Dr. Eric Steffen, Appellant,

This opinion is nonprecedential except as provided by
Minn. R. Civ. App. P. 136.01, subd. 1(c).

STATE OF MINNESOTA
IN COURT OF APPEALS
A22-0042

Dr. Eric Steffen,
Appellant,

vs.

Scott Uttley, et al.,
Respondents.

Filed August 29, 2022
Affirmed
Halbrooks, Judge*

Washington County District Court
File No. 82-CV-18-3401

Thomas H. Boyd, Joseph M. Windler, Christina Rieck Loukas, Winthrop & Weinstine,
P.A., Minneapolis, Minnesota (for appellant)

Todd Wind, Pari I. McGarraugh, Fredrikson & Byron, P.A., Minneapolis, Minnesota (for
respondents)

Considered and decided by Bjorkman, Presiding Judge; Bratvold, Judge; and
Halbrooks, Judge.

* Retired judge of the Minnesota Court of Appeals, serving by appointment pursuant to
Minn. Const. art. VI, § 10.

2
NONPRECEDENTIAL OPINION
HALBROOKS, Judge
In this appeal from the judgment following a bench trial, appellant-shareholder
asserts that the district court erred by (1) construing the parties’ agreements to eliminate
his post-termination distribution rights; (2) ordering him to pay $40,249 for excess
compensation and insurance; (3) rejecting three of his four shareholder-oppression theories
and ordering inadequate relief; (4) declaring respondents to be the prevailing parties; and
(5) declining to award appellant attorney fees. We affirm.
FACTS
Appellant Eric Steffen, M.D., is an ophthalmologist who practiced with respondent
St. Paul Eye Clinic, P.A. (SPEC) from December 2004 through August 5, 2018.
Respondents are SPEC, St. Paul Opticians, Inc. (SPO), Eye Surgery Associates, Inc.
(ESA), Northway Resource Development, LLC (Northway), and the following medical
doctors who were all equal shareholders in SPEC, SPO, ESA and members of the
companies’ shared board of directors: Scott Uttley, Richard Stanek, Thomas Rice, Phil
Sheridan, Susan Quick, James George, Todd Watanabe, Aaron Tsai, Dan Nichols, and Alla
Kelly.
1

1 SPEC is a professional medical practice in the field of ophthalmology. SPO owns and
operates optical stores at six of SPEC’s locations. ESA is a 50% partner in the Midwest
Surgery Center in Woodbury. Northway is a real estate holding company with an interest
in a building in Woodbury. Appellant does not raise any claims specific to Northway.
3
Appellant became an equal shareholder in the SPEC Entities, effective January 1,
2008.2 At the time of his buy-in, appellant signed Stock Sale and Redemption Agreements
with SPEC, SPO, and ESA (collectively, the Agreements). In relevant part, the
Agreements provide that a shareholder “shall be deemed to have made an offer to sell” his
shares in the SPEC Entities upon the termination of the shareholder’s employment. Each
of the Agreements also sets forth the formulas used to calculate the “Specified Value” of
the departing shareholder’s shares. The Agreements all provide that the Specified Value
is determined according to a book-value formula based on the particular company’s
“accrual based corporate balance sheet,” with adjustments then made as provided for in the
Agreements. Despite the requirement that the Specified Value be calculated using an
accrual-based balance sheet, the SPEC Entities did not use the accrual-based accounting
method for their day-to -day financial records. Rather, SPEC used a cash-based method
while SPO and ESA used a modified accrual-based method.
Prior Shareholder-Physician Buyouts
During the time that appellant was a shareholder-physician with the SPEC Entities,
four shareholders were bought out: Tim Allen, M.D.; Scott McKee, M.D.; Alan
Weingarden, M.D.; and Honora Kennedy, M.D. The buy-out amounts for Drs. Allen,
McKee, and Weingarden were all calculated using a cash- based balance sheet for SPEC
and a modified accrual -based balance sheet for SPO and ESA. Thus, the balance sheets

