Kathryn Ward Blum, 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This opinion will be unpublished and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
A19-0938

Kathryn Ward Blum, et al.,
Appellants,

Thomas Ward,
Appellant,

vs.

Molly Thompson, et al.,
Respondents,

Ward Family, Inc.,
Respondent.

Filed April 27, 2020
Affirmed
Smith, Tracy M., Judge

Stearns County District Court
File No. 73-CV-14-1829

Christopher W. Harmoning, John F. Mathews, Gray, Plant, Mooty, Mooty & Bennett, P.A.,
St. Cloud, Minnesota (for appellants Kathryn Ward Blum and Charles Ward)

Mark V. Steffenson, Henningson & Snoxell, Ltd., Maple Grove, Minnesota (for appellant
Thomas Ward)

Paul A. Rajkowski, Christopher A. Wills , Rajkowski Hansmeier, Ltd., St. Cloud,
Minnesota (for respondents Molly Thompson , Ann Sullivan, Richard Ward, and Kevin
Ward)

Ward Family, Inc., St. Cloud, Minnesota (respondent)

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Considered and decided by Jesson, Pres iding Judge; Rodenberg, Judge; and Smith,
Tracy M., Judge.
U N P U B L I S H E D O P I N I O N
SMITH, TRACY M., Judge
This case involves a dispute among shareh olders of a family-owned corporation.
Appellants are three siblings who are minor ity shareholders of the corporation.
Respondents are three other sibling-shareholde rs; all of the siblings’ father, who is a
shareholder; and the corporation itself. After an appeal to and a remand from this court, the
district court held a jury trial on appella nts’ common-law breach-of-fiduciary-duty claim
against respondents and a court trial on appellants’ statutory shareholder-oppression claim
against respondents. Both the jury and the district court found in favor of respondents,
rejecting appellants’ claims.
Appellants challenge the resulting district court judgment against them. They argue
that the district court (1) abused its disc retion during the jury trial on the common-law
claim by providing the jury with inaccurate instructions and special-verdict questions and
by excluding certain evidence and (2) erred by rejecting their statutory shareholder-
oppression claim. We affirm.
FACTS
Richard Ward and Rosemary Koop Ward were married in 1958. During their
marriage, they raised seven children: Kathryn Ward Blum , Charles Ward, Kevin Ward,

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Thomas Ward, Molly Thompson, Ann Sullivan, and Maggie Motyl.1 Kathryn, Charles, and
Thomas (appellants) sued Richard, Kevi n, Molly, and Ann for their conduct while
controlling Ward Family, Inc. (WFI) (collectively, respondents). The crux of the dispute is
a long-term lease that WFI executed that ga ve Kevin’s corporatio n, El Rancho Manana,
Inc. (ERMI), greater authority over a large plot of land kn own by the parties as “the
Ranch.”
Many of the underlying facts of this cas e as well as its procedural history are
described in our decision on the previous appeal in this case, Blum v. Thompson , 901
N.W.2d 203, 208-14 (Minn. App. 2017), review denied (Minn. Oct. 25, 2017). While that
decision preceded the trial, the general underlying facts remain unchanged and do not bear
repeating here.
On remand after our decision in the previo us appeal, the district court determined
that appellants were entitled to a jury trial on their co mmon-law claim for breach of
fiduciary duty (count 1) but not for their statutory claim for shareholder oppression (count
2). The district court decided to bifurcate the case into a jury trial on count 1, followed by
a court trial on count 2.
Before the jury trial, respondents filed a motion in limine to exclude two expert
reports that showed the value of appellant s’ shares in WFI had dropped from $6.25 per
share to $0.40 per share after WFI and ERMI executed the lease. Respondents also sought
to exclude materials connected with ERMI. The district court determined that the reduction

1 Due to the number of overlapping last names, this opinion refers to the parties using their
first names throughout.

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in the value of the shares amounted to evidence of a derivative claim and therefore granted
respondents’ motion to exclude the expert re ports. It also excluded the ERMI materials,
reasoning that Richard and Kevin did not owe appellants a fiduciary duty with respect to
ERMI.
At the jury trial on count 1, the jury returned a special-verdict finding that none of
respondents’ conduct was a breach of their fiduciary duties. At the bench trial on count 2,
the district court ruled for the respondents, dismissing appellants’ remaining claims with
prejudice. Appellants brought posttrial motions, which the district court denied.
This appeal follows.
D E C I S I O N
I. The district court did not abuse its di scretion during the jury trial on
appellants’ common-law breach-of-fiduciary-duty claim (count 1).

