*1 MEYER, (concurring in part, Justice
dissenting part). join
I concurrence and dissent of Hanson.
Justice BOLANDER, individually and as
trustee of the David C. Bolander 1994 (A04- Trust, Respondent
Irrevocable
2003, A04-2031), Appellant (A04-2117), Plunkett, guardian Patrick ad litem
J. plaintiff Katherine intervenors
Bolander, al., Respondent, et BOLANDER, Appellants al.,
David et (A04-
(A04-2003), Respondents
2031, A04-2117), Co., al.,
Carl Bolander & Sons et (A04-2003,
Respondents A04-
2117), (A04-2031), Appellants Bolander, al.,
Susan et defendant
intervenors, Respondents. A04-2003, A04-2031,
Nos. A04-2117. Minnesota.
Court of Appeals
Aug. *5 Minnesota,
apolis, Bolander & Carl Co., al. Sons et Bethel, II, Christopher E. Charles Associates, P.A., Heinze, Bethel & St. Paul, Minnesota, for defendant interve- nors. HUDSON,
Considered and decided KLAPHAKE, Judge; Judge; Presiding MINGE, Judge. OPINION HUDSON, Judge. appeal out of a lawsuit
This arises parents, David against Bolander his Bolander, Dorothy against & family-owned company, Carl Bolander (CB&S).1 presi- Bruce was the Sons Co. operating chief of CB & S dent and officer May from 1994 until late when Following employment was terminated. *6 termination, David, Bruce sued Doro- CB&S, thy, alleging op- and shareholder (Count I); fiduciary pression breach of (Count II); prom- duty/breach contract (Count III); misrepre- issory estoppel and (Count IV). sentation Schultz, Cortney Sylvester, G. David T. Druckrey,
Nicole J. Halleland Lewis Nilan coun- denied Bruce’s claims and Minnesota, P.A., Johnson, Minneapolis, & (Count I); terclaimed, alleging conversion Bolander, individually and as (Count for Bruce II); breach breach of contract David Bolander 1994 trustee of the C. (Count III); loyalty fiduciary duty/duty of Trust. (Count Irrevocable accounting and trust constructive (Count V); IV); and liability civil for theft Blaney, & James E. Moore Costello VI). (Count receiving property stolen Hart, Paul, Minnesota, P.L.L.P., for St. claims Dorothy and denied Bruce’s David plaintiff intervenors. equitable un- and counterclaimed for relief Wackman, Rooney, Patrick John J. J. § vio- der 302A.467 for Bruce’s Minn.Stat. Bennett, Miller, LLP, Marcia K. Rider provisions lation of various the Minneso- Minnesota, David Bolan- Minneapolis, for Act, including Corporation ta Business der, al. et (Count I); alleging §§ 302A.251 and .361 (Count II); Ostlund, Gullickson, duty seek- Randy fiduciary breach of Richard T. P.A., §§ Baer, under 501B.16 and Anthony ing Minne- relief Minn.Stat. & Ostlund parties parties first No disre- significant to the their names. most of the Because Bolander, clarity any party usage. this case the name for spect share is intended to this frequently and ease reference we will refer (Count III); $388,160, interest, costs, plus .21 reformation or modifi- and disburse- ments, fees; (3) cation of irrevocable trust -witha decla- including attorney rights parties’ ration of the under dismissing all prejudice. other claims with agreement and the irrevocable shareholder Bruce moved for amended and addition- (Count IV). trust findings al law, of fact and conclusions of The moved the district court for and, alternatively, for a new trial. CB&S 27, summary judgment. September On judgment moved for notwithstanding the summary granted the district court verdict, and, findings, amended alterna- David, Dorothy, judgment for and CB&S tively, a new Dorothy trial. David and respect specific to Bruce’s demand for for findings moved amended or a new trial. performance provi- of the recapitalization August 27, On court district sion in the shareholder posttrial entered order in which it denied claims of breach of the employ- Bruce’s all posttrial motions all par- submitted contract, ment misrepresentation, ties, $530,583.32 granted but attorney for promissory estoppel. Additionally, $40,000 fees to Bruce attorney for fees granted for district court Bruce’s motion 8, 2004, On September judgment CB&S. summary judgment on CB&S’s claims respect was entered with to the district against him for theft and conversion. 7, 2003, January court’s orders of March 7, 2003, Subsequently, January and August 2004. David and September district court amended its CB&S, Dorothy, appealed. and Bruce all to allow to pursue order (the guardian guardian) ad litem shareholder-oppression claim under Minn. minor children submitted an ap- Thereafter, § Stat. 302A.751. the matter pellate brief response David Dor- a jury January was tried to from 6 to othy’s appeal. This consolidated the 2003, on Bruce’s breach-of-employment- appeals. contract claims and CB&S’s counterclaim Bruce; repayment appeal, funds advanced to On jury and to court without a district court’s were erro- instructions *7 (2) 31, 2003, July remaining neous; from on the by the district court erred rul- claims, employment ing claims. On Bruce’s that pre- extrinsic evidence could be jury the special finding returned a verdict of sented show extension a contract that (3) employment agreement required writing; the had to be in been modifications the and by extended that Bruce’s there is support insufficient evidence to employment jury’s was terminated without “due the verdict that Bruce was terminat- cause,” term in employment as that was defined the ed without cause under the (4) trials, agreement. the Following agreement; by the district court erred concluding March court alleged district entered extension of fact, law, findings employment of of conclusions and was not barred (1) (5) judgment frauds; order grant- for as follows: statute of and dis- ing in favor Bruce judgment against by awarding attorney of and trict court erred fees breaeh-of-employment- Dorothy argue CB&S on Bruce’s to Bruce. and David (1) $1,368,000, contract claim the amount of dismissing the district court erred interest, costs, plus disbursements, § in- and their claims under Minn.Stat. 302A.467 (2) fees; (2) attorney cluding granting judg- fiduciary duty; and breach of and against ment in of distributing favor CB & S and Bruce not trust assets to Bruce siblings breach of contract in the of in separate, equal amount and his three ambiguous, 4.02 the trust we conclude capitalization, under article of shares by granting that the district court erred summary judgment dismissing Bruce’s argues that Further, shareholder-oppression claim. (1) him denying relief under erred that the district court did not we conclude § for violation his Minn.Stat. 302A.751 by refusing its to reopen abuse discretion including minority-shareholder rights, vio- record to consider new evidence. We (2) agreement; employment lations argument that the do not address Bruce’s summary judgment dismissing granting its ex- district court abused discretion regard- shareholder-oppression claim his cluding Dorothy’s evidence of David and provision under 1.2 of ing recapitalization compensation amended wills and because (3) agreement; refusing to the shareholder jury’s Finally, affirm the verdict. we we new reopen the record to consider evi- affirm the district court’s of attor- award (4) dence; excluding evidence of David and fees ney to CB&S. compensa- Dorothy’s amended wills and tion; fees awarding and costs FACTS
CB&S. fourth-generation, St. Paul- CB&S is we conclude the district Because based, family-owned company construction court’s instructions were errone- closely corpo- founded in 1924. It is a held ous and because there was sufficient evi- verdict, ration under Minnesota Business Cor- jury’s support we dence 302A.011, § poration Act. Minn.Stat. subd. of Bruce on affirm the favor award (2004). At all times to this agree- 6a relevant claim for breach action, affirm Bolander the chairman Accordingly, also David was ment. we dis- (the board) attorney trict fees of the board directors court’s related award wife, David to Bruce. conclude the contract CEO CB&S. Bolander’s We Dorothy Bolander, provision requiring that modifications be also serves on the directors, writing preclude did or forma- as renewal CB&S board of the board after the wholly tion of a new contract written chair CEO CB&S’s owned substantially performed Environmental, subsidiary, contract was Inc. SKB expired, (SKB), specified term operates which commercial land- of a new contract could be estab- existence fills. evidence, by parol that a
lished new president and chief became contract, expira- formed after (COO) May operating officer parties’ agreement, tion of the written becoming president, Prior to *8 of barred the statute frauds. partner large with a East Bruce was that article 4.02 of Because we conclude firm, $400,000 earning law between Coast unambiguous, the trust we $500,000 per year. In Bruce and of affirm district court’s distribution parents began and his serious discussions to Bruce. But we the trust assets hold CB&S, joining goal his about with that the district court abused its discretion eventually Bruce control of would assume Dorothy equita- granting David and company. goal, In of this furtherance § and ble relief under Minn.Stat. 302A.467 (Martin), Phillip Martin Bruce met with and to the district court to reverse remand Dorsey spe- partner Whitney at & with grant relief. planning. cialty business-succession general goals Martin of the provision find that 1.2 of the Bruce advised
