James P Gerchy, Respondent,

This opinion is nonprecedential except as provided by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
A24-0209

James P Gerchy,
Respondent,

vs.

Autumn Antlers Trophy Whitetail Lodge, Inc., a Minnesota corporation, et al.,
Appellants.

Filed January 13, 2025
Reversed and remanded
Ross, Judge

Stearns County District Court
File No. 73-CV-21-3905

James C. Kovacs, Bassford Remele, P.A., Minneapolis, Minnesota (for respondent)

Thomas D. Jensen, Lind, Jensen, Sullivan & Peterson, P.A., Minneapolis, Minnesota (for
appellants)

Considered and decided by Ross, Presiding Judge; Cochran, Judge; and Jesson,
Judge.∗
NONPRECEDENTIAL OPINION
ROSS, Judge
This case concerns a corporation’s contractual obligation to provide a one-percent
equity share to its general manager each year the corporation was profitable under his

∗ Retired judge of the Minnesota Court of Appeals, serving by appointment pursuant to
Minn. Const. art. VI, § 10.
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management. The district court conducted a bench trial on the general manager’s breach-
of-contract claim and entered judgment for $50,000 against the corporation and its two
shareholders based on its findings that the corporation was profitable during the one year
of the general manager’s employment and that it was worth $5 million. In this appeal by
the corporation and its shareholders, we construe the contract and hold that the district court
correctly determined that the corporation was profitable, entitling the manager to his
contractual ownership share. But we reverse the $50,000 judgment because the district
court improperly entered judgment against the shareholders rather than just the corporation
and because it clearly erred by valuing the corporation at $5 million. We remand for the
district court to properly determine the corporation’s value and to enter judgment only
against the corporation.
FACTS
Autumn Antlers Trophy Whitetail Lodge Inc. (Whitetail) is a Minnesota corporation
that, during its operation until 2019, facilitated hunting excursions in Morrison County for
its patrons. Douglas Ferns and Dennis Niess are Whitetail’s sole shareholders. James
Gerchy managed Whitetail from about 2010 to 2013 and again from 2016 to 2017. Gerchy
sued Whitetail, Ferns, and Niess in 2021, alleging breach of his 2016 employment contract
with Whitetail. He also included equitable claims against Whitetail, Ferns, and Niess based
on, among other things, Whitetail’s refusal to convey to Gerchy a share of ownership in
Whitetail. The district court conducted a bench trial. We now summarize the relevant
circumstances and the district court’s factual findings.
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Ferns had concerns about Gerchy’s work ethic during Gerchy’s first stint as
Whitetail’s general manager, but the parties separated on good terms in 2013 when Gerchy
left to start his own hunting business in South Dakota. Gerchy represented that his South
Dakota business was successful and promised substantial growth. Ferns and Niess
approached Gerchy in 2015 and asked him to return to manage Whitetail. Gerchy told Ferns
and Niess that he was interested but needed a financial reason to leave his South Dakota
business.
The parties negotiated Gerchy’s return to Whitetail management. To lure Gerchy
from his South Dakota business and incentivize him to perform well, the parties drafted an
employment contract that allowed Gerchy the opportunity to obtain equity in Whitetail,
contingent on the company’s success. The parties volleyed various contract drafts during
negotiations. An early draft included a term allowing Gerchy “10% ownership at the end
of ten years,” and a handwritten note on that draft included an arrow pointing to the figure
“+500,000.” Gerchy would later testify that Ferns and Niess represented this number as ten
percent of the valuation of Whitetail based on “land values, what the lodge was worth,”
and other assets that “came up to around $5 million, like roughly speaking.”
The parties negotiated further toward a contract that would allow Gerchy to earn
one-percent equity in Whitetail annually if, under his management, the business was
profitable for that year. Gerchy was concerned that Ferns and Niess would make
unnecessary purchases that would increase expenses to artificially prevent the company
from showing a profit. The parties settled on the following short contract, which excluded
certain expenses when determining profitability:
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This is a contract between James P. Gerchy and
[Gerchy’s wife] and Autumn Antlers Trophy Whitetail Lodge,
INC. James will be referred to as Jim and Autumn Antlers
Trophy Whitetail Lodge, INC shall be referred to as AA.

Effective January 1, 2016, Jim Gerchy will become a
contract worker and future partner of AA. Jim shall have an
equal vote for business conducted with AA in all business
operations.

