Bolander v. Bolander, No. A04-2003

• Decision Date: 09 August 2005
• Docket Number: No. A04-2031, No. A04-2117., No. A04-2003
• Citation: 703 N.W.2d 529
• Parties: Bruce BOLANDER, individually and as trustee of the David C. Bolander 1994 Irrevocable Trust, Respondent (A04-2003, A04-2031), Appellant (A04-2117), J. Patrick Plunkett, guardian ad litem for plaintiff intervenors Katherine Bolander, et al., Respondent, v. David BOLANDER, et al., Appellants (A04-2003), Respondents (A04-2031, A04-2117), Carl Bolander & Sons Co., et al., Respondents (A04-2003, A04-2117), Appellants (A04-2031), Susan Bolander, et al., defendant intervenors, Respondents.
• Court: Minnesota Court of Appeals

703 N.W.2d 529

Bruce BOLANDER, individually and as trustee of the David C. Bolander 1994 Irrevocable Trust, Respondent (A04-2003, A04-2031), Appellant (A04-2117), J. Patrick Plunkett, guardian ad litem for plaintiff intervenors Katherine Bolander, et al., Respondent, v. David BOLANDER, et al., Appellants (A04-2003), Respondents (A04-2031, A04-2117), Carl Bolander & Sons Co., et al., Respondents (A04-2003, A04-2117), Appellants (A04-2031), Susan Bolander, et al., defendant intervenors, Respondents.

Nos. A04-2003, A04-2031, A04-2117.

Court of Appeals of Minnesota.

August 9, 2005.

David T. Schultz, Cortney G. Sylvester, Nicole J. Druckrey, Halleland Lewis Nilan & Johnson, P.A., Minneapolis, Minnesota, for Bruce Bolander, individually and as trustee of the David C. Bolander 1994 Irrevocable Trust.

James E. Blaney, Moore Costello & Hart, P.L.L.P., St. Paul, Minnesota, for plaintiff intervenors.

Patrick J. Rooney, John J. Wackman, Marcia K. Miller, Rider Bennett, LLP, Minneapolis, Minnesota, for David Bolander, et al.

Richard T. Ostlund, Randy Gullickson, Anthony Ostlund & Baer, P.A., Minneapolis, Minnesota, for Carl Bolander & Sons Co., et al.

Charles E. Bethel, II, Christopher Heinze, Bethel & Associates, P.A., St. Paul, Minnesota, for defendant intervenors.

Considered and decided by HUDSON, Presiding Judge; KLAPHAKE, Judge; and MINGE, Judge.

OPINION

HUDSON, Judge.

This appeal arises out of a lawsuit by Bruce Bolander against his parents, David and Dorothy Bolander, and against the family-owned company, Carl Bolander & Sons Co. (CB&S).¹ Bruce was the president and chief operating officer of CB & S from May 1994 until late 2000, when his employment was terminated. Following the termination, Bruce sued David, Dorothy, and CB&S, alleging shareholder oppression (Count I); breach of fiduciary duty/breach of contract (Count II); promissory estoppel (Count III); and misrepresentation (Count IV).

CB&S denied Bruce's claims and counterclaimed, alleging conversion (Count I); breach of contract (Count II); breach of fiduciary duty/duty of loyalty (Count III); accounting and constructive trust (Count IV); civil liability for theft (Count V); and receiving stolen property (Count VI). David and Dorothy denied Bruce's claims and counterclaimed for equitable relief under Minn.Stat. § 302A.467 for Bruce's violation of various provisions of the Minnesota Business Corporation Act, including §§ 302A.251 and .361 (Count I); alleging breach of fiduciary duty (Count II); seeking relief under Minn.Stat. §§ 501B.16 and .21 (Count III); and reformation or modification of the irrevocable trust with a declaration of the parties' rights under the shareholder agreement and the irrevocable trust (Count IV).

The parties moved the district court for summary judgment. On September 27, 2002, the district court granted summary judgment for David, Dorothy, and CB&S with respect to Bruce's demand for specific performance of the recapitalization provision in the shareholder agreement and Bruce's claims of breach of the employment contract, misrepresentation, and promissory estoppel. Additionally, the district court granted Bruce's motion for summary judgment on CB&S's claims against him for theft and conversion.

Subsequently, on January 7, 2003, the district court amended its September 27, 2002 order to allow Bruce to pursue his shareholder-oppression claim under Minn.Stat. § 302A.751. Thereafter, the matter was tried to a jury from January 6 to 17, 2003, on Bruce's breach-of-employment-contract claims and CB&S's counterclaim for repayment of funds advanced to Bruce; and to the district court without a jury from July 28 to 31, 2003, on the remaining claims. On Bruce's employment claims, the jury returned a special verdict finding that the employment agreement had been extended by the parties and that Bruce's employment was terminated without "due cause," as that term was defined in the agreement. Following the trials, on March 17, 2004, the district court entered findings of fact, conclusions of law, and an order for judgment as follows: (1) granting judgment in favor of Bruce and against CB&S on Bruce's breach-of-employment-contract claim in the amount of $1,368,000, plus interest, costs, and disbursements, including attorney fees; (2) granting judgment in favor of CB&S and against Bruce for breach of contract in the amount of $388,160, plus interest, costs, and disbursements, including attorney fees; and (3) dismissing all other claims with prejudice.

