Richard Pomije, Respondent,

This opinion will be unpublished and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

STATE OF MINNESOTA
IN COURT OF APPEALS
A18-0942

Richard Pomije,
Respondent,

vs.

Digitaltown, Inc.,
Appellant.

Filed April 1, 2019
Reversed and remanded
Jesson, Judge

Dakota County District Court
File No. 19HA-CV-17-124

Mark A. Olson, Olson Law Office, Burnsville, Minnesota (for respondent)

Craig M. Byram, John S. Beckmann, Samantha E. Steward, Hoverste n, Johnson,
Beckmann & Hovey, LLP, Austin, Minnesota (for appellant)

Considered and decided by Ro ss, Presiding Judge; Johnson, Judg e ; a n d J e s s o n ,
Judge.
U N P U B L I S H E D O P I N I O N
JESSON, Judge
This case centers on the employm ent agreement between responde nt Richard
Pomije and appellant Digitaltown, Inc. The district court gran ted summary judgment on
Pomije’s employment agreement cl aim, dismissed Digitaltown’s co unterclaims, and
awarded Pomije damages and attorney fees and costs. Because there are genuine issues of

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material fact regarding the va lidity of the employment agreemen t and whether
Digitaltown’s counterclaims state a claim upon which relief may be granted, we reverse
and remand.
FACTS
Respondent Richard Pomije forme d and became president and chie f executive
officer (CEO) of appellant Digitaltown, Inc. in 1982. Around 2000, Digitaltown became a
publicly-traded company. Pomije was the majority shareholder until September 2015. His
brother, Thomas Pomije, also becam e a shareholder in 2005. Dig italtown was an asset-
based corporation, meaning it wo uld buy assets and the value of the company was based
on those assets. Digitaltown primarily bought high school website domain names that were
not previously owned and made money from the website traffic, generating revenue from
advertising and leasing domain names.
While Pomije was CEO, he was also a member of Digitaltown’s board of directors,
where he served as secretary. In early May 2015, Digitaltown’s board of directors
consisted only of Pomije and Je ffrey Mills, a board member sinc e 2003, who also served
as the sole audit committee membe r. But on May 11, 2015, Pomij e resigned from his
positions as CEO and president effective May 18, 2015. And he resigned from his position
on Digitaltown’s board of directors effective May 31, 2015. Af ter Pomije resigned, two
additional directors were appointed. Later, Mills became Digitaltown’s board secretary.
After resigning, Pomije stayed on at Digitaltown as a nonofficer employee. Pomije
drafted a document titled “employment agreement,” stating that Digitaltown would employ
Pomije for one year, to be renewed annually, unless Pomije was notified in writing 30 days

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before expiration of the agreement. Under the purported employ ment agreement, Pomije
would be paid $125,000 for the first year, and five percent mor e for the second year of
employment. Both Pomije and Mills signed this document, which stated it began on May
11, 2015. But the parties dispute the date that Mills signed t he employment agreement.
And neither Pomije’s nor Mills’s signatures are dated. Digital town asserts that Mills did
not sign the agreement until June 2015, when he did not have au thority to sign on behalf
of the company. This lack of authority stems, Digitaltown contends, from the fact that the
agreement was never presented to the new board of directors, wh ich then included two
additional members.
In August 2015, Digitaltown no longer had the funds to pay its employees. Pomije
agreed to temporarily forego his salary, in order to have enoug h money to pay the rest of
the employees. When he agreed to this arrangement, he contends that payments were to
resume the following week. But Pomije did not receive any addi tional paychecks after
August 28, 2015. He continued to work for Digitaltown until Fe bruary 2016, when his
email account was shut-off. At this time, Pomije took another full-time job as the vice
president of a company called Smart Express.
Digitaltown asserts that in the fall of 2015, as its financial situation worsened, Mills
learned from Digitaltown sharehold ers that had purchased shares from Pomije’s brother,
Thomas, that the purchases were solicited by Pomije. Thomas or iginally acquired these
shares in 2005 and 2007, and in 2010, Digitaltown amended the pricing terms of Thomas’s
2007 shares, reducing the purchase price from $2.50 per share t o $0.75 per share. These
shares were at least partially r esold to Digitaltown shareholde rs sometime before

