Chesney v. Hypertension Diagnostics, Inc., No. A05-2210 (Minn. App. 8/8/2006)
| Decision Date | 08 August 2006 |
| Docket Number | No. A05-2210.,A05-2210. |
| Parties | Charles F. Chesney, et al., Respondents, v. Hypertension Diagnostics, Inc., et al., Appellants. |
| Court | Minnesota Court of Appeals |
Appeal from the District Court, Hennepin County, File No. 05-1046.
Shawn L. Pearson, Seymour J. Mansfield, V. John Ella, Mansfield Tanick & Cohen, P.A., (for respondents).
Michael S. Ryan, Melanie P. Persellin, Murnane Brandt, (for appellants).
Considered and decided by Dietzen, Presiding Judge; Toussaint, Chief Judge; and Stoneburner, Judge.
UNPUBLISHED OPINION
Appellants challenge the district court's order granting summary judgment and injunctive relief in favor of respondents and denying appellants' motion to amend to assert counterclaims, arguing that (1) issues of material fact regarding the formation of an agreement precludes summary judgment; and that the district court abused its discretion, (2) in denying its motion to amend, and (3) granting permanent injunctive relief. Because we conclude that the district court properly applied the law and did not abuse its discretion, we affirm.
Appellant Hypertension Diagnostics, Inc. (HDI) designs, develops, manufactures, and markets medical devices that non-invasively measure blood vessel elasticity, and appellants Mark Schwartz and Greg Guettler serve, respectively, as its CEO and president. Respondent Charles Chesney founded HDI and was employed as its Chief Technology Officer until the termination of his employment in March 2004. Respondent Julie Radosevich was employed by HDI as the Director of Marketing and Reimbursement until the termination of her employment in April 2004.
Following the terminations, respondents asserted various "whistleblower" claims against appellants. During litigation of these claims, the parties engaged in voluntary mediation that resulted in a settlement and execution of a "Memorandum of Understanding in Settlement of Dispute" (memorandum agreement).
The memorandum agreement provided, inter alia, that HDI would pay to respondents (1) $85,000 at the time of settlement, and (2) $45,000 within 6 months of settlement execution; that HDI would issue (1) $70,000 worth of stock to Chesney, and (2) $30,000 worth of stock to Radesovich; that HDI would remove Chesney and Radesovich from the HDI website and corporate communications; that respondents would return all of HDI's property or business records in their possession or provide an accounting of any missing property; and that the parties would "exchange mutual complete releases and stipulations of dismissals with prejudice and without costs to any party." The memorandum agreement was signed by the parties and their counsel.
Subsequently, appellants' attorneys prepared a draft final settlement agreement that provided a list of the missing property and conditioned appellants' monetary payment and issuance of stock on respondents accounting for and returning of all HDI property. Respondents countered with a draft that removed the return or accounting of HDI property as a condition precedent to appellant's obligation to perform the payment provisions of the agreement, specified the stock valuation date, and replaced the missing property provision with the following statement: "By signing this Agreement, Chesney and Radosevich warrant that they have no HDI property in their possession." But the parties were unable to agree on either the language of the draft final settlement agreement or the use of a mediator to assist the parties in resolving the final language of the draft settlement agreement.
Respondents then brought an action to enforce the memorandum agreement and moved for summary judgment and a permanent injunction, arguing that they had performed their obligations under the agreement but that appellants had failed to tender monetary payments, issue stock, and remove their names from HDI materials. Appellants opposed respondents' motion and moved to amend their answer to assert counterclaims relating to the alleged missing property, including misappropriation of trade secrets and conversion.
At the hearing on the motions, appellants argued that summary judgment should be denied because respondents had failed to return or properly account for missing HDI property, including HDI records that were discovered missing after execution of the memorandum agreement. Respondents argued that they provided an accounting of all property at issue in a 19-page letter provided to appellants in March 2005.
