This opinion will be unpublished and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
American Iron & Steel Company,
d/b/a American Iron & Supply Company, et al.,
Filed January 24, 2006
Toussaint, Chief Judge
Mark Donald Wisser, Anthony Ostlund & Baer, P.A., 90 South Seventh Street, Suite 3600, Minneapolis, MN 55402 (for respondents)
Considered and decided by Toussaint, Chief Judge; Dietzen, Judge; and Crippen, Judge.*
U N P U B L I S H E D O P I N I O N
TOUSSAINT, Chief Judge
Appellant John Isaacs challenges the partial judgment granted to respondents on some of his claims; he and respondents challenge his award of damages for wrongful termination. Because we see no error of law, we affirm the district court’s invocation of Minn. R. Civ. P. 54.02, its assumption of jurisdiction, and its adoption of respondents’ proposed findings of fact and conclusions of law; because the death of respondent Fred Isaacs during the pendency of this appeal has implications on the order that the company buy John Isaacs’s shares, we reverse that order and remand for a determination of whether the company should buy the shares belonging to the estate of Fred Isaacs or to John Isaacs and we do not address whether John Isaacs would be unfairly prejudiced by a buyout of his shares; because the district court made no finding as to whether Fred Isaacs waived the forfeiture clause in his agreement with John Isaacs, we remand for a determination of that question; because John Isaacs was not entitled to damages for wrongful termination but may be entitled to damages as an oppressed shareholder, we reverse the award of wrongful termination damages and remand for a consideration of appropriate equitable relief under the oppression doctrine.
The late Fred Isaacs planned that his son, appellant John Isaacs, would acquire ownership of respondent American Iron & Steel Company (the company) when Fred Isaacs died. In 1985, Fred and John Isaacs entered into an agreement whereby John was to purchase enough stock to give him 46% ownership while Fred retained 54%. The agreement also provided that John could purchase Fred’s remaining shares at “book value” and that the agreement would terminate if the company became insolvent. John Isaacs became CEO of the company in 1993. Fred and John were then the only members of the board of directors.
In July 2002, over John’s objection, Fred voted to add his wife, respondent Rhea Isaacs, and his daughter, respondent Mindy Odegaard, to the board of directors. By January 2003, the board had demoted, suspended, and terminated John Isaacs.
In February 2003, John
Isaacs brought an action against the company and its three directors. They counterclaimed, and both parties moved
for summary judgment. The district
granted partial summary judgment, which was affirmed by this court. Isaacs
v. America Iron & Steel, 690 N.W. 2d 373 (
In May 2004, while the appeal was pending, the remaining counts were tried to a referee, who entered a second partial judgment. The district court subsequently adopted the referee’s findings. John Isaacs now challenges (1) the entry of both the first and the second partial judgments, (2) the district court’s jurisdiction while the appeal on the first judgment was pending, (3) the verbatim adoption of respondents’ proposed findings of fact and conclusions of law, (4) the order that the company buy out John Isaacs’s shares rather than the shares of the late Fred Isaacs, (5) the finding that his stock purchase agreement had either been terminated by the company’s insolvency or been amended by Fred Isaacs’s oral waiver of the forfeiture clause, and (6) the determination that John Isaacs was not unfairly prejudiced by violations of Minn. Stat. § 302A.751, subd. 1(2002). Both John Isaacs and respondents challenge the determination that John Isaacs is entitled to $1.5 million from the company as damages for his wrongful termination.
Fred Isaacs died while this appeal was pending, and respondents move to strike from the record references to his death.
D E C I S I O N
Minn. R. Civ. P. 54.02 provides for entry of judgment on
“fewer than all” of the parties’ claims “upon an express determination that
there is no just reason for delay and upon an express direction for the entry
of judgment.” Appellate courts review
questions of law, including statutory interpretation, de novo. Nordmarken
v. City of Richfield, 641 N.W.2d 343, 346 (Minn. App. 2002), review denied (
John Isaacs argues that the
district court erred “by twice invoking Minn. R. Civ. P. 54.02
prematurely.” He has no right to
challenge the entry of first partial judgment because he failed to challenge it
when he appealed. See Dieseth v. Calder Mfg. Co., 275
District courts have broad
discretion to enter final judgment for less than all counts of a complaint
under Minn. R. Civ. P. 54.02, if the “claims are clearly separable and no prejudice
would result from appeal.” Olson v. Tufford, 392 N.W.2d 281, 283 (
of subject matter jurisdiction are reviewed de novo. Johnson
The judgment on appeal addressed (a) John Isaacs’s claims of breach of contract, of improper and illegal board of directors’ conduct, and of unspecified violations of “Chapter 302A” and (b) respondents’ counterclaims of breach of fiduciary duty and waste of corporate assets. After entry of the first partial final judgment, John Isaacs’s unresolved claims consisted of three counts of unfairly prejudicial conduct by board members in violation of Minn. Stat. § 302A.751, subd. 1(b)(3)(2002), one count of breach of fiduciary duty, one count of wrongful termination, and a request for injunctive relief, and respondents’ unresolved claims consisted of breach of contract and a request for the company to buy John Isaacs’s shares under Minn. Stat. § 302A.751, subd. 2(2002). These claims were involved in the second partial judgment, and the district court had jurisdiction over them regardless of the pendency of the appeal of the first partial judgment.
