text:
    STATE of Minnesota, Respondent, v. Shah Quaran Ehassan AZIZ, Petitioner.
    No. C8-99-910.
    Supreme Court of Minnesota.
    June 13, 2000.
    Review Denied Oet. 17, 2000.
   ORDER

Based upon all the files, records and proceedings herein,

IT IS HEREBY ORDERED that the petition of Shah Quaran Ehassan Aziz for further review be, and the same is, granted for the limited purpose of remanding to the court of appeals for reconsideration. This matter came before the court of appeals by direct appeal from the judgment of conviction, but the court of appeals’ decision indicates that the court applied the review standard for appeals from post-conviction proceedings. See State v. Aziz, No. C8-99-910, 2000 WL 369497, at *2 (Minn.App. Apr. 11, 2000). Since there is no provision in the rules for a petition for rehearing of a decision of the court of appeals, petitioner raised the issue in his petition for further review. In the interests of justice and without suggesting that petitioner would be entitled to any relief on the merits of the appeal, we remand the matter for reconsideration under the appropriate standard of review for direct appeals. Cf. State v. Hanson, 473 N.W.2d 312 (Minn.1991) (consolidated criminal eases remanded to the court of appeals for reconsideration, in the interests of justice and without comment on the merits, after discovery that court of appeals did not have the complete record).

BY THE COURT

Kathleen A. Blatz Kathleen A. Blatz Chief Justice


source: Caselaw Access Project

author: Alan C. Page Associate Justice

license: Public Domain

text:
    In re Petition for DISCIPLINARY ACTION AGAINST Jesse GANT, III, an Attorney at Law of the State of Minnesota.
    No. C8-99-2060.
    Supreme Court of Minnesota.
    July 18, 2000.
   ORDER

The Director of the Office of Lawyers Professional Responsibility has filed a petition for disciplinary action alleging that respondent Jesse Gant, III, has committed professional misconduct warranting public discipline, namely, pursued frivolous litigation and violated procedural rules of the trial and appellate courts in numerous cases, failed to pay a court reporter, failed to pay a court-ordered sanction, and failed to cooperate with the disciplinary investigation in violation of Rules 1.1, 1.3, 1.4, 1.5(e), 1.15, 1.16, 3.1, 3.2, 3.3, 3.4, 3.5(h), 5.1(b) and (c), 8.1, 8.2(a), 8.4(c), and 8.4(d), Minnesota Rules of Professional Conduct, and Rule 25, Rules on Lawyers Professional Responsibility.

Respondent admits his conduct violated the Rules of Professional Conduct, waives his rights pursuant to Rule 14, Rules on Lawyers Professional Responsibility (RLPR), and has entered into a stipulation with the Director wherein they jointly recommend that the appropriate discipline is a 90-day suspension, with a Rule 18 RLPR, reinstatement hearing, and two years supervised probation following reinstatement, and payment of $900 in costs pursuant to Rule 24, RLPR.

This court has independently reviewed the file and approves the jointly-recommended disposition,

IT IS HEREBY ORDERED that respondent Jesse Gant, III, is suspended from the practice of law with leave to petition for reinstatement in 90 days and that he pay $900 in costs pursuant to Rule 24, RLPR. Respondent shall comply with Rule 26, RLPR, and successfully complete the professional responsibility portion of the bar examination. Upon reinstatement respondent shall be placed on two years supervised probation, the terms of which shall be recommended by the panel at the hearing on a petition for reinstatement and determined by the court at the time of reinstatement.

BY THE COURT:

Alan C. Page Associate Justice


text:
    In re Petition for DISCIPLINARY ACTION AGAINST Michael Lee MARTINEZ, an Attorney at Law of the State of Minnesota.
    No. C3-00-451.
    Supreme Court of Minnesota.
    July 25, 2000.
   ORDER

The Director of the Office of Lawyers Professional Responsibility has filed a petition for disciplinary action alleging that respondent Michael Lee Martinez has committed professional misconduct warranting public discipline, namely, respondent failed to file or pay employee withholding tax returns, failed to adequately communicate with clients, failed to diligently pursue several client matters, and failed to cooperate with the Director’s Office in its investigation of client complaints, in violation of Minn. R. Prof. Conduct 1.3, 1.4,1.16(d), 8.1(a)(3) and 8.4(d).

Respondent admits his conduct violated the Rules of Professional Conduct, waives his rights pursuant to Rule 14, Rules on Lawyers Professional Responsibility (RLPR), and has entered into a stipulation with the Director wherein they jointly recommend that the appropriate discipline is a 60-day suspension followed by 2 years of supervised probation subject to the following conditions:

(1) Respondent shall pass the professional responsibility portion of the state bar examination within one year of the date of this court’s, order;
(2) Respondent shall comply with Rule 26, RLPR;
(3) Prior to reinstatement, respondent shall enter into agreements satisfactory to the Internal Revenue Service (IRS) and the Minnesota Department of Revenue (DOR) for the payment of all unpaid employer withholding taxes. Respondent shall provide copies of the payment agreements and proof of currency on payments required by the agreement to the Director. If, prior to reinstatement, agreements with the IRS and/or DOR have not been reached despite diligent effort by respondent, respondent shall report to the Director concerning his progress in reaching agreement. Such reports shall continue after reinstatement on a monthly basis until written agreements have been signed by both the IRS and DOR;
(4) Respondent shall be reinstated to the practice of law following expiration of his suspension provided that at least 15 days before the expiration of the suspension period respondent files an affidavit with the Clerk of Appellate Courts and Director’s Office establishing that he is current with continuing legal education requirements, has fully complied with Rules 24 and 26, RLPR, and has satisfactorily completed . all other conditions imposed by the court;
(5)Upon reinstatement, respondent shall be on probation for 2 years subject to the following conditions:
(a) Respondent shall cooperate fully with the Director’s Office in its efforts to monitor compliance with this probation and promptly respond to the Director’s correspondence by the due date. Respondent shall cooperate with the Director’s investigation of any allegations of unprofessional conduct that may come to the Director’s attention. Upon the Director’s request, respondent shall provide authorization for release of information and documentation to verify compliance with the terms of this probation.
(b) Respondent shall abide by the Minnesota Rules of Professional Conduct.
(c) Respondent shall be supervised by a licensed Minnesota attorney, appointed by the Director to monitor compliance with the terms of this probation. Respondent shall provide to the Director the names of four attorneys who have agreed to be nominated as- respondent’s supervisor at least two weeks prior to respondent being reinstated to the practice of law. If, after- diligent effort, respondent is unable to locate a supervisor acceptable to the Director, the Director will seek to appoint a supervisor. Until a supervisor has signed a consent to supervise, the -respondent shall, on the first day of ■ each month, provide the Director with an inventory of active client files described in paragraph (d) below. Respondent shall make active client files available to the Director upon request.
(d) Respondent shall cooperate fully with the supervisor in his/her efforts to monitor compliance with this probation. Respondent shall contact the supervisor and schedule a minimum of one in-person meeting per calendar quarter. Respondent shall submit to the supervisor an inventory of all active client files by the first day of each month during the probation. With respect to each active file, the inventory shall disclose the client name, type of representation, date opened, most recent activity, next anticipated action, and anticipated closing date. Respondent’s supervisor shall file written reports with the Director at least quarterly, or at such more frequent intervals as may be reasonably requested by the Director.
(e) Within 30 days after his being reinstated to the practice of law, respondent shall provide to the Director and to the probation supervisor, if any, a written plan outlining office procedures designed to ensure that respondent is in compliance with probation requirements. Respondent shall provide progress reports as requested.
(f) Respondent shall initiate or continue current treatment by a licensed consulting psychologist or other mental health professional acceptable to the Director, and shall complete all therapy programs recommended by the therapist.
(g) Respondent shall timely file all required employer withholding returns and timely pay the taxes due thereon. Respondent shall affirmatively report to the Director, on or before the due date of the required returns, his compliance with filing and payment requirements. Such reports shall include copies of the required returns. On or before the filing deadline, respondent shall provide the Director with copies of all applications for filing extension and proof of approval of such applications. Respondent shall provide all of the documents and information required herein without specific reminder or request.
(h) If at any time during the period of probation, after giving respondent an opportunity to be heard by the Director, the Director concludes that respondent has violated the conditions of the probation or engaged in further misconduct, the Director may file a petition for disciplinary action against respondent in the Minnesota Supreme Court without the necessity of submitting the matter to a Panel or Panel Chair. Respondent waives the right to such consideration by the Panel or Panel Chair.

