This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480A.08, subd. 3 (2004).








P. H. T. Systems, Inc.,





Tropical Flavors, Inc., d/b/a Kokomo's Island Café, et al.,



Timothy Buffham,



Patricia Buffham,




Filed May 30, 2006

Affirmed; motion granted in part

Toussaint, Chief Judge


Hennepin County District Court

File No. CT 04-9500



Donald R. McNeil, Stephen F. Buterin, Brian W. Varland, Coleman, Hull & Van Vliet, PLLP, 8500 Normandale Lake Boulevard, Suite 2110, Minneapolis, MN 55437 (for respondent)


Timothy and Patricia Buffham, 13000 June Terrace, Minnetonka, MN 55305 (pro se appellants)



            Considered and decided by Toussaint, Chief Judge; Hudson, 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

            Appellants Timothy and Patricia Buffham challenge the district court’s order joining them as judgment debtors, declaring a transfer of their corporation’s asset void, and piercing the corporate veil to hold them personally liable for the judgment of respondent P. H. T. Systems, Inc. (PHT) against their corporation.  PHT moves to strike parts of the Buffhams’ brief and appendix.  Because we conclude that the law of the case precludes the Buffhams from challenging the district court’s finding and that the transfer of the corporate asset violated the Uniform Fraudulent Transfer Act and we see no abuse of discretion in the district court’s decision to pierce the corporate veil, we affirm.  Because some of the items PHT moves to strike  are not part of the record, PHT’s motion is granted in part.


            Patricia Buffham is chief executive officer and Timothy Buffham is the majority shareholder of Tropical Flavors, Inc. (Tropical).   PHT, a supplier of kitchen and restaurant equipment, was not paid for equipment it supplied to Tropical for use in Tropical’s only asset, Kokomo Island Café (Kokomo’s), a restaurant.  In 2004, PHT sued for payment and was awarded summary judgment against Tropical.  Beachfront Eatery, LLC was then organized with Patricia Buffham as its chief executive officer and sole shareholder, and Tropical transferred Kokomo’s to Beachfront.

            Unable to collect its judgment, PHT moved to join the Buffhams, Kokomo’s, and Beachfront as judgment debtors.  The district court granted the motion, concluding that the law of the case prevented the Buffhams from challenging the finding that Tropical owned Kokomo’s and that Tropical’s transfer of Kokomo’s to Beachfront violated the Uniform Fraudulent Transfer Act.[1] 

On appeal, the Buffhams challenge these conclusions; they argue in addition that the district court abused its discretion in piercing the corporate veil to join them as judgment debtors and that they were deprived of due process. [2]  PHT moves to strike parts of the Buffhams’ brief and appendix. 


1.         Law of the Case

In opposing PHT’s motion to join them as judgment debtors, the Buffhams argued that Tropical could not have transferred Kokomo’s to Beachfront because Tropical did not own Kokomo’s.  The district court found that: (1) Patricia Buffham stated in her affidavit opposing PHT’s motion for summary judgment that Tropical owned Kokomo’s; (2) Randy Jernberg, one of Tropical’s two shareholders, stated that Tropical owned Kokomo’s; (3)Tropical in its answer to PHT’s complaint admitted to the allegation that Tropical was doing business as Kokomo Island Cafe; (4) Tropical did not dispute its ownership of Kokomo’s during oral argument; and (5) Tropical did not challenge the summary judgment that it was liable to PHT for equipment supplied to Kokomo’s. Based on these findings, the district court concluded that law of the case prevented the Buffhams from challenging the finding that Tropical owned Kokomo’s. 

Failure to challenge a court’s decision results in that decision becoming the law of the case.  See, e.g., In re Welfare of D.T.P., 685 N.W.2d 709, 712 (Minn. App. 2004) (failure to appeal initial adjudication of delinquency resulted in adjudication becoming law of case); State v. Harrington, 504 N.W.2d 500, 503 (Minn. App. 1993) (failure to challenge validity of order resulted in order becoming law of case), review denied (Minn. Sept. 30, 1993).  “Law of the case is a rule of practice that once an issue is considered and adjudicated, that issue should not be reexamined in that court or any lower court throughout the case.”  Peterson v. BASF Corp., 675 N.W.2d 57, 65 (Minn. 2004), vacated and remanded on other grounds, 125 S. Ct. 1968 (2005). 