Because we to achieve parents with that he and his wanted agreement, dealing shareholder re- they seeking sending September letter, and for retain After which were goals were to: Martin counsel. Those drafted the documents that com- prised the estate and plan: succession (1) taxes upon minimize estate David employment agreement; a shareholder deaths; Dorothy’s and agreement, and the Irrevocable Trust (2) gradually control of the transfer (trust Agreement of C. David Bolander Dorothy from David business and agreement). The executed these Bruce; and 4,1994. or May documents on about fairly with deal Bruce’s three sib- Pursuant to the employment agreement, lings in the of David division president Bruce became of for a Dorothy’s estate. term, specified ending March 2000. began Martin representing CB&S and salary $198,000, was with an annu- Dorothy July or David and on about al bonus of 15% of CB&S’s consolidated them, After meeting 1993. Martin pre-tax earnings, including those of its sent a series letters David and Doro- subsidiary, SKB. CB&S could terminate 23,1993; thy July August 25,1993; Bruce with due without cause. “Due In September each these cause” defined as embezzlement or letters, provided Martin David and Doro- misappropriation of company property, thy synopsis plans with a for the fraud, willful disobedience of lawful board estate-planning business-succession and is- directives, or material breach of the em- they sues that had discussed. ployment agreement. If terminated with- cause, letter, out September In due Martin Bruce was entitled re- bonuses, ceive Dorothy salary, advised David and that the busi- for the benefits plan specified employ- “two remainder of the term of ness-succession would have basic The ment. steps.” step gift first would involve aggregating CB&S stock million $1.2 agreement prescribed shareholder newly
value to a primarily created trust process to transfer control of CB&S to for the benefit of Bruce. Martin advised through a recapitalization of David Dorothy David and the trust would Dorothy’s Dorothy’s stock. David and provide if ceases to a full- “Bruce be preferred shares would become shares and employee Company time with the within a majority the trust would become own- (as years certain number of determined voting trustee, er of the stock. As Bruce), you the two of the trust would voting would have control CB&S after thereupon separate be divided into trusts recapitalization. finally, pursuant And your per for the of each of children benefit agreement, to the terms the trust David In stirpes.” step, the second remain- 134,983 transferred shares CB&S com- ing common stock owned David mon stock the trust. Bruce’s three Dorothy for a exchanged would be siblings beneficiaries of contingent became of preferred new class stock. In the let- trust; Bruce’s three children are resid- ter, Martin also set forth understand- ual beneficiaries the trust. *9 ing Dorothy recapi- that David and would in preferred talize the stock sometime As a of the and succession result estate future, 3, 1994, May Company plan, “when the can more as of when Bruce be- it, CB&S, 392,- readily president afford but not later than March came CB&S had 31, 2000, stock, outstanding Bruce in the of common provided that is still shares employ the Company.” owned as follows: repay to
note CB&S amounts with- note, one-half drawn. Under was due 31, 2001, payable on March and the 31, other half was due on March 2002. from Bruce continued take withdrawals 18, May CB&S between October 18, 2000, 2000. On David and October Dorothy learned Bruce had taken ad- CB&S, from bringing ditional funds operating significant suffered CB&S $353,000 just amount total withdrawn tenure, in- during losses most Bruce’s over 18 months. David informed Bruce $1,732,338 for the cluding a net loss of that he decided Bruce’s to terminate 31, Al- year ending fiscal March later, Two employment. days on October agreement expired' though employment 20, 2000, completed the sale of SKB 31, 2000, on Bruce its terms March $6,000,000. for more than Bruce assets presi- to work for CB&S as its continued $780,000 would have been entitled to that date with no past dent and COO bonus based on SKB sale had he still change duties, or oth- compensation, in his when According employed been the bonuses were employment. er conditions (and Bruce, orally later calculated. conduct) agreed employment to renew the thereafter, 2000, Shortly 25, on October agreement for a March expiring term placed paid the board Bruce on leave and 31, 2002. CB&S denied there was an $353,000. Bruce to repay instructed oral extend contract and immediately Bruce repay did disputed this characterization of otherwise $353,000, 29, 2000, and on November status. employment, board terminated Bruce’s of the loss the fiscal Because net compensation through granting severance year ending March Bruce did not the end of 2000. Because his year. receive a bonus for that Between terminated, receive, did not was Bruce September 1999 and March Bruce among things, expected other his bonus $194,000 approximately took in cash with- $6,000,000 connection sale of SKB from above his normal sala- drawals par- assets. Bruce sued CB&S ry. asked trial if it When at he believed ents, part, he claiming, was termi- company was in the best interests nated without due cause and therefore was employees its shareholders bonus, salary, entitled to his and benefits him to withdraw sums in addition to such through the remainder of March compensation during his base Bruce employment term. the extended “I replied, probably have to answer as it interest, wasn’t in the best but I company’s keep
needed to do what I needed to do ISSUES myself solvent.” I. court’s in- Were the district May testified that he David erroneous? structions learned of Bruce’s withdrawals. David by ruling II. the district court err Did that he Bruce not to take testified told could show ex- withdrawals; extrinsic evidence further denies he requiring of a contract written any tension given such instruction. Around time, signed modification? promissory same *10 sup- III. Is there sufficient evidence to without due cause. The jury awarded jury’s damages $1,368,000. that Bruce was port the verdict Bruce of appeal, On due terminated without cause under CB&S that the district court com- (a) by mitted reversible error employment agreement? allowing to change theory after the evi- by the district court err con- IV. Did presented, was from alleged dence an oral em- cluding the extension of the of extension agreement to ployment agreement was not barred conduct; (b) alleged by extension in- by the statute of frauds? structing jury a “preponderance by Did the district court err V. award- the evidence” standard than rather attorney ing fees to Bruce? and convincing “clear evidence” standard by VI. Did the district court err dis- respect to Bruce’s claim for breach of missing Dorothy’s David and claims contract; (c) refusing to § under Minn.Stat. 302A.467and their the jury corporate instruct that a officer fiduciary duty? claim breach for duty a fiduciary has to act in the best court by VII. Did err (d) company; interests instruct- distributing the trust assets to Bruce jury ing “poor performance” did siblings in separate, and his three not constitute “due cause” under the em- equal shares under article 4.02 ployment agreement. agreement? trust court VIII. Did the district err de- The district court has broad dis nying Bruce relief under MinmStat. instructions, in determining jury cretion § 302A.751 violation his minori- and this court will not reverse in ab ty-shareholder rights, including viola- Hilligoss sence abuse of discretion. v. the employment agreement? tions of Inc., (Minn. Cargill, 649 N.W.2d IX. Did the district court err refus- ]2002). District courts are allowed broad ing reopen the record to consider selecting language latitude new evidence? jury charge determining as well as in X. by grant- Did the district court err of a propriety specific instruction. Alholm
ing summary dismissing judgment (Minn.1986). Wilt, shareholder-oppression Bruce’s claim destroys If an instruction the substantial regarding the recapitalization provi- whole, charge correctness of the as a sion forth in provision set 1.2 of the justice, miscarriage causes or results agreement? shareholder prejudice, requires substantial the error properly XI. Did the district ex- a new trial. Morlock v. St. Paul Guard Dorothy’s Co., (Minn. clude evidence of David and ian Ins. 650 N.W.2d compensation? 2002). amended wills and A required jury if a new trial instruction was erroneous and the error XII. Did district court err prejudicial appellant or if its effect awarding fees and costs to CB&S? cannot be determined. Id.