We begin with appellants’ challenge to the judgment against them on their common-
law claim of breach of fiduciary duty. Appellants seek a new trial, arguing that the district
court abused its discretion by (1) incorrectly instructing the jury, (2) misleading the jury
on the special-verdict form, and (3) excluding certain evidence.
A. The district court did not abuse it discretion in instructing the jury.
Appellate courts review a district court’s jury instructions for an abuse of discretion.
State v. Huber, 877 N.W.2d 519, 522 (Minn. 2016). “The district court has broad discretion
in determining jury instructions . . . .” Hilligoss v. Cargill, Inc. , 649 N.W.2d 142, 147
(Minn. 2002). But appellate courts will re mand for a new trial “[i]f the challenged
instructions materially misstate the law resu lting in prejudice to th e complaining party.”

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Staffing Specifix, Inc. v. TempWorks Mgmt. Servs., Inc. , 913 N.W.2d 687, 691-92 (Minn.
2018). Appellate courts review de novo whether a jury instruction misstates the law. Id. at
692.
1. Duty-of-care instruction
Appellants argue that the district court gave an erroneous instruction on the standard
of care applicable to the directors and officers of a closely held corporation. Shareholders
of a closely held corporation have a fiduciary duty to obser ve “the highest standard of
integrity in their deali ngs with each other.” Evans v. Blesi, 345 N.W.2d 775, 779 (Minn.
App. 1984), review denied (Minn. June 12, 1984). That fi duciary duty includes the “duty
to deal openly, honestly and fairly with other shareholders,” id., and to “act with complete
candor in their negotiations with each other,” Gunderson v. All. of Comput. Prof’ls , Inc.,
628 N.W.2d 173, 186 (Minn. App. 2001), review granted (Minn. July 24, 2001), appeal
dismissed (Minn. Aug. 17, 2001). Generally, the law requires directors and officers to
discharge the duties of their position “with the care an ordinarily prudent person in a like
position would exercise under similar circumst ances.” Minn. Stat. § 302A.251, subd. 1,
.361 (2018). But the law holds directors and o fficers of closely held corporations to the
higher standard that applies to shareholders of a closely held corporation: their fiduciary
relationship “imposes the highest standard of integrity and good faith.” Wenzel v. Mathies,
542 N.W.2d 634, 641 (Minn. App. 1996), review denied (Minn. Mar. 28, 1996).
The disputed jury instruction stated:
A shareholder’s fiduciary duty is the duty to act with
loyalty and the highest standards of integrity and good faith in

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conducting corporate business and in communications with
fellow shareholders.
In addition to the fiduc iary duties owed by all
shareholders, directors and o fficers of a corporation are
required to act with the care an ordinarily prudent person in a
like position would exercise under similar circumstances. You
are instructed that Richard Wa rd was the sole officer and
director of WFI from its incep tion until November 14, 2012.
Thereafter, Richard Ward, Ann Sullivan and Molly Thompson
assumed the duties of officers and directors of WFI.
Appellants claim that the instruction misstated the law because directors and officers of
closely held corporations are held to the same higher standard as the corporation’s
shareholders.
Richard, Ann, and Molly were all sharehol ders, in addition to being officers and
directors. We agree with appellants that th e phrase describing their duty as directors and
officers is not correct in the context of a closely held corporation. But the sentence in which
that phrase appears specifically states that the director-officer duty of care is “[i]n addition
to the fiduciary duties owed by all sharehol ders.” The complete sentence effectively
incorporates the duty of care that respondent s owed as shareholders, which is correctly
described in the instruction’s earlier statemen t of a shareholder’s fiduciary duty. Thus,
while the district court may have misstated the law of director fiduciary duty in the context
of closely held corporations, the misstatement was not prejudicial because the instruction
makes clear that the higher standard of care also applied to the three respondents.
Appellants also argue that the language of the instruction describing who was a
director and officer at what time somehow implied to the jury that only the lower standard
of care applied when the respondents were acting as WFI’s directors and officers. But this

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argument requires the jury to have misread the instructions. The district court specifically
stated that the directors’ and officers’ duty of care was in addition to the duty of care owed
by all shareholders. The jury instruction conveys that the director-officer standard of care
did not apply at all times to respondents, but nowhere does the instruction imply that, when
the director-officer standard of care applies, that standard somehow overrides or displaces
the shareholder standard of care. Since the directors and officers were all also shareholders,
we conclude that the duty-of-care instruction did not prejudice appellants.
2. Instruction to limit focus to contract term related to direct claims
Appellants next claim that the district court erred by instructing the jury to consider
only certain provisions of the lease agreement in deciding whether respondents breached
their fiduciary duty. The instruction in question stated:
You may only consider lease terms relating to Plaintiffs’ access
to, and use of, the property in deciding whether fiduciary duties
were breached and in answering the damages questions. You
may not consider other lease terms unrelated to Plaintiffs’
current rights to access and use of the property, such as the
acreage subject to the lease, the rent amount, or the duration of
the lease, in assessing any breach of fiduciary duty or damages.
Appellants argue that this instruction ignores a fundamental aspect of contract law: one can
only interpret a contract when it is viewed as a whole. But, while appellants cite authority
on how courts interpret the meaning of contractual terms, they offer no authority that says
that a district court cannot limit a jury’s assessment of the impacts of a contract in the
appropriate context.
In any event, the district court’s instru ction makes clear that it was trying to limit
the jury’s consideration to the alleged harm against appellants that we, in our decision in

