This opinion will be unpublished and

may not be cited except as provided by

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






Jeff T. Wiltse,


Boarder Financial Services, Inc., d/b/a Boarder Agency,


Filed April 13, 2004


Minge, Judge


Pennington County District Court

File No. C2-02-212



Delray Sparby, Ihle & Sparby, P.A., 312 North Main Avenue, P.O. Box 574, Thief River Falls, MN 56701 (for appellant)


Steven A. Anderson, Law Office of Steven A. Anderson, P.A., P.O. Box 430, Warroad, MN 56763 (for respondent)


            Considered and decided by Shumaker, Presiding Judge; Kalitowski, Judge; and Minge, Judge.

U N P U B L I S H E D  O P I N I O N


MINGE, Judge

            Appellant, a minority shareholder, challenges the rejection of his claim that he was treated prejudicially and that the corporation should buy his shares of stock under Minn. Stat. § 302A.751, subd. 1(b)(3) (2002).  Because the district court’s finding that the corporation did not treat appellant prejudicially was not clearly erroneous, we affirm.



In 1996, appellant Jeff Wiltse and 10 of the 11 shareholders of Boarder State Bank (Bank) formed respondent corporation, Boarder Financial Services, Inc. (Agency), to purchase and operate an insurance agency in Roseau.  From the outset, Wiltse was aware of the relationship of the others with the Bank and that the idea of forming the Agency had taken place at Bank meetings.  Wiltse became the manager of the Agency pursuant to an at-will employment agreement and also served as president.  Wiltse and the 10 Bank shareholders held stock in the Agency and constituted its board of directors.  He was the only board member familiar with the details of the Agency’s operations, and over time, became the owner of 20% of the shares of Agency stock.

Wiltse successfully ran the Agency’s business until September 1, 2001, when he resigned to move to another city.  The officers of the Agency urged him to stay and offered to sell him the business.  Wiltse declined but did commute to Roseau to assist the Agency through the transition to new management.  During the summer of 2002, a flood damaged the Agency’s building.  The other directors sold the building and moved the Agency into the Bank where it paid the Bank rent.

After Wiltse’s departure, the Agency’s directors and shareholders held several meetings and discussions regarding the management and operation of the Agency and possible buy/sell arrangements.  While steps were made to sell the business, no agreement materialized.  The sale efforts centered on tentative offers from two competing firms.  Until shortly before trial, a sale was being pursued with the firm that was arguably offering a lower price. 

Wiltse commenced this action for a mandatory buyout of his stock under Minn. Stat. § 302A.751, subd. 1(b)(3).  He claimed that the other officers, directors, and shareholders prejudiced him by discussing the Agency business at the Bank meetings, by failing to give him proper notice of meetings, by making decisions, such as the sale of the Agency’s building and its move into the Bank, without his participation, by failing to offer him a reasonable price for his shares, by not aggressively trying to sell the Agency, by considering an offer at a lower price more favorable to the Bank, and by disregarding the conflict of interests between the Bank and the Agency.

After a trial without a jury, the district court found that Wiltse had been given inadequate notice of meetings and that the Agency business had been discussed at the Bank meetings.  However, the district court also found that Wiltse had not been provided less notice or opportunity to participate than others, that the others did not intentionally exclude Wiltse, that Wiltse had participated by telephone and in person in several crucial meetings, that Wiltse’s limited involvement was largely due to his move to another city and his decision not to be involved with the Agency, that Wiltse had been given the opportunity to purchase the Agency or its business on terms similar to those offered to others, that the tentative offer for a potentially higher price may not have been as favorable to the shareholders as Wiltse asserted because of the multi-year nature of the buyout, and that Wiltse’s evidence of prejudice was not adequate to justify a mandatory buyout under Minn. Stat. § 302A.751, subd. 1(3).  This appeal followed.



            A reviewing court may reverse a district court’s order denying a motion to compel a stock buy-out if the district court abused its discretion.  See City of Cloquet v. Cloquet Sand & Gravel, Inc., 312 Minn. 277, 279, 251 N.W.2d 642, 644 (1977) (stating that in equitable relief cases, the standard of review is whether district court abused discretion).  Minn. Stat. § 302A.751, subd. 1(b)(3) (2002), states that the district court can grant any equitable relief it finds just and reasonable:

(b) In an action by a shareholder when it is established that:


            . . . .


(3) the directors or those in control of the corporation have acted in a manner unfairly prejudicial toward one or more shareholders in their capacities as shareholders or directors of a corporation that is not a publicly held corporation, or as officers or employees of a closely held corporation. 


When making the decision whether to order equitable relief, dissolution, or a buy-out

the court shall take into consideration the duty which all shareholders in a closely held corporation owe one another to act in an honest, fair, and reasonable manner in the operation of the corporation and the reasonable expectations of all shareholders as they exist at the inception and develop during the course of the shareholders’ relationship with the corporation and with each other. 


Minn. Stat. § 302A.751, subd. 3a (2002).  Conduct that frustrates the reasonable expectations of shareholders in their capacity as shareholders in a closely held corporation is “unfairly prejudicial.”  Berreman v. W. Publ’g Co., 615 N.W.2d 362, 374 (Minn. App. 2000), review denied (Minn. Sept. 26, 2000).  “Often, shareholder expectations arise from understandings that are not expressly stated in the corporation’s documents.”  Gunderson v. Alliance of Computer Prof’l, Inc., 628 N.W.2d 173, 186 (Minn. App. 2001), review granted (Minn. July 24, 2001) and appeal dismissed (Minn. Aug. 17, 2001). 