ANALYSIS A. Did district court err al- I lowing change legal the- found the parties ories? employment agreement extended the for a term years of two and that employ CB&S breach- CB&S terminated Bruce’s agreement by terms, ed the terminating By Bruce ment in late 2000. its *11 (Minn. on agreement expired March Dist. No. 555 N.W.2d employment argued App.1996). Notwithstanding the that jury to Bruce’s reli 2000. employment con- alleged extended the ance on the existence of an oral the Bruce argued agreement contract, to tract March to extend the Bruce’s not terminated employment generally alleged his was more complaint the exis cause, as term was defined agreement for due an to tence of extend his em was, agreement, and employment the he ployment and he contract asserted that compensation therefore, entitled employment “understood his was expiration of the term of the through the continue on the same terms conditions and renewed contract. all the existing plans agree under and in place.” language arguably ments This discovery on the breach-of- Throughout express agree both an encompasses oral claim, the record in- employment-contract ment to extend the contract and an exten primarily argued that dicates that by par sion the established the conduct of employment agreement had the written theory by an ties. And extension by alleged agree- oral been extended fully conduct consistent with parties. alleges CB & S ment between at trial contention changed his claim from an al- that Bruce ter was in effect when he was leged extension or renewal of oral minated, with in his apparent change no alleged agreement to an mod- day-to-day responsibilities after March change that the by ification conduct and object to presen 2000. CB&S did not after all only occurred evidence had been during trial, this we tation of evidence change that the presented. CB&S parties litigated conclude that the the issue occurred district court deter- because by of an extension conduct consent. mined, on in- during the conference structions, proof that different standards Furthermore, has overstated CB&S applied would be an oral-modification Title, a holding of Standard which involved (clear evidence) than convincing claim presented different situation from one on con- to a claim based an extension Title, In the Eighth here. Standard Cir- evidence). (preponderance duct did not cuit held the district court com- alleges that the district court in denying posttrial abuse its discretion a by allowing Bruce mitted error reversible complaint, a when the motion amend change legal theory after close of a claim prior complaint stated contract higher avoid the the evidence order to pro- a guarantee based on written that, any event, proof standard of posed raise a claim amendment would established both theories to be unjust tort indemnification based on convincing clear evidence. at 621. The court enrichment. F.2d explained appeals proffered “[t]he cites Title Ins. Co. Standard (8th Cir.1965), new Roberts, completely set forth a F.2d amendment action, plaintiff wholly cannot based on different proposition that a cause alleged in ... com- theory cause from that complaint amend a to assert new Here, Id. at 620. plaint theo wholly [that tried].” of action different based amend, theo- ry recovery fully after case has Bruce did move both been al- may supported for extension the same tried. But the district court consider ries contract, leged and the claimed breach pleadings all raised and addi issues did not involve litigated by express or im extension conduct tional issues of a new cause action Septran, Inc. v. Sch. assertion plied Indep. consent. *12 541 theory recovery. of On Bruce the wholly by different to establish extension clear record, and convincing did not disagree we conclude evidence. We this of hold that extension of a legal theory after the close services contract change term, an trial additional prop- and that the after substantial the evidence performance expiration of jury the that it could con- the term erly instructed contract, in subject stated the written is parties’ sider both oral statements the the preponderance-of-the-evidence em- stan- determining conduct whether the ordinarily dard that applies proving the ployment agreement had been extended or elements of a contract claim. renewed. rule, As a general the standard by Did the district court err in-
B. proof when interpreting contracts jury structing “prepon- the on a determining the elements of a contract derance the evidence” stan- claim is the preponderance of evidence. dard? See, e.g., Leasing ICC Corp. v. Midwestern objection, Over CB&S’s Co., 551, (Minn. 257 Mach. N.W.2d 555 it was to jury court instructed 1977); H. Marshall v. Marvin Anderson a apply preponderance-of-the-evidence Co., 320, 326, Constr. 283 Minn. 167 questions posed standard 724, (1969). N.W.2d Some contract special Specifically, verdict. the district subject claims are to a heightened stan jury court instructed the to answer instance, dard of For when proof. party a any question “yes,” greater weight “the seeks to rescind a written contract on the support must such an evidence fraud, alleged basis of fraud must be explained swer.” The district court by established clear and evi convincing greater weight of the evidence means Sheehan, dence. See v. Taylor all of the whomever “that evidence 575, (Minn.App.1989) (noting N.W.2d produced lead it you must believe is in caselaw the inconsistencies on standard likely more that the claim true than not of proof relying Owl Weise Red you If true. the evidence does not lead Inc., Stores, 286 Minn. it likely
believe is more that the claim is (1970)), N.W.2d review denied true, (Minn. 1989). claim true than not then the has when Apr. party And a proved by greater weight been has asserts that there been an enforceable I.A., supra evidence.” As discussed Part oral of a modification of terms written jury also the district court instructed contract, party “has the burden to consider conduct and oral state both proving the modification written [of determining parties ments whether the convincing clear and evidence. contract] expiration extended the date of the em prepon The is not met a mere burden ployment agreement. answered Er derance of the evidence.” Merickel v. “yes,” to special-verdict question: the first 15, 95 Corp., ickson 255 Minn. Stores em “Did extend Bruce Bolander’s (involving [CB&S] a claim ployment agreement year period for a two modified written to March 2002?” change the dimen construction contract building sions of a while under construc that extension of the tion). two-year a “modi contract term was con respects written of the con This court written fication” terms was, therefore, tract, subjects of an incon subject allegations and it to a tracts and to a heightened proof, requiring rigorous sistent oral contract examina- standard requisite height- setting aside was established justified be “[T]o tion. standard, it as aban- holding ened the terms of written contract written by subsequent par- or substituted contract enforceable. Id. doned were with its written variance contract at ol *13 con- must be and clear a governs
terms the evidence contract the When Rule, Kavanagh v. The vincing.” Golden for parties specified duties of the term 697, 510, 517, 700 33 226 Minn. N.W.2d parties may the expired, and it has there Co., 190 (quoting Dwyer v. Ill Oil new contract after enter into a conduct (1934)). 616, 619, 252 N.W. Minn. (continued payment performance) or does claim But Bruce’s breach-of-contract otherwise, they may the adopt provi fraud or oral modi- rely proof of an not agree of their former contract or to sions terms that is with the fication inconsistent modify them. v. E. Cas. & Steele Great deny the written contract. He did of Co., 160, 162, 197 Indem. 158 Minn. N.W. the em- governed contract that the written (1924). of an existence ex relationship through March ployment subject or to a tension renewal to it or and he not seek abandon did proof. par of Once heightened standard an contract at variance substitute oral to a written contract for services have ties terms of the written the “behind,” party left that contract with one Instead, the he agreement. claimed continuing for the oth perform to services agreed an extended to er, prom ... a accepts, “which the latter relationship governing their contract after pay may implied.” or even ise must be the expired. And the written contract Pfunder, Benedict Minn. of he to enforce for the term terms seeks (1931); 2, 4 also House v. 237 N.W. see ex- the written contract employment after Baxter, (Minn.App.1985) N.W.2d substantially the as those are same pired employ (involving party who continued parties’ in the written specified years” ment “for after a several involv- mistakenly relies on cases holding contract and term written of the of a written ing modification terms may impliedly have been the Metal, contract, Inc. v. including Reliable “parties’ and in extended conduct Inc., 407 Shakopee Valley Printing, agree after of the written expiration tent But these (Minn.App.1987). ment,” agreement incorporat with the new all modifi- inapposite are involve cases expired ing significant terms from significant provisions of cation or waiver of applica agreement). There is no written a con- contracts. Reliable involved written that the existence authority requiring ble specified struction contract for pay” of a new services “promise credit” builder would “consider trade the term of a expiration rendered after contract. partially price offset the contract must be established written rejected ultimately at 685. Id. The builder heightened applicable standard credit, un- insisted on payment the trade fraud, rescission, or oral modifi claims contract, terms and sued der the cation of terms written contracts. Id. at 686. This court held breach. of a that the existence re- We conclude did language of the written contract services, contract for newed extended trade accept not bind builder specified term expiration after of that credit and that no oral modification contract, must be es- parties’ written by clear provision had been established preponderance evi- Be- tablished Id. at 687. convincing evidence. Thus, did not the district court err price term dence. cause no modification jury perform on the standard of instructing obligation required by the contract which proof. is central to the achieve-
