This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480A.08, subd. 3 (1996).




Southwest Suburban Broadcasting, Inc.,

et al.,



Cove Communications, Inc.,


Norwest Bank Minnesota National Association,


Filed March 4, 1997

Reversed and remanded

Peterson, Judge

Hennepin County District Court

File No. 966467

Stuart Williams, Alan C. Eidsness, Henson & Efron, P.A., 1200 Title Insurance Company, 400 Second Avenue South, Minneapolis, MN 55401 (for Appellants)

Joe Walters, Olivia W. Walling, O'Connor & Hannan, 700 Baker Building, 706 Second Avenue South, Minneapolis, MN 55402-3003 (for Respondent Cove Communications)

Richard Thomson, Lapp, Laurie, Libra, Abramson & Thomson, One Financial Place, Suite 1800, 120 South Sixth Street, Minneapolis, MN 55402 (for Respondent Norwest Bank Minnesota National Association)

Considered and decided by Parker, Presiding Judge, Peterson, Judge, and Foley, Judge.[*]



Southwest Suburban Broadcasting, Inc. appeals from a judgment that dismissed its action and awarded damages to Cove Communications, Inc. We reverse and remand.


Appellant Southwest Suburban Broadcasting, Inc. (SSBI) is a Minnesota corporation. Its sole business is the ownership and operation of radio station KCFE-FM. Appellant Raymond O. Mithun, Jr., is an officer, director and shareholder of SSBI. Respondent Cove Communications, Inc. (Cove) is also a Minnesota corporation. Cove owns 15% of SSBI's stock.

An agreement between SSBI and Cove gave Cove the option to sell its SSBI shares to SSBI and/or its shareholders and obligated SSBI and/or its shareholders to purchase the shares. The agreement provided:

The purchase price for Cove's ownership interest shall be fifteen percent (15%) of the fair market value of the station, as if for sale, as determined by an independent appraisal of the station, or at least THREE HUNDRED THOUSAND DOLLARS ($300,000.00), whichever is greater. * * * Within ten (10) days after Cove gives notice to SSBI that it is exercising its option to sell its ownership interest in SSBI * * * Cove and SSBI shall each select one independent media appraiser who shall jointly select a third independent media appraiser and the three media appraisers shall, within ten (10) days thereafter, by majority vote determine the fair market value of the station, as if for sale at the time of appraisal or, if the said media appraisers fail to agree by majority vote on a monetary market value, then the three highest values of the said appraisers shall be added together and then divided by three and the resulting monetary market value shall be determined to be the fair market value of the station for the purposes of this agreement, as amended.

A guarantee and pledge agreement between Mithun and Cove secured SSBI's obligations to Cove with stock owned by Mithun. The stock was held in escrow by Norwest Bank.

In January 1996, Cove exercised its option to sell and three appraisers were selected to determine the fair market value of the radio station. When the appraisers were unable to agree by majority vote on a monetary market value, each rendered an individual appraisal. One appraisal was for $6,250,000, the second was for $6,000,000, and the third was for $3,000,000.

Cove demanded that SSBI pay Cove $762,499.95 (15% of the average of the three appraisals submitted by the appraisers) for Cove's SSBI stock. SSBI and Mithun refused to pay and commenced a declaratory judgment action seeking a declaration that (1) Cove is not entitled to payment based on the three appraisals, (2) SSBI's failure to pay Cove's demand is not a default under the agreement or under the separate guarantee and pledge agreement, and (3) Cove is not entitled to payment in excess of $300,000 in the absence of appraisals that adhere to the requirements of the agreement. When Cove demanded the escrowed stock, SSBI and Mithun amended their complaint to add Norwest Bank as a defendant. After the pledged stock was deposited with the district court, Norwest Bank was dismissed as a party.

Cove did not answer the complaint. Instead, Cove moved (1) to dismiss the action for failure to state a claim upon which relief can be granted and (2) for judgment on the pleadings. After a hearing, the district court granted both motions and judgment was entered dismissing SSBI's action and awarding Cove $762,499.95.