2 Appellant paid $465,987 for his interests in SPEC and ESA. SPO was initially part of
SPEC, but it became its own entity in 2013. Each SPEC shareholder, including appellant,
became an equal shareholder in SPO. We refer to SPEC, SPO, and ESA collectively as
the SPEC Entities.
4
were prepared based on the accounting method each entity used for its day-to-day financial
records. Dr. Kennedy’s shares in each entity were initially valued in the same fashion, but
Dr. Kennedy then pointed out that the valuations should be calculated using accrual-based
balance sheets and insisted that her shares be valued in strict accordance with the
Agreements. The valuations calculated under the accrual-based method resulted in a total
amount lower than the amount initially offered to Dr. Kennedy. Respondents agreed, in
good faith, to reoffer the original amount to Dr. Kennedy. But she declined. Respondents
eventually agreed to a total settlement payment to Dr. Kennedy of $1.3 million.
Prior to Dr. Kennedy’s buy-out, the parties were not aware that for the three previous
buyouts the balance sheets were prepared using two different accounting methods, and that
neither method was the method called for under the Agreements. The issues were
discussed at board meetings on June 20, 2017 , and August 22, 2017. Appellant attended
both meetings. He did not object to the use of the accrual-based balance sheet s for Dr.
Kennedy’s valuations, nor did he state that he expected that future buyouts would be valued
based on a cash-based balance sheet for SPEC and a modified accrual-based balance sheet
for SPO and ESA.
Following the buy-out of Dr. Kennedy, but before appellant announced that he was
leaving SPEC, respondents had further discussions concerning how to value future
buyouts. The shareholders, including appellant, were advised to expect a significant
decrease in the value of their shares if the SPEC Entities decided to apply the formulas in
the Agreements. On February 20, 2018, the board met and decided to use the accrual -
based method specified in the Agreements to value future buyouts, even though it resulted
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in a lower valuation than the cash-based and modified accrual-based methods. Appellant
attended this meeting by phone and had electronic access to the meeting materials.
Appellant’s Departure from SPEC
On April 11, 2018, appellant announced he was leaving SPEC, and his employment
was formally terminated on August 5, 2018. Under the terms of the Agreements, appellant
was deemed to offer his shares for sale upon the termination of his employment on August
5, 2018; the effective date for all three transactions was December 31, 2018. SPEC and
SPO accepted appellant’s offers to sell on August 29, 2018, and ESA accepted his offer on
September 4, 2018. The accrual-based balance sheets necessary to calculate the Specified
Value under the Agreements for appellant’s buy-out were not available until the last week
of June 2019.
On June 27, 2019, respondents sent appellant a letter, offering to purchase his shares
at the Specified Value that was calculated using accrual-based balance sheets and set
closing for the purchase for July 15, 2019. Appellant declined to accept the proposed
amount, stating that he needed more time to review the calculations. Respondents advised
appellant that the intent of the offer to close was to begin payment of the amount owed to
appellant but confirmed that appellant would retain the right to challenge the purchase
price. Nevertheless, appellant did not accept the offer and closing did not occur.
Lawsuit
On July 19, 2018, after appellant announced his departure but before his
employment terminated, appellant sued respondents, seeking damages and other relief for
harms caused by violations of his rights as a shareholder. He asserted four
6
claims: (1) a direct claim for breach of fiduciary duty against Scott Uttley, Richard Stanek,
Thomas Rice, James George, Phillip Sheridan, Aaron Tsai, Todd Wantanabe, Susan Quick,
Dan Nichols, and Alla Kelly (the Director Respondents); (2) a direct claim for breach of
fiduciary duty against David Rothschiller, Mark Sharockman, and Kristine Lindgren (the
Executive Respondents); (3) a derivative claim for breach of fiduciary duty against the
Director Respondents and the Executive Respondents; and (4) a claim for shareholder
oppression against all respondents. Respondents filed a counterclaim against appellant
with three counts: (1) breach of contract; (2) unjust enrichment; and (3) declaratory
judgment as to appellant’s ongoing rights to distribution and participation in the
governance of the SPEC Entities. The parties filed cross-motions for summary judgment.
Respondents sought summary judgment on all claims, but appellant sought summary
judgment solely on the declaratory-judgment counterclaim.
The district court granted partial summary judgment on February 21, 2020. The
district court dismissed appellant’s derivative claim as well as portions of his breach- of-
fiduciary duty and shareholder-oppression claims. With regards to respondents’
counterclaim counts one and two, the district court determined that appellant owed
respondents $40,249 in excess compensation and tail insurance.
3 And on counterclaim
three, the district court determined that appellant’s right to distributions from the SPEC
Entities ended when his employment was terminated on August 5, 2018, and that

