This opinion will be unpublished and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
Signal Bank National Association,
Kemnitz Sand & Gravel, Inc.,
Robert Kemnitz, et al.,
Filed October 29, 2002
Robert H. Schumacher, Judge
Ramsey County District Court
File No. C9-01-8429
Ralph L. Moore, Stein & Moore, 1010 Minnesota Building, St. Paul, MN 55101 (for respondent Signal Bank National Association)
Joseph A. Wentzell, Suite 201 Anthony Place, 2855 Anthony Lane South, St. Anthony, MN 55418 (for respondent Kemnitz Sand & Gravel, Inc.)
Scott A. Johnson, Johnson Law Group, L.L.P., 10801 Wayzata Boulevard, Suite 120, Minnetonka, MN 55305 (for respondents Robert & Joanne Kemnitz)
David J. Schoenecker, Jason R. Vohnoutka, 3109 Hennepin Avenue South, Minneapolis, MN 55408 (for appellant)
U N P U B L I S H E D O P I N I O N
ROBERT H. SCHUMACHER, Judge
Appellant Kenneth Kemnitz challenges the district court's order dissolving respondent Kemnitz Sand & Gravel, Inc. (corporation) and ordering the sale of corporate assets. Kemnitz argues that the district court erred or abused its discretion by (1) hearing an inappropriately venued motion; (2) exercising personal jurisdiction over him; (3) denying his motion for a continuance; and (4) dissolving the corporation based on shareholder deadlock. We affirm.
In May 1997, Kemnitz incorporated the corporation. Kemnitz and respondents Robert and Joanne Kemnitz all bought shares in the corporation. Kemnitz was the corporation's operator and president, and Robert Kemnitz, Joanne Kemnitz, and a third Kemnitz brother, now deceased, served as the board of directors.
In October 1998, respondent Signal Bank National Association loaned the corporation $200,000. To secure the loan, the corporation granted Signal Bank a security interest in the corporation's assets and Robert Kemnitz gave Signal Bank a mortgage on his homestead.
In June 2001, the corporation, facing mounting debts and threatened creditor lawsuits, passed a resolution authorizing a sale of corporate assets. Kemnitz hired a business broker, who received a bid from Chard Tile & Excavating, Inc. of $1,130,000. Kemnitz approved the sale, and the corporation's creditors agreed to a fixed distribution from the proceeds. When Kemnitz failed to appear at the scheduled closing, the sale collapsed, and the corporation's creditors, including Signal Bank, began foreclosure and replevin actions.
In September 2001, Signal Bank filed its foreclosure and replevin action against the corporation, Kemnitz, and Robert and Joanne Kemnitz. Signal Bank requested that the court direct a foreclosure sale of the mortgaged homestead and allow it to seize all corporate assets subject to the security interest. Neither Kemnitz nor Joseph Wentzell, the corporation's attorney, appeared at the hearing on Signal Bank's action. The district court ordered that a default judgment be entered against Kemnitz and the corporation and that the corporation surrender all corporate property in which Signal Bank had a security interest. Signal Bank began repossessing equipment from the corporation.
The same day, Wentzell informed the business broker that Kemnitz had authorized him to proceed with the sale of the corporation. The broker again contacted prospective purchaser Chard Tile and the creditors. Kemnitz again failed to appear at the scheduled closing, and the sale again collapsed.
Robert and Joanne Kemnitz, acting as the corporation's board of directors, then terminated Kemnitz as president of the corporation and authorized the sale of corporate assets to Chard Tile. Chard Tile expressed concerns that ongoing shareholder disputes over corporate control would prevent the corporation from conveying proper title. To resolve stock-ownership issues, Robert Kemnitz's attorney noticed Kemnitz's deposition. Kemnitz refused to appear and subsequently refused to meet with Robert Kemnitz and his attorney on other occasions.
In an effort to prevent foreclosure of his homestead mortgage, Robert Kemnitz filed a cross-claim against Kemnitz and the corporation, moving for involuntary dissolution of the corporation pursuant to Minn. Stat. § 302A.751 (2000), sale of the sand and gravel pit (the corporation's only remaining asset), and disbursal of the proceeds to the corporation's creditors. The cross-claim alleged that the corporation was insolvent and that shareholder deadlock was threatening the Chard Tile sale.