4
April 15, 2009.1 According to Mills, the shareholders had never even spoken to Thomas.
And the shareholders told Mills that Pomije told them that purchasing the shares from his
brother was the only way to acquire stock in Digitaltown.
Digitaltown was troubled by this information, Mills stated, as Pomije had previously
reported to the United States Securities and Exchange Commission (SEC) that he was not
involved in any way in these transactions, as his involvement ( according to Digitaltown)
would violate SEC regulations, b ecause these sales were not rep orted to the SEC.
Digitaltown asserts that because P omije coordinated the stocks to be purchased from his
brother, it lost corporate oppor tunities to sell stock to inter ested buyers, and further lost
money by reducing the purchase price of the 2007 shares. It wo uld not have reduced the
price if it had known Pomije was coordinating the resales, in violation of SEC regulations,
Digitaltown contends.
Almost a year after his last day of work, in January 2017, Pomije filed a breach-of-
contract lawsuit against Digitaltown, requesting the amount of wages due to him pursuant
to the alleged employment agreement as well as attorney fees an d penalties pursuant to
Minnesota Statutes sections 181 .13 and 181.171 (2018). Within its amended answer,
Digitaltown asserted three counterclaims: that Pomije breached his fiduciary duty to
Digitaltown; that he committed fra udulent misrepresentation and fraudulent omission

1 It is unclear when the shares were resold to Digitaltown’s current shareholders. The share
purchase agreements reflecting these transactions are not inclu ded in the record. But the
SEC inquired about the resale of Thomas’s shares and Pomije res ponded to its inquiry in
April 2009, indicating that the shares were resold before April 2009.

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regarding the sale of his brother’s Digitaltown shares; and tha t he unlawfully interfered
with Digitaltown’s property by soliciting and transacting share sales for his own benefit.2
In December 2017 (and after severa l months of discovery), Pomij e filed two
motions: a motion to dismiss Digitaltown’s counterclaims for failure to state a claim and a
motion for summary judgment on his employment claims. The dist rict court granted
Pomije’s motion for summary judgment on his breach-of-contract employment claim. And
it granted Pomije’s motion to dismiss the counterclaims on the basis that they were barred
by the statute of limitations and not pleaded with particularit y. Later, the district court
summarily determined Pomije’s damages, concluding that Pomije w as entitled to recover
reasonable costs, disbursements, witness fees, and attorney fees under Minnesota Statutes
section 181.171, subdivisions 1 and 3, and indemnification unde r Minnesota Statutes
section 302A.521, subdivision 2(a) (2018).3 Digitaltown appeals.
D E C I S I O N
On appeal from summary judgment , this court reviews de novo wh ether there are
any genuine issues of material fact and whether the district court erred in applying the law.
Ruiz v. 1st Fid. Loan Servicing, LLC , 829 N.W.2d 53, 56 (Minn. 2013). “We view the
evidence in the light most favorable to the party against whom summary judgment was
granted.” STAR Ctrs., Inc. v. Faegre & Benson, L.L.P. , 644 N.W.2d 72, 76-77 (Minn.

2 As part of the counterclaims, Digitaltown asserts that Pomije breached his duty of loyalty
by usurping corporate opportunities because Digitaltown had an opportunity to sell stock
directly to buyers interested in investing in the company, but Pomije instead directed these
opportunities to his brother.
3 The district court awarded Pomije $256,488.16 in contract damages and $296,488.16 for
attorney fees and costs, for a total of $552,976.32.

6
2002). A genuine issue of material fact exists when there is sufficient evidence that could
lead a rational trier of fact to find for the nonmoving party. DLH, Inc. v. Russ, 566 N.W.2d
60, 69 (Minn. 1997).
I. The district court erred by gran t i n g s u m m a r y j u d g m e n t o n P o m i j e’s
contract claim.

Digitaltown asserts that the district court erred in granting summary judgment
regarding the employment document because there is a genuine issue of material fact as to
whether a valid employment contract was formed. Specifically, Digitaltown points to a
dispute over when Mills signed the document, whic h impacts whether Mills had the
authority to sign on behalf of the corporation.
A plaintiff must show that a contract has been formed, to preva il on a
breach-of-contract claim. Cargill Inc. v. Jorgenson Farms, 719 N.W.2d 226, 232 (Minn.
App. 2006). It is generally a question of fact whether a contract exists. Id. “But if taking
the record as a whole, a rational trier of fact could not find for the nonmoving party,
summary judgment is appropriate.” Id. The district court determined that there was no
genuine issue of material fact as to whether an employment contract existed. We disagree.
Here, Digitaltown disputes the date that the document was signe d by Mills, and as
a result, contends Mills lacked authority to enter into the contract on behalf of Digitaltown.
Mills’s affidavits and depositi on testimony state that he signe d Pomije’s employment
agreement on June 15, 2015—not on May 11, 2015. In support of its argument,
Digitaltown asserts that Jeffrey Mills was presented the employment document on June 15,
2015. In his affidavit Mills sta ted that “[he] signed the docu ment, but informed [Pomije]