3 Tail insurance is a form of malpractice insurance. SPEC obtained tail-insurance coverage
for appellant at a cost of $8,079. The terms of appellant’s employment agreement with
SPEC required him to reimburse SPEC for the cost of coverage.
7
appellant’s voting rights in the SPEC Entities would end upon closing of the sale of his
shares, but that an earlier date may be appropriate if the parties unjustifiably refused to
close on the sale of the shares.
After summary judgment, the following claims remained:
Counts One and Two of the Complaint: Whether the Director
[Respondents] and the Executive [Respondents] breached their
fiduciary duties to [appellant] by delaying 2018 distribution
payments to [appellant].
Count Four of the Complaint: Whether there was shareholder
oppression under Minn. Stat. §302A.751 by [respondents’]
denying [appellant’s] governance rights, giving inadequate
meeting notice and accommodations, withholding
[appellant’s] distributions and frustrating [appellant’s]
reasonable expectations in valuing [appellant’s] shares.
Count Three of the Counterclaim: Establishment of the end
date of [appellant’s] voting rights in the SPEC entities.

On February 26, 2020, respondents moved the district court to preemptively exclude
any expert testimony on the fair value of appellant’s interest in the SPEC Entities in the
main trial. Appellant objected to the proposed trial bifurcation, arguing there should be a
single trial to adjudicate respondents’ “unfairly prejudicial conduct” and for appellant “to
have his shares purchased for ‘fair value.’” The district court bifurcated the issue of fair
value of appellant’s shares from the trial scheduled for June 29, 2020.
The case was tried to the district court in May 2021. The district court ruled against
appellant on his breach-of-fiduciary-duty claims and three of his four shareholder-
oppression theories. On the fourth shareholder-oppression theory, the district court found
that appellant’s reasonable expectations were frustrated with respect to his right to
8
participate in the governance of the SPEC Entities. The district court ordered respondents
to buy appellant’s shares at the Specified Value to be calculated in accordance with the
Agreements. Lastly, the district court determined that neither side was entitled to attorney
fees and declared respondents the prevailing parties for the purpose of costs and
disbursements. Appellant filed no posttrial motions, and the district court entered judgment
on November 12, 2021.
This appeal follows.
DECISION
I. The district court did not err by interpreting the Agreements to end appellant’s
right to distributions on the date his employment terminated.

The district court determined on summary judgment that the Agreements
unambiguously ended appellant’s right to distributions on August 5, 2018, the date his
employment with SPEC was terminated. We review de novo the district court’s grant of
summary judgment to determine “whether there are genuine issues of material fact and
whether the district court erred in its application of the law.” Montemayor v. Sebright
Prods., Inc., 898 N.W.2d 623, 628 (Minn. 2017) (quotation omitted).
Interpretation
The interpretation of a contract is a question of law subject to de novo review.
Valspar Refinish, Inc. v. Gaylord’s, Inc., 764 N.W.2d 359, 364 (Minn. 2009). The goal of
contract interpretation is to “ascertain and enforce the intent of the parties.” Id. “[W]hen
a contractual provision is clear and unambiguous, courts should not rewrite, modify, or
limit its effect by a strained construction.” Id. at 364-65. But if the contractual language
9
is ambiguous, summary judgment is inappropriate. Minn. Teamsters Pub. & Law Enf’t
Emps. Union, Local 320 v. County of St. Louis , 726 N.W.2d 843, 847 (Minn. App. 2007),
rev. denied (Minn. Apr. 25, 2007). We construe a contract “as a whole,” “attempt to
harmonize all [of its] clauses,” and seek to avoid interpretations that “render a provision
meaningless.” Chergosky v. Crosstown Bell, Inc., 463 N.W.2d 522, 525-26 (Minn. 1990).
Three contracts are at issue here: the SPEC Agreement, the ESA Agreement, and
the SPO Agreement. Each agreement contains a provision addressing a departing
shareholder’s right to receive distributions during the buy-out process. The relevant
provision of the SPEC Agreement provides:
(i) Dividends. So long as Eye Clinic is not in default in the
performance of any of the terms of this Agreement, or in the
payment of the principal or interest due, no dividends shall be
issued by Eye Clinic on the shares being purchased.

