This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480A.08, subd. 3 (2002).






Maverick Financial Group, Inc.,

a Minnesota corporation, as

Assignee of Frank W. Hetman, Sr.,


State Bank of Loretto,

Dean Barkley, et al.,



Filed December 10, 2002


Minge, Judge


Hennepin County District Court

File No. 019682


Mark J. Kallenbach CPA, 2260 Ridge Drive, Suite 13, Minneapolis, MN 55416 (for appellant)


T. Chris Stewart, Carl S. Wosmek, Dunkley, Bennett, Christensen & Madigan, P.A., 701 Fourth Avenue South, Suite 700, Minneapolis, MN 55415 (for respondent)


            Considered and decided by Minge, Presiding Judge, Wright, Judge, and Mulally, Judge.*


U N P U B L I S H E D  O P I N I O N


MINGE, Judge


Appellant Maverick Financial Group sued respondent State Bank of Loretto for dilution and decreased value of a block of stock representing a controlling interest in Temroc Metals, Inc.  The district court granted summary judgment in favor of respondent bank.  Appellant Maverick contends that the district court erred in determining that: (a) the statute of limitations precluded its claims; (b) an indemnification agreement precluded its claims; (c) res judicata barred its claims; and (d) no actionable loss occurred.  Furthermore, Maverick asserts the district court failed to rule on certain of its claims and issues including a claim of civil conspiracy.  We affirm.




Frank W. Hetman, Sr. was the moving force in organizing a manufacturing business incorporated as Temroc Metals, Inc. (Temroc).  He owned 2,570 shares of voting stock, which constituted a controlling interest of Temroc.  In 1993, Hetman borrowed $200,000 from respondent State Bank of Loretto (Bank), pledging all 2,570 shares of his voting stock in Temroc as collateral for the loan.  In December 1994, Hetman defaulted on the loan; and in April 1995, the Bank, as a secured party, took control of the stock.   

In exercising its rights as a secured party, the Bank elected a new board of directors.  At a shareholder’s meeting in May 1995, Dean Barkley, Patrick Cienciwa, and Curt Hedeen were voted in as Temroc’s board of directors.  Barkley was the attorney for the Bank and held a proxy allowing him to vote its shares.  Barkley resigned from his position as the Bank’s attorney after he was elected to the board.  Cienciwa was a long-time, high-level Temroc employee as well as a Temroc shareholder.  Cienciwa was appointed the chief executive officer.  Hedeen was an outside director and was brought in at Barkley’s suggestion.  When the new board of directors was elected, it met and noted the Bank’s intent to sell the Hetman shares to satisfy the debt owed by Hetman.  The Bank set a public sale of the Hetman shares for July 25, 1995.

Beginning in March 1995, Cecelia Lynch, a judgment creditor of Hetman, sought to obtain control of the Hetman block of Temroc stock.  At that time, she served the Bank with a garnishment summons.  Lynch held judgments against Hetman for approximately $500,000.  In response to the garnishment summons, the Bank disclosed that it was holding the Hetman shares but that it was entitled to those shares as security for its loan to Hetman. 

Maverick, the appellant in this case, loaned Lynch the money to pay off Hetman’s bank loan.  On July 3, 1995, Lynch attempted to pay the Bank the amount outstanding on Hetman’s loan in return for the Hetman shares.  The Bank informed Lynch that she would need a court order to purchase the Hetman shares. 

Lynch scheduled a hearing on her motion for a court order regarding sale of the stock.  But on July 14, 1995, before the scheduled hearing, the Bank assigned its rights and obligations under the loan documents and the Hetman shares to the Temroc Metals, Inc. Employees’ Profit Sharing Plan and Trust (Employee Trust).  The Bank was paid the remaining balance on the loan.  It does not appear from the record that the Bank made any profit in the transaction.  The assignment contained an indemnity provision whereby the Employee Trust agreed to indemnify the Bank against “any and all actions, at law or in equity, arising from this assignment and transfer.” 

