This opinion will be unpublished and

 may not be cited except as provided by

Minn. Stat.§ 480A.08, sub. 3 (2000)











Michael J. Tisdell, et al.,





ValAdCo, et al.,

Respondents (C6-01-2060),


Schuetzle, Carlson & Co., L.L.P.,

Respondent (C0-01-2054),


Mark Hanson, et al.,

Respondents (C6-01-2057),



AG Capital Company, et al.,

Respondents (C2-01-2055).



Filed October 16, 2002


Robert H. Schumacher, Judge


Renville County District Court

File No. C59976



John F. Bonner, III, Robyn K. Johnson, Bonner & Borhart LLP, 1500 AT&T Tower, 901 Marquette Avenue, Minneapolis, MN 55402-3205 (for appellants)


Terrence J. Fleming, Michael D.L. Olafson, William F. Stute, Lindquist & Vennum P.L.L.P., 4200 IDS Center, 80 South Eighth Street, Minneapolis, MN 55402 (for respondents ValAdCo and individuals)


Peter A. Koller, Thomas J. Shroyer, Moss & Barnett P.A., 4800 Wells Fargo Center, 90 South Seventh Street, Minneapolis, MN 55402-4129 (for respondent Schuetzle, Carlson)


Lewis A. Remele, Jr., Charles E. Lundberg, Bassford, Lockhart, Truesdell & Briggs, P.A., 3550 Multifoods Tower, 33 South Sixth Street, Minneapolis, MN 55402 (for respondents Hanson and Doherty, Rumble & Butler)


John L. Krenn, Gray, Plant, Mooty, Mooty & Bennett, P.A., 3400 City Center, 33 South Sixth Street, Minneapolis, MN 55402-3796 (for respondents AG Capital, Offutt, and Olson)



Considered and decided by Stoneburner, Presiding Judge, Schumacher, Judge, Harten, Judge.*


U N P U B L I S H E D  O P I N I O N




Appellants Michael J. Tisdell, William Tisdell, and M. Shawn Tisdell (Tisdells) were investors in respondent ValAdCo, a hog cooperative.  They sued ValAdCo and respondents officers, directors, and employees of ValAdCo, its accountant, respondent Schuetzle, Carlson & Co., L.L.P., its attorneys, respondents Mark Hanson and Doherty, Rumble, & Butler, P.A., and its lender, respondents AG Capital Company, Ron Offutt, and Rick Olson, for fraud, consumer fraud, and violation of the Minnesota Securities Act.  The district court granted summary judgment to all respondents except ValAdCo.  The Tisdells contend the court erred in (1) making factual determinations; (2) ruling that only the cooperative could be held liable for damages despite the Tisdells' claim that co-tortfeasors are jointly and severally liable; (3) dismissing the consumer fraud claim because it is preempted by the Minnesota Securities Act and the Tisdells are not consumers under applicable law; (4) determining stock conversions and equity contributions were not purchases of securities for purposes of the Tisdells' Securities Act claim; (5) ruling that the lender did not owe the Tisdells any fiduciary duty and rejecting the claim that the release was invalid because it was procured under duress; and (6) ruling cooperative officers owe no fiduciary duty to shareholders.  We affirm.


            The Tisdells are partners in  Tisdell Farms Partnership, a farming partnership near Olivia, Minnesota.  In 2000, the Tisdells farmed about 7,500 acres.  The annual gross income of the Tisdells' farming operations exceeded $3 million for the last several years. 

            Over the years, the Tisdells have invested in several farm cooperatives, including the Southern Minnesota Sugar Beet Cooperative, in which they invested approximately $1 million.  Some of these were startup entities.[1] 

            In 1991, each of the Tisdells deposited funds toward and ultimately purchased five shares in ValAdCo, a prospective hog cooperative offering shares in a hog breeding and marketing facility called Crossing Farm 1 (CF1).   ValAdCo was designed to provide large facilities that would add value to its shareholders' corn by feeding the corn to hogs bred and raised by ValAdCo.

 Each of the Tisdells paid $25,000 for his purchase, received a disclosure statement, and entered into a uniform marketing agreement (1991 UMA) with ValAdCo.  The 1991 UMA obligated each of the Tisdells to deliver 25,000 bushels of corn to ValAdCo, specifically, 5,000 bushels of corn during each fiscal year for each share of common stock  purchased.  The agreement also provided that the cooperative would market the corn at the best price obtainable under market conditions, and that the

Cooperative may withhold from the purchase price of corn purchased from Grower pursuant to this Agreement as a per unit retain capital investment in this Cooperative an amount per bushel of corn delivered by Grower on or before November 1, of each year that is determined by the Cooperative's Board of Directors * * * .


