author: LANSING, Judge.

text:
    Thomas BERREMAN, Appellant, v. WEST PUBLISHING COMPANY, et al., Respondents.
    No. CX-00-110.
    Court of Appeals of Minnesota.
    Aug. 1, 2000.
    Review Denied Sept. 26, 2000.

      Michael C. McCarthy, William Z. Pen-telovich, Maslon Edelman Borman & Brand, LLP, Minneapolis; and Thomas J. Lyons, Thomas Lyons & Associates, P.A., Maplewood; and Thomas J. Lyons, Jr., Consumer Justice Center, P.A., Maple-wood, for appellant.
    Patricia A. Bloodgood, Susan E. Elling-stad, Lockridge Grindal Ñauen P.L.L.P., Minneapolis, for respondents.
    Considered and decided by RANDALL, Presiding Judge, LANSING, Judge, and WILLIS, Judge.
   OPINION

LANSING, Judge.

Thomas Berreman appeals from summary judgment dismissing his action against West Publishing Company and three West directors (collectively “West”). Berreman alleged three causes of action: breach of fiduciary duty, unfairly prejudicial conduct in violation of Minn.Stat. § 320A.751, subd. 1(b)(3) (1994), and fraud. Berreman’s claims were based on his assertion that West had a duty to disclose to him, before Berreman retired from West and sold his stock back to the company in June 1995, that three of West’s directors had begun to consider the sale of West and had engaged an investment-banking firm to explore West’s options. On cross-motions for summary judgment, the district court granted summary judgment to West on all of Berreman’s claims. Because West did not breach a fiduciary duty, unfairly prejudice Berreman within the meaning of Minn.Stat. § 302A.751, subd. 1(b)(3), or commit fraud, we affirm.

FACTS

The facts are undisputed. In April 1995, Thomas Berreman, a 25-year employee of West Publishing Company, told West’s Chief Executive Officer, Dwight Opperman, that he intended to retire effective June 1, 1995. Berreman had worked for West’s lawschool division since 1970. West promoted him to assistant manager of the division in 1977 and to division head in 1992.

Beginning in 1974, Berreman bought West stock through a stock-option program for high-level managers and sales representatives that granted options at Dwight Opperman’s discretion. In June 1995, Berreman owned 1,600 shares of stock. Berreman bought his stock subject to a written agreement for purchase, sale, and resale, which provided that if he decided to sell his stock or in the event of his death, incompetency, or termination of employment, West could exercise an option to repurchase the stock at book value. The agreement placed no ultimate limitation on Berreman’s ability to sell his stock outside the company, but historically West had always exercised its option to redeem its stock. When Berreman told Dwight Op-perman of his plans to retire, Opperman looked at Berreman’s records and told him that he should “do all right.”

Berreman’s last day at West was May 31, 1995. On June 1, 1995, with Berre-man’s authorization, West redeemed Ber-reman’s stock at the current book value of $2,088.90 per share and paid off a bank loan secured by the stock. On June 15, 1995, Chief Financial Officer Grant Nelson gave Berreman a check for approximately $2.8 million.

As of May 31, 1995, West had about 200 employee shareholders, 25 non-employee shareholders, and 328,908 shares outstanding. Dwight Opperman, Nelson, and board president Vance Opperman, in addition to being directors, were each shareholders. Together they held 23 percent of West’s outstanding shares. Until its sale to Thomson Corporation in 1996, West was a privately held corporation. And until West announced the possibility of a. sale in August 1995, West directors had publicly expressed their commitment to remaining privately held.

During 1994 and 1995, West was facing an increasingly competitive legal publications market. Two of West’s competitors, Mead Data, owner of Lexis-Nexis, and Prentice Hall Law & Business, merged into international publishing companies in 1994. That same year West received unsolicited materials on possible mergers from investment-banking firms Goldman-Sachs and A.G. Edwards, which included information about Thomson Corporation. In response to the increasingly competitive conditions, West’s board increased its acquisition fund from $70 -million to $300 million in October 1994.

During the second-week of May 1995, while on vacation, Nelson reflected on the future of West in light of the changing legal-publications market. Nelson was concerned about West’s future given increasing competition, changing technology, and pending antitrust investigations. Nelson concluded that rather than making an acquisition, West should consider being acquired or entering into a joint venture.

On May 15, 1995, Nelson met with Dwight Opperman, who listened to Nelson’s concerns and told him, “I think you may be right.” Nelson and Dwight Opper-man met with Vance Opperman the next day, and the three decided to engage A.G. Edwards to explore West’s options. Nelson called Ray Kalinowski at A.G. Edwards the same day and told him that West wanted advice on the company’s future financial options, including a possible sale of the company. On May 17, 1995, A.G. Edwards representatives met with the West directors. The directors authorized A.G. Edwards to retain another investment-banking firm if necessary.

The West board met on May 23, 1995. During that meeting, the board again addressed its potential acquisitions and authorized A.G. Edwards to explore financing options beyond West’s local bank. The board did not discuss the possibility of selling the company. This meeting was the last board meeting before Berreman’s June 1 retirement.

On August 28,1995, A.G. Edwards made a presentation to the West board outlining four options: recapitalization, public offering, status quo, and sale. The board engaged A.G. Edwards and Goldman-Sachs to advise and assist West in evaluating its options and authorized West management to take necessary steps, including contacting potential buyers and developing acquisition proposals.

On August 29, 1995, West announced to its employees and to the public that it had engaged investment bankers and was considering alternative financial options including public offering, entering into a joint venture, joining a strategic partner, recapitalization, sale, or any other available option. In September 1995, West sent invitations for bids to 45 potential purchasers. The bids were due by February 1996, and West eventually received four bids, including one from Thomson Corporation. West accepted Thomson Corporation’s bid, and the companies entered into a merger agreement on February 25,1996. After a shareholder vote and review by the Department of Justice, West concluded the sale to Thomson in June 1996. Thomson paid $10,445 per share to acquire West, about five times the amount Berreman received when he sold his stock back to the company in June 1995. Berre-man’s action against West followed.

ISSUES

I. Did the district court err by granting summary judgment to West on Berreman’s fiduciary-duty claim?

II. Did the district court err by granting summary judgment to West on Ber-reman’s claim of unfairly prejudicial conduct under Minn.Stat. § 302A.751, subd. 1(b)(3) (1994)?

III. Did the district court err by granting summary judgment to West on Ber-reman’s fraud claim?

ANALYSIS

I

This court reviews appeals from summary judgment to determine if there are any genuine issues of material fact and if the district court erred in its application of the law. Reads Landing Campers Ass’n, Inc. v. Township of Pepin, 546 N.W.2d 10, 13 (Minn.1996). When the facts are not disputed, the only questions before this court are questions of law, which we review de novo. Id. Whether a fiduciary duty has been breached generally is a question of fact. Miller Waste Mills, Inc. v. Mackay, 520 N.W.2d 490, 496 (Minn.App.1994), review denied (Minn. Oct. 14, 1994). Materiality is a question of both fact and law. Connelly v. General Med. Corp., 880 F.Supp. 1100, 1113 (E.D.Va.1995). Thus, summary judgment on Berreman’s fiduciary-duty claim “is only appropriate where no rational finder of fact could conclude” that West breached a fiduciary duty to Berreman by failing to disclose material facts. Id. (citation omitted).

Common Law Fiduciary Duty

At common law, the shareholders in a close corporation owe one another a fiduciary duty. See Fewell v. Tappan, 223 Minn. 483, 494, 27 N.W.2d 648, 654 (1947); Pedro v. Pedro, 489 N.W.2d 798, 801 (Minn.App.1992) (Pedro II), review denied (Minn. Oct. 20, 1992); Evans v. Blesi, 345 N.W.2d 775, 779 (Minn.App.1984). Courts impose the fiduciary duty because they find that close corporations are really more like “partnership^ in corporate guise.” Westland Capital Corp. v. Lucht Eng’g Inc., 308 N.W.2d 709, 712 (Minn.1981); see also Fewell, 223 Minn, at 494, 27 N.W.2d at 654 (concluding that two men who co-owned corporation and agreed not to sell stock without other man’s consent, “stood in the relationship of copartners”); Pedro II, 489 N,W.2d at 801 (“relationship among shareholders in closely held corporations is analogous to that of partners”); Donahue v. Rodd Electrotype Co., 367 Mass. 578, 328 N.E.2d 505, 512.(1975) (“Commentators and courts have noted that the close corporation is often little more than an ‘incorporated’ or ‘chartered’ partnership.”).

Attributes of Close Corporation

Courts generally identify common law close corporations by three characteristics: (1) a small number of shareholders; (2) no ready market for corporate stock; and (3) active shareholder participation in the business. Donahue, 328 N.E.2d at 511; see also Westland, 308 N.W.2d at 712 (describing close corporations). In addition, dividends are rarely-distributed in a close corporation. Westland, 308 N.W.2d at 712. Rather, “shareholders derive their income mainly from salaries and perquisites.” Id.

In May 1995, West exhibited characteristics of a close corporation. First, West was not publicly traded; thus; there was no ready public market for its stock. See Sundberg v. Lampert Lumber Co., 390 N.W.2d 352, 354, 357 (Minn.App.1986) (no ready public market for stock that was never registered for sale and was not traded on any securities market), review denied (Minn. Sept. 22, 1986), superseded by statute on other grounds, Minn.Stat. § 302A.751, subd.-2 (1994). This court has recognized the lack of a public market as the dominant characteristic of a common law close corporation. Sundberg, 390 N.W.2d at 357 (citing F.H. O’Neal, Close Corporations § 1.02 (2d ed.1971)). The legislature has also recognized the significance of this factor in providing remedies. As initially written, the MBCA allowed a buy-out remedy only to shareholders in a closely-held corporation, but a 1994 amendment to the MBCA allows a buy-out remedy for shareholders of all corporations that are not publicly held. See 1994 Minn. Laws, ch. 417, § 9. Additionally, West offered its stock only to high-level managers and sales people at Dwight Op-perman’s discretion. The lack of a public market for West stock, combined with the managerial role West’s shareholders occupied, supports the characterization of West as a common-law close corporation.

