This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (2004).
IN COURT OF APPEALS
Dominion Sports Services, Inc.,
Bradford Bruce Bredehoft,
John William Zastrow, Sr.,
Steve Scott Swanson, et al.,
Hennepin County District Court
Ted S. Meikle, Meikle &
Micheal D. O’Neill, O’Neill, Grills & O’Neill, P.L.L.P., W1750 First National Bank Building, 332 Minnesota Street, Saint Paul, MN 55101 (for respondent Bradford B. Bredehoft)
John J. McDonald, Susan K. Fitzke, Meagher & Geer, P.L.L.P., 33 South Sixth Street, Suite 4200, Minneapolis, MN 55402 (for respondents Steve S. Swanson and Adult Hockey Association, Ltd.)
Todd J. Thun, Scott J. Hoss, Bassford Remele, P.A., 33 South Sixth Street, Suite 3800, Minneapolis, MN 55402 (for respondent John W. Zastrow)
Considered and decided by Willis, Presiding Judge; Toussaint, Chief Judge; and Huspeni, Judge.
U N P U B L I S H E D O P I N I O N
Appellant challenges the award of summary judgment to respondents, alleging that a contract existed between the parties that (a) must be interpreted under Virginia law, under which restrictive covenants are enforceable; (b) included sufficient consideration to make the restrictive covenants contained therein enforceable; (c) was reaffirmed by the parties; (d) was the subject of a novation; (e) contained written agreements that were violated by respondents; and (f) was breached by failure of respondents to observe their common law duties of loyalty and due care an agent owes its principal in a fiduciary relationship. Appellant also alleges that the district court erred in determining that the doctrine of unclean hands barred appellant’s fiduciary-duty claims and in awarding summary judgment for respondents on appellant’s claims for tortious interference with contractual relations and prospective contractual relations, unfair competition and civil conspiracy. Because there are no material fact issues present in any of appellant’s claimed bases for recovery, and because respondents are entitled to summary judgment as a matter of law, we affirm.
HNA conducted a winter and summer
In March 1999, respondent Bradford Bredehoft began providing services as the local administrator for HNA. In April 1999, Root and Bredehoft discussed the administrator functions that Bredehoft would be performing, including booking and arranging ice contracts, corresponding with local team captains, and preparing schedules for the upcoming season. There was no written contract specifying Bredehoft’s duties at this time.
On August 23, 1999, however, approximately six months after assuming the administrator functions, Bredehoft did sign an Administrator’s Agreement (HNA Contract). The HNA Contract provided that Bredehoft was an independent contractor, and was not an employee of NNHL or HNA. After signing the HNA Contract, Bredehoft’s duties did not change, nor did his compensation, either in monetary or other job-related benefits. There was no new consideration given to him for signing. The HNA Contract did provide, however, that
[w]hile employed by League, and for a period of twelve months thereafter, Administrator agrees not to have any ownership interest in, render any services for, or to otherwise be involved in the promotion, organization, management, or operation of any other adult amateur ice hockey league or organization, directly or indirectly, anywhere in the area of the local league, which shall be defined as that area within twenty-five (25) miles of any rink where the local league activities of the League are being held, or are planned to be held, as of the date of termination of this agreement, regardless of who initiated such termination. Administrator agrees that any violation of this provision shall cause this twelve-month covenant to begin to run again from the date of each such violation. . . .
Also during the term of this agreement and for a period of twelve months thereafter, neither party will make any disparaging or negative statements or suggestions about the other, whether or not true, and will not solicit or hire any employee or agent of the other for any employment or business venture.
Respondent Steve Swanson assisted Bredehoft during the 2000-2001 winter hockey season by scheduling games and booking ice for league games. Although Swanson referred to himself as assistant administrator, he never executed a contract with HNA. Swanson received no compensation for his efforts.
HNA was frequently late in paying operating costs; as a result of both financial and management problems, Ashley Root was removed from the HNA payroll by the 2000-2001 season. In April and June 2001, local ice arenas contacted Bredehoft complaining that they had not been fully paid for the previous winter season. Soon thereafter, due to HNA’s failure to pay rent on time, one ice arena notified HNA that it would no longer rent it ice time and another considered doing the same. Bredehoft made repeated attempts to contact the head offices of HNA regarding these difficulties, but received no response.
