author: LANSING, Judge

text:
    R. Edwin POWELL, et al., Respondents, v. MVE HOLDINGS, INC., et al., Appellants, MVE Investors, LLC., et al., Defendants.
    No. C4-00-1379.
    Court of Appeals of Minnesota.
    May 15, 2001.

      James H. Raster, Nicholas G. May, Diane M. Odeen, Nichols, Raster & Anderson, and Eric J. Magnuson, Rider, Bennett, Egan & Arundel, LLP, Minneapolis, MN; and Paul J. Rogosheske, Thuet, Pugh, Rogosheske & Atkins, Ltd., South St. Paul, MN, (for respondents).
    Robert L. DeMay, Daniel Oberdorfer, Leonard, Street & Deinard, P.A., Minneapolis, MN; and Gerald Walpin, Rosen-man <& Colin, LLP, New York, NY, (for appellants).
    Considered and decided by G. BARRY ANDERSON, Presiding Judge, LANSING and RANDALL, Judges.
   OPINION

LANSING, Judge

MVE Holdings, Inc. (Holdings), appeals from judgment and denial of its new-trial motion in a breach-of-contract action brought by R. Edwin Powell, its former employee and shareholder. The district court found that Holdings contracted to redeem Powell’s stock and then breached that contract. Holdings appeals, claiming that it did not agree to redeem Powell’s stock; that its president and CEO did not have authority to make such an agreement; and that any agreement was not the parties’ final expression but rather evidence of negotiation, is void for lack of consideration, and is against public policy. We conclude that the evidence supports the district court’s findings and affirm.

FACTS

From 1993 until January 23, 1997, R. Edwin Powell was CEO and president of CAIRE, Inc., a Delaware company based in Burnsville, Minnesota. CAIRE manufactures home health-care products, including portable oxygen tanks. Powell had worked for CAIRE, a subsidiary of Holdings, for the preceding 13 years as an at-will employee. In addition, Powell and the Powell Family Limited Partnership were minority shareholders in Holdings, owning 63,747 shares or 11.9% of the company. Trial testimony established that Powell paid $114,000 to $344,000 for the stock during his employment.

In 1996, a group of investors decided to acquire Holdings and CAIRE. They formed MVE Investors, LLC (Investors), a Delaware limited-liability company with its principal place of business in New York. Investors; organized solely to acquire a majority interest in Holdings, purchased the shares of three retiring Holdings shareholders in June 1996 as part of a recapitalization of the company. Investors paid the retiring shareholders $125.456 per share, investing $47 million in Holdings to become its primary owner.

Powell declined Investors’ offer to sell his stock and retire with the shareholders who had accepted Investors’ offer. Powell continued as CAIRE’s CEO and president. To compensate Powell for losing his chance to sell his shares in the recapitalization, Holdings loaned Powell $1.5 million secured by 24,793 of Powell’s shares of Holdings’ common stock. Holdings called the loan in January 1998; at the time, an independent company valued the shares at $5.37 per share.

In response to CAIRE’s financial setbacks, David O’Halloran, Holdings’ CEO and president, met with Powell on January 23, 1997, to fire Powell. O’Halloran gave Powell the option to resign in lieu of termination, and Powell chose to resign, writing a resignation letter on January 28, 1997.

The critical factual issues in this litigation revolve around O’Halloran and Powell’s January 23, 1997, meeting. The two men sharply disagree on the severance package O’Halloran offered Powell on behalf of Holdings at the meeting, the terms of which were to be included in a “separation agreement.” Both men agree that O’Halloran offered Powell six months’ salary and an additional six months’ salary if Powell was not re-employed within the six months immediately following his departure. They also agree that O’Halloran offered Powell $30,000 in out-placement services, a continuation of Powell’s health insurance and other benefits for a year, and a cash bonus if Powell was successful in lobbying Congress for particular legislation.

But the two men disagree on the terms for the disposition of Powell’s stock. Powell testified that O’Halloran agreed, on behalf of Holdings, to buy Powell’s stock at the same price that the retiring shareholders had been paid at the recapitalization that occurred in August 1996. According to Powell, O’Halloran told Powell that Holdings would be able to buy the shares within a few weeks and would buy them no later than August 1997.

O’Halloran maintains that he did not promise Powell that Holdings would buy Powell’s stock. But O’Halloran concedes that at the meeting, he gave Powell a detailed chart showing the number of shares Powell owned on January 23, 1997, and how much money Powell would receive if those shares were sold or redeemed at a price of $125,456, the same price the retiring shareholders had received. O’Halloran also testified that he wrote a letter terminating Powell’s employment if he chose not to resign. In the letter, O’Halloran expressed Holdings’ intent to buy Powell’s stock in the same manner as it had bought the retiring shareholders’ stock.

After his termination, Powell continued to attend trade-association meetings and to lobby Congress on Holdings’ behalf until April 1997. Holdings and Powell continued to discuss Powell’s separation agreement until April 1997, when O’Halloran informed Powell in writing that Holdings would no longer reimburse Powell for any expenses he incurred on behalf of Holdings. Also, Powell testified that O’Hallo-ran called* Powell in April to tell him that O’Halloran had lost board support for the stock redemption and that the deal was off.