This court has independently reviewed the file and approves the jointly-recommended disposition.

IT IS HEREBY ORDERED that respondent Michael Lee Martinez is suspended from the practice of law for 60 days with the suspension to take effect 14 days from the date of this order, subject to the reinstatement and probation conditions jointly agreed to and stated above. Respondent is further ordered to pay $900 in costs and $441.05 as disbursements pursuant to Rule 24, RLPR.

BY THE COURT:

Alan C. Page

Associate Justice


text:
    Scott NIESEN, Relator, v. ADVANCED CIRCUITS and Travelers Insurance Company, Respondents, and Blue Cross/Blue Shield of Minnesota, MII Life, Intervenors.
    No. C7-00-792.
    Supreme Court of Minnesota.
    July 25, 2000.
    David A. Stofferahn, Sieben, Grose, Von Hultum & Carey, Ltd., Minneapolis, for appellants.
    Gary M. Swanson, John G. Ness & Associates, St. Louis Park, for respondents.
   ORDER

Based upon all the files, records and proceedings herein,

IT IS HEREBY ORDERED that the decision of the Workers’ Compensation Court of Appeals filed April 19, 2000, be, and the same is, affirmed without opinion. See Minn. R. Civ.App. P. 186.01, subd. 1(b).

BY THE COURT:

Alan C. Page

Associate Justice


text:
    In re Petition for DISCIPLINARY ACTION AGAINST Brent Viscount BIDJOU, an Attorney at Law of the State of Minnesota.
    No. CX-00-138.
    Supreme Court of Minnesota.
    July 27, 2000.
   ORDER

The Director of the Office of Lawyers Professional Responsibility has filed a petition for disciplinary action alleging that respondent Brent Viscount Bidjou has committed professional misconduct warranting public discipline, namely, knowingly making false statements of material fact on his bar application in violation of Minn R. Prof. Conduct 8.1.

On May 5, 2000 the referee appointed by this court made his findings of fact, conclusions of law, and recommendation for discipline. The referee found that respondent knowingly made a false statement of material fact when he indicated on his bar application that he had never been involved in any legal proceeding when in fact he had filed complaints with the Minnesota Department of Commerce and the Minnesota Department of Human Rights and had been a defendant in a defamation action. The referee found that this conduct violated Minn. R. Prof. Conduct 8.1(a)(1). In mitigation, the referee found that respondent -did not intend to deceive the Board of Law Examiners and that he would have been permitted to sit for the bar examination had he disclosed the information.

Respondent and the Director have entered into a stipulation wherein they stipulate that the referee’s findings of fact and conclusions of law are conclusive, waive briefing and oral argument, and jointly recommend that the appropriate discipline is that recommended by the referee, namely, a public reprimand and payment of $900 in. costs and $456.46 in disbursements pursuant to Rule 24, Rules on Lawyers Professional Responsibility (RLPR).

This court has independently reviewed the file and approves the jointly recommended disposition.

IT IS HEREBY ORDERED that respondent Brent Viscount Bidjou is publicly reprimanded and that he shall pay $900 in costs and $456.46 in disbursements pursuant to Rule 24, RLPR.

BY THE COURT:

Alan C. Page

Associate Justice


text:
    In re Petition for DISCIPLINARY ACTION AGAINST Richard G. DAY, an Attorney at Law for the State of Minnesota.
    No. C7-00-1117.
    Supreme Court of Minnesota.
    July 27, 2000.
   ORDER

The Director of the Office of Lawyers Professional Responsibility has filed a petition for disciplinary action alleging that respondent Richard G. Day has committed professional misconduct warranting public discipline, namely, respondent engaged in the practice of law while suspended for nonpayment of his attorney registration fee and while on CLE restricted status, failed to return a client’s file, failed to diligently pursue claims on behalf of two clients and misrepresented the status of the matter to one of those clients, and failed to cooperate in the disciplinary proceedings in violation of Minn. R. Prof. Conduct 1.3, 1.15(c)(4), 1.16(d), 4.1, 5.5, 8.1(a)(3) and 8.4(c), and Rules on Lawyers Professional Responsibility (RLPR).

Respondent admits his conduct violated the Rules of Professional Conduct, waives his rights pursuant to Rule 14, RLPR, and has entered into a stipulation with the Director wherein they jointly recommend that the appropriate discipline is a 90-day suspension with no waiver of the reinstatement hearing provided for in Rule 18, RLPR. The parties further agree that reinstatement is conditioned on compliance with Rule 26, RLPR, successful completion of the professional responsibility portion of the bar examination, and satisfaction of continuing legal education requirements.

This court has independently reviewed the file and approves the jointly recommended disposition.

IT IS HEREBY ORDERED that respondent Richard G. Day is suspended for 90 days with reinstatement, conditioned on the agreed-upon terms set forth above. Respondent shall pay $900 in costs pursuant to Rule 24, RLPR.

BY THE COURT:

Alan C. Page

Associate Justice


author: LANCASTER, Justice. PAUL H. ANDERSON, Justice STRINGER, Justice GILBERT, Justice

text:
    Peter R. PAIDAR, et al., Plaintiffs, v. Charles E. HUGHES, defendant and third-party plaintiff, Appellant, v. Guardian Title, Inc., et al., Third-Party Defendants, Fidelity National Title Insurance Company of New York, third-party defendant, Respondent.
    No. C6-98-2192.
    Supreme Court of Minnesota.
    Aug. 3, 2000.
    Rehearing Denied Sept. 1, 2000.

      Joseph B. Marshall, Marshall and Associates, P.A., Circle Pines, for appellant.
    James A. Beitz, Micahel C. Hagerty, Hagerty, Johnson, Albrightson & Beitz, P.A., Minneapolis, for respondent.
   OPINION

LANCASTER, Justice.

This slander of title action comes to us on appeal from summary judgment in favor of respondent, Fidelity National Title Insurance Company -of New York (Fidelity). The district court implicitly held that attorney fees cannot constitute special damages necessary to plead a slander of title action. The Minnesota Court of Appeals affirmed. See Paidar v. Hughes, No. C6-98-2192, 1999 WL 300910 (Minn. App. May 11, 1999). We hold, consistent with the Restatement (Second) of Torts § 633 (1977), and the rule adopted in a majority of jurisdictions, that reasonable attorney fees that are a direct consequence of an action to quiet title that results from slander of title constitute special damages. We therefore reverse and remand for proceedings consistent with this opinion.

Appellant Charles E. Hughes (Hughes) is the father-in-law of Joel Holstad (Hol-stad), the principal shareholder and officer of two separate corporations, Guardian Title, Inc. (Guardian) and National Title Resources Corp. (National). Hughes is a former member of the Board of Directors of National. Prior to March 31, 1995, Guardian was the owner of the Forest Lake property subject to the slander of title action in this case.

From approximately 1992 to 1995, National was an agent of Fidelity. In 1995, Fidelity terminated its agency agreement with National due to shortages in National’s escrow accounts and National’s breach of its agency agreements with Fidelity. To forestall legal proceedings, Holstad assigned the title interests for various properties allegedly possessed by National to Fidelity. In March 1995 Holstad represented to Fidelity that National had an interest in the Forest Lake property-and at Fidelity’s request National conveyed a security interest in the property to Fidelity. National, in fact, had no interest in the property and the “assignment” to Fidelity was a nullity. Two weeks after National conveyed the illusory interest in the property to Fidelity, Guardian transferred the same property to Hughes by warranty deed for $40,000. Hughes promptly filed the deed from Guardian and it was recorded before Fidelity’s illusory security interest was recorded on April 4,1995.

