author: LANSING, Judge.

text:
    Julia A. CHRISTIANS, Trustee for the Bankruptcy Estate of Technimar Industries, Inc., Appellant, v. GRANT THORNTON, LLP, Respondent.
    No. A06-1309.
    Court of Appeals of Minnesota.
    July 3, 2007.

      Gordon B. Conn, Jr., Kalina, Wills, Gis-vold & Clark, P.L.L.P., Minneapolis, MN, for appellant.
    Michael E. Keyes, Katherine M. Wilhoit, Heidi A.O. Fisher, Mark P. Schneebeck, Oppenheimer Wolff & Donnelly LLP, Minneapolis, MN, for respondent.
    Considered and decided by LANSING, Presiding Judge; HALBROOKS, Judge; and HUDSON, Judge.
   OPINION

LANSING, Judge.

Julia Christians, in her capacity as the bankruptcy trustee for Technimar Industries, Inc., appeals the district court’s summary judgment dismissing her auditor-malpractice and breach-of-contract claims against Grant Thornton, LLP. The district court based its order on the trustee’s failure to provide sufficient evidence of causation, the trustee’s failure to demonstrate that the damages were sustained by the corporation rather than the corporation’s creditors, and the application of the equitable doctrine of in pari delicto. Although we conclude that the record contains sufficient evidence to show that Grant Thornton caused a fractional amount of the claimed damages, we also conclude that the district court acted within its discretion by applying the in pari delicto doctrine to bar the trustee’s claims because Technimar bears at least substantially equal responsibility for the injury that its trustee in bankruptcy seeks to remedy. Therefore, we affirm.

FACTS

Technimar Industries, Inc., is a defunct Delaware corporation that was organized by Roberto Contreras, Sr., and his sons Roberto Contreras, Jr., and Luis Contreras. The elder Contreras acted as Chairman of the Board of Directors, President, and Chief Executive Officer. The junior Contreras acted as the Vice President of Operations and served on the board. Luis Contreras acted as Treasurer, Secretary, Administrative Vice President, and also served on the board.

In July 1994 Technimar entered into an exclusive license agreement with an Italian company, Breton S.p.A., to purchase, for $16 million, equipment necessary for the manufacture of an agglomerated stone product known as “Stonite.” To raise the necessary capital Technimar retained the services of David Welliver and Rothschild Capital Corporation. Welliver raised approximately $13 million through private debt and security offerings in early 1996, which Technimar used to begin construction of a manufacturing plant in Cohasset, Minnesota, and also used to make payments on the Breton contract. The Minneapolis police and firemen’s pension funds were substantial investors.

Welliver made arrangements for a bond issuance in 1996 because Technimar needed additional capital to pay $8.4 million remaining on the Breton contract. The City of Cohasset agreed to issue a $12 million industrial-revenue bond on Techni-mar’s behalf and to assign the bond to Heller Financial. Heller required a guaranty for the bond. Cohasset agreed to provide $2.4 million, and the Iron Range Resources Rehabilitation Board agreed to provide $2 million. Through a complex financing arrangement devised in Italy in September 1996, Rothschild Venture & Growth, L.P. (RVG) (previously known as Valent Venture & Growth, L.P.) agreed to provide the remaining $7.6 million. Breton essentially underwrote RVG’s commitment by agreeing to wire RVG $7.6 million of the $8.4 million it would receive from Technimar, in exchange for a corresponding amount of shares in the Valent Fund. Immediately thereafter, Technimar was to purchase $4 million of Breton’s position in the Valent Fund, and RVG was to redeem Breton’s remaining $8.6 million investment in the Valent Fund over a period of several months.

The Technimar board ratified the September 1996 agreement in a meeting that same month. Before the bond closing, however, Breton, RVG, and Contreras, Sr., entered into a separate agreement restructuring the buyout of Breton’s Valent Fund investment. In this December 1996 agreement, Technimar agreed to redeem Breton’s entire Valent Fund investment over a period of several months. Shipment of the equipment was divided into phases corresponding with these payments. Techni-mar’s board did not ratify this separate agreement. The bond sale closed at the end of December 1996.

Technimar retained Grant Thornton to audit its 1996 financial statements. As part of its preparation for the audit, Grant Thornton requested all relevant documents relating to the equipment-purchase agreement. Contreras, Sr., executed a letter attesting to Technimar’s full delivery of all “[financial records and related data” requested by Grant Thornton. Grant Thornton’s audit file included the minutes for the September 1996 Technimar board meeting but did not contain either the September or the December agreements with Breton and RVG. Nonetheless, Grant Thornton’s work papers reflected its awareness that Technimar was making payments to Breton. Grant Thornton asked Luis Contreras about the payments and was told that Technimar was replacing Breton as guarantor on the bond. As a result of these and other representations, Grant Thornton produced, in April 1997, audited financial statements that showed a $16 million deposit on the Breton equipment. The financial statements did not reflect Technimar’s obligation to purchase the Valent Fund investment from Breton and replace Breton as guarantor. Consequently, Techni-mar appeared solvent when it was, in fact, not.

Between April 1997 and December 1997, the Minneapolis Police Relief Association lent Technimar an additional $8 million. Technimar used this money to continue its operations, including construction of the Cohasset plant, and to purchase Breton’s Valent Fund shares. Technimar defaulted on the Heller bonds in December 1997, and Heller foreclosed. In July 1998 Tech-nimar filed for Chapter 11 bankruptcy protection. In March 1999 the Chapter 11 reorganization was converted to a Chapter 7 liquidation.

The trustee brought this action against Grant Thornton in March 2003, alleging, primarily, auditor malpractice and breach of contract. Among the claimed damages, the trustee asserted that Technimar was harmed by the deepening insolvency that resulted from Grant Thornton’s erroneous audited financial statements. Grant Thornton moved for summary judgment, and the district court granted the motion. In relevant part, the court found that a claim for deepening-insolvency damages belongs to a corporation’s creditors rather than its bankruptcy trustee and that the trustee did not sufficiently demonstrate that any claimed loss was caused by Grant Thornton’s conduct. The court also found that the trustee’s claims were barred under the doctrine of in pari delicto because Technimar was at least equally at fault for the misleading financial statements. This appeal follows.

ISSUES

I. Did the district court properly grant summary judgment on the trustee’s claims in favor of Grant Thornton?

A. Did the trustee support her claims with sufficient damages evidence?
B. Did the trustee support her claims with sufficient causation evidence?

II. Did the district court abuse its discretion in holding that the trustee’s claims were barred by the equitable doctrine of in pari delicto?

ANALYSIS

I

Summary judgment is appropriate when “the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue of material fact and that either party is entitled to judgment as a matter of law.” Fabio v. Bellomo, 504 N.W.2d 758, 761 (Minn.1993). To raise a genuine issue of material fact the nonmoving party need not introduce substantial evidence; sufficient evidence is all that is required. Schroeder v. St. Louis County, 708 N.W.2d 497, 507 (Minn.2006). But evidence that only raises “a metaphysical doubt as to a factual issue and that is not sufficiently probative with respect to an essential element of [the nonmoving party’s] case to permit reasonable people to draw different conclusions” will not meet this standard. State Farm Fire & Cas. v. Aquila Inc., 718 N.W.2d 879, 886-87 (Minn.2006). On review we evaluate whether the evidence, taken in a light most favorable to the nonmoving party and with all factual inferences drawn in favor of the nonmoving party, presents a genuine issue of material fact. Wartnick v. Moss & Barnett, 490 N.W.2d 108, 112 (Minn.1992). We also independently determine whether the district court properly applied the law. Id.

To prevail in an action for auditor malpractice or breach of contract, the plaintiff must prove the existence of a duty or contract, breach of that duty or contract, factual and proximate causation, and damages. Vernon J. Rockier & Co. v. Glickman, Isenberg, Lurie & Co., 273 N.W.2d 647, 650 (Minn.1978) (setting forth elements for auditor-malpractice claim); Rubbelke v. Mabley, 410 N.W.2d 880, 883 (Minn.App.1987) (combining elements of legal-malpractice and breach-of-contract claims).

In granting summary judgment against the trustee’s claims, the district court concluded that the trustee had presented sufficient evidence on the elements of duty and breach but failed to provide adequate evidence on the elements of damages and causation. The trustee disputes this conclusion and contends that she has provided adequate evidence in the form of affidavits, depositions, and answers to interrogatories and that the evidence supports her theory of “deepening-insolvency” damages. We turn first to the issue of damages and then to the issue of causation.

A. Evidence of Damages

The district court held that the trustee’s claim was flawed because she did not present any evidence of damage to Technimar. Because Technimar was insolvent at the time of the alleged wrongdoing, the court reasoned that “[t]he creditors suffered the injury, not Technimar,” therefore the claim “more appropriately belonged to [Techni-mar’s] creditors.” In essence, the court determined that the trustee lacked standing to pursue the claim.

At the outset, we observe that because Technimar was incorporated in the state of Delaware, the laws of both Delaware and Minnesota are relevant to this case. The first step in our conflict-of-law analysis, however, requires us to determine whether there is an actual conflict of law on the issue of trustee standing. Jep-son v. Gen. Cas. Co. of Wis., 513 N.W.2d 467, 469 (Minn.1994). We see no basis for concluding that Minnesota’s law is in actual conflict with Delaware’s law on this issue. Because Delaware’s law on trustee standing is more clearly developed, we will, as a matter of judicial convenience, refer to Delaware cases.

The notion that harm to an insolvent corporation produces a direct creditor claim stems from the trust-fund doctrine. The trust-fund doctrine holds that when a corporation enters insolvency, the corporation’s officers and directors no longer owe a fiduciary duty to the shareholders, but to the creditors. Prod. Res. Group, L.L.C. v. NCT Group, Inc., 863 A.2d 772, 791 (Del. Ch.2004). The underlying rationale is that, because an insolvent corporation has no shareholder equity, the creditors are the only remaining stakeholders with an interest in the corporation. Id. The corporate assets are therefore held in “trust” for the creditors. Because any subsequent corporate injury is borne solely by the creditors, the claim is arguably held by the creditors and not the corporation.