Second, the rationale for distinguishing close corporations from other corporations supports the characterization of West as'a close corporation. Courts have recognized that because majority shareholders of a close corporation can deny minority shareholders income from their investment, minority shareholders are in a vulnerable position. See, e.g., Westland, 308 N.W.2d at 712. Majority shareholders can “freeze out” minority shareholders by refusing to employ them, refusing to declare any dividends, siphoning off profits through excessive salaries to officers or directors or self-dealing leases and contracts, selling business assets to majority shareholders or their affiliates, forcing redemption of shares, or “cashing out” minority shareholders at an unfairly low price through a merger. Daniel S. Kleinberger, Why Not Good Faith? The Foibles of Fairness in the Law of Close Corporations, 16 Wm. Mitchell L.Rev. 1143,1152 (1990). In combination with the lack of a public market for the shares, these actions effectively hold the minority shareholders’ investments hostage. That West’s corporate structure would have allowed this type of “freeze out” supports its characterization as a close corporation.

On the, other hand, West’s 200 shareholders far exceed the number of shareholders in any corporation that Minnesota courts have recognized as a close corporation. To categorize West as a close corporation under Minnesota common law would substantially extend the definition’s numerical boundaries. Berreman argues that because 94% of the stock was held by employees and subject to repurchase agreements, West’s decision-making was concentrated, in only a few individuals, and West’s numerical structure should be analyzed from that viewpoint. These arguments have persuasive force and a fact-finder could draw inferences that would credit Berreman’s arguments. Because we are reviewing a summary judgment against Berreman’s claims, he is entitled to review'' in a light most favorable to the evidence supporting his claims, and thus we assume for purposes of our analysis that West may be categorized as a close corporation. See Martin v. Spirit Mountain Recreation, 566 N.W.2d 719, 721 (Minn.1997) (reviewing court must view evidence in light most favorable to party opposing motion).

Effect of Minnesota Business Corporation Act on Common Law Fiduciary Duty

West argues that even if it could have been characterized as a common law close corporation, the legislature abrogated the common law definition by enacting the Minnesota Business Corporations Act (MBCA), Minn.Stat. §§ 302A.01-.917 (1994 & Supp.1995). First, the MBCA did not completely abrogate the common law fiduciary duty in the context of a close corporation. See Pedro II, 489 N.W.2d at 802 (affirming judgment based on breach of fiduciary duty). In fact, the MBCA specifically recognizes “the duty which all shareholders in a closely held corporation owe one another to act in an honest, fair, and reasonable manner.” Minn.Stat. § 302A.751, subd. 3a (1994). But, significantly, the MBCA defines closely held corporations as those with 35. or fewer shareholders. Minn.Stat. § 302A.011, subd. 6a (1994). West asserts that adoption of this definition abrogates common law fiduciary-duty claims involving companies with more than 35 shareholders. Berreman, in turn, argues that a statutory closely held corporation is distinguishable from the common law close corporation and that the common law close corporation survives for purposes of determining fiduciary duties.

Although West’s abrogation argument has merit, we conclude for’ several reasons that it does not prevail. Statutory law is presumed to be consistent with the common law. Wirig v. Kinney Shoe Corp., 461 N.W.2d 374, 377 (Minn.1990). “If statutory enactment is to abrogate common law, the abrogation must be by express wording or necessary implication.” Id. Nothing in the MBCA specifically abrogates the common law definition of a close corporation. Berreman submitted the affidavit of a law school professor, who stated that he drafted the 1983 amendment that added the closely held corporation definition to the statute, and that the amendment was not intended to abrogate the common law remedies. The affidavit indicates that the professor testified that the 1983 amendments to section 302A.751 were not intended as a ceiling to limit fiduciary duties, but solely as a floor to insure that shareholders in “closely held corporations” would be automatically entitled to the doctrines referred to in Minn.Stat. § 302A.751, subd. 3a.

The reporter’s notes tend to support the affidavit, providing that the “closely held corporation” definition is “used primarily in connection with” the buy-out remedy of Minn.Stat. § 302A.751, subd. 2. Minn.Stat. Ann. § 302A.011 (West 1985) (Reporter’s Notes 1982-84). It is also significant that application of the common law definition of close corporation in the context of an action for breach of fiduciary duty does not conflict with the MBCA. The fiduciary-duty action is distinct and separate from the remedies provided by the MBCA.

West argues that the MBCA abrogates the common law definition of a close corporation by necessary implication because the legislature intended the- MBCA to eliminate the “confusion and frustration in the modern business world for shareholders, directors, officers, creditors, governmental agencies, lawyers, and the courts.” Report to the Senate by Advisory Task Force on Corporation Law (1981) (Advisory Task Force Report), reprinted in Minn. Stat. Ann. § 302A.001 (West Supp.2000). But'the task force report focuses on the confusion that was caused by the predecessor to the MBCA, which contained “needlessly structured formalit[ies]” and did not allow “the use of more informal and flexible procedures that are available in other states.” Id. Thus, the changes to’the statute made it easier for corporations to form and operate.

Although the task force enumerated the confusing problems with the old business-corporations statute, it did not mention the common law shareholder remedies. Instead the task force focused on the predecessor statute’s narrow remedy of dissolution and the unwillingness of courts to invoke so extreme a measure. Id. The purpose of the new dissolution section, Minn.Stat. § 302A.751, was to give statutory authority to grant a broad range of equitable remedies other than dissolution. Minn.Stat. Ann. § 302A.751 (West 1985) (Reporter’s Notes 1981). Subsequent amendments to the MBCA have broadened shareholders’ rights under the statute. See PJ Acquisition Corp. v. Skoglund, 453 N.W.2d 1, 18 (1990) (change of statutory language from “persistently unfair” to “unfairly prejudicial” intended to “liberalize the remedies available”); Wessin v. Archives Corp., 581 N.W.2d 380, 387-88 (Minn.App.1998) (recounting history and purpose of amendments to MBCA), rev’d on other grounds, 592 N.W.2d 460 (Minn.1999).

This case is distinguishable from Sundberg v. Lampert Lumber Co., in which this court held that statutory limitations on the buy-out remedy of Minn.Stat. § 302A.751, subd. 2, abrogated any common law buyout remedy. 390 N.W.2d at 357. In that ease, the common law remedy directly conflicted with the statutory limitations. Id. No such conflict exists in this case. Because we can discern no clear legislative intent to abrogate the common law, we conclude that the common law definition of a close corporation continues to apply for purposes of determining fiduciary relationships.

Scope of Common Law Fiduciary Duty

We turn next to the scope of the common law fiduciary duty. While it is well established that shareholders in a close corporation owe a fiduciary duty to one another, the scope of the duty has never been well defined. In Donahue v. Rodd Electrotype Co. — often cited as a leading case on fiduciary duty in the close corporation context — the Massachusetts Supreme Court held that “stockholders in a close corporation owe[d] one another substantially the same fiduciary duty in the operation of the enterprise that partners owe one another.” 328 N.E.2d at 515 (footnote omitted). The court described the duty as one of “utmost good faith and loyalty” and went on to hold that a corporation that buys shares from one shareholder must offer to buy shares from all other shareholders at the same rate. Id. at 515, 518. This has since been called the equal-opportunity rule. Donahue is probably the broadest statement of the fiduciary duty in the close-corporation context. Even the Massachusetts Supreme Court later qualified its holding by recognizing that there may be legitimate business reasons for treating shareholders differently. Wilkes v. Springside Nursing Home, Inc., 370 Mass. 842, 353 N.E.2d 657, 663 (1976) (establishing that when corporation demonstrates legitimate business interest, plaintiff, to succeed on fiduciary claim, must show less harmful alternative to achieve that interest).

“Freeze-out” situations are the classic situations in which courts have found and enforced fiduciary duties. Thus, courts have found breaches of fiduciary duty based on majority shareholders’ preferential use of corporate assets. See Crosby v. Beam, 47 Ohio St.3d 105, 548 N.E.2d 217, 221 (1989) (stating that majority shareholders breach fiduciary duty when they use their control to give themselves benefits not enjoyed by the minority); Tillis v. United Parts, Inc., 395 So.2d 618, 619 (Fla.Dist.Ct.App.1981) (recognizing that allowing only majority shareholder to sell shares to corporation constitutes preferential distribution of corporate assets and is inconsistent with fiduciary duty); Comolli v. Comolli, 241 Ga. 471, 246 S.E.2d 278, 281 (1978) (same); Donahue, 328 N.E.2d at 518 (same). The courts also have found breaches of fiduciary duties based on majority shareholders’ withholding of dividends or exclusion of minority shareholders from employment. Wilkes, 353 N.E.2d at 663 (holding that majority shareholders breached fiduciary duty when they terminated 25-percent shareholder from his position as officer, director, and employee).

Minnesota appellate cases addressing fiduciary duty in the close-corporation context, while sparse, are consistent with the fiduciary-duty cases in other jurisdictions. In Fewell v. Tappan, the supreme court held that the co-owners of a close corporation owed each other “the highest standard of integrity and good faith in their dealings with each other.” 223 Minn, at 494, 27 N.W.2d at 654. In Fewell and Evans v. Blesi, the courts found breaches of the fiduciary duty when shareholders threatened or deceived other shareholders into selling their shares. Fewell, 223 Minn, at 494, 27 N.W.2d at 654 (co-owner of close corporation breached duty by misleading other owner to believe business was in danger of receivership and thus inducing the other owner to sell his shares for a fraction of their value); Evans, 345 N.W.2d at 779-80 (partner in closely held corporation breached fiduciary duty by using intimidating tactics to gain majority share of stock and forcing plaintiffs resignation). In essence, the Minnesota courts have held that shareholders in a close corporation have a duty to deal “ ‘openly, honestly, and fairly with other shareholders.’ ” Pedro II, 489 N.W.2d at 801 (quoting Evans, 345 N.W.2d at 779).

The Minnesota cases have not addressed whether the fiduciary duty in a close corporation context includes a duty to disclose. The supreme court has, however, ruled that “[o]ne who stands in a confidential or fiduciary relation to the other party to a ■ transaction must disclose material facts.” Klein v. First Edina Nat’l Bank, 293 Minn. 418, 420, 196 N.W.2d 619, 622 (1972). And this court has applied the duty to disclose material facts in the analogous partnership context. See Appletree Square I Ltd. Partnership v. Investmark, Inc., 494 N.W.2d 889, 892 (Minn.App.1993) (holding partners had duty to disclose to their other partners existence of asbestos in office building), review denied (Minn. Mar. 16,1993).