Two years thereafter Hughes decided to sell the property and in May 1997 he found buyers in Peter and Ardith Paidar. Hughes agreed to sell the property to the Paidars on a contract for deed for a purchase price of $217,000. The contract for deed in pertinent part: (a) required Hughes to deliver marketable title, and (b) permitted the Paidars to take immediate possession pending the sale. The Paidars were also permitted to make limited improvements to the property provided that lien waivers were obtained and Hughes consented in writing to any improvement in excess of $10,000. The purchase agreement made no reference to any interest held by Fidelity. The Paidars immediately took possession of the property and made approximately $50,000 in improvements.

A title search revealed the Fidelity assignment. When the Paidars learned of the encumbrance, they refused to close until the encumbrance was - removed. When Hughes attempted informally to obtain a release of the assignment, Fidelity refused unless Hughes would submit to a deposition in an unrelated matter being litigated between Fidelity and Holstad.

On June 26, 1997, Hughes served notice on the Paidars that he had declared the Paidars’ purchase agreement null and void. Hughes then commenced an unlawful de-tainer action against the Paidars to evict them from the property. Trial on the unlawful detainer action commenced on July 28, 1997. • A settlement was reached prior to the end of the trial. The settlement agreement provided in pertinent part that: (1) the settlement agreement would constitute the new purchase agreement at the same price; (2) the Paidars would take the contract for deed (and eventually title) in its present condition; and (3) the Pai-dars would guarantee to defend, hold, and save Hughes harmless from any claims made by Fidelity on its security interest. The unlawful detainer action was then dismissed on its merits with prejudice.

On July 21, 1997, prior to the trial on the unlawful detainer action, the Paidars sued Hughes in a declaratory judgment action for fraud and specific performance of the contract for deed. Hughes answered the Paidars’ complaint and then named, inter alia, Fidelity as a third-party defendant in both a slander of title action and an action to quiet title. In his action against Fidelity, Hughes states that the Paidars waived any objections to title based on Fidelity’s security, interest. By November 5, 1997, all remaining claims between the Paidars and Hughes were resolved and the property was transferred.

However, the slander of title action remained, Hughes claiming Fidelity’s refusal to release its security interest in the property caused him to incur attorney fees and costs. Fidelity moved for "summary judgment, claiming Hughes could not prove special damages required for an action for slander of title. The district court granted Fidelity’s motion, stating the following:

Minnesota requires a showing of special damages in slander of title actions. Wilson v. Dubois [35 Minn. 471], 29 N.W. 68, 69 (Minn.1886). Legal fees incurred to pursue the cause of action are not recoverable .without a showing of special damages. Advanced Training Sys., Inc. v. Caswell Equip. Co., Inc., 352 N.W.2d 1 (Minn.1984). Wilson at 69.
Hughes claims to have incurred over $20,000.00 in legal fees to pursue this action. He is not claiming any special damages. Since no special damages have been alleged, Hughes’ slander of title action cannot proceed. Fidelity’s motion for summary judgment must be granted.

On review of this determination, the court of appeals did not address the question whether attorney fees constitute special damages. While observing that special damages are a necessary element of the cause of action, the court of appeals specifically found that, “[a]ny attorney fees amassed during [the] litigation did not arise as a consequence of Fidelity’s actions” and affirmed summary judgment.

I.

When we review an order for summary judgment, we examine whether there are any genuine issues of material fact and whether the trial court erred in its application of the law. See State by Cooper v. French, 460 N.W.2d 2, 4 (Minn.1990). Whether attorney fees may be considered special damages for purposes of a slander of title action is a question of law. Our review is therefore de novo. See Frost-Benco Elec. Ass’n v. Minnesota Pub. Utils. Comm’n, 358 N.W.2d 639, 642 (Minn.1984).

The elements required for a slander of title claim are:

(1) That there was a false statement concerning the real property owned by the plaintiff;
(2) That the false statement was published to others;
(3) That the false statement was published maliciously;
(4) That the publication of the false statement concerning title to the property caused the plaintiff pecuniary loss in the form of special damages.

See Wilson v. Dubois, 35 Minn. 471, 472-73, 29 N.W. 68, 68-69 (1886); see also Kelly v. First State Bank of Rothsay, 145 Minn. 331, 332, 177 N.W. 347, 347 (1920). The filing of an instrument known to be inoperative is a false statement that, if done maliciously, constitutes slander of title. See Kelly, 145 Minn, at 332, 177 N.W. at 347.

Both Hughes and Fidelity agree that in Minnesota a slander of title action requires a showing of special damages. Hughes asserted to the district court that attorney fees necessary to clear title resulting from slander on the title are special damages. Without expressly addressing that assertion, the district court granted summary judgment to Fidelity stating only that “Hughes has admitted he has suffered no special damages in this action.” In fact, Hughes’ admission on special damages was simply that he suffered no loss attributable to a lost sale or any damages attributable to anything other than attorney fees. The district court apparently ruled based on the implicit assumption that attorney fees cannot be special damages in a slander of title action.

The issue of whether attorney fees incurred to remove a cloud on title constitute special damages in a slander of title action is one of first impression in Minnesota. The clear majority of states that have considered this issue hold, consistent with the Restatement (Second) of Torts § 633(l)(b) (1977), that attorney fees are special damages in a slander of title action. See James 0. Pearson Jr., Annotation, What Constitutes Special Damages in Action for Slander of Title, 4 A.L.R.4th 532, 560-62 (1981) & 92-93 (Supp.1999). Professors Prosser and Keeton have noted the soundness of the policy contained in the Restatement: “It would also appear obvious that special damages include the expenses of legal proceedings necessary to remove a cloud on the plaintiffs title caused by the [slander of title] * * W. Page Keeton et al., Prosser and Keeton on the Law of Torts § 128, at 972 (5th ed.1984). Only Texas requires proof of the loss of a particular sale to establish special damages. See Clark v. Lewis, 684 S.W.2d 161, 164 (Tex.App.1984) (holding attorney fees not recoverable as special damages in slander of title action because attorney fees are not a pecuniary loss); A.H. Belo Corp. v. Sanders, 632 S.W.2d 145, 146 (Tex.1982).

In examining Minnesota precedent, we are convinced that adoption of the majority rule is consistent with the common law in this state. We have adopted Restatement of Torts § 914 (1939), which sets forth a policy that substantially overlaps with the one set forth in section 633. See Prior Lake State Bank v. Groth, 259 Minn. 495, 499-500, 108 N.W.2d 619, 622 (1961). In Prior Lake State Bank, we held attorney fees to be recoverable when litigation with a third party was the natural and proximate consequence of defendant’s tortious conduct (embezzlement from a bank). Id. at 622-23. Section 633 merely provides for recovery of litigation expenses when necessitated by the particular tort of tor-tious slander of title.

We have also allowed recovery of attorney fees in similar actions where one party”s tortious conduct necessitated litigation by the other party. In Tarnowski v. Resop, 236 Minn. 33, 39-40, 51 N.W.2d 801, 804 (1952), we allowed recovery of attorney fees from litigation with a third party when the litigation was directly traceable to the defendant’s false representations about a business for sale. We have.also concluded that attorney fees are recoverable as special damages in malicious prosecution cases. See, e.g., Mitchell v. Davies, 51 Minn. 168, 169, 53 N.W. 363, 363 (1892).

In Hill v. Okay Constr. Co., Inc., 312 Minn. 324, 347, 252 N.W.2d 107, 121 (1977), we held that attorney fees were recoverable when litigation with a third party was necessary. In Hill, an attorney’s negligent representation forced his clients to defend themselves against outside creditors. Id. We allowed recovery from the negligent attorney of those litigation costs his clients incurred in defending against the creditors. See id.

