Daniel R. Pakonen, 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This opinion is nonprecedential except as provided by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
A23-0063

Daniel R. Pakonen,
Appellant,

vs.

Housing Alternatives Development Company, et al.,
Respondents.

Filed November 6, 2023
Affirmed
Slieter, Judge

Hennepin County District Court
File No. 27-CV-19-9488

David A. Davenport, Samuel T. Johnson, BC Davenport, LLC, Minneapolis, Minnesota
(for appellant)

Ellen A. Brinkman, Erin S. Conlin, Gordon Rees Scully Mansukhani, LLP, Minneapolis,
Minnesota (for respondents)

Considered and decided by Gaïtas, Presiding Judge; Slieter, Judge; and Frisch,
Judge.
NONPRECEDENTIAL OPINION
SLIETER, Judge
In this appeal from judgment following a trial, appellant asserts that the district court
erred by determining that appellant was not entitled to relief on his Minnesota Payment of
Wages Act claim, notwithstanding the jury’s determination that amounts owed to appellant
were “wages” pursuant to the act . Because the undisputed evidence demonstrates that
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appellant was never an employee, he is ineligible to receive relief pursuant to the act, and
we affirm.
FACTS
In 2019, appellant Daniel R. Pakonen filed suit against respondents Housing
Alternatives Development Company (HADC) and HADC Services, LLC alleging
(1) breach of contract against HADC regarding the 2004 life-i nsurance agreement,
(2) breach of contract against HADC and HADC Services regarding the 2017 employment
agreement, (3) unpaid wages pursuant to the Minnesota Payment of Wages Act (wages
act), Minn. Stat. § 181.13 (2022), against HADC and HADC Services, and (4) promissory
estoppel against HADC and HADC Services. The following facts derive from the evidence
presented during the April 2022 jury trial.
In 2004, Pakonen joined HADC’s board of directors. HADC is a nonprofit
corporation that owns and operates assisted-living facilities in Minnesota. In exchange for
Pakonen’s service on its board, HADC agreed to credit $12,500 annually towards a
life-insurance policy in Pakonen’s name. At an HADC board meeting in March 2017, and
following the attorney general’s investigation into HADC’s compensation practices,
Pakonen resigned from the board effective April 1, 2017.
Pakonen signed an “employment agreement” with HADC Services effective April
1, 2017. HADC Services is a nonprofit limited liability company, and HADC is its sole
member. HADC Services was created to reduce payroll costs and unemployment
premiums, and it employs all persons working at HADC facilities. Similar to his 2004
agreement with HADC, Pakonen’s employment agreement provided that HADC Services
3
would credit $12,500 annually to an insurance policy in Pakonen’s name. In December
2018, counsel for HADC Services informed Pakonen that his employment agreement was
void because it was not adopted by the board, and because it violated Minnesota law
prohibiting board members from engaging in self-dealing. See Minn. Stat. § 317A.255
(2022) (outlining the procedure when a conflict of interest arises, including self-dealing, to
prevent an action from being void or voidable). HADC Services terminated Pakonen’s
employment on December 31, 2018.
The jury returned a special verdict determining that (1) HADC breached the 2004
life-insurance agreement and that Pakonen was entitled to $292,573.06; (2) Pakonen’s
employment contract was not fair to HADC Services, nor had it been entered in good faith;1
(3) payments promised under the 2004 life-insurance agreement were wages pursuant to
the wages act; and (4) Pakonen did not suffer a loss in relying on HADC’s promise to pay
the life-insurance benefits pursuant to the 2004 agreement.
The district court’s findings of fact, conclusions of law, and order for judgment
following the jury’s special verdict determined, in relevant part, that Pakonen is not entitled
to judgment pursuant to the wages act against HADC because he was never an HADC
employee.2 Pakonen appeals.