The 1991 UMA also provided that the rights and obligations of the parties to the contract would be subject to and contingent upon ValAdCo's execution of a contract with DeKalb Genetics to furnish and market breeding stock produced by the cooperative and ValAdCo's execution of a cost-plus marketing agreement with a meatpacker to buy a stipulated number of hogs annually.  Pursuant to this agreement, the Tisdells delivered 75,000 bushels of corn to ValAdCo in 1991.

In February 1992, seven months before CF1 was stocked with sows, ValAdCo entered into a Swine License Agreement with DeKalb Breeders, Inc.  In January 1993, ValAdCo entered into a Market Hog Purchase Agreement with Farmland that provided for the sale of market hogs.  ValAdCo also effected a 5 to 1 split of the 64 shares issued in connection with CF1.  Each split share carried a commitment to deliver 1,000 bushels of corn annually.  The Tisdells' number of shares therefore rose from 15 to 75, but their corn delivery obligation remained at 75,000 bushels annually.

            In early 1993, ValAdCo offered for sale to stockholders additional shares of  ValAdCo stock to finance another hog breeding facility, Crossing Farm 2 (CF2).  As part of the CF2 offering, the Tisdells collectively purchased 156 additional shares for a total of $530,000.   In so doing, they were required to execute a new uniform marking agreement (1993 UMA), which superseded the 1991 UMA.   The 1993 UMA provided in part:

The Cooperative agrees to pay the Member by the following methods:


(a)  Corn Payments.  For delivery and transfer of corn to the Cooperative (but not for participation in the equity offering) there may be two types of payment to the Member in the discretion of the Board of Directors:


(1) Purchase price of corn in the amount determined by the Board.


(2) A unit retain evidenced by nondividend bearing equity credits may be issued.


Hanson and Doherty, Rumble, & Butler represented ValAdCo during this offering process.

In 1992, Ag Capital had become the Tisdells' agricultural lender.  In early 1993, Rick Olson, the Tisdells' loan officer with Ag Capital, began promoting the ValAdCo share offering for CF2. Olson investigated the CF2 expansion and gave a written report to the Tisdells;  he also met with the Tisdells to advise them regarding investing in the CF2 expansion.  Olson also sent the Tisdells an attachment to the Ag Capital credit report that discussed risk factors and identified how ValAdCo was addressing those risk factors. 

In July 1994, VadAdCo held a third offering, this time in connection with the construction of two commercial sow farms known as COM1 and COM2.  ValAdCo issued 320 shares of stock through options to be exercised by its shareholders and sold 960 shares at $4,400 per share, with each share requiring the holder to deliver annually  1,000 bushels of corn.  Olson called the Tisdells and offered to lend them funds to invest in the projects.  Olson provided the Tisdells with a report, which contained projections for the future performance of the projects.  This report was based on assumptions provided by ValAdCo and information provided by Schuetzle.   

             The Tisdells borrowed money from Ag Capital and collectively purchased 321 shares in the COM1 and COM 2 projects for a total cost of more than $1 million.  In connection with that purchase, the Tisdells executed a subscription agreement, accompanied by a promissory note, and made the required $1,000 deposit on each share prior to July 31, 1994.  The subscription agreement stated in part :

5. Representations and Warranties of the Subscriber.  The subscriber hereby represents and warrants to the Cooperative that the Subscriber:


*  *  *  *


(d) has the financial ability to bear the economic risk of the membership, has adequate means of providing for current needs and contingencies, and has no need for liquidity with respect to membership in the Cooperative; 


*  *  *  *


(f) has the necessary knowledge and experience in financial and business matters to be capable of evaluating the merits and risks of membership and share ownership in the Cooperative;


*  *  * *


(h) in deciding to purchase the Shares herein subscribed for,  has relied solely upon independent investigations made by the Subscriber;

(i) understands that membership and share ownership in the Cooperative involves certain risks, and has given consideration to and has an understanding of those risks, including those set forth as contingencies and under the "Risk Factors" section in the Disclosure Statement; *  * * .


Thereafter, the Tisdells completed their purchase by making additional payments in September and December.  The Tisdells purchased no additional ValAdCo shares after 1994.  William Tisdell became a ValAdCo board member in December 1995, became secretary of the board, and remained on the board until June 1996. 

In the summer of 1994, Olson knew that ValAdCo was looking for a chief financial officer/president.  Olson applied for that job and was hired by ValAdCo in late August 1994.  Ag Capital did not know that Olson was leaving his job at Ag Capital until September 2, 1994, after Olson decided to take the position at ValAdCo.  Olson left Ag Capital in September, 1994.

Schuetzle was ValAdCo's accountant and auditor from 1991 to 1997.   Most of the accounting services provided were audits and reviews of ValAdCo as a single entity.  The first audit prepared by Schuetzle related to the August 31, 1992 fiscal year-end, but was not issued until January 31, 1993.  From 1991 to 1996, the financial statements showed operational losses for ValAdCo in every year.  At each year's annual meeting, Dale Carlson, one of Schuetzle's partners, orally reviewed the audited financial statements for the members, including the Tisdells.  Carlson stated that he had never seen any audit statement from the firm indicating that ValAdCo had made money. 