We hold that the recovery of attorney fees for the tortious conduct at issue here, slander of title, is in accordance with our precedent. The special damages at issue here are not the same' as those alleged in Wilson v. Dubois, where we stated that:

Where loss of sale of a thing disparaged is claimed and relied on as special damages occasioned by the disparagement, it is indispensable to allege and show a loss of sale to some particular person, for the loss of a sale to some particular person is the special damage, and of the gist and substance of the action.

35 Minn. at 473, 29 N.W. at 69. Hughes does not claim a “loss of sale” as his special damages; he claims attorney fees as his damages. The fact that Hughes ultimately was able to sell the property at issue here should not prevent him from recovering his attorney fees if he can show that he necessarily incurred them as a direct result of Fidelity’s tortious actions.

II.

Fidelity argues that even if the court holds that attorney fees constitute special damages in this context, Hughes claim must fail because Fidelity’s actions did not cause Hughes to incur attorney fees. > Specifically, the Paidars sued Hughes after Hughes attempted to cancel the purchase agreement-nob as a result of Fidelity’s refusal to release ■ its security interest. The district court, did not address this causation argument, but simply held that because Hughes did not allege special damages he could not recover. In contrast, the court of appeals proceeded to determine the causation issue-agreeing with Fidelity that any attorney fees did not arise as a consequence of Fidelity’s actions.

Causation is generally a question of fact left to the finder of fact that only becomes a question of law “where different minds can reasonably arrive at only one result.” Lyons v. Scnei, Inc., 262 N.W.2d 169, 170 (Minn.1978). The question whether Fidelity’s actions required Hughes to litigate some or all issues in this property dispute is a question not significantly different in kind from the question whether an attorney’s negligence “would have made a difference” in an attorney malpractice claim. Admiral Merchants Motor Freight v. O’Connor & Hannan, 494 N.W.2d 261, 267 (Minn.1992). We leave the causation question in an attorney malpractice claim for the jury. See Rouse v. Dunkley & Bennett, P.A., 520 N.W.2d 406, 409 (Minn.1994); Admiral, 494 N.W.2d at 267. Similarly, we should leave the fact-based causation question here for the district court to decide whether summary judgment is appropriate. See generally Nord v. Herreid, 305 N.W.2d 337, 339 (Minn.1981) (noting that a district court’s proper function on summary judgment is not “to decide issues of fact but solely to determine whether there is an issue of fact to be tried” (citation omitted)).

Indeed, even if the determination of causation here were not a purely factual issue, the district court, which is markedly more familiar with the history of . this litigation than the appellate court, is particularly well-suited to determining whether the legal actions Hughes took can be traced to Fidelity’s conduct. Because the district court did not decide the issue of causation, we remand for that determination.

The district court erred in assuming that attorney fees cannot be special damages. Because that was the sole basis on which it ruled, we reverse the court of appeals’ affirmance of the summary judgment and remand for further proceedings consistent with this opinion to determine whether any or all of the attorney fees alleged by Hughes were a direct consequence of the action to quiet title pursuant to the slander of title action.

Reversed and remanded.

PAUL H. ANDERSON, Justice

(dissenting).

I respectfully dissent. We have not previously answered the question of whether, in an action for slander of title, attorney fees and other legal expenses incurred in clearing title are recoverable as special damages. This is an important question, deserving an answer. But the majority has essentially put the cart before the horse by adopting Section 633 in its entirety in the context of facts that do not present the issue it seeks to decide.

A thorough examination of the facts and procedural history of this case makes two clear points. First, the record does not show a clear nexus between appellant Charles E. Hughes’ alleged attorney fees and legal expenses and any attempt to clear title to the real property (Property). Further, the record demonstrates that Hughes has not made even a prima facie showing that his quiet title and slander of title claims against Fidelity National Title Insurance Company of New York (Fidelity) were the direct and necessary consequence of Fidelity’s actions. Accordingly, this case falls woefully short of presenting a proper context within which to adopt a rule on whether attorney fees may constitute special damages. Therefore, we should either dismiss as improvidently granted or, in the alternative, affirm the district court’s grant of summary judgment.

Both Hughes and Fidelity agree that a pecuniary loss is required in a slander of title action. Hughes concedes that he sustained no pecuniary loss in the form of special damages other than his attorney fees and other legal expenses incurred in his prior litigation with the Paidars, but he claims that these are special damages. In support of his claim, he asserts that the clear trend nationally in recent years has been to recognize that attorney fees and other legal expenses incurred in clearing a disparaged title are recoverable as special damages in the common law action of. slander of title. He specifically cites Rorvig v. Douglas, 123 Wash.2d 854, 873 P.2d 492, 497 (1994), to support this argument. He further asserts that the Restatement supports allowing recovery of litigation expenses in a slander of title- action and urges that we adopt Section 633 of Restatement (Second) of Torts.

Fidelity asserts that Hughes’ emphasis on Section 633 is misplaced. It claims that even were we to adopt Section 633 of the Restatement, Hughes would not be entitled to recovery because the prior litigation expenses he incurred were not a direct consequence of Fidelity’s conduct. Thus, the key question becomes whether the attorney fees and other legal expenses incurred by Hughes during his prior litigation with the Paidars were a direct consequence of Fidelity’s conduct. Fidelity asserts that the record does not demonstrate that Hughes’ initial, unilateral action to evict the Paidars from the property was caused by Fidelity’s refusal to relinquish its claims on the Property. If Fidelity’s conduct did not necessitate the litigation with the Paidars, the attorney fees and other legal expenses are not recoverable. See Stickney v. Goward, 161 Minn. 457, 459-60, 201 N.W. 630, 631 (1925).

Section 633 specifically relates to the recovery of pecuniary loss for “impairment of vendibility or value caused by disparagement” and the expense of measures reasonably necessary to “remove the doubt cast upon vendibility or value by disparagement.” Restatement (Second) of Torts § 633(l)(a)-(b) (1977). For there- to be recovery, there must be legal causation. Here the comments to Section 632 of the Restatement are helpful. The injurious statement must be a substantial factor that brings about the loss. See Restatement (Second) of Torts, § 632, cmt. b (1977). A relevant part of the comment to Section 632 reads as follows:

Thus the vendibility of land, chattels or intangible things may be impaired when a statement makes them appear less desirable for purchase, lease or other dealings than they actually are. But the liability does not accrue until the publication of the disparaging matter operates as a substantial factor in determining the decision of a prospective purchaser or other interested persons, to refrain from buying or otherwise acquiring the thing in question, or causes the oumer to incur the expense of such legal proceedings as may be available or necessary to remove the cloud upon the vendibility that is cast upon it by the publication.

Id. (emphasis added).

Hughes’ prior litigation involved (1) the unlawful detainer action brought by Hughes to have the Paidars evicted, and (2) the Paidars’ declaratory judgment brought one week before the trial of Hughes’ unlawful detainer action in which the Paidars sought specific performance of the purchase agreement. For Hughes to recover, Fidelity’s conduct must be the immediate and direct legal cause of the unlawful detainer action, but the unlawful detainer action is unrelated to removing any impairment of vendibility. There is even less of a connection between Fidelity’s conduct and the Pai-dars’ specific performance action. In this action, the Paidars in essence sought specific performance of the purchase agreement that, in the end, they performed.

• It was not until after the Paidars’ 'specific performance action was filed and settled that Hughes sought to “quiet title” to the Property and he did not commence his action until August 21, 1997, 24 days after the Paidars, on the record in open court, waived any objection to Fidelity’s filing. At this point, the quiet title action was not necessary to preserve this deal or the ven-dibility of the property.