ment the purpose of the contract. Did the district court abuse its C. The district court declined to use by failing discretion to instruct proposed jury CB&S’s instruction: corporate that a officer As an Officer [President] Director duty fiduciary has a to act in the Co., of Carl & Bolander Sons company best interests of the obligated Bolander was perform that failure to do so constitutes a following duties in the manner: material breach? An officer director shall dis- and/or *14 argues district charge that the the of position good duties the in faith, jury refusing erred to instruct the in manner the officer/director fiduciary reasonably in corporate that a officer has a believes to best be the corporation, duty to act in the best interests the interests the and with an [ordinarily] the care company. prudent person position in a like would exercise under employment agreement provides The similar circumstances. that “due for termination occurs if: cause” If discharge Bruce Bolander to failed (i) the Executive shall embezzle funds his duties as an Officer and Director of misappropriate property or other the Carl Bolander & Sons in the Co. manner Corporation any Entity or Affiliated or him, required of he breached the terms engage regards fraudulent conduct as alleged employment of his agreement. Corporation any Entity, the or Affiliated argues the district court’s (ii) willfully or the Executive shall diso- give jury refusal to this instruction was Board, bey a lawful directive the prejudicial error jury because the “was through whether commission or omis- receipt denied of appropriate legal guid (iii) sion, or the breach Executive shall ance” concerning responsibilities Agreement this a material manner. president as the COO CB&S under district court gave following The the Corporation Minnesota Business Act. jury instruction on due cause: Finkelstein, v. CB&S cites Backus 23 F.2d employment agreement The that ex- 357, (D.Minn.1927), Prozinski v. Ne. 31st, pired its terms on March LLC, Serv., Mass.App.Ct. Real Estate for defines due cause termination. (2003), Zak 797 N.E.2d Inc., terminating McCarron, Due cause for Bruce Bo- ibe v. Ahrens & 28 S.W.3d if lander exists he embezzled funds or (Mo.Ct.App.2000), proposi misappropriated corporate property, fiduciary en- tion that of an officer’s violations duty em gaged per fraudulent conduct se constitute a breach of an regarding willfully disobeyed ployment agreement. corporation, company’s lawful directive [of] argues em- terms Board, act, an act or failure ployment do not support materially or the employment breached CB&S’s that “breach of common- assertion agreement. statutory have law duties would breach- performance Agreement.” Poor does not constitute ed Bruce also jury due cause as defined in the giving proposed instruction term, jury “material would because the have confused generally alleged fiduciary breach” means the claims failure breach of poor performance in the does not constitute were addressed statutory duties cause, proceedings then “material bifurcated due but defined portion court, being perform.” than breach” as “failure to the rather was tried jury. submitted correctly argues that the district condi- court’s instruction that financial Here, court acted within its the district more, without company, tion of did give by refusing pro- CB&S’s discretion establish existence of due cause was con- jury instruction. The posed broad within district court’s discretion. only a material breach of the tracted that clearly The instruction consistent than a employment agreement, rather less- express language of the due-cause defi- breach, due cause for termi- er constituted employment agreement. nition See Thus, proposed jury in- nation. CB&S’s Co., Morlock Paul Guardian Ins. St. comport parties’ with the struction did (indicat- (Minn.2002) therefore do not provision. due cause We that the court has ing discretion argument reach violations CB&S’s on the construction of instruct duty per fiduciary an officer’s se constitute terms). and unambiguous clear contract employment agreement. of an breach *15 poor The district court’s Backus, instruction But a court in we note under performance satisfy not the did contractual may require an officer has equity who cause, proof definition of due absent of a duty fiduciary corpora- his to the breached breach, material was consistent with the he is compensation tion forfeit otherwise contract an abuse discre- terms not Backus, 361; F.2d due. See at see also tion. Accordingly, Part VI. the district infra by failing court did not abuse its discretion Furthermore, jury instruction was jury in accordance
to instruct confusing. not CB&S mischaracterizes jury instruction. proposed CB&S’s definition of “material the district court’s asserting as to perform,” breach” “failure D. Did district court abuse its that the instruction circular and there- was by instructing jury discretion confusing. fore district court’s entire “poor performance” not did of “material was “failure definition breach” “due under the constitute cause” obligation required by an perform employment agreement? contract which is central to achieve- purposes of the contract.” It ment argues CB&S district (con- perform” is possible that “failure to by instructing court abused its discretion breach) stituting a material could be con- “poor jury performance” does (which “poor performance” fused with does “due cause” the employ constitute under breach). But the not constitute a material argues ment CB&S that the full of “material district court’s definition prejudicial instruction was be CB&S required than failure breach” more mere away proper cause “it took from CB&S the perform, correctly and it reflected argument that was [Bruce] terminated Thus, in- contract. the district court’s materially due cause because he breached struction not an abuse of discretion. was through employment agreement his specific performance, which was one of the II
contractual definitions of due cause.” de- argues challenges that the district the district court’s CB&S also court’s summary judgment and JNOV jury “hopelessly confusing” nial of its instruction was claim for for the stated motions breach because instruction genuine employment agreement, arguing issue fact material existed as to employ- the claim was barred because the whether he was an at-will employee or parties, agreement by express ment extended writ- whether the conduct, ing. extended the agreement. Accordingly, the district court summary from this appeal judgment, On did not denying err CB&S’s motions for any genuine court asks whether there are summary judgment and JNOV on Bruce’s issues of material fact and whether the claim for employment agree- breach district court applying erred law. ment. French, by Cooper State N.W.2d (Minn.1990). “Summary judgment is not a Ill
trial It proceeding of issues of fact. is a if designed determine issues fact employ- that even if the Wing County, exist.” Convine v. Crow extended, ment agreement had been 345, 361, 244 309 Minn. N.W.2d court erred not granting JNOV (1976). because Bruce was terminated for due cause as a matter of law.
Unless otherwise agreed be
parties,
tween the
rela
In reviewing a trial court’s
tionship is at-will. Aberman v. Malden
granting or denying
judgment
a motion for
Indus., Inc.,
Mills
verdict,
notwithstanding the
this court de
law,
(Minn.App.1987). Under Minnesota
termines
is any competent
whether there
employee
discharged
can be
at-will
reasonably
evidence
tending to
sustain
*16
any reason or no
at all.
reason
Vouch v.
Inc.,
verdict. Blue
Corp.,
Water
v.
Cos., Inc.,
406,
Carlson
439 N.W.2d
408 O’Toole,
279,
(Minn.1983).
336 N.W.2d
(Minn.
(Minn.App.1989), revieiv denied
jury’s
The
verdict stands unless it mani
1989).
12,
an
July
employee
And
at-will
festly
palpably contrary
and
to the evi
wrongful
has no claim for
termination or dence,
in
light
considered
favor
most
an employment
breach of
contract once
plaintiff.
Parke,
able
Stuempges
to the
discharged. See Gunderson v. Alliance
Co.,
(Minn.
252,
of Davis &
297 N.W.2d
Inc.,
Profls,
173,
Computer
628 N.W.2d
1980).
upset only
Verdicts are
in extreme
(Minn.App.2001).