In 1995 and 1996, ValAdCo experienced problems with the hog respiratory disease, PRRS, which caused financial losses at the cooperative.  Tisdell Farms also began experiencing financial difficulty.  Although they had received periodic "value added payments," in 1994 and 1995, the Tisdells had not been paid full market price for the corn they had delivered to ValAdCo.   In 1995, problems with their sugar beet crop had also caused them to lose over $400,000 in revenue.  A 1996 crop year projection drafted by the Tisdells' financial advisor showed a negative cash position of $686,000, the first time in the previous ten years that the Tisdells had ever projected a negative cash flow.

The Tisdells were also obligated to deliver more corn to ValAdCo.   They sold their 1995 corn crop to make a loan payment to Ag Capital, rather than using it for corn deliveries to ValAdCo.  In 1996, they were planning to buy corn for their payment to ValAdCo, but the market price for corn was then higher than in 1995. The Tisdells decided not to make a full delivery of corn to ValAdCo in 1996.  They had heard rumors about problems at ValAdCo and did not think ValAdCo would be able to fulfill their cash delivery payment schedule. 

The Tisdells made a partial corn delivery in April 1996 but declined to make further deliveries, asserting that they had no legal obligation to deliver corn.   The Tisdells then hired counsel to represent them.  On May 14, 1996, ValAdCo wrote a letter to all shareholders, indicating that the financial problems of the cooperative had been caused in part by operational losses due to higher feed costs and PRRS, but also by startup losses and cost overruns on construction. 

Normally, the Tisdells would renew their annual operating loan with Ag Capital in the spring and pledge a security interest in the upcoming year's crop.  In 1996, Ag Capital, through its loan agent Brian Madson, approved a seasonal loan increase of $300,000 to the Tisdells, stating the increase was needed to purchase corn for delivery to ValAdCo.  Madson also indicated that the Tisdells would not deliver corn in April as scheduled because they were waiting for complete financial information before making a decision. The Tisdells also told Madson they would not sign the security interest for the 1996 crop until they resolved their delivery problems with ValAdCo.  The Tisdells' loans to Ag Capital became due and payable on April 1, 1996, but Ag Capital extended the due date to May 1, and then to June 1.   The Tisdells failed to make the payment of the principal balance due on June 1, 1996.  In July, Ag Capital told the Tisdells it would be using the money from the Tisdells' crop checks to pay down the Tisdells' default on the debt to Ag Capital.

During the spring of 1996, Madson also had discussions with ValAdCo regarding the cooperatives' current financial situation, giving feedback on how a lender would react to a loan.  He also worked with ValAdCo to provide feedback or comments challenging some of their assumptions because they were making  new budgets.

Throughout the summer of 1996, the Tisdells and their counsel had discussions attempting to resolve the problems with the corn delivery and the Tisdells' dissatisfaction with ValAdCo.  The Tisdells' financial advisor met with Madson to attempt to work out a financing plan with Ag Capital.  The advisor also set up a meeting between the Tisdells and another lender similar to Ag Capital.  

A meeting was arranged at Ag Capital's offices in Fargo in July, 1996  between the Tisdells and Ron Offutt, who controlled a majority of the shares of Ag Capital.  The Tisdells were accompanied by their  attorneys and their financial adviser.  At the meeting, there was discussion of the Tisdells' problems with ValAdCo.   At Michael Tisdell's request, Offutt set up another meeting with the attorneys for the Tisdells and representatives from ValAdCo, St. Paul Bank for Cooperatives, and Ag Capital.  This meeting was held in St. Paul at the offices of ValAdCo's attorney.  The meeting lasted several hours but ended without resolution.  After further negotiations, the Tisdells in August agreed to the following terms:

(1) The Tisdells would wire to ValAdCo the sum of $629,727.49, representing  their share of the total corn deliveries due with interest and penalties;

(2) The 25% liquidated damages penalty in the 1993 UMA would not be collected but carried on ValAdCo's books for three years and written off if the Tisdells delivered corn as required for three years.  The confirmation of this agreement was used as the basis for a request to Ag Capital's loan committee for a new loan for the Tisdells. 

On August 13, 1996, the Tisdells, with their attorney present, executed a loan agreement with Ag Capital.  The loan was for $3,725,000 in new loans, consolidated with $1,921,900 in existing loans, for a total loan of $5,646,000.  The loan by its terms in the "Limitation on Advances" section required that a release be delivered before each advance would be made.  The loan document, except the release, had been sent during the day on August 12 to the Tisdells.  The release had been sent during the evening on August 12 to their attorney.   The agreement required the Tisdells to wire a net amount of $629,727.49 to ValAdCo that afternoon.

