This opinion will be unpublished and

may not be cited except as provided by

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

STATE OF MINNESOTA

IN COURT OF APPEALS

C6-96-2267

Carol A. Thompson,

Respondent,

vs.

Northern Realty, Inc., a/k/a Briarwood Investment Co.,

Respondent,

Peter E. Perovich,

Appellant,

John T. Rathman,

Respondent.

Filed April 8, 1997

Affirmed

Huspeni, Judge

Crow Wing County District Court

File No. C196507

Felix A. Mannella, Steven J. Lodge, Babcock, Locher, Neilson & Mannella, 118 E. Main St., Anoka, MN 55303 (for Appellant)

Joseph J. Christensen, Kay M. Thompson, Snelling, Christensen & Laue, P.A., 5101 Vernon Ave. S., Suite 400, Minneapolis, MN 55436 (for Respondent Thompson)

John T. Rathman, Box 397, Crosslake, MN 56442 (pro se Respondent)

Bruce B. Bundgaard, P. O. Box 768, Crosslake, MN 56442 (for respondent Northern Realty)

Considered and decided by Huspeni, Presiding Judge, Parker, Judge, and Schumacher, Judge.

U N P U B L I S H E D O P I N I O N

HUSPENI, Judge

Appellant, a shareholder, challenges both the trial court's denial of his motion for a temporary restraining order (TRO) enjoining respondents from acts they voted to take at a shareholders' meeting and its dismissal of his action pursuant to Minn. R. Civ. P. 41.01(b). Because we see no abuse of discretion in the denial of the TRO or the dismissal of appellant's action, we affirm.

FACTS

Respondent Carol Thompson, a one-third shareholder, officer, and director of respondent Northern Realty, Inc. (NRI), brought this action, in part, for a buyout and an accounting against NRI and her fellow one-third shareholders, officers, and directors, appellant Peter Perovich and respondent John Rathman. Following a hearing, the district court ordered Perovich and Rathman to buy out Thompson's shares and to provide her with an accounting. When Perovich and Rathman did not comply with this order, Thompson moved to have it enforced. The court then ordered that Thompson be paid the amount Perovich and Rathman estimated to be the value of her shares; the order also provided that the actual value would be settled at trial if Thompson disagreed with the value they estimated.

Again Perovich and Rathman did not comply. Thompson moved for an order to show cause and to compel discovery. Shortly before the hearing Thompson was paid $5,000, the amount estimated as the value of her shares.

Prior to trial, Rathman allied himself with Thompson, and she agreed to dismiss with prejudice her action against him, Perovich, and NRI. Thompson's attorney conveyed her agreement to dismiss to the attorney for NRI, Perovich, and Rathman and wrote to the court that the matter was settled and that a stipulation of dismissal would be filed as soon as it had been fully executed.

That afternoon, an NRI shareholders' meeting was held. Thompson and Rathman voted for and Perovich voted against proposals that Perovich be required to move out of the NRI premises, that Perovich make good all rents owed, that Perovich be terminated as NRI's officer, employee, agent, and broker of record, that Perovich's management fees be revoked, and that Rathman become NRI's president and Thompson its secretary-treasurer.

Perovich then moved for a TRO enjoining Thompson and Rathman from enforcing any of the proposals passed at the shareholders' meeting on the ground that Thompson was not a shareholder at the time of the meeting. The district court denied the TRO, holding that under Minn. Stat. § 302A.751, subd. 2 (1996), Thompson was still a shareholder. The court also ordered dismissal of the case pursuant to Minn. R. Civ. P. 41.01(b).

D E C I S I O N

1. The Temporary Injunction

"A decision on whether to grant a temporary injunction is left to the discretion of the trial court and will not be overturned on review absent a clear abuse of that discretion." Carl Bolander & Sons v. City of Minneapolis, 502 N.W.2d 203, 209 (Minn. 1993). However, if an injunction is based on construction of a statute, the standard of review is de novo. NewMech Companies, Inc. v. Independent Sch. Dist. 206, 509 N.W.2d 579, 581 (Minn. App. 1994), rev'd on other grounds, 540 N.W.2d 801 (Minn. 1995).

Minn. Stat. § 302A.751, subd. 2 (1996), provides for the court first to order a sale of shares, then to establish a value for the shares if the parties cannot come to an agreement, and finally provides for the termination of a shareholder's rights when the court is satisfied that the shareholder will be timely paid the full purchase price of the shares.