1 Nonprofit board members are required to administer their duties in good faith, including
avoiding actions that present conflicts of interest, and a contract may be void if it presents
a conflict of interest. See Minn. Stat. §§ 317A.251 (standard of conduct), .255 (outlining
the procedure when a conflict arises to prevent a board action from being void or voidable)
(2022).
2 Pakonen also alleged that HADC Services is the alter ego of HADC so that any judgment
obtained against HADC Services could be collected against HADC. “Piercing the
corporate veil is an equitable remedy that may be applied when a party acts as the alter ego
4
DECISION
Minnesota Rule of Civil Procedure 49.01(a) governs the use of special verdicts.
Special verdicts allow a jury to decide specific facts or issues of a case rather than ruling
generally on all issues of the case. Poppler v. Wright-Hennepin Co- op Elec. Ass’n, 845
N.W.2d 168, 171 (Minn. 2014). Findings by special verdict are generally binding on
district courts.3 Orwick v. Belshan, 231 N.W.2d 90, 94 (Minn. 1975). However, a district
court has “the same authority to set aside and change an answer to a question in a special
verdict as it h as to grant judgment notwithstanding a general verdict, that is, where the
evidence requires the change as a matter of law.” Id.
The wages act provides:
When any employer employing labor within this state
discharges an employee, the wages or commissions actually
earned and unpaid at the time of the discharge are immediately
due and payable upon demand of the employee. . . . If the
employee’s earned wages and commissions are not paid within
24 hours after demand, whether the employment was by t he
day, hour, week, month, or piece or by commissions, the
employer is in default . . . . [T]he discharged employee may
charge and collect a penalty equal to the amount of the
employee’s average daily earnings at the employee’s regular
rate of pay or the rate required by law, whichever rate is
greater, for each day up to 15 days, that the employer is in
default, until full payment or other settlement, satisfactory to
the discharged employee, is made.

of a corporate entity.” All Finish Concrete, Inc. v. Erickson, 899 N.W.2d 557, 568 (Minn.
App. 2017). The district court concluded that Pakonen’s veil-piercing claim fails because
the jury denied any recovery against HADC Services and, hence, no purpose exists in
piercing the corporate veil. We decline on appeal to address this issue for the same reason.
3 The jury was also asked to provide an advisory special verdict relating to Pakonen’s alter-
ego claim, which the district court is not bound to follow. Onvoy, Inc. v. ALLETE, Inc.,
736 N.W.2d 611, 615-17 (Minn. 2007).
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Minn. Stat. § 181.13(a) (emphasis added).
Pakonen does not challenge the district court’s determination that the wages act
applies only to wages owed to employees. Rather, Pakonen claims that “additional findings
concerning [his] employment status were not necessary” because the jury implicitly found
that Pakonen was an employee for purposes of the wages act. We are not persuaded.
“An answer to a special verdict question should be set aside only if it is perverse
and palpably contrary to the evidence, or where the evidence is so clear as to leave no room
for differences among reasonable persons.” Moorhead Econ. Dev. Auth. v. Anda, 789
N.W.2d 860, 888 (Minn. 2010) (quotation omitted). The district court observed the facts
as established by Pakonen’s testimony and record evidence. It then determined that
Pakonen was never an employee of HADC. The record supports this determination.
Pakonen testified that he was not an employee of HADC and that he knew that he could
not simultaneously serve on the board while also being an employee. Evidence shows that
Pakonen was appointed to HADC’s board of directors in 2004. The 2004 life-insurance
agreement states that it “shall not be construed as a contract of employment.” Pakonen did
not receive a W-2 from HADC to indicate he received wages as an employee.
Relying on Lakeland Tool and Eng’g, Inc. v. Engle, Pakonen states that his
testimony that he was not an employee is irrelevant because the jury “implicitly found”
that he was an employee. 450 N.W.2d 349 (Minn. App. 1990). We disagree. “Once the
controlling facts are determined, the question of whether a person is an employee becomes
one of law.” Id. at 352.
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Because the undisputed evidence shows that Pakonen was never an HADC
employee, the district court did not err by setting aside the jury’s special verdict answer
that the payments were wages pursuant to the wages act.
Affirmed.