The district court granted summary judgment, concluding that (1) the memorandum agreement is binding and enforceable and that appellants had breached the agreement; (2) appellants were obligated, jointly and severally, to provide to respondents $130,000 and 714,286 shares of HDI stock; and (3) respondents were entitled to a permanent injunction enjoining appellants from affirmatively, or by their inaction, representing that respondents are employed by HDI. The district court denied appellants' motion to amend their answer to assert counterclaims. Appellants moved for amended findings and conclusions of law, but later withdrew the motion. This appeal followed.
Appellants argue that the district court erred by granting summary judgment because genuine issues of material fact exist as to (1) the enforceability of the memorandum agreement, and (2) the interpretation of ambiguous terms of the memorandum agreement.
"A motion for summary judgment shall be granted when the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue of material fact and that either party is entitled to a judgment as a matter of law." Fabio v. Bellomo, 504 N.W.2d 758, 761 (Minn. 1993). On appeal from summary judgment, this court makes two determinations: (1) whether there are any genuine issues of material fact; and (2) whether the district court erred in its application of the law. N. States Power Co. v. Minn. Metro. Council, 684 N.W.2d 485, 491 (Minn. 2004). "[T]he reviewing court must view the evidence in the light most favorable to the party against whom judgment was granted." Fabio, 504 N.W.2d at 761. But "[t]he party opposing summary judgment may not establish genuine issues of material fact by relying upon unverified and conclusory allegations, or postulated evidence that might be developed at trial, or metaphysical doubt about the facts." Dyrdal v. Golden Nuggets, Inc., 689 N.W.2d 779, 783 (Minn. 2004). Schroeder v. St. Louis County, 708 N.W.2d 497, 507 (Minn. 2006) (emphasis in original).
Initially, appellants contend that the memorandum agreement was merely a preliminary document and that a contract was never formed between the parties. A settlement is contractual in nature and is enforceable if there is a definite offer and acceptance with a meeting of the minds on the essential terms of the agreement. Jallen v. Agre, 264 Minn. 369, 373, 119 N.W.2d 739, 743 (1963). A mediated settlement agreement is binding if:
(1) it contains a provision stating that it is binding and a provision stating substantially that the parties were advised in writing that (a) the mediator has no duty to protect their interests or provide them with information about their legal rights; (b) signing a mediated settlement agreement may adversely affect their legal rights; and (c) they should consult an attorney before signing a mediated settlement agreement if they are uncertain of their rights; or (2) the parties were otherwise advised of the conditions in clause (1).
Minn. Stat. § 572.35, subd. 1 (2004).
Here, the memorandum agreement includes the requisite advisories required under section 572.35, subdivision 1, and states, "We intend that this memorandum shall bind each of us" and "[w]hile we understand that formal documents will be prepared to facilitate the detail of our agreement contained here, we do not intend our settlement to be dependent upon our agreement as to any such detail, and agree that our agreements contained here are fully enforceable against us." It provides that the parties "agree" to nine settlement terms and that "the dispute has been settled by the agreements contained here and the settlement is not conditioned upon any further agreement." Thus, on its face, the memorandum agreement was valid, binding, and enforceable.
Appellants further argue that five terms of the memorandum agreement are ambiguous. The determination of whether a contract is ambiguous is a question of law, which this court reviews de novo. Yang v. Voyagaire Houseboats, Inc., 701 N.W.2d 783, 788 (Minn. 2005).
"[T]he primary goal of contract interpretation is to determine and enforce the intent of the parties." Motorsports Racing Plus, Inc. v. Arctic Cat Sales, Inc., 666 N.W.2d 320, 323 (Minn. 2003). When there is a written agreement, the intent of the parties is determined from the plain language of the agreement itself. Metro. Sports Facilities Comm'n v. Gen. Mills, 470 N.W.2d 118, 123 (Minn. 1991). An ambiguous contract is one that, based solely on the plain language, is reasonably susceptible of more than one construction. Denelsbeck v. Wells Fargo & Co., 666 N.W.2d 339, 346 (Minn. 2003). Bd. of Regents v. Royal Ins. Co. of Am., 517 N.W.2d 888, 892 (Minn. 1994)....
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