Further, the Paidars did not seek to rescind the purchase agreement;- rather, they were trying to get the court to enforce the purchase agreement. It was Hughes, by virtue of his unlawful detainer action, who wanted to rescind the purchase agreement after the Paidars made nearly $50,000 in improvements to the property. By the time this action by Hughes was brought, the Paidars had guaranteed that they would defend, hold, and save Hughes harmless from any claims made by Fidelity. The prior litigation expenses with respect to the Paidars that Hughes seeks to recover were not the direct legal consequence of Fidelity’s conduct. Rather, these litigation expenses were the consequence of Hughes’ unlawful detainer action to eject the Paidars from the property after they had made significant improvements. The record on its face fails to support Hughes’ claim even if we were to adopt Section 633.

We should at least require some prima facie showing of' a legal causation for the alleged special damages before we adopt Section 633’s statement of the law and remand to the district court for reconsideration. I conclude the district court properly granted Fidelity’s summary judgment motion and the court of appeals properly affirmed. The district court may have based its analysis on what the majority perceives to be an erroneous conclusion of law; however, the record supports the court’s decision regardless of the propriety of that conclusion. We do not issue advisory opinions on hypothetical facts; rather, we make conclusions of law regarding the facts present in a given case. The majority’s holding today is essentially an advisory opinion.

I have one further concern with respect to the action taken by the majority. This case arises in the context of a cloud on title to real property. But Section 633 is much broader and applies to publication of an injurious falsehood that affects the vendi-bility or value of a product in any context. While the majority only addresses Section 633 in the context of a slander of title against real property, it does not so limit its holding. Consequently, to adopt this section in a case where the facts do not demonstrate that liability exists, the court, in what is an advisory opinion, adopts a new rule in a context that provides no clear boundaries for future application of the rule.

I would dismiss review of this matter as improvidently granted or, alternatively, affirm the decision of the lower court.

STRINGER, Justice

(dissenting).

I join in the dissent of Justice Paul H. Anderson.

GILBERT, Justice

(dissenting).

I join in the dissent of Justice Paul H. Anderson.

      . "Special damages are those [that] 'are the natural, but not the necessary and inevitable result of a wrongful act' ” or occurrence, whereas “general damages are the natural, necessary and usual result of the wrongful act.” Phelps v. Commonwealth Land Title Ins. Co., 537 N.W.2d 271, 275 n. 2 (Minn.1995) (quoting Black’s Law Dictionary 390 (6th ed.)).

      . Section 633 of the Restatement provides:
      (1) The pecuniary loss for which a publisher of injurious falsehood is subject to liability is restricted to
      (a) the pecuniary loss that results directly and immediately from the effect of the conduct of third persons, including impairment of vendibility or value caused by disparagement, and
      (b) the expense of measures reasonably necessary to counteract the publication, including litigation to remove the doubt cast upon vendibility or value by disparagement.

      . The title search also revealed an encumbrance by third-party defendant McCullough. At some time prior to March 31, 1995, third-party defendant Robert McCullough individually, and/or McCullough Companies, a Minnesota General Partnership (collectively McCullough), purchased from Guardian certain items of personal property located on the property, including a shed and commercial light poles. Hughes apparently was not a party to the transaction between Guardian and McCullough. McCullough removed some or all of the commercial light poles, but did not remove the shed and some other items. In February 1997 McCullough filed a document containing the legal description of the property and a document purporting to be the purchase contract between Guardian and McCullough with Washington County, which represented that McCullough had an interest in the property.

      . Restatement (Second) of Torts § 914 (1977), contains nearly identical language to section 914 in the first Restatement and provides:
      (1) The damages in a tort action do not ordinarily include compensation for attorney fees or other expenses of the litigation.
      (2) One who through the tort of another has been required to act in the protection of his interests by bringing or defending an action against a third person is entitled to recover reasonable compensation for loss of time, attorney fees and other expenditures thereby suffered or incurred in the earlier action.

      . The dissent claims that "the unlawful de-tainer action is unrelated to removing any impairment of vendibility. There is even less of a connection between Fidelity’s conduct and the Paidars' specific performance action.” The problem between the Paidars and Hughes arguably arose because Hughes was unable to deliver marketable title due to Fidelity's intransigence. Delivery of marketable title is part of the specific performance the Paidars sought and which arguably led to the unlawful detainer action. However, as noted above, the determination of the connection between the litigation and Fidelity’s conduct should be left for the district court and perhaps for a jury.

      . The dissent complains that our opinion is simply advisory because causation has not been established. Our remand is consistent with recent opinions such as Moreno v. Crookston Times Printing Co., 610 N.W.2d 321 (Minn.2000), in which the district court incorrectly applied the fair and accurate reporting privilege. We reversed and remanded to the district court for a factual determination because we did not have a sufficiently developed record. See id. at 334. Here our remand is likewise for the district court to make a new factual determination based on the correct legal standard: whether special damages were incurred as a necessary consequence of litigation to remove a cloud on title. The dissent claims that review in Moreno was necessary only because the court of appeals had also misapplied the legal standard. Here the court of appeals decided a factual issue, causation, not reached by the district court. Because that determination is properly made by the district court, remand is appropriate.

      . The majority compounds its misunderstanding of this case by claiming that its decision is in accord with our earlier decision in Moreno v. Crookston Times Printing Co., 610 N.W.2d 321 (Minn.2000). The majority ignores the key and obvious difference between these two cases. In Crookston, we remanded after the district court misapplied the correct legal standard and the court of appeals reversed, incorrectly stating the law on the fair and accurate reporting privilege. Id. at 334. We remanded to the district court after discussing the correct legal standard and reversing the court of appeals. See id. Remand in Crook-ston was necessary after we had corrected the holding of the court of appeals, a holding binding on the lower courts of this state. In the case before us today, the court of appeals never reached the question of attorney fees as special damages. It affirmed the district court on the issue of causation, concluding as I do, that the record simply does not support Hughes’ claims that any of this litigation was caused by Fidelity’s actions. If the district court's statement of law in this matter is incorrect, it is not binding on any other court and does not compel review in the same manner. The adoption of a new rule of law should be based on facts that, if proven, support that rule. See, e.g., Lake v. Wal-Mart Stores, Inc., 582 N.W.2d 231, 235 (Minn.1998).


author: STRINGER, Justice.

text:
    ADVANCED COMMUNICATION DESIGN, INC., d/b/a ACD, Inc., petitioner, Appellant, v. Brian FOLLETT, Respondent, John Doe, et al., Defendants. Brian Follett, third-party plaintiff, Respondent, v. Marco Scibora, third-party defendant, Appellant.
    No. C1-99-778.
    Supreme Court of Minnesota.
    Aug. 3, 2000.
    Rehearing Denied Aug. 29, 2000.

      Joanne H. Turner, Mackall, Crounse & Moore, PLC, Minneapolis, for appellant.
    Ruth S. Marcot, Felhaber, Larson, Fen-Ion & Vogt, P.A., St. Paul, for respondent.
   OPINION

STRINGER, Justice.

We granted review to consider whether, in a court-ordered buy-out of a minority shareholder pursuant to Minn.Stat. § 302A.751 (1998), a marketability discount should be applied to the value of the shares, and whether in a closely held corporation a minority shareholder with only nonvoting shares owes a fiduciary duty to the corporation or its other shareholders.

Appellant Advanced Communication Design, Inc. (ACD) brought suit against respondent Brian Follett (respondent), a shareholder and former employee, alleging several claims including breach of fiduciary duty as a minority shareholder. Respondent counterclaimed against ACD and filed a third-party complaint against its President Marco Scibora (appellant Scibora) requesting that the trial court judicially intervene to dissolve ACD or grant other relief pursuant to section 302A.751 based on conduct respondent claims was unfairly prejudicial to him. The trial court found that appellant Scibora had acted in an unfairly prejudicial manner toward respondent and ordered appellants to purchase respondent’s shares in ACD at a price that did not include a marketability discount. The trial court also held that respondent did not owe ACD a fiduciary duty as a minority shareholder. The court of appeals affirmed on both issues. We affirm as to the court of appeals ruling on the fiduciary duty of a minority shareholder but reverse and remand as to application of a marketability discount.