Delaware, which recognizes the trust-fund doctrine, nonetheless rejects the direct-creditor-claim theory. Delaware courts have held that while “creditors of an insolvent corporation have standing to maintain derivative claims against directors on behalf of the corporation for breaches of fiduciary duties,” they “have no right to assert direct claims.” N. Am. Catholic Educ. Programming Found., Inc. v. Gheewalla, No. 521,2006, 2007 WL 1453705, at *7-8 (Del. May 18, 2007) (emphasis omitted). In Production Resources, the court reasoned that “even in the case of an insolvent firm, poor decisions by directors that lead to a loss of corporate assets and are alleged to be breaches of equitable fiduciary duties remain harms to the corporate entity itself.” Prod. Res. Group, 863 A.2d at 792. The court explained that, “At all times, claims of this kind belong to the corporation itself because even if the improper acts occur when the firm is insolvent, they operate to injure the firm in the first instance by reducing its value, injuring creditors only indirectly by diminishing the value of the firm.” Id. at 776; see also Smith v. Arthur Andersen LLP, 421 F.3d 989, 1004-06 (9th Cir.2005) (holding that traditional corporate harms to insolvent corporation are properly raised by bankruptcy trustee).

Although the conduct alleged to be improper in this case were actions of outside auditors rather than corporate officers, they purportedly reduced the firm’s value just the same. Thus, any resulting claim would belong to the corporation. Accordingly, the trustee has standing to pursue the claim.

Deepening-Insolvency Damages

We next address the trustee’s claim that Technimar was damaged by the deepening of its insolvency. The trustee asserts that Technimar was harmed by becoming more insolvent than it would have been absent Grant Thornton’s alleged wrongdoing. Before considering whether the trustee produced sufficient evidence of this claim, we must consider whether Minnesota law recognizes deepening insolvency as a theory of damages. We hold that it does not.

Deepening insolvency has its origins in the doctrine of in pari delicto. In pari delicto operates to bar suits between two wrongdoers who are at equal fault. State by Head v. AAMCO Automatic Transmissions, Inc., 293 Minn. 342, 347, 199 N.W.2d 444, 448 (1972). In the corporate context, when the inequitable actions of officers and directors are imputed to the corporation, the doctrine bars suits brought on the corporation’s behalf if the officers and directors (1) acted in their employment capacity and (2) for at least the partial benefit of the corporation. Official Comm, of Unsecured Creditors v. R.F. Lafferty & Co., 267 F.3d 340, 358-59 (3d Cir.2001). The “adverse interest” exception prevents imputation, however, if the individual’s conduct provides no benefit to the corporation. Restatement (Second) of Agency § 228(1) (1958). To determine whether a corporate insider’s decision to burden the corporation with wrongfully incurred and unpayable debt could be imputed to the insolvent corporation, the Seventh Circuit considered whether the resulting extension of the corporation’s life was beneficial. Sckacht v. Brown, 711 F.2d 1343, 1350 (7th Cir.1983). The court held that the mere prolongation of a corporation’s life did not necessarily equate to a corporate benefit because “the corporate body is ineluctably damaged by the deepening of its insolvency, through increased exposure to creditor liability.” Id. (emphasis added).

Deepening insolvency has since permu-tated into an independent measure of damages, and, in that form, has been recognized by several jurisdictions. Liquidating Trustee of Amcast Unsecured Creditor Liquidating Trust v. Baker (In re Amcast Indus. Corp.), Ch. 11 Case No. 04-40504, Adv. No. 05-3515, 2007 WL 777704 (Bankr.S.D.Ohio 2007); Alberts v. Tuft (In re Greater Se. Cmty. Hosp. Corp. I), 353 B.R. 324 (Bankr.D.Colo.2006); Amato v. Sw. Fla. Heart Group, P.A. (In re Sw. Fla. Heart Group, P.A), 346 B.R. 897 (Bankr.M.D.Fla.2006); Allard v. Arthur Andersen & Co., 924 F.Supp. 488 (S.D.N.Y.1996). The concept presumes that, in taking on additional unpayable debt, a corporation might be harmed by operational limitations, strained corporate relationships, diminution of corporate assets, and the legal and administrative costs of bankruptcy. R.F. Lafferty, 267 F.3d at 349-350.

The trustee argues that Minnesota courts have already recognized deepening-insolvency damages in Bonhiver v. Graff, 311 Minn. Ill, 131, 248 N.W.2d 291, 303 (1976). But Bonhiver is distinguishable because it addressed damages that an insolvent corporation suffered as a result of embezzlement that would have been prevented but for an accountant’s negligence. Id. The damages incurred were the result of an additional illegal act rather than the mere continuation of the corporation’s existence. Thus, the case does not endorse deepening insolvency as a measure of damages. Instead, the case suggests that deepening-insolvency damages are superfluous because traditional-damages measures are sufficient for assessing injuries to insolvent corporations.

That rationale is confirmed and expanded in a frequently cited article by Sabin Willet, analyzing the theory of deepening-insolvency damages. The Shalloios of Deepening Insolvency, 60 Bus. Lawyer 549 (2005). Willet explains that additional debt will never harm a corporation because loans are balance-sheet neutral; every addition to a corporation’s liabilities is offset by an equal addition to the corporation’s assets. Id. at 554-55. After dismissing the “damages” identified in Lafferty, Wil-let concludes that:

[Ijnjury to solvency is an incident to the harm, not the harm itself. If the [corporation] lost asset value through defendant’s conversion of property, the law measures damage; if through breach of contract, commission of tort, breach of fiduciary duty, or fraudulent transfer, the law already measures damage. The damages may include the insult to asset values ... or the accumulation of a liability.... Depending on the underlying law, the damage may or may not also include lost profits.... Solvency analysis will be incidental to all of these damage analyses. It may so happen that the diminished asset value, new liability, or lost profits that measures the damage also measures precisely the deepening of the firm’s insolvency. The point is that insolvency analysis adds nothing to the measure of damages the law already alloios.

Id. at 571-72 (emphasis added).

Willet’s reasoning has been adopted by several jurisdictions in the course of rejecting deepening-insolvency damages. Seitz v. Detweiler, Hershey & Assocs. (In re CitX Corp.), 448 F.3d 672, 677 (3d Cir. 2006) (holding that under Pennsylvania law deepening insolvency “should not be interpreted to create a novel theory of damages for an independent cause of action like malpractice”); Commercial Fin. Servs., Inc. v. J.P. Morgan Sec., Inc., 152 P.3d 897, 900 (Okla.Civ.App.2006) (rejecting deepening-insolvency damages under Oklahoma law), cert. denied (Okla. Jan. 16, 2007).

Even those jurisdictions that have supported deepening-insolvency damages have done so only in theoretical terms, on motions to dismiss, or on motions for summary judgment. In re Amcast, 2007 WL 777704, at *20 n. 19 (allowing that deepening-insolvency “concept may be useful as a measure of damages” after rejecting concept as independent cause of action on motion to dismiss); In re Greater Se. Cmty. Hosp., 353 B.R. at 338 (accepting deepening-insolvency damages at motion-to-dismiss stage); In re Sw. Fla. Heart Group, 346 B.R. at 898 (indicating — in course of granting summary judgment— that deepening insolvency is measure of damages only); Allard, 924 F.Supp. at 494 (declining to grant summary judgment when plaintiff claimed deepening-insolvency damages). One court’s offered calculation for deepening-insolvency damages equates to nothing more than an amalgamation of traditional damages. In re Greater Se. Cmty. Hosp., 353 B.R. at 338 n. 12 (explaining that plaintiff would need to quantify costs of bankruptcy, lost profitability, and diminution of assets).

We are persuaded that permitting deepening-insolvency damages would needlessly replicate and consequently confuse the current measure of damages for auditor-malpractice actions. Once the deepening-insolvency theory is stripped of the additional-loans component, we are unable to discern what recoverable harms the concept captures that the ordinary measures of damages in auditor-malpractice and breach-of-contract claims do not. See Olson, Clough & Straumann, CPA’s v. Trayne Props., Inc., 392 N.W.2d 2, 4 (Minn.App.1986) (allowing corporation to bring claim for lost profits in accountant-malpractice action); J.B. Heaton, Deepening Insolvency, 30 J. Corp. L. 465, 483-84 (2005) (observing that “if professionals are negligent in providing services to a corporation, then the corporation can recover for out-of-pocket expenses paid for negligent work and declines in the value of corporate property associated with the negligence”). We therefore hold that deepening insolvency is not a recognized form of corporate damage in Minnesota.

Auditor-Malpractice Damages

Having resolved the questions of standing and deepening-insolvency damages, our inquiry now turns to whether the trustee introduced sufficient evidence of recognized auditor-malpractice damages: auditor’s fees, asset diminution, and lost profits. The trustee’s evidence consists of answers to interrogatories, claiming as damages approximately $22,000 in auditor’s fees and an assortment of loans, expenses, and losses. Aside from the auditor’s fees, the claims are improper, duplicative, and, ultimately, unsupported.

The trustee claims as damages additional loans received from the Minneapolis Police Relief Association and increases in current liabilities. But additional debt does not produce injury because it is balance-sheet neutral. The trustee also claims as damages (1) net losses of $14 million in 1997 and $5.2 million in 1998; (2) a loss of $1.25 million from the forced sale of an operating subsidiary; (3) $5 million in Chapter 11 administration expenses; and (4) a loss of $12 million on the equipment contract. These claims are duplica-tive because the losses of $14 million and $5.2 million encapsulate the net effect of all losses and gains in the given year. Finally, the trustee requests, “Possibly lost profits ... if it can be determined that a successful reorganization under Chapter 11 would have been feasible had the case been filed shortly after receipt of accurate audited financial statements in 1997.”

The difficulty with the trustee’s final claim is her failure to provide any evidence of what financial outcome would have flowed from a successful Chapter 11 reorganization, or any other set of circumstances. Technimar’s financial situation was unquestionably perilous at the time of the allegedly improper audit, thus it is unclear that the revelation of that fact would have necessarily improved Techni-mar’s fortunes. Without a reasonable prediction of what Technimar’s financial results would have been but for Grant Thornton’s alleged malpractice, the trustee’s claims are too remote or speculative. Trayne, 392 N.W.2d at 4; see also MCI Comm. Corp. v. AT & T Co., 708 F.2d 1081, 1162 (7th Cir.1983) (“When a plaintiff improperly attributes all losses to a defendant’s illegal acts, despite the presence of significant other factors, the evidence does not permit a jury to make a reasonable and principled estimate of the amount of damage.”). As a result, the trustee has failed to produce evidence that would permit reasonable jurors to reach a nonspecu-lative conclusion about damages and summary judgment was properly granted.