Relying on the principles expressed in the Minnesota cases addressing disclosure, we conclude that the fiduciary duties of shareholders in a close corporation include the duty to disclose material information about the corporation. Our holding is consistent with federal cases recognizing the duty to disclose material facts as within' the fiduciary duties of shareholders in a close corporation. Jordan v. Duff & Phelps, Inc., 815 F.2d 429, 435 (7th Cir.1987) (stating that “[cjlose corporations buying their own stock, like knowledgeable insiders of closely held firms buying from outsiders, have a fiduciary duty to disclose material facts”); Helms v. Duckworth, 249 F.2d 482, 487 (D.C.Cir.1957) (stating that “holders of closely held stock in a corporation * * * bear a fiduciary duty to deal fairly, honestly, and openly with their fellow stockholders and to make disclosure of all essential information”).

Materiality of Undisclosed Facts

The recognition that shareholders in a close corporation have a duty to disclose material facts leads us to the second part of the question: What facts are material and-thus fall within the scope of that duty? In the context of the federal securities laws, the U.S. Supreme Court has held that an omitted fact is material “if there is a substantial likelihood that a reasonable shareholder would consider it important in deciding how to vote.” Basic Inc. v. Levinson, 485 U.S. 224, 231, 108 S.Ct. 978, 983 (1988) (citation omitted). Or, put another way, “there must be a substantial likelihood that the disclosure of the omitted fact would have been viewed by the reasonable investor as having significantly altered the ‘total mix’ of information made available.” Id. at 231-32, 108 S.Ct. at 983 (citation omitted)' See also Black’s Law Dictionary 991 (7th ed.1999) (defining material as “[o]f such a nature that knowledge of the item would' affect a person’s decision-making process”). Materiality, then, depends on the specific facts of each case. Basic, 485 U.S. at 239, 108 S.Ct. at 987.

In Basic v. Levinson, the Supreme Court adopted the probability-magnitude approach for determining whether preliminary merger discussions are material; Under that test, materiality “will depend at any time upon a balancing of both the indicated probability that the event will occur and the anticipated magnitude of the event in light of the totality of the company activity.” Id. at 238, 108 S.Ct. at 987 (citation omitted). Probability should be assessed by evaluating the “indicia of interest in the transaction at the highest corporate levels.” Id. at 239, 108 S.Ct. at 987. Magnitude should be assessed by considering “such facts as the size of the two corporate entities and of the potential premiums over market value.” Id.

Addressing circumstances similar to Berreman’s, the federal courts have held that tentative or preliminary merger discussions were not material. See Taylor v. First Union Corp., 857 F.2d 240, 243 (4th Cir.1988) (holding discussions between two companies on “the possibility of a future merger” were not material); Panfil v. ACC Corp., 768 F.Supp. 54, 58 (W.D.N.Y.1991). In Panfil, the plaintiff alleged that ACC breached a duty to him by failing to inform him, before he sold his stock, that it intended to approach another company “to facilitate a combination” of the two businesses. 768 F.Supp. at 58. The court found that the facts were not material, reasoning that “there were not ‘tentative’ discussions” about merger, “there were no discussions.” Id. The court concluded that “[t]he mere intention to pursue a possible merger at some time in the future, without more, is simply not a material fact * * *. The probability of merger prior to contact with potential suitors — prior to any evidence that a suitor is in any way interested in merger — is too remote.” Id.

The Supreme Court has recognized, however, that facts that would not be material in the context of a publicly held corporation may be material, and thus subject to the duty to disclose, when they relate to a close corporation:

Since a merger in which it is bought out is the most important event that can occur in a small corporation’s life, to wit, its death, we think that inside information, as regards a merger of this sort, can become material at an earlier stage than would be the case as regards lesser transactions — and this even though the mortality rate of mergers in such formative stages is doubtless high.

Basic, 485 U.S. at 238, 108 S.Ct. at 987 (citation omitted). Consistent with this analysis, the Seventh Circuit 'Court of Appeals has held that a close corporation’s initial decision to seek buyers may be material. Jordan, 815 F.2d at 434 (reasoning that a jury could conclude “that the board’s decision * * * to seek a buyer * * * — coupled with the fact that at least one putative buyer thought Duff & Phelps worth $50 million * * * — -was material”); Michaels v. Michaels, 767 F.2d 1185, 1197 (7th Cir.1985) (concluding that “a jury could reasonably find that Littlejohn’s agreement to contact prospective buyers on behalf of Hyman-Michaels was material”).

Application of Probability-Magnitude Test to Undisclosed Facts

Applying the probability-magnitude test to this case, we hold that the facts known to West at the time Berreman resigned were immaterial as a matter of law. By the end of May 1995, Nelson, Dwight Opperman, and Vance Oppennan had decided to explore options for the future of West including a possible sale, and they had hired an investment-banking firm to investigate West’s options. West, however, had made no decision to solicit bids for the sale of West, much less initiated discussions with any potential buyers. The federal courts have been reluctant to find materiality in the absence of evidence that the corporation engaged in discussions with potential buyers. Even in the close-corporation context, the Seventh Circuit has gone no further than to say that a corporation’s decision to seek a buyer may be material. We agree that tentative, speculative discussions about merger are not material.

Berreman urges that the early discussions among the West directors about the possibility of merger should be found material because the magnitude of any potential merger was substantial. West had always been a privately held corporation, and until August 1995, its directors were vocally committed to being privately held. That any merger would have been such a sharp departure from West’s long history of being privately held supports the magnitude of the merger discussions. But the magnitude of the discussions does not overcome the low probability that the merger would ever occur. The initial discussions were among West’s top directors, which supports probability. But even these three directors had decided only to explore West’s financial options. Thus, the discussions were not material.

II

Berreman next claims that West’s conduct was unfairly prejudicial to him and that he is thus entitled to equitable relief under the MBCA. See Minn.Stat. § 302A.751, subd. 1(b)(3) (1994). The district court did not directly address Berre-man’s theory that West’s failure to disclose the initial merger discussions was unfairly prejudicial under section 302A.751. West argues that the district court implicitly rejected this theory based on its conclusion that there were no material facts that would trigger a duty to disclose. But Ber-reman contends that materiality is not dis-positive of the analysis under section 302A.751 and that the district court should have separately considered his statutory claim.

We agree that materiality is not an element of unfairly prejudicial conduct under section 302A.751, subd. 1(b)(3), and thus Berreman’s statutory claim warrants separate consideration. We believe, however, that the circumstances would be rare when a director’s failure to disclose immaterial facts would constitute unfairly prejudicial conduct under the statute. We also conclude that because the issue has been fully briefed, we need not remand to the district court for a specific determination on this issue. Holen v. Minneapolis-St. Paul Metro. Airports Comm’n, 250 Minn. 130, 135, 84 N.W.2d 282, 286 (1957) (stating that appellate court may address issues when fully briefed and no possible advantage or disadvantage to either party in not having prior ruling).

The MBCA allows the courts to grant equitable relief to a shareholder in a corporation that is not publicly held when the directors of that corporation have “acted in a manner unfairly prejudicial” toward that shareholder in his capacity as shareholder or director.' Minn.Stat. § 302A.751, subd. 1(b)(3). The term “unfairly prejudicial” should be liberally construed. Minn.Stat. Ann. § 302A.751 (West 1985) (Reporter’s Notes 1982-84); McCollum v. Rosen’s Diversified, Inc., 153 F.3d 701, 703 (8th Cir.1998). The statute does not define the term, however, and its plain meaning is not apparent.

Breaches of fiduciary duty are probably unfairly prejudicial within the meaning of section 302A.751, subd. 1(b)(3). Section 302A.751, subd. 3a, specifically directs .that courts, in deciding whether to grant equitable relief, should consider the “duty which all shareholders in a closely held corporation owe one another to act in an honest, fair, and reasonable manner.” Minnesota courts’ application of this section is consistent with that understanding. See Pedro II, 489 N.W.2d at 802-03 (affirming judgment on fiduciary-duty claim along with award of equitable relief under Minn.Stat. § 302A.751). Unfairly prejudicial conduct also is distinct from fraudulent or illegal conduct, which is addressed elsewhere in the statute. See Minn.Stat. § 302A.751, subd. 1(b)(2) (1994) (court may grant equitable relief based on directors’ fraudulent or illegal conduct); Minn.Stat. § 645.17 (1994) (statute must be considered as a whole to harmonize and give effect to all provisions).

. Seven other states refer to “unfair prejudice” or “unfairly prejudicial” in their business corporation statutes. See Kiriakides v. Atlas Food Sys. & Servs., Inc., 527 S.E.2d 371, 386 (S.C.Ct.App.2000) (listing Alaska, California, Minnesota, Missouri, Montana, Wisconsin, and Wyoming in addition to South Carolina). Other states follow the Model Business Corporations Act by referencing “oppressive conduct.” O’Neal, swpra, § 9.29, at 131-32. Only South Carolina, which has a statute that references both oppressive and unfairly prejudicial conduct, has explicitly defined unfairly prejudicial. According to the South Carolina Court of Appeals, oppressive or unfairly prejudicial conduct is

1) A visible departure from the standards of fair dealing and a violation of fair play on which every shareholder who entrusts his money to a company is entitled to rely; or

2) A breach of fiduciary duty of good faith and fair dealing; or

3) Whether the reasonable expectations of the minority shareholders have been frustrated by the actions of the majority; or

4) A lack of probity and fair dealing in the affairs of a company to the prejudice of some of its members; or

5) A deprivation by majority shareholders of participation in management by minority shareholders.

Kiriakides, 527 S.E.2d at 387-88.

Kiriakides’s definition of oppressive or unfairly prejudicial conduct is consistent with other jurisdictions’ application of oppressive conduct. The courts have primarily defined “oppressive” as one of the first three prongs of the Kiriakides definition. See O’Neal, supra, § 9.29, at 132 (collecting cases). The most often applied definition of oppressive asks whether the actions of majority shareholders have frustrated a minority shareholder’s reasonable expectations. See id.

We conclude that the reasonable-expectations approach is most consistent with the Minnesota legislature’s intent in adopting the unfairly prejudicial language. The advisory task force indicated that one of its goals was to draft a law that would “provide, as rules, all of the provisions that would normally be expected to result from associative bargaining if all parties were represented by counsel, coupled with the expressed flexibility to vary those rules whenever necessary to reflect the actual associative bargain.” Advisory Task Force Report, supra. Further, the statute explicitly directs the courts to consider the expectations of shareholders in a closely held corporation. Minn.Stat. § 302A.751, subd. 3a. Although this section of the statute does not directly apply in this case, it demonstrates the importance that the legislature has placed on shareholder expectations.