And the analogous provisions of the ESA and SPO Agreements provide:
(i) Dividends. So long as purchaser is not in default in the
performance of any of the terms of this agreement, or in the
payment of the principal or interest due, purchaser, other than
Company, shall have the right to any dividends issued by
Company on the shares being purchased.

The difference in the provisions reflects the fact that SPEC shares may only be sold back
to SPEC, while SPO and ESA shares may be sold to other shareholders and third parties.
Appellant’s first argument focuses on the language used in the “Dividends”
provisions of the ESA and SPO Agreements. He argues that these provisions apply only
to the rights of the share purchaser, and thus, do not dictate his dividend rights as a share
10
seller. He further argues that his right to dividends continues because the companies cannot
receive their own respective dividends. We disagree.
Although the ESA and SPO Agreements are drafted from the perspective of the
purchaser, they nonetheless establish what rights the seller must relinquish for the
purchaser to acquire those rights. Because the purchaser acquires the right to any dividends
on the shares being purchased, the seller cannot simultaneously retain those dividend
rights. Thus, the purchaser’s right to dividends displaces the seller’s dividend rights. And
when the companies exercise their options to buy back shares, as was the case here , the
ESA and SPO Agreements specify that the “shares of stock shall be held as treasury stock
until the full purchase price has been paid.” Treasury stock does not receive dividends, but
that does not mean that the seller is entitled to continuing dividends when the companies
are the purchasers. Instead, it follows that these provisions end the selling shareholder’s
right to dividends as of the date he terminates his employment and is deemed to have
offered his shares for sale. Therefore, the district court correctly interpreted the SPO and
ESA Agreements to end appellant’s right to dividends on August 5, 2018, so long as the
companies were not in default.
Alternatively, appellant argues that his right to dividends could not have been
displaced by the purchaser’s rights because there was no purchaser until the SPEC Entities
accepted his offers to sell. He therefore asserts that his distribution rights continued until
the SPEC Entities accepted his offers to sell. But it was respondents who made this
argument to the district court, while appellant maintained that he was entitled to receive
dividends until closing on the repurchase of his shares. Thus, appellant did not preserve
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this argument for appeal. Thiele v. Stich, 425 N.W.2d 580, 582 (Minn. 1988) (holding that
appellant had not preserved a position when she “never contended” that position in the
district court).
Default
Appellant argues that the district court erred in concluding that his right to dividends
from SPEC ended on August 5, 2018, because the undisputed evidence showed that SPEC
was in default of its obligations to timely close and tender payment as required by the SPEC
Agreement. The Minnesota Supreme Court has required that the tender of payment to
redeem or repurchase shares must comply with the terms of the shareholder agreement.
Drewitz v. Motorwerks, Inc., 728 N.W.2d 231 , 237 (Minn. 2007). Here, the terms of the
SPEC Agreement required closing to occur by July 25, 2019, and provided that “[t]he full
purchase price for the shares sold . . . shall be paid in cash, or, at the Purchaser’s option,
by promissory note.” Closing did not occur by July 25, 2019. However, the record shows
that it was appellant, not respondents, who obstructed the closing. In a letter to appellant
dated July 16 , 2019, respondents stated that they “remain[ed] ready, willing and able to
deliver the promissory notes to [appellant] and begin payments in accordance therewith.”
A party may not unjustifiably hinder the other party’s performance of a contract. In re
Hennepin Cnty. 1986 Recycling Bond Litig., 540 N.W.2d 494, 502 (Minn. 1995). Because
appellant hindered SPEC’s performance under the SPEC Agreement, SPEC was not in
default of its contractual obligations.
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Appellant also argues, for the first time on appeal, that SPO and ESA were in default
of their obligations to timely close. But because appellant did not raise this argument to
the district court, it was not properly preserved for appeal. Thiele, 425 N.W.2d at 582.
II. The district court did not er r by ordering appellant to pay $40,249 for excess
compensation and insurance.

