Kruger v. Goossen, 959 N.W.2d 847

Background

Thomas Kruger and Sally Goossen co-owned North Dakota Safety Professionals, LLC (NDSP); a written August 13, 2013 document listed Kruger 55% / Goossen 45%.
Beginning with the 2013 tax year, NDSP K-1s and some tax paperwork showed a 50/50 income allocation; NDSP’s later accountant prepared K-1s reflecting equal shares based on prior returns.
Goossen claimed a 50% ownership interest and alleged distributions and checks written for her benefit were properly allocated to her draws; Kruger alleged he owned 55%, accused Goossen of conversion, and sought dissolution and accounting.
The parties stipulated three trial issues: (1) ownership percentages, (2) equality of draws and any balancing payment, and (3) valuation date/value of assets.
The district court found NDSP dissolved December 31, 2016, held ownership was 55% Kruger / 45% Goossen, evaluated disputed expense classifications, and ordered Goossen to pay Kruger to equalize draws.
On appeal Goossen challenged the ownership ruling, argued tax documents established a 50/50 transfer and estoppel, and contested the district court’s classification of $72,450 of Wyoming-related expenses as NDSP business expenses.

Issues

Issue	Plaintiff's Argument (Kruger)	Defendant's Argument (Goossen)	Held
1) Correct ownership percentage	Kruger asserted he never transferred any interest after Aug. 13, 2013 and retained 55%	Goossen argued parties agreed (and tax records show) 50/50 ownership so she owns 50%	Court found 55% Kruger / 45% Goossen based on the unambiguous Aug. 13, 2013 document and witness credibility
2) Do tax returns/K-1s effect a transfer of the extra 5%?	Tax K-1s were mistakes and do not evidence an intent or legal transfer of membership interest	K-1s and tax filings reflect equal ownership and should be treated as evidence of the transfer	Court held the K-1s alone did not show a valid transfer; tax returns were insufficient to effect a change in membership without evidence of intent and transfer documentation
3) Are the Wyoming-labeled expenses business expenses or personal draws?	Kruger maintained the "Tom Training Materials," "Office Supplies WY," and "WY Office Set Up" items were NDSP business expenses and should not be counted as his personal draws	Goossen contended those expenses were personal/Wyoming-office expenses and should be counted against Kruger’s draws	Court found $72,450 of those expenses were legitimate NDSP business expenses (deducted on taxes) and excluded them from Kruger’s draw total
4) Equitable estoppel as to ownership and distributions	Kruger argued no estoppel and the issue was not litigated below	Goossen argued Kruger is estopped from asserting less than 50% ownership due to K-1s and conduct	Court declined to consider estoppel on appeal because it was not raised before the district court (issue forfeited)

Key Cases Cited

Titan Machinery, Inc. v. Renewable Res., LLC, 950 N.W.2d 149 (N.D. 2020) (bench-trial findings reviewed for clear error; conclusions of law fully reviewable)
B.J. Kadrmas, Inc. v. Oxbow Energy, LLC, 727 N.W.2d 270 (N.D. 2007) (trier of fact determines contract existence and credibility; appellate court will not reweigh evidence)
Knop v. Knop, 830 S.E.2d 723 (Va. 2019) (statements on tax returns do not constitute delivery sufficient to transfer certificated shares for gift purposes)
Larson v. Midland Hosp. Supply, Inc., 891 N.W.2d 364 (N.D. 2016) (tax documents may be admissible evidence of ownership change but are not dispositive alone)
In re Estate of Finstrom, 950 N.W.2d 401 (N.D. 2020) (appellate courts defer to trial court credibility determinations)