This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480A.08, subd. 3 (1998).






Jacquelin Powell,





Richard Anderson, et al.,


Walter G. Anderson, Inc., et al.,


A&P Partnership,



Filed July 11, 2000

Affirmed in part, as modified, and remanded in part

Amundson, Judge


Hennepin County District Court

File No. 9722393


John F. Bonner III and Robert J. Borhart, Bonner, Dawson, Borhart LLP, 901 Marquette Avenue, 1500 AT&T Tower, Minneapolis, MN 55402 (for appellant)


Richard T. Ostlund and Randy G. Gullickson, Lindquist & Vennum PLLP, 80 South Eighth Street, 4200 IDS Center, Minneapolis, MN 55402 (for respondents Richard Anderson, Walter E. Gervais, and Walter G. Anderson Corp.)


Patrick J. Rooney, Erik J. Magnuson, and John J. Wackman, Rider, Bennett, Egan & Arundel LLP, 333 South Seventh Street, Suite 2000, Minneapolis, MN 55402 (for respondent Walter G. Anderson, Inc., A&P Partnership, and Estate of Walter G. Anderson)


            Considered and decided by Crippen, Presiding Judge, Amundson, Judge, and Anderson, Judge

U N P U B L I S H E D   O P I N I O N



Appellant is minority shareholder in a closely held family corporation and a 50 percent partner in a related partnership.  She argues that the district court erred in valuing her corporate stock, refusing to award attorney fees to her as a wronged minority shareholder, refusing to allow an accounting with respect to the partnership, requiring her to pay attorney fees incurred by the partnership, applying minority and lack of marketability discounts to her award of damages for the usurpation of a corporate opportunity, and finally by refusing to determine her damages on the basis of value as a combined entity.  By notice of review, respondents argue that the district court erred by awarding appellant more than the book value of the closely held corporation as provided in the share retirement agreement, and by failing to reduce appellant’s award by the amount of her imputed capital contribution to the corporation to which her corporate opportunity was usurped.  We affirm in part, as modified, and remand in part.


            Walter G. Anderson, Inc. (Anderson, Inc.), is a closely held corporation that manufactures paper boxes.  Anderson, Inc.’s now deceased founder, Walter Anderson, is the father of both Jacquelin Powell and Richard Anderson.  Richard Anderson is Board Chairman, CEO, and a shareholder of Anderson, Inc.  Powell is a member of the Anderson, Inc. board and a shareholder in the company.

            Powell and Richard Anderson are equal partners in respondent A&P Partnership, which was formed in 1980 at the behest of their father who then sold A&P the two properties where Anderson, Inc. leased its production and storage facilities. 

            Richard Anderson is an officer, and the director and controlling shareholder of Walter G. Anderson Corp. (Anderson, Corp.), a Minnesota Subchapter ‘S” corporation engaged in the paperboard packaging industry.  Anderson Corp. was founded in 1991 and began operation in 1992.  Walter Gervais is the minority shareholder in Anderson Corp. as well as an employee and officer of Anderson, Inc.  Powell has no involvement with Anderson Corp.

            In 1976, Powell began receiving shares of Anderson, Inc. as gifts from her father.  At the time of her father’s death, she owned 24.73% of the corporation’s stock.  On November 1, 1976, she and her husband signed a share retirement agreement providing that upon the death and final distribution of the estate of Walter Anderson or his wife (whoever died last), Anderson, Inc. would redeem all stock owned by Powell for the aggregate book value as of the end of the fiscal year immediately preceding the redemption date.  On January 30, 1988, Powell and her husband signed an amended share retirement agreement.  Under this agreement, the obligation to purchase Powell’s shares was made into an option to purchase exercisable by the company upon the final distribution of Walter Anderson’s estate.  The book value purchase formula remained in effect.

            Following her father’s death, Powell questioned the validity and enforceability of the share retirement agreement, attempted to rescind the agreement, and initiated the litigation that was the genesis of this appeal.  Her complaint alleged that Richard Anderson and Gervais breached fiduciary duties and acted in a manner unfairly prejudicial to her; she claimed a right to a fair value buyout under Minn. Stat. § 302A.751 (1998). Powell also asserted claims for fraud, misrepresentation, breach of fiduciary duty, usurpation of a corporate opportunity, violation of the Uniform Partnership Act, and breach of the A&P Partnership agreement.