John Isaacs also argues it was error for the referee,
and then the district court, to adopt verbatim the respondents’ proposed
findings of fact and conclusions of law.
When a district court adopts the findings and conclusions of a referee,
this court considers those findings and conclusions to be made by the
Verbatim adoption of proposed
findings is not reversible error, but it raises “the question of whether the
trial court independently evaluated each party's testimony and evidence.” Bliss v.
Bliss, 493 N.W.2d 583, 590 (Minn. App. 1992), review denied (Minn. Feb. 12, 1993). The practice is acceptable, although it
should be used with caution.
Whether to grant equitable
relief is within the sound discretion of the district court and will not be
reversed on appeal absent a clear abuse of that discretion. Ripley
v. Piehl, 700 N.W.2d 540, 544 (
Here, the district court ordered the buyout of John Isaacs’s shares because it determined that the company would be better off under Fred Isaacs’s control. Fred Isaacs’s death while this appeal was pending eliminates the reason for the district court’s decision. We reverse the order for the buyout of John Isaacs’s shares and remand for the district court to reconsider whether the company should buy John Isaacs’s shares or the shares of Fred Isaacs’s estate.
John Isaacs argues that the
district court erred in finding that the stock purchase agreement had either
been terminated when the company became insolvent or had been amended by an
oral agreement of the parties because Fred Isaacs waived the forfeiture clause
by continuing to assert the validity of the agreement after the insolvency. This
court will not reverse findings of fact unless the findings are manifestly
contrary to the weight of the evidence or not reasonably supported by the
evidence as a whole. Fletcher v.
After reviewing the record, we conclude that
there is reasonable support in the record for the finding that the company was
insolvent in 1999, which activated the insolvency clause. The district court, however, made no findings
as to whether Fred Isaacs waived the forfeiture clause, an issue that was
clearly raised below by John Isaacs.
District courts are to make sufficient findings of fact to permit
meaningful appellate review.
John Isaacs argues the district court’s determination that he was not unfairly prejudiced by the board’s actions under Minn. Stat. § 302A.751, subd. 1(2002) is not supported by the record. John Isaacs’s requested relief for the board’s alleged violations of Minn. Stat. § 302A.751, subd. 1, is that he be reinstated as CEO and that the company buy out the shares of Fred Isaacs’s estate. Because we are remanding for a reconsideration of whose shares the company should buy, we do not address this issue at this time.
Both respondents and John Isaacs challenge the district court’s wrongful-determination damages award of $1.5 million. John Isaacs challenges the amount, arguing that it should be based on his salary and the bonuses he earned as CEO; respondents challenge the award itself, arguing that John Isaacs, as an at-will employee, did not have a reasonable expectation of lifetime employment and was not wrongfully terminated.
The district court found that John Isaacs was an at-will
employee who had no contract for lifetime employment but had a reasonable
expectation of lifetime employment from his status as a shareholder. A shareholder of a closely-held corporation
typically has a reasonable expectation of continuing employment, and
terminating the employment of the shareholder may be the basis for equitable
relief under the oppression doctrine pursuant to Minn. Stat. § 302A.751 (2004). Gunderson
The district court correctly found that there was no employment contract between the company and John Isaacs and that his reasonable expectation of continuing employment as a shareholder-employee was frustrated, but it incorrectly awarded him lost wages for wrongful termination. Therefore, we affirm the district court’s decision that the termination of John Isaacs violated the oppression doctrine, but we reverse the award of $1.5 million in lost wages and remand for the court to determine whether John Isaacs is entitled to equitable relief under the oppression doctrine.
Prior to oral arguments, John Isaacs’s attorney notified this court that
Fred Isaacs had died on September 7, 2005.
Respondents filed a motion requesting that we strike the notice of Fred
Isaacs’s death as irrelevant to the issues on appeal. But the death of a party to an appeal is
generally, if not invariably, relevant to an appellate court, and that is
especially true here because the district court relied on Fred Isaacs’s ability
to manage the company in reaching its decision.
Affirmed in part, reversed in part, and remanded; motion denied.
* Retired judge of the Minnesota Court of Appeals, serving by appointment pursuant to Minn. Const. art. VI, § 10.
 Respondents testified that John Isaacs did not pay for these shares but received them as a gift from Fred Isaacs.
 He claims he was prejudiced because the district court did not have the complete file before it when it reviewed the referee’s report, but the district court clearly stated the contrary: “Counsel for plaintiff insists that the district court never possessed or never read the record produced at trial in front of [the referee]. It is not clear whence counsel got this misinformation, but it is incorrect.”