At the December 21 hearing, Kemnitz, appearing pro se, requested a continuance and argued that because he was the corporation's majority shareholder, there could be no shareholder deadlock sufficient to warrant dissolving the corporation. Kemnitz questioned the gravity of Signal Bank's threat to foreclose on Robert Kemnitz's mortgage. Kemnitz also made unsubstantiated claims that he was about to get a large personal loan and that he had a purchase offer for the corporation "on the table." Robert Kemnitz argued that the corporation's major creditors, including Signal Bank, were prepared to commence foreclosure actions if the sale did not close by December 31. The business broker testified that the corporation's debt was approximately $2,000,000.
The district court denied Kemnitz's motion for a continuance, citing the urgency of the situation and Kemnitz's failure to respond to Signal Bank's original foreclosure and repossession suit or challenge the default judgment entered against him in October. The court found that (1) the corporation was insolvent; (2) the corporation's shareholders were irreconcilably deadlocked; (3) Kemnitz had refused to participate in earlier efforts to sell the corporation; (4) Chard Tile remained willing to purchase the corporation; and (5) foreclosure would cause special injury to Robert Kemnitz because his home was pledged as security for a corporate debt. The court granted the motion for involuntary dissolution and sale of corporate assets.
Because Kemnitz did not move for a new trial or amended findings of fact or conclusions of law, our scope of review is limited to whether the evidence sustains the findings of fact and whether the findings sustain the conclusions of law and the judgment. Tyroll v. Private Label Chemicals, Inc., 505 N.W.2d 54, 56 (Minn. 1993); see also Sauter v. Wasemiller, 389 N.W.2d 200, 201 (Minn. 1986) (stating that "matters such as trial procedure * * * are subject to appellate review only if there has been a motion for a new trial in which such matters have been assigned as error").
1. Kemnitz contends that the district court erred by allowing venue in Ramsey County. The venue provision of the corporate-dissolution statute, Minn. Stat. § 02A.751, subd. 5 (2000), provides: "Proceedings under this section shall be brought in a court within the county in which the registered office of the corporation is located." Kemnitz argues that pursuant to the statute, the dissolution-motion hearing should have been venued in Scott County, where the corporation's registered office is located.
Kemnitz failed to raise this issue before the district court or in a motion for a new trial and has therefore waived it for the purposes of this appeal. See Roby v. State, 547 N.W.2d 354, 357 (Minn. 1996) (stating that this court generally will only review issues previously raised before district court); Sauter, 389 N.W.2d at 201 (holding that issue is only appealable if it is preserved in motion for new trial). Kemnitz did not object to venue when served with Robert Kemnitz's cross-claim and did not move for a transfer of venue according to the procedure described by Minn. Stat. § 542.10 (2000). We do not agree with Kemnitz's contention that he properly objected to venue, thereby preserving the issue for appeal, by stating to the district court that "I can't figure, for the life of me, why [this action] couldn't have been brought in Scott County where the pit is."
We also note that Kemnitz's argument lacks merit. Venue is not jurisdictional, but refers to the location where a court with jurisdiction should hear a case. See Minn. Stat. § 542.11 (4) (2000); State v. Smith, 421 N.W.2d 315, 320 (Minn. 1988) (stating that venue is "less significant" than jurisdiction). Here, the district court noted that the dissolution motion arose out of Signal Bank's underlying foreclosure and replevin claim, which was properly venued in Ramsey County. The court had subject matter jurisdiction to dissolve the corporation, and a venue error does not authorize Kemnitz to challenge the merits of the court's decision.
2. Kemnitz argues that the district court lacked personal jurisdiction over him because he was not properly served in the underlying action. Kemnitz has waived his objection to personal jurisdiction. Lack of personal jurisdiction is an affirmative defense that may be raised by motion or by pleading. Minn. R. Civ. P. 12.02. The defense is waived if not raised by motion or pleading. Minn. R. Civ. P. 12.08.
Kemnitz did not challenge personal jurisdiction when the underlying claim was filed, when the court entered default judgment against him, or at the dissolution-motion hearing, and did not raise personal jurisdiction in a motion for a new trial. Moreover, Kemnitz appeared before the court at the motion hearing to request a continuance, testify, and cross-examine witnesses.
A party who takes or consents to any step in a proceeding which assumes that jurisdiction exists or continues has made a general appearance which subjects him to the jurisdiction of the court.
Slayton Gun Club v. Town of Shetek, 286 Minn. 461, 467, 176 N.W.2d 544, 548 (1970).