Holdings fired O’Halloran from his position as CEO and president of Holdings in August. As part of the separation agreement that followed O’Halloran’s discharge, he agreed to represent that he did not “make any statements or provide any writings that [he] in good faith believefd] could reasonably be construed to constitute any agreement, oral or written, concerning the payment of severance or similar payments to, or the redemption or other disposition of capital stock of, R. Edwin Powell.”

Powell brought this action against Holdings in October 1997, claiming, among other things, that Holdings had contracted to buy back his shares and then breached that contract. Chart Industries merged with Holdings in February 1999, paying $78 million for Holdings’ stock. The merger agreement specified that shareholders who released claims against Holdings would receive $45 per share, but shareholders refusing to release claims against Holdings would receive only $25 per share. Powell refused to drop his lawsuit, and Holdings redeemed his shares at $25 per share, paying him a total of about $860,000 and retaining about $680,000 for defense costs associated with Powell’s lawsuit. Powell also received shares of stock in a Holdings subsidiary as a result of the merger.

Following a nine-day bench trial, the district court found that Holdings had contracted to buy Powell’s stock and breached the contract. The district court awarded Powell $3,455,887.20, the amount that Powell would have received had he sold his non-pledged stock for $125,456 per share, less $860,050 Powell received for his shares after the Chart merger, and also ordered Powell to transfer to Holdings the Holdings subsidiary shares he had acquired in the Chart merger. Both parties brought posttrial motions for amended findings and a new trial. The court amended its findings, but denied the new-trial motions. Holdings appeals, claiming that O’Halloran did not have authority to agree on its behalf to buy Powell’s stock; that the district court’s finding that O’Hal-loran and Powell entered into a contract is contrary to the evidence'; and that any agreement was not the parties’ final expression, is void for lack of consideration, and is against public policy.

ISSUES

I. Did the district court err in finding that O’Halloran had apparent authority to act for Holdings in entering into a stock-redemption agreement with Powell?

II. Did the district court err in finding that the evidence established a stock-redemption agreement between O’Halloran and Powell?

III. Is the agreement between O’Hallo-ran and Powell invalid because it is not a final written agreement, lacks consideration, or is in violation of public policy?

IV. Is Holdings entitled to a new trial because the district court’s findings are manifestly contrary to the weight of the evidence?

ANALYSIS

In a case tried without a jury, the scope of review is limited to determining whether the district court’s findings are clearly erroneous and whether the court erred as a matter of law. Schweich v. Ziegler, 463 N.W.2d 722, 729 (Minn.1990). The district court’s findings “shall not be set aside unless clearly erroneous, and due regard shall be given to the opportunity of the trial judge to judge the credibility of the witnesses.” Minn. R. Civ. P. 52.01. On appeal, the district court’s findings will be reversed only if the “reviewing court is left with a definite and firm conviction” that the district court has made a mistake. Gjovik v. Strope, 401 N.W.2d 664, 667 (Minn.1987) (citation omitted). But this court exercises independent judgment on purely legal questions. Frost-Benco Elec. Ass’n v. Minnesota Pub. Utils. Comm’n, 358 N.W.2d 639, 642 (Minn.1984).

I

Holdings argues that O’Halloran did not have apparent authority to enter into a stock-redemption agreement with Powell. Powell does not dispute that O’Halloran did not have express authority to enter into such an agreement.

A principal is bound not only by an agent’s actual authority but also by authority that the principal has apparently delegated to the agent. Duluth Herald & News Tribune v. Plymouth Optical Co., 286 Minn. 495, 498, 176 N.W.2d 552, 555 (1970). Apparent authority is authority a principal “holds an agent out as possessing, or knowingly permits an agent to assume.” Foley v. Allard, 427 N.W.2d 647, 652 (Minn.1988). To find apparent authority, (1) “the principal must have held the agent out as having authority, or must have knowingly permitted the agent to act on its behalf,” (2) third parties “must have [had] actual knowledge that the agent was held out by the principal as having such authority or had been permitted by the principal to act on its behalf,” and (3) “proof of the agent’s apparent authority must be found in the conduct of the principal, not the agent.” Hockemeyer v. Pooler, 268 Minn. 551, 562, 130 N.W.2d 367, 375 (1964); Restatement (Second) of Agency § 8 (1958).

Whether an agent is clothed with apparent authority is a question of fact. Hagedorn v. Aid Ass’n for Lutherans, 297 Minn. 253, 257, 211 N.W.2d 154, 157 (1973). In determining whether apparent authority exists, the court may consider any statements, conduct, lack of ordinary care, or manifestations of the principal’s consent, such that a third party might be justified in concluding that the agent acted with apparent authority. McGee v. Breezy Point Estates, 283 Minn. 10, 22, 166 N.W.2d 81, 89 (1969); Restatement (Second) of Agency § 27 (1958) (describing creation of apparent authority).

