Bay Side Recycling Company LLC, et al., Appellants,

This opinion will be unpublished and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
A19-0102

Bay Side Recycling Company LLC, et al.,
Appellants,

vs.

SKB Environmental Inc.,
Respondent,
Gem-Ash Processing LLC, et al.,
Respondents.

Filed December 23, 2019
Affirmed
Reyes, Judge

Hennepin County District Court
File No. 27-CV-15-8797

David R. Marshall, Richard D. Snyder, Ryan C. Young, Fredrikson & Byron, P.A.,
Minneapolis, Minnesota (for appellants)

Theresa M. Bevilacqua, David Y. Trevor, Nathan J. Ebnet, Dorsey & Whitney, L.L.P.,
Minneapolis, Minnesota (for respondent SKB Environmental Inc.)

Mark R. Bradford, Jonathan P. Norrie, Bass ford Remele, P.A., Minneapolis, Minnesota
(for respondents Gem-Ash Processing, et al.)

Considered and decided by Florey, Presiding Judge; Reyes, Judge; and Smith, Tracy
M., Judge.

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U N P U B L I S H E D O P I N I O N
REYES, Judge
Appellants challenge the denial of their motion for a new trial on breach -of-
fiduciary-duty and related civil-conspiracy and aiding-and-abetting claims following a jury
trial. Appellants assert that (1) the district court abused its discretion by submitting to the
jury the question of whether respondents owed a fiduciary duty to appellant AMG Alliance
and (2) even if the district court properly submitted the question to the jury, it improperly
instructed the jury on that question. We affirm.
FACTS
Appellants AMG Alliance LLC (AMG Alliance) and Bay Side Recycling Company
LLC (Bay Side) are companies engaged in scrap-metal recycling and processing. Bay Side
is based in Duluth, and AMG Alliance is a D elaware Limited Liability Company ( LLC)
based in Saint Paul . Bay Side is owned by parent company Alliance Steel Services
Company (Alliance Steel), which is not a party to this litigation. Alliance Steel and AMG
Resources Corporation (AMG Resources), also not a party to this litigation, formed and
own AMG Alliance under an LLC agreement. AMG Alliance asserts that it is a joint
venture of Alliance Steel and AMG Resources. AMG Alliance contracted with respondent
SKB Environmental Inc. (SKB) to purchas e scrap metal that SKB received from waste
processed at the Hennepin Energy Recovery Center ( HERC) in Minneapolis. Bay Side
also contracted with SKB for SKB to take the by -products of Bay Side’s scrap-metal-
extraction pr ocess to SKB’ s landfill. Respondents Matthew and C.J. Goodwald (the

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Goodwalds) are brothers who were managers at Bay Side and received compensation from
both Bay Side and Alliance Steel.
During an April 2013 meeting with SKB regarding its business with Bay Side, the
Goodwalds learned from SKB of an opportunity to extract metal s from the HERC
incinerator ash that SKB hauled to its landfill. SKB had not been able to separate metal
from this ash . C.J. Goodwald and his father, respondent Jerry Goodwald, form ed
respondent Gem-Ash Processing LLC, which began contracting with SKB to extract metals
from the incinerator ash. 1 The Goodwalds subsequently resigned from Bay Side. Later
that year, SKB did not renew its contract with AMG Alliance for the scrap metal from the
HERC. Instead, SKB sent AMG Alliance and other companies a request for bids on the
new contract. AMG Alliance submitted the minimum bid, and SKB awarded the contract
to a company unaffiliated with the parties that submitted the highest bid.
Appellants brought twelve claims against respondents, one of which appellants
voluntarily dismissed before trial. Relevant here, appellants alleged that the Goodwalds
acted on a corporate opportunity presented to them by SKB and which the Goodwalds
should have brought to the attention of appellants . Appellants also allege d that
respondents’ work with SKB caused SKB not to renew its contract with AMG Alliance for
the purchase of the HERC scrap metal. Appellants claimed that the Goodwalds breached
the fiduciary duties they owed to appellants (count IV) and that the other respondents
conspired in (count IX) and aided and abetted (count X) this breach.