Also on July 14, 1995, at a special board meeting, directors Barkley and Hedeen submitted their resignations.  But their resignations were rejected by Cienciwa, the third director, and they continued to serve on the board.  Later in that meeting, the board voted to issue an additional 3,671 Temroc voting shares to the Employee Trust.  The Employee Trust now controlled 6,241 voting shares, of which 2,570 represented the Hetman stock that secured the $200,000 Bank loan; and the Hetman shares had been diluted to a minority interest in Temroc.   

            On July 18, 1995, after the Bank had transferred the Hetman shares and after the issuance of the additional shares to the Employee Trust, Lynch again garnished the Bank to collect her judgment against Hetman.  The Bank asserted that it no longer had an interest in the stock and that the garnishment was ineffective.  Lynch challenged the Bank’s position.  The resulting litigation continued until February 1996, when this court decided the Bank had properly discharged its duties to Lynch under the garnishment statute.  Lynch v. Hetman, 559 N.W.2d 124 (Minn. App. 1996), review denied (Minn. Mar. 26, 1997).

            In October 1995, a district court, in response to an action by Lynch against the Employee Trust, declared that the issuance of the 3,671 additional voting shares to the Employee Trust was illegal and ordered the issuance of shares rescinded.  Because of the pendancy of all the litigation, the Hetman shares were not sold on July 25, 1995, as was originally scheduled.  A judicially supervised sale of the original block of Hetman shares finally took place on September 26, 1996.  At that time, the shares constituted a majority of the voting shares.  The sale price of $1,050,000 was approved by the district court as commercially reasonable.  The proceeds were paid to creditors of Hetman, including Lynch and the Employee Trust, who had liens on the stock; no proceeds were paid to Hetman.

            In November 2000, Hetman settled all of his claims against Temroc and the Employee Trust.  As a part of the settlement agreement, Hetman waived all claims against the Bank covered by the Employee Trust indemnification agreement.  In July 2001, Hetman assigned to Maverick any claims he had against the Bank.  Maverick then brought this suit against the Bank.  The district court granted summary judgment in favor of the Bank on the following bases: (1) the statute of limitations had run; (2) res judicata prevented Maverick’s claims; (3) an indemnification agreement precluded Maverick’s claims; (4) the Bank’s actions were not the proximate cause of the claimed damages; and (5) Hetman would not have benefited from a higher value for his block of stock.  Maverick contends the district court erred in its conclusions of law.  There are no material facts in dispute. 




When the district court grants summary judgment based on the application of a statute to undisputed facts, the result is a legal conclusion, reviewed de novo by the appellate court.  Lefto v. Hoggsbreath Enters., Inc., 581 N.W.2d 855, 856 (Minn. 1998).  Thus, we review the district court’s decision de novo.



The first issue we face is the statute of limitations defense.  The acts of which Maverick complains took place between May and July of 1995.  Maverick served its complaint on July 13, 2001.  Maverick argues that the Bank is vicariously liable for the Temroc board of directors’ actions because the Bank selected its attorney, Dean Barkley, to vote the stock in Temroc.  Maverick argues that Barkley’s involvement resulted in a board that was controlled by the Bank.  The Bank argues that Maverick’s claims are barred by the statute of limitations.  Maverick and the Bank do not dispute that Minn. Stat. § 541.05 contains the applicable limitations period.  The limitations period in that statute is six years.  Minn. Stat. § 541.05, subd. 1 (2002).  The limitations period does not start to run until a cause of action is sufficiently ripe to overcome a motion to dismiss.  Jacobsen v. Bd. of Trs. of the Teachers Ret. Assn., 627 N.W.2d 106 (Minn. App. 2001), review denied (Minn. Aug. 15, 2001).  Maverick and the Bank do not dispute this principle. 

The Bank argues that Maverick’s cause of action arose either when the Bank took complete physical voting control of the Hetman shares (April 1995) or when the Bank’s attorney voted in a new board of directors (May 1995).  Maverick argues that its cause of action accrued when the board voted to issue the additional shares on July 14, 1995, because that issuance diluted the Hetman shares to a minority interest.

Because Maverick’s claim is based on liability for the board’s decisions, the cause of action became ripe when the Temroc board authorized issuance of the additional shares.  The appellant’s claims would have been able to overcome a motion to dismiss on July 14, 1995.  This lawsuit was commenced one day short of six years.  Therefore, Maverick’s claim is not barred by the statute of limitations. 