The district court found that O’Halloran had apparent authority to enter into a stock-redemption agreement with Powell. Holdings can be held to O’Halloran’s agreement only if Powell’s belief that O’Halloran had authority to make that agreement is reasonable and traceable to Holdings. See Hockemeyer, 268 Minn. at 562, 130 N.W.2d at 375. But because corporate presidents generally control and supervise a corporation’s business, unless there is contrary evidence, contracts made by a corporation’s president in the ordinary course of business are presumed to be within the president’s authority. 2A William Meade Fletcher et al., Fletcher Cyclopedia of the Law of Private Corporations § 559 (perm.ed., rev.vol.1992); see also Foley v. Wabasha-Nelson Bridge Co., 207 Minn. 399, 401, 291 N.W. 903, 905 (1940) (quoting with approval earlier version of the treatise). Holdings argues that the stock-redemption agreement was so extraordinary that, as a matter of law, Powell could not reasonably have believed that O’Halloran was authorized to agree to it. The evidence, however, does not support this argument.

Whether a contract is in “the ordinary course of business” is, in most instances, part of the fact-specific inquiry of whether apparent authority exists. Lee v. Jenkins Bros., 268 F.2d 357, 370 (2d Cir.1959) (surveying cases deciding what is or is not an extraordinary contract and concluding that except in certain limited circumstances the inquiry is the same factual inquiry as whether apparent authority exists). See also Restatement, supra, § 27 cmt. a (“[Ajpparent authority can be created by appointing a person to a position, such as that of manager or treasurer, which carries with it generally recognized duties * * *.”). The factual inquiry depends on a number of factors, including the nature of the contract, the officer negotiating it, and the corporation’s usual manner of conducting business. Id. at 369 (finding that corporation president’s promise to pay pension to newly hired manager was not extraordinary); see also Foley, 207 Minn. at 403-04, 291 N.W. at 905-06 (finding that corporate president’s contract modification to allow agent to collect a salary was not in corporation’s ordinary course of business).

A number of facts support a determination that the contract between O’Halloran and Powell was not extraordinary. Just six months earlier, in August 1996, Holdings had redeemed other shareholders’ stock for the same price O’Halloran offered Powell. At the time of the 1996 recapitalization, with board approval, O’Halloran signed the shareholders’ agreement on behalf of Holdings, agreeing to buy the shares of the departing shareholders for $125,456 a share, the same amount O’Halloran offered to Powell. Powell could have reasonably believed that if O’Halloran had the authority to agree on behalf of Holdings to buy stock in August 1996, he had similar authority in January 1997. See Temple, Brissman & Co. v. Greater St. Paul Corp., 189 Minn. 236, 237, 248 N.W. 819, 819 (1933) (holding that corporate president was clothed in apparent authority to bind corporation to pay for corporate audit because corporation had previously paid for two other audits).

Holdings also alleges that the district court based its apparent-authority finding solely on O’Halloran’s position as Holdings’ president, GEO, and member of its board of directors and that proof of O’Halloran’s authority cannot be found in his title without some other manifestation of authority traceable to Holdings. To make its point, Holdings cites cases standing for the proposition that an agent’s position alone is not sufficient evidence of apparent authority to bind the corporation to obligations incurred by that agent. See, e.g., Thompson v. North Star Muskrat Farm, Inc., 183 Minn. 314, 315-16, 236 N.W. 461, 462 (1931) (finding no apparent authority for corporate vice-president to enter into agreement with real-estate broker when vice-president made agreement without board authorization); Bloomingdale v. Cushman, 134 Minn. 445, 450, 159 N.W. 1078, 1080 (1916) (finding no apparent authority when president signed bank notes without board authorization).

Although a job title alone will not conclusively establish apparent authority for a contract, Powell’s belief that O’Halloran was authorized to redeem Powell’s stock is traceable, in part, to O’Halloran’s position as Holdings’ top-ranking executive. See Frank Sullivan Co. v. Midwest Sheet Metal Works, 335 F.2d 33, 40-41 (8th Cir.1964) (finding that superintendent had apparent authority to bind contractor because superintendent was highest-ranking person sent to assess construction job and communicate with subcontractor); Associated Lithographers v. Stay Wood Prods., Inc., 279 N.W.2d 787, 790 (Minn.1979) (holding that executive vice-president had apparent authority to bind corporation to printing contract); Lindstrom v. Minnesota Liquid Fertilizer Co., 264 Minn. 485, 497, 119 N.W.2d 855, 863 (1963) (finding that branch manager had apparent authority to bind company to contract because fertilizer company led salesperson to believe that branch manager’s position included authority to enter into contract to buy materials).

Because corporations are engaged in many different transactions and because the pace of corporate business is too swift to insist on express approval by a corporation’s board of directors for every transaction labeled “unusual,” third parties commonly rely on the authority bestowed on corporate officials. Lee, 268 F.2d at 366; Note, Inherent Power as a Base of a Corporate Officer’s Authority to Contract, 57 Colum. L.Rev. 868, 885 (1957) (describing courts’ “increasing tendency” to vest a corporate president with broad apparent authority to bind the corporation to contracts executed by that president). In fact, Holdings’ officers’ conduct after Powell left its employ demonstrates additional unapproved action and illustrates the way in which Holdings conducted its business. In February and March 1997, Holdings’ in-house counsel made two separate proposals to Powell to buy Powell’s stock, despite not having prior board approval for those proposals.

