This opinion will be unpublished and

may not be cited except as provided by

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







Michael Afremov,





Kurt Amplatz, M.D.,



Franck Gougeon,



AGA Medical Corporation,



Filed January 13, 2004

Affirmed in part, reversed in part, and remanded

Willis, Judge


Hennepin County District Court

File No. CT 02-017734


William Z. Pentelovitch, Laura E. Walvoord, Jason A. Lien, Maslon Edelman Borman & Brand, LLP, 3300 Wells Fargo Center, 90 South Seventh Street, Minneapolis, MN  55402; and Michel A. LaFond, Sulloway & Hollis, P.L.L.C., 9 Capitol Street, P.O. Box 1256, Concord, NH  03302-1256 (for respondent Michael Afremov)


Terence M. Fruth, Douglas L. Elsass, Fruth, Jamison & Elsass, P.A., 3902 IDS Center, 80 South Eighth Street, Minneapolis, MN  55402 (for appellant Kurt Amplatz, M.D.)


Ansis V. Viksnins, Eric J. Peck, Lindquist & Vennum P.L.L.P., 4200 IDS Center, 80 South Eighth Street, Minneapolis, MN  55402 (for appellant Franck Gougeon)


Richard G. Mark, J. Patrick McDavitt, Neil Thomas Buethe, Briggs and Morgan, 2400 IDS Center, 80 South Eighth Street, Minneapolis, MN  55402 (for appellant AGA Medical Corporation)


            Considered and decided by Willis, Presiding Judge; Schumacher, Judge; and Poritsky, Judge.*

U N P U B L I S H E D   O P I N I O N


            AGA Medical Corporation (AGA) is a Minnesota closely held corporation.  At its inception, the corporation’s three shareholders—respondent Michael Afremov and appellants Franck Gougeon and Kurt Amplatz—acted as directors and officers in the corporation.  After several profitable years during which the shareholders cooperated in the management of the corporation, Gougeon and Amplatz, claiming that Afremov was involved in employee misconduct, took various actions against him.   Afremov sought equitable relief from the district court.

            The district court issued a temporary injunction against appellants AGA, Gougeon, and Amplatz; the district court later clarified the injunction.  After the clarification, appellants appealed from the temporary injunction.  The district court then issued a modified temporary injunction.  Appellants also appealed from the modified injunction, consolidating this appeal with their original appeal.  We affirm in part, reverse in part, and remand.




            AGA was incorporated in 1995; the company develops, manufactures, and distributes medical devices designed to treat heart defects.  After incorporation, Afremov, Amplatz, and Gougeon each became one-third shareholders in the company, and each became a director.  Afremov acted as vice president of operations responsible for research and development, manufacturing, and quality control at AGA.  Gougeon was the executive vice president for administration, responsible for supervising the administrative, regulatory, marketing, clinical, and financial affairs of the corporation.  Amplatz was the president of AGA.

            In September 1999, Amplatz entered into a share-redemption agreement with AGA under which AGA would buy out Amplatz’s ownership interest in the company over time.  The agreement provided that there would be no penalty if AGA accelerated the payment schedule for redemption of Amplatz’s shares.  At the same time that AGA executed the share-redemption agreement, Gougeon, on behalf of AGA, executed a pledge agreement with Amplatz, describing, inter alia, who would have the voting rights in Amplatz’s shares during the term of the purchase contemplated by the share- redemption agreement.   Since this litigation began, two inconsistent pledge agreements have surfaced.  The first provides that “[p]rior to the occurrence of any Event of Default, AGA will have the right to exercise all voting rights with respect to [Amplatz’s] Pledged Shares.”  Under the second pledge agreement, Amplatz retains his voting rights in all of his shares until AGA makes its final payment.  Afremov claims that he never saw the second pledge agreement before the start of litigation; he also claims that he never agreed to the terms of the second pledge agreement and that Amplatz has no voting rights for his stock because the first pledge agreement is the effective agreement.  In spring 2002, AGA attempted to accelerate the purchase of Amplatz’s shares by tendering full payment to Amplatz under the share-redemption agreement.  But Amplatz refused the payment.