The district court granted summary judgment in favor of respondents on their
counterclaim for unjust enrichment and ordered appellant to pay $40,249 in excess
compensation and insurance.4 We review the district court’s summary-judgment order de
novo “to determine whether there are genuine issues of material fact and whether the
district court erred in its application of the law.” Montemayor, 898 N.W.2d at 628
(quotation omitted).
Appellant challenges the district court’s summary-judgment order, arguing that
there were disputed facts regarding whether respondents manipulated appellant’s patient
mix and schedule after he returned from a medical leave in 2018 in a way that affected his
productivity and compensation. But whether respondents manipulated appellant’s patient
mix and schedule is immaterial to the court’s inquiry as to whether appellant was
overdrawn on his compensation. See Palmer v. Walker Jamar Co., 945 N.W.2d 844, 846
n.6 (Minn. 2020) (affirming grant of summary judgment because the disputed facts were
immaterial to the dispositive legal issue). Here, appellant does not dispute that an overdraw

4 We note that appellant challenges the entire $40,249 award, but his arguments relate only
to the determination that he was required to reimburse respondents for excess
compensation. He does not challenge the determination that he was required to reimburse
SPEC $8,079 for the cost of tail-insurance coverage.
13
occurred and did not challenge the calculated overdraw amount. His claim that the
overdraw was caused by the alleged manipulation of his patient mix and schedule is not
material to the dispositive issue of whether he received more compensation than he earned.5
Appellant also argues that the district court erred by failing to deduct appellant’s
deferred compensation from the amount he owed to SPEC and asserts that the amount owed
should not have exceeded $7,087—the amount remaining after his deferred compensation
is deducted from the amount owed to respondents. But because appellant did not raise this
argument at summary judgment or at any other time to the district court, it was not properly
preserved for appeal. Thiele, 425 N.W.2d at 582.
III. The district court did not err in its shareholder-oppression rulings.
A district court may grant equitable relief to a shareholder in a corporation that is
not publicly held if “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.” Minn. Stat. § 302A.751, subd. 1(b)(3) (2020). Unfairly prejudicial conduct
is “conduct that frustrates the reasonable expectations of the shareholders.” U.S. Bank N.A.
v. Cold Spring Granite Co., 802 N.W.2d 363, 377 (Minn. 2011) (quotation omitted).

5 That is not to say appellant is without legal remedy if respondents did impermissibly
manipulate his schedule and patient mix to depress his compensation after he returned from
medical leave. Appellant filed a separation action alleging disability discrimination in
federal court; he did not assert a claim for disability discrimination in this case, and the
issue was not before the district court. Rather, the narrow question before the district court
was whether appellant received more compensation than he earned under the established
compensation system.
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“Breaches of fiduciary duty are probably unfairly prejudicial within the meaning of
section 302A.751, subd. 1(b)(3).” Berreman v. West Pub. Co., 615 N.W.2d 362, 373
(Minn. App. 2000). In a closely held corporation, shareholders owe fiduciary duties to
each other, which encompasses the substantive obligation “not to withhold dividends.”
Gunderson v. All. of Comput. Pros. Inc., 628 N.W.2d 173, 185 (Minn. App. 2001), rev.
granted (Minn. July 24, 2001) and appeal dismissed (Minn. Aug. 17, 2001). A director
has the fiduciary duty to discharge his duties “in good faith, in a manner the director
reasonably believes to be in the best interests of the corporation, and with the care an
ordinarily prudent person in a like position would exercise under similar circumstances.”
Minn. Stat. § 302A.251, subd. 1 (2020). A director may rely on the advice of “counsel,
public accountants, or other persons as to matters that the director[s] reasonably believe[]
are within the person’s professional or expert competence.” Id., subd. 2(a)(3) (2020).
In determining whether equitable relief is warranted,
the court shall take into consideration the duty which all
shareholders in a closely held corporation owe one another to
act in an honest, fair, and reasonable manner in the operation
of the corporation and the reasonable expectations of all
shareholders as they exist 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 (2020) (emphasis added). “[W]hether a shareholder’s
reasonable expectations have been frustrated is essentially a fact issue.” Gunderson, 628
N.W.2d at 186. A 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),
rev. denied (Minn. Oct. 20, 1992). The clear-error standard of review “does not permit an
15
appellate court to weigh the evidence as if trying the matter de novo” or “to engage in fact-
finding anew.” In re Civ. Commitment of Kenney, 963 N.W.2d 214, 221-22 (Minn. 2021)
(quotations omitted). Rather, appellate courts “fairly consider[] all the evidence” and
determine whether “the evidence reasonably supports the [district court’s] decision.” Id.
at 222.
Appellant alleged that respondents frustrated his reasonable expectations by
(1) denying him governance rights, (2) giving inadequate notice and accommodations for
board meetings, (3) delaying payment of a portion of his post-termination distributions,
and (4) valuing his shares according to the terms of the Agreements. The district court
determined that respondents frustrated appellant’s reasonable expectation to participate in
the governance of the SPEC Entities but rejected his other shareholder-oppression theories.
The district court ordered that appellant’s shares be bought out according to the valuation
formulas set forth in the Agreements. Appellant challenges the district court’s rulings
concerning the delayed distributions, the valuation method for his shares, and the relief
ordered by the district court.
Delayed Distributions