Whether a shareholder’s reasonable expectations have been frustrated is a factual issue.  Id.  Reviewing courts will not set aside the district court’s factual findings unless they are clearly erroneous.  Minn. R. Civ. P. 52.01.  Factual findings are clearly erroneous if they are “manifestly contrary to the weight of the evidence or not reasonably supported by the evidence as a whole.”  Pedro v. Pedro, 489 N.W.2d 798, 801 (Minn. App. 1992) (quotation omitted), review denied (Minn. Oct. 20, 1992).

Wiltse contends that the failure of the corporation to offer a fair value for his shares constituted unfairly prejudicial action.  Wiltse concedes that because the parties did not have a buy/sell agreement, the Agency did not have a contractual obligation to buy his shares.  He does not offer any evidence or authority to support his argument that the offered price or conditions were unfair.  Claims of unfairly prejudicial conduct may not be predicated on the failure to fulfill a minority shareholder’s subjective hopes and desires in joining the venture.  Gunderson, 628 N.W.2d at 191.  The fact that the remaining shareholders offered to sell Wiltse their shares on those same terms and conditions included in their offer to buy his shares indicates that their offer was reasonable and that Wiltse’s expectation of a higher price was unreasonable. 

Wiltse argues that the corporation’s freezing him out of the Agency business after his resignation was unfairly prejudicial conduct.  But, the district court’s findings that Wiltse was treated no differently than the other shareholders, that he was still able to participate in the Agency’s business, and that it was his own actions that resulted in his limited involvement are not clearly erroneous.  The record reflects that other shareholders were given short notice of the meetings, that shareholder and officers meetings were held if Wiltse requested one, that the board did not prevent Wiltse from assisting with the sale of the Agency, and that when Wiltse discovered that the board had moved the Agency into the Bank, he did not make any inquiries or act on the issue. 

Further, while adequate notice of meetings is a reasonable expectation, directors and shareholders can waive notice by attending and participating in the meeting.  Minn. Stat. §§ 302A.231, subds. 4, 6; .435, subds. 2, 4 (2002).  Although minority shareholders in a closely held corporation have a reasonable expectation that the controlling shareholders will seek board approval for decisions affecting the corporation, “the circumstances underlying the formation of a . . . corporation and the shareholders’ practice thereafter may change that expectation and alter the shareholders’ fiduciary duty.”  Gunderson, 628 N.W.2d at 187. 

Wiltse participated in many of the meetings to which he is now objecting.  Further, he knew of the affiliation between the Bank and the other shareholders when he agreed to the venture.  He knew that the Agency business was being discussed at the Bank meetings and never objected to such practice while he was manager of the Agency.  He cannot now argue that he has a reasonable expectation that these practices would not continue, particularly after he expressed and exercised less interest in the business.  

Wiltse lastly argues that he was unfairly prejudiced because he was not informed or consulted in the decision to sell the Agency and was harmed by the remaining shareholders’ consideration of the Bank’s interests in that sale.  The record shows that he was able to express his views on the sale and to participate in the vote on the sale.  Further, Wiltse failed to participate in other meetings of which he was aware, and despite being the president of the Agency, he failed to help the board find other prospective buyers.  The district court’s finding that Wiltse was kept informed of these discussions and participated in several meetings relating to the sale is not clearly erroneous. 

Wiltse, as a shareholder, did have a reasonable expectation that the board would consider the best interests of the Agency, rather than the Bank, when selling the corporation.  See Advanced Communication Design, Inc. v. Follett, 615 N.W.2d 285, 294 (Minn. 2000) (noting a fiduciary duty to exercise the highest degree of integrity and good faith in corporate dealings); PJ Acquisition Corp. v. Skoglund, 453 N.W.2d 1, 17-19 (Minn. 1990) (noting a fiduciary duty not to make decisions based on personal and private interests to the detriment of the corporation); Gunderson, 628 N.W.2d at 186 (citing shareholders’ obligation to act with complete candor in negotiations with each other including duty to disclose ulterior motives).  But, the district court’s findings that the sale terms were acceptable and that Wiltse did not have reasonable expectations that were frustrated by the board’s actions are not clearly erroneous.  Others on the board testified to legitimate business reasons why the lower offer may actually have been more advantageous.  “Minnesota courts are generally reluctant to interfere with corporate decision-making.”  Haley v. Forcelle, 669 N.W.2d 48, 58 (Minn. App. 2003).  Wiltse failed to offer evidence suggesting that their considerations were improper.  Without more substantial evidence that the offer violated the deference given to directors in corporate decision-making, we cannot find that the board acted against the Agency’s best interests. 

We also conclude that the district court did not abuse its discretion in denying Wiltse’s request for a forced sale of his shares.  The statute states that the court “may grant any equitable relief it deems just and reasonable in the circumstances . . . .”  Minn. Stat. § 302A.751, subd. 1.  Under the permissive language of the statute and the circumstances of the case, it was not an abuse of discretion for the court to determine that justice did not require a forced sale.