183-84
Ralph Hegman
circumstances.
Co. v.
Co.,
323, 327,
Ins.
Transamerica
Minn.
employment agreement
stat
555,
(1972).
198 N.W.2d
Agreement may
ed: “This
not be amend
ed,
canceled,
supplemented,
discharged
argues
CB&S
that Bruce
ter
was
except
duly
aby writing
executed
due
a
minated for
cause as matter of law
Corporation and
Executive.” It is un
willfully disobeyed
because he
a
di
lawful
disputed that
did not amend
materially
rective of the board and
breach
agreement writing.
It is also undis
ed the
&
employment agreement. CB S
puted that Bruce continued to work for
argues
materially
that Bruce
breached the
31,
CB&S after March
(1)
employment agreement
admittedly
argues
violating legal
president/COO by
CB&S
that Bruce became
at-
duties as
will
employee
employment agree-
failing
when his
to act
the best interests of CB&S
therefore,
and,
expired
by continuing
ment
no valid and
from
had
to take advances
need;
claim
an employment
for breach of
con-
at a time of critical
CB&S
financial
But,
(2)
tract.
because Bruce continued to
di
disobeying
board’s
work for CB&S after March
rectives not to take more
after
advances
(7)
CB&S;
meeting
May
taken
from
to attend a board
loans
May
plan
pay
signed
promissory
back
2000 Bruce
note for
actions
discuss his
$194,173.30
argues
further
cover
had
CB&S
the amounts he
the advances.
(8)
findings
2000;
independent
through
court’s
the district
borrowed
March
the bench trial establish
Bruce
following
David learned of the amount that
materially
his employment
Bruce
breached
Bruce how he
borrowed
asked
(9)
advances;
repay
going
was
planned
pay
Bruce
that he
indicated
whether
the loans
argues
Bruce
money
out of his future bonus-
of the
contrary to the best interests
were
(10)
conversation,
es;
during
this
disputed
factual
issue.
company was
any
told
not to take
David never
Bruce
“legal
that the
Bruce also
duties”
Further,
more
Bruce testified
advances.
in the
refers are
found
which CB&S
that he did not receive a written directive
agreement. Fi-
terms
prohibiting
him from
from
board
bor-
have
nally,
argues that he could not
Bruce
rowing any
money
more
from CB&S.
violated a lawful board directive because
Thus,
record,
jury
on this
could have
never received one.
he
that Bruce never received
concluded
Bruce
has not demonstrated that
him
tak-
prohibiting
board directive
from
terminated for
cause as a matter
was
due
ing
from
advances
CB&S.
rejected
jury
of law. The
considered and
arguments. Where David
CB&S’s
Additionally,
testified that David
Bruce
conflicted,
assume
testimonies
we
on October
terminated
jury
Bruce and disbe
believed
told Bruce that
assumed
2000. David
he
As
lieved David. See Dick Weatherston’s
employment agreement
still
was
Servs.,
Mut.
soc. Mech.
Inc. v. Minn.
Life
terminating
that he
effect and
Co.,
257 Minn.
100 N.W.2d
Ins.
“for cause” under the
because
credibility
(indicating that
money
from CB&S
had borrowed
primarily
are
for the
determinations
he
allegedly
after
told Bruce
to borrow
court).
and the trial
any
money. Bruce did not receive
more
*17
Here,
to
prior
the
notice from the board
appears
jury
it
believed written
(1)
testimony
employment agree-
2000. The
Bruce’s
that:
he borrowed October
money
ment delineated that CB&S would tell
personal
from
to meet his
CB&S
(2)
1999;
if
em-
Bruce
it intended to terminate his
expenses
prior
on one occasion
having
ployment
specific
deduct
based
a
reason
repaid
by
he
the loan
CB&S
(3)
bonus;
opportunity
him
Bruce
give
his next
the
cure.
the amount owed from
the
him notices of
money
from
be-
testified that
board sent
he borrowed
CB&S
fired,
meetings
he was
borrowing
him that
“was board
after
cause David told
“[bjecause
a
not
it
problem,”
respond
not a
loaned
which he did
and CB&S had
money
a
act.” Bruce
amount
to the chief would have been
useless
substantial
house;
“I
togo
could
this meet-
help
buy
explained,
him
a
further
financial officer
(4)
money
ing
pay pay
from
told—be told to
he
to borrow
be
continued
—
(5)
1999;
already
fired
money
they
back after
CB&S after
on March
ability
away my
to do it.”
David
Bruce
not me and taken
told
that CB&S would
that,
year, Finally,
prior
to Octo-
pay
them
for that
testified
either of
bonuses
18, 2000,
him that
no one indicated to
lend Bruce some ber
but
that CB&S could
way
any
had in
a material
money
expenses during the
he
breached
to meet his
(6)
already
employment agreement.
of the
year;
provision
told
that he had
he
David
record,
jury
argues
could have con-
CB&S
On this
Bruce’s claim
extended
term
'willfully
of the
violate a
cluded that Bruce did
employment agreement an additional
two
board directive.
years, to March
is barred
have
The
could also
concluded that
statute of frauds
it
incapable
because
materially
did not
breach the em-
being performed
year.
within one
ployment
The
Co.,
Eng’g
cites Roaderick v. Lull
not make
agreement does
adherence
(1973),
sup
Minn.
fiduciary
obligations
employ-
a condition
argument.
port
reply,
its
In
Bruce cites
Thus,
identify specif-
ment.
CB&S cannot
Eklund for the
proposition
that the statute
provisions
employment agreement
ic
apply
of frauds
a
does
contract
alleged material
vio-
that Bruce’s
breach
providing term maximum
Further,
lates.
while
district court
Eklund,
greater
than
year.
one
In
at
may have determined
the bench trial
oral
permanent
contract was for
employ
fiduciary
that Bruce breached his
obli-
retirement,
long
ment until
so
as Eklund
interests,
gation to act
CB&S’s best
Id. at 375. This
performed satisfactorily.
finding
such
does not constitute mate-
court concluded that the contract
be
could
performed
year
following
within one
in the
employment agreement
rial breach of the
(1)
(2)
death;
circumstances:
Eklund’s
Ek-
as a matter of law.
voluntarily departed;
lund
Eklund
jury’s
Because the
verdict
is not mani-
Id. at
perform satisfactorily.
failed to
festly
palpably contrary to the evi-
375-76.
light
when considered
most
dence
Roaderick,
CB&S,
cited
is distin
Bruce,
court
favorable to
district
did
guishable
because it addresses minimum
by denying
not err
motion for
CB&S’s
year which, by
term of more than one
—
JNOV.
definition, cannot
performed
be
in less
Roaderick,
See
year.
