This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat § 480A.08, subd. 3 (2000).
STATE OF MINNESOTA
IN COURT OF APPEALS
Scott Qualle, et al.,
Hennepin County District Court
File No. CT994864
Benjamin S. Houge, 310 Fourth Avenue South, Suite 604, Minneapolis, MN 55415 (for respondent)
Michael C. Black, Michael C. Black Law Office, Ltd., 265 West Seventh Street, Suite 201, St. Paul, MN 55102 (for appellants)
Considered and decided by Stoneburner, Presiding Judge, Lansing, Judge, and Peterson, Judge.
In this action involving a dispute over the ownership and control of Golden Valley Products, Inc. (GVP), Scott Qualle and GVP appeal from summary judgment restoring ownership and control of GVP to Joseph Kuhn. Because the record indisputably establishes that the sale of the shares Qualle voted to take control of GVP required approval from the board of directors, and that the board of directors has never approved the sale of those shares, we affirm.
Eugene Qualle formed GVP, a printing business, in 1973. When Qualle retired in 1995, GVP redeemed all of his stock and issued 50,000 shares of common stock each to Lisa Millhone and Joseph Kuhn, who became directors and officers of the corporation. Robert Westin, GVP’s accountant, also became a director. The remaining stock, 238.96 shares, was retained by Susan Brallier under an agreement dissolving an employee stock-ownership plan. Brallier later sold 100 shares to David Hawkes.
In January 1998, Millhone sold her 50,000 shares back to GVP. In September 1998, GVP and Scott Qualle, Eugene Qualle’s son, entered into an agreement under which Scott Qualle would buy the 50,000 shares of GVP treasury stock that Millhone had sold back to the company at $.70 per share. The agreement obligated Kuhn to call a special meeting of shareholders to elect Qualle as a director and to call a special meeting of the board of directors to obtain approval of the stock-purchase agreement. The agreement precluded Kuhn and Qualle from acquiring Brallier’s or Hawkes’s shares without each other’s consent and gave GVP a right of first refusal on those shares.
In November 1998, at his son’s urging, Eugene Qualle bought Brallier’s and Hawkes’s shares. Scott Qualle obtained proxies to vote those shares. Brallier and Hawkes did not notify GVP or Kuhn of Eugene Qualle’s offer.
At a special meeting of shareholders held in December 1998, the shareholders voted to ratify a debt GVP had incurred to Scott Qualle. Scott Qualle then voted his proxy shares and the 50,000 shares he hoped to buy under the stock-purchase agreement in favor of his motions to reduce the number of directors to one and to appoint himself as sole director. Kuhn opposed both motions.
After the December meeting of shareholders, Scott Qualle, acting as sole director, approved the stock-purchase agreement, terminated Kuhn’s employment, and took control of GVP. Kuhn then brought this action, alleging illegal termination from employment and seeking damages and an injunction reinstating his salary and the benefits he had earned as a GVP officer. Kuhn later amended his complaint to include a claim for injunctive relief compelling Qualle to restore control of the company to Kuhn (counts I and II) and claims for breach of fiduciary duty and breach of the stock-purchase agreement (counts III and IV).
In February 2000, the district court granted Kuhn summary judgment on counts I and II of his amended complaint, but it denied his request for injunctive relief, reasoning that Kuhn had an adequate remedy at law. The court premised its grant of summary judgment on a finding that GVP’s shareholders and directors had never approved the stock-purchase agreement and that approval was required by law, the corporation’s articles of incorporation, and the stock-purchase agreement itself.
Following the court’s February order, Kuhn convened a special meeting of GVP directors on February 27. After the existing directors declined to attend the meeting and indicated that they no longer considered themselves directors, Kuhn appointed his brother as director. The new board declined to ratify the sale of GVP shares to Qualle under the stock-purchase agreement and elected Kuhn and his wife as officers. Kuhn then took possession of the business premises. In response, Qualle moved for and obtained an order restoring the status quo until a hearing could be held.
In March, Qualle moved to restrain Kuhn from interfering with the operations of GVP while this action was pending. In turn, Kuhn moved for entry of judgment on counts one and two of his amended complaint pursuant to the court’s February order and for dismissal of counts three and four. Kuhn also renewed his request for injunctive relief to restore his control of GVP.
In June, the district court directed the entry of judgment on counts one and two of the amended complaint, granted Kuhn’s motion for injunctive relief enforcing the judgment, and granted his motion to dismiss counts three and four. Although the district court order correctly stated the motion for dismissal of counts three and four, it mistakenly identified the counts as one and two in the operative part of the dismissal order. The parties do not dispute that the court intended to dismiss counts three and four. This appeal followed.
D E C I S I O N
Qualle first argues the district court abused its discretion in considering Kuhn’s renewed request for injunctive relief without requiring that he comply with the procedure set forth in Minn. R. Gen. Pract. 115.11. Rule 115.11 permits motions for reconsideration only with the express permission of the trial court and in response to compelling circumstances, after submission of a written request. Qualle argues that Kuhn did not submit a written request. Relying on Dalco Corp. v. Dixon, 338 N.W.2d 437, 440 (Minn. 1983), Qualle also argues the district court erred in considering new evidence.