Further illustrating the importance of an agent’s corporate position as a manifestation of the principal’s consent to the agent’s actions, the tentative draft of the third restatement of agency partially defines apparent authority based on an agent’s position:

When an agent holds a position within an organization, or has been placed in charge of a transaction or situation, a third party acts reasonably in believing that the agent has authority to do acts consistent with the position the agent occupies absent knowledge of circumstances that would lead a reasonable third party to inquire into the existence, extent or nature of the agent’s authority.

Restatement (Third) of Agency § 2.03 (Tentative Draft No. 1, 2000).

It is significant that O’Halloran’s appearance of authority resulted from Holdings’ conduct. Holdings placed O’Halloran in the position to ask Powell to resign or to be fired and to offer Powell a severance package. Holdings also invested authority in O’Halloran to buy shares from the retiring shareholders at the time of the recapitalization, leading to Powell’s reasonable belief that O’Halloran had authority to buy Powell’s stock as well.

Holdings points out that in the face of evidence raising questions as to the agent’s authority, third parties dealing with agents are put on inquiry and must discover whether the agent has the authority to complete the proposed act. See Truck Crane Serv. Co. v. Barr-Nelson, 329 N.W.2d 824, 827 (Minn.1983). Holdings contends that Powell was on notice that O’Halloran lacked authority because at the time of the recapitalization he had entered into a stockholders’ agreement specifying that Holdings could not repurchase securities without the approval of a majority of the board of directors and three Investors’ directors. But even accepting that Powell knew O’Halloran needed board and Investors’ approval to agree to buy the stock, it is unclear what Powell could have done to ascertain whether O’Halloran had the necessary approval. Both O’PIalloran and Holdings’ in-house counsel testified that Holdings’ board acted informally and secretly, generally preparing board resolutions only when a third party such as the IRS required them. In fact, although O’Halloran testified that Holdings’ board had approved the decision to terminate Powell, there are no corporate minutes reflecting this decision. Had Powell looked to the board for a writing confirming the stock-redemption agreement, he would likely not have found one even if the board did agree to redeem Powell’s stock.

The district court did not err in concluding that O’Halloran had apparent authority to enter into a stock-redemption agreement.

II

Holdings asserts that whether or not O’Halloran had apparent authority, the evidence is insufficient to support the district court’s finding that O’Halloran agreed to buy the stock from Powell. “If in dispute, the existence and terms of a contract are questions for the fact finder.” Morrisette v. Harrison Int’l Corp., 486 N.W.2d 424, 427 (Minn.1992) (citation omitted). An appellate court has limited review over findings of fact, and those findings may only be overturned if manifestly contrary to the evidence. Id.; Greer v. Kooiker, 312 Minn. 499, 507, 253 N.W.2d 133, 139-40 (1977) (upholding district court finding of oral contract because finding was not clearly erroneous).

Whether a contract has been formed is judged objectively by the parties’ conduct, not by the parties’ subjective intent. Cederstrand v. Lutheran Bhd., 263 Minn. 520, 532, 117 N.W.2d 213, 221 (1962). The court must determine not what the parties really meant, but what words and actions justified the other party to assume what was meant. Crince v. Kulzer, 498 N.W.2d 55, 57 (Minn.App.1993). In determining whether a contract was formed, this court may look behind words to “consider the surrounding facts and circumstances in the context of the entire transaction, including the purpose, subject matter and nature of it.” Capital Warehouse Co. v. McGill-Warner-Farnham Co., 276 Minn. 108, 114, 149 N.W.2d 31, 35 (1967).

The district court found that a contract had been formed between Powell and Holdings and that Holdings had breached the contract. The court’s findings specifically took into account its determinations on credibility, stating that

[t]he Court has had the opportunity to be in the unique position to observe the witnesses and weigh their credibility. The Court has considered their relationship to the parties, their interest or lack of interest in the outcome of the case, their age, experience, manner and appearance, their ability and opportunity to know, remember and relate fqcts, their frankness and sincerity, or lack thereof, and the reasonableness of tqeir testimony in light of all the other Evidence in the case. v.

The court went on to state that “[t]he critical issue for the Court’s consideration was the credibility of Powell and O’Hallo-ran as to what was said at the January 23, 1997 meeting, how it was said, and what was meant. This credibility judgment was pivotal in the Court’s decision-making.” The court specifically discredited O’Hallo-ran’s testimony, stating in a memorandum attached to an order amending its findings that it did not find O’Halloran’s testimony to be credible and did not accept his version of the events.

The record contains ample evidence supporting the district court’s determination that O’Halloran offered, on behalf of Holdings, to redeem Powell’s stock and that Powell agreed to that redemption. The strongest evidence pointing to a contract between Holdings and Powell is the chart and letter O’Halloran prepared for the January 23 meeting. The handwritten chart depicts Powell’s shares on that date: 24,793 shares pledged as collateral for Powell’s loan and another 34,402 shares labeled “non-optioned/non-restricted.” The chart shows 16,590 of Powell’s shares redeemed for cash at the same sum that was paid the retiring shareholders, $125,456, for a total sum of $2,081,315. The chart also depicts Powell’s remaining “non-optioned/non-restricted” 17,812 shares being redeemed for preferred B stock, at a value of $2,234,622. This amount of money is identical to what Powell would have been paid had he sold his shares after Holdings’ 1996 recapitalization.