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the previous appeal in this case, described as part of the direct claim that appellants could
present to the jury. We held that the alleged harm that the lease deprived appellants of their
right to use the property related to a direct cl aim, while appellants’ alleged harm that the
written lease agreement was disadvantageous to WFI related to a derivative claim. Blum,
901 N.W.2d at 215-16. Appellants’ derivative claim, we held, was properly dismissed on
summary judgment, but th e direct claim could be tried to a jury. Id. The district court’s
instruction reflects this differen tiation: it told the jury to c onsider only contractual terms
related to the direct claim—the deprivation of the right to access and use the property—
but not to consider terms that would go to the dismissed derivative claim based on the value
of the contract for WFI—the rent, the duration of the lease, the acreage, etc.
Appellants contend that this instruction prevented the jury from considering the “full
impact” of the lease on appellants. But it was appropriate for the district court to do exactly
that: the jury was not supposed to consider the “full impact ” of how the lease indirectly
impacted appellants through the lease’s impact on WFI. The indirect impacts were part of
appellants’ derivative claim, and the district court had properly di smissed the derivative
claim on summary judgment.
Theoretically, one could argue that a jury considering only part of the contract could
misinterpret the contract based on an isolated understanding of some term. But appellants
identify no examples of how th at could have occurred here. Appellants say that sections
8.1 and 8.4 allow ERMI, in its sole discretion, to exclude family members from the Ranch
if they would interfere with ERMI’s use of the property. But appellants do not explain why
the jury could not have consid ered those terms; those terms “relat[e] to Plaintiffs’ access

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to, and use of, the property.” Appellants also do not explain why the instruction prevented
the jury from considering the possibility that Kevin might sell ERMI, as this argument
appears to be based on the lack of a term, rather than on the existence of a term.
Because the challenged inst ruction properly reflected the alleged harms to be
considered by the jury, the district court’s jury instruction was not an abuse of discretion.
B. The questions on the special-verd ict form were not an abuse of
discretion.

Appellants also claim that the district c ourt’s special-verdict questions misled the
jury by implying that respondents could rest rict appellants’ access to the land, without
violating their fiduciary duty, so long as the restrictions were “reasonable.” District courts
“have broad discretion in drafti ng special-verdict questions.” Russell v. Johnson , 608
N.W.2d 895, 898 (Minn. App. 2000), review denied (Minn. June 27, 2000). Absent an
abuse of discretion, appellate courts will not reverse a district court’s decision on a special-
verdict form. Kronebusch v. MVBA Harvestore Sys. , 488 N.W.2d 490, 496 (Minn. App.
1992), review denied (Minn. Oct. 20, 1992).
Appellants challenge the following specia l-verdict question, which was asked 12
times—once for each combination of appellant and respondent: “Did [respondent] breach
[his/her] fiduciary duty to [appellant] by unreasonably restricting, through the ERM[I]
lease or otherwise, [his/her] right to access to, and use of, the land?” (Emphasis added.)
Appellants claim that the use of “unreasonab ly restricting” necessarily implied to
the jury that reasonable restrictions were permitted and that the instruction thus misapplies
this court’s holding in the earlier appeal. In that appeal, we concluded that appellants

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alleged a direct claim about the negotiation of the ERMI lease to the extent that the lease
“deprive[d] individual shareholders of property rights or interests that they enjoyed before
the written lease agreement was executed.” Blum, 901 N.W.2d at 216. This language,
appellants argue, shows that the relevant question for the jury was whether there were any
deprivations of their rights or interests, not whether there were unreasonable deprivations.
Appellants’ argument oversta tes this court’s earlier holding. We did state that
appellants alleged a direct claim to the ex tent that the lease “deprive[d] individual
shareholders of property rights or interests that they enjoyed before the written lease
agreement was executed.” Blum, 901 N.W.2d at 216. But we went on to say “such as the
right to use the 1,200-acre property for camping, hunting, and other recreational activities.”
Id. While our examples did not purport to constitute an ex haustive list of rights and
interests, they fairly suggest that appellants’ rights and interests are not limitless.
Moreover, the ERMI lease, even when it was an im plied, unwritten lease,
necessarily restricted the rights of appellants to access and use the land. The district court,
in determining the parties’ rights under the le ase, found that it acco rded with appellants’
history of growing up using and accessing the land in a way that did not interfere with the
campground. As respondents argue, the district court’s use of the phrase “unreasonably
restricting” was a way to “adequately encaps ulate[]” the historical balance between the
children’s access to the property and ERMI’s ability to operate its business without
interference.
Appellants counter that respondents’ argu ment merely “highlights” the district
court’s error in excluding evidence that a ppellants sought to introduce about their

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reasonable expectations regarding WFI. This argument conflates the “reasonableness”
underlying appellants’ reasona ble expectations for WFI, about which the district court
excluded evidence during the jury trial,2 and the “reasonableness” of restrictions on their
access to the Ranch as co-users with ERMI. With respect to the special-verdict form, the
district court did not abuse its discretion.
C. The district court did not abuse its discretion by excluding appellants’
evidence.