Appellant Scibora founded ACD in 1986 to engage in the business of voicemail- and integrated voice response (IVR) systems and from its inception has been its President, its sole voting shareholder, and its only Director. Respondent joined ACD as a vice-president in 1988 and worked primarily with ACD’s voicemail and IVR technologies.

In 1990, respondent and Don Stein, another employee, each purchased 1500 shares of ACD’s Class B nonvoting stock resulting in ownership of ACD divided equally among appellant Scibora, respondent and Stein, but with appellant Scibora owning all of the Class A voting stock. In July of 1994, the threé shareholders and ACD entered into a “Stock Purchase and Transfer Restriction Agreement of the Shareholders of Advanced Communication Design, Inc.” (buy-sell agreement) which included a provision that if a shareholder’s employment is terminated for reasons other than disability or death, the corporation may exercise an option to purchase the terminating shareholder’s shares within 90 days. The agreement further provided that if the parties could not agree on a valuation, the value of the shares would be determined in an appraisal by Exponential Business Valuation and Financial Advisory, Inc. (Exponential), or its successor, or any other firm selected by agreement of the parties.- Stein terminated his employment with ACD as of December 1995 and was paid $45,000 in severance and for a noncompete agreement and $50,000 for his nonvoting shares. At that time appellant Scibora informed respondent of the purchase price of Stein’s stock but did not inform him of the $45,000 payment for the severance and noncompete agreement.

In January 1996, appellant Scibora’s wife, Frances Scibora (F. Scibora), who hád not been previously' employed by the company, was appointed as the Chief Operating Officer of ACD and thus' became respondent’s supervisor. The létter confirming the terms of her employment stated that her compensation would include a salary of $20,000 and 1500 shares of nonvoting stock in a restricted stock award-750 shares to be issued effective January 1, 1997, and another 750 shares to be issued effective July 1, 1997. The award would be forfeited if she failed to remain an employed of the company during the restricted periods. Respondent was not informed of the restricted stock award to F. Scibora.

The relationship between appellant Sci-bora and respondent deteriorated and in October 1996, appellant Scibora demoted respondent from the position of vice-president and reduced his salary. Respondent thereupon provided appellant Scibora with a proposal for a severance package. When no agreement could be reached as to the terms, on November 18, 1996, respondent submitted a letter of resignation effective immediately. He retained his ACD stock however.

ACD brought suit against respondent in December of 1996 alleging several claims relating primarily to solicitation of ACD customers and included a claim that respondent breached a fiduciary duty owed to the corporation as a shareholder. Respondent filed a counterclaim against ACD and a third-party complaint against appellant Scibora asserting several claims, including that persons in control of appellant ACD had acted in an unfairly prejudicial manner toward him and that the court should dissolve the corporation or provide other equitable relief pursuant to section 302A.751.

In February of 1997 appellant Scibora sent respondent a letter exercising ACD’s option to purchase respondent’s shares pursuant to the buy-sell agreement executed in July of 1994. ACD offered to purchase respondent’s shares for $24,646 but respondent declined. ACD then sought an appraisal of the shares from Chartwell Financial Advisory, Inc. (Chartwell) because Exponential no longer performed such appraisals. Chartwell appraised the shares at $30,000 and ACD thereupon amended its complaint seeking an order requiring respondent to sell his ACD shares to the corporation at the appraised value pursuant to the buy-sell agreement.

In January of 1998, the parties agreed to a trial court order for another appraisal of the shares, this by a three-member panel with each party appointing one member and the court appointing a third. The appraisers selected by respondent and the trial court joined in a majority report and the appraiser appointed by ACD and appellant Scibora prepared a minority report. The majority appraised ACD as an enterprise at $1,426,143 and respondent’s one-third interest at $475,381 but applied a marketability discount of 55%, thus valuing respondent’s shares at $213,921. Chart-well, the appraiser selected by appellants, valued ACD as an enterprise at $875,000, and after applying a minority discount of about 75% and a marketability discount of 35%, appraised respondent’s stock at $46,665.

The parties’ claims were tried in May 1998 in three phases. The trial court first determined that Chartwell was not the successor to Exponential for purposes of ACD’s compliance with the buy-sell agreement. Though the trial court never made explicit findings as to the enforceability of the buy-sell agreement, it apparently concluded that ACD breached the agreement by obtaining an appraisal from Chartwell.

The trial court then rejected ACD’s assertion that respondent owed ACD a fiduciary duty as a minority shareholder and directed a verdict for respondent on this claim. ACD’s remaining claims against respondent were tried before a jury, and respondent’s claims against appellants were tried before the court.

The trial court entered findings that appellant Scibora had acted in bad faith toward respondent because he failed to disclose all of the terms of Stein’s severance agreement, did not offer respondent the opportunity to purchase some or all of Stein’s stock, did not inform respondent that F. Scibora would receive stock in ACD, and, when attempting to exercise ACD’s option to purchase respondent’s stock, failed to follow the valuation procedures in the buy-sell agreement and offered to purchase the stock for an unfairly low price. The court found that as of November 18, 1996-respondent’s resignation date-he owned one-third of the shares in ACD. The court concluded that pursuant to Minn.Stat. § 302A.751, subd. 1(b)(3) (1998), appellant Scibora’s actions had been unfairly prejudicial and ordered him and ACD, jointly and severally, to purchase respondent’s shares in ACD for fair value.

The court adopted the majority appraisal report but declined to adopt the marketability discount reasoning that while it may be appropriate to apply such a discount in a sale to a third party, here the court-ordered sale was to a corporation whose only remaining shareholders would be the president, who had acted in an oppressive manner to the selling shareholder, and his wife. In these circumstances the court concluded that applying a discount would interfere with the statutory purposes of protecting minority shareholders and ensuring that court-ordered buy-outs are fair and equitable to all parties. It found the fair value of respondent’s shares to be one-third of the majority’s appraised value of $1,426,143 of ACD as an enterprise, or $475,381.

The court of appeals affirmed. See Advanced Communication Design, Inc. v. Follett, 601 N.W.2d 707, 712 (Minn.App.1999). Noting no Minnesota precedent and citing two recent New Jersey Supreme Court decisions, Balsamides v. Protameen Chemicals, Inc., 160 N.J. 352, 734 A.2d 721 (1999), and Lawson Mardon Wheaton, Inc. v. Smith, 160 N.J. 383, 734 A.2d 738 (1999), the court held that a marketability discount was inappropriate because it would allow the controlling shareholder to benefit at the expense of an oppressed minority shareholder. See Advanced Communication Design, Inc., 601 N.W.2d at 710-11. The court also held that respondent, who “in no sense controlled the corporation[,]” did not owe appellants a fiduciary duty as a shareholder. Id. at 711.

I.

The issues presented by this appeal are questions of law that we review de novo. See Balsamides, 734 A.2d at 732 (applicability of marketability discount presents a question of law); Lewis v. Knutson, 699 F.2d 230, 235 (5th Cir.1983) (fiduciary duty of shareholder is a question of law).

We first consider whether the trial court erred when it declined to apply a marketability discount to respondent’s shares in ordering a buy-out pursuant to the Minnesota Business Corporations Act, specifically, Minn.Stat. § 302A.751. In section 302A.751 the legislature has provided broad and flexible authority to the court to “grant any equitable relief it deems just and reasonable in the circumstances or * * * dissolve a corporation” in a wide variety of situations including that alleged here-unfair prejudicial treatment of a shareholder or shareholders of a closely held corporation by those in control of the corporation. Minn.Stat. § 302A.751, subd. 1 (1998). The statute provides additional flexibility in fashioning a remedy, authorizing the court, upon petition, to order a buy-out if it is fair and equitable to all parties:

In an action under subdivision 1, clause (b), involving a corporation that is not a publicly held corporation at the time the action is commenced and in which one or more of the circumstances described in that clause is established, the court may, upon motion of a corporation or a shareholder or beneficial owner of shares of the corporation, order the sale by a plaintiff or a defendant of all shares of the corporation held by the plaintiff or defendant to either the corporation or the moving shareholders, whichever is specified in the motion, if the court determines in its discretion that an order would be fair and equitable to all parties under all of the circumstances of the case.
The purchase price of any shares so sold shall be the fair value of the shares as of the date of the commencement of the action or as of another date found equitable by the court * * *.
* * * *
If the parties are unable to agree on fair value within 40 days of entry of the order, the court shall determine the fair value of the shares under the provisions of section 302A.473, subdivision 7 [regarding dissenters’ rights] * * *.