than one
296 Minn.
IV
at
(indicating
548 § fees not recover terclaims under Minn.Stat. 302A.467
Attorney are fiduciary duty. of or for breach by statute con authorized able unless tract, not disturb a district will we § provides: Minn.Stat. 302A.467 of at regarding an award court’s decision ... of If an officer or director an abuse of discretion. torney fees absent corporation provision violates a of this Formanek, 459 Savage v. N.W.2d City of may, chapter, a court in this state in an 173, review denied (Minn.App.1990), brought action a shareholder (Minn. 1990). Here, the employ Oct. corporation, grant any equitable it relief recovery at authorized agreement ment just and in deems reasonable the cir- fees, agrees to stating torney “[CB&S] expenses, cumstances and award includ- basis, monthly all fees and ex pay, on disbursements, ing attorneys’ fees and (including attorneys penses reasonable to the shareholder. fees) in incurred the Executive connec his rights chapter requires with the enforcement of tion directors act in a corporations officers manner Agreement.” this under reasonably that the director or officer be- attorney that the award of in lieves to be the best interests judg because the fees should be reversed 302A.251, §§ corporation. See Minn.Stat. of the ment in Bruce’s favor breach (2004). Additionally, an subd. .361 offi- should be re fiduciary or cer director owes relation- argues that Additionally, CB&S versed. ship corporation to the under common law. court to there is no basis for Maria, Inc., re In Villa N.W.2d attorney in fee “sweep clause” (Minn.1981). 922-23 if the employment agreement, even equity A court of is to be ac employment agreement by extended the in fashioning corded broad latitude reme According conduct. CB&S there their particular dies to meet the needs of each in is no evidence the record establish See, City Cloquet e.g., Cloquet case. v. specifically terms which Gravel, Inc., 277, 279, & Minn. Sand Because the agreement were extended. (1977); 251 N.W.2d Beliveau v. jury’s favor verdict Beliveau, 235, 14 217 Minn. N.W.2d 360 error, claim was not breach-of-contract (1944). As was observed Beliveau: also affirm the of attor we related award equity power adapt A court of has the reject argument ney fees. We CB&S’s the exigencies par- its decree to of each attorney-fee provision was ex justice. as accomplish ticular case so empted employ from the extension of eq- It is traditional characteristic of Pinske, ment See Fischer uity flexibility possesses it Minn. expansiveness invent new remedies (1976) (noting that the as a contract whole modify require- meet old ones to conduct). parties’ extended satisfy every case and to ments Thus, we affirm the district court’s award *19 progressive of a social condition. needs attorney fees Bruce. 245, 14 at 366. 217 Minn. at N.W.2d We of equi the district court’s exercise review VI State table relief for abuse discretion. (Minn. 256, Dorothy argue Ambaye, David and dis- v. 616 261 N.W.2d by their dismissing trict court erred coun- 2000). order, company, stating
In its March the district “but I to do needed that Bruce court concluded admitted to I keep myself what needed to do to sol- contrary in a to the best “acting manner vent.” And the district court found that Corporation by continuing interests Bruce did not act in best CB&S’s interests to take substantial cash advances at time by taking withdrawals company when the Corporation when the was acute finan- was experiencing difficulty. financial In Further, difficulty.” cial district court light findings, of these there was no basis that Bruce concluded acted “deliber- for Dorothy’s dismissal of David and coun- disregard ate for best interests Thus, terclaims. we reverse and remand Corporation.” for grant the district court to David equitable Dorothy relief. Dorothy argue that the
David district court its not abused discretion include, may note that We relief granting equitable them relief it con after to, but equitable is not limited forfeiture of contrary cluded Bruce acted compensation awarded the company. best interests of Bruce ar “Any person acting fiduciary Bruce. gues relief under Minn.Stat. capacity is to compensation entitled for his discretionary, § 302A.467 is not mandato services, good when he acts in faith § ry. (stating See 302A.467 Minn.Stat. beneficiary best interests his any may grant equi that “a court ... ... diligently guarding advancing in just” (emphasis table relief it deems add terests of the latter.” Backus v. Finkel ed)); 645.44, § see also Minn.Stat. subd. stein, (D.Minn.1927). 23 F.2d But “ (2004) (stating ‘[m]ay’ permis is “[a]ny variation from necessary this re sive”). Therefore, argues, even if quirement with it carries a forfeiture of all court found did that Bruce not compensation might which otherwise be interests, act in CB&S’s best the district Id.; due.” see also Zakibe v. & Ahrens required grant equitable McCarron, (Mo. Inc., 28 S.W.3d relief. Bruce also the record (holding Ct.App.2000) corporate that a offi supports the district court’s dismissal of cer compensation is not entitled to if Dorothy’s David and counterclaims be duty breach fiduciary proved). is cause the evidence shows that his actions Accordingly, we reverse and remand harm company did not share its grant the district court to David and Doro- Dorothy holders and that David and thy equitable relief. they “unclean hands” because terminated cause, eliminating ability Bruce without VII But repay loans. the district court Next, Dorothy argue David adopt any did not of these arguments that the district court erred not distrib Dorothy’s when it dismissed David uting trust assets to Bruce and his counterclaim. siblings separate, equal three shares in agree While we with Bruce that 4.01(4) of trust accordance with article grant equitable relief decision whether discretionary, we conclude that under the facts this case the district court We review the district court’s unambiguous granting interpretation abused its discretion of an written Dorothy equitable David and de novo. In re Trust Created relief. Bruce document Hill, act in (Minn.App admitted that he did not CB&S’s (Minn. 1993). .1993), by withdrawing money July best interests from review denied *20 immediately of my of the trust instru benefit son shall be language Where the the intent of the unambiguous, ment is my (including my distributed issue from the must be ascertained four settlor son), per stirpes. agreement, the without resort corners of agree- Provision 1.2 of the shareholder of intent. In re extrinsic evidence provides: ment Agreement Trust Created Under (Minn.
McLaughlin, 361 N.W.2d 44-45 Recapitalization. Recapi- The Time of 1985). ambiguity is But where there as talization shall occur on date to be intent, may the court the settlor’s David, Dorothy and determined In re Trust admit extrinsic evidence. See Bruce; however, provided, in no (Minn. 856, 864 Campbell, 258 N.W.2d of Recapitalization on event shall the occur 1977). apply “clearly erroneous” We than March a date which is later standard of review “where critical evidence In Recapital- 2000. no event the shall in case on extrinsic evidence turns if, on ization occur the scheduled date disputed about the settlor’s intent and ex Recapitalization, is not a full-time opinions language of the pert about employee Company, having been Hill, trust instrument.” 499 N.W.2d at employed by the from the be- Company Term ginning Employment of his 4.01(4) agreement Article of the trust (as in Em- such terms are defined provides: Agreement) to the ployment scheduled Em- Distribution on Termination of Recapitalization The parties date. ployment. My son intends become Recapitalization shall agree that employee of & full-time Carl Bolander place date at which take on earliest (the July on “Company”) Sons Co. they unanimously that the then- agree 1994, pursuant Employment to an current financial condition the Com- 3, 1994, Agreement, May dated as required make pany would enable it to my Company and between son and payments preferred dividend (the “Employment Agreement”), which negatively impacting without shares Employment Agreement is attached operation of its business. A. In hereto as Exhibit the event that my never employ- son commences such district court concluded that The employ- ment or ceases to be full-time agreement, shareholder employment or Company, ee of the its successor cor- of an inte- agreement, part and trust are any poration corporations, or at time grated plan together and must be read prior any to March reason may upon whatever one shed light son, my than other the death of found that arti- others. district court (as Disability defined of the Section 4.01(4) trust was am- cle of the son, my Employment Agreement) of 1.2 of provision read with biguous when my termination son’s agreement. The district the shareholder (as Due without Cause defined Sec- explained, “The Trust instrument Agreement) the Employment tion 9 of ambiguous, be- incomplete, and therefore my or the constructive termination of possibility it fails cause to address the (as son’s described Sec- might fail corporate purpose its control Employment Agreement), tion 12 of the imple- could not Corporation because Company, all or shares stock restructuring prior 31 March ment any corporation corpora- successor thereto, tions held this trust for the 2000.” *21 4.01(4) ous, the finding