Appellants argue that the district court e rred by excluding (1) evidence related to
the sale of ERMI and (2) evidence showing the decrease in value of WFI shares caused by
the WFI-ERMI lease. Appellate courts review the decision to exclude evidence for a clear
abuse of discretion. State v. Bustos, 861 N.W.2d 655, 666 (Minn. 2015). The district court
abuses its discretion when its ruling “is based on an erroneous view of the law or is against
logic and the facts in the record.” Riley v. State, 792 N.W.2d 831, 833 (Minn. 2011). If the
district court did abuse its discretion in an evidentiary matter, an appellant must also show
prejudice from the error to obtain reversal. Bustos, 861 N.W.2d at 666.
1. Sale-of-ERMI evidence
Appellants assert that the district court erred by excluding evidence relating to the
agreements, terms, and arrangements regarding the sale of ERMI to Kevin. The district
court explained that it was limiting the evidence the parties could present at the jury trial
related to ERMI because the owner and dire ctor of ERMI (Richard) owed no fiduciary

2 We note that, while appellants challenged two of the district court’s evidentiary decisions,
they did not challenge the exclusion of this evidence on appeal.

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duties to appellants with respect to ERMI. The district court then elaborated in its final
order that “[e]vidence relating to ERMI was allowed to the extent that it related to fiduciary
duties owed to [appellants] by virtue of thei r status as WFI shareholders.” Appellants
contend that this decision went against what this court held in the first appeal—that the sale
of ERMI was a direct injury to appellants’ interest.
Appellants overstate the holding of this court. We did not conclude that the sale of
ERMI corresponded with a direct claim in connection with count 1—common-law breach
of fiduciary duty. Instead, we stated that “appellants have alleged direct claims in count 1
and in count 2 to the extent that the claims are based on ” the injuries resulting from the
sale of ERMI and the other direct harms. Blum, 901 N.W.2d. at 216 (emphasis added). So
the district court still had to resolve the extent to which the breach of fiduciary claim was
based on the sale of ERMI. The district court made it clear that it recognized this during
the trial:
Obviously, I agree and I accept the Court of Appeals
determination that injuries rela ted to the sale of ERMI are
direct claims that can be brought by the plaintiffs. The question
is which theory of relief are th ey able to bring those claims
under, and there’s the common law fiduciary duty claim and
then there’s the statutory claim under 302A.751.
Appellants try to frame the sale of ERMI as a breach of respondents’ fiduciary duty
to appellants as WFI shareholders, but, be yond citing the opinion fro m the first appeal,
appellants’ legal theory on why the sale of ERMI was relevant to this issue is unclear. At
trial, the district specifically asked counsel for an explanation:

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THE COURT: Okay. I’ve made th is invitation a few times,
does somebody want to tell me what the source of a common
law fiduciary duty with respect to ERMI would be in this case?
COUNSEL OF APPELLANT THOM AS: Well, I think that
our position is that the Court of Appeals said that this is a direct
injury claim.
. . . .
COUNSEL OF APPELL ANTS CHARLES AND
KATHRYN: Your Honor, if I may. The argument is not that
our clients are owed fiduciary duty by Richard as a shareholder
of ERM[I] or nonshareholder of ERM[I] with him being a
shareholder of ERM[I]. The ar gument is that Richard is a
shareholder of WFI, Kevin are sh areholders of WFI, and they
owed our clients a duty of loyalty within their fiduciary duty to
our clients. And the transactio n that transpired negatively
impacted their personal rights with respect to WFI and the
property rights that they have.