The release provided in part:

The Releasing Parties, for good and valuable consideration the receipt and sufficiency of which is acknowledged, release and forever discharge AGCAPCO of and from any and all past, present and future claims, demands, obligation, actions and causes of action, at law or in equity, whether arising by statute, common law, or otherwise, that the Releasing Parties may now have or hereafter have, or claim to have, that arise out of or relate to any action or failure to act of AGCAPO or to any other event, matter, or thing in any way involving or relating to AGCAPO at any time prior to the date of this Release of Claims, including, but not limited to, the following:


*  *  *  * 


2.3 Any and all communications of any type or nature between AGCAPCO and any one or more of the Releasing Parties;


2.4 Any and all communications of any type or nature  between AGCPCO and any third party or parties in any way relating to any one or more of the Releasing Parties;


2.5 The conduct, operation, and management of the business of any one or more of the Releasing Parties; and


2.6 The offer, purchase, sale or ownership of any interest or equity security in ValAdCo or any other legal entity.


The release also provided:


4.2 In entering into this Release of Claims, the undersigned each represent that it or he has proceeded upon the advice of an attorney of its or his own choice, that each has read the terms of this Release of Claims, and that these terms are fully understood and voluntarily accepted by it or him. 


The release defined the "Releasing Parties" to include the Tisdells in their individual capacities and in their capacities as partners of Tisdell Farms and defined the released parties to include

Ag Capital Company and each of its past, present and future directors, officers, attorneys, insurers, agents, representatives, employees, parent subsidiaries, affiliates, predecessors, successors and assigns.


Each of the Tisdells signed the release once for himself individually and once as general partner for Tisdell Farms.

            Following this agreement, the Tisdells continued making corn deliveries to ValAdCo until January, 1999.  They then suspended their corn deliveries and brought an action alleging fraud, negligent misrepresentation, securities violations, violations of consumer fraud law, joint and tortious conduct, and breach of fiduciary duty against individually-named officers, directors, and employees of ValAdCo, Schuetzle, Ag Capital, Offutt, Olson, and Doherty, Rumble & Butler, and Hanson.  The Tisdells also sued for dissolution of ValAdCo and sued ValAdCo itself for common law fraud, negligent misrepresentation, violation of consumer fraud laws, and breach of contract.

On October 12, 1999, the district court granted motions to dismiss several claims against the named parties.  On August 23, 2001, the court issued its order granting motions for summary judgment on all remaining claims against the individual ValAdCo respondents; Schuetzle; Ag Capital, Offutt, Olson, Doherty, Rumble, & Butler, and Hanson.  The court did not grant summary judgment as to claims against ValAdCo, which remain for trial.  This appeal followed. 


On appeal from summary judgment, this court determines whether there are any genuine issues of material fact and whether the district court erred in its application of the law.  Offerdahl v. Univ. of Minn. Hosp. & Clinics, 426 N.W. 425, 427 (Minn. 1988).  No genuine issue of material fact exists "[w]here the record taken as a whole could not lead a rational trier of fact to find for the nonmoving party."  DLH Inc. v. Russ, 566 N.W. 2d 60, 69 (Minn. 1997) (alteration in original) (quoting Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S. Ct. 1348, 1356 (1986)).  "[T]he party resisting summary judgment must do more than rest on mere averments."  Id. at 71.  A genuine issue for trial "must be established by substantial evidence."   Id. at 69-70 (quoting Murphy v. Country House, Inc., 307 Minn. 344, 351, 240 N.W.2d 507, 512 (1976)).   No  genuine issue of material fact exists when the nonmoving party brings forth evidence merely creating a metaphysical doubt concerning a factual issue, and that evidence is not sufficiently probative concerning an essential element of the case so as to permit reasonable persons to draw different conclusions.  Id. at 71.

1.            The Tisdellsfirst contend that the district court erred in making the factual determination that ValAdCo fulfilled alleged conditions precedent to the 1991 UMA, namely, the execution of a contract with DeKalb Genetics to furnish and market breeding stock produced by the cooperative, and the execution of a cost-plus marketing contract with a packer to buy a stipulated number of hogs annually.   None of the named respondents in this appeal, however, were direct parties to the UMA contracts between the Tisdells and ValAdCo.  The Tisdells' lawsuit against ValAdCo alleging breach of contract, inter alia, is still pending in the district court and addresses this claim.

Therefore, the resolution of any contractual  issues arising from these contracts is not properly before this court on appeal.  To the extent that the Tisdells are asking for rescission of the contract with ValAdCo, they may ultimately be precluded from recovering damages for restitution from the named parties in this lawsuit.   See Knopff  v. Olson, No. C7-95-601, 1995 WL 497275 (Minn. App. Aug. 22, 1995).    