[T]he court may, upon motion of a corporation or a shareholder or beneficial owner of shares of the corporation, order the sale by a plaintiff or a defendant of all shares of the corporation held by the plaintiff or defendant to either the corporation or the moving shareholders * * *.

* * * *

If the parties are unable to agree on fair value within 40 days of entry of the order, the court shall determine the fair value of the shares * * *.

* * * * Upon entry of an order for the sale of shares under this subdivision and provided that the corporation or the moving shareholders post a bond in adequate amount with sufficient sureties or otherwise satisfy the court that the full purchase price of the shares, plus such additional costs, expenses, and fees as may be awarded, will be paid when due and payable, the selling shareholders shall no longer have any rights or status as shareholders, officers, or directors, except the right to receive the fair value of their shares plus such other amounts as might be awarded.

Id.

The district court construed the statute to mean that shareholders lose rights only after the parties agree to or the court determines the fair value of the shares. Because the parties never agreed on the valuation of the shares and the court never issued an order establishing that value, the court concluded that Thompson did not lose her shareholder's rights. We agree with the district court's liberal construction of this statute. See Pedro v. Pedro, 463 N.W.2d 285, 288-89 (Minn. App. 1990) (holding that because the statute is remedial, it should be construed liberally to protect the rights of noncontrolling shareholders), review denied (Minn. Jan. 24, 1991).

Perovich argues that Thompson lost her rights as a shareholder and her status as an officer and director when the order to sell her shares was entered and she was paid the $5,000 that Perovich and Rathman determined to be the worth of the shares, even though she had not agreed to that value. Perovich's construction of the statute would deprive minority shareholders of their rights as soon as majority shareholders tendered or posted bond for any amount that the majority shareholders unilaterally determine to be the value of the minority shares. Minority shareholders would thus lose simultaneously the right to a voice in the affairs of the corporation and the right to a voice in determining the value of the shares. Because this right is conferred by the statute itself, a construction of the statute removing the right would be inconsistent and in violation of Minn. Stat. § 645.16 (1996): "Every law shall be construed, if possible, to give effect to all its provisions."

The court based its denial of the TRO on its conclusion that, absent a determination of the value of her shares, Thompson remained a shareholder, officer, and director of NRI at the time of the shareholders' meeting. There was no abuse of discretion in denying the TRO.

2. The Dismissal

The district court dismissed this action without prejudice under Minn. R. Civ. P. 41.01(b). A dismissal will be overturned only if there has been an abuse of discretion. Metropolitan Federal Bank v. W.R. Grace & Co., 999 F.2d 1257, 1262 (8th Cir. 1993) (applying Fed. R. Civ. P. 41(a)(2), identical to Minn. R. Civ. P. 41.01(b)).

Minn. R. Civ. P. 41.01(b) provides that:

[A]n action shall not be dismissed at the plaintiff's instance except upon order of the court and upon such terms and conditions as the court deems proper. If a counterclaim has been pleaded by a defendant prior to the service upon the defendant of the plaintiff's motion to dismiss, the action shall not be dismissed against the defendant's objection unless the counterclaim may remain pending for independent adjudication by the court. Unless otherwise specified in the order, a dismissal herein is without prejudice.

Perovich argues first that Thompson never moved for dismissal, and the court lacks authority to dismiss sua sponte. However, in her memorandum opposing the TRO, Thompson asked the court to dismiss the case under rule 41.01(b) if the court found that it had not already been dismissed by agreement of the parties. Therefore, the rule 41.01(b) dismissal was not sua sponte.

Perovich next argues that dismissal was inappropriate because he had an unresolved counterclaim, alleging that Thompson had misused the legal process to compel a buyout of her shares and that she was guilty of malicious prosecution. In ruling that Perovich and Rathman were compelled to buy out Thompson's shares, the trial court effectively denied both elements of the counterclaim, so it was not unresolved. Moreover, once Rathman aligned himself with Thompson instead of Perovich, Thompson's original action for a buyout against Perovich and Rathman was moot.

Moreover, Perovich is now a minority shareholder of NRI. The remedies of chapter 302A are available to him if he meets the statutory criteria. Perovich's argument that he is prejudiced because the dismissal put Thompson in an "unnatural" position of power in the corporation ignores the fact that Thompson is still only a one-third shareholder. Rathman, along with Thompson, made the decisions to which Perovich objects: Thompson as a one-third shareholder could not have made them alone.

We see no abuse of discretion in either the denial of the TRO or the dismissal.

Affirmed.