            In October 2002, at the first board meeting since 1999, Amplatz and Gougeon voted together to elect Gougeon CEO over Afremov’s objection.  After the meeting, Gougeon terminated Afremov’s employment with AGA.  Appellants claim that Gougeon fired Afremov for cause. 

            In December 2002, AGA held another board meeting at which, over Afremov’s objection, Amplatz and Gougeon voted to create an AGA subsidiary corporation, Amplatzer Medical Sales Corporation (Amplatzer), to receive certain AGA assets and operations.  After the December 2002 board meeting, on December 19, 2002, Afremov filed an action in district court, seeking equitable relief to protect his rights and to preserve his interest in AGA.  Afremov sought a temporary restraining order (TRO) to stop Amplatz and Gougeon from, among other things, transferring AGA assets and operations to the subsidiary.

            Appellants attempted to persuade the district court that if AGA did not establish the subsidiary corporation before December 31, 2002, AGA would lose “millions” of dollars in tax savings; acting on this information, the district court set an emergency hearing for December 31, 2002, and requested that appellants provide documentation to support their claim.  Before the December 31, 2002 meeting, appellants cancelled the emergency hearing without providing the requested documentation, and the hearing was rescheduled for January 28,2003.

            Pending the outcome of the January 2003 hearing, the district court ordered appellants not to transfer any AGA assets or operations to a subsidiary, unless appellants could “guarantee the availability of $30,000,000” for a possible judgment in Afremov’s favor.  Although appellants produced a letter of credit showing AGA’s assets and available funds, the district court found that the letter was “inadequate as a guarantee.” 

            On March 26, 2003, the district court ordered equitable relief, pursuant to Minn. Stat. § 302A.751 (2002), which is the Minnesota business corporations statute governing judicial intervention and equitable remedies and dissolution.  The March order reads, in part:

1.   Until further order of this Court, the Defendants are restrained from creating and/or transferring any of the assets of or operations of AGA to any entity, whether a subsidiary or not, unless the following conditions are met:


a.   Defendants Amplatz and Gougeon, personally, and Gougeon, on behalf of AGA, must provide in writing to the Plaintiff their agreement that Plaintiff has and will have an ownership interest in any such entity equal to his current interest in AGA as determined by this litigation;


b.   All decisions involving the operations of AGA and any other affiliated entity or subsidiary must be by unanimous vote of Plaintiff Afremov and Defendants Amplatz and Gougeon.  If the vote is not unanimous, the proposed action cannot take place.


            At a May 1, 2003 hearing, the district court clarified its March 26, 2003 order for temporary injunctive relief (March order) by stating that the unanimity requirement existed whether or not the subsidiary was created.  The court stated that the unanimity requirement in the March order applied to “all decisions involving the operations of AGA”; this requirement applied even in the event that AGA did not create a subsidiary corporation or transfer assets and operations to a subsidiary.  Appellants then immediately appealed the March order.

            On May 22, 2003, the district court modified the temporary injunction against appellants by appointing a receiver.  In the May 22, 2003 order (May order) the district court recognized “the strong arguments made in [appellants’] brief against compliance as well as [appellants’] insistence that [the parties] will remain in a deadlock to the detriment of the corporation, [and therefore] any attempt to enforce the March 26th Order appears useless.”  The district court modified the March order by providing that (1) if Afremov, Amplatz, and Gougeon unanimously agree on a proposed corporate action, that action can be taken; (2) if there is not unanimity, the receiver is required to evaluate a proposed action of the corporation and authorize that action if the receiver decides it is in the best interests of AGA; and (3) any dispute over a decision made by the receiver can be appealed to the district court.  This order also was challenged by appellants.

            We consolidated the appeals from the March and May injunction orders.



            The decision to grant a temporary injunction is in the discretion of the district court; a reviewing court will not disturb that decision absent a clear abuse of discretion.  Carl Bolander & Sons Co. v. City of Minneapolis, 502 N.W.2d 203, 209 (Minn. 1993).  A clear abuse of discretion occurs when the district court disregards either facts or applicable principles of equity.  First State Ins. Co. v. Minn. Mining & Mfg. Co., 535 N.W.2d 684, 687 (Minn. App. 1995), review denied (Minn. Oct. 18, 1995).