2.            As against Ag Capital and its agents, the Tisdells challenge the validity of the 1996 release that they signed, claiming that it was obtained by economic coercion and  fraud. Releases carry a strong presumption of validity under Minnesota law.  Sorensen v. Coast-to-Coast Stores, 353 N.W. 2d 666, 669 (Minn. App. 1984), review denied (Minn. Nov. 7, 1984).  Factors necessary to rebut that presumption include

lack of intent to release claims; whether the release language is complicated, confusing, or misleading;  effect  of absence or presence of counsel; existence of fraud or misrepresentation which touches the release; mutual mistake of fact where defendant has wrongfully concealed facts from the plaintiff or induced the mistake in some other way; or duress caused by economic coercion. 


Noble v. C.E.D.O., Inc., 374 N.W.2d 734, 744 (Minn. App. 1985), review denied, (Minn. Nov. 18, 1985). 

Duress caused by economic coercion may illustrate the lack of intent to release claims.  Sorensen, 353 N.W.2d at 670.  A party seeking to void a release for economic duress must show that the terms of the release were involuntarily accepted,that circumstances allowed only that alternative, and that the other party created those circumstances through compelling acts.  Id.

The Tisdells contend that Ag Capital placed them in a position in which they were forced to sign the release to maintain their livelihood and that Ag Capital's prior funding had induced them to forego other funding options.  The record establishes, however, that by 1996 the Tisdells were experiencing financial problems unrelated to ValAdCo which caused them, in part, to seek additional funding from Ag Capital.  They had lost over $400,000 in 1995 because of problems with their sugar beet crop, and financial projections predicted a substantial loss in 1996.   The Tisdells' difficult financial situation will not by itself rebut their intent to sign the release.   See id. (stating that loss of plaintiff's business and mounting debts may have created great stress on him, but absent coercive acts by defendant did not rebut intent to execute release).

Given the record before us, there are no facts that could be construed to find coercion on the part of Ag Capital.  Ag Capital had voluntarily extended the due date on the Tisdells' existing loans twice in the spring of 1996 so as to enable the Tisdells to meet their obligations to that company.  We further note that the Tisdells were represented by competent counsel at all times during the negotiation and execution of the release.

The Tisdells also seek to avoid that release on the grounds of fraud.  Fraudulent misrepresentation requires a showing of "reliance on a representation that resulted in damage to the plaintiff."   Simplex Supplies, Inc. v. Abbie & Svoboda, Inc, 586 N.W.2d 797, 803 (Minn. App. 1998), review denied (Minn. Feb. 24, 1999).  In order to void a release for fraud, the fraud must touch the execution of the release.  Sorensen,  353 N.W.2d at 670.  The Tisdells maintain that Ag Capital misrepresented that it had investigated ValAdCo's financial condition and that this representation induced them to sign the release.

Although Madson, the Ag Capital loan officer, discussed financial documents of ValAdCo with the Tisdells in the spring of 1996, there is no evidence that Madson made any misstatements of fact based on those documents, which included a ValAdCo budget obtained for him by William Tisdell, who served on the board of ValAdCo in 1995-1996.   Furthermore, the Tisdells were aware of ValAdCo's financial difficulties.  ValAdCo reported its losses to shareholders each year, and William Tisdell served on the ValAdCo board. 

The Tisdells further allege a conflict of interest on the part of Olson, the agent of Ag Capital who later worked for ValAdCo.  But Olson's dealings with the Tisdells occurred in 1994, two years before the release was signed.

We conclude that the Tisdells have failed to establish the existence of facts tending to support their allegation of fraud in the execution of the release.  

3.            The Tisdells also argue that the respondents, in their various capacities, committed fraud in their dealings with the Tisdells concerning ValAdCo.  In Minnesota,  in order to establish fraud:

(1) There must be a representation.

(2) That representation must be false.

(3) It must have to do with a past or present fact.

(4) That fact must be material.

(5) It must be susceptible of knowledge.

(6) The representer must know it to be false, or, in the alternative, must assert it as of his own knowledge without knowing whether it is true or false.

(7) The representer must intend to have the other person induced to act or justified in acting upon it.

(8) That person must be so induced to act or so justified in acting.

(9) That person's action must be in reliance upon the representation.

(10) That person must suffer damage.

(11) That damage must be attributable to the misrepresentation, that is, the statement must be the proximate cause of the injury. 