In their reply brief, the Buffhams argue that “whether Tropical owned Kokomo’s was never litigated below.”  But there was no need to litigate the matter because PHT had alleged that Tropical was doing business as Kokomo’s in the complaint and Tropical admitted it in the answer.  “Once a matter is deemed admitted, it is established for purposes of the proceeding.  Any effort to submit adverse evidence on the matter or to attempt to contradict an admitted fact would be irrelevant because the issue is no longer in dispute.”  In re Welfare of  J.W., 391 N.W.2d 791, 796 (Minn. 1986); see also Phelps v. Benson, 252 Minn. 457, 480, 90 N.W.2d 533, 548 (1958) (“Where a fact is admitted in the pleadings, the admission stands in the place of evidence.”).  Therefore, Tropical’s admission of its ownership of Kokomo’s meant that the ownership of Kokomo’s was not in dispute; Patricia Buffham’s postjudgment assertion that Tropical did not own Kokomo’s was irrelevant.  Moreover, the evidentiary weight given to subsequent contradictions of previously admitted matters is negligible.  See, e.g., Banbury v. Omnitrition Int’l, Inc., 533 N.W.2d 876, 881 (Minn. App. 1995) (self-serving affidavit that contradicts earlier damaging sworn testimony does not raise genuine issue of material fact).

Tropical maintained the position that it owned Kokomo’s to both PHT and the district court until PHT attempted to collect its judgment from Kokomo’s.  Tropical is not entitled to change that position as a means of preventing collection. 

2.         The Uniform Fraudulent Transfer Act

            The district court determined that the transfer of assets from Tropical to Beachfront was fraudulent under Minn. Stat. § 513.44(a) (2004).  Whether a statute applies is a question of law that this court reviews de novo.  O’Malley v. Ulland Bros., 549 N.W.2d 889, 892 (Minn. 1996).

            A transfer made or obligation incurred by a debtor is fraudulent as to a creditor, whether the creditor's claim arose before or after the transfer was made or the obligation was incurred, if the debtor made the transfer or incurred the obligation:    (1) with actual intent to hinder, delay, or defraud any  creditor of the debtor; or  (2) without receiving a reasonably equivalent value in  exchange for the transfer or obligation. . . . 


Minn. Stat. § 513.44(a).   The second criterion is satisfied: Tropical received no consideration from Beachfront when it transferred Kokomo’s.

To determine whether the first criterion is satisfied, actual intent, a court considers whether:

(1)       the transfer or obligation was to an insider;

(2)       the debtor retained possession or control of the property transferred after the transfer;

(3)       the transfer or obligation was disclosed or concealed;

(4)       before the transfer was made or obligation was incurred, the debtor had been sued or threatened with suit;

(5)       the transfer was of substantially all the debtor's  assets;

(6)       the debtor absconded;

(7)       the debtor removed or concealed assets;

(8)       the value of the consideration received by the debtor was reasonably equivalent to the value of the asset transferred or the amount of the obligation incurred;

(9)       the debtor was insolvent or became insolvent shortly after the transfer was made or the obligation was incurred;

(10)     the transfer occurred shortly before or shortly after a substantial debt was incurred; and

(11)     the debtor transferred the essential assets of the business to a lienor who transferred the assets to an insider of  the debtor.


Minn. Stat. § 513.44(b) (2004).   These factors indicate that the transfer was fraudulent.  Patricia Buffham was CEO of Tropical, the transferor; she was also both CEO and sole shareholder of Beachfront, the transferee.  There is no indication that control of Kokomo’s changed as a result of the transfer.  The transfer was concealed from the minority shareholder of Tropical and from the district court.  Tropical had been sued by PHT, and judgment, a “substantial debt,” had been awarded against Tropical before the transfer.  Kokomo’s was Tropical’s only asset, and Tropical received nothing in exchange for it.  Tropical’s transfer of Kokomo’s to Beachfront was fraudulent within the meaning of Minn. Stat. § 513.44.

3.         Piercing the Corporate Veil

“In an action for relief against a transfer . . . a creditor . . . may obtain . . . subject to applicable principles of equity and in accordance with applicable Rules of Civil Procedure . . . any other relief the circumstances may require.”  Minn. Stat. § 513.47(a)(3)(iii) (2004).  “Granting equitable relief is within the sound discretion of the trial court.  Only a clear abuse of that discretion will result in reversal.”    Nadeau v. County of Ramsey, 277 N.W.2d 520, 524 (Minn. 1979). Piercing the corporate veil is an equitable remedy.  Roepke v. W. Nat’l Mut. Ins. Co., 302 N.W.2d 350, 352 (Minn. 1981).

The district court pierced the corporate veil to join the Buffhams as judgment debtors under Minn. Stat. § 513.47(a)(3)(iii).  Persons who have abused the corporate form may be held personally liable for fraud by piercing the corporate veil.  Victoria Elevator Co. of Minneapolis v. Meriden Grain Co., 283 N.W.2d 509, 512 (Minn. 1979). 

 Patricia Buffham was CEO of Tropical, the transferor corporation, and Timothy Buffham was the majority shareholder; she was both CEO and sole shareholder of Beachfront, the transferee corporation.  The transfer defeated PHT’s attempts to collect on its judgment against Tropical.  Holding the Buffhams personally liable for Tropical’s fraud in transferring Kokomo’s was not an abuse of discretion. 