While Holdings maintains that the chart was meant as a “draft” for O’Halloran’s use only and points out that the word “draft” is written on the top of the chart, O’Halloran’s act of giving a copy of the chart to Powell and later directing Holdings’s human-resources director to type the chart and give Powell the typed 'version of the chart belies that argument.

Equally damaging to Holdings’s claim that the two men made no agreement is O’Halloran’s “termination” letter to Powell, prepared in case Powell refused to resign and O’Halloran was forced to fire him. O’Halloran wrote Powell that “[w]hile there is never a desirable time for a decision like this, I do feel that the recent investment and redemption process provide both a model and a means for this separation to occur in a very fair and enriching way.” He went on to state that “as part of the separation and release process, I have arranged for the Company to redeem your non-optioned and nonrestrict-ed stock for cash and securities in the same proportions to that received by other redeeming shareholders in August.”

Other evidence tends to prove that O’Halloran, on behalf of Holdings, agreed to redeem Powell’s stock at the January 23, 1997, meeting. O’Halloran prepared an agenda for the meeting, listing “Stock redemption” as an agenda item. Powell took notes at the meeting, and his notes corroborate O’Halloran’s agenda, listing discussed items in the same order and stating “cash pref. B for remaining stock.”

Further, at trial, Powell entered into evidence a document provided by Holdings’s bank stating, “[a]n additional $2.6 [million] will be left in MVE Holdings account which will be potentially utilized to repurchase Ed Powell’s stock. The Ed Powell transaction will be completed by August * ⅜ *. The stock would then be available for key officers and/or the Investor group to purchase.”

In February and March 1997, while negotiating Powell’s separation agreement, Holdings offered to buy a portion of Powell’s stock at the same price that Powell alleged it had agreed to buy all the stock— $125.456 — and also offered to attempt to arrange for the repurchase of the rest of the stock. In the February offer letter to Powell, Holdings’ counsel stated that Holdings would attempt to arrange the sale of the stock by August 31, 1997, and stated, “we are confident we would be able to achieve this goal.” In June, O’Halloran sent a letter soliciting Holdings’ officers to buy Powell’s stock. These communications evidence Holdings’ officers’ belief that Holdings had agreed to buy Powell’s stock in January 1997.

Also, Powell’s attorney sent a conflict-of-interest waiver to Holdings on January 23, 1997, stating that “[Holdings] hereby waives any and all conflicts that may exist should [attorney] represent Ralph E. Powell in connection with the sale of his company stock ⅜ * ⅜.” Holdings’ counsel signed and returned the waiver, apparently not disavowing the waiver’s purpose, the sale of Powell’s stock. Further, Powell’s attorney testified that during a telephone conference with O’Halloran and Holdings’ counsel in March 1997, he asked whether Holdings intended to redeem Powell’s stock, and O’Halloran purportedly stated, “We are going to buy the stock. We just don’t want to put it in writing.”

To show that O’Halloran and Powell did not agree that Holdings would buy Powell’s stock, Holdings points out that the stock-redemption agreement is not part of the proposed separation agreement O’Hal-loran gave Powell at the January meeting, Powell kept the stock-redemption agreement secret until late February or early March, and in his letter of resignation written after the January 23 meeting, Powell asked Holdings to buy his stock.

But Powell satisfactorily explains these facts, stating that the separation agreement was distinct from the stock-redemption agreement and that O’Halloran wanted the latter agreement to remain confidential. According to Powell, O’Hal-loran wanted the stock agreement and Powell’s termination to be private to avoid setting a “bad precedent.” Also, Powell states that he asked Holdings to buy back his stock in his resignation letter at O’Halloran’s request and styled the letter “taking words and concepts off of Mr. O’Halloran’s letter.”

The evidence, therefore, supports the district court’s finding that O’Halloran agreed to buy Powell’s stock.

Ill

Holdings also challenges the validity and enforceability of the contract on three grounds. First, Holdings asserts that the agreement between Powell and O’Halloran was not a final, written expression, but only evidence of continued negotiations between the parties.

A signed agreement is not required for formation of a contract. Aratex Servs. Inc. v. Blue Horse, Inc., 497 N.W.2d 283, 285 (Minn.App.1993), review denied (Minn. May 11, 1993). But “where the parties know that the execution of a written contract was a condition precedent to their being bound, there can be no binding contract until the written agreement was executed.” Dataserv Equip., Inc. v. Technology Fin. Leasing Corp., 364 N.W.2d 838, 841 (Minn.App.1985), (finding no contract after one party rejected the other’s counteroffer), review denied (Minn. May 31, 1985) (citation omitted).

The record contains no evidence, however, that O’Halloran and Powell intended to impose a condition precedent requiring a written contract. See Asbestos Prod., Inc. v. Healy Mechanical Contractors, Inc., 306 Minn. 74, 78, 235 N.W.2d 807, 809 (1975) (finding no condition precedent to reduce contract to a writing when parties have assented to all the essential terms of the contract). Thus, in the absence of evidence to the contrary, the agreement between Powell and O’Halloran was not a preliminary negotiation but, rather, the parties’ final agreement.