Appellant argues that respondents acted in an unfairly prejudicial manner toward
him and frustrated his reasonable expectation to be paid his distributions at the same time
as all other shareholders. The record establishes that respondents prepared checks for
appellant’s 2018 prorated dividends at the same time dividends were paid to other
shareholders, but respondents withheld these checks at the direction of the executive
committee. The executive committee’s direction to hold the checks was based on the
16
advice of their litigation counsel. Appellant also brought a breach-of-fiduciary-duty claim
based on the same underlying conduct.
The district court concluded that respondents did not breach any fiduciary duty to
appellant with respect to the delay in distribution payments, reasoning:
The Director [respondents’] actions in delaying the distribution
payments to [appellant] were made on the advice of counsel.
Given the uncertainty of the extent of [appellant’s] overdraw
and the parties’ disagreement regarding the proration date, the
decision to delay the payments was made in good faith and in
the best interest of the corporations.

For the same reasons, the district court concluded that respondents’ decision to delay
distributions to appellant was not unfairly prejudicial within the meaning of Minn. Stat.
§ 302A.751 (2020) . Appellant argues that the district court erred in not separately
analyzing the legal requirements of a claim of unfairly prejudicial conduct under section
302A.751 and in not finding that the withholding of appellant’s distributions constituted
unfairly prejudicial conduct.
Although the district court relied on its breach-of-fiduciary-duty analysis, it
identified legitimate reasons that justified the delay, including the advice of counsel,
appellant’s overdraw, and the parties’ disagreement regarding the proration date. And the
determination that respondents did not breach their fiduciary duties is plainly relevant to
the question of whether appellant’s reasonable expectations were frustrated, as a breach of
fiduciary duty could frustrate a shareholder’s reasonable expectations. But here no breach
occurred, and the conduct was reasonable under the circumstances identified by the district
17
court. The record therefore supports the district court’s determination that respondents’
conduct did not frustrate appellant’s reasonable expectations.
Valuation Method

Appellant challenges the district court’s finding that appellant’s “expectation upon
signing the Agreements was that his buy-out would be calculated as set forth in the
Agreements.” There is a statutory presumption that written agreements “reflect the parties’
reasonable expectations concerning matters dealt with in the agreements.” Minn. Stat.
§ 302A.751, subd. 3a. Written agreements carry great weight in determining a
shareholder’s reasonable expectations, but “are not dispositive of shareholder expectations
in all circumstances.” Gunderson, 628 N.W.2d at 186. “[W]ritten agreements should,
nonetheless, be honored to the extent they specifically state the terms of the parties’
bargain.” Id.
Here, the district court relied on the following evidence to determine that the
accrual-based calculation method provided for by the Agreements did not violate
appellant’s reasonable expectations: (1) appellant’s expectation that his buy-out would be
calculated as set forth in the Agreements; (2) neither appellant nor the other shareholders
were aware that the valuations calculated between 2008 and 2017 were not in compliance
with the terms of the Agreements; (3) before appellant’s employment terminated, he “had
an opportunity to voice his objection or expectation” when the board decided to utilize the
accrual-based methodology for valuations going forward; and (4) appellant was aware
respondents would be switching to accrual-based balance sheets for valuations.
18
Appellant argues that the evidence at trial established a consistent practice with prior
shareholders such that appellant reasonably expected he would be bought out using the
same valuation method used for the previous departing shareholders. However, the record
shows that, following Dr. Kennedy’s settlement, the Board of Directors of the SPEC
Entities, including appellant, agreed to use the formulas set forth in the Agreements to
calculate future buyouts. Appellant asserts that he was not fully informed of the various
calculation methods, but he attended board meetings where the issue was discussed, had
written materials relating to the issues, and obtained written materials relating to Dr.
Kennedy’s settlement. The district court’s determination was therefore consistent with the
trial evidence and with the statutory presumption that written agreements “reflect the
parties’ reasonable expectations.” Minn. Stat. § 302A.751, subd. 3a. Accordingly, the
district court did not clearly err in finding that appellant had no reasonable expectation for
his shares to be valued contrary to the Agreements.
Relief