Avery v. Solargizer Int'l, Inc.,  427 N.W.2d 675, 681 (Minn. App. 1988)  (citations omitted).  Opinions or statements that are "general and indefinite" do not constitute representations of fact.   Martens v. Minn. Min. & Mfg. Co., 616 N.W.2d 732, 747 (Minn. 2000) (quotation omitted).  Proximate cause is an essential element of an action for fraud.  Davis v. Re-Trac Manufacturing Corp., 276 Minn. 116, 117, 149 N.W. 2d 37, 39 (1967).  The elements of negligent misrepresentation are:

1. The supplying of false information to another for the guidance of the other in a business transaction;

2. By one having a pecuniary interest;

3. Made without due care or competence in obtaining or communicating the information;

4. Said false information was justifiably relied on by the other;

5. Causing a pecuniary loss to the other. 


See Bonhiver v. Graff,  311  Minn. 111, 122, 248 N.W.2d 291, 298-99  (Minn. 1976).  

 Under Minnesota law, a party may not claim fraudulent inducement by way of promises that are directly contradicted by a subsequently-executed agreement, absent some factor that justifies the party's reliance.  Prod. Credit Assoc. of E. Central Wis. v. Farm Credit Bank of St. Paul, 781 F. Supp. 595, 604-05 (D. Minn. 1991); Boyd v. DeGardner Realty & Constr., 390 N.W.2d 902, 904 (Minn. App. 1986), review denied (Minn. Sept. 24, 1986).

The Tisdells allege that the individual ValAdCo respondents fraudulently represented that the Tisdells would receive market price for their corn on delivery and that these representations induced the Tisdells to invest in ValAdCo.  The record reflects that several individual ValAdCo respondents had different understandings concerning the terms of payment for their own corn.  There is no evidence, however, that they made misrepresentations on this point to the Tisdells.

Further, even if such misrepresentations had been made, the language of the 1991 UMA signed by the Tisdells provided that the cooperative could withhold from the purchase price of the corn purchased from the grower, as a per unit retain capital investment in the cooperative, an amount per bushel of corn delivered by the grower.  The 1993 UMA, also signed by the Tisdells, was even more direct, specifying two types of payment for corn at the discretion of the board: either the purchase price of corn in the amount determined by the Board, or a unit retain evidenced by non-equity-bearing equity credits.  The Tisdells signed this document as well.

The Tisdells also contend that Ag Capital and Olson engaged in fraud by inducing them to invest in COM1 and COM2. They point to Olson's employment at ValAdCo immediately after he left Ag Capital in 1994.  But the evidence establishes that Olson's statements about COM1 and COM2 were future projections, rather than statements of present fact.  Further,  Michael Tisdell stated that he thought Olson truly believed the projections that Olson presented regarding the investment opportunities in COM1 and COM2.  Finally, the subscription agreement, signed by the Tisdells, and the equity offering disclosure statement for COM1 and COM2 specifically noted the investment risk inherent in an investment in the projects.

The Tisdells also claim that Schuetzle in its financial statement for the 1992 fiscal year should have noted ValAdCo's failure to enter into contracts to satisfy contingencies contained in the 1991 UMA.  Before the audit was issued, however, the contracts with Farmland and Dekalb had been signed. 

The Tisdells additionally claim that Hanson committed fraud by misrepresenting the changes to the 1993 UMA as "housekeeping changes," when in fact they were more substantial, and by misrepresenting the enforceability of the marketing agreement.  As to the alleged representation that the changes in the 1993 UMA were "housekeeping," this is a general statement, rather than a misrepresentation of fact.  Hanson's statements concerning the enforceability of the marketing agreement were made in the context of explaining the asserted rights of ValAdCo, Hanson's client, in 1996, when the Tisdells were represented by their own attorney.

A misrepresentation of law is not actionable.  Northernaire Prods. v. County of Crow Wing, 309 Minn. 386, 388, 244 N.W.2d 279, 281 (1976).  Even if it were, however, no evidence demonstrates the falsity of these remarks nor the Tisdells' reasonable reliance on them. 

4.            The Tisdells further argue that their claims for fraud fall within the purview of the Minnesota Consumer Fraud Act, Minn. Stat. § 325F.68-70 (2000).  This Act prohibits:

The act, use, or employment by any person of any fraud, false pretense, false promise, misrepresentation, misleading statement or  deceptive practice, with the intent that others rely thereon in connection with the sale of any merchandise, whether or not any person has in fact been misled, deceived, or damaged thereby * * * .


Minn. Stat. § 325F.69, subd. 1.   

            In determining the applicability of this Act, the Minnesota Supreme Court has distinguished between an ordinary consumer and a merchant, defined in the Uniform Commercial Code as "a person who deals in goods of [that] kind."  Church of the Nativity of Our Lord v. WatPro, Inc., 491 N.W.2d 1, 7 (Minn. 1992) (quoting Minn. Stat. § 336.2-104(1) (1990)), overruled on other grounds, Ly v. Nystrom, 615 N.W.2d 302, 314 n.25 (Minn. 2000).  The Tisdells argue for an expansive definition of the Act, defining them as consumers for the purpose of their stock purchases in ValAdCo.    See Ly 615 N.W.2d at 310 (applying Consumer Fraud Act to cause of action brought by plaintiff in isolated, one-on-one purchase of restaurant, noting that Act "was intended to protect a broad, though not limitless, range of individuals from fraudulent and deceptive trade practices").