Holdings alternatively argues that any agreement between Powell and Holdings is void because Powell did not furnish adequate consideration. When a contract is not supported by consideration, no valid contract is formed. Franklin v. Carpenter, 309 Minn. 419, 422, 244 N.W.2d 492, 495 (1976). Consideration is “something of value given in return for a performance or promise of performance,” Deli v. Hasselmo, 542 N.W.2d 649, 656 (Minn.App.1996), review denied (Minn. Apr. 16, 1996), and requires that a contractual promise be the product of a bargain. Baehr v. Penn-O-Tex Oil Corp., 258 Minn. 533, 538, 104 N.W.2d 661, 665 (1960). The determination of whether sufficient consideration underlies an agreement raises a question of law, which this court reviews de novo. Brooksbank v. Anderson, 586 N.W.2d 789, 794 (Minn.App.1998), review denied (Minn. Jan. 27, 1999).

Powell asserts and O’Halloran concedes that, in exchange for the stock redemption, O’Halloran asked him to continue, even after he left CAIRE, to participate as a member of several trade-association boards, to attend trade-association meetings, and to lobby Congress on behalf of Holdings. Additionally, Powell and O’Hal-loran testified that to disrupt CAIRE’s business as little as possible and because of his belief that customer goodwill might be affected if customers felt that Powell was fired, O’Halloran asked Powell to contact CAIRE’s key customers and industry contacts to reassure them that Powell’s departure was a positive, voluntary step. Powell performed these functions until April 1997, when O’Halloran wrote a letter requesting that Powell no longer make those efforts and telling Powell that Holdings would no longer pay him or offer reimbursement for any incurred expenses.

Holdings asserts that Powell’s lobbying activities were not performed as consideration for stock redemption but, instead, for a cash bonus tied to those efforts and that the other tasks Powell claims to have performed were of no value to Holdings. But even if Powell’s lobbying efforts are discounted, he performed other tasks for Holdings at Holdings’ request. Also, a court will not examine the adequacy of consideration so long as something of value has passed between the parties. Brooksbank, 586 N.W.2d at 794; see also Cederstrand, 263 Minn. at 531, 117 N.W.2d at 220 (“[B]argain does not mean an exchange of things of equivalent, or any value.”). Although the consideration that Powell furnished may not have been as significant as the benefits that Holdings promised to confer, Powell provided adequate consideration, and the agreement between Powell and Holdings is not void for lack of consideration.

Relying on Berreman v. West Publ’g Co., 615 N.W.2d 362 (Minn.App.2000), review denied (Minn. Sept. 26, 2000), Holdings also claims that the oral agreement between Holdings and Powell is against public policy because the agreement prefers Powell as a shareholder at the expense of the other shareholders. In Berreman, this court discussed the “equal-opportunity rule” found in Donahue v. Rodd Electrotype Co., 367 Mass. 578, 328 N.E.2d 505, 518 (1975), which forces a closely held corporation buying shares from one shareholder to offer to buy shares from other shareholders at an identical price. Berreman, 615 N.W.2d at 370. Holdings contends that under Berreman, this court must find that O’Halloran breached his fiduciary duty to the remaining Holdings’ shareholders when he offered to buy Powell’s shares for more than Holdings was willing to pay other shareholders and, because of that breach of fiduciary duty, the agreement is void as against public policy.

But Holdings’ argument is unpersuasive in this context. The “equal-opportunity rule” is designed to protect minority shareholders from being “frozen out.” Id. In making this argument, Holdings ignores the fact that if this court applied the rule to the facts in the case, it would not be protecting a minority shareholder. Further, buying one shareholder’s shares at a premium could reasonably be founded on a valid business judgment. See id. (recognizing that the Massachusetts Supreme Court later retreated from the Donahue holding in Wilkes v. Springside Nursing Home, Inc., 370 Mass. 842, 353 N.E.2d 657, 663 (1976), because legitimate business reasons may exist for treating different shareholders differently).

Because the district court did not err in finding a contract between Holdings and Powell, we need not address the district court’s finding that, in the alternative, Holdings was bound to Powell by virtue of promissory estoppel.

IV

Finally, Holdings claims that it is entitled to a new trial because the district court’s findings are manifestly contrary to the evidence. Ordinarily, a decision to grant a new trial rests within the sound discretion of the district court and will not be disturbed absent a clear abuse of that discretion. Halla Nursery, Inc. v. Baumann-Furrie & Co., 454 N.W.2d 905, 910 (Minn.1990). “On appeal from a denial of a motion for a new trial, the verdict must stand unless it is manifestly and palpably contrary to the evidence, viewed in the light most favorable to the verdict.” ZumBerge v. Northern States Power Co., 481 N.W.2d 103, 110 (Minn.App.1992) (citation omitted), review denied (Minn. Apr. 29, 1992). The district court’s decision was not so manifestly and palpably contrary to the evidence as to require a new trial.

DECISION

The district court did not err in finding that O’Halloran had apparent authority to enter into a contract with Powell and that the parties formed a valid contract supported by consideration, not in violation of public policy, and not subject to a condition precedent requiring the agreement to be in writing.

Affirmed.


source: Caselaw Access Project

author: SCHUMACHER, Judge.

license: Public Domain

text:
    Bruce ROLLINS, Appellant, v. CARDINAL STRITCH UNIVERSITY, Respondent.
    No. C4-00-2032.
    Court of Appeals of Minnesota.
    May 29, 2001.