B. Evidence of Factual Causation

The trustee’s nonauditor’s fees claims also lack adequate evidence of factual causation. Simply stated, factual causation is the “but for” test. Rockier, 273 N.W.2d at 650. The test examines whether “but for defendant’s conduct the plaintiff would” have avoided the injury alleged. Blue Water Corp., Inc. v. O’Toole, 336 N.W.2d 279, 281 (Minn.1983).

When applying the “but for” test, we must envision what would have occurred but for the negligent conduct. In the standard personal-tort case the inquiry is straight-forward: the plaintiff is uninjured and whole. In the professional-malpractice case, however, the inquiry is more complex. In Blue Water, the plaintiff alleged that an attorney’s failure to file an application in time constituted malpractice, and the supreme court held that the plaintiff had to show that the application would have been accepted. Id. at 282. And in Jerry’s Enterprises, Inc. v. Larkin, Hoffman, Daly & Lindgren, Ltd., the supreme court required another legal-malpractice plaintiff to show that it would have cleared title to land in a flawed real-estate transaction. 711 N.W.2d 811, 819-20 (Minn.2006). Accordingly, the trustee needed to introduce concrete evidence of what Technimar would have done but for Grant Thornton’s negligence and what those actions would have reasonably produced.

The trustee argues that she provided causation evidence in the form of deposition testimony given by Technimar directors and others. The trustee directs our attention to statements that, had they known about Technimar’s insolvency, (1) a Minneapolis Police Relief Association representative would have taken “action” earlier, and (2) a Technimar director would have “done everything [he] could to get it rectified.” The trustee then posits that major creditors could have forced management change or triggered work-out discussions earlier, or bankruptcy protection could have been obtained while the chance for success still existed. Certainly, many positive things could have occurred but for Grant Thornton’s alleged negligence, but these speculative potential outcomes are the problem with the causation element rather than the answer to it.

In assessing what the outcome would have been had a corporation’s insolvency been properly revealed, we see no concrete evidence that the outcome would have been any better. In fact, some view the concealment of a corporation’s insolvency as a benefit rather than a harm. See In re CitX Corp., 448 F.3d at 677-78 (holding that additional equity received because of concealed insolvency was opportunity squandered by corporation’s management). While that is a stark view, it nonetheless highlights the dilemma. Corporations are managed by officers and directors who make thousands of decisions in the course of managing, and we recognize the necessity for this independent decision-making by protecting it under the business-judgment rule. Janssen v. Best & Flanagan, 662 N.W.2d 876, 881-82 (Minn.2003) (discussing business-judgment rule). And, as the trustee points out, these managers have a range of options available to save or revive a struggling company. Given these two realities, the trustee must untangle the multiple decisions that result in a single net-loss figure and explain how that figure would have changed “but for” some alleged negligence.

The trustee was not able to produce sufficient causation evidence. Instead, the trustee broadly asserts that “action” would have been taken and problems would have been “rectified,” while resting on the presumption that those efforts would have resulted in a more beneficial outcome. Even when taken in a light most favorable to the trustee, and drawing every inference in favor of the trustee, these statements cannot defeat a motion for summary judgment.

The trustee has standing to bring a claim for auditor-malpractice and breach-of-contract, but the great majority of her damages claims fail because they are either unrecognized at law in Minnesota, too speculative, or not demonstrably the reasonable effects of Grant Thornton’s alleged negligence. Therefore, the only portion of the trustee’s claim remaining is the claim for auditor’s fees.

II

The trustee argues that the district court also erred in holding that her claims were barred by the doctrine of in pari delicto. As stated earlier, the doctrine operates to prevent wrongdoers at equal fault from recovering against one another and “is based upon judicial reluctance to intervene in disputes between [wrongdoing] parties.” AAMCO, 293 Minn. at 347, 199 N.W.2d at 448. One purpose of the doctrine “is to prevent the courts from getting thrust into the position of finding facts where the parties have devised a scheme to deceive outsiders.” Long v. Smead Mfg. Co., 383 N.W.2d 452, 455 (Minn.App.1986), review denied (Minn. May 29, 1986). Because in pari delicto is an equitable doctrine, we review its application for an abuse of discretion. Med-tronic, Inc. v. Advanced Bionics Corp., 630 N.W.2d 438, 450 (Minn.App.2001).

The trustee argues that the district court abused its discretion because the facts do not support a fraud claim and that any alleged fraud was not sufficiently “massive.” But application of the doctrine does not require a finding of fraud. Long, 383 N.W.2d at 455. The trustee also argues that the doctrine should not apply to bankruptcy trustees as a matter of public policy because it would harm innocent creditors. A creditor who relied on a false financial statement may, under certain circumstances, have a claim against a eompli-cit accountant. Nycal Corp. v. KPMG Peat Marwick LLP, 426 Mass. 491, 688 N.E.2d 1368, 1371-74 (1998). But complicity is not alleged in this malpractice action. Furthermore, courts regularly consider in pari delicto defenses and act to bar trustee claims on that basis despite the inevitable harm to creditors. See Moratzlca v. Morris (In re Senior Cottages of Am., LLC), 482 F.3d 997, 1001 (8th Cir.2007) (listing numerous federal bankruptcy cases applying in pari delicto doctrine). The facts in this case do not provide a basis to vary from the settled application of the doctrine.

The trustee’s final argument is that the district court’s refusal to rule on Grant Thornton’s comparative-fault defense required the court to also defer consideration of the in pari delicto defense, because it also compares fault. The two defenses, however, are conceptually distinguishable and do not require simultaneous resolution.

The undisputed facts are as follows: Technimar and Breton entered into an agreement to complete the equipment purchase, under which Breton agreed to provide $7.6 million of the required guaranty, in September 1996. The Technimar board ratified this agreement. In December 1996 Bretón and Technimar’s CEO entered into another agreement obligating Technimar to replace Breton’s position as guarantor, over a'period of three months. This agreement was never ratified by the board and was never presented to Grant Thornton despite the CEO’s assertion that Technimar had provided Grant Thornton with all relevant financial records and related data. Because Grant Thornton did not know of the December agreement, it overstated Technimar’s equity and that action provided the basis for this lawsuit.

The district court held that whether that overstatement constituted negligence was for the jury to resolve, thus any relative negligence was also a jury determination. On the in pari delicto issue, however, the court could presume that Grant Thornton was negligent and still determine that the trustee was equitably barred from recovering for that negligence because Technimar “bears at least substantially equal responsibility for the injury it seeks to remedy.” Official Comm, of Unsecured Creditors of Allegheny Health, Educ. & Research Found. v. Pricewaterhouse Coopers, LLP, No. 2:00cv684, 2007 WL 141059, at *13 (W.D.Penn. Jan. 17, 2007). And when “a defendant’s only sin is its failure to prevent transgressions by the plaintiff, no benefit flows to the public from rewarding the transgressor.” Miller v. N.Y. Produce Exch., 550 F.2d 762, 768 (2d Cir.1977).

The district court held that Technimar’s inequitable conduct precluded it from seeking damages for the harms to which that conduct contributed. Bearing in mind that equitable decisions are discretionary, we find no basis on which to conclude that the district court abused its discretion in finding that the trustee, who now stands in Technimar’s shoes, is equitably barred from asserting the malpractice and breach-of-contract claims.

DECISION

The district court properly granted summary judgment because the trustee’s claims fail to allege recognized, nonspecu-lative damages; fail to establish sufficient evidence of causation; and are equitably barred by the doctrine of in pari delicto.

Affirmed.


source: Caselaw Access Project

author: WRIGHT, Judge. MINGE, Judge

license: Public Domain

text:
    In re the Marriage of Carol Bernice BAKER, petitioner, Appellant, v. Daniel Remember BAKER, Respondent.
    No. A06-1252.
    Court of Appeals of Minnesota.
    July 3, 2007.

      Kay Nord Hunt, Lommen, Abdo, Cole, King & Stageberg, Minneapolis, MN, for appellant.
    Richard D. Goff, Richard D. Goff & Associates, Minneapolis, MN, for respondent.
    Considered and decided by MINGE, Presiding Judge; WRIGHT, Judge; and HARTEN, Judge.

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

   OPINION

WRIGHT, Judge.

In this appeal from the district court’s judgment dissolving the parties’ marriage, appellant-wife challenges the district court’s division of the parties’ marital property, arguing that the district court ,(1) understated the portion of respondent-husband’s retirement accounts that is marital property; (2) understated the overall value of husband’s surgical practice by not including the value of the institutional goodwill of the practice; and (3) abused its discretion by holding that husband did not improperly dispose of marital assets. By notice of review, husband challenges the district court’s spousal-maintenance award to wife, arguing that it is based on erroneous and insufficient findings. We affirm in part, reverse in part, and remand.

FACTS

In May 2003, appellant-wife Carol Baker filed a petition for dissolution of her 13-year marriage to respondent-husband Daniel Baker. After a trial before a referee, the district court entered a judgment dissolving the parties’ marriage, dividing their property, and awarding wife spousal maintenance. Thereafter, wife moved the district court to amend its findings of fact and conclusions of law. The district court denied the motion, and this appeal followed.

ISSUES

I. Did the district court err as a matter of law when it held that the value of the appreciation of husband’s premarital retirement funds is nonmarital property?

II. Did the district court erroneously conclude that the law precludes the inclusion of the value of the institutional goodwill accumulated in husband’s surgical practice during the parties’ marriage in the overall valuation of the practice?

III. Did the district court abuse its discretion when it held that husband did not improperly encumber or dispose of marital assets when he used them to pay his attorney fees, fund education accounts for his and wife’s grandchildren, pay for his daughter’s wedding, and purchase a one-half interest in a Porsche?