We conclude that unfairly prejudicial conduct under Minn.Stat. § 302A.751, subd. 1(b)(3), is conduct that frustrates the reasonable expectations of shareholders in their capacity as shareholders or directors of a corporation that is not publicly held or as officers or employees of a closely held corporation.

West argues that the buy-back agreement compels a conclusion that West’s conduct did not frustrate Berre-man’s reasonable expectations. See Minn. Stat. § 302A.751, subd. 3a (written agreements between the parties are presumed to represent their reasonable expectations). We disagree that the repurchase terms are dispositive of reasonable expectations in all circumstances. Berreman’s reasonable' expectations would not have been frustrated if the buy-back agreement had been triggered by events outside Ber-reman’s control, i.e., if West terminated his employment. In this case, however, Ber-reman chose the course of action that triggered the buy-back agreement, i.e., retirement, and contends that he would not have retired if West had disclosed the merger discussions to him. Under these circumstances the presumed reasonableness of the buy-back agreement is not dispositive.

Nonetheless, we conclude that West’s conduct did not frustrate Berre-man’s reasonable expectations as a shareholder. In a typical close corporation, a shareholder may have an expectation of a job, a share of corporate earnings, and a place in management. Pedro II, 489 N.W.2d at 802; see also Balvik v. Sylvester, 411 N.W.2d 383, 387 (N.D.1987). Atwill employees who are allowed to buy stock subject to a buy-back-on-termination agreement may have lower expectations. See Coleman v. Taub, 638 F.2d 628, 636 (3d Cir.1981) (holding that shareholder who signed buy-back agreement bargained for right to be shareholder only while employed). Berreman did not have a reasonable expectation that he would be informed of any speculative discussions West’s directors had about the financial future of West. See Balvik, 411 N.W.2d at 387 (N.D.1987) (reasoning that “[disappointment alone should not necessarily be equated with oppression”) (citation omitted). Therefore, West’s conduct was not unfairly prejudicial to Berreman, and he is not entitled to equitable relief under the MBCA.

Ill

Berreman finally claims that West committed fraud by failing to disclose the initial merger discussions and actions the West directors took to explore financial options. Berreman alleges no affirmative misrepresentations and concedes that silence does not constitute fraud in the absence of a duty to speak. See L & H Airco, Inc. v. Rapistan Corp., 446 N.W.2d 372, 380 (Minn.1989) (recognizing that nondisclosure amounts to fraud only if legal obligation to communicate exists). Because West had no affirmative duty to disclose at the time Berreman retired or when West redeemed his stock, West is entitled to judgment as a matter of law on Berreman’s fraud claim.

DECÍSION

As a matter of law West did not breach a fiduciary duty, unfairly prejudice Berre-man within the meaning of Minn.Stat. § 302A 751, subd. 1(b)(3), or commit fraud. Accordingly, we affirm summary judgment for West on each of Berreman’s claims.

Affirmed.


source: Caselaw Access Project

author: DAVIES, Judge.

license: Public Domain

text:
    STATE of Minnesota, CITY OF MAPLE GROVE, Appellant, v. Pamela Jean BREUHL, Respondent.
    No. C7-00-162.
    Court Of Appeals of Minnesota.
    Aug. 1, 2000.
    Review Denied Oct. 17, 2000.

      Mike Hatch, Attorney General, St. Paul; and Steven M. Tallen, Tallen & Baertschi, Minneapolis, for appellant.
    Timothy R. Anderson, Frederic Bruno & Associates, Minneapolis, for respondent.
    Considered and decided by DAVIES, Presiding Judge, WILLIS, Judge, and HALBROOKS, Judge.
   OPINION

DAVIES, Judge.

The state challenges a pretrial order of the district court dismissing misdemeanor charges of careless driving, Minn.Stat. § 169.13, subd. 2 (1998), and inattentive driving, Minn.Stat. § 169.14, subd. 1 (1998). The charges had been dismissed six months earlier upon a finding that respondent was incompetent to assist in her own defense. Minn. R.Crim. P. 20.01, subd. 4(2). Because the district court erred in concluding that a rule 20.01 dismissal prevents the state from recharging a misdemeanor offense, we reverse.

FACTS

Respondent Pamela Jean Breuhl, aged 34, was involved in a fatal traffic accident on April 30,1998. Breuhl’s car rear-ended another vehicle on 1-494. She was driving 40 to 60 miles per hour and the driver of the other car was travelling about 20 miles per hour. The driver of the other car, who was not wearing a seat belt, was thrown from her vehicle into the path of an oncoming motorcycle, and killed. Breuhl may have been momentarily distracted by her stepdaughter’s infant child. There was no evidence that drugs or alcohol were involved in the accident.

When Breuhl was first charged, both parties sought a rule 20 competency hearing because Breuhl was suffering depression and post-traumatic stress disorder, both arising from the accident. Based on the report of the court-appointed psychologist, the district court determined that Breuhl was at the time incapable of assisting in her own defense and dismissed the misdemeanor charges under Minn. R.Crim. P. 20.01, subd. 4.

Six months later, when the state recharged Breuhl, the district court again dismissed the charges, relying on Minn. R.Crim. P. 20.01, subd. 4(2).

ISSUES

I. Does a prosecuting attorney have authority to recharge a misdemeanor offense against a defendant when the initial charge was dismissed because the defendant was incompetent to assist in her own defense?

II. Should respondent be awarded attorney fees and costs incurred in responding to this appeal?

ANALYSIS

I.

Construction of a rule of procedure is a legal question, which an appellate court reviews de novo. State v. Martin, 591 N.W.2d 481, 484 (Minn.1999). It is a function of the judiciary, arising from the court’s inherent judicial powers, to determine procedural matters. State v. Nerz, 587 N.W.2d 23, 24 (Minn.1998); State v. Johnson, 514 N.W.2d 551, 554 (Minn.1994); see also Minn.Stat. § 480.059, subd. 1 (1998) (“The supreme court shall have the power to regulate the pleadings, practice, procedure, and the forms thereof in criminal actions in all courts of this state, by rules promulgated by it from time to time.”).

When appealing a pretrial order, the state is required to demonstrate “clearly and unequivocally” that the district court erred in its judgment and that, unless reversed, the error will have a “critical impact” on the trial’s outcome. Martin, 591 N.W.2d at 484. Dismissal of a complaint has a critical impact. State v. Dendy, 598 N.W.2d 4, 6 (Minn.App.1999), review denied (Minn. Sept. 28, 1999). This court must therefore determine whether the district court erred.

Minn. R. Crim P. 20.01 provides that criminal proceedings are to be suspended upon a finding of incompetency. When the case involves a misdemeanor, the court is directed to either institute a civil commitment proceeding or dismiss the case. Minn. R.Crim. P.'20.01, subds. 2(1), 4(2). When the charge is a felony or gross misdemeanor,.-the charge is to be suspended, not dismissed. Id. at subd. 4(2). With felonies and gross misdemeanors, the rule provides for continued court supervision while, the case is suspended, including the receipt of regular reports on the defendant’s mental condition from the institution or officer charged with the defendant’s supervision. Id. at subd. 5. Felony proceedings may resume if the court finds the defendant competent to proceed within three years after the finding of incompetency. Id. at subds. 5, 6. Unless the defendant is charged with murder, the rule specifies that charges are to be dismissed three years after the finding of incompetency unless the prosecutor files written notice of an intent to prosecute. Id. at subd. 6. The rule, however, is silent as to whether a misdemeanor offense may be recharged.

The district court concluded that the doctrine of expressio unius, codified at Minn.Stat. § 645.19 (1998), supports an interpretation that later misdemeanor charges are precluded because the rule provides for straight dismissal of misdemeanors, in contrast with the continuing court supervision mandated for more serious crimes.

The state, however, maintains that it may recharge the misdemeanor offenses against Breuhl because recharging is not specifically prohibited by the rules or applicable statutes. The ' state further asserts that public policy supports prosecuto-rial discretion to recharge misdemeanor offenses against a defendant whose prosecution has been delayed due to a temporary lack of competency. Breuhl responds that prohibiting misdemeanor offenses from being recharged reflects a reasonable decision to treat less serious crimes differently in the interest of fairness, finality, and simplicity, and to avoid expense and delay — goals set forth in Minn. R.Crim. P. 1.02.

We conclude the district court erred in ruling that the prosecuting attorney is without discretionary authority to recharge a misdemeanor offense under the circumstances of this case. First, jeopardy that would bar future charges did not attach during the initial proceeding. See State v. Leroy, 604 N.W.2d 75, 77 (Minn.1999) (noting double jeopardy clauses of United States and Minnesota Constitutions bar second prosecution of same offense following acquittal); U.S. Const, amend. V (“nor shall any person be subject for the same offense to be twice put in jeopardy of life or limb”); Minn. Const, art. I, § 7 (“no person shall be put twice in jeopardy of punishment for the same offense”).

Second, although the* legislature has directed that persons may not be tried for a crime while mentally ill or deficient, it has also declared that a person “shall not be excused from criminal liability” unless the person suffered from the mental illness or defect at the time of the crime. Minn.Stat. § 611.026 (1998). The lack of competency was not present at the time of the offense.

We hold that, under the rules and statutes of this state, a prosecutor has authority to recharge a previously dismissed misdemeanor offense against a defendant when the dismissal was based on a finding of incompetence under rule 20.01.

II.

Breuhl moves for attorney fees and costs incurred in defense of this appeal. Based on the supporting documentation submitted by counsel and the awards made by this court in similar cases, we award $2,000, plus costs of $66.37. See Minn. R.Crim. P. 28.04, subd. 2(6) (defendants responding to pretrial prosecution appeals entitled to reasonable attorney fees and costs).

DECISION

The district court’s pretrial order dismissing misdemeanor careless and inattentive driving charges against respondent is reversed. Because neither the statutes nor the rules of criminal procedure prohibit the state from recharging these misdemeanor offenses, the district court erred in dismissing them.

Reversed.