      Gary B. Bodelson, Minneapolis (for appellant).
    Corey J. Ayling, Kathleen M. Brennan, McGrann Shea Anderson Carnival Straughn & Lamb, Chartered, Minneapolis (for respondent).
    Considered and decided by LANSING, Presiding Judge, SCHUMACHER, Judge, and ANDERSON, Judge.
   OPINION

SCHUMACHER, Judge.

Appellant Bruce Rollins challenges adverse summary judgment, arguing that the district court erred in ruling against his common law and contractual claims for expulsion from respondent Cardinal Stritch University (CSU). We affirm.

FACTS

CSU is a private institution of post-secondary education, whose College of Business and Management (CBM) provides undergraduate and master’s degrees in business and management. CBM facilitates degree completion for working adults at various locations in Minnesota and Wisconsin. CBM’s Region III office is located in Edina, Minnesota.

In January 1999, Rollins enrolled in a two-year Bachelor of Science degree program in business and management in CBM’s Region III. One of the features of the degree program is that students are assigned to a specific “cohort group.” The students in the cohort group usually progress through the CBM program together towards their degree. The cohort group concept requires ongoing interaction among the students in the cohort group, as well as the development of a collegial and cooperative relationship amongst those students.

On October 27, 1999, Rollins sent an unsolicited e-mail message to a female classmate. The e-mail had an image of “kissing lips” when it was opened and contained a text message, “FOR THE MAN (OR WOMEN) IN YOUR LIFE.” The female classmate forwarded the message to a teacher, stating that she did not know Rollins and that she was not sure why he sent her the e-mail. She further stated that Rollins gave her “the creeps” and his off-color remarks in class made her uncomfortable. The teacher then forwarded the message to Dr. Patrick Sheedy, the Assistant Dean for Operations in Region III, and Douglas Gorsuch, an Educational Counselor in Region III, telling them that Rollins had made numerous inappropriate comments in class and 'requesting that they look into the matter.

Sheedy asked Gorsuch to contact Rollins and set up a meeting. On December 6, 1999, Gorsuch contacted Rollins and asked him to come into the office to discuss some issues. Gorsuch suggested Rollins could meet with him before class on December 7, 1999, but Rollins declined. On December 10, 1999, Rollins came into the office and Sheedy and Gorsuch talked to him about his behavior in and outside of class. Sheedy informed Rollins that Sheedy had received information that indicated that his remarks in class and outside of class made some of his classmates feel uncomfortable. Sheedy told Rollins that he needed to refrain from any offensive behavior or comments. Rollins responded by threatening to sue the school. Sheedy then ended the meeting.

In January 2000, Rollins continued sending unsolicited e-mails to numerous members of the cohort group. On January 7, 2000, Rollins sent the same female classmate an e-mail referencing the complaint about the kissing lips e-mail and stating, “I don’t think you would turn me in, but I sure would rest easier hearing it from you.” She forwarded the e-mail to a fellow classmate stating, “What would you do if you were me? I got this from Bruce today. HELP!!!”.

On January 18, 2000, Rollins forwarded to several female classmates an e-mail exchange with another classmate concerning the complaint about the kissing lips e-mail. On January 21, 2000, one of the female classmates responded to Rollins’s January 18 e-mail and requested that he stop sending her unsolicited e-mails, copying the message to several classmates and CBM administrators. Rollins responded by sending an e-mail stating that she was “incorrect when you say you have ask [sic] me not to e-mail you” and inquiring why he was a target of her “vendetta.” The classmate forwarded Rollins’s response to Sheedy and requested intervention as soon as possible.

On January 31, 2000, Rollins sent the same female classmate an e-mail, without comment, containing news accounts of a recent federal district court decision holding that free speech protected a college student from criminal charges stemming from an Internet posting about the fantasy kidnapping and torture-murder of a female classmate. On February 1, 2000, the classmate forwarded Rollins’s January 31, 2000 e-mail to Sheedy. According to his affidavit, Sheedy was “immediately alarmed that Rollins would send an e-mail to [the classmate] when she had specifically told him that she did not want to receive any unsolicited e-mail messages from him.” Sheedy was “even more alarmed that the message Rollins sent to [the classmate] concerned a story about a male college student who had written about the fantasy kidnapping and torture-murder of a female classmate.” Sheedy immediately contacted Christine Robinson, CSU’s Interim Dean of Students, to discuss what action to take in response to Rollins’s conduct. Robinson and Sheedy decided to suspend Rollins from class.

A February 1, 2000 letter from Robinson to Rollins informed him of his immediate suspension pending a formal hearing. The letter stated that over the course of a couple months Rollins had “been engaged in conduct with your fellow students that has been unwelcome, persistent, and in some cases frightening,” behavior that may have been in violation of specific provisions of the Student Code of Conduct. A disciplinary hearing was subsequently scheduled for February 8, 2000.

Prior to the hearing, Robinson investigated the matter and interviewed Rollins’s classmates regarding his conduct. Based on Robinson’s pre-hearing investigation of the situation, she determined that several of Rollins’s female classmates felt uncomfortable -with him and that Rollins had created a level of fear in some of them. Robinson learned that because of Rollins’s behavior, some of the female students were having their husbands drop them off and pick them up from classes, wanted to have the classes moved, were thinking about leaving school, and were asking that Rollins not be in their classes.