Meanwhile, and of critical importance in resolving the issues presented in this appeal, on June 21, 2001, Root, through his company, appellant Dominion Sports Services, Inc. (Dominion), purchased the assets of HNA from Ashley Root. The document containing the provisions of that transaction is the Asset Purchase Agreement (Agreement). After entering the Agreement, Dominion operated the business as HNA. Under the Agreement, the liabilities of HNA assumed by Dominion included all unpaid contracts with ice rinks, real-estate loans, mortgages, outstanding lines of credit, and the IRS lien. Additionally, the Agreement provided that “[Dominion] will neither assume, pay nor in any way be responsible for any debts or other liabilities of [HNA] . . . other than the Assumed Liabilities,” and, as to existing employees, the Agreement provides “After Closing, [Dominion] shall have the right, but not the obligation, to employ or contract with any employee or contractor of [HNA], free of any restrictive covenants which may exist with respect to such employee and/or contractor of [HNA] at the time of Closing.” (Emphasis added.) There is no mention of Bredehoft in the Agreement. No contract was signed between appellant and Bredehoft.
In order to voice his concerns and discuss his problems anticipated in the upcoming hockey season, Bredehoft met with team captains Kevin Moore and respondent John Zastrow in late June or early July 2001. Besides the loss of ice time at certain arenas, the three also discussed the failure to pay referees on time and the options available to ensure the teams’ continued ability to play hockey. One option discussed was the formation of a new local league.
On August 6, 2001, the
At the August 6 meeting, the captains also discussed their desire to have local control over the hockey league, so that an entity outside the Twin Cities would not be involved. They believed that local control would ensure timely payments and guarantee that their money was being used for teams in the Twin Cities, rather than teams in other states or business ventures. Discussions also involved what form a local organization would have and its purpose.
At its conclusion of the August 6 meeting, the players voted to create Twin City Adult Hockey Association (TCAHA), a player’s association, and form a corporation to explore the possibility of operating the league locally, either through HNA or independently. Upon learning of the August 6 meeting, Root refused to pay Bredehoft for his services for HNA’s 2000-2001 season because, as he stated, he did not pay traitors.
TCAHA was incorporated on August 16,
2001, as a nonprofit corporation with the purpose of representing the interests
of the players.
On August 28, 2001, HNA, by letter, informed players for the first time about its change in ownership. As a result of this letter, TCAHA concluded that HNA wished to compete with others to run the local league.
September 5, 2001, the HNA and AHA submitted proposals on how it would
administer TCAHA. HNA’s proposal called
for a local player to hold and administer the money collected through league
fees, and once the referees and ice rinks were paid, to send the remainder of
the money to HNA’s head offices in
On September 11, 2001, TCAHA held a meeting
at which both HNA and AHA made proposals to the player captains. This was the day of the tragic terrorist
attack upon the
Appellant subsequently brought suit for breach of contract and fiduciary duty against respondents Bredehoft and Swanson and suit for misappropriated trade secrets, defamation, deceptive trade secrets disparagement, common law disparagement, unfair competition, civil conspiracy, interference with contractual relations with players and captains, and interference with “prospective advantage with players and captains” against all respondents. Finally, appellant brought suit for interference of “contractual relationships with Bredehoft” against all respondents except Bredehoft and interference with prospective contractual relationships against all respondents except Swanson. Respondents’ motion for summary judgment was granted on all issues and this appeal resulted. On appeal, appellant challenges only the grant of summary judgment for breach of contract and fiduciary duty, interference of contractual relationships, interference with prospective contractual relationships, unfair competition, and civil conspiracy.
D E C I S I O N
On appeal from summary judgment,
this court determines whether any genuine issues of material fact exist and
whether the district court erred in applying the law. State
by Cooper v. French, 460 N.W.2d 2, 4 (
Our analysis of all claims brought by appellant against all respondents must begin with an inquiry as to whether, in fact, there ever was a contract in existence between appellant and Bredehoft that could give rise to the claims asserted. Appellant assumes that because a contract existed between HNA and Bredehoft when Root and Ashley Root entered into the Agreement on June 21, 2001, it must follow that appellant and Bredeoft also had a contractual relationship after June 21, 2001. That assumption cannot withstand scrutiny.