Kemnitz's personal-jurisdiction argument also lacks merit. When Signal Bank began the underlying action against the corporation, it served a summons and complaint on Wentzell, who filed an admission of service with the district court stating that he was authorized to accept service on behalf of Kemnitz and the corporation. "As a general rule, when a party is represented by an attorney, service is effective when made upon the attorney." Palmquist v. Onan Corp., 482 N.W.2d 791, 792 n.1 (Minn. 1992). Kemnitz presented no evidence that Wentzell was not his attorney at the time of service or that he had not authorized Wentzell to accept service on his behalf. The district court properly exercised personal jurisdiction over Kemnitz.
3. Kemnitz argues that the district court abused its discretion by denying Kemnitz's motion for a continuance. This court typically reviews a district court's ruling on a motion for continuance for an abuse of discretion. See Dunshee v. Douglas, 255 N.W.2d 42, 45 (Minn. 1977). Nevertheless, Kemnitz has waived the issue here by failing to raise it in a motion for a new trial.
Minn. R. Gen. Pract. 115.03(a) provides that
[n]o motion shall be heard until the moving party serves a copy of the [moving papers] on opposing counsel and files the original with the court administrator at least 28 days prior to the hearing.
It is undisputed here that Kemnitz was served with the cross-claim on December 10, 11 days before the motion hearing. Minn. R. Gen. Pract. 115.07 allows the district court to waive or modify time limits pertaining to motions "[i]f irreparable harm will result absent immediate action by the court, or if the interests of justice otherwise require."
The district court heard ample evidence that the corporation's creditors were prepared to foreclose on Robert Kemnitz's mortgage if the sale of the corporation did not close by December 31, ten days after the motion hearing. The urgency of the dissolution motion was exacerbated by Kemnitz's refusal to attend either of the two previously scheduled closings. The court noted that Kemnitz had also failed to respond to the underlying complaint in this matter or object to the entry of default judgment against him. In light of Kemnitz's past performance, the court discredited Kemnitz's claims at the hearing that he was about to hire a lawyer and get a loan, and that he had received purchase offers for the corporation. We defer to the district court's credibility determinations. Sefkow v. Sefkow, 427 N.W.2d 203, 210 (Minn. 1988). The district court appropriately denied Kemnitz's motion in order to prevent irreparable harm to Robert Kemnitz.
4. Kemnitz argues that the court abused its discretion by ordering involuntary dissolution based on a finding of irreconcilable shareholder deadlock. In an action by a shareholder, a district court
may dissolve a corporation and liquidate its assets and business [upon a showing that] the directors or the persons having the authority otherwise vested in the board are deadlocked in the management of the corporate affairs and the shareholders are unable to break the deadlock[.]
Minn. Stat. § 302A.751, subd. 1(b)(1) (2000).
The court found that Robert Kemnitz and Kemnitz each claimed to own a majority of shares in the corporation, that the shareholders were irreconcilably deadlocked both over the control and prospective sale of the corporation, and that the deadlock prevented the corporation from functioning to the advantage of the shareholders.
Kemnitz argues that because he holds a controlling interest in the corporation and can therefore make unilateral corporate decisions, there can be no deadlock as to corporate management. Kemnitz correctly cites Lakeland Dev. Corp. v. Anderson, 277 Minn. 432, 445, 152 N.W.2d 758, 767 (1967), for the proposition that a district court ordering involuntary dissolution must make comprehensive findings concerning whether shareholder deadlock is so great that the business can no longer be conducted with advantage to its shareholders. Kemnitz argues that under Lakeland, the district court here was required to make findings on Kemnitz's claim that he is the majority shareholder prior to finding a deadlock and ordering dissolution. We disagree.
Here, the court heard a great deal of conflicting testimony regarding the ownership and distribution of shares and concluded that, for the purposes of avoiding an otherwise imminent foreclosure and given Kemnitz's repeated refusal to participate in selling the corporation, the deadlock was sufficient to warrant dissolution. See id. at 440, 152 N.W.2d at 764 (noting that in dissolution proceedings, adjudication of specific shareholder claims of right is not warranted if resulting delay would be prejudicial to party seeking dissolution or corporation). The court's finding that the shareholders here were deadlocked was supported by the evidence.
The district court also found that the corporation was insolvent, that further creditor foreclosure suits were imminent, and that Robert Kemnitz was at risk of losing his home should Chard Tile be prevented from buying the corporation. The evidence supports these findings. The court granted the motion for involuntary dissolution, approved the sale of the corporation to Chard Tile, and ordered disbursal of the proceeds to the corporation's creditors. The findings support these conclusions.