We agree with the district court's determination, however, that the Tisdells were not consumers within the context of these transactions.  They were owners and operators of large commercial farms.  They had sold farm produce before to cooperatives, investing on a large scale.   To hold that they were ordinary consumers and thus entitled to the protection of the Consumer Fraud Act would be extending the Act beyond its intended purpose.  Following this reasoning, this court has denied the protection of the Act to a grain producer, holding that he acted as a merchant in selling his grain products to a grain elevator.  Huntting Elevator Co. v. Biwer, No. C9-98-548, 1998 WL 747170, (Minn. App.  Oct. 28, 1998) at * 2.

            Because we have determined that the Tisdells were not consumers in the context of their share purchases of ValAdCo, we need not address the related issue of whether the shares constituted merchandise under the Act.

5.            The Tisdells next advance a claim under the Minnesota Securities Act, Minn. Stat. § 80A.01-80A.03 (2000).  Section 80A. 01 provides that it is unlawful, "in connection with the offer, sale, or purchase of any security,"  to defraud, to make any untrue statement or omission of  material fact, or to engage in any practice operating as a  fraud upon any person.   Minn. Stat. § 308A.505 (2000) specifically provides that cooperatives are subject to the provisions of the Securities Act. 

Under Minn. Stat. § 80A.23, subd. 7 (2000), a three-year statute of limitations applies to state securities claims.  Fraud does not toll this limitation period.  Semrad v. Edina Realty, Inc., 470 N.W.2d 135, 140 (Minn. App. 1991), rev'd. on other grounds, 493 N.W. 2d 528 (Minn. 1992). 

The Tisdells have not challenged the district court's dismissal, pursuant to Minn. R. Civ. P. 12, of their securities act claims for ValAdCo investments purchased before January 27, 1966, on the grounds that such claims were untimely.  They now contend instead that their scheduled corn deliveries made pursuant to contract as capital contributions, as well as their receipt of additional ValAdCo stock as part of an equity conversion, constituted  purchases of stock under the Securities Act.  Both of these activities occurred within the relevant limitations period. 

Courts interpreting Minnesota law have held that obligations incident to ownership or purchase of a security do not affect the limitations period, which begins to run on the date the security was initially purchased.  See Nielsen v. Prof'l Fin. Mgmt., Ltd., 682 F. Supp. 429, 441 (D. Minn. 1989) (limitations period under MSA held not to be affected by lease payments incident to purchase of security); Mikulak v. Scura, 691 F. Supp. 1218, 1221 (D. Minn. 1989) (payments on promissory note given in connection with purchase of security did not extend Securities Act limitations period).  Capital contributions have also been held, under the federal Securities Act, to be infusions of capital in an ongoing enterprise and not to involve the purchase of securities.   Klaers v. St. Peter, 942 F.2d 535, 538-39 (8th Cir. 1991).

In this case, the Tisdells' actual purchases of the cooperative shares in 1991, 1993, and 1994 were the triggering events for purposes of the statute of limitations,  because those events gave the Tisdells the right to receive ownership in ValAdCo.  Therefore, the Tisdells' corn deliveries, made pursuant to schedule under existing contract, did not extend the Securities Act limitations period.

The Tisdells also argue that a 1996 reorganization resulted in a purchase of ValAdCo shares.  Courts have held, however, that a change in the form of stockholding through a corporate reorganization was not a purchase for purposes of securities laws.  See Isquith v. Caremark Int'l, Inc., 136 F.3d 531, 533-36 (7th Cir. 1998) (spin-off of subsidiary did not involve sale of securities under federal Securities Act); Goldberg v. Hankin, 835 F. Supp. 815, 817-18 (E.D. Pa. 1993), aff'd., 30 F.3d 1486 (3d Cir. 1994) (share exchange in internal reorganization, as opposed to merger of two separate corporate entities, did not involve purchase for purposes of federal Securities Act).   We conclude that the district court properly found that the Tisdells' claims time-barred under the Minnesota Securities Act. 

6.            The Tisdells contend that the district court erred by not considering the doctrine of joint and several liability regarding their fraud and misrepresentation claims.  In particular, they propose holding Schuetzle liable under an aiding and abetting theory of tortious conduct.   Minnesota courts have

long relied on the well-recognized rule that all who actively participate in any manner in the commission of a tort, or who procure, command, direct, advise, encourage, aid, or abet its commission, or who ratify it after it is done are jointly and severally liable for the resulting injury. 