Once a shareholder demonstrates unfair prejudice, the court may order an equitable
buy-out of his shares. Minn. Stat. § 302A.751, subd. 2 (2020); see also Pedro, 489 N.W.2d
at 802 (stating that district courts have broad equitable powers in fashioning relief for the
buy-out of shareholders in a closely held corporation). The statute provides:
The purchase price of any shares so sold shall be the fair value
of the shares as of the date of the commencement of the action
or as of another date found equitable by the court, provided
that, if the shares in question are then subject to sale and
purchase pursuant to the bylaws of the corporation, a
shareholder control agreement, the terms of the shares, or
otherwise, the court shall order the sale for the price and on the
19
terms set forth in them, unless the court determines that the
price or terms are unreasonable under all the circumstances of
the case.

Minn. Stat. § 302A.751, subd. 2. “This court will reverse a district court’s equitable
remedy only if the district court abuses its discretion.” State ex rel. Swan Lake Area
Wildlife Ass’n v. Nicollet Cnty. Bd. of Cnty. Comm’rs, 799 N.W.2d 619, 625 (Minn. App.
2011).
Appellant argues that the district court erred by failing to order a fair-value buy-out
of his shares. The district court determined that respondents frustrated appellant’s
reasonable expectations and treated appellant in an unfairly prejudicial way by preventing
appellant from participating in the governance of the SPEC Entities. The district court
therefore had the discretion to order an equitable buy-out of appellant’s shares. But
because the sale of appellant’s shares was subject to the terms of the Agreements, the
district court was required to “order the sale for the price and on the terms set forth in them,
unless the court determine[d] that the price or terms [were] unreasonable under all the
circumstances of the case.” Minn. Stat. § 302A.751, subd. 2. A s discussed above, the
district court determined that appellant’s reasonable expectation was that the valuations
would be calculated under the terms of the Agreements. Accordingly, the district court did
not abuse its discretion in ordering that appellant’s shares be valued in accordance with the
method set forth in the Agreements.
Appellant further argues that the district court failed to consider all the
circumstances of the case when ordering relief because it bifurcated the damages portion
of the trial and did not allow him to present evidence on damages during the first stage of
20
trial. Respondents contend that appellant’s challenge to the district court bifurcation order
is not properly before this court because appellant did not move for a new trial. The
Minnesota Supreme Court has stated that “matters such as trial procedure [and] evidentiary
rulings . . . are subject to appellate review only if there has been a motion for a new trial in
which such matters have been assigned as error.” Sauter v. Wasemiller, 389 N.W.2d 200,
201 (Minn. 1986). But the supreme court later clarified that “pretrial orders on motions in
limine are appealable regardless of whether those orders have been assigned as error in a
motion for a new trial” while “[t]he Sauter rule continues to apply to motions brought or
decided during trial.” County of Hennepin v. Bhakta, 922 N.W.2d 194, 199 (Minn. 2019).
The supreme court in Bhakta ruled only that challenges to pretrial motions in limine
need not be raised in a motion for a new trial. Neither this court nor the supreme court has
addressed whether its underlying reasoning applies to other types of p retrial orders.
Assuming without deciding that Bhakta allows appellant to challenge the district court’s
pretrial order bifurcating the trial, we conclude that his challenge fails. “The court, in
furtherance of convenience or to avoid prejudice, or when separate trials will be conducive
to expedition and economy, may order a separate trial of one or any number of claims . . .
or of any separate issues.” Minn. R. Civ. P. 42.02. And a district court’s decision to order
separate trials will not be overturned absent a clear abuse of discretion. McGuire v. C & L
Rest., Inc., 346 N.W.2d 605, 614 (Minn. 1984).
Here, the district court’s summary-judgment order identified the factual dispute
concerning valuation as whether appellant “had a reasonable expectation of using a method
of valuation that varied from [the method] set forth in [the Agreements].” Evidence related
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to the value of the shares under different valuation methods is not relevant to this
determination—such evidence would only become relevant if the district court first
determined that appellant had a reasonable expectation that his shares would be valued
using a method that varied from the method established in the Agreements. Because the
district court determined that the terms of the Agreements reflected appellant’s reasonable
expectations regarding valuation method, the evidence was unnecessary. Thus, we discern
no abuse of discretion in the district court’s bifurcation decision as it was “conducive to
expedition and economy.” Minn. R. Civ. P. 42.02.
IV. The district court did not abuse its discretion in declaring respondents the
prevailing parties.