IV. Did the district court abuse its discretion when it set husband’s spousal-maintenance obligation?

ANALYSIS

As an initial matter, we consider the scope of review in this case. Wife filed a motion for a new trial or amended findings of fact and conclusions of law. Because the motion did not identify specific grounds for a new trial, the district court concluded that, “No motion for a new trial is before th[is] Court.” The district court also denied the motion for amended findings of fact and conclusions of law. In the absence of a motion for a new trial, our scope of review includes substantive legal issues properly raised to and considered by the district court, whether the evidence supports the findings of fact, and whether those findings support the conclusions of law and the judgment. Alpha Real Estate Co. of Rochester v. Delta Dental Plan of Minn., 664 N.W.2d 303, 310 (Minn.2003) (stating that new-trial motion is not prerequisite to appellate review of substantive legal issues properly raised and considered in district court); Gruenhagen v. Larson, 310 Minn. 454, 458, 246 N.W.2d 565, 569 (1976) (stating that absent motion for new trial, appellate courts may review whether evidence supports findings of fact and whether findings support conclusions of law and judgment).

I.

Wife first argues that the district court erred as a matter of law when it held that the appreciation of husband’s premarital retirement funds is nonmarital property. Whether property is marital or non-marital is a question of law over which we exercise de novo review. Gottsacker v. Gottsacker, 664 N.W.2d 848, 852 (Minn.2003). But in doing so, we defer to the district court’s findings of fact. Id.

Marital property is “property, real or personal, including vested public or private pension plan benefits or rights, acquired by the parties, or either of them, to a dissolution ... proceeding at any time during the existence of the marriage.” Minn.Stat. § 518.003, subd. 3b (2006) (codified at Minn.Stat. § 518.54, subd. 5 (2004)). All property acquired by either spouse during the marriage is presumed to be marital property. Id. To overcome this presumption, a spouse must demonstrate by a preponderance of the evidence that the property is nonmarital. Crosby v. Crosby, 587 N.W.2d 292, 296 (Minn.App.1998), review denied (Minn. Feb. 18, 1999). Nonmarital property includes property acquired by either spouse before marriage and any increase in the value thereof, MinmStat. § 518.003, subd. 3b, provided such an increase is the result of passive appreciation, Gottsacker, 664 N.W.2d at 853 (citing Nardini v. Nardini, 414 N.W.2d 184, 193 (Minn.1987)); Swick v. Swick, 467 N.W.2d 328, 331 (Minn.App.1991), review denied (Minn. May 16, 1991). Appreciation is passive when it is “ ‘attributable to inflation or to market forces or conditions.’ ” Gottsacker, 664 N.W.2d at 853 (quoting Nardini, 414 N.W.2d at 192). In other words, appreciation occurring when “no investment decisions are made, and neither [spouse] may withdraw the funds or otherwise control the investments,” is passive. Prahl v. Prahl, 627 N.W.2d 698, 706 (Minn.App.2001). Conversely, appreciation that is attributable to the exertion of efforts by one or both spouses during the marriage generally is deemed active and, thus, marital property. Gottsacker, 664 N.W.2d at 853 (quoting Nardini, 414 N.W.2d at 192); White v. White, 521 N.W.2d 874, 878 (Minn.App.1994). Such efforts may include the application or investment of marital funds, marital labor, or entrepreneurial decision-making that is marital in nature. White, 521 N.W.2d at 878.

When the parties married, husband had $957,473 in a retirement plan entitled Specialists in General Surgery Pension and Profit Sharing Plan (“SIGS accounts”). During the marriage, additional contributions and investment returns caused the value of the SIGS accounts to reach $3,088,072 on the date of valuation for the dissolution proceedings. During trial, husband’s expert, Thomas Harjes, testified as to the proper allocation of that amount between marital and nonmarital property. To derive this allocation, Harjes classified the premarital amount of $957,473 as non-marital property and all contributions made during the marriage as marital property. For each year of marriage, Harjes determined the percentage of funds in the SIGS accounts that was marital property and the percentage that was nonmarital property. He then used those percentages to divide the investment returns between marital and nonmarital property. Based on these calculations, Harjes concluded that $639,577 of $3,088,072 was marital property subject to equitable division. The district court adopted Harjes’s conclusions and allocated the final value of the SIGS accounts between marital and non-marital property accordingly.

Wife challenges this allocation, arguing that the district court should have allocated the entire amount by which the SIGS accounts have increased above the premarital amount of $957,473 to marital property because that increase is attributable to the exertion of marital efforts. Specifically, wife argues that this increase is the result of husband’s active management of the SIGS accounts himself and through his financial advisor. The district court rejected this argument, holding that the appreciation of a spouse’s nonmarital retirement funds is not active appreciation “simply because the spouse ... hires a financial advisor to manage the funds.”

We agree that a financial advisor’s management of a retirement account containing nonmarital funds does not necessitate a finding that the appreciation of those funds is active. That nonmarital funds are managed by a financial advisor, however, does not preclude a finding that the appreciation thereof is active. Rather, to make this determination, a district court must examine the nature of the spouses’ efforts regarding these retirement accounts. Gottsacker, 664 N.W.2d at 853. Here, the district court’s findings of fact and the record evidence of husband’s involvement with the SIGS accounts establish that the appreciation of the SIGS accounts is active and, therefore, marital property.

At trial, wife testified that she and husband hired financial advisor Randy Trask to manage the SIGS accounts. Specifically, wife testified that “after we were married we invited Merrill Lynch representatives to come out to our home and discuss retirement plans for our future.... [Together we sat down and chose some Merrill Lynch plans and then invested money in those plans.” Trask testified that husband paid him an annual fee to manage these accounts. Trask confirmed that he “could not have discretionary management over any of these accounts if [husband] would not allow it” and that husband “has the ultimate control over [the] accounts.” Harjes also confirmed that husband has full discretion regarding how the accounts are controlled.

The evidence conclusively establishes that husband and Trask created an agency relationship when they mutually agreed that Trask would act on husband’s behalf but subject to husband’s control. See A. Gay Jenson Farms Co. v. Cargill, Inc., 309 N.W.2d 285, 290 (Minn.1981) (“Agency is the fiduciary relationship that results from the manifestation of consent by one person to another that the other shall act on his behalf and subject to his control, and consent by the other so to act.”); see also Dalager v. Montgomery Ward & Co., 350 N.W.2d 391, 394 (Minn.App.1984) (holding that whether agency relationship exists is fact question unless evidence is conclusive). As such, husband is bound by Trask’s active management of the accounts as if it were his own. See Fingerhut Mfg. Co. v. Mack Trucks, Inc., 267 Minn. 201, 204, 125 N.W.2d 734, 737 (1964) (holding that when agent acts within scope of express or implied authority, principal is bound thereby); Kellogg v. Woods, 720 N.W.2d 845, 852 (Minn.App.2006) (holding that principal is liable for agent’s acts that are within scope of agency relationship).

Not only did husband actively manage the SIGS accounts through Trask, husband also actively managed them himself. During the trial, there was extensive evidence and testimony presented about husband’s ability to control and withdraw funds from the SIGS accounts. Harjes testified that husband had full authority to make changes to the SIGS accounts, which he often exercised by rolling funds from one account to another. Trask testified that, during his tenure as manager of the SIGS accounts, husband made at least one stock purchase in which husband bought stock of a company with which husband’s son was associated. Wife testified, and Trask confirmed, that, at one point, husband transferred the SIGS accounts to another financial advisor, but husband later transferred them back to Trask. Trask and Harjes also testified that, during the marriage, the funds in the SIGS accounts were available as liquid assets that husband could withdraw at any time.

We have held that the ability to control investments or withdraw funds can defeat a claim that the increases in value of premarital funds were the result of passive appreciation. See Prahl, 627 N.W.2d at 706 (stating that appreciation is passive when “no investment decisions are made, and neither [spouse] may withdraw the funds or otherwise control the investments”). Taken together, and with the statutory presumption that all property acquired during the marriage is marital property, these characteristics establish that the appreciation of husband’s premarital funds in husband’s SIGS accounts was not the result of mere market forces or conditions but rather the result of marital efforts in the form of entrepreneurial decision-making. Accordingly, this increase constitutes active appreciation that is marital property subject to just and equitable division under Minn.Stat. § 518.58, subd. 1 (2006).

Because the district court erroneously concluded that the value of the appreciation of husband’s premarital funds in his SIGS accounts is nonmarital property, we reverse and remand to the district court with instructions to divide the parties’ marital property in a just and equitable manner.

II.

Wife also argues that the district court erred as a matter of law when it failed to include the value of the institutional goodwill accumulated in husband’s surgical practice during the parties’ marriage in its overall valuation of the practice for purposes of property division. As discussed above, whether an asset is marital or nonmarital property is a question of law, which we review de novo. Gottsacker, 664 N.W.2d at 852. The district court may include intangible assets, such as goodwill, in its valuation of marital property. Sweere v. Gilbert-Sweere, 534 N.W.2d 294, 297 (Minn.App.1995). A district court’s valuation of an asset is a finding of fact that we will not set aside unless the record establishes that it is clearly erroneous. Maurer v. Maurer, 623 N.W.2d 604, 606 (Minn.2001). Because “valuation is necessarily an approximation in many cases,” it need only fall “within a reasonable range of figures.” Id. (quotation omitted).

Here, neutral expert Patrick Schmidt testified that the value of husband’s surgical practice, Daniel R. Baker, M.D., P.A., without any goodwill is $112,000. Schmidt testified that the value of the practice’s goodwill is $365,000, which includes $73,000 in institutional goodwill. The district court credited Schmidt’s testimony and adopted his valuation of $112,000 excluding any goodwill as the overall value of the practice. In doing so, the district court determined that “goodwill cannot be included, given the evidence presented” because the goodwill Schmidt calculated is tied “directly to the execution of a noncompetition] agreement.”

