This opinion will be unpublished and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
Richard Anderson, et al.,
Walter G. Anderson, Inc.,
A & P Partnership, et al.,
Filed January 10, 2006
Hennepin County District Court
File No. CT 97-22393
John F. Bonner, III, Robert J. Borhart, Bonner & Borhart LLP, 1950 U.S. Bank Plaza, 220 South Sixth Street, Minneapolis, MN 55402-4511 (for appellant)
Richard T. Ostlund, Randy G. Gullickson, Anthony Ostlund & Baer, P.A., 3600 Wells Fargo Center, 90 South Seventh Street, Minneapolis, MN 55402 (for respondents Richard Anderson, et al.)
Eric J. Magnuson, Patrick J. Rooney II, John J. Wackman, Rider Bennett, LLP, 33 South Sixth Street, Suite 4900, Minneapolis, MN 55402 (for respondent Walter G. Anderson, Inc.)
Considered and decided by Toussaint, Chief Judge, Hudson, Judge, and Crippen, Judge.
After a remand from this court, appellant Jacquelin Powell challenges the district court’s summary judgment dismissing her claims under Minn. Stat. § 302A.751 as a minority shareholder in a closely-held family corporation. Appellant alleges that there are material fact issues on the valuation method for her stock under a shareholder-buyout agreement and the percentage of her stock ownership following a delay in redemption of the corporate shares of her late father, and she challenges the district court’s denial of additional discovery and attorney fees. Finding no merit in these claims, we affirm.
of this case are set forth in detail in Powell v. Anderson, No.
C5-99-1975, 2003 WL 22705878 (
In 1988, appellant
signed an amended share retirement agreement that provided that following her
father’s death the company would have an option to redeem her shares at a price
equal to the aggregate book value of those shares at the end of the fiscal year
immediately preceding the redemption date.
The option was exercisable on the day after the last distribution from
Walter Anderson’s estate. In 1991,
The district court determined, by summary judgment, that appellant had a right to a fair-market-value buyout of her shares of the company, but that the 1988 share retirement agreement signed by appellant was valid and enforceable. The district court summarily determined the percentage of appellant’s interest in the company to be 24.73%, the percentage stated in the agreement, which was less than the 33% claimed by appellant. The district court, also on summary judgment, determined the fair market value for appellant’s shares to be $3,464,499.
In its initial summary judgment, the district court determined that the only issue remaining for trial was the usurpation claim and resulting damages and ordered that discovery be limited to claims not resolved on summary judgment. Later, the court granted appellant’s motion for partial summary judgment on the usurpation claim, based on respondents’ stipulation to liability for usurpation. The court determined the valuation date for appellant’s claims against both corporations (Anderson, Inc. and Anderson Corp.) to be November 12, 1997, the date of filing of her lawsuit.
The court held a bench trial on the usurpation claim, limiting testimony on damages to the separate value of Anderson Corp. and excluding proffered evidence on the combined value of the two corporations. The court found that appellant was entitled to $605,390.40 in damages. The court denied appellant’s request for attorney fees.
supreme court vacated this court’s decision on appellant’s first appeal, we
considered the matter on remand in Powell v. Anderson, No. C5-99-1975,
2003 WL 22705878 (
On remand, the district court summarily redetermined that a court-ordered buyout of appellant’s interest in the company was an appropriate remedy. The court determined as a matter of law that appellant failed to show that the book-value terms of the 1988 buyout agreement were unreasonable and that appellant’s shares had a book value price of $2,846,820. The court concluded that appellant’s ownership was 24.73%, not the greater percentage that she claimed as a result of delay in redeeming certain shares. Finally, the district court denied further discovery and refused to allow costs and attorney fees.
D E C I S I O N
An appellate court reviews summary
judgments to determine whether there are any genuine issues of material fact
and whether the district court erred in applying the law. Reads
Landing Campers Ass’n v. Twp. of Pepin, 546 N.W.2d 10, 13 (
Appellant contends that the usurpation-of-corporate-opportunity claim for which she received a separate recovery requires that her shares in the company be valued at greater than the book value specified in the 1988 buyout agreement—that there are genuine fact questions as to whether application of the book value agreement is unreasonable.
Under Minn. Stat. § 302A.751, subd. 1(b)(3) (2004), a court may order a buyout of a shareholder’s interest if corporate directors or controlling shareholders have acted in a manner unfairly prejudicial to that shareholder. The district court determined that the usurpation by Anderson Corp. of corporate opportunity of the company fell within the ambit of this section, thus triggering appellant’s right to a buyout. But this decision leads to the separate issue on the valuation method.
Although the statute provides for a
fair-market-value approach, it also indicates that if the shares are subject to
a shareholder control agreement, the court “shall order the sale for the price
and on the terms set forth [in the agreement] . . . , unless the court
determines that the price or terms are unreasonable under all circumstances of
The district court concluded that no material factual issue existed on the reasonableness of the agreement and ordered a buyout at the contracted-for book value of appellant’s shares, a value well below the market value of the shares. Appellant argues that the court improperly found facts on summary judgment because a genuine issue of material fact exists on the reasonableness of the agreement “under all the circumstances of the case.”