Bredehoft’s argument that his contract was never with appellant, is persuasive. The Agreement provides that the assumed liabilities “shall consist solely” of specifically enumerated liabilities. Nowhere in the Agreement is the relationship between HNA and Bredehoft mentioned. In fact, a provision in the Agreement specifically provides that appellant has the right, but not the obligation, to employ or contract with any employee or contractor of HNA free of any restrictive covenants that may have existed at the time the Agreement was entered. The terms of the Agreement are unambiguous and permit but one interpretation: There is no contract between appellant and Bredehoft.
“It is now, as always, the law that where
parties enter into an express contract they are bound by its terms.” Nw.
Marble & Tile Co. v. Swenson,
Appellant next argues that even if Bredehoft’s
former contract was terminated by the Agreement, that contract was reaffirmed
by Bredehoft and Root, in writing. Appellant
relies on Borchardt v. Kulick, 234
Appellant here argues that the holding in Borchardt allows parties to reaffirm a
contract that would otherwise have been extinguished. We see no support in Borchardt for the result urged by appellant. In Borchardt,
the parties in the lawsuit were the parties to a previous existing
contract. Here, appellant and Bredehoft
were never parties to the contract appellant argues was reaffirmed. A party cannot seek affirmation or
ratification of a contract to which he was never a party. “There cannot, in law, be a ratification of a
contract which could not have been made binding on the ratifier at the time it
was made, because the ratifier was not then in existence.” McArthur
v. Times Printing Co., 48
Appellant points to a specific communication between Root and Bredehoft to argue that there was an affirmation or ratification of Bredehoft’s former contract. We disagree. The communication relied on by appellant discusses money owed to Bredehoft for services he rendered while he discharged his duties to HNA. Bredehoft was not inquiring into his future with appellant, but rather whether he was going to be paid for past services. Appellant also argues that Bredehoft acknowledged a contract between appellant and himself in his resignation letter. Again, we disagree. Bredehoft requested in his letter of resignation that he be paid according to the provisions of his contract with HNA. There is no acknowledgement by Bredehoft that he was a party under contract with appellant.
In order for there to be a valid novation, there
must be a prior obligation that is discharged and a new obligation
substituted. 13 Arthur L. Corbin, Corbin on Contracts, § 71.3 (rev.
ed. 2003). The prior obligation may be
actual or asserted.
There is no merit in appellant’s argument that a novation occurred. When the benefits of Bredehoft’s employment with HNA were extinguished through the Agreement executed on June 21, 2001, Bredehoft was correspondingly released on that same date from any obligations he owed to that employer. Clearly, appellant was never substituted as a party to Bredehoft’s former employment contract. A novation requires the agreement of all parties involved. Epland, 564 N.W.2d at 207. There was no agreement among all parties here.
Appellant insists that various emails and letters between Root and Bredehoft demonstrate a mutual agreement. We disagree. Communications between the two men demonstrate only Bredehoft’s inquiries about whether he was going to be paid for the services he had already performed. There was no novation.
D. Fiduciary Duty
Appellant next argues that there was an agency relationship between itself and Bredehoft, and Bredehoft’s actions violated his fiduciary duty to appellant. The allegation of breach of fiduciary duty is extended by appellant to respondents Swanson and Zastrow.
order to determine whether an agency relationship exists, the court must find
“the manifestation of consent by one person to another that the other shall act
on his behalf and subject to his control, and consent by the other so to
act.” Jurek v. Thompson, 308
We agree with the determination of the district court that because none of these respondents had a written agreement with appellant, and because the facts do not support the finding of a fiduciary duty arising in any other context, there can be no merit to this claim. Nothing in the record would support a determination that Bredehoft, Swanson, or Zastrow ever acted as an agent for appellant.
E. Tortious Interference with Contractual Relations
Appellant’s argument that respondents are liable for tortious interference with contractual relations must fail. We have determined that no contract existed after the Agreement was created. There can be no interference with a contract that is nonexistent. Bredehoft had no contract with appellant, and to the extent that appellant claims tortious interference by players and team captains, there is no basis for that allegation either. First, Swanson argues that appellant has waived this issue as to him. We tend to agree, but even if we assume the viability of that issue against respondents other than Bredehoft on appeal, there is no support for appellant’s argument. No player had any obligation to renew his registration from season to season, nor to play in any season other than that for which he had registered. Players had the right to terminate a relationship with the league and to request a full refund of payments made toward winter league play if that request was made before September 1. Again, the lack of any evidence of a contract leads irrevocably to a conclusion that there could be no tortious interference with that contract.