This court views the facts alleged in the pleadings and affidavits in the light most favorable to the party who prevailed below.  Pac. Equip. & Irrigation, Inc. v. Toro Co., 519 N.W.2d 911, 914 (Minn. App. 1994), review denied (Minn. Sept. 16, 1994).  The district court’s findings in an order for injunctive relief will not be set aside unless they are clearly erroneous.  LaValle v. Kulkay, 277 N.W.2d 400, 402 (Minn. 1979). 


Temporary injunctive relief is appropriate to prevent irreparable harm.  Pickerign v. Pasco Mtkg., Inc., 303 Minn. 442, 444, 228 N.W.2d 562, 564 (1975).  The purpose of a temporary injunction is to maintain the matter in controversy in its existing condition until judgment, so that the effect of the judgment is not impaired by the parties’ actions during litigation.  Berggren v. Town of Duluth, 304 N.W.2d 24, 27 (Minn. 1981).  The district court does have the power, however, to shape preliminary injunctive relief in a manner that protects the rights of the parties, “even if in some cases it requires disturbing the status quo.”  Cox v. Northwest Airlines, Inc., 319 F. Supp. 92, 95 (D. Minn. 1970).

Appellants argue that temporary injunctive relief must merely “preserve the status quo pending trial, not . . . re-order the parties’ relationships.”  We conclude that maintaining the matter in controversy in its existing condition until judgment does not refer merely to maintaining the facts and circumstances at the time of filing of the application for injunction but may refer to the last uncontested status preceding the controversy between the parties.  See Cox, 319 F. Supp. at 95 (concluding that the court had “the power to shape relief in a manner which protects the basic rights of the parties, even if in some cases it requires disturbing the status quo”).  

Here, the district court acted to preserve the facts and circumstances as they existed immediately before the actions of appellants that Afremov challenges.  The district court did not abuse its discretion in deciding that the conditions to be maintained were those that existed immediately before the dispute arose between the parties. 


We next determine whether the district court clearly abused its discretion by issuing the March order for a temporary injunction.  In reviewing the district court’s decision to grant or deny a temporary injunction, we consider the five factors described in Dahlberg Bros. v. Ford Motor Co., which are:  (1) the nature and background of the parties’ relationship; (2) the harm that will be suffered by both parties if the injunction does or does not issue; (3) the likelihood of success on the merits by the party seeking the injunction; (4) the public-policy concerns related to issuing the injunction; and (5) the administrative burden associated with the judicial supervision and administration of the injunction.  272 Minn. 264, 274-75, 137 N.W.2d 314, 321-22 (1965). 

Appellants challenge the district court’s determinations on all five Dahlberg factors, in both the March and May orders.  We will review the district court’s analysis of the Dahlberg factors in the March order for a clear abuse of discretion.  But we have held, in an unpublished decision, that a district court need not analyze all five Dahlberg factors again when it modifies an injunction.  Bonanza Grain, Inc. v. Roverud Constr., Inc., No. C1-89-1315, 1989 WL 153820, at *2 (Minn. App. Dec. 26, 1989).  While Bonanza Grain is not precedential, we adopt its reasoning, and we will review the modified order to determine “whether the trial court clearly abused its discretion by disregarding either the facts or the applicable principles of equity.”  Bonanza Grain, 1989 WL 153820, at *1.  Therefore, we will not review the Dahlberg factors in assessing the May order. 

(1)       Relationship of the parties


In its March order, the district court found that the parties’ relationship had “deteriorated to one of lack of trust and fair dealing.”  The court cited the existence of two inconsistent pledge agreements, Amplatz’s refusal to accept the buyout of his shares under the share-redemption agreement, and appellants’ intent to transfer AGA assets and operations to a subsidiary in which Afremov did not have any control, as examples of the bad relationship between the parties.  The district court concluded that both the tremendous growth of the corporation since 1999 and the potential for future growth, together with appellants’ attempts to “prevent [Afremov] from experiencing this growth in the value of his shares and . . . Amplatz’s desire now to benefit from the corporation’s growth since 1999” supported issuing an injunction.  The district court’s conclusion that the relationship of the parties favored injunctive relief was not a clear abuse of discretion.