This explanation parallels appellants’ argument on appeal. Appellants, for instance,
reiterate that Richard and Kevin had fiduciary duties to the other WFI shareholders. They
state that the sale of ERMI, “in conjunction with the execution of the Lease,” benefited
Richard and Kevin to the detriment of appellants. But this suggests that the alleged breach
of fiduciary duties was the WFI-ERMI lease, not the sale of ERMI. Appellants do not
isolate how the sale of ERMI, separate from th e lease, is relevant to Richard and Kevin’s
fiduciary obligations to the other WFI shareholders.
On appeal, appellants do raise the possibility that ERMI’s sale revealed that the
lease involved self-dealing. Appellants cite Westgor v. Grimm for the proposition that the
burden of proof shifts in shareholder claims alleging self-dealing between directors and the
corporation. 318 N.W.2d 56, 59 (Minn. 1982). While this argument appears to be a shift
from the argument made to the district court, even if appellants preserved the self-dealing
argument for appeal, additional evidence on the sale of ERMI was not required to establish

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self-dealing. At the time that the lease was executed, Richard was a director and majority
shareholder of WFI and the owner of ERMI, so the alleged self-dealing was already clear
from the record with no further evidence of the sale. Ye t the jury found Richard did not
breach his fiduciary duties to appellants. T hus, any error in excluding the evidence was
harmless. Minn. R. Civ. P. 61 (providing that courts must disregard error that does not
affect substantial rights).
The district court did not abuse its discretio n by excluding evidence of the sale of
ERMI from the jury trial, and, in any event, appellants’ have failed to show prejudice from
any error.
2. Reduction in WFI’s share value
Finally, appellants argue that the district court erred by excluding evidence of the
diminished value of their shares in WFI. As discussed above, appellants could present only
a direct claim to the jury. Th e issue here is whether the di minished-share-value evidence
related to their direct claim or whether it related to a derivative claim and was thus properly
excluded. Appellants contend that diminished share value was a direct harm to them as
shareholders so the district court erred by excluding it as evidence of a derivative harm.
Generally, “an individual shareholder may not assert a cause of action that belongs
to the corporation.” Nw. Racquet Swim & Health Club s, Inc. v. Deloitte & Touche , 535
N.W.2d 612, 617 (Minn. 1995). A shareholder may, however, pursue a cause of action on
behalf of the corporation if the corporation has failed to do so. Janssen v. Best & Flanagan,
662 N.W.2d 876, 882 (Minn. 2003). “A shareholder derivative suit is a creation of equity
in which a shareholder may, in effect, step into the corporation’s shoes and seek in its right

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the restitution he could not demand in his own.” In re UnitedHealth Group Inc. S’holder
Derivative Litig., 754 N.W.2d 544, 550 (Minn. 2008) (quotation omitted).
To determine whether a claim is direct or derivative, a court must determine
“whether the complained -of injury was an injury to the sharehol der directly, or to the
corporation.” Wessin v. Archives Corp., 592 N.W.2d 460, 464 (Minn. 1999). A court must
“look not to the theory in wh ich the claim is couched, but instead to the injury itself.” Id.
If a shareholder has indirectly sustained an injury that directly affects the corporation, the
shareholder may assert only a derivative claim. Id. This court applies a de novo standard
of review to the question of whether a claim is direct or derivative. In re Medtronic, Inc.
S’holder Litig., 900 N.W.2d 401, 405 (Minn. 2017).
Appellants argue that the share-value evid ence went to a direct harm suffered by
appellants—specifically, that the lease interfere d with their rights to access and use the
Ranch, and the interference caused harm equal to the decrease in stock value that followed
the execution of the lease.
We conclude that the district court’s determination that the decrease in stock value
relates to a derivative claim is correct, and thus it was not an abuse of discretion to exclude
the evidence as irrelevant. First, as a point of clarification, appellants alleged two types of
harms caused by the lease: (1) it harms them as shareholders of WFI as it made poor use
of WFI’s most valuable asset and (2) it harms them as individuals because it deprives them
of their right to access and use the land as shareholders of WFI. As we explained when we
differentiated the harms in the first appeal , appellants’ claim that the written lease
agreement was somehow disadvantageous to WFI is a derivative claim. Blum, 901 N.W.2d

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at 215-16. The claim that the lease deprived appellants of their right to use the property
was a direct claim. Id. While appellants try to link the two harms together, the decrease in
share value is only evidence of the harm to them as shareholders. Appellants do not explain
how a decrease in share value would be a measure of the damages allegedly caused by
excluding them as individuals from the Ranch.
Moreover, appellants’ argument that the harm to them as shareholders was a direct
harm contradicts the facts. The claimed injury is the decrease in the value of the WFI’s
property after WFI tied the prop erty up in a long-term lease w ith ERMI. Indeed, this is a
key point in appellants’ overall argument: the lease with ERMI dram atically reduced the
appraised value of the property. Appellants claim that the lease effectively amounted to an
$8 million transfer of value to ERMI. But WF I, not any individual family member, owns
the property; any transfer of value was from WFI to ERMI. While a de crease in value of
WFI’s asset may have led to a corresponding injury to WFI’s shareholders by reducing the
value of WFI’s stock, that is an indirect harm resulting from a direct harm to the
corporation.
Appellants claim that it is impossible fo r the shareholder price drop to correspond
to a derivative harm because the “District Court affirmed the SLC’s decision that the Lease
did not harm WFI.” But this appears to misread the district court’s decision. The district
court determined that the “long term lease significantly diminishes the market value of the
land.” This conclusion, combined with the relatively small amount of rent ERMI pays WFI,
clearly corresponds with an economic in jury to WFI. But WFI’s special litigation
committee investigated the injury and the conduct that lead to the lease and concluded that