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that [he] did not have the authority to execute it on behalf of Digitaltown and that it needed
to be approved by the full board.” On June 15, 2015, the board consisted of Mills and two
other members, neither of whom signed nor approved the employme nt document. And
Mills stated that Pomije showed h im how he planned to manipulat e the metadata of the
document to show the last edit date as being May 11, 2015, to avoid needing the new board
of directors’ approval.4 Finally, Mills’s appointment book contains a page that states that
on June 15, 2015, Pomije backdated his employment agreement.
When the district court conclude d that there was no genuine iss ue of material fact
regarding when the employment document was signed, it relied on its finding that “Jeffrey
Mills lacks credibility.” This is error. A district court should not weigh evidence or assess
credibility at the summa ry judgment stage. Hoyt Props., Inc. v. Prod. Res. Grp., L.L.C. ,
736 N.W.2d 313, 320 (Minn. 2007).
But Pomije asserts that the dispute as to the date that the co ntract was signed is not
material given the overwhelming evidence of the contract’s validity. We disagree. Here,
Mills’s affidavits and deposition testimony, along with the pag e from his appointment
book, presents more than a metaphysical doubt as to the factual issue of the formation of
the employment agreement. See DLH, Inc. , 566 N.W.2d at 71 (noting that “there is no
genuine issue of material fact for trial when the nonmoving party presents evidence which
m e r e l y c r e a t e s a m e t a p h y s i c a l d o u b t a s t o a f a c t u a l i s s u e a n d which is not sufficiently
probative with respect to an ess ential element of the nonmoving pa r t y’ s c a s e t o pe r m i t

4 Metadata typically shows the history of a document that is created on a computer.

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reasonable persons to draw diffe rent conclusions”). Reasonable persons could draw
different conclusions from the evidence presented. See Ill. Farmers Ins. Co. v. Tapemark
Co., 273 N.W.2d 630, 634 (Minn. 1978). And established caselaw is clear: on summary
judgment, it is error for the district court to assess credibility. Hoyt, 736 N.W.2d at 320.
Because we conclude that genuine i ssues of material fact exist regarding the date
that the employment contract w as signed by Mills and whether he had authority to enter
into the contract on behalf of Digitaltown, we reverse and remand.5
II. The district court erred in di smissing Digitaltown’s counterclaims based
on this record.

Digitaltown asserted three counte rclaims in its answer, all of which relate to
Pomije’s alleged role in the sales of his brother Thomas’s Digi taltown stock: breach of
fiduciary duty; fraudulent misrep resentation and omission; and conversion. The district
court dismissed Digitaltown’s counterclaims because it concluded they were barred by the
statute of limitations. In add ition the court concluded that t hey were not pleaded “with
particularity.” 6 We disagree as to the first basis for dismissal and conclude, with regard to

5 Because we reverse and remand, and the issues of damages, atto rney fees, and statutory
penalties depend on the outcome of this contract issue, we do not address these contingent
issues here.
6 The district court dismissed the counterclaims pursuant to rul e 12.02 of the Minnesota
Rules of Civil Procedure, which states that “[e]very defense, i n law or fact, to a claim for
relief in any pleading, whether a claim [or] counterclaim . . . shall be asserted in the
responsive pleading thereto if one is required, except that the following defenses may at
the option of the pleader be made by motion: . . . (e) failure to state a claim upon which
relief can be granted.” But if “m atters outside the pleadings are presented to and not
excluded by the court, the motion shall be treated as one for s ummary judgment.” Minn.
R. Civ. P. 12.03. Because the district court here considered matters outside the pleadings,
we review Pomije’s motion as one for summary judgment. Minn. R. Civ. P. 56.