(2)       Balance of harms


Courts evaluate the balance of harms to assess the “harm to be suffered by plaintiff if the temporary restraint is denied as compared to that inflicted on defendant if the injunction issues pending trial.”  Dahlberg, 272 Minn. at 274-75, 137 N.W.2d at 321.   Here, the district court determined that Afremov had raised “legitimate concerns not only as to the necessity of . . . a subsidiary, but as to the intent of its creation.”  The district court concluded that Afremov would suffer irreparable harm without injunctive relief because “[t]he creation of the proposed subsidiary would divest [Afremov] of any control over or participation in any increase in the value of AGA assets and operations transferred to the subsidiary.”  The district court’s conclusion on this factor was not a clear abuse of discretion.

(3)       Likelihood of success on merits


Before conducting our review of the district court’s decision on Afremov’s likelihood of success on the merits, we must decide a preliminary issue:  appellants argue that the district court erred as a matter of law by rejecting the facts set forth in appellants’ brief. 

In deciding whether to grant a temporary injunction, the district court is not required to make a final adjudication of the issues raised in the complaint because neither issuing nor denying a temporary injunction is a decision on the merits.  Thompson v. Barnes, 294 Minn. 528, 536, 200 N.W.2d 921, 927 (1972).  Further, in an appeal from an injunction, the reviewing court should not determine crucial questions going to the merits of the case.  Mesabi Iron Co. v. Reserve Mining Co., 270 F.2d 567, 570 (8th Cir. 1959), aff’g 172 F. Supp. 1 (D. Minn. 1959).

The district court did not decide the issues of whether Amplatz remains either a shareholder or director of AGA.  We conclude that this was not an abuse of discretion.

Without deciding whether Amplatz is a shareholder of AGA or if Afremov committed employment misconduct, the district court found that because Afremov owned “shares of considerable value in AGA and is entitled to their fair market value when he is bought out, whether immediately or sometime in the future,” it was likely that Afremov would prevail on the merits of his claim.  This conclusion was not a clear abuse of the court’s discretion. 

(4)       Administrative burden for the court


In issuing a temporary injunction, the district court must evaluate the administrative burden associated with issuing the injunction.  If the injunction would create a significant administrative burden for the court, for example, by requiring the district court to continuously supervise the party’s relationship to ensure cooperation between the parties, then the administrative burden would weigh against issuing the injunction.  See, e.g., Pac. Equip. & Irrigation, Inc., 519 N.W.2d at 916.

But the district court is in the best position to judge the administrative burden that will result from its orders.  Dailey v. City of Long Lake, No. C3-98-1663, 1999 WL 118633, at *5 (Minn. App. Mar. 9, 1999) (citing Dahlberg, 272 Minn. at 283, 137 N.W.2d at 326).  The district court concluded that its ongoing involvement would be minimal.  While this assessment has not been borne out by subsequent events, based on the facts that were before the court in March 2003 when it issued the temporary injunction, we cannot conclude that the district court’s determination was a clear abuse of discretion.

(5)       Public-policy considerations


AGA is a Minnesota closely held corporation.  See Minn. Stat. § 302A.011, subd. 6a (2002).  Under Minnesota law, each shareholder of a closely held corporation owes a fiduciary duty to deal openly, honestly, and fairly with all the other shareholders of the corporation.  Pedro v. Pedro, 489 N.W.2d 798, 801 (Minn. App. 1992), review denied (Minn. Oct. 20, 1992); Evans v. Blesi, 345 N.W.2d 775, 779 (Minn. App. 1984), review denied (Minn. June 12, 1984).  The highest standards of integrity and good faith apply in fiduciaries’ dealings with one another.  Pedro, 489 N.W.2d at 801.

Here, the district court concluded that public policy “weighs heavily in favor of protecting Plaintiff Afremov’s rights as a shareholder in this closely held corporation with equitable relief.”  When the Minnesota legislature enacted Minn. Stat. § 302A.751, it provided courts with the authority to “grant any equitable relief [deemed] just and reasonable in the circumstances.”  The district court did not clearly abuse its discretion by concluding that public policy favors protecting Afremov’s rights in AGA.

We will, therefore, not disturb the district court’s decision to issue the March order for a temporary injunction.