1 Appellants’ claims against Gem-Ash are not at issue in this appeal.

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Before trial, appellants and respondents filed cross motions for summary judgment,
which the district court largely denied. It granted Matthew Goodwald’s motion on the
usurpation of corporate opportunity claim against him, dismissing the claim after
determining that no reasonable jury could find that appellants entrusted him with active
management. The case proceeded to a 16-day jury trial. Appellants requested a jury
instruction stating that the Goodwalds owed fiduciary duties not only to their employer s
but also to their employers’ joint ventures , including AMG Alliance. The district court
denied the proposed instruction based on its determinations that AMG Alliance is not a
joint venture of Alliance Steel and AMG Resources and that fiduciary duties do not flow
as a matter of law from employees of a company to the company’s joint venture s. It
prohibited appellants from arguing these joint-venture theories in their closing arguments.
Appellants were allowed to argue instead that the Goodwalds directly owed fiduciary
duties to AMG Alliance. With appellants’ agreement, the district court submitted a special-
verdict form to the jury that included the question of whether the Goodwalds owed
fiduciary duties to AMG Alliance. The jury found that they did not. Appellants moved for
judgment as a matter of law or a new trial. The district court denied the motion and entered
judgment in favor of respondents . This appeal of the denial of appellants’ motion for a
new trial on counts IV, IX, and X follows.
D E C I S I O N
As an initial matter, Bay Side does not raise any issues on appeal. SKB therefore
asks this court to affirm t he judgment against Bay Side. Appellants’ brief makes no
arguments on behalf of Bay Side, and at oral arguments, counsel for appellants conceded

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that Bay Side does not raise any issues on appeal. We therefore conclude that Bay Side
has waived all arguments and turn to the issues AMG Alliance raises.
We review a district court’s decision to deny a motion for a new trial for a clear
abuse of discretion. See Halla Nursery, Inc. v. Baumann-Furrie & Co., 454 N.W.2d 905,
910 (Minn. 1990).
I. The district court did not abuse its discretion by submitting to the jury the
question of whether the Goodwalds owed fiduciary duties to AMG Alliance.

AMG Alliance argues that the district court improperly submitted the question of
fiduciary duty in count IV to the jury because the existence of a fiduciary duty is a question
of law for the district court, not the jury, to determine. We disagree.
Respondents claim AMG Alliance failed to object to the district court submitting
the question to the jurors and that it therefore cannot raise the issue now . When a party
fails to object on the record, the party generally forfeits any objection, and it is precluded
from raising the issue on appeal. Estate of Hartz v. Nelson, 437 N.W.2d 749, 752 (Minn.
App. 1989), review denied (Minn. July 12, 1989); see also Minn. R. Civ. P. 51.03, . 04;
State v. Beaulieu , 859 N.W.2d 275, 278 (Minn. 2015) (clarifying that “ forfeiture is the
failure to make the timely assertion of a right” (quotation omitted)). But even if a party
forfeits an objection, this court may review special-verdict question s for error s in
fundamental law or controlling principle. Estate of Hartz, 437 N.W.2d at 752. We address
the issue of forfeiture first.

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A. AMG Alliance forfeited its right to challenge the submission of the
fiduciary-duty question to the jury.

AMG Alliance asserts that it did not forfeit its right to challenge the submission of
the fiduciary-duty question to the jury because it repeatedly argued to the district court that
the Goodwalds owed it a fiduciary duty, including at summary judgment, the c harging
conference, and in post trial motions. AMG Alliance’s argument is misguided. While
AMG Alliance argued that the Goodwalds owed it a fiduciary duty, it did not object to the
jury deciding the issue rather than the district court.
At the first charging conference, AMG Alliance argued extensively that employees
of Alliance Steel who owed it a fiduciary duty also owed that duty to Alliance Steel’s joint
ventures, such as itself. AMG Alliance requested a jury instruction that explained that the
Goodwalds “owed fiduciary duties to all of their employers’ joint ventures. ” (Emphasis
added.) But, it agreed when the district court stated that it could not use AMG Alliance’s
suggested language:
DISTRICT COURT: Sure. Okay, so I just can’t tell the jury
that they owe that duty. The jury would have to find that they
owe it.

COUNSEL: Changing this to “can owe” would be fine.

