In re Lindmark Endowment for Corp.-Bus. Ethics Fund

• Decision Date: 28 October 2019
• Docket Number: A19-0229
• Parties: In the Matter of the Lindmark Endowment for Corporate-Business Ethics Fund.
• Court: Minnesota Court of Appeals

In the Matter of the Lindmark Endowment for

Corporate-Business Ethics Fund.

A19-0229

STATE OF MINNESOTA IN COURT OF APPEALS

October 28, 2019

This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (2018).

Affirmed

Larkin, Judge

Stearns County District Court

File No. 73-CV-18-4431

Roger M. Lindmark (pro hac vice), Lindmark Law Offices, Los Angeles, California (attorney pro se); and

Beau D. McGraw, McGraw Law Firm, P.A., Lake Elmo, Minnesota (for appellant Roger Lindmark)

Michael R. Cunningham, Sheryl G. Morrison, James R. Thomson, Gray, Plant, Mooty, Mooty & Bennett, P.A., Minneapolis, Minnesota (for respondent Saint John's University)

Considered and decided by Rodenberg, Presiding Judge; Larkin, Judge; and Smith, Tracy M., Judge.

UNPUBLISHED OPINION

LARKIN, Judge

Appellant challenges the district court's dismissal of his opposition to respondent-university's petition to modify the administration of an endowment, arguing that the district court erred by determining that it had subject-matter jurisdiction over the petition under the Uniform Prudent Management of Institutional Funds Act (UPMIFA), Minn. Stat. §§ 309.73-.77 (2018), and that appellant did not have standing to contest the petition. We affirm.

FACTS

This case comes to us for review of a grant of summary judgment. The summary-judgment record establishes the following undisputed facts.

In January 2004, as part of a settlement of a class-action lawsuit in which appellant Roger M. Lindmark was a class representative, the U.S. District Court for the Central District of California ordered American Express Company to pay $50,000 to respondent Saint John's University (SJU) "to be used to fund programs and activities in the field of corporate-business ethics." In February 2004, SJU and Lindmark executed "The Lindmark Endowment for Corporate-Business Ethics Criteria Statement," which described the anticipated $50,000 payment from American Express as a "cy pres donation"¹ and a "gift." The criteria statement provided that proceeds from the endowment would be used to "fund programs and activities in the field of Corporate-Business Ethics." In June 2004, American Express sent SJU a check for $50,000.

In 2007, Lindmark represented an individual who contested a settlement agreement in a class-action lawsuit. In settlement of that individual's claim, the law firm of Engstrom, Lipscomb & Lack agreed to pay $250,000 to the endowment. In 2008, the law firm gave Lindmark a $250,000 check for the endowment, which he provided to SJU. In 2010, SJU and Lindmark executed an amended criteria statement regarding the endowment, which again described the original $50,000 payment from American Express as a "cy pres donation" and a "gift." The amended criteria statement included a prioritized list of programs and activities for which proceeds from the endowment could be used. The first priority on the list was the "Lindmark Fellowship in Ethics," described as follows:

The Lindmark Fellowship in Ethics will be an attractive and competitive on-campus, summer undergraduate research fellowship experience for Saint John's students who have completed their junior year. The summer award will be substantial so the recipients will have summer income in order to return to SJU. Upon completion of the 10 week summer fellowship, students will submit their work during their senior year for presentation at conferences and/or publication in professional journals. The work will also be submitted for competition in the annual undergraduate research "Scholarship and Creativity Day." The fellowship program will be administered by Office of the Associate Provost and Academic Dean in consultation with Institutional Advancement.

The amended criteria statement also contained a "Reservation" provision, which stated:

Because circumstances change from time to time, it is possible that the above criteria for making awards cannot be met at some future date (e.g., a major or program is dropped from the curriculum, so awards in that field can no longer be made). In such a case, after consultation with all available living donors who signed the document that governs the Fund, the Board of Regents may modify the award criteria in a waythat it deems appropriate. In all cases, the intent of the donors to the Fund shall be foremost in this process, and new criteria shall adhere as closely as practical to the original criteria.

The amended criteria statement also contained a "Miscellaneous Matters" provision, which stated:

This document constitutes a "gift instrument" within the meaning of and governed by Minnesota's Uniform Prudent Management of Institutional Funds Act, and this document constitutes the entire gift instrument with respect to all gifts to which it applies. The Fund does not constitute a trust. The laws of the State of Minnesota relating to endowment funds shall govern this gift instrument and the Fund.