      . We note that the district court, in dismissing the charges against Breuhl, also relied on Minn.Stat. § 631.21 (1998). Charges dismissed under Minn.Stat. § 631.21 are generally not appealable by the state. See, e.g., State, City of Crystal v. Kivi, 554 N.W.2d 97, 100-01 (Minn.App.1996), review denied (Minn. Dec. 17, 1996). But section 631.21 applies to dismissal motions offered by the prosecutor or dismissal sua sponte by the court. Here, the court was acting in response to, a dismissal motion brought by Breuhl. Furthermore, the court made no other reference to the statute and the reasons provided for the decision in the court's memorandum are based solely on rule 20.01. We therefore limit our review to the dismissal under rule 20.01.


author: DAVIES, Judge

text:
    JERRY MATHISON CONSTRUCTION, INC., Respondent, v. Craig BINSFIELD, et al., Appellants.
    No. C8-00-168.
    Court of Appeals of Minnesota.
    Aug. 1, 2000.

      Robin C. Merritt, Hanft Fride, P.A., Duluth, for respondent.
    James 0. Redman, Charles E. Lund-berg, Bassford, Lockhart, Truesdell & Briggs, P.A., Minneapolis, for appellants.
    Considered and decided by DAVIES, Presiding Judge, LANSING, Judge, and HALBROOKS, Judge.
   OPINION

DAVIES, Judge

Respondent Jerry Mathison Construction and its comprehensive general liability insurer, Great American Insurance Company (Great American), entered into a loan-receipt agreement under which Great American paid a judgment against respondent arising out of respondent’s failure to maintain Wisconsin workers’ compensation coverage. Respondent has now, in this Minnesota action, sued appellants Craig Binsfield and Binsfield & Associates, Inc., an insurance agency, alleging that it was Binsfield’s negligence that left respondent uninsured against Wisconsin worker’s compensation claims.

After a jury found that the appellants had been negligent, the Minnesota district court ruled that respondent was entitled to recover damages. On an earlier appeal, this court remanded for further findings. On remand, the district court made findings and ruled that an action against appellants in respondent’s name is not barred by the fact that respondent itself did not pay any portion of the Wisconsin judgment. Appellants challenge that ruling, alleging respondent’s failure to itself pay the Wisconsin judgment means it suffered no damage and precludes it from recovering from appellants. We affirm.

FACTS

In April 1991, respondent Jerry Mathi-son Construction was a subcontractor at a construction site in Wisconsin when one of its employees was injured on the job. Although respondent had primary responsibility to provide workers’ compensation for its employees at the site, it did not have Wisconsin coverage. Therefore, as required by Wisconsin law, the general contractor paid the injured employee’s claims through its own workers’ compensation insurer, Wausau Underwriters Insurance Company (Wausau). The general contractor and Wausau then sued respondent and Great American in Wisconsin to recover the amount of workers’ compensation benefits Wausau had paid.

The general contractor and Wausau won a $126,704 judgment against respondent, which Great American paid pursuant to a loan-receipt agreement it entered into with respondent. Respondent then, as required by the loan-receipt agreement, sued appellants Craig Binsfield and Binsfield <& Associates, Inc., its insurance agent and agency, for negligence in failing to provide the required workers’ compensation coverage. A jury apportioned 75% of the fault to appellants. The trial court set $95,028, 75% of the Wisconsin judgment against respondent that had been paid under the loan-receipt agreement, as the amount of damages respondent was entitled to recover from appellant. After trial, appellants brought a posttrial motion to dismiss, claiming that respondent sustained no actual damages, as it was an inactive corporation and had not paid the Wisconsin judgment.

The trial court denied appellants’ motion to dismiss and ordered judgment against appellants. The trial court determined that respondent was a viable, albeit an inactive, corporation that had been sued and thus had “suffered the liability of a [Wisconsin] judgment and has sued in this case.”

Appellants appealed, and this court remanded for further findings. On remand, the district court again concluded that respondent had suffered harm and was entitled to judgment against appellants in the amount of $95,028.

This second' appeal follows.

ISSUE

Must this judgment be dismissed because respondent corporation has suffered no damages because it paid out nothing to satisfy the Wisconsin judgment?

ANALYSIS

Appellant argues that the district court erred in concluding that, under the judgment rule, the mere entry of a judgment against respondent was sufficient for respondent to recover damages from appellants. The judgment rule states that “an entry of judgment * * * alone is sufficient damages [for an insured] to sustain a recovery from an insurer for its breach of duty.” Gray v. Grain Dealers Mut. Ins. Co., 871 F.2d 1128, 1131 (D.C.Cir.l989) (citation omitted). Minnesota has supported the judgment rule in cases when an insurer has refused to undertake its contractual duties to defend and indemnify under its policy. Strand v. Travelers Ins. Co., 300 Minn. 311, 219 N.W.2d 622 (1974); Lange v. Fidelity & Casualty Co. of New York, 290 Minn. 61, 185 N.W.2d 881, 882 (1971).

The judgment rule has not, however, been applied broadly in Minnesota, and never to a situation when, as here, the claim sounds in professional malpractice and negligence. And we find it unnecessary to decide whether its use by the district court in this case was proper. We instead hold that entering judgment against appellants was proper on the basis of the loan-receipt agreement entered into by respondent and Great American.

Deciding the case on this basis is appropriate even though the district court did not base its decision on the loan-receipt agreement and counsel failed to brief this theory on appeal. See State v. Hannuksela, 452 N.W.2d 668, 673 n. 7 (Minn.1990) (applying legal theory not briefed or presented at oral argument); Carousel Automobiles, Inc. v. Gherity, 511 N.W.2d 472, 476 n. -2- (Minn.App.1994) (not necessary to reverse decision simply because trial court did not rely on strongest reasons), aff'd 527 N.W.2d 813 (Minn.1995).

This court must decide cases in accordance with existing law when there is nothing “novel- or questionable” about the relevant law. Greenbush State Bank v. Stephens, 463 N.W.2d 303, 306 n. 1 (Minn.App.1990), review denied (Minn. Feb. 4, 1991). That responsibility is not to be “diluted by counsel’s oversights, * * * failure to specify issues or to cite relevant authorities.” Granse & Assocs., Inc. v. Kimm, 529 N.W.2d 6, 9 n. 1 (Minn.App.1995) (quoting Hannuksela, 452 N.W.2d at 673 n. 7), review denied (Minn. Apr. 27, 1995).

1. Loan-Receipt Agreement

A loan-receipt agreement is a device used to achieve an equitable result. John E. McKay, Loan Agreement: A Settlement Device That Deserves Close Scrutiny, 10 Val. U.L.Rev. 231, 240 (1976). Loan receipts are essentially a subrogation tool. Pacific Indem. Co. v. Thompson-Yaeger, Inc., 260 N.W.2d 548, 556-57 (Minn.1977). The purpose of the loan-receipt agreement between an insurer and its insured is to allow a subsequent action to be brought in the name of the insured even when the' insurer has in effect fully indemnified the insured for the loss. Blair v. Espeland, 231 Minn. 444, 448, 43 N.W.2d 274, 277 (1950); see also Jostens, Inc. v. Mission Ins. Co., 387 N.W.2d 161, 164 (Minn.1986) (loan-receipt agreements useful in disposing of insurance disputes when there has been payment); E. Michael Johnson, The Real Party Under Rule 17(a): The Loan Receipt and Insurers’ Subrogation Revisited, 74 Minn. L.Rev. 1107,1130 (1990).

We see nothing novel or questionable in the use of a loan-receipt agreement in this circumstance. The parties, moreover, brought before the district court (in post-trial motions approximately three months after trial) the existence of the loan-receipt agreement. Therefore, we proceed to consider the impact and significance of the loan-receipt agreement in this case notwithstanding that the parties did not present this argument on appeal.

Respondent entered into a loan-receipt agreement with Great American under which Great American loaned $126,704 to respondent to satisfy the Wisconsin judgment. In exchange, respondent authorized Great American to pursue in respondent’s name an action against appellants to recover the amount Great American had paid. Any recovery in the suit against appellants is to be applied in satisfaction of the loan. Respondent has no other obligations on the loan receipt.

We conclude that respondent and Great American entered into a proper loan-receipt agreement. Great American, thus, properly brought the suit in respondent’s name to satisfy the loan receipt. Appellants were not prejudiced by the fact that Great American’s involvement was not formally disclosed earlier. Appellants cannot escape their liability merely because Great American, while not directly named as an interested party, will ultimately receive the recovery. That is true of hundreds of subrogation actions in Minnesota, actions routinely approved.

Because there was an actual transfer of funds and the Wisconsin judgment was paid, equity entitles respondent and Great American to recover damages from appellants to satisfy the loan-receipt obligation.

2. Other Issues

Appellants also argue that the law of the case applies because this court determined in its prior order that the mere entry of judgment does not constitute actual harm or damage.

The law-of-the-case doctrine “ordinarily applies where an appellate court has ruled on a legal issue and has remanded the case to the lower court for further proceedings.” Loo v. Loo, 520 N.W.2d 740, 744 n. 1 (Minn.1994). This court’s previous opinion did not, however, review the substantive issue now presented. This court simply remanded for more findings because the district court had failed to make findings sufficient for this court to review. Jerry Mathison Constr., Inc. v. Binsfield, No. Cl-98-2360, 1999 WL 561964 (Minn.App. Aug. 3, 1999). Because in the earlier appeal this court did not address the substantive issues, law-of-the-case does not apply. We note also that the existence of the loan-receipt agreement apparently was not brought to the attention of this court on the first appeal.

Respondent was statutorily dissolved on August 1,1997, but this information was never submitted to the district court. Appellants now submit a certificate of statutory dissolution issued on February 23, 2000. Respondent’s dissolution is irrelevant in light of the valid loan-receipt agreement executed before the dissolution.

DECISION

The district court did not err in entering judgment against appellants for their negligence in failing to place proper insurance coverage.

Affirmed.

      . The third-party complaint in Wisconsin against respondent (and Great American) was for negligence, breach of contract, statutory obligations for respondent to repay, and contribution (because of joint causal negligence).


author: STONEBURNER, Judge.

text:
    Thomas MAYE, Appellant, v. UNIVERSITY OF MINNESOTA, Respondent.
    No. C7-00-2.
    Court of Appeals of Minnesota.
    Aug. 1, 2000.