Bruce moved for amended and additional findings of fact and conclusions of law, and, alternatively, for a new trial. CB&S moved for judgment notwithstanding the verdict, amended findings, and, alternatively, a new trial. David and Dorothy moved for amended findings or a new trial.

On August 27, 2004, the district court entered a posttrial order in which it denied all posttrial motions submitted by all parties, but granted $530,583.32 for attorney fees to Bruce and $40,000 for attorney fees to CB&S. On September 8, 2004, judgment was entered with respect to the district court's orders of January 7, 2003, March 17, 2004, and August 27, 2004. David and Dorothy, CB&S, and Bruce all appealed. The guardian ad litem (the guardian) for Bruce's minor children submitted an appellate brief in response to David and Dorothy's appeal. This court consolidated the appeals.

On appeal, CB&S argues that (1) the district court's jury instructions were erroneous; (2) the district court erred by ruling that extrinsic evidence could be presented to show extension of a contract that required modifications to be in writing; (3) there is insufficient evidence to support the jury's verdict that Bruce was terminated without cause under the employment agreement; (4) the district court erred by concluding that the alleged extension of the employment agreement was not barred by the statute of frauds; and (5) the district court erred by awarding attorney fees to Bruce. David and Dorothy argue that the district court erred by (1) dismissing their claims under Minn.Stat. § 302A.467 and for breach of fiduciary duty; and (2) not distributing the trust assets to Bruce and his three siblings in separate, equal shares under article 4.02 of the trust agreement.

Bruce argues that the district court erred by (1) denying him relief under Minn.Stat. § 302A.751 for violation of his minority-shareholder rights, including violations of the employment agreement; (2) granting summary judgment dismissing his shareholder-oppression claim regarding recapitalization under provision 1.2 of the shareholder agreement; (3) refusing to reopen the record to consider new evidence; (4) excluding evidence of David and Dorothy's amended wills and compensation; and (5) awarding fees and costs to CB&S.

Because we conclude that the district court's jury instructions were not erroneous and because there was sufficient evidence to support the jury's verdict, we affirm the award in favor of Bruce on his claim for breach of the employment agreement. Accordingly, we also affirm the district court's related award of attorney fees to Bruce. We conclude that the contract provision requiring that modifications be in writing did not preclude renewal or formation of a new contract after the written contract was substantially performed and the specified term had expired, that the existence of a new contract could be established by parol evidence, and that a new employment contract, formed after expiration of the parties' written agreement, was not barred by the statute of frauds.

Because we conclude that article 4.02 of the trust agreement is unambiguous, we affirm the district court's distribution of the trust assets to Bruce. But we hold that the district court abused its discretion by not granting David and Dorothy equitable relief under Minn.Stat. § 302A.467 and reverse and remand to the district court to grant relief.

Because we find that provision 1.2 of the shareholder agreement, dealing with recapitalization, is ambiguous, we conclude that the district court erred by granting summary judgment dismissing Bruce's shareholder-oppression claim. Further, we conclude that the district court did not abuse its discretion by refusing to reopen the record to consider new evidence. We do not address Bruce's argument that the district court abused its discretion by excluding evidence of David and Dorothy's amended wills and compensation because we affirm the jury's verdict. Finally, we affirm the district court's award of attorney fees to CB&S.

FACTS

CB&S is a fourth-generation, St. Paul-based, family-owned construction company founded in 1924. It is a closely held corporation under the Minnesota Business Corporation Act. Minn.Stat. § 302A.011, subd. 6a (2004). At all times relevant to this action, David Bolander was the chairman of the board of directors (the board) and CEO of CB&S. David Bolander's wife, Dorothy Bolander, also serves on the CB&S board of directors, and as the board chair and CEO of CB&S's wholly owned subsidiary, SKB Environmental, Inc. (SKB), which operates commercial landfills.

Bruce became the president and chief operating officer (COO) of CB&S in May 1994. Prior to becoming the president, Bruce was a partner with a large East Coast law firm, earning between $400,000 and $500,000 per year. In 1993, Bruce and his parents began serious discussions about his joining CB&S, with the goal that Bruce would eventually assume control of the company. In furtherance of this goal, Bruce met with Phillip Martin (Martin), a partner at Dorsey & Whitney with a specialty in business-succession planning. Bruce advised Martin of the general goals that he and his parents wanted to achieve and for which they were seeking to retain counsel. Those goals were to:

(1) minimize estate taxes upon David and Dorothy's deaths;

(2) gradually transfer control of the business from David and Dorothy to Bruce; and

(3) deal fairly with Bruce's three siblings in the

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