Minn.Stat. § 302A.751, subd. 2 (1998).

If the court determines that ordering a buy-out is fair and equitable to all parties under the circumstances, it also has broad discretion both in the process and the ultimate determination of the “fair value” of the shares to be sold:

The court may appoint appraisers, with powers and authorities the court deems proper, to receive evidence on and recommend the amount of the fair value of the shares. The court shall * * * determine the fair value of the shares, taking into account any and all factors the court finds relevant, computed by any method or combination of methods that the court, in its discretion, sees fit to use, whether or not used by the corporation or by a dissenter.

Minn.Stat. § 302A.473, subd. 7 (1998).

We first address the meaning of the term “fair value” in the Minnesota Business Corporations Act. Other courts interpreting the term in states’ corporations acts have held that fair value is a shareholder’s pro rata share of the value of the corporation as a going concern. See, e.g., Cavalier Oil Corp. v. Harnett, 564 A.2d 1137, 1144 (Del.1989). The American Law Institute (A.L.I.) has similarly recommended that fair value should equal the shareholder’s proportionate interest in the corporation. See 2 A.L.I., Principles of Corporate Governance: Analysis and Recommendations § 7.22(a) (1994). We conclude that fair value, in ordering a buy-out under the Minnesota Business Corporations Act, means the pro rata share of the value of the corporation as a going concern. To determine fair value, the trial court may rely on proof of value by any technique that is generally accepted in the relevant financial community and should consider all relevant factors, but the value must be fair and equitable to all parties. See Minn.Stat. § 302A.751, subd. 2; Minn. Stat. § 302A.473, subd. 7; see also Lawson Mardon Wheaton, Inc., 734 A.2d at 746 (noting that to determine fair value a court may rely on any valuation technique that is generally accepted within the relevant financial community).

With these general principles in mind, we turn to the issue of whether, in determining the fair value of the stock of a closely held corporation pursuant to section 302A.751, it is appropriate to apply a marketability discount. A marketability discount “adjusts for a lack of liquidity in one’s interest in an entity” and should be distinguished from a minority discount, which adjusts for lack of control of the corporation. Balsamides, 734 A.2d at 733. The basis for the marketability discount is that shares in a closely held corporation cannot be sold as readily as shares in a corporation with securities traded over an exchange or in an established market and therefore investors tend to pay less, and sometimes significantly less, for such shares. See, e.g., Harry J. Haynsworth IV, Valuation of Business Interests, 33 Mercer L.Rev. 457, 489 (1982).

The application of a marketability discount in a court-ordered buy-out is an issue of first impression in Minnesota. Though most courts in other jurisdictions have held that the application of a marketability discount denies a selling shareholder fair value in either a court-ordered buyout or a dissenters’ rights proceeding, courts have disagreed on this issue, particularly in the buy-out context. Compare Charland v. Country View Golf Club, Inc., 588 A.2d 609, 613 (R.I.1991) (declining to apply marketability discount where corporation elected to buy out minority shareholder because it would deny the minority a pro rata share of the value of the corporation as a going concern) with In re Seagroatt Floral Co., 78 N.Y.2d 439, 576 N.Y.S.2d 831, 583 N.E.2d 287, 291 (1991) (stating that illiquidity is a relevant factor in determining fair value of shares in a buy-out) and Balsamides, 734 A.2d at 738 (applying a marketability discount where oppressed shareholder was ordered to buy out oppressing shareholder).

The Rhode Island Supreme Court declined to apply a marketability discount where a corporation elected to purchase the shares of a shareholder who had petitioned the court for dissolution of the corporation. See Charland, 588 A.2d at 613. The Rhode Island statute allowed a corporation to avoid dissolution after a petition had been filed by electing to purchase the shares of the petitioning shareholder. See id. at 609-10. The court reasoned, in part, that because the oppressed shareholder would receive a pro rata share of the corporation’s assets in the event of dissolution, where-in lieu of dissolution-the corporation elects to buy out the shareholder, the shareholder should not receive less than a pro rata share of the corporation’s value as a going concern. See id. at 613.

In contrast, the New Jersey Supreme Court recently upheld the application of a marketability discount where the trial court ordered that the oppressed shareholder had the right to purchase the shares of the oppressing shareholder. See Balsamides, 734 A.2d at 738. The court reasoned that because the illiquid nature of the corporation’s shares impacted the value of the corporation as a whole, a marketability discount should be applied to avoid unfairly burdening the oppressed shareholder purchasing the stock. See id. at 735-36. The court concluded that if the discount were not applied an oppressed minority shareholder who purchases the shares of an oppressing shareholder would be penalized. See id. at 738. The court reconciled its result with that in Lawson Mardon Wheaton, Inc., 734 A.2d at 749-a case filed by the court the same day declining to apply a marketability discount in a dissenters’ rights proceeding-by noting that it applied the same “guiding principle” as in Lawson: “a marketability discount cannot be used unfairly by the controlling or oppressing shareholders to benefit themselves to the detriment of the minority or the oppressed shareholders.” Id The New Jersey court expressly did not reach the “harder question” of whether to apply a marketability discount where the oppressing shareholder buys out the oppressed shareholder. Id

Our statutory scheme in court-ordered buy-outs is clearly directed toward providing the court maximum flexibility to fashion a remedy “fair and equitable to all parties,” Minn.Stat. § S02A.751, subd. 2, and thus a bright-line rule is not appropriate. A result that allows majority shareholders to reap a windfall by buying out dissenting or oppressed shareholders at a discount or that encourages corporate squeeze-outs is contrary to the statutory purpose to provide a remedy to minority shareholders. See, e.g., In re McLoon Oil Co., 565 A.2d at 1005; Cavalier Oil Corp., 564 A.2d at 1145. Similarly, a bright-line rule that would foreclose consideration of a marketability discount in all circumstances could lead to a valuation that is unfair to the remaining shareholders, a result also contrary to the purpose of section 302A.751.

The legislative policy of providing Minnesota courts with broad equitable powers to structure a dissolution or buyout where a shareholder establishes any of the circumstances set forth in subdivision 1 of section 302A.751 is clear and unequivocal, but a remedy must be on terms “fair and equitable to all parties.” Minn. Stat. § 302A.751, subd. 2. The A.L.I. in 1994 set forth standards for determining fair value in dissenters’ rights proceedings and recommended that fair value should equal the shareholder’s proportionate ownership interest in the corporation, not the specific shares, without a discount for lack of marketability, except in extraordinary circumstances. See 2 A.L.I., Principles of Corporate Governance: Analysis and Recommendations § 7.22(a) (1994). The A.L.I. further recommended that the extraordinary circumstances exception exists where not applying a marketability discount would result in “an unfair wealth transfer from the remaining shareholders to the dissenting shareholder.” Id. at 325.

We conclude that establishing a bright-line test as to the applicability of the marketability discount would be inconsistent with this legislative policy of flexibility and fairness to all parties and would hamper the courts’ ability to take into account circumstances that would lead to an unfair wealth transfer if the marketability discount were not applied. Therefore, we adopt the A.L.I. standard for court-ordered buy-outs pursuant to section 302A.751 and hold that, absent extraordinary circumstances, fair value in a court-ordered buy-out pursuant to section 302A.751 means a pro rata share of the value of the corporation as a going concern without discount for lack of marketability.