17
WFI should not pursue the cl aims, in part because econom ic gain was not the sole
motivation of the lease. Corporations may a ddress derivative claims this way, as we
discussed in the prior appeal before a ffirming the grant of summary judgment to
respondents on the derivative claims. Blum, 901 N.W.2d at 221-23.
Appellants also argue that In re Medtronic, Inc. S’holder Litig. demands a different
result. 900 N.W.2d at 401. The district court considered Medtronic and concluded that the
claims at issue in that case were distinct from the claims here. We agree.
In Medtronic, the supreme court considered wh ether shareholders could bring a
challenge against a corporate merger that created capital-gains tax liability for its
shareholders and diluted its sh areholders’ ownership interest. Id. at 403-04. At issue was
whether the claims asserting those harms were direct or derivative claims, and the supreme
court held that both claims were direct. Id. at 405, 411. It determined that the claim related
to the capital-gains tax liability was direct b ecause the shareholders, not the corporation,
incurred the liability and that any recovery for the injury would go to the shareholders. Id.
at 410. The supreme court further determined that the dilution of ownership interest was a
direct claim because the dilu tion was a loss of “certain ri ghtful incidents of [the
shareholder’s] ownership interest, which is an injury that falls only on shareholders and
not on the corporation.” Id. at 411.
Appellants argue that the diminution of share value is analogous to both harms
described in Medtronic. They claim that any recovery for damages as a result of the plunge
in share values belongs to the shareholders, analogous to the tax liability in Medtronic. But
here the direct injury was th e dramatic reduction in the valu e of the land, so WFI would

18
receive any theoretical recovery for its economic loss. This in jury is distinct from the tax
liability in Medtronic, which the shareholders themselves had to pay. Appellants’ share-
value injury is a derivative in jury, “paid” first by WFI throu gh the decreased value of its
asset.
Appellants also claim that their present a nd future rights to access the Ranch were
almost entirely conveyed to ERMI and that this amounts to a loss of rightful incidents of
ownership, akin to the loss described in Medtronic. First, it is not clear that this situation is
analogous to Medtronic. The alleged loss in Medtronic was a reduction in control of the
corporation through the dilution of ownership. Id. at 404. Appellants here retained the same
percentage of control of WFI before and after execution of the lease. But, that aside, the
evidence of a reduction in share prices was irrelevant to whether appellants could no longer
access and use the Ranch after the lease. The evidence would have si mply confused the
issue of damages by inviting th e jury to conflate the dama ges from appellants’ dismissed
derivative claims and appellants’ direct claims . Thus, the district court did not abuse its
discretion by excluding evidence of the reduction in WFI’s share price from the jury trial.
II. The district court did not err in declining to grant appellants relief under Minn.
Stat. § 302A.751 (2018) (count 2).

We turn to appellant’s challenge to the di strict court’s rejection of their statutory
shareholder-oppression claim in the court trial. Appellants argue that the district court erred
by rejecting both bases they asserted for their claim—specifically, that respondents
(1) frustrated appellants’ reasonable expectations and (2) breached their fiduciary duties to
appellants.

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By statute, a court may, in certain circumstances, “grant any equitable relief it deems
just and reasonable in the circumstances or may dissolve a corporation and liquidate its
assets and business.” Minn. Stat. § 302A.751, subd. 1. In particular, a court may grant relief
for oppression of shareholder rights if the shar eholder establishes that “the directors or
those in control of the corporation have acted in a manner unfairly prejudicial toward one
or more shareholders in their capacities as shareholders or directors.” Minn. Stat.
§ 302A.751, subd. 1(b)(3).3
“The term ‘unfairly prejudicial’ is liberally construed.” Lund ex rel. Revocable Tr.
of Kim A. Lund v. Lund , 924 N.W.2d 274, 280 (Minn. App. 2019), review denied (Minn.
Mar. 27, 2019). “Unfairly prejudicial conduc t under Minn. Stat. § 302A.751 includes
conduct that violates or frustrates the reasona ble expectations of a minority shareholder.”
Id. at 279-80. We have also noted that “[b]reaches of fiduciary duty are probably unfairly
prejudicial.” Berreman v. W. Pub. Co. , 615 N.W.2d 362, 3 73 (Minn. App. 2000), review
denied (Minn. Sept. 26, 2000).
Whether a “shareholder’s conduct complies with the reasonable expectations of all
shareholders generally is a question of fact,” Blum, 901 N.W.2d at 218, as is whether there
is a breach of fiduciary duty, Berreman, 615 N.W.2d at 367. The district court’s findings
of fact “shall not be set aside unless clearly erroneous.” Pedro v. Pedro, 489 N.W.2d 798,
801 (Minn. App. 1992 ) (quotation omitted), review denied (Minn. Oct. 20, 1992). If

3 While appellants also alleged statutory claims for relief under section 302A.751 based on
illegal activity and corporate waste, see Minn. Stat. § 302A.751, subd. 1(b)(2), (5), their
arguments on appeal focus on whether respondents’ conduct violated their reasonable
expectations and breached their fiduciary duties.