      Lynn Klicker Uthe, Susan A. Cragg, Lynn Klicker Uthe, Ltd., Minnetonka, for appellant.
    Andrew D. Parker, Matthew E. Johnson, Smith Parker, PLLP, Minneapolis, for respondent.
    Considered and decided by KLAPHAKE, Presiding Judge, KALITOWSKI, Judge, and STONEBURNER, Judge.
   OPINION

STONEBURNER, Judge.

Appellant was a plaintiff in an earlier racial-discrimination lawsuit that settled. In a subsequent action, he alleged that the terms of the settlement contract were breached. The district court dismissed this claim, ruling that it lacked subject-matter jurisdiction because a writ of cer-tiorari was the proper way to review the claim. Following a trial on the remaining claim, judgment was entered. This appeal of the dismissal of appellant’s breach of contract claim followed.

FACTS

Appellant Thomas Maye worked as a Protection Services Officer for the University of Minnesota (the University) hospital from 1985 to 1996. In 1988, Maye and two other black employees sued the University for race discrimination. The case settled in 1991. In the settlement agreement, the University stipulated that it would give Maye “due consideration” for all subsequent promotions, which would be posted in the normal manner. The agreement also provided that the University would not retaliate against Maye for bringing the suit.

In 1992, the University advertised the position of Director of Protection Services, the highest management position in Maye’s department. Considering it a promotion opportunity, Maye applied for the position. The University hired an executive search firm to recruit and screen candidates. The search firm determined that Maye was not qualified for the position. Maye was not interviewed for the position. The University eventually hired Rev. William A. Watson, III, a black man with extensive experience in security and management.

Maye requested and took two leaves of absence in 1994. The first was to care for his sick father, but during the second, Maye worked for the Minnesota Department of Corrections as a Security Case Manager. The University’s leave policy does not provide for absences to pursue other employment. Rev. Watson became aware of Maye’s outside employment during his leave of absence, but did nothing.

In December 1994, the University posted two openings for Global Supervisor positions in Maye’s department. Again, recognizing a promotion opportunity, Maye submitted an application. The interview panel consisted of Rev. Watson and two other managers who had both been defendants in Maye’s previous lawsuit against the University. Rev. Watson, however, had the final hiring authority. The panel identified the qualities they wanted in a Global Supervisor and prepared eight open-ended questions and four situational questions to ask candidates. They asked each candidate all eight open-ended questions, one situational question chosen randomly and some basic questions about why the candidate wanted the job. The panel also created a scoring system to rate the candidates on various qualities.

Maye was selected to be interviewed by the panel. The panel also interviewed five other Protection Services Officers for the position. The two candidates who were promoted are both white men. They received the highest scores from each member of the panel and received substantially higher scores from Rev. Watson than Maye did.

On December 31, 1996, the University sold the hospital and the new owner contracted out for security services. Therefore, as of January 1, 1997, all Protection Services Officer positions at the hospital were eliminated and Maye and about 12 others lost their jobs.

In January 1998, Maye brought this action in district court. He alleged two counts: (1) the University violated the Minnesota Human Rights Act (MHRA) by denying Maye promotions in 1992 and 1995 because of his race and his previous lawsuit; and (2) the University breached its contract by failing to give Maye “due consideration” for the 1992 and 1995 promotions and retaliating against him. The district court dismissed Maye’s breach of contract claim for lack of subject-matter jurisdiction. After a bench trial, the district court decided the remaining claim in favor of the University, making numerous findings of fact against Maye. Maye appeals the district court’s dismissal of his breach of contract claim, arguing the court had subject-matter jurisdiction to consider the claim because the University’s actions were not quasi-judicial.

ISSUE

Did the district court have subject-matter jurisdiction over Maye’s breach of contract claim against the University?

ANALYSIS

This court is not bound by a trial court’s decision on a purely legal issue. Frost-Benco Elec. Ass’n v. Minnesota Pub. Utils. Comm’n, 358 N.W.2d 639, 642 (Minn.1984). Whether subject-matter jurisdiction exists is a question of law this court reviews de novo. Federal-Hoffman, Inc. v. Fackler, 549 N.W.2d 93, 96 (Minn.App.1996), review denied (Minn. Aug. 20, 1996). “Whenever it appears * * * that the court lacks jurisdiction of the subject matter, the court shall dismiss the action.” Minn. R, Civ. P. 12.08(c). When no statutory authority exists for judicial review of a quasi-judicial administrative agency decision, judicial review is limited to review by certiorari. Neitzel v. County of Redwood, 521 N.W.2d 73, 75 (Minn.App.1994) (citing Plunkett v. First Nat’l Bank, 262 Minn. 231, 245-46, 115 N.W.2d 235, 245 (1962)), review denied (Minn. Oct. 27,1994).

The University is part of the executive branch of state government, and as such, its decisions are given deference by this court under the principle of separation of powers. See Dokmo v. Independent Sch. Dist. No. 11, 459 N.W.2d 671, 674 (Minn.1990) (applying separation of powers to school districts). In Shaw v. Board of Regents, we held that: “certiorari pursuant to Minn.Stat. § 606.01 (1998) is the only method available for review of a university decision.” Shaw v. Board of Regents, 594 N.W.2d 187, 191 (Minn.App.1999). Relying on the Minnesota Supreme Court’s decision in Willis v. County of Sherburne, 555 N.W.2d 277, 282 (Minn.1996), this court held that petitions for writ of certiorari are appropriate when an employee raises a “pure breach of contract” claim. Shaw, 594 N.W.2d at 191. The supreme court in Willis held that:

Regardless that the claim is cloaked in the mantle of breach of contract, when the alleged breach of the employment contract of a governmental employee results in termination of the claimant’s employment by an executive body which does not have statewide jurisdiction * * * the claimant may contest the employer’s action by certiorari alone, absent statutory authority for a different process.

Willis, 555 N.W.2d at 282.

In Dietz v. Dodge County, 487 N.W.2d 237 (Minn.1992), the supreme court noted that

[t]he issue which Dietz would have the court review' demands scrutiny of the manner in which the county has discharged its administrative function; the very type of scrutiny that runs a grave risk of usurping the county’s administrative prerogative. Thus, to the extent that she has characterized her contract as requiring cause to dismiss, she has raised a threshold issue which at least arguably renders the county’s termination decision quasi-judicial in nature, warranting the issuance of writ of certio-rari.

Id. at 240.

In the present case, Maye argues that the district court had jurisdiction over his breach of contract claim because it does not implicate any quasi-judicial decision by the University. The settlement provisions Maye claims were breached are that Maye “will be given due consideration for any promotional opportunities that come up within the hospital security department” and “there will not be any retaliation against [Maye] as a result of this litigation.” Both provisions apply to Maye’s employment relationship with the University and implicate the University’s internal administrative functions. See Dietz, 487 N.W.2d at 240 (holding review of administrative function requires writ of certiorari).

A quasi-judicial decision need not be made by a commission or a board; one “public officer” can make it. Neitzel, 521 N.W.2d at 75. So, the fact that only one person at the University was ultimately responsible for making the promotion decisions does not disqualify the decisions as quasi-judicial acts. Also, a hearing creating a record of the decision-making process is not a prerequisite to review by writ of certiorari. Dokmo, 459 N.W.2d at 675-76.

The Minnesota Supreme Court has summarized the indicia of quasi-judicial actions as

(1) investigation into a disputed claim and weighing of evidentiary facts;
(2) application of those facts to a prescribed standard; and
(3) a binding decision regarding the disputed claim.

Minnesota Ctr. for Envtl. Advocacy v. Metropolitan Council, 587 N.W.2d 838, 842 (Minn.1999); see also Neitzel, 521 N.W.2d at 75 (defining quasi-judicial acts as administrative acts of investigating and considering evidentiary facts to make judgements requiring exercise of discretion). The supreme court decision that first narrowed the definition to include these three indicia ultimately defined a quasi-judicial action as “a decision which determines the rights of contending parties and is binding upon them.” Meath v. Harmful Substance Comp. Bd., 550 N.W.2d 275, 280 (Minn.1996).

Maye alleges he was not given the consideration required by the settlement agreement, which he construes as an employment contract. The only reason we examine the University’s promotion decision is because of Maye’s breach of contract claim. In these limited circumstances, we find the University’s promotion decision is a quasi-judicial action. The University created a standard by identifying the qualities required for the position to be filled. Then the University investigated its options by collecting and reviewing applications and interviewing candidates, it applied the criteria to the information provided by the candidates, and using its discretion, made a binding decision not to promote Maye. The University’s promotion process was an administrative function requiring discretion and thus resulted in a quasi-judicial decision. See, e.g., Bohr v. City of Litchfield, 420 N.W.2d 604, 606 (Minn.1988) (applying other sections of writ-of-certiorari statute to review of promotion decisions); Neitzel, 521 N.W.2d at 75 (holding a decision to deny conditional-use permit is quasi-judicial decision because it required determination of facts and exercise of discretion). Because the University’s actions in this case were quasi-judicial, certiorari in this court was the only available method of review.

Review of Maye’s retaliation claims based on the University denying him promotions is also limited to certiorari. For any retaliation claims not tied to the University’s promotion decisions, Maye chose his remedy by pursuing an action under the MHRA, and he is barred from bringing a separate breach of contract action by the MHRA’s exclusivity provision. Minn. Stat. § 363.11 (1998).

DECISION

The University’s decisions not to promote Maye were quasi-judicial decisions arrived at through administrative processes. Maye’s breach of contract claims would be impossible to examine without reviewing the internal management decisions of the University. Therefore, a writ of certiorari was the only avenue available for Maye to seek review of the University’s actions.

Affirmed.

      . The settlement agreement also required the University to maintain a diversity council. The University abolished the council, but appellant did not include this issue in his appeal.


author: CRIPPEN, Judge. G. BARRY ANDERSON, Judge

text:
    Terri L. CARLSON as Trustee for the Heirs and Next of Kin of Ronald J. Carlson, and Terri J. Carlson, individually and as parent and natural guardian for Alexis L. Carlson, Tyler J. Carlson and Joshua T. Hardman, minors, Respondent, v. Eric B. THOMPSON, et al., Defendants, City of Byron Firefighters Relief Association, Appellant.
    No. CX-00-222.
    Court of Appeals of Minnesota.
    Aug. 1, 2000.
    Review Denied Oct. 17, 2000.