Jim shall be contracted at $4333.33/month. His
responsibilities will include overall operation of AA. At the
end of each calendar year, if AA has a gross profit of $50,000
or more, Jim shall receive a 1.5% wage increase. If AA has a
gross profit of more than $100,000, Jim shall receive a 3%
wage increase. Exclusions for expenses in regards to gross
profit shall include pre paid animal purchases, asset
acquisition, and any major equipment purchases. At the end of
the each [sic] calendar year, for the term of 10 years, if AA
remains profitable each year with above exclusions for
expenses, Jim shall earn 1% stock ownership, per year, for a
period of 10 years. In the event of a sale of AA within the first
five years, Jim would receive a minimum of $300,000 or th e
stock ownership, whichever amount is greater. In the event that
Jim resigns, is terminated or deceased any time before the 10
year period, then he shall only retain the percentage from the
prior year.

Gerchy began work under this contract in January 2016. After his first full year as
general manager in 2016, Gerchy gave himself a raise based on his assertion that the
business had been profitable. But three months later Ferns objected, asserting that Whitetail
had not been profitable in 2016, and he directed Gerchy to reduce his pay. The relationship
between Gerchy and the two shareholders soured, and in July 2017 Gerchy quit managing
Whitetail. He testified that he left primarily because Whitetail breached the contract by not
giving him the one-percent equity share he believed he earned in 2016.
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Ferns and Niess sold the assets of Whitetail and its related businesses in 2019. The
2019 purchase agreement reflects that Whitetail owned the assets relating to the “whitetail
deer business” while Whitetail Real Estate Holdings LLC and Gold Country Property LLC
owned the buildings and real estate. The purchase agreement valued the businesses’ assets
at $4.9 million, with $3.2 million allocated to buy the buildings, $900,000 for the land,
$50,000 for equipment, and $750,000 for a noncompete consulting agreement. Niess
testified that investors had previously invested $5 million in the preserve and $500,000 in
Whitetail. The district court received documentary evidence suggesting that stockholder
equity totaled $404,457.83 in 2016. Ferns and Niess both testified that Whitetail itself was
entitled to only $50,000 from the sale, but Niess acknowledged that the purchase agreement
does not expressly indicate the value of the 600 to 700 animals sold or the value of the
equipment Whitetail bought in 2016. Niess testified that his and Ferns’s lawyer along with
the buyers’ lawyer together allocated the costs in the purchase agreement.
The district court interpreted the parties’ contract and applied its interpretation to
the company’s balance sheet to find that Whitetail was profitable in 2016, entitling Gerchy
to a one-percent share. And it found that Whitetail was worth $5 million at the 2019 sale,
resulting in a $50,000 judgment for Gerchy based on his one-percent ownership. The
district court reached its $5 million valuation based on the 2015 contract-draft annotation
of “10%” with the arrow pointing to “+500,000,” reasoning t hat the parties must have
agreed that ten percent of the company was worth $500,000. It factored in Ferns’s
precontractual representations that immediate one-percent ownership of the company
would be akin to $50,000 as well as Gerchy’s desire to earn an equity share similar to his
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South Dakota business—which Gerchy valued at $300,000. The district court entered the
$50,000 judgment against Whitetail, Ferns, and Niess.
This appeal follows.
DECISION
Whitetail, Ferns, and Niess appeal from the judgment, offering three arguments. The
appellants argue first that the district court erroneously interpreted a term in the contract to
conclude that Whitetail was profitable in 2016. They maintain second that, even if we
disagree about profitability and hold that Gerchy is entitled to one percent of the company,
we should reverse because the district court miscalculated the company’s value. A nd
appellants contend third that the district court improperly entered judgment against all three
defendants rather than against only Whitetail. After careful consideration, we conclude that
the district court did not err by holding that Whitetail was profitable in 2016 but that it
clearly erred in valuing the company at $5 million and improperly entered judgment against
Ferns and Niess individually.
I
Appellants argue that the district court misinterpreted the parties’ contract to find
that Whitetail was profitable in 2016, resulting in Gerchy’s entitlement to a one-percent
share in the corporation. We interpret the meaning of unambiguous contract terms de novo,
turning to extrinsic information to aid our interpretation only if the contract is ambiguous.
See Staffing Specifix, Inc. v. TempWorks Mgmt. Servs., Inc., 913 N.W.2d 687, 692 (Minn.
2018). The operative contract provision states, “Exclusions for expenses in regards to gross
profit shall include pre paid animal purchases, asset acquisition, and any major equipment
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purchases.” The parties focus on whether four pieces of equipment that appellants
purchased in 2016 constitute “major equipment” under that provision. The disputed 2016