In reviewing cases dismissed for failure to state a claim on which relief can be granted, "the only question before us is whether the complaint sets forth a legally sufficient claim for relief."

Elzie v. Commissioner of Pub. Safety, 298 N.W.2d 29, 32 (Minn. 1980) (quoting Royal Realty Co. v. Levin, 244 Minn. 288, 290, 69 N.W.2d 667, 670 (1955)). It is immaterial whether the plaintiff can prove the alleged facts. Id.

The complaint must be liberally construed in determining whether it states a cognizable cause of action, and its factual allegations must be taken as true.

Gertken v. State, 493 N.W.2d 290, 292 (Minn. App. 1992), review denied (Minn. Feb. 9, 1993).

A claim is sufficient against a motion to dismiss based on Rule [12.02(e)] if it is possible on any evidence which might be produced, consistent with the pleader's theory, to grant the relief demanded. To state it another way, under this rule a pleading will be dismissed only if it appears to a certainty that no facts, which could be introduced consistent with the pleading, exist which would support granting the relief demanded.

Elzie, 298 N.W.2d at 32 (quoting Nothern States Power Co. v. Franklin, 265 Minn. 391, 395, 122 N.W.2d 26, 29 (1963)).

A motion for judgment on the pleadings is not a favored way of testing the sufficiency of a pleading, and will not be sustained if by liberal construction the pleading can be held sufficient.

Moreover, the pleadings must be construed favorably to the party against whom the judgment is asked.

Only if the pleadings create no fact issues should a motion for judgment on the pleadings be granted. Ruling on the motion, the court must give the benefit of the doubt to the nonmoving party.

Ryan v. Lodermeier, 387 N.W.2d 652, 653 (Minn. App. 1986)(citations omitted).

SSBI alleged in its complaint that the three appraisals used to determine the fair market value of Cove's SSBI stock were not based on the fair market value of the stock

in that they assumed SSBI would retain all liabilities in the event of a sale of the corporation and they assumed the existence of an interested in-market buyer for SSBI. Both assumptions greatly increase the appraised value, and both are inconsistent with the standard of fair market value required by the [agreement].

The district court found that there is nothing in the agreement to construe and, therefore, declined to look outside the agreement to determine the meaning of fair market value. The district court concluded that the unambiguous language of the agreement provided "that the fair market value would be the mean value of the appraisers' three highest figures."

We agree with the district court that the parties agreed that the fair market value of the station would be the mean value of the appraisers' three highest figures, but the parties also agreed that the appraisers were to determine the fair market value of the station. There is no dispute that the figure submitted by each appraiser was to reflect that appraiser's determination of the fair market value of the station.

Determining the fair market value of an asset is not a wholly subjective exercise.

Fair market value is the price that the asset would bring by bona fide bargaining between well-informed buyers and sellers at the date of acquisition. Usually the fair market price will be the price at which bona fide sales have been consummated for assets of like type, quality, and quantity in a particular market at the time of acquistion.

Black's Law Dictionary 597 (6th ed. 1990). The agreement did not permit the appraisers to submit any numbers they wished. The appraisers were to submit their individual appraisals of fair market value and the mean value of those three appraisals was to be the fair market value of the station.

In its complaint, SSBI alleged that the figures submitted by the individual appraisers were not appraisals of the fair market value of the radio station because the appraisers used two improper assumptions when determining the figures. It does not appear to a certainty that no evidence could be introduced to prove these allegations and we must assume that the allegations are true. If the figures submitted by the appraisers were not appraisals of the fair market value of the station, the mean value of the figures was not the fair market value of the station required by the agreement and SSBI's refusal to pay $762,499.95 for Cove's stock was not a breach of the agreement. The district court did not assume that SSBI's allegations were true. We, therefore, reverse the judgment dismissing SSBI's complaint and awarding Cove damages and remand for further proceedings.

Reversed and remanded.

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