20
appellants’ arguments implicate questions of law, appellate c ourts review those de novo.
See Berreman, 615 N.W.2d at 367.
A. The district court did not err by finding that appellants’ expectations for
lease negotiations were not reasonable.

When analyzing section 302 A.751 actions involving closely held corporations,
courts consider “the duty wh ich all shareholders in a clos ely held corporation owe one
another to act in an honest, fair, and reasonable manner in the operation of the corporation.”
Minn. Stat. § 302A.751, subd. 3a. Courts also consider “the reasonable expectations of all
shareholders as they exist at the incept ion and develop during the course of the
shareholders’ relationship with the corporation and with each other.” Id.
Courts presume that any written agreemen ts between shareholders reflect the
parties’ reasonable expectations concerning matters dealt with in the agreements. Id. “But
written agreements are not dispositive of expectations in all circumstances.” Lund, 924
N.W.2d at 280. Generally, expectations must be known to the other shareholders to be
considered reasonable. Cf. Gunderson , 628 N.W.2d at 191 (“Additionally, to be
reasonable, an expectation of continuing employment must be known and accepted by
other shareholders.”).
Appellants assert that they had a reas onable expectation to “engage in the
negotiation, execution, and approval of the [WFI-ERMI] Lease,” based on a written
meetings notice from one of the WFI shareholder meetings in 2000. They also assert that
they had a reasonable expectation that they would eventually own the Ranch and would be
involved in ERMI’s operations based on the parents’ 1985 divorce decree. Finally, they

21
claim that the course of dealing between Ri chard and his children created an expectation
that WFI decisions, including approval of the lease, would effectively be made only with
unanimous consent of the shareholders. We address each argument in turn.
1. Written shareholder resolution from 2000
Appellants argue that their reasonable expe ctations were established in a written
shareholder resolution from the August 2000 shareholder meeting. Respondents assert that
the written document from August 2000 was simply the meeting minutes and not an official
resolution. The meeting minutes stated:
The next order of business is th at leases should be drawn up
between [WFI] and the current leasees, El Rancho Manana,
Inc. and RCK Quantum Ranch. Molly Thompson agreed to
draft preliminary leases that Richard Ward, Charles Ward,
Kevin Ward and Kathryn Ward-Blum will meet to review. The
leases will also be mailed to Thomas Ward, Ann Sullivan, and
Maggie Motyl for review before signing.
Molly and Richard signed the minutes. The district court considered appellants’ argument
that the minutes established reasonable expect ations in its post-tria l order and concluded
that the minutes set forth expectations “n either shared nor reasonable when lease
negotiations were finally completed over 12 years after the 2000 shareholder meetings.”
Appellants contend that the meeting minu tes entitled them to a presumption that
they had a reasonable expectatio n to be included in the lease negotiations and approval.
But, even assuming these minutes are a “wr itten agreement” under section 302A.751, the
agreement does not state that any proposed lease would pass only with the unanimous
consent of all the WFI shareholders. The minutes instead state that the appellants would be
able to review the agreem ent before signing. At most , the minutes established a

22
presumption that the shareholders had a reasonable expectation to review the lease before
it was signed.
But, based on the record, the district cour t reasonably found that this expectation
was no longer reasonable when the agreem ent was executed 12 years after the 2000
shareholder meeting. The dispute over the lease terms had been escalating for years, with
Thomas and Charles threatening to sue over the matter in 2011. It became clear in 2012
that Richard intended to fo rmalize the WFI-ERMI lease terms despite the minority
shareholders’ wishes when he elected directors over their objection. The elected directors
then solicited input on the lease, making it clear that the directors were going forward with
lease negotiations. It was not clear error for the district court to find that it was no longer
reasonable for appellants to believe that they wo uld be able to review the lease before it
was executed based on minutes from a meeti ng 12 years earlier, particularly given the
tension between the parties related to the lease.
2. 1985 divorce decree
Appellants also claim that they had a reasonable expectation that they would
eventually own the Ranch and would be involved in ERM I’s operations based on the
parents’ 1985 divorce decree. Appellants assert that, when WFI was created 13 years after
the divorce decree and they executed quit-claim deeds in favor of WFI, it was represented
to them that “nothing would change.” Thus, they argue, they continued to have reasonable
expectations based on the decree.
In deciding whether to grant equitabl e relief in cases involving closely held
corporations, courts consider “the reasonable expectations of all shareholders as they exist