The district court’s determination is based on the general rule that, when a marital dissolution requires the district court to value a business acquired during the marriage, any value that is attached to a requirement that a spouse restrict his or her postmarital employment options is the nonmarital property of the spouse whose employment options are restricted. Grigs-by v. Grigsby, 648 N.W.2d 716, 722 (Minn. App.2002), review denied (Minn. Oct. 15, 2002); Sweere, 534 N.W.2d at 300-01. Although employment opportunities are often restricted through the execution of noncompetition agreements, that a spouse was required to sign a noncompetition agreement does not, by itself, establish that the spouse will be restricted in his or her future employment. Sweere, 534 N.W.2d at 297. Rather than restricting future employment, a noncompetition agreement may be a protective device intended to assure the value of the business’ goodwill. Id. at 297-98 (observing that rather than restricting employment, non-competition agreement may be intended to prevent solicitation of customers or employees or divulging of trade secrets). A noncompetition agreement also may be some combination thereof, in which case the district court must allocate the value of the noncompetition agreement between its restriction on the spouse’s future employment, which is nonmarital property, and its restrictions that are intended to protect the value of the business’ goodwill, which is marital property. Id. at 298, 301.

Schmidt distinguished between the value of the practice’s goodwill that is personal to husband and the value of the “institutional goodwill” that is attributable to the practice itself. Schmidt testified that the institutional goodwill derives from attributes such as “having a workforce in place, ... having a relationship with a hospital where you can do work, ... [and] having a lease in place.” None of these restricts husband’s future employment. Thus, even if a buyer required a noncompetition agreement to be attached to the value of the practice’s institutional goodwill in addition to the value of husband’s personal goodwill, that portion of the noncompetition agreement pertaining to the institutional goodwill would not be intended to restrict husband’s future employment. The value of that institutional goodwill, therefore, is marital property subject to just and equitable division under Minn. Stat. § 518.58, subd. 1.

Because the district court erroneously excluded the value of the practice’s institutional goodwill from the valuation of the practice, we reverse and remand to the district court with instructions to include the value of the institutional goodwill in its valuation of the surgical practice and to divide the parties’ marital property in a just and equitable manner.

III.

Wife next argues that the district court abused its discretion when it held that husband did not “dissipate” marital assets when he used them to pay his attorney fees, to fund education accounts for his grandchildren and wife’s granddaughter, to pay for his daughter’s wedding, and to purchase a one-half interest in a Porsche. Wife argues that this holding resulted in an unjust and inequitable division of the parties’ marital property. A district court has broad discretion to divide marital property, and we will not reverse such a division absent a clear abuse of that discretion or an erroneous application of the law, Ebnet v. Ebnet, 347 N.W.2d 840, 842 (Minn.App.1984), even if we would have reached a different result, Antone v. Antone, 645 N.W.2d 96, 100 (Minn.2002).

Minnesota law prohibits a spouse from transferring, encumbering, concealing, or disposing of marital assets in contemplation of commencing, or during the pen-dency of, a marital-dissolution proceeding unless the spouse does so with the other spouse’s consent or “in the usual course of business or for the necessities of life.” Minn.Stat. § 518.58, subd. la (2006). A violation of this statute requires the district court to compensate the other spouse “by placing both parties in the same position that they would have been in had the transfer, encumbrance, concealment, or disposal not occurred.” Id. The party alleging an improper transfer, encumbrance, concealment, or disposal of marital assets bears the burden of proof. Id.

Wife argues that the district court erroneously concluded that husband’s payment of his attorney fees out of the parties’ marital assets did not violate section 518.58, subdivision la. We agree. The district court’s conclusion not only is inconsistent with our case law, see Thomas v. Thomas, 407 N.W.2d 124, 127-28 (Minn. App.1987) (“Any amount taken from marital property to pay one party’s attorney’s fees should be accounted for ... in the distribution [of marital property].”), it also is inconsistent with the district court’s own order that “[e]ach party shall be responsible for [his or her] own attorney’s fees and costs.” We, therefore, reverse the district court’s determination that husband did not improperly dispose of marital assets in violation of section 518.58, subdivision la, when he used them to pay his attorney fees. Accordingly, we remand to the district court with instructions to compensate wife by placing her in the position she would have occupied had this improper disposal of marital assets not occurred.

Wife also argues that husband improperly transferred and disposed of marital assets when he used them to fund education accounts for his grandchildren and wife’s granddaughter and to pay for his daughter’s wedding. Specifically, wife argues that the district court clearly erred when it found that such expenditures were in the “usual course of business” or “for the necessities of life.” The evidence establishes that, throughout their marriage, husband and wife provided support to all of their adult children, often in the form of financial assistance for education costs. The evidence also demonstrates that they were very generous to their grandchildren. Thus, on these facts, the district court’s finding that these expenditures were in the parties’ usual course of business was not a clear abuse of discretion.

Finally, wife argues that the district court abused its discretion when it held that husband’s purchase of a one-half interest in a Porsche was not an improper disposal of marital assets. In 2001, husband paid $30,000 for that interest, which, at dissolution, was worth only $19,475. Wife argues that this depreciation constitutes an improper disposal of marital property. Because husband purchased this interest prior to the commencement of the marital-dissolution proceedings, the district court was required to determine whether husband made that purchase in contemplation of the marital dissolution. Minn.Stat. § 518.58, subd. la. We agree with the district court’s determination that the record is devoid of any evidence that husband purchased this interest “in contemplation” of commencing marital-dissolution proceedings. Therefore, we affirm this aspect of the district court’s decision.

IV.

Husband challenges the district court’s spousal-maintenance award to wife, arguing that the district court abused its discretion when it set husband’s spousal maintenance obligation. A district court has broad discretion in determining spousal maintenance, and we will not reverse such a determination absent an abuse of discretion. Erlandson v. Erlandson, 318 N.W.2d 36, 38 (Minn.1982). A district court abuses its discretion when it resolves the matter in a manner that is “against logic and the facts on record.” Rutten v. Rutten, 347 N.W.2d 47, 50 (Minn.1984). We will uphold findings of fact unless they are clearly erroneous. Prahl, 627 N.W.2d at 702. A finding is clearly erroneous if it leaves us “with the definite and firm conviction that a mistake has been made.” Id. (quotation omitted). We view the evidence in the light most favorable to the district court’s findings and defer to the district court’s credibility determinations. Id.

First, husband argues that the district court’s spousal-maintenance determination is erroneous because the district court failed to make a specific finding regarding husband’s income. Ordinarily, detailed factual findings are necessary to demonstrate that the district court considered the relevant statutory factors. Tut-hill v. Tuthill, 399 N.W.2d 230, 232 (Minn.App.1987). Insufficient findings render meaningful appellate review impossible. Stick v. Stick, 435 N.W.2d 52, 53 (Minn.1989). The district court’s findings are sufficient if they show that the district court considered the statutory factors relevant to its conclusion. Tuthill, 399 N.W.2d at 232. When setting a spousal-maintenance obligation, the statutory factors relevant to the district court’s conclusion include (1) the financial resources of the spouse seeking maintenance, including the marital property apportioned to that spouse, and that spouse’s ability to meet his or her needs; (2) the time necessary to acquire sufficient education or training to enable the spouse seeking maintenance to find appropriate employment and the probability that the spouse seeking maintenance will become fully or partially self-supporting; (3) the marital standard of living; (4) the duration of the marriage and, in the case of a homemaker, the length of absence from the job market and the effect thereof; ■ (5) the loss of earnings and retirement benefits foregone by the spouse seeking maintenance; (6) the age and physical and emotional condition of the spouse seeking maintenance; (7) the ability of the spouse from whom maintenance is sought to meet his or her own needs; and (8) the contribution of each party to the acquisition and appreciation of marital property. Minn.Stat. § 518.552, subd. 2 (2006).

Although the district court did not make a specific finding as to husband’s income, the district court’s findings demonstrate that the district court thoroughly considered the relevant statutory factors. Regarding the statutory factor that requires the district court to consider husband’s income and his ability to meet his own needs, the district court examined husband’s recent income levels, the impact a downturn in husband’s surgical field would have on husband’s income, the incomes of husband’s business associates, and husband’s intent to retire in the near future. Based on this thorough consideration of the relevant facts, we conclude that the district court’s findings regarding this statutory factor are sufficient in spite of the failure to make a specific finding regarding husband’s income.

Next, husband argues that the district court made inconsistent findings regarding wife’s mortgage debt, which resulted in an erroneous spousal-maintenance determination. But the district court’s findings regarding wife’s mortgage obligation are consistent. Together, these findings establish that the resources available to wife are insufficient to allow her to meet her needs regardless of whether she continues to pay her monthly maintenance obligation or she chooses to use her property settlement to pay off her mortgage balance.

Finally, husband challenges the district court’s determinations that “it is not possible to conclude that [wife] could return to the field of professional nursing at this time” and that wife “is not capable of working full-time.” Husband maintains that the district court should have imputed income to wife because wife can work but chooses not to. Before a district court may impute income to a party for the purpose of making a spousal-maintenance determination, it must find that the party is voluntarily unemployed or underemployed in bad faith. Carrick v. Carrick, 560 N.W.2d 407, 410 (Minn.App.1997). Here, the district court did not make such a finding. Rather, it credited wife’s testimony that she is unable to work in her field of nursing because of her physical limitations. And we defer to the district court’s credibility determination. See Prahl, 627 N.W.2d at 702 (stating that appellate courts leave credibility determinations to fact-finder when reviewing evidence regarding spousal maintenance).

Husband refers us to the testimony of his expert, Jan Lowe, in support of his argument that wife is voluntarily underemployed in bad faith. Lowe, an employability consultant, testified that there were a number of nursing positions available with job requirements that wife could perform. The district court did not find this testimony credible because “Lowe never interviewed [wife] so as to make a determination as to whether or not [wife] could perform the tasks of a nurse at the present time,” “made no inquiry about whether [wife] had physical conditions which would prevent her from returning to the field of nursing,” and “was unable to make any correlation between [wife] as an appropriate candidate for [nursing] jobs [available in the Twin Cities area].” This credibility determination also is accorded deference. Id. Therefore, because the record lacks any credible evidence that wife was voluntarily underemployed in bad faith, the district court did not abuse its discretion when it refused to impute income to her.