DISTRICT COURT: But I would have to ask the jury if they
owe a fiduciary duty, right?

COUNSEL: I’m sorry, I don't understand.

DISTRICT COURT: . . . [I]f you’re going to pursue this theory
[of fiduciary duty to AMG Alliance] , then I think you have to
explain it to the jury and then ask them if they find it.

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COUNSEL: And I guess I’m unclear on what’s not explained
in the proposed. I understand you say I can’t just tell them they
owe it, and so I get that. And revising it to say “you can owe”
is fine with me. But I’m afraid I don’t understand.

DISTRICT COURT: Okay.

(Emphases added.) All of AMG Alliance’s arguments and objections on this issue related
to the content of the jury instructions, not to whether to submit the question to the jury for
the jury to decide. Upon the first review of the special-verdict form, AMG Alliance raised
no objections to the jury being asked to determine if the Goodwalds ow ed it a fiduciary
duty, nor did it object upon the final review of the form. Nowhere in the record did AMG
Alliance object to this question, nor did it ask the court to decide the issue, rather than the
jury, as it now argues on appeal. Therefore, because AMG Alliance did not object at any
point to the district court sending to the jury the question of fiduciary duties owed to AMG
Alliance, it cannot now seek a new trial on that basis.
B. The district court properly asked the jury to determine whether the
Goodwalds owed a fiduciary duty to AMG Alliance.

Because AMG Alliance forfeited its argument, we may review the special-verdict
question only for errors in fundamental law or controlling principle . See Estate of Hartz,
437 N.W.2d at 752. The district court has broad discretio n over the substance of special -
verdict questions. Poppler v. Wright Hennepin Co op. Elec. Ass’n, 845 N.W.2d. 168, 171
(Minn. 2014). But, courts must decide questions of law, not the jury. See generally Sparf
v. United States , 156 U.S. 51, 171, 15 S. Ct. 273, 320 (1895) (discussing rationale for
leaving questions of law to the court). Nonetheless, special-verdict questions “need not be
questions of pure fact, but, in the discretion of the trial court, may be in the form of ultimate

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fact questions.” Hill v. Okay Const. Co. , 252 N.W.2d 107, 118 ( Minn. 1977) ( citing
Thielbar v. Juenke , 189 N.W.2d 493, 498 ( Minn. 1971)). When questions are of mixed
law and fact, the jury may properly resolve them. United States v. Gaudin, 515 U.S. 506,
506, 115 S. Ct. 2310, 2311 (1995).
Although “a relationship might not be fiduciary per se, the facts of the case mig ht
create such a relationship.” Carlson v. SALA Architects, Inc., 732 N.W.2d 324, 331 (Minn.
App. 2007) , review denied (Aug. 21 , 2007) . Therefore, “[t]he existence of a fiduciary
relationship is a question of fact.” Toombs v. Daniels, 361 N.W.2d 801, 809 (Minn. 1985)
(fiduciary duties of trustees); see also, e.g., Murphy v. Country House, Inc. , 240 N.W.2d
507, 512 (Minn. 1976) (fiduciary duties of direct or shareholders to one another) . AMG
Alliance cites Staffing Specifix, Inc. v. TempWorks Mgmt. Servs., Inc. , 913 N.W.2d 687
(Minn. 2018), in support of its argument that the question of fiduciary duty is a question of
law not proper for the jury. But the supreme court in Staffing Specifix, Inc. found it
improper for a jury to determine whether contract terms were ambiguous. Id. at 692. The
decision did not involve fiduciary duties.
Here, the parties heavily disputed whether the Goodwalds had a fiduciary
relationship with AMG Alliance. The district court stated that the jury would need to
determine the relationship between AMG Alliance and the Goodwalds, and AMG Alliance
agreed to let it do so. The special-verdict question itself correctly stated Minnesota law on
fiduciary duty. See State by McClure v. Sports and Health Club, Inc. , 370 N.W.2d 844,
858 (Minn. 1985); Carlson, 732 N.W.2d at 3 30-31. The question as written related to a
mixed question of law and fact appropriate for the jury.