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the second, that the record on appeal does not provide an adequ ate basis for appellate
review.
We first address whether Digitalto wn’s counterclaims are barred by the statute of
limitations, a question which we review de novo. Ryan v. ITT Life Ins. Corp., 450 N.W.2d
126, 128 (Minn. 1990).
There is no dispute that the purchases of shares at the heart o f the counterclaims
occurred in 2005 and 2007. Because of the six-year statute of limitations governing actions
for fraud, the district court correctly concluded that the clai ms were barred unless
fraudulent concealment extended the statute. Minn. Stat. § 541 .05, subd. 1(6) (2018);
Sletto v. Wesley Constr. Inc., 733 N.W.2d 838, 845 (Minn. App. 2007). Digitaltown asserts
that Pomije’s April 2009 representation to the SEC that neither h e n o r a n y o n e a t
Digitaltown was directly involved with any resales of his broth er’s stock constitutes
fraudulent concealment. And it was only in the fall of 2015, Mills asserts, that Digitaltown
learned from stockholders that they were directed, by Pomije, t o purchase stock directly
from his brother in 2005 and 2007.
To prove fraudulent concealment, resulting in a tolling of the statute of limitations,
“a party must show (1) the defendant made a statement that concealed plaintiff’s potential
cause of action, (2) the statement was intentionally false, and (3) the concealment could
not have been discovered by reasonable diligence.” Sletto, 733 N.W.2d at 846. “The
six-year period begins to run when the facts constituting fraud were discovered or, by
reasonable diligence, should have been discovered.” Toombs v. Daniel, 361 N.W.2d 801,
809 (Minn. 1985).

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The district court dismissed this fraudulent-concealment argume n t w i t h t h e
statement that “[a]ll information regarding the buying and selling of Digitaltown stock was
available to Digitaltown’s board of directors, auditors and regulators when they occurred.”
Based upon this finding, the court implicitly concluded that, w ith reasonable diligence,
Digitaltown could have discovered the alleged fraud.
But “[r]easonable diligence is generally a question of fact.” Appletree Square I Ltd.
P’ship v. Investmark, Inc., 494 N.W.2d 889, 894 (Minn. App. 1993), review denied (Minn.
Mar. 16, 1993). Our review of the record reveals a dispute over whether Digital town
should have discovered that Pomije’s statement to the SEC was m isleading before 2015.
Neither the district court nor Pomije point to specific records which undisputedly should
have placed Digitaltown on notice. And we are concerned, given the district court’s scant
attention to the concealment allegation, that the district court’s conclusion that Digitaltown
did not act with reasonable diligence was based, at least in pa rt, on its credibility finding
regarding Mills. It was Mills’s affidavit that set out the fac ts underlying Pomije’s
concealment. It was Mills who served on the board and audit committee during the relevant
time. And it was Mills who had the 2015 conversations with the shareholders. Again,
assessing credibility is not appro priate at the summary-judgmen t stage. See Hoyt , 736
N.W.2d at 320. Given the brief analysis of the concealment iss ue and its intertwinement
with Mills’s testimony and based on our review of the record, we conclude the district court
erred in determining the counterclaims time-barred as a matter of law.
Finally, the district court found that Digitaltown’s countercla ims failed to plead
fraud with particularity as required under Minnesota Rules of C ivil Procedure 9.02. The

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court focused on Digitaltown’s “fail[ure] to show how any actions by [Pomije] have caused
specific damage” to the company. The record before us does not permit thorough appellate
r e v i e w o f t h i s d e c i s i o n . S o m e of Digitaltown’s damage evidence is contained in an
affidavit from Willard Olson which was included as an exhibit to an affidavit in support of
Digitaltown’s motion to amend its answer and counterclaim. Dig italtown’s proposed
amended answer and counterclaim included additional specificity and clarification,
including on the issue of damages . B u t i t i s u n c l e a r w h e t h e r Digitaltown’s proposed
amended answer and counterclaim are properly before us.
The district court’s order of dismissal makes no reference to the proposed amended
answer and counterclaim. While the district court’s law clerk sent an email to the parties
indicating that “[i]t is the Court’s intent to deny all outstanding motions,” which may have
included the motion to amend, the district court itself never issued a ruling on Digitaltown’s
motion to amend. As such, it is unclear to this court whether the amended answer and
counterclaim, together with Olson’ s affidavit, are included in the record and can be
considered on appeal. Accordingl y, the record does not provide a n a d e q u a t e b a s i s f o r
appellate review of the distric t court’s decision that the coun terclaims were not pleaded
with particularity. We remand for the district court to rule o n Digitaltown’s motion to
amend and subsequently consider whether Digitaltown’s countercl aims of fraud are
pleaded with particularity.

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In sum, we reverse the district court’s summary judgment in favor of Pomije and its
dismissal of Digitaltown’s counterclaims. Disputed material fa cts cloud each claim, and
the district court’s improper credibility determination permeates each as well.
Reversed and remanded.