F. Tortious Interference with Prospective Contractual Relations
Appellant argues that all respondents except Swanson are liable for tortious interference with prospective contractual relations because of their interference with appellant’s expectation that the players would return to the league; that by conducting meetings and discussing the future of how players should operate the league, respondents interfered with these expectations.
We see no merit in appellant’s argument on this issue. The actions taken by respondents from and after being notified about the financial instability of appellant, together with the involvement of appellant in respondents’ discussion and decision-making regarding who would be involved in the future activities of the teams demonstrate not only the absence of any tortious interference with prospective contractual relations, but the clear inclusion of appellant in any presentations made regarding who would guide the teams in their scheduled activities. There was no tortious interference with prospective contractual relations by coming together and forming a competing league. The players were under no obligation to return to appellant’s league and had every right to form their own league. Additionally, respondents did not intentionally commit wrongful acts in an attempt to interfere with prospective business relationships.
G. Unfair Competition and Civil Conspiracy
Appellant’s argument that respondents engaged in unfair competition and civil conspiracy by coming together and forming a competing league must fail. Again, players were under no obligation to return to appellant’s league and appellant was included in all discussions concerning the formation of a new, local league. Respondents even considered continuing to play in and support appellant’s league. We agree with the determination of the district court that such claims are not independent torts, but are a category of tort derived from tortious interference with contractual relations. United Wild Rice, Inc. v. Nelson, 313 N.W.2d 628, 632 (Minn. 1981) (stating there are two ways by which an individual can be guilty of unfair competition: tortious interference with contractual interests and improper use of trade secrets); D.A.B. v. Brown, 570 N.W.2d 168, 172 (Minn. App. 1997) (stating that civil conspiracy must be supported by an underlying tort); Rehabilitation Specialists, Inc. v. Koering, 404 N.W.2d 301, 305 (Minn. App. 1987) (finding that unfair competition is not a tort with specific elements, but rather it describes a general category of torts). Because there is no basis upon which tortious interference could exist here, there is no underlying basis upon which claims for unfair competition or civil conspiracy could rest.
* Retired judge of the Minnesota Court of Appeals, serving by appointment pursuant to Minn. Const. art. VI, § 10.
 In 2001, the Internal Revenue Service filed a $99,000 lien against HNA for failing to properly submit withheld payroll taxes.
 “Appellant” hereafter shall refer to Dominion d/b/a HNA unless otherwise identified.
 There were other
concerns. First, it was customary for
HNA to mail notices to players in May of each year, encouraging them to
register for the upcoming season. This
had not occurred. Second, HNA’s 800
number was temporarily disconnected.
Third, HNA’s national coordinator, the main connection between local and
national offices, resigned. It was later
discovered that this resignation was prompted by HNA’s failure to pay the
coordinator on a regular schedule.
Fourth, players learned HNA was discontinuing its league in
 The captains also
learned at this meeting of HNA’s
 Soon after receiving HNA’s letter, however, Moore learned that HNA still had no ice time contracts for the upcoming season, nor had all its debts been paid.
 Appellant’s claim of
breach of contract was based on Bredehoft’s alleged violation of the noncompete
agreement with HNA. The district court,
in granting summary judgment to Bredehoft on this claim, found the noncompete
agreement to be unenforceable because no independent consideration had been
given to him for that agreement, which occurred after he had been employed for
several months. While, indeed, it may be
possible to affirm summary judgment for respondents pursuant to that rationale,
because we affirm on an alternative basis, we do not address further either the
noncompete clause or the application of
 Interestingly, the
district court continued its analysis of this issue by observing that even if a
fiduciary duty existed, the doctrine of unclean hands would bar appellant from
obtaining relief; that it was appellant’s financial woes that led respondents
to explore alternative ways to play hockey.
Neither the district court nor any of the parties, however, cite to any