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Because the special-verdict question did not contain any error in fundamental law
or controlling principle , we do not need to address whether i t caused AMG Alliance
prejudice. As a result, the district court properly asked the jury to determine whether the
Goodwalds owed a fiduciary duty to AMG Alliance , and a new trial on that ground is not
warranted.
II. The district court did not abuse its discretion by instructing the jury on the
question of fiduciary duty.

AMG Alliance argues that the instructions on fiduciary duty in count IV materially
misstated the law by (1) omitting any instruction regarding joint ventures and
(2) misleading the jury to think fiduciary duties are owed only in the employee -employer
context. We disagree.
Absent a clear abuse of discretion, we will not reverse a district court’s decision to
deny a motion for a new trial based on a claim of an erroneous jury instruction. Youngquist
v. W. Nat’l Mut. Ins. Co., 716 N.W.2d 383, 385 (Minn. App. 2006). A new trial is required
if the district court issues an erroneous instruction that either prejudices the complaining
party or has an effect that cannot be determined. Christie v. Estate of Christie, 911 N.W.2d
833, 838 (Minn. 2018). Jury ins tructions must be reviewed as a whole, including in the
context of the other instructions, Lewis v. Equitable Life Assur. Soc. of the U.S. , 389
N.W.2d 876, 885 (Minn. 1986 ), and the evidence in the case, Poppenhagen v. Sornsin
Const. Co. , 220 N.W.2d 281, 2 86 ( Minn. 1974). Here, the district court provided the
following jury instructions:

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In Count IV, Bay Side and AMG Alliance each brings claims
against CJ Goodwald and Matthew Goodwald for breach of
fiduciary duty.

To succeed on this claim, the plaintiff must prove:

1. That the defendant owed a fiduciary duty;
2. That the defendant breached the fiduciary duty;
3. That the breach directly caused harm to the
plaintiff; and
4. That the plaintiff suffered damages.

Breach of fiduciary duty
In general, all employees have a fiduciary relationship to their
employers with a duty to act in the interest of the employer and
not as an adversary.

A “fiduciary relationship” is characterized by a “fiduciary”
who enjoys a superior position in terms of knowledge and
authority and in whom the other party places a high level of
trust and confidence. The law imposes on fiduciaries the
highest standards of integrity and good faith in their dealings
with those who place trust in them.

The special-verdict form then asked whether C.J. and Matthew Goodwald owed a fiduciary
duty to AMG Alliance.
AMG Alliance proposed an instruction stating that the Goodwalds “owed fiduciary
duties to those who placed a high degree of trust and confidence in them. Th at included,
but was not limited to, their employers, Bay Side Recycling and Alliance Steel. Matthew
Goodwald and Christopher J. Goodwald also owed fiduciary duties to all of their
employers’ joint ventures.” The proposed instruction went on to list the elements required
for the formation of a joint venture. We address AMG Alliance’s arguments in turn.

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A. The district court properly rejected AMG Alliance ’s proposed joint-
venture instruction.

AMG Alliance argues that the instruction on fiduciary duty materially misstated the
law by omitting any instruction regarding joint ventures. We are not persuaded.
In its order denying AMG Alliance a new trial , the district court determined that it
properly rejected the joint-venture instruction because, as a m atter of law, (1) AMG
Alliance is not a joint venture and (2) fiduciary duties do not flow from employees of a
company to the company’s joint venture. Because we conclude that AMG Alliance is not
a joint venture,2 we need not address whether employees of a company owe fiduciary duties
to the company’s joint ventures.
Whether a joint venture exists is generally a question of fact, but a district court may
decide it as a matter of law i f “no competent evidence will support a finding of joint
venture.” Duxbury v. Spex Feeds, Inc. , 681 N.W.2d 380, 390 (Minn. App. 2004), review
denied (Minn. Aug. 25, 2004). We review de novo a finding as a matter of law that a joint
venture does not exist. Dorsey & Whitney LLP v. Grossman, 749 N.W.2d 409, 416 (Minn.
App. 2008). The party arguing for the existence of a joint venture has the burden of proof.
Beehner v. Cragun Corp., 636 N.W.2d 821, 832 (Minn. App. 2001).
The required elements of a joint venture under Minnesota law are (1) contribution
by the parties of money, property, time, or skill ; (2) joint proprietorship and control over

2 AMG Alliance did not argue that this duty existed by virtue of it being an LLC with
members Alliance Steel and AMG Resources . Members of LLCs can also owe fiduciary
duties to other LLC members. Nonetheless, the Goodwalds were not officers or directors
of either member, and an argument on that basis also fails.