The issue is narrowed by a preliminary legal consideration: Disparity in price does not by itself establish that a valuation method specified in the parties’ contract is unreasonable, absent separate conduct that would make enforcement of that term unreasonable. See Gunderson, 628 N.W.2d at 187 (stating that mere fact that valuation method agreed on in buyout agreement resulted in purchase price lower than appraised value of stock does not establish breach of fiduciary duty).
Appellant argues that the usurpation
conduct in 1991 demonstrates the unreasonableness of the book-value
agreement. But appellant failed to
specify any conduct that establishes a link between the usurpation of corporate
opportunity when Anderson Corp. was founded and the 1988 buyout agreement. As the district court observed, the record
lacks any evidence that the controlling shareholders used the agreement to
manipulate or force a sale; it is undisputed that the buyout provision was
triggered by the death of
We further reject appellant’s argument that the district court failed to follow this court’s remand instructions when it declined to adopt appellant’s proposal for valuing both corporations (Anderson, Inc. and Anderson Corp.) together. The court was not required to consider appellant’s valuation proposal, and its refusal to do so would bear further examination only if we had concluded that the buyout value established in the agreement was unreasonable, a proposition that we are rejecting.
Appellant argues that the district
court erred in determining on summary judgment that appellant owned 24.73% of
the shares of Anderson, Inc. for purposes of the court-ordered buyout. Appellant asserts that a material factual
issue remains regarding whether
It is evident, as respondents have observed, that if the cost of redemption lowered the total book value of all, 33.60% of a lower book value might not exceed 24.73% of a higher total value. At any rate, appellant had the burden to show facts warranting cause for greater relief and has failed to show that an increase in her ownership percentage share interest would have correspondingly enlarged her recovery beyond that awarded by the district court.
Respondents also refer, in a
separate proceeding, to this court’s affirmance of a district court determination
Nonetheless, we conclude that the
district court on remand had other good cause to disregard the
date-of-redemption issue. It is undisputed
that on November 12, 1997, the valuation date previously established by the
district court (eight months after
claims that the district court abused its discretion by declining to allow
further discovery. The court’s determination
on discovery will not be disturbed absent a clear abuse of its wide discretion. Shetka
v. Kueppers, Kueppers, Von Feldt, & Salmen, 454 N.W.2d 916, 921 (
This court in
Finally, appellant challenges the
district court’s denial of attorney fees.
We consider the court’s determination on whether to grant attorney fees
under an abuse-of-discretion standard.
asserts that the district court’s determination that she was entitled to relief
under chapter 302A entitles her to attorney fees. See Minn.
Stat. §§ 302A.467 (2004) (stating that if an officer or corporate director
violates a section of chapter 302A, the court, in an action brought by a
corporate shareholder, “may . . . award expenses, including attorney fees”);
.751, subd. 4 (2004) (stating that district court may “in its discretion” award
attorneys’ fees and expenses if a party has acted arbitrarily, vexatiously, or
in bad faith). But neither statutory
provision mandates the award of fees and costs.
See Minn. Stat. § 645.44,
subd. 15 (2004) (providing that “‘[m]ay’ is permissive”). Although
appellant was awarded damages, the district court found that no evidence was
presented to indicate that
Appellant also contends that the district court erred by imposing a heightened burden for obtaining attorney fees, arguing that an award of fees would be “extraordinary.” Although the statute does not establish any presumption against awarding fees, we view the reference as a stylistic choice and not the court’s evidentiary determination. The record establishes that there was a reasonable basis for the court to exercise discretion and to deny fees.
* Retired judge of the Minnesota Court of Appeals, serving by appointment pursuant to Minn. Const. art. VI, § 10.
 In a determination no longer at issue, this amount was redetermined after correction of the district court’s initial application of minority and marketability discounts.
Respondents claim that the appeal is defective because it was taken from the
wrong judgment. The notice of appeal
referred to the district court’s February 2005 judgment, which determined an
issue not currently on appeal. The
district court’s October 2004 order for partial summary judgment on the claims
raised in this appeal was not appealable when it was executed and neither was
the judgment entered on that order in November 2004. See Minn.
R. Civ. App. P. 103.03(a) (stating that appeal may be taken “from a final
judgment, or from a partial judgment entered pursuant to Minn. R. Civ. P.
54.02”); 104.01, subd. 1 (providing that time to appeal partial judgment does
not begin to run until entry of a final judgment adjudicating remainder of
claims). Because the November 2004
judgment finally determined the issues challenged on appeal, appellant should
have included a reference to that judgment in the current notice of
appeal. But “notices of appeal are to be
liberally construed in favor of their sufficiency,” and we will not dismiss an
appeal on the basis of defects that could not have been misleading. Kelly
v. Kelly, 371 N.W.2d 193, 195-96 (
 The record shows that appellant originally contested the valuation date in district court in a different context, i.e., measuring damages for usurpation of corporate opportunity. In that context, appellant argued that damages for the lost opportunity belonging to the company should be valued as of the trial date. The valuation date for usurpation damages was not challenged in the first appeal, although appellant challenged other valuation factors that are not at issue in this appeal. The district court’s February 1999 determination that any buyout under the parties’ agreement should be valued as of November 1997 was not raised in the first appeal, it was not remanded for additional consideration, and it is not properly before us at this time.