“[T]he district court retains discretion to determine which party, if any, qualifies as
a prevailing party” when considering a request for costs incurred. Benigni v. County of St.
Louis, 585 N.W.2d 51, 54-55 (Minn. 1998). The district court abuses this discretion only
if its decision “is against logic and facts on the record.” Posey v. Fossen, 707 N.W.2d 712,
714 (Minn. App. 2006). And the party challenging a district court’s exercise of its
discretion bears the burden to demonstrate “that no reasonable person would agree with the
trial court’s assessment.” Id. (quotation omitted).
The determination of which party —if any— is the prevailing party depends on the
“careful weighing of the relative success of the parties to a lawsuit, a process that invests a
certain amount of discretion in the district court.” Id. at 715. Here, the district court
conducted a review of the totality of the litigation and acknowledged that both parties
succeeded to some extent. Appellant succeeded in proving one of his shareholder-
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oppression claims under Minn. Stat. § 302A.751, but “the remedy awarded to him is the
amount calculated by [respondents] to be the appropriate amount for the purchase of the
shares under the Agreements.” Whereas respondents succeeded on two of their
counterclaims and appellant’s breach -of-fiduciary-duty claims were decided in
respondents’ favor. After weighing the relative success of the parties as required, the
district court concluded that respondents were more successful and were thus the prevailing
parties.
Appellant argues that the district court should have determined that he was the
prevailing party because he succeeded in proving his primary claim—that respondents
treated him in an oppressive and unfairly prejudicial manner—or, alternatively, that neither
party prevailed. Although appellant prevailed on one of his shareholder-oppression
theories, the relief ordered by the district court equated to what respondents initially
offered: a buy-out of appellant’s shares according to the terms of the Agreements.
Conversely, respondents obtained a $40,249 judgment on their breach-of-contract and
unjust-enrichment counterclaims. Because reasonable persons could agree that
respondents were the prevailing parties in this action, the district court did not abuse its
discretion.
V. The district court did not abuse its discretion by not awarding appellant
attorney fees.

Pursuant to Minn. Stat. § 302A.751, subd. 4 (2020), a court has the discretion to
award reasonable expenses, including attorney fees, if the court finds that a party to a
proceeding “has acted arbitrarily, vexatiously, or otherwise not in good faith.” This court
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“will not reverse the district court’s decision on attorney fees absent an abuse of
discretion.” Carlson v. SALA Architects, Inc., 732 N.W.2d 324, 331 (Minn. App. 2007),
rev. denied (Minn. Aug. 21, 2007).
The district court found that neither party acted arbitrarily, vexatiously, or otherwise
not in good faith, and ordered that all parties pay their own attorney fees. Appellant asserts
that the district court abused its discretion, arguing that respondents acted arbitrarily,
vexatiously, and in bad faith by (1) taking secret action to remove appellant from the SPEC
Entities’ boards; (2) deliberately withholding distributions owed to appellant to gain
litigation advantage; and (3) attempting to force appellant to accept a valuation that was
nearly $159,000 less than it would have been had respondents followed their historical
valuation method.
The district court determined that respondents treated appellant in an unfairly
prejudicial way and frustrated his reasonable expectations by preventing him from
participating in the governance of the SPEC Entities. But it found that respondents
“believed these actions were necessary and in the best interests of the entities because
[appellant] was no longer employed by SPEC, had become hostile to the companies, and
was actively pursuing dissolution of the businesses.” Additionally, the district court
determined that it was not improper to delay appellant’s distribution payments or to offer
to buy appellant’s shares according to the terms of the Agreements. It was within the
district court’s discretion to determine that, under these circumstances, respondents had not

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acted arbitrarily, vexatiously, or otherwise not in good faith. Thus, the district court did
not abuse its discretion by denying appellant attorney fees and costs.
Affirmed.