      John M. Sheran, Daniel P. Tschida, Leonard, Street and Deinard, P.A., Minneapolis, for respondents.
    Eric J. Magnuson, Mark A. Solheim, Steven Kluz, Jr., Rider, Bennett, Egan & Arundel, LLP, Minneapolis, for appellant.
    Considered and decided by AMUNDSON, Presiding Judge, CRIPPEN, Judge, and ANDERSON, Judge.

       BLATZ, C.J., took no part in the consideration or decision of this case.

   OPINION

CRIPPEN, Judge.

Appellant Firefighters Relief Association challenges the trial court’s summary judgment that it is liable in a civil damages act suit when it charged defendant Eric Thompson an admission fee, sold beer tickets to him, and later provided him alcoholic beverages when he was obviously intoxicated, resulting in damages suffered by the respondents Terri Carlson and other heirs of her deceased husband. We affirm.

FACTS

The parties have stipulated to the facts. In July 1998, appellant held a Firefighters Relief Association dance, an event for which appellant obtained a license to sell non-intoxicating liquor to the public. At around 9:00 p.m., Thompson arrived at the dance, paid a $5 entrance fee, entered an enclosed area where beer was sold and a band was playing, and Thompson purchased 5 to 10 beer tickets.

Thompson, who was not obviously intoxicated at this time, used one or two of the beer tickets to procure a beer. He then obtained more drinks but never gave anybody his remaining tickets. The Association continued to serve Thompson beer, without collecting further money or beer tickets, until he had consumed several beers. Thompson became obviously intoxicated at some point, and the Association continued to serve him beer.

Thompson left the dance at around 11:45. He drove away in his car and subsequently struck respondent and her husband, killing respondent’s husband and injuring respondent. The parties stipulated that the beer Thompson was served at the party resulted in Thompson’s intoxication and that the accident was directly caused by Thompson’s intoxication. Respondent sued appellant under the Civil Damages Act, Minn.Stat. § 340A.801 (1998). After cross-motions for summary judgment, on stipulated facts, the trial court granted judgment to respondent.

ISSUE

Was respondent entitled to a judgment on its civil-damages-act claim?

ANALYSIS

When there are no genuine issues of material fact, an appellate court asks “whether the lower court[] erred in [its] application of the law.” State by Cooper v. French, 460 N.W.2d 2, 4 (Minn.1990) (citation omitted). Similarly, the application of a statute to the undisputed facts of a case involves a question of law, and the trial court’s decision is not binding on this court. Boubelik v. Liberty State Bank, 553 N.W.2d 393, 402 (Minn.1996).

The civil damages act provides that a person who incurs a pecuniary loss as a result of the intoxication of another party has a right of action against a person who caused the intoxication of that person by “illegally selling alcoholic beverages.” Minn.Stat. § 340A.801, subd. 1 (1998). The occurrence of a sale of alcohol is an important element of a civil damages act claim and the only element at issue in this case. See Rambaum v. Swisher, 435 N.W.2d 19, 21 (Minn.1989) (stating elements of civil damages act claims, including an illegal sale and the occurrence of a sale violation that “substantially relate(s) to the purposes sought to be achieved by the civil damages act”).

Thompson paid admission charges and bought beer tickets and was in that sense a paying customer who anticipated the serving of beer for his payment. This transaction took place in the ordinary course of a commercial vendor’s business, enlarging its prospect for profits in the serving of drinks. The trial court properly adjudged the transaction a sale of beers that were served.

We are mindful in affirming the trial court’s judgment that we should avoid a hypertechnical determination of whether a sale was consummated or intended. See Cady v. Coleman, 315 N.W.2d 593, 595-96 (Minn.1982). Such an approach, among other things, permits practices designed to frustrate application of the act. We account for the fundamental purpose of the act to uphold liability in respect to people engaged in a business, making a profit in the provision of liquor. See Koehnen v. Dufuor, 590 N.W.2d 107, 112 (Minn.1999); see also Cady, 315 N.W.2d at 596. Although the Act is not to be construed “beyond its definite scope,” it is to be liberally construed to the ends of suppressing the illegal furnishing of liquor that causes a person’s intoxication and providing compensation for those who are injured as a result of this conduct. Lefto v. Hoggsbreath Enterprises, Inc. 581 N.W.2d 855, 857 (Minn.1998) (citation omitted).

Respondent’s argument, suggesting that the legislature’s various amendments of the Act show the clear responsibility of licensed vendors, takes us beyond the study of the transaction in this case. This argument suggests that the Act extends to purely gratuitous furnishing of liquor by a vendor. Because we are not dealing with such a case of pure gratuity, we needn’t reach this question. It is unclear in this case whether the tickets purchased by Thompson were delivered to the vendor by Thompson or anyone else. But appellant’s conduct is sufficient to demonstrate a sale for the purposes of the Act, with consideration furnished for the delivery of drinks, where appellant imposed charges on Thompson for drinking and then served drinks to him, and this conduct occurred in the ordinary course of appellant’s business as a commercial vendor.

DECISION

The trial court properly granted summary judgment to respondent. The civil damages act will apply where there is adequate evidence of consideration charged for the serving of an alcoholic beverage by a commercial vendor to an obviously intoxicated person.

Affirmed.

G. BARRY ANDERSON, Judge

(dissenting).

I respectfully dissent because I do not believe that there is evidence in the record establishing that a sale of alcoholic beverages took' place at a time when Eric Thompson was obviously intoxicated.

Respondent places great weight on the cover charge paid by Thompson and the beer tickets purchased by Thompson. While the stipulated facts make clear that Thompson used the tickets to purchase beer when he was not obviously intoxicated, the stipulated facts also make equally clear that, after the initial exchange of tickets for beer, no further consideration passed between Thompson and the Fire Fighters Relief Association. Critically, after using one or two tickets, the stipulated facts lay out what followed,

Thompson gave the remainder or his tickets to a friend, and from that point forward, the Fire Fighter’s (sic) continued to serve Thompson beer but they did not collect any additional tickets. At no time did Thompson expect or receive a refund for the unused tickets he had purchased. By 10:30 p.m., Thompson had become obviously intoxicated, however, the Fire Fighters continued to serve Thompson beer, as indicated, without an exchange of tickets. The beer served to Thompson between 10:30 p.m. and 11:45 p.m. further contributed to his intoxication.

Thompson’s decision to give away his tickets is the critical fact upon which liability pivots. The medium of exchange in this ease, beer tickets, is no longer in his possession following his decision to givé those tickets away. This is not a mildly interesting fact or something of historical interest; it is critical to establishing liability under the Civil Damages Act. A right of action exists against the person causing intoxication of that person only by “illegally selling alcoholic beverages.” Minn.Stat. § 348.801 (1998) (emphasis added). As the supreme court recognized in Koehnen v. Dufuor, 590 N.W.2d 107 (Minn.1999), in discussing the legislative history of the Civil Damages Act, the legislature clearly recognized the difference between sales and gifts because in 1977 the legislature amended the act by deleting the word “giving” from the statute.

It certainly is possible to construct scenarios involving cover charges and beer tickets where liability could exist under the Civil Damages Act, but those are not our facts. Here, there is no dispute that the medium of exchange then prevailing for the sale of alcohol in exchange of tickets for beer was not used and beer was simply given to Thompson over an extended period of time while he was obviously intoxicated. There is thus no illegal sale of an alcoholic beverage and no liability can be imposed on appellant. If the legislature had intended that commercial vendors incur liability for the illegal provision or gift of alcohol it could have done so. It did not.

Under these circumstances, while the result is unsatisfactory from an equitable viewpoint, I believe the conclusion is inescapable that no liability under the Civil Damages Act attaches to appellant and reversal is required.

      . The Minnesota Supreme Court has interpreted the meaning of the amendments eliminating the "gift” of alcoholic beverages as a declaration regarding the persons covered, holding, as a result, that a social host is never civilly liable, even when there has been a sale. See Koehnen, 590 N.W.2d at 112. See also Cady, 315 N.W.2d at 595 (one of the reasons commercial vendors are subject to liability under the act is that "they profit by their sales and therefore should bear some of the risks created by their business;" this argument is inapplicable to social hosts).

      . Appellant observes, in refutation, that the Minnesota Supreme Court's social-host analysis narrows the scope of coverage of the Act, eliminating some coverage for some sales, and appellant argues that an extension of liability to a commercial vendor for gifts would be an enlargement of the application of the statute, potentially contradicting the proposition that the statute will be strictly construed. See Lefto, 581 N.W.2d at 857 (while generally the statute is to be liberally construed, it "is to be strictly construed in the sense that it cannot be enlarged beyond its definite scope") (quotation omitted).


author: BERTRAND PORITSKY, Judge.

text:
    STATE of Minnesota, Respondent, v. Robert Quarry JACKSON, Appellant.
    No. C0-99-1534.
    Court of Appeals of Minnesota.
    Aug. 8, 2000.
    Review Denied Oct. 17, 2000.

      Mike Hatch, Attorney General, St. Paul; and Amy Klobuchar, Hennepin County Attorney, Gayle C. Hendley, Assistant County Attorney, Minneapolis, for respondent.
    Melissa Sheridan, Assistant State Public Defender, St. Paul, for appellant.
    Considered and decided by PETERSON, Presiding Judge, HALBROOKS, Judge, and PORITSKY, Judge.
   OPINION

BERTRAND PORITSKY, Judge.

Appellant argues that the trial court erred in denying his motion to sever a charge of assault from charges of murder. Appellant also argues that the trial court abused its discretion in denying his motion for a Schwartz hearing to inquire into a juror’s claim that another juror pressured her into changing her vote. We affirm.

FACTS

Appellant Robert Quarry Jackson was charged with attempted aggravated robbery, second-degree assault, and two counts of second-degree murder arising from two separate incidents that both occurred on June 26, 1998, in Minneapolis.

The attempted aggravated robbery and second-degree assault arise from an incident that occurred at approximately 8:30 p.m. outside a Minneapolis homeless shelter. Appellant and Frank Mendoza got into an argument with Juan Esquivel about money. Mendoza stabbed Esquivel. Esquivel claimed that, after Mendoza started stabbing him, appellant encouraged Mendoza to continue the assault.