purchased equipment includes a John Deere skid loader ($54,000), a John Deere tractor
($13,574), a Kawasaki “Mule” ($11,211), and a trailer ($3,825), totaling $82,610. The
appellants maintain that none of these expenses constitutes “major equipment purchases,”
so that their cost reduces Whitetail’s 2016 profit, while Gerchy says that all of them
constitute “major equipment purchases,” so that their cost does not reduce Whitetail’s 2016
profit.
Gerchy has the better argument. The contract does not expressly define “major
equipment purchases,” but we may look to the dictionary to define basic terms. See Savela
v. City of Duluth, 806 N.W.2d 793, 797 (Minn. 2011). The dictionary and our
understanding of the basic word “major” inform us that it is a term indicat ing relative
significance. It means, “Greater than others in importance or rank,” or “Great in number,
size, or extent.” The American Heritage Dictionary of the English Language 1059 (5th ed.
2011). The appellants contend that the “major equipment purchases” clause is ambiguous,
requiring us to look beyond the contract for its meaning. We think not; contractual language
is ambiguous if it is susceptible to more than one reasonable interpretation when
considering the meaning assigned to the words and phrases consistent with the apparent
purpose of the contract as a whole. Halla Nursery, Inc. v. City of Chanhassen, 781 N.W.2d
880, 884 (Minn. 2010). Reading the contract as a whole and applying the ordinary
definition, we conclude that the term may be a bit loose in application but certainly not
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ambiguous. That is, “major equipment purchases” are those equipment purchases that are
greater than other equipment purchases in cost or importance.
Applying this definition leads us to conclude that the skid loader, tractor, and Mule
were major equipment purchases in 2016. Each had significant cost (between $54,000 and
$11,211), and each was important to the business. Niess testified to their importance, and
the cost of each amounted to a significant portion of Whitetail’s listed 2016 expenses. Each
also far exceeded the cost of most other identified periodic purchases. By contrast, the
trailer cost less than half of each of the other three items and, although it was important to
the business, it can be treated as a nonmajor purchase.
Given our conclusion that the skid loader, tractor, and Mule constitute major
equipment purchases, we have no difficulty affirming the district court’s finding that the
company was profitable in 2016. The district court had some difficulty determining how
much of a 2016 loss the appellants were alleging, since at one point they said it was $3,869,
at another they said it was $7,414, and after trial they contended it was $54,280. They
present additional figures on appeal. But even their most extreme claim of a $54,280 loss
does not come close to exclude $78,785 in major equipment expenses. The approximately
$24,000 profit satisfies the contracted, annual-profit contingency that obligates Whitetail
to compensate Gerchy with a one-percent share of the company.
We add that it would be improper for us to determine which of appellants’ various
loss calculations is the “true” figure. The district court did not credit any of the evidence
offered on this issue, meaning that we would improperly have to find facts to choose a
different profitability metric. See Kucera v. Kucera, 146 N.W.2d 181, 183 (Minn. 1966).
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And the exercise would involve a futile review of tax returns, testimony, and balance
sheets, because accepting the appellants’ most severe loss calculation and excluding the
costs of the major equipment purchases would still end in concluding that Whitetail was
profitable in 2016.
II
The district court entered its judgment favoring Gerchy against all appellants. Ferns
and Niess argue that the district court should have limited any judgment against only
Whitetail, the corporate entity, not its shareholders. The argument has considerable merit.
Generally, only the parties to a contract have obligations that can result in breach-
of-contract liability. Mon-Ray, Inc. v. Granite Re, Inc., 677 N.W.2d 434, 439 (Minn. App.
2004) (“[A]s a general rule, nonparties to a contract acquire no rights or obligations under
it.”), rev. denied (Minn. June 29, 2004). And because Whitetail is its own corporate entity,
its shareholders, Ferns and Niess , can be liable for Whitetail’s contract breach only if
Gerchy provided a basis for the district court to pierce the corporate veil shielding them
from personal liability. See Victoria Elevator Co. v. Meriden Grain Co., 283 N.W.2d 509,
512 (Minn. 1979) (describing corporate-veil-piercing factors). Gerchy does not allege that
the corporate veil has been pierced here, nor would the record support this claim. Ferns and
Niess can be personally liable to Gerchy therefore only if the judgment rests on
independent equitable or tort grounds.
It is true that Gerchy’s amended complaint included equitable claims against Ferns
and Niess as well as his breach-of-contract claim. But despite his pleading of equitable
claims in addition to the contract- breach claim, it is clear to us that only the breach- of-
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contract claim was tried to and decided by the district court. The record informs us that the
district court refused to dismiss Gerchy’s unjust-enrichment claim—Gerchy’s most