The next issue we address is the Bank’s defense under the indemnification clause. When the Bank assigned its rights and obligations under the Hetman shares to the Employee Trust, the Employee Trust agreed to indemnify the Bank “against any, and all actions, at law or in equity, arising from this assignment and transfer [of Temroc stock].”  In November 2000, Hetman, who harbored claims against the Employee Trust over its role in diluting his stock in Temroc, settled his claims with the Employee Trust and with Temroc.  As a part of that settlement agreement, Hetman waived all claims against the Bank that the Employee Trust was required to indemnify.  Maverick, which is Hetman’s assignee and asserts claims regarding dilution of stock against the Bank that originated with Hetman, is precluded from bringing claims against the Bank that were waived in the settlement agreement.

Maverick argues that the settlement and indemnification agreement do not preclude its claims because the indemnification agreement is illegal.  Maverick further argues that even if the indemnification agreement is legal, it does not cover the claims in this case.

Maverick asserts seven reasons why the indemnification agreement is not effective in this proceeding: (1) the indemnity agreement is a “self-indemnity” provision and therefore void as a matter of law; (2) the indemnity provision is circuitous and therefore void as a matter of law; (3) the indemnity provision is contrary to statutory duties imposed on the Bank and the Employee Trust; (4) the indemnity provision violates the Employee Retirement Income Security Act (ERISA); (5) the indemnity provision is not enforceable against intentional torts; (6) the indemnity provision is subject to strict construction; and (7) the indemnity provision does not apply in this case. 

In arguing the indemnity agreement is void because it is a “self-indemnity” provision, Maverick cites the principle that a party to a contract may be indemnified against the party’s own negligence only if such indemnification is an undesired possibility and not induced by the indemnification agreement.  St. Paul Fire & Marine Ins. Co. v. Perl, 415 N.W.2d 663, 666 (Minn. 1987).  There is no evidence in the record that the Employee Trust indemnification commitment to the Bank caused or had anything to do with the dilution of the Hetman shares.  Although contemporaneous, the two are completely separate.  In this setting, the Bank claims the indemnity agreement was to protect it against claims that arose from its assignees’ conduct.  This does not present the appearance of an inappropriate use of indemnification.  It clearly is not the odious, overreaching type of indemnification of which Maverick complains.  Thus, we conclude this argument by Maverick is not persuasive. 

Next, Maverick argues the indemnification agreement is void because it is circuitous.  Maverick cites Hedged Inv. Partners, L.P. v. Norwest Bank Minn., N.A., 578 N.W.2d 765 (Minn. App. 1998) to support its argument.  Circuity of obligation exists “when the plaintiff is obligated to indemnify the defendant for claims, including the plaintiff’s own claims, by virtue of pre-existing indemnity agreements or obligations.”  Id. at 772 (citation omitted).  Hedged Inv. Partners went on to find that when circuity of obligation exists, a plaintiff’s claims against the defendant are defeated as a matter of law.  Id. at 772.  The case contradicts the argument being advanced by Maverick.  It did not hold that indemnification agreements creating a circuity of obligation are void.  We do not find any authority to support Maverick’s argument that circuitous indemnity agreements are void.  Rather, as in Hedged Inv. Partners, Maverick may not hold the Bank liable for actions for which it has an indemnification responsibility.

Third, Maverick asserts that the indemnification agreement is contrary to statutory duties imposed on the Bank by Minn. Stat. § 336.9-207 (1994) and that those statutory duties are non-delegable.  Since appellant raises the provisions of this section of the statutes as an independent issue, we discuss it in part III of this opinion.  However, we note that Maverick does not cite, nor can we find, any legal authority for the proposition that in an indemnification agreement dispute the specific statutory duties Maverick discusses are non-delegable.  We find Maverick’s argument is not persuasive and decline to address it in further detail.  Cf. Balder v. Haley, 399 N.W.2d 77, 80 (Minn. 1987) (holding that issues not argued or supported by authorities on appeal are deemed waived).

Fourth, Maverick argued the indemnity provision violated ERISA law.  At oral argument, Maverick admitted there was nothing in the record to establish that ERISA law applies in this case, and it agreed to waive its ERISA argument.