Appellant, Mendoza, and a third unknown man named Mike left the homeless shelter and traveled approximately four miles to a Northeast Minneapolis bar. At approximately 10:30 p.m., appellant, Mendoza, and Mike followed James Branby and Donald Pyle out of the bar. Once Branby and Pyle were seated in their vehicle in the bar parking lot, they were stabbed several times and died from their wounds within minutes. No personal effects, cash, or jewelry were taken from the victims.

Appellant was charged in a single complaint with two counts of second-degree murder for the Branby/Pyle murders, and charged with attempted aggravated robbery and assault for the Esquivel incident. Appellant testified that, although he witnessed at least part of both incidents, he did not participate in or encourage the criminal behavior in either incident. On the day of trial, appellant brought a motion to sever the first and second incidents into two trials. The trial court denied his motion. The jury found appellant guilty of assault, guilty on the two counts of second-degree murder, and not guilty of attempted aggravated robbery.

After the jury had returned its verdicts, the trial judge polled each member of the jury, and each answered individually that the above verdicts were true and correct as to that juror. The jury was thereupon discharged. Later, after sentencing, a juror came forward, claiming that she had been pressured into finding appellant guilty after the jury foreman told her he was having a party and wanted to finish deliberations. The trial court found that this evidence did not warrant a Schwartz hearing. This appeal follows.

ISSUES

I. Did the trial court prejudicially err when it denied appellant’s motion to sever the offenses?

II. Did the trial court abuse its discretion when it denied appellant’s motion for a Schwartz hearing?

ANALYSIS

I.

The trial court’s ruling on severing claims, even if improper, will not be reversed unless “prejudicially erroneous.” State v. Profit, 591 N.W.2d 451, 460 (Minn.1999), cert. denied, — U.S. -, 120 S.Ct. 153, 145 L.Ed.2d 130 (1999).

A. Severing Claims

Appellant argues that Minn. R.Crim. P. 17.03 requires severance because the offenses were not related. See id. at subd. 3(l)(a) (trial court shall sever offenses if “the offenses or charges are not related”). It is proper to join offenses for trial only if the offenses are part of a single behavioral incident. Profit, 591 N.W.2d at 460. The determination of whether offenses arise from a single behavioral incident is dependent upon the particular facts and circumstances of each case. State v. Hawkins, 511 N.W.2d 9, 13 (Minn.1994).

In deciding whether two crimes are part of a single behavioral incident, the focus is on the time and place of the crimes, with the additional consideration of “whether the segments of conduct involved were motivated by an effort to obtain a single criminal objective.” State v. Banks, 331 N.W.2d 491, 493 (Minn.1983); see also State v. Dukes, 544 N.W.2d 13, 20 (Minn.1996) (“In determining whether thei*e should be separate trials for separate charges, we look to how the offenses were related in time and geographic proximity and at whether the actor was motivated by a single criminal objective.”).

The facts of the present case show that the offenses occurred approximately two hours and four miles apart. These offenses, therefore, were related in both time and place. The state argues that the final requirement of a single criminal objective is present based on the fact that appellant’s offenses “appear to be similarly motivated by [appellant’s] willingness to react with deadly force when faced with little or no provocation.” A propensity to use violence, however, does not satisfy the requirement of a single criminal objective. Therefore, the trial court erroneously joined the offenses. See State v. Bookwalter, 541 N.W.2d 290, 295 (Minn.1995) (holding that sexual assault and attempted murder were not part of a single behavioral incident where they occurred in or near the victim’s van at two distinct times and places, and that a single common criminal objective failed to underlie both offenses); State v. Stevenson, 286 N.W.2d 719, 720 (Minn.1979) (holding that, while offenses both involved coerced sexual intercourse with same 15-year-old girl and both occurred in same general place on the same day, the offenses were separated by a period of approximately five hours and neither act bore any essential relationship to the other).

B. Prejudicially Erroneous

Even when joinder of offenses is improper, “remand is not required if the district court’s denial of the motion to sever was not prejudicially erroneous.” Profit, 591 N.W.2d at 460. In Profit, the supreme court held that the Spreigl analysis for admitting other-crimes evidence is a useful framework for evaluating whether the trial court’s failure to sever is so prejudicial that reversal is required. Profit, 591 N.W.2d at 461.

Spreigl evidence shall not be admitted in a criminal prosecution unless the court determines:

(1) that the evidence is clear and convincing that the defendant participated in the other offense; (2) that the Spreigl evidence is relevant and material to the state’s case; and (3) that the probative value of the Spreigl evidence is not outweighed by its potential for unfair prejudice.

State v. Shannon, 583 N.W.2d 579, 583 (Minn.1998).

1. Clear and Convincing

The jury found appellant guilty of the Esquivel assault and of the Brandby/Pyle murders. In light of these jury verdicts, which require proof beyond a reasonable doubt, the offenses were proven by clear and convincing evidence.

2. Relevance

The main issue here is whether this evidence is relevant and material to the state’s case. In determining the relevance and materiality of Spreigl evidence,

the trial court should consider the issues in the case, the reasons and need for the evidence, and whether there is a sufficiently close relationship between the charged offense and the Spreigl offense in time, place or modus operandi.

State v. Kennedy, 585 N.W.2d 385, 390 (Minn.1998) (quoting State v. DeBaere, 356 N.W.2d 301, 305 (Minn.1984)).

The state argues that the crimes are similar enough in modus operandi to be relevant. We agree. Both crimes are related in time and place, involved the stabbing of a victim, appear to be impulsive acts, and in both crimes the assailants fled in a get-away car. While the two crimes may not be so similar as to be signature crimes of each other, it is not required that the crimes be signature crimes in order to admit other-crime evidence. State v. Slowinski, 450 N.W.2d 107, 114 (Minn.1990).

The close relationship of the crimes also increases the relevance. See Kennedy, 585 N.W.2d at 390 (close relationship between events increases relevance or probative value of evidence). The crimes that were joined in appellant’s case both involved stabbings within a two-hour period of time. The crimes were sufficiently similar to each other, closely related, and involved the same two alleged perpetrators to be admissible Spreigl evidence. See State v. Filippi 335 N.W.2d 739, 743 (Minn.1983) (“In determining relevancy, we have generally required that the other crime be similar in some way — either in time, location, or modus operandi-— to the charged offense, although this of course is not an absolute necessity.”); Kennedy, 585 N.W.2d at 391 (Spreigl offense “need not be identical in every way to the charged crime, but must instead be sufficiently or substantially similar to the charged offense”).

3.Unfair Prejudice

The third factor in the Spreigl analysis is whether the admitted evidence was unfairly prejudicial. In our view, two reasons support the conclusion that it was not. First, as noted above, evidence of either crime could be admitted to show modus operandi with respect to the other. Id. (“While it is important to make plain that such bad act evidence cannot be used to prove action in conformity therewith, it can be used to show a link between the bad act and the charged offense in order to establish a modus operandi * * *.”). Second, appellant testified that he was not an active participant in either crime and did not know that violence was going to be used either time. To rebut this testimony with respect to the more serious crimes— the Branby/Pyle murders — the Esquivel stabbing just two hours earlier showed appellant’s knowledge of Mendoza’s potential for violence. For these reasons, the probative value of the other-crimes evidence outweighed the potential for unfair prejudice. Therefore, the joinder of these offenses was not prejudicially erroneous because the joined offenses could have been admitted as Spreigl evidence. See Profit, 591 N.W.2d at 461 (“Because, absent joinder, evidence of either crime could have been used for legitimate means in a separate trial on each, charge, we hold that joinder, although improper under Minn. R. 17.03, was not prejudicially erroneous.”).

II.

The standard of review for the denial of a Schwartz hearing is abuse of discretion. State v. Church, 577 N.W.2d 715, 721 (Minn.1998).. The granting of a Schwartz hearing is generally a matter of discretion for the trial court. State v. Rainer, 411 N.W.2d 490, 498 (Minn.1987). The trial court should be liberal in granting a hearing, but the defendant must first present evidence that if unchallenged would warrant the conclusion that jury misconduct occurred. Id.

Appellant’s request for a Schwartz hearing was based on a conversation between two jurors, out of the hearing of the rest of the panel, in which one juror allegedly “pressured” another juror to change her position. The two allegations of misconduct are: (1) the fact that the conversation was outside of the hearing of the rest of the jurors; and (2) the content of the conversation.

As to the first allegation, none of the authorities cited by appellant address communication between jurors, but address communication from a non-juror to a juror. Minnesota rules governing jury conduct do not include any rules relating to a conversation between jurors out of the hearing, of the other jurors. See generally Minn. R. Evid. 606(b). Appellant has failed to meet his burden of showing misconduct based on the fact that there was a communication between jurors. See State v. Pelawa, 590 N.W.2d 142, 149 (Minn.App.1999) (“defendant must establish a prima facie case of jury misconduct before a hearing is mandated”).

The second allegation goes to the content of the conversation. Evidence of what happened in the jury room is inadmissible, except that evidence of improper extraneous prejudicial information, outside influence, or threats of violence or violent acts is admissible. Minn. R. Evid. 606(b) (emphasis added). Evidence of psychological intimidation, coercion, and persuasion is not admissible. See Minn. R. Evid. 606(b) cmt. (“trial court must distinguish between testimony about ‘psychological’ intimidation, coercion, and persuasion, which would be inadmissible, as opposed to express acts or threats of violence”). In this case, the jury foreman told another juror that he was having a party that night and “wanted to finish the case and get home.” This conversation does not rise to the level of violence or threats thereof. The trial court did not abuse its discretion in denying appellant’s motion for a Schwartz hearing.

DECISION

The joinder of appellant’s offenses, although improper under Minn. R. Crim P. 17.03, was not prejudicially erroneous where evidence of either crime could have been introduced as Spreigl evidence in a separate trial on the other charge. The trial court did not abuse its discretion in denying a Schwartz hearing to inquire into one juror’s expressing to another juror a desire to finish deliberations.

Affirmed.

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

      . The trial court in this case used a Spreigl analysis to state that, even if the offenses are not part of a single behavioral incident, they would be admitted as Spreigl evidence, and thus were properly joined. The supreme court has recognized the danger of proceeding to a Spreigl analysis in a joinder case and reminded the trial courts "that if after careful analysis they conclude the joined offenses do not constitute a single behavioral incident or course of conduct, they are to sever the charges.” Profit, 591 N.W.2d at 461. We again caution the trial courts not to rely on a Spreigl analysis to circumvent the traditional joinder analysis.