First, we disagree with Qualle’s characterization of Kuhn’s motion as a motion for reconsideration of the court’s order. We think the motion is more accurately characterized as a new motion for injunctive relief based on events that occurred at the board of directors’ February 27 meeting. By their very nature, injunctive-relief motions are likely to reoccur if the parties’ circumstances change. They thus do not raise issues of finality comparable to those recognized in Dalco in the context of summary-judgment motions. A new motion for injunctive relief arising out of changed circumstances does not, therefore, come within the purview of rule 115.11.
Second, the district court did not violate Dalco by considering new evidence. Dalco involved a pending motion for summary judgment and an attempt to introduce new evidence after the court had held a hearing but before it had issued a decision. Unlike the motion in Dalco, Kuhn’s motion requested injunctive relief to enforce the court’s judgment after the decision on the original motion. The district court thus did not abuse its discretion either in considering new evidence or in entertaining Kuhn’s renewed request for injunctive relief without requiring him to comply with Minn. R. Gen. Pract. 115.11.
Qualle next argues the district court erred in granting summary judgment on counts one and two of Kuhn’s amended complaint. Qualle claims that genuine issues of material fact remain for trial and that the district court incorrectly applied the law. The record does not support this argument.
Rule 56 of the Minnesota Rules of Civil Procedure allows a court to resolve an action on the merits when no genuine issues of material fact remain for trial and the moving party is entitled to judgment under the applicable law. DLH, Inc. v. Russ, 566 N.W.2d 60, 69 (Minn. 1997). No genuine issues of material fact remain for trial when the record, taken as a whole, creates only a “metaphysical doubt” as to a factual issue and could not lead a rational trier of fact to find for the nonmoving party. Id. at 70. A genuine issue of material fact must be established by substantial evidence. Id. at 69, 70.
Qualle has failed to present specific facts showing that there is a genuine issue for trial. The record conclusively shows that Kuhn, Millhone, and Westin were the directors of GVP at the time of the December special meeting of shareholders. Qualle admitted as much in deposition testimony. The record similarly establishes that Kuhn, Millhone, and Westin did not approve the stock-purchase agreement at the December special meeting of shareholders as required by the articles of incorporation, Minn. Stat. § 302A.401 (1998), and the stock-purchase agreement itself. The minutes of the December shareholders meeting reflect only that the shareholders ratified the corporation’s debt to Qualle. The minutes contain no reference to the ratification of the stock-purchase agreement. Because board approval was required for the agreement to become effective, Qualle did not acquire the shares he voted to take over GVP. On this record, therefore, the district court correctly concluded that Kuhn was entitled to summary judgment on counts one and two of his amended complaint.
Contrary to Qualle’s argument, equitable estoppel does not preclude Kuhn from challenging the transfer of shares to Qualle. Qualle has failed to demonstrate that Kuhn made misrepresentations upon which Qualle relied to his detriment. See Saaf v. Duluth Police Pension Relief Ass’n, 240 Minn. 60, 68,59 N.W.2d 883, 888 (1953) (detrimental reliance on misrepresentations is one of the essential elements of equitable estoppel). Additionally, the record supports the district court’s finding that the delay in calling the December meeting, upon which Qualle premises his estoppel claim, was justified and did not prejudice Qualle. In fact, the delay worked in Qualle’s favor because it gave him time to negotiate the purchase of the Brallier/Hawkes shares, which he needed to prevail in his efforts to take over the corporation.
Furthermore, any equitable-estoppel argument is eviscerated by the district court’s determination that Qualle violated the stock-purchase agreement by obtaining the Brallier/Hawkes shares, and thereby released Kuhn of his obligations under the agreement. Qualle’s argument that he did not violate the agreement because he obtained the proxies rather than the actual shares is disingenuous. Qualle could not have obtained the proxies had he not conspired with his father to obtain the shares in violation of the stock-purchase agreement.
Qualle’s argument that Kuhn breached the agreement first and thereby released Qualle of his obligations under the agreement is similarly without merit. The record supports the district court’s finding that Kuhn’s failure to call a special meeting of shareholders immediately after entering into the stock-purchase agreement was justified and did not prejudice Qualle.
Qualle’s final argument is that the district court abused its discretion in granting Kuhn injunctive relief because Kuhn failed to demonstrate the factors necessary for injunctive relief. Qualle, however, confuses preliminary injunctive relief with injunctive relief that is imposed to enforce a final judgment. A legal remedy in the form of damages would not be as “practical and efficient to the ends of justice and its prompt administration as the remedy in equity.” Yager v. Thompson, 352 N.W.2d 71, 74 (Minn. App. 1984) (citation omitted). The district court did not abuse its discretion in granting Kuhn an injunction restoring to him the control of the corporation.