After article trust the district court’s findings were not agreement ambiguous, clearly the district court erroneous. considered extrinsic evidence to determine agree We that agreement, the trust Dorothy the settlor’s intent. David and agreement, shareholder and employment they that have the testified would wanted agreement must together. be construed be equally shares the trust to divided Johnson, See Farrell v. 442 N.W.2d if among restructuring their children (Minn.App.1989) (holding instru- that financial to prior failed for reasons March ments executed at the same time 31, 2000. The district court found this same parties relating to the same transac- testimony court incredible. tion are considered and togeth- construed key also trust in- found was a er). But, court, contrary to the district we to ducement leave his well-es- 4.01(4) conclude that article of the trust practice law and return to tablished agreement is not incomplete there- —and Minnesota, not and that would have fore ambiguous construed with —when accepted plan if business-succession provision 1.2 of agree- the shareholder “if this inducement did exist or he 4.01(4) ment. Article agree- the trust possibil- thought that there was realistic ment not specifically does refer ity away him, it could be taken from ex- recapitalization provision the sharehold- cept by his or choice because some 4.01(4) agreement. er Article of the trust or on malfeasance criminal action agreement does list conditions that must evidence, part.” Based on the the district if be satisfied trust assets are to be (David) concluded that settlor per stirpes. distributed David’s issue gift
would have intended that the to the 4.01(4), Under article trust assets were to fully Trust would March vest Bruce on be siblings distributed to Bruce and his 31, 2000, regardless ability of CB&S’s (a) only if Bruce never commenced em- (a) implement recapitalization if: ployment CB&S; or with Bruce ceased employed by Bruce was March CB&S on to be a full-time employee any at (b) 31, 2000; or employment with prior time to March for reasons CB&S has been terminated March before death, disability, other than termination of death, disability, because of employment cause, without due or con- without termination due cause. structive None enu- termination. argue Dorothy David and that the dis- merated circumstances occurred March trict court’s findings clearly are erroneous. 31, 2000, and none of the enumerated cir- the guardian argue Bruce and to, is directly cumstances related contin- district court erred concluding gent on, recapi- or otherwise linked to the incomplete trust agreement was and there- talization in the addressed shareholder guardian ambiguous. fore Bruce and the agreement. Thus, recap- conclude we argue “recapitalization irrelevant was operation italization irrelevant operation of the Trust’s distribution provision. the trust-distribution provision.” They that Bruce is enti- argue Accordingly, although the district court tled to the trust assets because it is undis- by concluding agree- erred that the puted trust that Bruce commenced ambiguous, ment was we affirm the dis- pursuant trict enti- agreement court’s conclusion Bruce is and remained full-time em- shares; ployee through tled to trust do so of CB&S March but we Alternatively, guardian solely plain language ar- based Bruce and gue ambigu- that if the trust trust
552 closely corporation in shareholders a held
VIII fair, honest, “to act in an and reasonable court argues that trial operation corporation in the of manner dismissing equitable his claim for erred expectations and the reasonable of all 302A.751, § subd. relief under Minn.Stat. they as exist at the inception shareholders 1(b)(3) (2004), Business of Minnesota develop during the course of the Act. Corporation relationship corpo- shareholders’ with the § 302A.751 MinmStat. Id., ration with other.” each subd. 3a. eq judicial intervention and provides This court will not disturb a trial court’s or of a cor dissolution uitable remedies equitable it grant relief unless finds the enumerated circum poration under City trial court abused its discretion. stances, including when “the or directors Gravel, Cloquet Cloquet v. Sand & 312 corporation have in control those 642, (1977). Minn. 644 N.W.2d unfairly prejudicial in a to acted manner order, In March its their one more shareholders ward or prejudice court dismissed with or capacities as shareholders directors § claim under Minn.Stat. 302A.751. The publicly is held corporation that no suggesting district court found evidence employees or as officers or corporation, Dorothy that David and or CB&S acted Id., closely corporation.” subd. held fraudulently, unfair illegally, prej- or 1(b)(3). “unfairly prejudicial” phrase any udicial manner other share- toward Pedro See liberally. is interpreted to be capacity holder in that shareholder’s as Pedro, (Minn. v. 288-89 shareholder, director, officer, employee. or (Minn. App.1990), review denied Jan. The district court also concluded: 1991). prejudice Unfair exists when expectations shareholder’s reasonable 9. termination on 17 [Bruce’s] While have been frustrated. Berreman West October was without contractual Co., (Minn. Publ’g 615 N.W.2d cause, fraudulent, good it was neither (Minn. App.2000), review denied Sept. illegal, unfairly nor prejudicial 2000). section, “any For purposes of this meaning within the [Bruce] Minn. including agreements, employ written extensively § nego- Stat. 301A.751. The agreements buy-sell agree ment expertly Employment tiated and drafted ments, among or shareholders between Agreement gave Corporation the un- among one or share between or more right ambiguous to terminate [Bruce] corporation pre and the are holders good without cause. a cen- [Bruce] the parties’ sumed to reflect reasonable negotiating tral drafting role dealt expectations concerning matters Employment Agreement. pre- It is agreements.” Minn.Stat. to, does, sumed and in fact reflect 302A.751, (2004). § 3a subd. parties’ expectations. reasonable Minn. 301A.751, § Stat. subd. 3a. The fact is grant equitable
The decision to relief Corporation’s exercise of its 302A.751, § discretionary. See Minn.Stat. right to terminate absolute contractual may grant (stating that “a subd. good without does not im- cause [Bruce] just it any equitable relief deems and rea- any expectation pinge reasonable (emphasis in the circumstances” sonable may have had. [Bruce] added)). In determining whether to order equitable judicial acting admits in a finding relief after [Bruce] warranted, contrary must to the interest of intervention is the court manner best continuing to duty Corporation by of all take take into consideration the cash at a time substantial advances withdrawals from were not in in acute fi- Corporation when the company’s best interests. difficulty. knowing nancial He did so disapproved
that David Bolander *23 IX told to practice stop. [Bruce] argues Bruce that the district court Further, he admits he did so dismissing erred in his reopen motion to purely maintaining selfish reason his record, and consequently a new trial is personal solvency. While facts do these warranted. contractual create defenses to Employment claim [Bruce’s] that ground “New trials on the of new
Agreement was breached when the Cor- ly discovered granted by ap evidence are him poration pay failed to what he was pellate courts with much contract, caution. The they due under the undercut largely matter rests in the discretion of equitable his claim to relief under Minn. Wood, the trial court.” stemming § 301A.751 his Wood Stat. from ter- Minn. (1918). mination. N.W. Bruce required is to show that the new evidence argues that he is to Bruce entitled relief is not “cumulative ... and likely that it is § under Minn.Stat. 302A.751 as matter produce a different result.” Vikse v. (1) conclusively of law the verdict because: Flaby, (Minn.1982). Dorothy established David provisions employ- CB&S violated argues Bruce the district court ment agreement governing termination erred reopening record when he (2) cause; without he due had a reasonable presented new evidence. See R. Minn. expectation salary to the continued 59.01(d) Civ. P. (delineating that a new employment agreement bonuses under the trial may granted newly be discovered when he terminated without due evidence, material if the evidence could cause; expectations were frus- not, diligence, with reasonable have been speci- trated when he did not receive trial). produced found and at The “new fied compensation. argues CB&S proposed evidence” that Bruce to intro- reasonable, objective Bruce could have no response duce was a from letter CB&S expectations other than those contained request inspect Bruce’s docu- “certain parties’ agreements. written corporation ments” that a required is asserts, there are contractual sev- “[w]hile maintain and which a shareholder has the may erance payments apply right inspect under Minn.Stat. termination, event of thing beyond one is (2004). letter, § 302A.461 In the at any doubt—Bruce could be terminated requested “requested make Bruce any time for reason and all parties knew representations” pro- before'CB&S would contractually agreed that.” vide the documents. Bruce court did not its dis- abuse CB & letter in further S’s “is evidence denying equitable cretion in relief. § support of Bruce’s claims.” 302A.751 may While Bruce be entitled to relief on a record, On cumula- this the evidence is contractual basis under the likely produce tive and would not a differ- if terminated due without Thus, cause, ent result. the district court did not the district court did not err abuse discretion concluding denying that he “undercut” his claim its § under reopen Minn.Stat. 302A.751when he took motion to the record. provision