Although we reject husband’s challenges to the district court’s spousal-maintenance determination, we recognize that, when the district court revisits the other aspects of the division of marital property addressed in this opinion, the district court may need to reconsider the appropriate amount of spousal maintenance in light of our conclusions that the value of the appreciation of husband’s premarital retirement funds in his SIGS accounts is marital property, that the value of the institutional goodwill in husband’s surgical practice shall be included in the overall valuation of the practice, and that wife must be compensated for husband’s improper disposal of marital property to pay his attorney fees. Indeed, these holdings may affect the district court’s findings as to the statutory factors to be considered when setting spousal maintenance. Minn.Stat. § 518.552, subd. 2.

DECISION

Because the district court erred as a matter of law when it held that the appreciation of husband’s premarital retirement funds was nonmarital property and the institutional goodwill accumulated in husband’s surgical practice could not be included in the overall valuation of the practice, and because the district court erred when it held that husband did not improperly dispose of or transfer marital assets when he used them to pay his attorney fees, we reverse and remand to the district court to divide the parties’ marital property in a just and equitable manner. Because the district court did not abuse its discretion when it held that husband did not improperly encumber or dispose of marital property when he used it to fund education accounts for his grandchildren and wife’s grandchild, to pay for his daughter’s wedding, or to purchase a one-half interest in a Porsche, we affirm these aspects of the district court’s decision. Although we reject husband’s challenge to the district court’s spousal-maintenance determination, the district court may reconsider on remand the appropriate amount of spousal maintenance for wife in light of the statutory factors set forth in Minn.Stat. § 518.552, subd. 2 (2006), and the division of property.

Affirmed in part, reversed in part, and remanded.

MINGE, Judge

(concurring in part, dissenting in part).

I concur in sections II, III, and IV of the decision and respectfully dissent from the result in section I.

In reviewing the record and the findings of the district court, I conclude that it used the proper standard for determining what constituted active management of nonmari-tal investment assets and properly applied that standard.

With three relatively isolated and minor exceptions, respondent did not play an active or practical role in the management of his nonmarital retirement funds. Respondent’s “active” involvement consists of three decisions: (1) Investing a modest amount in a business in which his son was involved. This was ultimately a loss; it contributed nothing to the growth of the nonmarital asset and even worse it now contributes to all appreciation as being classified as marital property. (2) Changing his investment advisor. This was done once upon the recommendation of respondent’s accountants. This was not active management. It was simply an attempt to save advisory service fees and obtain better services. Respondent subsequently reversed that decision. (3) Rolling funds from certain widely-held mutual funds to others largely within the same family of funds. This was done as any wage earner with a 401 (k) account or other flexible retirement fund might adjust a retirement portfolio mix to maintain balance. It was not often or dramatic. Respondent was working full-time. The record is clear that respondent did not engage in research, take time from his medical practice, take time from his family for this activity, or engage an active, hands-on manager. If this constitutes active management, the bar is very high.

In these circumstances, I would not overrule the district court, but rather defer to its decision that respondent’s management did not cause the appreciation of a nonmarital retirement fund becomes marital property.

      . At the time of dissolution, wife was age 57 and husband was age 69.

      . We cannot determine from the record whether Trask is paid with the parties' marital property or with nonmarital property.

      . Harjes testified that, before age 59 1/2, husband could have withdrawn funds by paying a penalty and that, after age 59 1/2, he has had the ability to freely withdraw funds. Husband testified that, beginning at age 70 1/2, he would be required to withdraw $125,000 from the SIGS accounts every year.

      . In support of his argument that the mere ability to control a financial advisor does not make the appreciation of nonmarital funds managed by that advisor active appreciation, husband relies on Chamberlain v. Chamberlain, 615 N.W.2d 405 (Minn.App.2000), review denied (Minn. Oct. 25, 2000). There, we were presented with the issue of whether the appreciation of the husband's premarital retirement funds was marital property because, during the marriage, the husband actively managed those funds through his financial advisor. Chamberlain, 615 N.W.2d at 413. We determined that those funds were marital property on other grounds, and, therefore, declined to reach the merits of this issue. Id. But we commented that “the treatment of this nonmarital asset as marital by the district court based on the alleged active management of the account by [husband's] agent is troubling for several reasons.” Id. at 413 n. 2. Because Chamberlain does not identify the reasons such treatment was ''troubling,” it does not inform our analysis here.

      . In addition to this extensive testimony regarding husband’s ability to control and withdraw funds in the SIGS accounts, the district court’s findings and the record evidence show that the marital contributions to the SIGS accounts were commingled with the premarital funds therein. But because we conclude that the appreciation of the premarital funds in husband's SIGS accounts is marital property on the ground that it is active appreciation, we need not reach wife's argument that this appreciation is marital property because it cannot be traced to nonmarital property.

      . Wife’s expert also testified about the practice's value. That expert did not appraise the practice, but he reviewed Schmidt's appraisal. The district court rejected the testimony of wife's expert, determining that it was "far less credible and reliable than the carefully-considered analysis of [Schmidt,] the neutral expert.” As wife concedes, we defer to this credibility determination by the district court. See Vangsness v. Vangsness, 607 N.W.2d 468, 472 (Minn.App.2000) (stating that appellate courts defer to district court’s credibility determinations).

      .That the goodwill is tied to the execution of a noncompetition agreement is consistent with Schmidt's testimony that a willing buyer would pay the entire $365,000 for goodwill only if husband agreed to sign a noncompetition agreement.

      . In support of her argument, wife cites cases decided before, or derived from cases decided before, the 1991 enactment of Minn.Stat. § 518.58, subd. la. 1991 Minn. Laws ch. 266, § 5 at 1197. Those cases refer to a party’s "dissipation” of marital assets. Under the version of the statute in effect at the time of the dissolution, however, the question is whether a party "transferred, encumbered, concealed, or disposed of marital assets except in the usual course of business or for the necessities of life.” Minn.Stat. § 518.58, subd. la (2004).


author: WILLIS, Judge.

text:
    Charles RISDALL, et al., Respondents, v. BROWN-WILBERT, INC., et al., Defendants, Christopher C. Brown, et al., Appellants.
    No. A06-1233.
    Court of Appeals of Minnesota.
    July 3, 2007.

      Scott D. Hillstrom, Guardian Law Group, LLC, Minneapolis, MN; and Peter A. Roller, Moss & Barnett, P.A., Minneapolis, MN, for respondents.
    Kay Nord Hunt, Lommen, Abdo, Cole, King & Stageberg, P.A., Minneapolis, MN; and George E. Antrim, III, Minneapolis, MN, for appellants.
    Considered and decided by RANDALL, Presiding Judge; KLAPHAKE, Judge; and WILLIS, Judge.
   OPINION

WILLIS, Judge.

Appellants challenge the district court’s grant of summary judgment to respondents on their claim that appellant corporation sold unregistered securities in violation of Minnesota securities law, entitling respondents to rescind their purchases of appellant’s stock. Because we conclude that respondents’ state-law claims are preempted by federal law, we reverse and remand.

FACTS

Appellant funeral.com was incorporated in 1999; it is “principally engaged in the development and marketing of an internet website where those with funeral needs can find information and alternatives.” Its CEO, appellant Christopher C. Brown, is also the president of Brown-Wilbert, Inc., a burial-vault manufacturer. In March 2000, funeral.com issued a private-placement offering memorandum (PPM1) for the sale of funeral.com stock. Respondents Charles Risdall, Len Dozier, and Mary Risdall learned of the stock-purchase opportunity and received copies of PPM1 from Ted Risdall, who served on funerakcom’s board of directors. In March and April 2000, respondents purchased shares of funeral.com stock under PPM1.

In May 2000, funeral.com issued a second private-placement offering memorandum (PPM2). PPM2 was posted on the Internet and mailed to a list of funeral directors until funeral.com learned that general solicitation and general advertising would prevent the offering from being exempt under Regulation D from the registration requirement of the federal Securities Act. See 17 C.F.R. §§ 230.501-.508 (2006) (Regulation D). The web postings were removed, and PPM2 was withdrawn before any sales were made under it. Ted Risdall stated in an affidavit presented to the district court that when he learned of the general solicitation at a May 31, 2000 board meeting, he explained that such solicitation was impermissible without registration and directed the webmaster to remove the material immediately.

The record also contains a letter dated August 14, 2000, to the Securities and Exchange Commission (SEC) from funeral.com’s counsel, responding to an inquiry by the SEC regarding funeralxom’s use of e-mail and websites to describe an unregistered stock offering. In the letter, funeral.com’s counsel admitted that information about a private-placement offering was placed on two websites “at some point after June 1, 2000,” and assured the SEC that as of August 10, 2000, the material had been removed from both websites, that no stock sales had been made under the advertised offering, and that funeral.com would ensure that no future sales were made to individuals who had requested a copy of PPM2 “through the websites.”

Respondents filed suit against funeral.com in March 2003, alleging consumer fraud, negligence, securities fraud, and unjust enrichment, and seeking rescission of their stock purchases. Both parties moved for summary judgment.

Respondents moved for summary judgment on the grounds that (1) funeral.com sold unregistered securities, in violation of Minn.Stat. § 80A.08 (1998) and (2) funeral.com committed securities fraud, in violation of Minn.Stat. § 80A.01 (1998). Respondents’ claim that funeral.com sold unregistered securities was based on their contention that the alleged violations involving PPM2 affected the securities sales made under PPM1 because PPM1 and PPM2 were “integrated,” or considered to be part of the same offering. Noting that funeral.com disputed that PPM1 and PPM2 should be integrated, the district court determined that its disposition of respondents’ motion for summary judgment “hinge[d] on resolution of this single difference of position.”

In its motion for summary judgment, funeral.com argued that respondents’ claim is barred by federal securities law because the shares were sold under the exemption from registration provided by Regulation D, promulgated by the SEC. In the alternative, funeral.com argued that it is entitled to summary judgment because Minn.Stat. § 80A.15, subd. 2(h) (1998), provides an exemption from the registration requirement for stock that is sold “in reliance on” the Regulation D exemption. Further, funeral.com argued, there should be no integration of PPM1 and PPM2 because no sales were made under PPM2.