Appellants argue that the district court abused its discretion by failing to require, or even consider, security for the injunction.  We agree.  Generally, a temporary injunction may not issue unless the party seeking the injunction gives security for the payment of costs and damages that any party may incur from being wrongfully enjoined.  Minn. R. Civ. P. 65.03; see Bellows v. Ericson, 233 Minn. 320, 328-29, 46 N.W.2d 654, 660 (1951) (holding that district court lacked jurisdiction to issue alternative temporary mandatory injunction in part because plaintiff failed to give bond).  The district court may, in its discretion, waive the security requirement when appropriate.  In re Giblin, 304 Minn. 510, 525-26, 232 N.W.2d 214, 223 (1975).  But the district court must affirmatively address the security requirement in issuing an injunction; failure to address the issue or waiving the requirement without any indication of the basis for doing so is an abuse of discretion.  Bio-Line, Inc. v. Burman, 404 N.W.2d 318, 322 (Minn. App. 1987). 

Here, the district court abused its discretion by issuing the March temporary injunction without addressing the issue of security for appellants’ expenses if it were to be determined that they were wrongfully enjoined.  We therefore remand to the district court with instructions to address the issue of security and either require the posting of an appropriate bond or other security or explain why security should not be required.



Here, there was confusion regarding the terms of the March order.  At the May 1, 2003 hearing, counsel told the court that there was disagreement between the parties regarding whether the unanimous-action requirement in the March order for a temporary injunction applied if no subsidiary was created.  We accord great weight to the district court’s construction of its own judgment.  Ladwig v. Chatters, 623 N.W.2d 266, 267 (Minn. 2001).  Further, where the terms are “ambiguous or indefinite,” the district court may clarify their meaning.  Id. at 268 (citing Stieler v. Stieler, 244 Minn. 312, 319, 70 N.W.2d 127, 131 (1955)).  We conclude that the district court clarified its March order orally on May 1, 2003, when it stated that the unanimity requirement existed whether or not the subsidiary was created.    


Appellants also contend that the written May order was not a modification of the temporary injunction but rather an impermissible vacation of the March order.  We disagree.  According to the terms of the May order, the receiver was not required to evaluate and authorize actions that Afremov, Amplatz, and Gougeon reached unanimous agreement on.  The receiver was required to evaluate and authorize proposed corporate action at AGA when the parties could not unanimously agree on a proposed action.  When the parties could not reach agreement, then the receiver determined if the proposed action was in the best interests of the corporation; if it was, the receiver had the authority to act.  But, any disputes over the receiver’s decisions could be appealed to the district court.  Thus, the unanimity requirement of the March order remained in effect; the May order modifies the March order in that the receiver must authorize only those actions that are not unanimously agreed on. 

Appellants argue that the district court did not have jurisdiction to modify the March order for injunctive relief after it had been appealed.  We disagree.  Minn. R. Civ. P. 62.02 provides:

When an appeal is taken from an interlocutory or final judgment granting, dissolving, or denying an injunction, the court in its discretion may suspend, modify, restore, or grant an injunction during the pendency of the appeal upon such terms as to bond or otherwise as it considers proper for the security of the rights of the adverse party.


Rule 62.02 grants the district court authority to modify an injunction during the pendency of an appeal on the injunction.  Because the district court had jurisdiction to modify the injunction, we review the modification of a temporary injunction to determine “whether the trial court clearly abused its discretion by disregarding either the facts or the applicable principles of equity” in modifying the injunction.  Bonanza Grain, 1989 WL 153820, at *1 (citing Thompson v. Barnes, 294 Minn. 528, 533, 200 N.W.2d 921, 925 (1972)). 

The district court modified the March order by the May order that appointed a receiver to act where the parties could not reach unanimous decision on proposed actions at AGA.  The district court modified the March order after appellants argued that compliance with the unanimity requirement of the March order was impossible and that the requirement would result in deadlock that would harm AGA.  In issuing the May order, the district court relied on Pooley v. Mankato Iron & Metal, Inc., which stands for the proposition that “[a] court may fashion equitable remedies based on the exigencies and facts of each case so as to accomplish justice.”  513 N.W.2d 834, 837 (Minn. App. 1994) (citing Clark v. Clark, 288 N.W.2d 1, 11 (Minn. 1979)), review denied (Minn. May 17, 1994).