X At issue 1.2 the share- agreement, part holder set out in relevant argues that district court in Part VII further supra. provision This judgment summary re- by granting erred provided: claim, shareholder-oppression jecting his the parties unanimously agree Unless alleged he that he was enti- under which otherwise, Company shall be deemed pursuant recapitalization tled to required pay- to make able dividend shareholder preferred on the shares ments without summary judgment, from this appeal On negatively impacting operation of its any genuine there whether are asks if following business either of the condi- *24 material fact and whether the issues of (a) the appraised tions is met: value of in applying erred the law. district court Company’s common shares used French, 2, Cooper 460 4 by State v. N.W.2d purchases connection with and sales (Minn.1990). “Summary judgment is anot thereof the Company Employee It a proceeding trial of issues of fact. is (the “ESOP”) Ownership Plan Stock as if designed to determine issues fact any appraisal at annual is least $25.00 Wing County, exist.” Corwine v. Crow share; (b) straight per or two fiscal 345, 361, 482, 244 309 Minn. N.W.2d 491 years the net income after of the taxes (1976). (4) Company four times has exceeded Determining a whether con aggregate dividends that would be ambiguous legal question. a tract is is Re shares, payable preferred on the deter- Ins. Co. v. Re public Nat’l Lorraine upon a mined based recommendation of Life (Minn. 349, 279 alty Corp., N.W.2d independent appraiser pursuant 1979). Language ambiguous is if it is rea 1.3(b)© Section below. subject more sonably interpre than one argues that Bruce the district court Halverson,
tation. Halverson “un- interpreting provision erred this as 69, (Minn.App.1986). in N.W.2d When by concluding ambiguous” and contract, “the terpreting language found meaning only possible recapitaliza- is that given plain in a is its contract to be place tion could never take one of unless Alpha ordinary meaning.” Turner v. Phi (ESOP the financial conditions value or net (Minn. House, 63, 67 Sorority 276 N.W.2d income) contrast, By was met. Bruce ar- 1979). gues Agreement requires that “the that a place by must recapitalization take March argues the district 31, latest, at it but could occur (1) court financial misconstrued the tests earlier if Bruce can show that [Bolander] 1.2 provision agree of the shareholder financial fulfilled.” conditions were prerequisites recapitalization; ment as Bruce, According the financial tests are (2) incorrectly found that lacked only in deciding relevant whether CB&S recapi could evidence that CB&S afford Dorothy and David and must consent to affecting talize its negatively without busi 31, earlier than March recapitalization (3) ness denied Bruce the operations; opportunity to present evidence expecta provision 1.2
recapitalization a reasonable of the clearly agreement provides tion after March and that shareholder Dorothy that certain financial criteria had to be met David defeated ex him pectation by terminating recapitalization order for the to occur without due if cause. and that those criteria were not met 31, 2000, recapitalization issues, novelty difficulty March would or skill and “in no could standing not occur because event” the attorney, value of the inter involved, recapitalization occur after that date. trial, est results secured at loss of opportunity for other employment, Here, provision parties’ readings both party’s ability pay, taxed customary plau- 1.2 of the shareholder are services, charges for similar certainty Thus, sible. we conclude that the share- Kasal, of payment.” Jadwin v. ambiguous. holder There agreement is (Minn.1982). rea “[T]he a genuine issue of material fact as to attorneys’ sonable value of ques fees ais the parties whether intended for the re- fact, tion of findings the [dis 31, 2000, capitalization to occur on March trict] court must be upheld reviewing regardless of whether financial condi- court clearly unless erroneous.” Amer met, tions whether were the financial man v. Lakeland Corp., Dev. 295 Minn. met by conditions to be March 203 N.W.2d 400-01 2000, if recapitalization were ever to (citation omitted). Therefore, occur. the district erred by granting summary judgment on Bruce’s *25 order, its In March 2004 the alleging claim breach of the shareholder district court that concluded had a CB&S we on Because reverse the right contractual to an award of its costs of the in ambiguity basis of the shareholder including collection attorney reasonable agreement, we do reach not Bruce’s other relating note, fees to the promissory and arguments. instructed CB&S to petition submit a for an award of such Following fees. submis XI sion, the in posttri district court stated its argues in the Bruce that event this court al order: reverses verdict and remands for The Corporation seeks an of award fees trial, a new the district court should admit $115,000. and of expenses I conclude Dorothy’s David and amended wills and this amount not in reasonable of compensation. evidence their total Be- light of the of dispute limited nature jury verdict, cause affirm we we do not involving my notes. Based on argument. address this years experience lawyer of as a involved XII in commercial on litigation behalf of my years a trial creditors as argues Bruce district court judge, I find the fees and by awarding attorney erred & S fees CB expenses for the collection of the notes collecting promissory for on Bruce’s note through litigation by similarly conducted because he never disputed this claim. experienced and talented could counsel Attorney fees are not recover reasonably $40,000. not exceed able unless statute or con authorized tract, and we will not disturb district that CB&S incurred no regarding court’s decision of at for enforcing promissory award costs note claim. torney dispute fees absent an abuse of because did discretion. Formanek, City Savage v. But requests 459 N.W.2d Bruce refused CB&S’s repay loan. (Minn.App.1990), revieiv denied conclude that We (Minn. 1990). In determining finding Oct. district court’s incurred fee, $40,000 size attorney collecting the district court must for fees required, promissory consider the “time and effort note was unreasonable. bylaws in the court did not abuse its modification articles Thus, corporation. See Minn.Stat. awarding attorney discretion (2004). 302A.111, 4(b) .251, §§ subd. fees. fiduciary duty Although analogous, a DECISION goes beyond good-faith focus on hones- court’s dismissal reverse the district We ty encompass loyalty and care. See Dorothy Mathies, claims Bolander’s David Wenzel (noting fiduciary § (Minn.App.1996) Minn.Stat. 302A.467 and for under encompasses duty to act duty, duty “fairly fiduciary and remand for breach of evenly”); Dictionary, Black’s Law grant equitable relief. the district court (7th ed.1999) (defining fiduciary duty “a as Additionally, court erred the district degree act duty highest with the summary judgment on Bruce Bo- granting honesty loyalty per- toward another recapitalization regarding claim lander’s son”). corporation Although this state’s agreement. There- under the shareholder allows law for limitations on director’s fore, this claim reverse and remand we duty, fiduciary must be in the such limits affirm the district trial. We otherwise incorporation. articles Minn.Stat. all issues. court on other 4(u) (2004). 302A.111, § subd. And part, part, Affirmed reversed liability articles cannot eliminate director remanded. duty loyalty. Minn.Stat. 4(a) (2004). 302A.251, § con- subd. Officer MINGE, concurring specially. Judge, subject parallel, duct if not should be opinion I in the join decision *26 more, exacting requirements. specially court and concur address Nothing in in this indi the record case fiduciary duty an to a question of officer’s incorporation cates that CB&S’s articles of of a A material breach fidu- corporation. liability. an As attempt limit officer’s a ciary duty should constitute material jurisdictions argues, other have an contract between breach of have an im corporate found officers corporation. as and the Just officer fiduciary plied duty that a term of their obli- recognizes “[t]he Minnesota corporation contract with the and cannot faith, diligence, gations good reasonable- Finkelstein, be v. disclaimed. See Backus ness, prescribed by and care Uniform (D.Minn.1927); 23 F.2d Prozinski may Commercial Code not be disclaimed LLC, Servs., Real Ne. Estate Mass. 336.1-302(b) § by agreement,” Minn.Stat. (2003); N.E.2d App.Ct. too, (2004), corporate officer’s fiducia- so McCarron, Inc., Zakibe v. Ahrens & explicit ry duty subject should be (Mo.Ct.App.2000). S.W.3d implicit an im- disclaimer and should be fiduciary I would hold that Bruce owed plied every contract between the term duty corporate as a officer and corporation. and the officer his that to extent conduct unilateral- $350,000 ly borrowing from CB&S Act almost Corporation
Minnesota’s Business constituted material breach his fidu- duty recognizes that officers have duty, ciary he violated “good corporation. faith” to the Minn. contract with CB&S. (2004). § faith” is
Stat. 302A.361 “Good “honesty as fact the conduct defined
of the act or transaction concerned.” (2004). 302A.011, §
Minn.Stat. subd. obligation good subject faith is not
This