Fifth, Maverick asserts the indemnity provision is not enforceable against intentional torts or deliberate acts.  Maverick has correctly stated the law.  See Lake Cable Partner v. Interstate Power Co., 563 N.W.2d 81, 86 (Minn. App. 1997), review denied (Minn. July 10, 1997) (finding company not liable for indemnification of utility for utility’s conduct that would warrant award of punitive damages).  Maverick notes the intentional torts pled in this case are conversion and conspiracy.  But, we find nothing in the record to support Maverick’s claims that the Bank was part of any conversion or conspiracy in issuing stock to the Employee Trust or diluting the value of the Hetman block of stock.  Maverick does not allege that the Bank orchestrated or benefited from the dilution of the stock.  The record does indicate that Dean Barkley resigned as the Bank’s attorney when he began service on the Temroc board of directors and that he even tried to resign from the Temroc board before the vote to issue additional stock to the Employee Trust.  The act of issuing the stock appears to have been the result of efforts by the Employee Trust, not the Bank.  We conclude the principle of not allowing indemnification against intentional torts does not apply to the facts of this case.

Sixth, Maverick argues that the indemnity provision should be strictly construed and, seventh, Maverick argues that when so limited, the provision does not apply to Maverick’s claims.  This court need not resort to rules of strict construction where there is no ambiguity in the language of the agreement.  See Carl Bolander & Sons, Inc. v. United Stockyards Corp., 298 Minn. 428, 433, 215 N.W.2d 473, 476 (1974) (noting that where language may be interpreted according to its plain meaning, there is no room for construction); see also Lake Cable Partners, 563 N.W.2d at 86 (finding unambiguous language and not engaging in a strict construction analysis). 

In this case, the indemnity provision requires the Employee Trust to “indemnify and hold [the Bank] harmless from and defend against any, and all actions, at law or in equity, arising from this assignment and transfer.”  We conclude that the meaning of this broad language includes the claims made against the Bank by Maverick.  The stock dilution was for the benefit of the Employee Trust.  This act, which occurred on the heels of the transfer of the Hetman shares, would not have occurred but for the transfer.  It appears to be a result of directors acting at the behest of the Employee Trust, and in this sense, it arises from the assignment and transfer.  Although the indemnification clause is not all encompassing and does not address with specificity the type of claim or conduct involved in this litigation, the result we reach does not require analytical gymnastics. 


Although our holding on the indemnity clause is dispositive of this appeal, we also address Maverick’s claim of the Bank’s duties to Hetman.  Maverick contends the Bank breached duties it owed to the debtor under Article 9 of the Uniform Commercial Code.  Specifically, Maverick contends the Bank breached the duties set forth in Minn. Stat.      § 336.9-207 (1994).  The record does not indicate that the transfer of the Hetman shares by the Bank to the Employee Trust was anything but an arm’s length transaction.  It is unclear that the Bank owed Maverick any duties once the Bank completed the sale.  Dean Barkley, who was on the Temroc board of directors, had already resigned as the Bank’s attorney when the sale took place.  Maverick does not reference any part of the record that would provide a factual basis for arguing the board continued to represent the Bank’s interests.  The only continuing role of the Bank was its insistence that the Employee Trust foreclose the security interest in the stock by a public sale.  Actually, this served to protect Hetman’s interest.  Though a secured party should not irresponsibly turn collateral over to a rapacious assignee, Maverick cites no authority for the proposition that the original secured party is liable for, or the guarantor of, the legality of everything done by the assignee.  There is nothing in the record of this case to indicate the Bank was privy to, anticipated, participated in, or benefited from any wrongful conduct by the Employee Trust with respect to the stock.  In any event, the Employee Trust agreed to indemnify the Bank from any further liability for litigation arising out of the assignment of the stock.  Finally, any misconduct was committed by the Employee Trust, and Hetman settled those claims.  This setting does not support Maverick’s call for application of good faith concepts and duties from Article 9 for its benefit. 


Since we hold that Maverick’s claims are precluded by the indemnification agreement, we do not reach the other issues raised by Maverick.   


* Retired judge of the district court, serving as judge of the Minnesota Court of Appeals by appointment pursuant to Minn. Const. art. VI, § 10.