Because the district court, after evaluating the facts and determining that enforcement of the March order as issued was impossible, used “the power of equity . . . where a better appreciation of the facts in light of experience indicates that the decree [was] not properly adapted to accomplishing its purposes,” the district court’s modification of the March order was not a clear abuse of its discretion.  See King-Seely Thermos Co. v. Aladdin Indus., Inc., 418 F.2d 31, 35 (2d Cir. 1969). 



Appellants argue that the district court had neither a factual basis nor a legal basis to appoint a receiver.  We disagree.  In fashioning the receivership portion of the May order, the district court relied, in part, on the fact that the appellants made strong arguments in their brief both that compliance with the March order, as clarified by the May 1, 2003 oral order, was not possible, and that the deadlock that would result from the parties’ inability to adhere to the clarified March order would be detrimental to the corporation.  This factual basis was sufficient for the district court to conclude that attempts to enforce the March order without a mechanism to avoid deadlock would be futile and that the order therefore needed modification.

Appellants argue that the appointment of a receiver is an extraordinary remedy; they assert that because interlocutory injunctions must be limited, and the relief granted by an injunction must accord with well-settled principles, the district court abused its discretion by appointing a receiver for AGA.  See Gen. Minn. Utils. Co. v. Carlton County Coop. Power Ass’n, 221 Minn. 510, 522-23, 22 N.W.2d 673, 679 (1946).  We disagree.  We conclude that the court had the legal authority to appoint a receiver to assist in effectuating the terms of the March temporary injunction.  A receiver may be appointed where no adequate remedy exists at law.  Seward v. Schrieber, 240 Minn. 489, 493, 62 N.W.2d 48, 51 (1953); Asleson v. Allison, 188 Minn. 496, 500, 247 N.W. 579, 580 (1933).  In appointing a receiver, the district court relied on Minn. Stat. §§ 302A.751, subd. 1(b)(1), 576.01, subd. 1(1), (4) (2002); and Minn. R. Gen. Pract. 137, which govern the appointment of a receiver in Minnesota, and Minn. R. Civ. P. 62.02, which provides that a district court may modify an injunction during the pendency of an appeal.

Minn. Stat. § 302A.751, subd. 1(b)(1), authorizes the district court to “grant any equitable relief it deems just and reasonable in the circumstances” where it is established in a shareholder action that the directors are deadlocked in the management of the corporation.  Further, a district court may appoint a receiver before it enters judgment when any party to the action applies to the court and shows both “an apparent right to property which is the subject of such action and is in the possession of an adverse party” and that the property in question is in danger of being lost or materially impaired.  Minn. Stat. § 576.01, subd. 1(1).  And Minn. Stat. § 576.01, subd. 1(4), provides that a receiver may also be appointed in “cases as are now provided by law, or are in accordance with the existing practice.”  Minn. R. Gen. Pract. 137 requires, inter alia, that a receiver must be impartial and that, after appointment, a receiver is required to give a bond approved by the court.

Because there was no adequate remedy at law, the district court did not clearly abuse its discretion by fashioning a modification of the March injunction in the form of a receivership that allows the parties, when they agree unanimously, to take corporation action without the authorization of the receiver, but which seeks to avoid deadlock by requiring authorization from the receiver for actions that cannot be unanimously agreed on by the parties.  See Seward, 240 Minn. at 493, 62 N.W.2d at 51; Asleson, 188 Minn. at 500, 247 580. 


Appellants argue that the district court erred by failing to require the court-appointed receiver to post a bond.  We agree.  In appointing the receiver, the district court stated that the receiver would be required to “file with the Court an affidavit pledging a fiduciary duty to the corporation, but will not be required to post any bond.” 

The Minnesota rules of civil procedure and the Minnesota general rules of practice govern the appointment of receivers.  Minn. R. Civ. P. 66; Minn. R. Gen. Pract. 137.02.  Minn. R. Gen. Pract. 137.03 requires that a receiver post a bond, and, unlike the issue of security for the injunction, we find no authority for the proposition that the district court may waive the requirement under appropriate circumstances and with a statement of its reasons.  We conclude, therefore, that the district court must require the receiver to post a bond, and its failure to do so here was error.  We remand that issue so that the district court may determine and order an appropriate bond for the receiver.

Affirmed in part, reversed in part, and remanded.

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