23
at the inception and develop during the course of the shareholders’ relationship with the
corporation and with each other.” Minn. Stat. § 302A.751, subd. 3a. The quit-claim deeds
that appellants themselves signed gave the majority shareholder of WFI—at that time,
Richard—the right to overrule them on matters related to the Ranch. This right is
inconsistent with appellants’ claimed e xpectation from the divorce decree. Moreover,
WFI’s bylaws stated that corporate actions were approved by simple majority. Even if only
a simple-majority requiremen t for WFI to act was not th e expectation when WFI was
created, this expectation had certainly deve loped by 2008, when the parties revived
discussions of a stock-redemption agreement. That agreement, as Richard’s lawyer had
explained to Rosemary when WFI was formed, would require an action to sell the land to
receive approval from a supermajority of WFI outstanding shares. On this record, it was
not clear error for the district court to find th at appellants’ expectations that the divorce
decree would somehow allow them to block the WFI-ERMI lease were not reasonable.
3. Course of dealings
Finally, appellants claim that the course of dealings between family members after
the formation of WFI informed their reasonable expectation to meaningfully participate in
the lease negotiations. They contend that WFI made decisions at informal “family
meetings” and only acted upon consensus. They also point out that the respondents
continued to include appellants in lease disc ussions until 2012, and they again highlight
the August 2000 meeting minutes and the plan for all the shareholders to review the
proposed lease.

24
The district court determin ed that, while the parties had reached a consensus on
some issues in the past, “it was not reasonabl e for [appellants] to expect that WFI would
be governed in a manner inconsistent with its bylaws.” WFI’s bylaws stated that actions
were approved by simple majority. Furthermor e, the course of dea lings before Richard
established WFI also showed that Richard, as the owner of the land and ERMI, had the
final say.
Our review of the record leads us to conclude that the district court’s determination
was not clearly erroneous. Whil e the WFI shareholders perh aps tried to act only upon
consensus, its bylaws specifically permitted a simple-majority to take action, which is what
eventually happened when the parties could not resolve the lease stalemate. It is not clear
error to conclude that it is unreasonable for minority shareholders to expect that they have
veto power over an action pe rmitted by the company’s bylaws just because the majority
shareholders had tried to achieve consensus with them in previous disputes.
In sum, the district court did not clearly error by determining that appellants had no
reasonable expectations that would have permitted them to prevent the WFI-ERMI lease.
B. The district court did not clearly err by finding no breach of fiduciary
duty.

Appellants also argue that the district erred by concluding that respondents did not
breach their fiduciary dut y to deal with other shareholders in an open, honest, and fair
manner. While appellants asserted a separate, common-law breach-of-fiduciary-duty claim
in count 1, courts also consider the share holders’ fiduciary duty to one another when

25
deciding whether to grant equita ble relief under section 302A.751. See Minn. Stat.
§ 302A.751, subds. 1(b), 3a.
Shareholders of a closely he ld corporation have a fiduc iary duty to observe “the
highest standard of integrity in their dealings with each other.” Evans, 345 N.W.2d at 779.
That fiduciary duty includes the duty to deal “openly, honestly a nd fairly with other
shareholders,” id., and to “act with complete candor in their negotiations with each other,”
Gunderson, 628 N.W.2d at 186.
Appellants assert that it is undisputed th at respondents prepared and executed the
WFI-ERMI lease in secret. This secrecy, they contend, violated respondents’ duty to deal
openly and honestly and thus was a breach of the fiducia ry duty to the other WFI
shareholders. They also argue that the district court, in finding no breach of fiduciary duty,
erroneously relied on the jury’s rejection of their separate common-law claim because the
jury’s determination was a product of prejudicial instructions.
We have already rejected appellants’ cha llenge to the jury in structions. Moreover,
the district court did not defer to the jury in rejecting appellants’ breach-of-fiduciary duty
theory of shareholder oppression. Rather, in its findings, conclusions of law, and order on
the statutory claim, the district court wrote that it “accepts, and independently adopts” the
jury’s findings on the special-verdict form that respondents did not breach their fiduciary
duties to appellants. (Emphasis added.) Finally , the district court’s determination was not
affected by clear error. See Pedro, 489 N.W.2d at 801 (explaining that whether there was
a breach of fiduciary duty is a factual finding , to be reversed only upon a showing a clear
error). The record shows the WFI shareholders knew about the plan to formalize the WFI-

26
ERMI lease arrangement. WFI also allowed the shareholders to propose terms of the lease.
WFI later informed the shareholders that it had entered into the lease, even if it did not do
so immediately. We discern no clear error in the district court’s finding that respondents
did not breach a fiduciary duty to appellants.
Affirmed.