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the subject matter of the property ; (3) sharing of profits but not necessarily of losses ; and
(4) an express or implied contract showing that the parties entered into a joint venture.3
Rehnberg v. Minn. Homes, 52 N.W.2d 454, 457 (Minn. 1952) (footnotes omitted).4
Here, elements two and four are missing. First, members Alliance Steel and AMG
Resources do not have joint control of AMG Alliance. The LLC agreement between the
members explicitly provides in section 4.02 that “[n]either Member, in its capacity as such,
shall take part in the management of the business and affairs of the Company or have, or
represent to any other Person that such Member has, any authority to bind the Company in
any respect.” Second, the parties did not agree to enter into a joint venture. The agreement
itself is called a “Limited Liability Company Agreement,” and it contains an unambiguous
disclaimer in section 6.16 that AMG Alliance is not a joint venture. Although a disclaimer
of joint-venture status is not dispositive, “it is strong evidence that the parties did not intend
that their cooperative undertaking create a partnership or joint venture.” Ringier Am., Inc.
v. Land O ’Lakes, Inc., 106 F.3d 825, 829 (8th Cir. 1997) (applying Minnesota law and
concluding joint venture did not exist when parties did not have joint control and expressly
disclaimed joint -venture relationship in contract). The district court therefore properly
concluded that AMG Alliance is not a joint venture. Because AMG Alliance is not a joint

3 Minnesota cases appear to use “joint venture” and “joint adventure” interchangeably, with
“joint venture” being a modern trend. See, e.g. , Tate v. Ballard , 68 N.W.2d 261, 264
(Minn. 1954) (using the term “joint venture” but citing to materials that use both terms).
4 The parties used Minnesota law, although AMG Alliance’s LLC agreement provides that
the agreement is governed and construed under Delaware law. While the parties cite to
some Delaware caselaw, they have argued joint -venture status under Minnesota law. We
will therefore use the Minnesota joint-venture elements.

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venture, the district court did not abuse its discretion in rejecting appellant’s proposed joint-
venture instruction.
B. The district court’s instruction did not improperly imply that a fiduciary
duty is owed only in a direct employer-employee relationship.

AMG Alliance argues that the district court’s instruction on count IV misled the
jurors and misstated the law by implying that fiduciary duties arise only from the employer-
employee relationship. We are not persuaded.
AMG Alliance did not argue to the district court that the instruction failed to focus
on positions of trust, even after the district court properly excluded the joint -venture
instruction. Because AMG Alliance did not raise this issue with the jury instruction below,
we review it only for errors in fundamental law or controlling principle . See Estate of
Hartz, 437 N.W.2d at 752. The instruction first described that “[i]n general, all employees
have a fiduciary relationship to their employers .” It then described that a “fiduciary
relationship” involves a “‘fiduciary’ who enjoys a superior position in terms of knowledge
and authority and in whom the other party places a high level of trust and confidence. ”
While the wording of this instruction may have been different had AMG Alliance requested
a focus on positions of trust, the instruction correctly stated the law.5 The district court

5 Further, at oral arguments, AMG Alliance argued that the Goodwalds owed it a fiduciary
duty because of a direct e mployer-employee relationship with AMG Alliance. AMG
Alliance’s brief argues that AMG Alli ance employed Matthew Goodwald , and AMG
Alliance’s reply brief states that cases about “special circumstances” and fiduciary duties
are distinguishable from this cas e, in which “a fiduciary relationship exists as a matter of
law.” To the extent that AMG Alliance has relied on arguing that the Goodwalds were
direct employees of AMG Alliance, even an instruction on only employer -employee
relationships would be proper.

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therefore did not abuse its discretion in instructing the jury on the fiducia ry-duty question
in count IV.
Because AMG Alliance is not entitled to a new trial on count IV, breach of fiduciary
duty, it also is not entitled to a new trial on counts IX or X, civil conspiracy and aiding and
abetting, both of which require proving the underlying breach of fiduciary duty.
Affirmed.