This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (2002).
STATE OF MINNESOTA
IN COURT OF APPEALS
Production Resource Group, L.L.C., et al.,
Thomas J. Van Hercke,
Affirmed as modified
Hennepin County District Court
File No. CT 01-3593
Karl E. Robinson, Thomas H. Boyd, Winthrop & Weinstine, P.A., 225 South Sixth Street, Suite 3500, Minneapolis, MN 55402-4629 (for respondents)
Gregory J. Stenmoe, Steven W. Wilson, Tamika R. Nordstrom, Briggs and Morgan, P.A., 2200 IDS Center, 80 South Eighth Street, Minneapolis, MN 55402 (for appellant)
Considered and decided by Kalitowski, Presiding Judge; Schumacher, Judge; and Huspeni, Judge.*
U N P U B L I S H E D O P I N I O N
Appellant Thomas J. Van Hercke challenges the district court’s decision (1) granting respondents’ motion for summary judgment; (2) dismissing appellant’s counterclaims; and (3) awarding damages to respondents. Respondents Production Resource Group L.L.C., et al. claim the district court abused its discretion in denying their motion to amend their complaint to seek punitive damages and in failing to award the full amount of their claimed damages. We affirm as modified.
Initially, we note that in his brief to this court appellant asks this court to remand this matter for arbitration. But this issue is not properly before us. In an order dated December 23, 2003, this court dismissed the part of appellant’s appeal that was from the order denying appellant’s motion to compel arbitration on the ground that state and federal law preclude review of a motion to compel arbitration after conclusion of the litigation.
Appellant argues that the district court erred in granting respondents summary judgment on liability and dismissing his counterclaims. “On an appeal from summary judgment, we ask two questions: (1) whether there are any genuine issues of material fact and (2) whether the lower courts erred in their application of the law.” State by Cooper v. French, 460 N.W.2d 2, 4 (Minn. 1990). When reviewing the district court, we must view the evidence in the light most favorable to the party against whom judgment was granted. Fabio v. Bellomo, 504 N.W.2d 758, 761 (Minn. 1993).
A motion for summary judgment shall be granted when the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue of material fact and that either party is entitled to a judgment as a matter of law. Minn. R. Civ. P. 56.03. No genuine issue of material fact exists where 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). “[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 70.
Respondents’ summary judgment motion
Appellant contends that the district court erred in finding that there were no genuine issues of material fact as to whether he breached his employment agreement. But appellant cites no legal authority and makes no argument in support of this claim. And mere assertion not supported by argument or authority is waived and will not be considered on appeal unless prejudicial error is obvious on mere inspection. State v. Modern Recycling, Inc., 558 N.W.2d 770, 772 (Minn. App. 1997).
Moreover, if we consider the merits of appellant’s claim, we conclude that the record supports the district court’s decision. Admissions by appellant in his deposition testimony indicate that he violated the terms of the June 21, 2000, amendment to his employment contract. The amended employment agreement stated that while appellant is to assist respondents in effectuating the sale of Haas: (1) appellant was to have no independent negotiating authority; (2) respondents, not appellant, were to determine the fair value of Haas; and (3) management participation in any sale was to be discussed only after economic terms have been agreed upon by buyer and respondents. Here, the record supports the district court’s determination that appellant breached his employment agreement by negotiating the specific sales price and by engaging in discussions regarding his involvement in Haas’s management after the sale.
Appellant also argues that the district court erred in finding that there were no genuine issues of material fact as to whether he violated any statutory duties owed to respondent. But because the damages awarded by the court are supported by appellant’s breach of his employment agreement and because the district court did not award respondents any damages based on a breach of statutory duties, we need not address this issue.
Appellant’s severance agreement counterclaim
Appellant argues that there is a genuine issue of material fact as to whether the handwritten notes regarding the parties’ negotiations concerning his severance package constitute a valid contract. Whether a contract is to be implied is usually a question to be determined by the trier of fact after considering the conduct and statements of the parties. Bergstedt, Wahlberg, Berquist Assocs., Inc. v. Rothchild, 302 Minn. 476, 479-80, 225 N.W.2d 261, 263 (1975). But to be valid, the parties must have a meeting of the minds regarding essential contract elements. Minneapolis Cablesystems v. City of Minneapolis, 299 N.W.2d 121, 122 (Minn. 1980).