            Respondents filed a motion for summary judgment on the issue of the validity and enforceability of the share retirement agreement.  The district court held that the share retirement agreement was enforceable against Powell, but because there was ample evidence that respondents “may have acted in a manner unfairly prejudicial to Powell,” the court also held that she was entitled to equitable relief under Minn. Stat. § 302A.751. This amount would comprise compensation for her shares in an amount equaling the difference between book value and fair market value.  After reviewing the reports prepared by both parties for use at a pre-hearing settlement conference, the district court adopted the principles of the fair market value approach utilized by respondent’s appraiser, applied to Powell’s 24.73% interest, and concluded that the fair market value of her shares in Anderson, Inc. was $3,464,449.  The court, pursuant to Minn. Stat. § 323.31 (1998), also dissolved the A&P partnership, dividing its assets equally.

            Powell filed a motion for partial summary judgment on the issue of usurpation of a corporate opportunity in the establishment of Anderson Corp., to which Richard Anderson and Gervais stipulated.  However, the district court denied Powell’s motion to have Anderson, Inc. and Anderson Corp. combined for purposes of valuation.

Powell’s claim for damages for the usurpation of the Anderson Corp. corporate opportunity was tried to the court.  The district court concluded that the damages were fair market value of what should have been Powell’s 24.73% interest in Anderson Corp., less discounts for marketability and minority shareholder interest.  This amount was $605,390.40.  The district court denied Powell’s request for attorney fees.

Both parties filed motions for amended findings or a new trial.  Powell sought to have an accounting of A&P Partnership, although it had not been involved in the trial. Respondents sought application of book value in valuing Powell’s interest in Anderson Corp.  The district court denied both motions.

The parties filed cross-motions for valuation of the real property owned by the A&P Partnership.  Powell again moved for an accounting of the partnership.  Respondents moved to compel Powell to sell her shares in Anderson, Inc. as previously ordered.  The district court issued an order granting Powell 30 days to tender her stock or the stock certificates would be cancelled, adopted the appraisal of the A&P Partnership, distributed the property, and granted Powell’s motion to compel payment of overdue lease payments from Walter G. Anderson, Inc., to the A&P Partnership.  The district court denied Powell’s motion for an accounting of the A&P Partnership and her request for reimbursement of legal fees incurred by the A&P Partnership while defending itself in this lawsuit.  This appeal followed.


            A reviewing court is not bound by and need not give deference to a district court’s decision on a purely legal issue.  Frost-Benco Elec. Ass’n v. Minnesota Pub. Utils. Comm’n, 358 N.W.2d 639, 642 (Minn. 1984).  However, the district court’s findings of fact “shall not be set aside unless clearly erroneous, and due regard shall be given to the opportunity of the trial court to judge the credibility of the witnesses.”  Minn. R. Civ. P. 52.01.

I.  Anderson, Inc.

A.  Sua sponte judgment on buyout value

            Powell first argues that the district court erred by prematurely entering a judgment on the buyout value of her shares in Anderson, Inc.  She contends that, because the court’s valuation of the shares was based on inadmissible “drafts” prepared for use in a settlement conference, it was without a basis for this determination.

            But Minn. R. Evid. 408 specifically does not require the exclusion of evidence “otherwise discoverable merely because it is presented in the course of compromise negotiations.”  Because the documents would have been otherwise discoverable, the draft reports prepared by Powell’s expert to support her valuation of Anderson, Inc. were admissible.

B.  Basis for Equitable Relief

            Respondents argue that the district court erred as a matter of law by awarding Powell more than the book value measure provided for in the share retirement agreement. We disagree.

            Although such agreements are generally enforceable, Miller Waste Mills, Inc. v. Mackay, 520 N.W.2d 490, 494 (Minn. Ct. App. 1994), review denied (Minn. Oct. 14, 1994), the terms of such agreements do not limit a court’s power.  In an action by a shareholder, a court may grant any equitable relief it deems just and reasonable in the circumstances when the directors or those in control of the corporation have acted in a manner unfairly prejudicial toward one or more shareholders in their capacities as officers or employees of a closely held corporation.  Minn. Stat. § 302A.751, subd. 1.

            Shareholders in a closely held corporation owe one another a fiduciary duty.  Evans v. Blesi, 345 N.W.2d 775, 779 (Minn. App. 1984), review denied (Minn. June 12, 1984). Thus, “the law imposes upon them highest standards of integrity and good faith in their dealings with each other,” Id.(citation omitted), and such shareholders must deal openly, honestly, and fairly with each other.  Id. (citation omitted).  Given the court’s finding of unfairly prejudicial actions on respondent’s part, equitable relief under section 302A.751 is appropriately within the discretion of the court.  The fact that the district court only found that respondents “may” have acted in an unfairly prejudicial manner without specifying an uncontroverted incident of such conduct is irrelevant.  Regardless of whether it was specifically stated or not, the record clearly supports a finding that respondents acted in a prejudicial manner.