Witzman v. Lehrman, Lehrman & Flom, 601 N.W.2d 179, 185-86 (Minn. 1999) (quotations omitted).   We note, however, that the lack of a colorable claim for fraud negates any claim for joint and several liability on the part of any respondent in this appeal.  Even were such a claim to be proved, however, we would decline to hold Schuetzle liable under a theory of aiding and abetting tortuous conduct under these facts.

A claim for aiding and abetting tortious conduct of another has the following elements:

(1) the primary tortfeasor must commit a tort that causes an injury to the plaintiff;

(2) the defendant must know that the primary tortfeasor's conduct constitutes a breach of duty; and

(3) the defendant must substantially assist or encourage the primary tortfeasor in the achievement of the breach. 


Id. at 187.   Although the courts have recognized the legitimacy of this theory in claims against attorneys and accountants,  the courts have "relied on strict interpretations of the elements of aiding and abetting to preclude meritless claims."  Id. at 186-87.

In the Witzman case, the Minnesota Supreme Court held that a trust beneficiary's allegations were insufficient to state a colorable claim against an accounting firm for aiding and abetting a trustee's breach of trust.  Id. at 189.  In so doing, the court noted that the accountant provided only routine professional services.

If we were to recognize that such routine services constitute substantial assistance, then it would be the rare accountant indeed who would not be subject to automatic liability merely because his client happened to be a tortfeasor.



            As in the Witzman case, there is no evidence that Schuetzle provided any other than routine professional accounting services to ValAdCo.  Schuetzle furnished financial statements and year-end audits to ValAdCo.  The Tisdells, as shareholders, had  ready access to that information, and William Tisdell served briefly on the ValAdCo board of directors.   Schuetzle, reviewed the audited financial statements for the shareholders every year at the ValAdCo annual meeting.  Each year from 1991 to 1999, the statements showed operational losses for ValAdCo.  Schuetzle also did occasional projections for ValAdCo, from which ValAdCo took selected pages to use in marketing ValAdCo shares.   There is no evidence that Schuetzle knew of any misrepresentations of fact made in the marketing of the shares.

7.            The Tisdells argue that the individual ValAdCo respondents, Doherty, Rumble & Butler, Hanson, Olson, and Ag Capital all breached fiduciary duties to the Tisdells as shareholders.  The Tisdells contend that the officers and directors of ValAdCo misrepresented to them that they would be paid market price for their corn on delivery.  We have examined this contention above and find it to be without merit.

The Tisdells further claim that the officers and directors of ValAdCo failed to enter into contracts with DeKalb and Farmland, as represented in 1991 offering materials.  Causation is an element required to state a claim for breach of fiduciary duty.  Conwed Corp. v. Employers Reinsurance Corp., 816 F. Supp. 1360, 1362 n.3 (D. Minn. 1993).  The evidence establishes that in fact ValAdCo did enter into contracts with those entities.  Even if these contracts were not strictly as contemplated, however, the Tisdells have failed to produce evidence linking their losses to any such nonconformance.

The Tisdells further claim that the officers and directors of ValAdCo failed to operate the cooperative in accordance with its bylaws by not enforcing a recoupment provision.   Although there appears to be a factual dispute as to which bylaws were in effect, this claim, as a derivative claim, may be asserted only by the cooperative. See Wessin v. Archives Corp., 592 N.W.2d 460, 464 (Minn. 1999) (stating that "an individual shareholder may not directly assert a cause of action that belongs to the corporation") . 

Concerning Ag Capital and Olson, our conclusion that the release was valid and enforceable precludes any recovery for breach of fiduciary duty on the part of these parties. 

Regarding Hanson, under Minnesota law an attorney acting within the scope of his employment is immune from liability to third parties.  Marker v. Greenberg, 313 N.W.2d 4, 5 (Minn. 1981). See Schuler v. Meschke, 435 N.W.2d 156, 163 (Minn. App. 1989) (attorney for cooperative had no fiduciary duty to cooperative members), review denied  (Minn. April 19, 1989).  There were no allegations that Hanson, at the time he was making any alleged representations, was not acting as an attorney for ValAdCo.  Therefore he owed no fiduciary to the Tisdells as a matter of law.


* The Honorable Daniel F. Foley, serving by appointment order from the supreme court, fully participated in the consideration of this appeal.  Due to Judge Foley's untimely death before the filing of the opinion, Judge Harten has been assigned as a substitute and now joins the panel in issuing this decision.


[1] The Tisdells have argued that they should be considered separately for the purpose of this appeal.  We note, however, that at the summary judgment hearing the Tisdells' counsel indicated that the representations in question were alleged to have been made to all of the Tisdells.  In addition, all of the Tisdells signed the release with Ag Capital both individually and as general partners in the Tisdell Farms Partnership.  We therefore consider them together for the purposes of the claims asserted in this case.