The district court concluded that PPM1 and PPM2 were integrated because they (1) were part of a single financing plan (i.e., starting funeral.com); (2) involved the same class of stock (i.e., common shares); (3) were sold “at or about the same time” (i.e., over a 5-month period); (4) both involved cash consideration; and (5) involved the same purpose (i.e., starting funeral.com). The district court determined that funeral.com failed to comply with Regulation D, that “purported reliance” on Regulation D does not trigger federal preemption of state securities laws in the absence of “actual compliance,” and that, therefore, Minn.Stat. ch. 80A is not preempted by federal securities law here.

The district court therefore concluded that funeral.com sold unregistered securities in violation of Minn.Stat. ch. 80A, granted summary judgment to respondents on that ground, and determined that respondents were entitled to rescission of their stock purchases, repayment of the purchase price with interest, costs, and attorney fees under Minn.Stat. § 80A.23, subd. 1 (1998). But the district court denied respondents’ motion for summary judgment on their securities-fraud claim on the ground that the facts material to this claim were not “sufficiently undisputed.” The district court also denied funer-ahcom’s motion for summary judgment. Respondents agreed to dismiss their remaining claims against funeral.com, including the securities-fraud claim, and final judgment for respondents was entered. This appeal by funeral.com follows.

ISSUE

When a securities offering is made pursuant to Regulation D, 17 C.F.R. §§ 230.501-.508 (2006), does federal law preempt a claim that the offering failed to meet the registration requirement of Minn. Stat. § 80A.08 (2006)?

ANALYSIS

This court asks two questions when reviewing a district court’s decision to grant summary judgment: (1) whether there are any genuine issues of material fact and (2) whether the district court erred in its application of the law. State by Cooper v. French, 460 N.W.2d 2, 4 (Minn.1990). No genuine issue of material fact exists when “the record taken as a whole could not lead a rational trier of fact to find for the nonmoving party.” DLH, Inc. v. Russ, 566 N.W.2d 60, 69 (Minn.1997) (quoting Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 1356, 89 L.Ed.2d 538 (1986)).

Interpretation of statutes regulating securities is a question of law, which this court reviews de novo. See Nash v. Wollan, 656 N.W.2d 585, 589 (Minn.App.2003), revieiv denied (Minn. Apr. 29, 2003).

Minnesota Statutes chapter 80A (2006) regulates the sale of securities. Section 80A.08 provides that “[i]t is unlawful for any person to offer or sell any security in this state unless (a) it is registered under sections 80A.01 to 80A.31 or (b) the security or transaction is exempted under section 80A.15 or (c) it is a federal covered security.” It is undisputed that funeral.com sold unregistered stock to respondents under PPM1, but because funeral.com did not generally advertise or generally solicit sales under PPM1 and the offering was therefore exempt from the registration requirements, those sales standing alone did not violate section 80A.08. And funeral.com asserts that because respondents’ state-law claims are preempted by federal law, even if PPM1 and PPM2 are integrated, there was no violation of MinmStat. ch. 80A.

Under the federal Securities Act of 1933, a registration statement must be filed with the SEC before a security may be offered or sold. 15 U.S.C. § 77e (2000). But federal securities law also provides a number of exemptions from the registration requirement, including Regulation D. 17 C.F.R. §§ 230.501-.508 (2006). The National Securities Markets Improvement Act (NSMIA) preempts enforcement of state registration requirements for “covered seeurit[ies],” which include those sold under Regulation D. 15 U.S.C. § 77r(a), (b)(4)(D) (2000). Regulation D exempts from the registration requirement “transactions by an issuer not involving any public offering.” 15 U.S.C. § 77d(2) (2000); see also id., § 77d(6) (providing that offers or sales solely to accredited investors are exempt from the registration requirement “if there is no advertising or public solicitation in connection with the transaction”). An issuer purporting to use the Regulation D exemption may not “offer or sell the securities by any form of general solicitation or general advertising.” 17 C.F.R. § 230.502(c).

PPM1 provided:

The Shares offered hereby have not been registered under the 1933 Act or any state securities or “blue sky” laws. The Shares are being offered pursuant to exemption from registration. Such exemptions from registration provide that we may sell the Shares offered hereby only to investors who are “accredited investors” as such term is defined in Rule 501(a) of Regulation D promulgated under the 1933 Act.

Because the stock sold to respondents was offered “pursuant to” Regulation D, funeral.com asserts, “any allegation of improper registration is covered exclusively by federal law,” and “[a]ny claim for failure to properly register under state law or for rescission under state law is preempted.”

There appears to be no genuine dispute regarding the fact that funeral.com intended for PPM1 to be exempt from the registration requirement under Regulation D— funeral.com points to respondents’ acknowledgment in their memorandum in opposition to funeral.com’s motion for summary judgment that they “purchased their shares in an offering made pursuant to Rule 506 of Regulation D.” But respondents argue that because PPM1 and PPM2 should be integrated into a single offering and funeral.com failed to comply with Regulation D when it publicly solicited securities sales under PPM2, PPM1 is not protected by Regulation D, so Minn.Stat. ch. 80A is not preempted by federal law here.

The parties’ positions represent two sides of an issue that has produced conflicting results in securities cases: must a defendant in an action alleging a sale of unregistered securities “prove preemption by proving exemption?” Grubka v. Web-Access Int’l, Inc., 445 F.Supp.2d 1259,1269 (D.Colo.2006). Minnesota’s federal district court recently concluded that “[w]hen an offering purports to be exempt under federal Regulation D, any allegation of improper registration is covered exclusively by federal law.” Pinnacle Commc’ns Int’l, Inc. v. Am. Family Mortgage Corp., 417 F.Supp.2d 1073, 1087 (D.Minn.2006); see also Lillard v. Stockton, 267 F.Supp.2d 1081, 1116 (N.D.Okla.2003); Temple v. Gorman, 201 F.Supp.2d 1238, 1244 (S.D.Fla.2002) (holding that when a private placement of securities purported to be exempt under Rule 506, “[rjegardless of whether the private placement actually complied with the substantive requirements of Regulation D or Rule 506, the securities sold to Plaintiffs are federal ‘covered securities’ because they were sold pursuant to those rules”).

The conflicting line of authority requires that the offering actually be exempt under Regulation D by complying with its requirements before an issuer of securities may assert that federal preemption applies. See Grubka, 445 F.Supp.2d at 1270 (“Nowhere does the statute indicate that a security may satisfy the definition if it is sold pursuant to a putative exemption. If Congress had intended that an offeror’s representation of exemption should suffice it could have said so, but did not. Such an intent seems unlikely, in any event; that a defendant could avoid liability under state law simply by declaiming its alleged compliance with Regulation D is an unsavory proposition and would eviscerate the statute.”); see also Brown v. Earthboard Sports USA, Inc., 481 F.3d 901, 910 (6th Cir.2007); Hamby v. Clearwater Consulting Concepts, LLLP, 428 F.Supp.2d 915, 920-21 (E.D.Ark.2006); Buist v. Time Domain Corp., 926 So.2d 290, 296 (Ala.2005).

Although it is not binding on this court, we agree with the opinion of the Minnesota federal district court. Because federal courts are uniquely qualified to address issues of federal law, such as the availability of a Regulation D exemption, we conclude that the better view is that an offering purporting to be exempt under Regulation D is governed exclusively by federal law, and any claim under state law relating to the offering is therefore preempted. It is not genuinely disputed that PPM1 purported to be exempt under Regulation D, so it and any subsequent, integrated offerings are governed by federal law. Respondents’ state-law claims are therefore preempted, and we reverse on that ground the district court’s grant of summary judgment to respondents.

Even if we were to follow the conflicting line of authority and conclude that an offering must actually comply with Regulation D for federal law to preempt state-law claims relating to the offering, we would nonetheless reverse the district court’s grant of summary judgment to respondents because we conclude that funeral.com complied with Regulation D in its sale of securities to respondents.

Respondents do not assert that PPM1, standing alone, violated Regulation D’s prohibition on public solicitation. Therefore, their argument that PPM1 failed to meet the requirements of Regulation D relies on their contention, with which the district court agreed, that PPM1 and PPM2 should be integrated.

Regarding integration, Regulation D provides:

(a)Integration. All sales that are part of the same Regulation D offering must meet all of the terms and conditions of Regulation D. Offers and sales that are made more than six months before the start of a Regulation D offering or are made more than six months after completion of a Regulation D offering will not be considered part of that Regulation D offering, so long as during those six month periods there are no offers or sales of securities by or for the issuer that are of the same or a similar class as those offered or sold under Regulation D, other than those offers or sales of securities under an employee benefit plan as defined in rule 405 under the Act (17 C.F.R. 230.405).
The following factors should be considered in determining whether offers and sales should be integrated for purposes of the exemptions under Regulation D:
(a) Whether the sales are part of a single plan of financing;
(b) Whether the sales involve issuance of the same class of securities;
(c) Whether the sales have been made at or about the same time;
(d) Whether the same type of consideration is being received; and
(e) Whether the sales are made for the same general purpose.

17 C.F.R. § 230.502(a).

Funeral.com emphasizes the fact that the five-factor test refers to “sales” of securities and the fact that the SEC originally used the word “offerings” in its five-factor integration test but replaced it with “sales” when it codified Regulation D. Compare Non-Public Offering Exemption, Securities Act, 27 Fed.Reg. 11316, 11317 (Nov. 16, 1962) (introducing the five-factor test, using the word “offerings”), with 17 C.F.R. § 230.502(a) (1982) (codifying Regulation D, including the five-factor test, using the word “sales” rather than “offerings”). Because no sales were made under PPM2, funeral.com argues, PPM2 cannot be integrated with PPM1, and the district court erred in its application of the law when it concluded otherwise. Respondents address this argument in a footnote in which they claim that “[cjourts and scholars have found no significance in the change from ‘offerings’ to ‘sales,’ as evidenced by the fact that they continue to use the word ‘offerings’ in discussing the current test.”

We agree with funerahcom’s argument. Such a deliberate change in the language of the SEC’s integration test cannot be dismissed as having “no significance.” Under the plain language of the federal regulation, an offering under which no sales are made cannot be integrated with another offering under Regulation D. And respondents do not dispute the fact that no sales were made under PPM2. We therefore conclude that PPM1 and PPM2 were not integrated, and respondents do not assert that PPM1, standing alone, violated the requirements of Regulation D. Because PPM1 complies with Regulation D, respondents’ state-law claims are preempted by federal law, even if we were to follow the line of cases that require defendants to prove exemption under Regulation D in order to establish federal preemption of state securities laws.