Here, appellant argues that the oral negotiation, the creation of the notes, respondents’ initials on the notes, respondents’ statement that an arrangement had been reached, and appellant’s detrimental reliance constitutes evidence of a contract. We disagree. The record indicates that there was no offer, acceptance, or meeting of the minds. The writing appellant refers to includes no language indicating an offer, acceptance, or that it purports to be a contract. The writing does not state any terms with clarity, lacks any coherent form, and is not signed by either party. The writing is nothing more than handwritten notes on a piece of paper. While the evidence indicates that there were negotiations between the parties, the district court properly dismissed this counterclaim because there was no genuine issue as to whether there was a meeting of the minds with respect to the terms of any alleged severance agreement.
Appellant’s breach of employment contract counterclaim
Appellant argues that the district court erred in dismissing his counterclaim for breach of employment contract. Following the failed attempt to reach an agreement with respect to a severance agreement, appellant purported to revoke his resignation and terminate his employment for good cause. Appellant argues that there are genuine issues of material fact as to whether he terminated his employment for good reason. Appellant’s employment agreement defines good reason as:
any act or omission by the Company which constitutes a material breach of any term or provision of this Agreement or which results in the assignment to Executive of any duties materially inconsistent with, or in any material diminution of, the positions, duties, responsibilities and status of Executive hereunder or any change in Executive’s titles or duties with the same intent or effect which breach continues for more than ten days after written notice of such breach to Company.
Here, there is nothing in the record that indicates that appellant ever gave respondents written notice of a material breach of contract, as required by the employment agreement. The record contains copies of E-mails from appellant to respondents’ representatives, but in none of these E-mails does appellant allege a material breach of contract. Moreover, the conduct complained of in appellant’s E-mails does not constitute a violation of his employment agreement. Appellant cites no legal authority in support of his proposition; he merely lists conduct by respondents that he contends constitutes good reason for him to terminate his employment. But the conduct listed by appellant is either not supported by the record or would not constitute a material breach of the employment agreement.
Appellant contends that his demotion and diminution of authority constitute good cause to terminate his employment with respondents. While the record contains some evidence of demotion or diminution of authority, appellant agreed to these changes in the amendments to his employment agreement. Because appellant failed to identify conduct, supported by the record, that would constitute a material breach and did not give written notice to respondents of material breach, we conclude that the district court did not err in dismissing this claim.
Appellant’s Minn. Stat. § 302A.751 (2000) counterclaim
Appellant argues that he is entitled to relief under section 302A.751 because respondents acted in an unfairly prejudicial manner towards him. Minn. Stat. § 302A.751 allows courts to grant equitable relief to a shareholder in a corporation that is not publicly held when the directors or those in control of the corporation have “acted in a manner unfairly prejudicial” toward the shareholder in his or her capacity as shareholder or director. Minn. Stat. § 302A.751, subd. 1(b)(3). This court has noted that the statute does not define the phrase “in a manner unfairly prejudicial toward [shareholders]” and that its plain meaning is not apparent. Gunderson v. Alliance Computer Prof’ls, Inc., 628 N.W.2d 173, 184 (Minn. App. 2001), review granted (Minn. July 24, 2001) and appeal dismissed (Minn. Aug. 17, 2001); Berreman v. West Publ’g Co., 615 N.W.2d 362, 373 (Minn. App. 2000), review denied (Minn. Sept. 26, 2000). But we have interpreted the phrase to mean conduct that frustrates the reasonable expectations of shareholders in their capacity as shareholders or directors of a corporation that is not publicly held, or as officers or employees of a closely held corporation. Gunderson, 628 N.W.2d at 184; Berreman, 615 N.W.2d at 374.
The district court concluded that appellant “failed to present any evidence that would support such equitable action by the Court.” We agree. Reviewing the record in the light most favorable to appellant, we conclude that none of respondents’ actions have frustrated appellant’s reasonable expectations as a shareholder. Termination of an employee may trigger relief under section 302A.751, but “a shareholder’s expectation of continued employment is not reasonable when the employee-shareholder is terminated for misconduct or incompetence.” Haley v. Forcelle, 669 N.W.2d 48, 60 (Minn. App. 2003), review denied (Minn. Nov. 25, 2003). While appellant was not terminated for misconduct or incompetence, his violation of the terms of his employment agreement would have justified termination for misconduct. Therefore, we conclude that the district court did not err in dismissing appellant’s section 302A.751 claim.