Lastly, the amended criteria statement provided that Lindmark would receive an annual report regarding the endowment. The amended criteria statement did not otherwise assign Lindmark an oversight role in the administration of the endowment, nor did it grant him a reversionary interest in the endowment's funds. Lindmark signed the document under the heading "Donor's Signature."

In November 2017, Lindmark sent a letter to SJU's president criticizing SJU's administration of the endowment. Specifically, Lindmark asserted that SJU had failed to "monitor and supervise the student Fellows" in the Lindmark Fellowship in Ethics program "and administer the program." Lindmark demanded that the endowment be dissolved, that the summer fellows program be eliminated, that Lindmark receive an itemized account of all of the endowment's expenditures, and that he be mailed "a bank draft for the final fund balance payable to [his] name."

On May 24, 2018, SJU petitioned the district court, under UPMIFA, for an order confirming that its actions in administering the endowment have been proper, approvingthe amended criteria statement as the sole governing instrument for the endowment, instructing SJU that it may not pay or transfer assets of the endowment to Lindmark, confirming that Lindmark is not the legal donor of the endowment, and awarding SJU attorney fees, costs, and disbursements. On May 30, SJU served its petition on the Office of the Minnesota Attorney General.

On June 5, Lindmark sued SJU in federal district court, based on SJU's administration of the endowment, claiming breach of contract, breach of the covenant of good faith and fair dealing, breach of fiduciary duty, and conversion. On June 26, Lindmark filed an "Opposition to and Request to Dismiss" SJU's petition in this action. Lindmark asserted that the district court lacked subject-matter jurisdiction to hear the petition because the endowment is a contract, and not a trust, and because it is not an institutional fund subject to the provisions of UPMIFA. Lindmark asked the district court to dismiss SJU's petition and allow the parties to "sort out their contract differences in Federal Court."

In September 2018, SJU moved to dismiss Lindmark's opposition to its petition under Minn. R. Civ. P. 12.02(e), or, in the alternative, for summary judgment. SJU asserted that Lindmark lacked standing to challenge its petition. The district court treated SJU's motion as one for summary judgment. See Minn. R. Civ. P. 12.02 (stating that if "matters outside the pleading are presented to and not excluded by the court," a motion to dismiss under rule 12.02(e) "shall be treated as one for summary judgment"). The district court dismissed Lindmark's opposition to SJU's petition for lack of standing. The district court reasoned that the endowment was a charitable gift, and not a contract; that the endowmentwas an "institutional fund" governed by UPMIFA; and that only the attorney general had standing to enforce the conditions placed on the endowment. Lindmark appeals.²

DECISION

"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). A genuine issue of material fact exists if a rational trier of fact, considering the record as a whole, could find for the nonmoving party. Frieler v. Carlson Mktg. Grp., Inc., 751 N.W.2d 558, 564 (Minn. 2008). This court reviews a district court's grant of summary judgment de novo. Dukowitz v. Hannon Sec. Servs., 841 N.W.2d 147, 150 (Minn. 2014). "We view the evidence in the light most favorable to the party against whom summary judgment was granted to determine whether there are any genuine issues of material fact and whether the district court correctly applied the law." Id.

I.

This case involves application of UPMIFA, a uniform law that "provides guidance and authority to charitable organizations concerning the management and investment of funds held by those organizations" and "imposes additional duties on those who manageand invest charitable funds." Unif. Prudent Mgmt. of Institutional Funds Act prefatory note (Unif. Law Comm'n 2006). The Minnesota Legislature adopted UPMIFA in 2008. 2008 Minn. Laws ch. 188, §§ 1-10, at 392-97 (codified at Minn. Stat. §§ 309.73-.77).

SJU's underlying petition for relief was brought under a provision of UPMIFA that authorizes the district court, "upon application of an institution," to "modify a restriction contained in the gift instrument of an institutional fund pursuant to the procedure, and in accordance with the standards, set forth" in certain charitable-trust statutes. Minn. Stat. § 309.755(b). Lindmark contends that UPMIFA is inapplicable in this case because the endowment constitutes a contract and not an institutional fund governed by UPMIFA and that the district court therefore...