And even if respondents’ claims under Minn.Stat. ch. 80A were not preempted by federal law, because we have determined that PPM1 and PPM2 should not be integrated, we also conclude that PPM1 was exempt under Minn.Stat. § 80A.15, subd. 2(h), from the registration requirement of Minn.Stat. § 80A.08. Section 80A.15, subdivision 2(h), exempts from the registration requirement

[a]n offer or sale of securities by an issuer made in reliance on the exemptions provided by Rule 505 or 506 of Regulation D promulgated by the Securities and Exchange Commission, [17 C.F.R. §§ 230.501-.508], subject to the conditions and definitions provided by Rules 501 to 503 of Regulation D, [which include the prohibition on public solicitation], if the offer and sale also satisfies the conditions and limitations in clauses (1) to (10).
(10) The determination whether offers and sales made in reliance on the exemption set forth in paragraph (h) shall be integrated with offers and sales according to other paragraphs of this subdivision shall be made according to the integration standard set forth in Rule 502 of Regulation D....

Section 80A.15, subdivision 2(h)(10), incorporates the integration standard provided in Regulation D. Because we have concluded that PPM1 should not be integrated with PPM2 and because PPM1 was offered in reliance on Regulation D and otherwise complies with subdivision 2(h), PPM1 is exempt under subdivision 2(h) from the registration requirement of section 80A.08. Therefore, even if we were to determine that respondents’ claims were not preempted by federal law, we would still conclude that respondents are not entitled to judgment.

DECISION

Because it is undisputed that funeral.com’s securities under PPM1 were sold pursuant to Regulation D, the sales are governed solely by federal law, and respondents’ state-law claims are preempted. We therefore reverse and remand for entry of judgment for appellants.

Reversed and remanded.

      . We refer to appellants collectively as "funeral.com.”

      . Mary Risdall is represented in this suit by John Risdall in his capacity as personal representative of her estate.

      . We note that respondents’ complaint did not specifically allege a violation of Minn. Stat. 80A.08, which prohibits the public sale of unregistered securities. It also did not allege the fact of nonregistration. The issue of nonregistration was raised for the first time in respondents' memorandum in support of their motion for summary judgment, and funeral.com then responded to the issue. We conclude that the parties have litigated this issue by consent. See Minn. R. Civ. P. 15.02 (providing that when a party does not raise an issue in its pleadings, the parties may litigate the issue by express or implied consent, and the district court will treat those issues as if they were raised in the pleadings).

      . Minn.Stat. §§ 80A.01-.31 have been repealed, effective August 1, 2007. 2006 Minn. Laws ch. 196, art. 1, §§ 51-52, at 91.


author: SHUMAKER, Judge.

text:
    Marvin Orlando JOHNSON, petitioner, Appellant, v. STATE of Minnesota, Respondent.
    No. A06-1102.
    Court of Appeals of Minnesota.
    July 3, 2007.

      John M. Stuart, State Public Defender, Richard Schmitz, Assistant Public Defender, Minneapolis, MN, for appellant.
    Lori Swanson, Attorney General, St. Paul, MN; and Michael O. Freeman, Hen-nepin County Attorney, Thomas A. Weist, Assistant County Attorney, Minneapolis, MN, for respondent.
    Considered and decided by PETERSON, Presiding Judge; SHUMAKER, Judge; and ROSS, Judge.
   OPINION

SHUMAKER, Judge.

Appealing from a postconviction resen-tencing on a multi-count sentence, appellant Marvin Johnson argues that although the postconviction court had the authority to reduce the erroneous portion of the sentence for one aggravated-robbery conviction, the court abused its discretion when it increased the duration of his sentence for the second aggravated-robbery conviction. Since Johnson expressly negotiated his original sentence through a plea agreement and received the benefit of that plea, and since his total sentence remained unchanged in either duration or disposition, we find that he is not entitled to a reduction of his overall sentence.

FACTS

The state charged appellant Marvin Orlando Johnson with three separate aggravated robberies in 2004. When one of the cases came on for trial, he pleaded guilty to the charge. He later moved to withdraw his plea, but, before the court ruled on the motion, Johnson and the state entered a plea agreement by which he would plead guilty to one additional charge of aggravated robbery, the state would dismiss the third charge, and Johnson’s aggregate sentence for two convictions would be 128 months, executed.

The aggregate sentence was composed of 98 months on the first conviction— which, based on the only record on file, the court and parties believed to be the presumptive sentence — and 30 months on the second conviction, which was a downward-durational departure from the presumptive sentence of 48 months.

The 98-month sentence was premised on a criminal-history score that included one custody-status point for probation from convictions in 2002. Without that custody-status point, the presumptive sentence for Johnson’s first aggravated-robbery conviction would have been 88 months.

In 2006, Johnson petitioned for postcon-viction relief on the ground that the custody-status point was erroneously included in his criminal-history score because his 2002 probationary sentence had been executed before the 2004 crimes. Johnson sought resentencing and a reduction of his aggregate sentence by ten months.

The postconviction court ruled that the 98-month sentence had been erroneously calculated; resentenced Johnson to the presumptive sentence of 88 months; but increased his 30-month sentence on the second aggravated-robbery conviction to 40 months and thereby declined any overall reduction in the 128-month aggregate sentence. The court’s reasoning was that Johnson “voluntarily entered into a favorable plea agreement with the State for a total sentence of 128 months. In return, a third aggravated robbery was dismissed. [Johnson] is not entitled to a reduction of his overall sentence.” Johnson contends on appeal that the court’s denial of a reduction of his overall sentence was error.

ISSUE

A plea bargain for a sentence of 128 months was composed of a 98-month presumptive sentence on the first charge and a 30-month downward departure from the 48-month presumptive sentence on the second. In a postconviction proceeding, appellant established that the presumptive sentence for the first charge was 88 months and requested correction. The court corrected that sentence but increased the second to 40 months so as to comport with the plea agreement.

Did the court have authority to increase the second sentence?

ANALYSIS

We note first that Johnson did not move to withdraw his pleas of guilty nor did he ask the court to vacate any plea. His challenge on appeal is solely to the court’s ruling that the overall sentence to which he agreed should not be reduced. He contends that the postconviction court lacked authority to adjust the 30-month sentence upward to 40 months for his second conviction.

Appellate courts “afford great deference to a district court’s findings of fact and will not reverse the findings unless they are clearly erroneous.” Dukes v. State, 621 N.W.2d 246, 251 (Minn.2001). “The decisions of a postconviction court will not be disturbed unless the court abused its discretion.” Id. The court abuses its discretion if it misinterprets or misapplies the law. State v. Babcock, 685 N.W.2d 36, 40 (Minn.App.2004), review denied (Minn. Oct. 20, 2004). A postconviction court’s factual findings will be sustained if they are supported by sufficient evidence, Dukes, 621 N.W.2d at 251, but we independently determine the law as it applies to the facts, Townsend v. State, 723 N.W.2d 14, 18 (Minn.2006).

The only factual finding that the post-conviction court made was that Johnson voluntarily entered a plea agreement that, in return for the dismissal of a charge, required a sentence of 128 months. Not only is this finding fully supported by the record, but also Johnson does not argue to the contrary.

Although we were not provided with the sentencing transcript on appeal, the post-conviction-hearing transcript contains a thorough review of the plea agreement, the basis for the agreement, the parties’ discussions, Johnson’s statements, and the observations of the sentencing judge, who was also the judge before whom the post-conviction petition was brought.

It is clear, and undisputed, that the essence of the plea bargain was the amount of time Johnson would receive in the aggregate for his convictions. Johnson suggested 126 months but then agreed to the state’s offer of 128 months. Having resolved that issue, the question was how a sentence of 128 months could properly be imposed. The parties concluded that a downward departure of 18 months would be required for the second conviction but that the apparent presumptive sentence could be imposed on the first. The controlling factor in the plea agreement was the 128-month sentence. All else was merely the means to accomplish that sentence consistent with the law.

There is no challenge to the authority of the postconviction court to correct the 98-month sentence. But Johnson argues that that correction was the limit of the court’s authority under Minn. R.Crim. P. 27.08, subd. 9, and the 30-month sentence must stand. This would result in an aggregate sentence of 118 months.

We hold that the court also had the authority to adjust the 30-month sentence so as to comport with the plea agreement that Johnson voluntarily entered. A similar issue was addressed in the context of a sentencing court’s authority upon remand after a direct appeal in State v. Nunn, 411 N.W.2d 214, 216 (Minn.App.1987). The court of appeals vacated the appellant’s sentence for aggravated robbery in a mul-ti-count sentence and remanded for resen-tencing, limiting the district court to a total sentence not to exceed appellant’s original sentence of 201 months. Id. The district court resentenced Nunn to 201 months, and he appealed. Id. Upon further review, this court stated that since “the sentences imposed were authorized by law and did not exaggerate the criminality of appellant’s conduct or exceed the original 201 month total sentence, the imposition of the 60-month consecutive sentence on Count IV was not error.” Id. at 217. See also State v. Coe, 411 N.W.2d 180, 181-82 (Minn.1987) (reversing sentence and holding that the remedy for an improper sentence on one count of a multi-count sentence was to remand, limiting the district court to the original total sentence if the sentence was increased on another count). Although Nunn and Coe did not involve plea agreements, the sentence-correcting principles in those cases pertain here.

The reasoning in Nunn is even more compelling in Johnson’s case. First, it is undisputed that the postconviction court’s sentence was authorized by law. See State v. Rohda, 358 N.W.2d 39, 41 (Minn.1984) (remanding a sentencing departure, when the district court never indicated it wanted to depart). Second, the new sentence did not exaggerate the criminality of Johnson’s conduct because one term was that which is presumed appropriate and the other was still eight months less than the presumptive sentence. Third, it was precisely the sentence term that Johnson had previously agreed to in exchange for the dismissal of one of the charges against him.

DECISION

Because the plea agreement called for an aggregate sentence of 128 months, it was permissible for the court to reduce the erroneous sentence on one charge but to increase the sentence on the other charge to comply with the plea agreement.

Affirmed.