In our application of the extraordinary circumstances exception to avoid an unfair wealth transfer, maximum flexibility can be achieved by taking into account factors relevant to fair value, including whether the buying or selling shareholder has acted in a manner that is unfairly oppressive to the other or has reduced the value of the corporation, whether the oppressed shareholder has additional remedies such as those available pursuant to Minn.Stat. § 302A.467 (1998), or whether any condition of the buy-out, including price, would be unfair to the remaining shareholders because it would be unduly burdensome on the corporation. The overarching policy however, is to ensure the buy-out is “fair and equitable to all parties.” Minn.Stat. § 302A.751, subd. 2.

Finally, we consider whether the extraordinary circumstances exception is met here. The trial court relied extensively on the Restricted Valuation Report of ACD prepared jointly by the Riley Group and the Hawthorne Company and referred to as the majority report. The court accepted the appraised value of ACD as an enterprise at $1,426,143 but rejected the report’s recommendation for a marketability discount factor of 55%.

Several aspects of ACD’s financial condition set forth in the majority report lead us to the conclusion that rejecting a marketability discount is clearly unfair to appellant Scibora and F. Scibora, the remaining shareholders. Rejecting a marketability discount resulted in respondent’s ownership interest in ACD to be valued at $475,381, more than five times the total net worth of the corporation as of the valuation date of November 18, 1996, almost seven times its average annual operating cash flow for the preceding five years, and more than eight times its average net income over the same period. The report further underscores the policy of the corporation to reinvest cash flows to finance the growth of the corporation as a primary consideration in its discount analysis. Given these factors, we conclude that a valuation of $475,381 for respondent’s one-third interest in ACD represents an unfair wealth transfer from the remaining shareholders to respondent because it places unrealistic financial demands on the corporation given the financial data presented in the majority report, and in all probability strips ACD of necessary cash flow and earnings for future growth. Respondent thus receives a value for his stock based on the past growth of the corporation, but the remaining shareholders are left with stock in a corporation that has extremely doubtful potential for growth. We therefore hold that extraordinary circumstances exist requiring application of a marketability discount. Any other result would be inconsistent with the statutory requirement that a court-ordered buy-out be “fair and equitable to all parties.” Minn.Stat. § 302A.751, subd. 2.

We remand to the trial court to determine the appropriate percentage marketability discount. As the majority appraisal report recommended a discount of 55% and the minority appraisal report recommended a discount of 35%, based on this record we direct the trial court to apply a marketability discount of between 35% and 55% to respondent’s pro rata share of the value of ACD in accordance with our ruling herein. The purchase price shall be paid in such installments as the trial court concludes meet the requirements of a fair and equitable buy-out set forth in section 302A.751, subdivision 2.

II.

Appellants also argue that respondent, as a minority shareholder in a closely held corporation, owes a fiduciary duty to the corporation. Generally, only a majority or controlling shareholder owes a fiduciary duty to the corporation or its other shareholders, see Westgor v. Grimm, 318 N.W.2d 56, 58 (Minn.1982) (stating controlling shareholder has a fiduciary relationship with corporation); see also Priddy v. Edelman, 883 F.2d 438, 445 (6th Cir.1989) (holding that absent control of corporation, minority shareholders owed no fiduciary duty to other shareholders), but as appellants note, we have recognized the similarity of the day-to-day operations of closely held corporations to those of partnerships, see Westland Capital Corp. v. Lucht Eng’g Inc., 308 N.W.2d 709, 712 (Minn.1981). We have held that in a closely held corporation where shareholders participate equally in the management of the corporation similar to partners, they may have fiduciary duties to each other requiring them to exercise the highest degree of integrity and good faith in their dealings. See Fewell v. Tappan, 223 Minn. 483, 493-94, 27 N.W.2d 648, 654 (1947) (quoting Venier v. Forbes, 223 Minn. 69, 74, 25 N.W.2d 704, 708 (1946)); see generally PJ Acquisition Corp. v. Skoglund, 453 N.W.2d 1, 19 (stating that Minn.Stat. § 302A.751, subd. 3a (1998) recognizes fiduciary obligations of shareholders of closely held corporations) (Yetka, J., dissenting). But where a shareholder has only nonvoting shares in a closely held corporation and is not a director, as here, clearly any significant ability to control corporate decision-making is lacking. The relationship between appellant Seibora and respondent is not comparable to that of partners because at all times appellant Seibora has owned all of the shares of voting stock and served as ACD’s only director. We therefore hold that respondent owed no fiduciary duty as a shareholder to ACD or its shareholders.

Reversed and remanded in part; affirmed in part.

      . The business later expanded to include music preview systems, video preview systems, and testing equipment sold as Digitrap and Digismart.

      . The articles of incorporation also named Frances Scibora, appellant Scibora’s wife, as an initial director of the corporation.

      . The two individuals who had performed appraisals at Exponential left the company and founded Chartwell.

      . Chartwell appraised the “enterprise value” of ACD as $875,000 but the "marketable minority interest value” as $220,000. As to the discrepancy between these valuations, Chart-well explained that the enterprise value "reflects inherent control of the Company’s operations” but that "given [respondent’s] ownership percentage at 33.3% of the total shares outstanding, the lack of voting power to control the operations, and the lack of an established market for the securities, we have utilized a standard of value for these shares which is commonly referred to as 'Closely-held Minority Interest Value.’ ”

      .The jury found that respondent had breached his duty of loyalty to ACD as an employee and intentionally interfered with ACD's contracts with certain customers and that resulting damages totaled $800.

      .The trial court provided in its order dated March 8, 1998, for payment partly in cash and partly by a promissory note payable over 10 years with 10 percent interest.

      .Chapter 302A defines a closely held corporation as "a corporation which does not have more than 35 shareholders.” Minn.Stat. § 302A.011, subd. 6a (1998).

      .Section 302A.751, subdivision 1 states:

        A court may grant any equitable relief it deems just and reasonable in the circumstances or may dissolve a corporation and liquidate its assets and business:

      (b) In an action by a shareholder when it is established that:

      (3) the directors or those in control of the corporation have acted in a manner unfairly prejudicial toward one or more shareholders in their capacities as shareholders or directors of a corporation that is not a publicly held corporation, or as officers or employees of a closely held corporation;

      Minn.Stat. § 302A.751, subd. 1 (1998).

      . Almost all courts addressing fair value for dissenters’ shares have declined to apply a marketability discount. See Swope v. Siegel-Robert, Inc., 74 F.Supp.2d 876, 922 (E.D.Mo.1999); Lawson Mardon Wheaton, Inc., 734 A.2d at 749; Security State Bank v. Ziegeldof, 554 N.W.2d 884, 889 (Iowa 1996); Cavalier Oil Corp., 564 A.2d at 1145; In re McLoon Oil Co., 565 A.2d 997, 1005 (Me.1989); cf. Columbia Management Co. v. Wyss, 94 Or.App. 195, 765 P.2d 207, 214 (1988).

      . An example of an "unfair wealth transfer” is where the exercise of a minority shareholder’s appraisal rights in a financially strained corporation with illiquid assets would yield a price far greater than the price that would actually be paid for the shares in a market transaction. See 2 A.L.I., Principles of Corporate Governance: Analysis and Recommendations § 7.22, at 325 (1994).

      . Section 302A.467 provides:
      If a corporation or an officer or director of the corporation violates a provision of this chapter, a court in this state may, in an action brought by a shareholder of the corporation, grant any equitable relief it deems just and reasonable in the circumstances and award expenses, including attorneys’ fees and disbursements, to the shareholder.
      Minn.Stat. § 302A.467.

      . We rely on the reported financial data for ACD as of December 31, 1996, because we conclude this date is sufficiently close in time to the valuation date of November 18, 1996, to accurately reflect the financial condition of the corporation.