C.  Valuation of Powell’s Shares

            Respondents argue further that the district court’s use of fair market value in valuing Powell’s shares was error, because it failed to make a specific finding that the book value of Powell’s shares was unreasonable under the circumstances.  See Minn. Stat. § 302A.751, subd. 2 (requiring the court to “determine that the price or terms are unreasonable under the circumstances” before using the “fair value” of the shares).  However, here, the district court’s conclusion that there was ample evidence on the record to support its exercise of the equitable powers granted it by section 302A.751 implicitly serves as a finding that the terms of the share retirement agreement were unreasonable. This is especially true where the majority stockholders acted unfairly and prejudicially toward the minority stockholder.

D.  Computation of Ownership

            Powell contends that the district court’s determination that she owned 24.73% of Anderson, Inc., was improper because she presented admissible evidence to support a much higher percentage.  The record, however, contains copies of the certificates memorializing shares given by her father and supports the district court’s determination of her ownership interest.

E.  Discovery

            In the week preceding the summary judgment hearing, Powell filed two affidavits requesting further discovery pursuant to Minn. R. Civ. P. 56.06.  The district court refused to grant a continuance but made no findings regarding its decision.  Powell now argues that she was prejudiced by refusal to allow her sufficient discovery to present an accurate valuation of Anderson, Inc. prior to the hearing on respondents’ summary judgment motion.

            This court will not overturn the district court’s refusal to grant a continuance absent an abuse of discretion.  Dunshee v. Douglas, 255 N.W.2d 42, 45 (Minn. 1977).  In determining whether to grant a continuance for further discovery, the court should consider whether the party seeking the continuance has been “diligent in obtaining or seeking discovery prior to its Rule 56.06 motion” and whether the party is acting “in the good faith belief that material facts will be uncovered, and not just “engaging in a ‘fishing expedition.’”  Rice v. Perl, 320 N.W.2d 407, 412 (Minn. 1982).  Here, the affidavits filed by Powell’s counsel failed to reflect any perceived need for further information regarding the valuation of Anderson, Inc.  Accordingly, the district court did not abuse its discretion in refusing to grant a continuance to permit further discovery.


II.  Anderson Corp.

A.  Valuation of Shares in a Combined Entity

            Powell argues that the district court erred in refusing to permit her to introduce expert testimony regarding the valuation of her shares in a combined Anderson, Inc. and Anderson Corp. entity.

            In general, the admission of expert testimony is within the sound discretion of the district court and will not be disturbed absent an abuse of that discretion.  Walton v. Jones, 286 N.W.2d 710, 713 (Minn. 1979).  The record reflects that, at trial, Powell’s expert presented extensive testimony on the synergistic effect of combining the two companies, resulting in fewer expenses and a concomitant share value increase.  The district court found the expert’s opinion lacked credibility.  See Pooley v. Mankato Iron & Metal, Inc., 513 N.W.2d 834, 838 (Minn. App. 1994), review denied (Minn. May 17, 1994) (stating that a district court, as trier of fact, need not accept witness’s opinion).

            Citing Foy v. Klapmeier, 992 F.2d 774 (8th Cir. 1993), Powell suggests that the use of combined valuation is compelled by law.  However, the Foy court did not specifically endorse the combined valuation theory, but held only that the use of that method by the district court was not an abuse of discretion under Minn. Stat. § 302A.467 (1998).  That statute “authorizes a trial court to grant any equitable relief it deems just and appropriate.”  Id. at 779 and n.5.  Therefore, the district court’s rejection of that method was also not an abuse of discretion.

B.  Minority and Marketability Discounts

            Powell also argues that the district court erred in applying minority and marketability discounts when valuing the usurpation damages.  We agree.  The legislative intent in enacting the dissenter’s rights and court-ordered buyout statutes protects minority shareholders.  MT Properties, Inc. v. CMC Real Estate Corp., 481 N.W.2d 383, 388 (Minn. App. 1992).  Therefore, it is not an abuse of discretion for a district court to eschew a minority discount to reduce the value of an unwilling vendor’s shares.  Pooley, 513 N.W.2d at 838.  The application of minority discounts is prohibited in determining “fair value” in statutory dissenter’s rights cases.  MT Properties, 481 N.W.2d at 388.  Powell is neither an unwilling vendor nor a dissenting shareholder.  But in this usurpation of corporate opportunity action, protecting shareholders whose rights are profoundly affected by others in control of a corporation (and preserving their right to share in the value of the company) will be best vindicated if minority or marketability discounts on the fair value of the price of the stock are disallowed.[1]

            Respondents counter that because Powell has never been a shareholder of Anderson Corp., she has no shareholder standing to assert a claim for a buyout under section 302A.751, subdivision 2 or the dissenter’s rights statute: sections 302A..471, .473 (1998). Without the usurpation, Powell would be a shareholder in Anderson Corp. Therefore, Powell’s buyout under section 302A.751 should have included Anderson Corp. as well as Anderson, Inc.