referenced noncontract claim on appeal—and refused to dismiss Ferns and Niess
individually from the suit under Minnesota Rule of Civil Procedure 12.02, allowing Gerchy
to pursue an unjust-enrichment theory against the individual defendants at trial. But the
district court implied that Gerchy would need to ultimately elect either contractual or
equitable remedies. Gerchy has not filed a notice of related appeal to challenge that
restriction, and we therefore do not address whether he could have pursued his unjust-
enrichment claim against the individual defendants while also pursuing his breach-of -
contract claim against Whitetail. See City of Ramsey v. Holmberg , 548 N.W.2d 302, 305
(Minn. App. 1996) (citing Minn. R. Civ. App. P. 106), rev. denied (Minn. Aug. 6, 1996).
Gerchy pursued only his contract-breach claims. At trial, Gerchy’s argument rested on his
contract claims, never mentioning unjust enrichment throughout the proceeding nor in
closing-argument briefing. Gerchy opened the trial claiming, “[T]his case . . . in its simplest
form, comes down to a written contract. What does it mean? What does it provide for under
the circumstances that the Court will hear about? That’s it. Not much more.” “[T]his really
is a fairly simple breach of contract case . . . . Really the primary and only issues here: was
there a contract; what are the terms of that contract . . . and did [Whitetail] breach it.” And
in closing, Gerchy framed his legal analysis only in terms of contract breach , making a
mere passing reference to the notion that Ferns and Niess should be held personally liable
“if they have liquidated [Whitetail].” In contrast to his posttrial brief, his proposed order
sought the entry of judgment against only Whitetail, not Ferns or Niess. The district court’s
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posttrial findings and conclusions describe Gerchy’s complaint by referencing only his
allegations of “breaches of an employment contract.” It provides a thorough assessment of
potential contract liability and it does not mention, let alone discuss , Gerchy’s equitable
claims.
We recognize that Gerchy’s closing argument emphasized that Ferns’s and Niess’s
allegedly dishonest behavior was a central issue at trial. But the district court did not make
any findings or reach any conclusions that would allow us to hold that it was implicitly
entering judgment against the individual defendants based on Gerchy’s equitable claims.
And our review of Gerchy’s posttrial argument informs us that he never asked the district
court to do so. We must therefore conclude that the district court acted outside its discretion
by entering judgment against the individual defendants. On remand, the district court
should amend the judgment accordingly.
III
Appellants argue that the district court clearly erred by awarding Gerchy $50,000,
purportedly representing his one percent of the 2019 asset sale. This is a finding of fact that
we review for clear error. See In re Civ. Commitment of Kenney, 963 N.W.2d 214, 221
(Minn. 2021). Our review under this standard leads us to agree that the district court clearly
erred by valuing Whitetail at $5 million.
For starters, the record supports a finding that the asset sale the district court relied
on for its valuation was for $4.9 million, not $5 million. A fact-finding is clearly erroneous
when it is not reasonably supported by the record taken as a whole. Id. And the only clear
documentary evidence in the record on the 2019 asset sale is the purchase agreement that
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lists a total sale price of $4.9 million, but $750,000 of this total went to a noncompete
agreement, and other amounts went to nonparty corporations Whitetail Holdings and Gold
Country Property. The 2019 purchase agreement further reflects that Whitetail owns the
assets relating to the “whitetail deer business” while Whitetail Holdings and Gold Country
Property own the buildings and land. Based on this allocation, Ferns and Niess testified
that Whitetail (the hunting-excursion business) received $50,000 of the sale price.
Although the district court characterized the testimony of the two shareholders as stating
that they were “free to allocate the purchase price between assets at their discretion, ” the
district court did not explain why it was allocating the entire $4.9 million to represent the
value of Whitetail.
An equally fundamental problem in the district court’s rationale is that it seems to
have also based the $5 million valuation on Ferns’s and Niess’s representations of the
valuation of the company when the parties negotiated Gerchy’s employment contract in
2015. There is reasonable support for the $5 million valuation as of 2015, and we have
outlined it above. But the district court did not adequately explain, and the record does not
otherwise inform us, why it concluded that the 2015 valuation indicates the company’s
value four years later at the time its assets were sold in 2019.
Gerchy became a one-percent shareholder in Whitetail after 2016 and is entitled to
compensation for that share based on Whitetail’s value from the 2019 sale. On remand, the
district court should rely on the record evidence and determine Whitetail’s true value at the
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time of the 2019 sale. The district court may at its discretion invite further briefing by the
parties to enter findings supported by the record.
Reversed and remanded.