to pursue relief; failure to do so makes later suit a collateral attack | Held: ACC’s claim is an impermissible collateral attack because ACC participated/received notice and did not object or appeal the receiver’s final report |
Key Cases Cited
- Snyder Elec. Co. v. Fleming, 305 N.W.2d 863 (Minn. 1981) (discussing when creditors must proceed through a receiver if assets exist)
- Equity Trust Co. Custodian ex rel. Eisenmenger IRA v. Cole, 766 N.W.2d 334 (Minn. Ct. App. 2009) (receiver may expand receivership and pursue assets held by insiders)
- Hoyt Props., Inc. v. Prod. Res. Grp., 736 N.W.2d 313 (Minn. 2007) (piercing corporate veil is equitable remedy to prevent injustice)
- Linn v. Blue Cross & Blue Shield of Minn., 905 N.W.2d 497 (Minn. 2018) (standard of review for summary judgment)
- Greer v. Prof’l Fiduciary, Inc., 792 N.W.2d 120 (Minn. Ct. App. 2010) (claims that effectively challenge finalized probate/guardian orders are collateral attacks)