Appellant argues that the district court erred in awarding damages to respondents. In reviewing a damage award, this court must consider the evidence in the light most favorable to the verdict. Rayford v. Metro. Transit Comm’n, 379 N.W.2d 161, 165 (Minn. App. 1985), review denied (Minn. Feb. 14, 1986). A reviewing court will not disturb a damage award “unless its failure to do so would be shocking or would result in plain injustice.” Hughes v. Sinclair Mktg., Inc., 389 N.W.2d 194, 199 (Minn. 1986). This court will set aside a damage award only if it is “manifestly and palpably contrary to the evidence.” Levienn v. Metro. Transit Comm’n, 297 N.W.2d 272, 273 (Minn. 1980).
Appellant first argues that the district court erred in failing to make any findings of fact sufficient to allow meaningful review of the damage award. “In all actions tried upon the facts without a jury . . . the court shall find the facts specially and state separately its conclusions of law thereon and direct the entry of the appropriate judgment.” Minn. R. Civ. P. 52.01. But “where the record is reasonably clear and the facts not seriously disputed, the judgment of the trial court can be upheld in the absence of trial court findings.” Roberson v. Roberson, 296 Minn. 476, 478, 206 N.W.2d 347, 348 (1973). At trial, the only issue was damages; the district court had determined by summary judgment that appellant had breached the employment agreement.
While the district court did not make specific findings regarding the damages award, the court awarded respondents $63.235.41 for “salary, car allowance, vacation, and expenses paid to [appellant] following his breaches of his duties.” And at trial, respondents introduced evidence indicating that upon leaving his employment appellant was paid $18,472.69 in expenses and $24,771.62 for accrued vacation time. Respondent also introduced evidence of the amount of salary and car allowance appellant received after his breach. Thus, we conclude that the record is reasonably clear as to how the district court arrived at its damages total and we cannot say the district court erred by failing to make specific findings of fact.
Appellant also challenges the damage amounts awarded by the district court. The district court awarded respondents $24,771.62 in damages for vacation time they paid to appellant, finding that appellant had forfeited that payment by breaching his employment agreement. While we conclude that the district court did not err in finding that appellant forfeited the vacation time he accrued after the breach, it erred as a matter of law in finding that appellant forfeited the vacation time he accrued before the breach. And the record indicates that most of the vacation time awarded by the district court was earned by appellant prior to the breach. Appellant contends, and the record supports, that he accrued approximately two vacation days after the breach. The record indicates that appellant had a total of 229 hours of accrued vacation time for which he was compensated at a rate of $108.17. Because approximately 213 hours of this time was accrued prior to the breach, we conclude that the appropriate amount of damages for forfeited vacation pay must be reduced by $23,040.21 (213 x $108.17).
The record also indicates that the district court granted respondents $18,472.69 in damages for amounts paid to appellant to reimburse him for business expenses. We conclude that even if these amounts were paid to appellant after he breached his employment agreement, these amounts do not represent damages to respondents caused by appellant’s breach. Appellant contends that he incurred the business expenses on behalf of respondents. The record does not indicate when the expenses were incurred and respondents did not submit any evidence indicating that they were not legitimate business expenses. Therefore, we conclude that the district court erred as a matter of law in determining that appellant had forfeited his right to reimbursement for these business expenses.
Because $23,040.21 of vacation time was accrued by appellant prior to the breach and appellant had the right to be reimbursed for $18,472.69 of business expenses he incurred on respondents’ behalf, we conclude that the district court overstated damages by $41,512.90. Accordingly, we modify the district court’s damages award and conclude that respondents are entitled to $21,722.51 ($63.235.41 - $41,512.90) in damages for appellant’s breach.
Appellant cites Gilchrist v. Perl for the proposition that the district court erred in ruling that he forfeits his entire salary following the breach. 387 N.W.2d 412, 417 (Minn. 1986). But that case is factually distinguishable in that it deals with fee forfeiture for breach of duty and fraud in an attorney malpractice case and does not discuss whether a district court errs in granting complete salary forfeiture for breach of an employment agreement by a director of a corporation. Viewing the record in the light most favorable to the verdict, we conclude that the district court’s grant of compensation forfeiture was not manifestly and palpably contrary to the evidence.