C.  Use of Fair Market Value

            Similarly, respondent contends that the district court erred in awarding fair market value, rather than book value, with respect to Powell’s damages for the usurpation of corporate opportunity claim.  But again, under section 302A.751, the court is authorized to use “fair value” in making such an award.  Minn. Stat. § 302A.751, subd. 2.

D.  Imputed Capital Contribution

            Richard Anderson and Gervais made an initial combined capital investment of $100,000 in Anderson, Corp.  The district court failed to account for that amount and accordingly, Powell’s award should have been reduced by $24,730, the amount of the imputed capital contribution required in connection with a 24.73% interest in Anderson Corp.

E.  Attorney Fees

            Powell contends that the district court abused its discretion in denying her motion for attorney fees and costs after finding that respondents had breached their fiduciary duties and usurped a corporate opportunity.

            A court may grant attorney fees if a corporation or an officer or director of the corporation either violates a provision of section 302A, Minn. Stat. § 302A.467, or if a party has acted arbitrarily, vexatiously, or otherwise not in good faith in a section 302A proceeding.  Minn. Stat. § 302A.751, subd. 4.  But this law does not compel a court to award attorney fees.  See Pedro v. Pedro, 489 N.W.2d 798, 804 (Minn. App. 1992), review denied (Minn. Oct. 20, 1992) (finding circumstances sufficient to justify an award of attorney fees under section 302A.751, without mandating them).  The district court here found that there was no evidence that Richard Anderson or Gervais acted maliciously or fraudulently in relation to Powell and the formation of Anderson, Corp.  Accordingly, it did not abuse its discretion in denying appellant’s motion for attorney fees.

III.  A&P Partnership

A.  Necessity for Accounting

            Powell argues that the district court’s recognition that she had a right to dissolution of the A&P Partnership and that she was owed rents not collected from Anderson, Inc. was catalyst for her right to an accounting.  A partner has the right to a formal accounting as to partnership affairs if wrongfully excluded from the partnership business or possession of its property by copartners.  Minn. Stat. § 323.21 (1998).

            But, as the district court noted, Powell received a more than adequate accounting of the operation of the partnership, including the court-ordered appraisal of all of the real property owned by the partnership.  Furthermore, any further expense that would be incurred through a formal accounting would be wholly unnecessary and wasteful because Powell was provided with virtually every document and record necessary to substantially evaluate the partnership’s financial history, including tax records, bank statements, ledgers, lease documents, and loan documents.  Powell’s allegation that lease payments were owed to the A&P Partnership from Anderson, Inc., is irrelevant.  If such payments were made, the partnership was still entitled to them and Powell would be entitled to her share.  In fact, the district court ordered Anderson, Inc. to make any such payments if they became due.

B.  A & P’s Legal Fees

            Powell contends that she should not be charged for attorney fees incurred by the A&P Partnership in this litigation.  Absent an abuse of discretion, an appellate court will not reverse a district court’s award or denial of attorney fees.  Becker v. Alloy Hardfacing & Eng’g Co., 401 N.W.2d 655, 661 (Minn. 1987).  The district court concluded that Powell was not entitled to reimbursement of fees because it was her choice to force the partnership to defend itself as a separate legal entity and it was entitled to do so.  Under these circumstances, we conclude that the district court acted well within its discretion in denying appellant reimbursement for the fees charged to the partnership.

            Affirmed in part as modified and remanded in part.

[1] Until recently, there has been no Minnesota law on the application of a lack of marketability discount.  Advanced Communication Design, Inc. v. Follet, 601 N.W.2d 707, 710 (Minn. App. 1999), review granted (Minn. Jan. 18, 2000).  In Follet, this court held that “a marketability discount cannot be used unfairly by controlling or oppressing shareholders to benefit themselves to the detriment of the minority or oppressed shareholders.”  Id. at 711 (quotation omitted).  This principle has precluded the application of a marketability discount to the valuation of a minority shareholder’s shares in a buyout following a court trial on the minority shareholder’s claims of bad faith and breach of fiduciary duty by the majority shareholder, id., and similarly precludes such application here.