4.         Due Process

            The Buffhams’ argument on this issue is unsupported by legal authority.  An assignment of error that is based only on assertions and unsupported by argument or authority is waived unless prejudicial error is obvious on mere inspection.  State v. Modern Recycling, Inc., 558 N.W.2d 770, 772 (Minn. App. 1997).

            No error is obvious.  The Buffhams were informed by notice a month before the hearing that PHT would seek to join them and Beachfront.    They did not request an evidentiary hearing.  At the hearing on PHT’s motion, the Buffhams and Beachfront were represented by counsel separate from the counsel that represented Tropical. 

            The Buffhams imply that, to hold them liable for Tropical’s judgment debt, PHT should have brought a separate action.  At the hearing, counsel for the Buffhams said this explicitly: “[I]f PHT has such a claim against [the Buffhams], they should file a summons and complaint, let there be an answer and counterclaim, let the discovery proceed, and let the evidence be presented to this court in the context of that separate action in an orderly fashion.”  Requiring PHT, which had received a judgment against Tropical, to bring a separate action to collect that judgment from the entity to which Tropical had transferred its sole asset would violate Minn. R. Civ. P. 19.01, which mandates joinder of those “in [whose] absence complete relief cannot be accorded among those already parties.”  The Buffhams’ due-process argument is without merit.

5.         Motion to Strike[3]

            PHT moved to strike the Certificate of Assumed Name included in the appendix to the Buffhams’ brief on the ground that it was not filed in the trial court.  The record on appeal consists of documents “filed in the trial court.”   Minn. R. Civ. App. P. 110.01.  A search of the district court file reveals that it does not include the certificate.  But the hearing transcript indicates that the certificate was handed to the judge.  We assume, without deciding, that a document handed to a judge during a hearing is constructively filed.

Moreover, some applications of Minn. R. Civ. App. P. 110.01 indicate that the dispositive factor is whether the material was before the district court, not whether it was filed.  See, e.g., Brett  v. Watts, 601 N.W.2d 199, 201 (Minn. App. 1999) (striking medical report not submitted to district court before entry of summary judgment), review denied (Minn. Nov. 17, 1999); S.W. v. Spring Lake Park Sch. Dist. No. 16, 592 N.W.2d 870, 877 (Minn. App. 1999) (granting motion to strike material because it “was not submitted to the trial court”) aff’d mem., 606 N.W.2d 61 (Minn. 2000); Midwest Family Mut. Ins. Co. v. AMCO Ins. Co., 422 N.W.2d 758, 760 (Minn. App. 1988) (granting motion to strike information not before trial court but quoting “filed in the trial court” language of Minn. R. Civ. App. P. 110.01), review denied (Minn. June 29, 1988). The transcript shows that the judge had received the certificate before the decision was made, accordingly the motion to strike the certificate is denied. 

PHT also moved to strike 30 allegations from the fact section of the Buffhams’ brief on the ground that they are not supported by citations to the record as required by Minn. R. Civ. App. P. 128.03.   The Buffhams then provided citations to the record for the 30 allegations, but examination of the record indicates that the cited sources do not provide adequate or complete support for the allegations.  Therefore, the motion to strike the 30 allegations is granted.

Affirmed; motion granted in part.

* Retired judge of the Minnesota Court of Appeals, serving by appointment pursuant to Minn. Const. art. VI, § 10.

[1] The district court also concluded that the doctrine of judicial estoppel precludes the Buffhams and Beachfront from challenging the finding that Tropical owned Kokomo’s.  But the doctrine of judicial estoppel has not been expressly recognized in Minnesota. State v. Pendleton, 706 N.W.2d 50, 507 (Minn. 2005) (discussing but not adopting judicial estoppel because it did not apply to facts of case).  Adopting the doctrine of judicial estoppel is beyond the scope of this court.  See Tereault v. Palmer, 413 N.W.2d 283, 286 (Minn. App. 1987) (“[T]he task of extending existing law falls to the supreme court or the legislature, but it does not fall to this court.”), review denied (Minn. Dec. 18, 1987).   Therefore, we do not address the application of judicial estoppel. 

[2] Until after the appellate briefs had been filed, the Buffhams, Tropical, and Beachfront were represented by the same counsel.  That counsel then withdrew, and no substitute counsel was obtained.  “[A] corporation must be represented by an attorney in legal proceedings.”  Save Our Creeks v. City of Brooklyn Park, 699 N.W.2d 307, 309 (Minn. 2005).  The only remaining appellants are the Buffhams, who now appear pro se; Tropical and Beachfront are no longer parties to this appeal.  We do not address the Buffhams’ challenge to the district court’s joinder of Beachfront under the doctrine of successor liability because the issue of Beachfront’s joinder is now moot.

[3] We note that none of the materials involved in the motion to strike is particularly relevant, much less essential, to the issues on appeal.