In conclusion, the district court did not err in finding that appellant completely forfeited all salary as a result of his breach, but we modify the award of damages to an award of $21,722.51 to properly reflect allowable damages suffered by respondents as a result of the breach.
Respondents, by notice of review, argue that the district court abused its discretion in failing to award the full amount of their claimed actual damages. Specifically, they argue that they are entitled to damages because of their alleged inability to sell Haas as a direct result of appellant’s actions. But “[f]indings of fact, whether based on oral or documentary evidence, shall not be set aside unless clearly erroneous, and due regard shall be given to the opportunity of the trial court to judge the credibility of the witnesses.” Minn. R. Civ. P. 52.01. The law does not permit a recovery of damages which are merely speculative, but it does not require proof to an absolute certainty. Northern States Power Co. v. Lyon Food Prods., Inc., 304 Minn. 196, 202, 229 N.W.2d 521, 525 (1975).
Here, the district court found that respondents suffered no economic loss as a result of appellant’s breaches. We agree. Specifically, the district court found that if the proposed buyer had gone through the process of due diligence, prior to entering a purchase agreement it would have received updated financial information on Haas that would have reflected Haas’s negative earnings before income tax, depreciation, and amortization in the third and fourth quarters of 2001. Moreover, a representative of the buyer testified that he would not have been interested in purchasing Haas had he seen the updated financial information of the third and fourth quarters of 2001. Thus, the record indicates that even if appellant had not breached his employment contract during the course of negotiations, the buyer would not have purchased Haas. The record also supports the district court’s conclusion that any additional damages sought by respondents as a result of appellant’s breach were too speculative. We conclude that the district court did not abuse its discretion by declining to award to respondents additional damages because of appellant’s breach.
Finally, respondents argue that the district court abused its discretion in denying their motion to amend their complaint to add a claim for punitive damages. An appellate court may not reverse a district court’s denial of a motion to add a claim for punitive damages absent an abuse of discretion. LeDoux v. Northwest Publ’g, Inc., 521 N.W.2d 59, 69 (Minn. App. 1994), review denied (Minn. Nov. 16, 1994).
After a party files an action, the party may move the court to amend his or her pleading to add a claim for punitive damages. Minn. Stat. § 549.191 (2000). The motion to amend “must allege the applicable legal basis under section 549.20 or other law for awarding punitive damages in the action and must be accompanied by one or more affidavits showing the factual basis for the claim.” Id. A district court must permit a party to add a claim for punitive damages if “the court finds prima facie evidence in support of the motion.” Id. In a civil action, punitive damages “shall be allowed . . . only upon clear and convincing evidence that the acts of the defendant show deliberate disregard for the rights or safety of others.” Minn. Stat. § 549.20, subd. 1(a) (2000).
Here, respondents made an oral motion to amend their complaint at the end of their closing statement on the first day of trial. The district court allowed respondents the opportunity to brief the issue. Respondents’ legal memorandum in support of its motion contained no supporting affidavits, as required by section 549.191, but contained references to the summary judgment findings by the court. The district court denied the motion because it did not contain supporting affidavits, it was untimely, and it was unfairly prejudicial to appellant.
We conclude that the district court did not abuse its discretion in denying respondents’ motion to amend. While respondents’ motion is supported by citations to the district court’s earlier summary judgment order, it did not contain supporting affidavits. Moreover, the district court issued a scheduling order on April 5, 2002, that required all motions to amend pleadings to be scheduled to be heard on or before July 12, 2002. Thus, respondents motion was made over four months after the deadline set by the court in its scheduling order. Respondents had notice of the deadline, failed to meet it, and appellant would be prejudiced if the district court did not enforce the deadline and allowed respondents to amend their complaint after the first day of trial. Therefore, we conclude that the district court did not abuse its discretion in denying respondents’ motion to amend.
Affirmed as modified.
* Retired judge of the Minnesota Court of Appeals, serving by appointment pursuant to Minn. Const. art. VI, § 10.