On February 8, 2000, Robinson conducted the disciplinary hearing with Rollins. Also present were Rollins’s attorney, Student Services Director Christine Keith, Gorsuch, and Sheedy. At the hearing, Robinson told Rollins that CSU was concerned that he had engaged in persistent and unwelcome behavior that caused some of his female classmates to be uncomfortable, wary and concerned about their safety, and that he had disregarded requests or directives to stop such behavior.

Robinson asked Rollins why he had emailed the classmate when he received the January 21, 2000 e-mail from her telling him not to e-mail her. Rollins’s response was that since she had e-mailed him, he was merely answering her e-mail and that he felt he had to respond to her and the others that she had copied on her e-mail to him.

Robinson then asked Rollins about the e-mail he sent on January 31, 2000, about the news account of the student who had posted a story on the Internet about a fantasy kidnapping and torture-murder of a female classmate. Rollins stated that it was an article from the Internet alluding to a case that said governmental agencies cannot stop people from e-mailing. When Robinson asked Rollins what was his intent in sending this e-mail, Rollins replied that she “can’t request me to not send emails” and “it was just an informational article.”

Robinson asked Rollins if he could do it all over again would he do anything differently. Rollins replied that Robinson was asking him to change himself and that he would do things the same way. Robinson then asked Rollins whether he learned anything from this experience. Rollins replied, “No comment.” Robinson told Rollins that she would not permit him to be in the same cohort group anymore since the situation had deteriorated enough to affect the learning atmosphere in that group. Robinson also told Rollins that she would require him not to initiate contact, e-mail or otherwise, with anyone in the cohort group.

Robinson asked Rollins (a) whether he would be willing to not initiate contact, in any way, including e-mail, with any former classmates; (b) whether he would be willing to participate in anger management counseling; (c) whether he would be willing to sign a statement indicating that any further problems on his part would result in his removal from the CBM program; and (d) whether he would be willing to obtain a psychological assessment. To each of these inquiries, Rollins replied that he needed to confer with his attorney.

Robinson then suggested to Rollins and his attorney that they draft a proposal that would include what Rollins would be willing to do to avoid future problems if he was allowed to join a different cohort group. Robinson also asked Rollins to rethink his position about not doing anything differently. Robinson told Rollins that she would have a hard time recommending his placement in another cohort group if she could not be reassured that they all would not be back in a similar meeting at the same time next year. The only issue Robinson felt needed to be resolved after the hearing was for Rollins to submit to her an acceptable proposal to allow placement in a new cohort group.

On February 9, 2000, Rollins’s attorney, Gary Bodelson, sent Robinson a letter complaining that the disciplinary proceedings had been “biased, unfair, and unnecessarily confrontational and adversarial.” Bodelson proposed mediation take place between Rollins and any alleged complainant who wished to participate and stated that Rollins would agree to not communicate with any student who specifically informed him or the university that they did not wish to communicate with him.

On February 11, 2000, Robinson sent Rollins a letter summarizing the decision arising from the disciplinary hearing. Robinson stated that Rollins was removed from his cohort group effective immediately because he had

engaged in e-mail contact with an individual classmate after being asked not to, did not comply with the directives of staff members to stop behaviors others experienced as harassing, and said [he] would not change [his] behavior if given another chance.

Robinson further acknowledged receipt of Bodelson’s letter proposing mediation but stated mediation would not be appropriate and Rollins could either appeal her decision or submit a proposal for reassignment to another cohort group.

In a letter dated February 24, 2000, Rollins, through his attorney Bodelson, appealed from Robinson’s decision to CSU President Schneider. Among other things, the letter complained of a lack of prior notice of the exact charges; and that Bo-delson was not allowed to actively participate in, or bring a court reporter to, the disciplinary hearing. The appeal letter stated that the disciplinary process used “was biased, unfair, and unreasonably confrontational and adversarial” and that “no legitimate factual basis has been established which would justify expelling Mr. Rollins.” In a February 28, 2000 letter to Rollins, CSU President Schneider upheld the disciplinary decision.

Rollins commenced this action, challenging the student disciplinary proceeding by pleading two counts against CSU. The complaint sought damages for loss of income. CSU moved for summary judg-xnent, which was granted by the district court after a hearing. Judgment was entered and Rollins appeals.

ISSUE

Did the district court err in granting summary judgment in favor of CSU?

ANALYSIS

On appeal from summary judgment, this court determines whether there are any genuine issues of material fact and whether the trial court erred in its application of the law. State by Cooper v. French, 460 N.W.2d 2, 4 (Minn.1990). This court must view the evidence “in the light most favorable to the party against whom judgment was granted.” Fabio v. Bellomo, 504 N.W.2d 758, 761 (Minn.1993) (citation omitted). No genuine issue of material fact exists “[w]here the record taken as a whole could not lead a rational trier of fact to find for the nonmoving party.” DLH, Inc. v. Russ, 566 N.W.2d 60, 69 (Minn.1997) (citation omitted).

1. Count I alleged that CSU’s disciplinary actions “were unfair, biased, arbitrary, lacking in due process, and based on the bad faith” of the university. In its summary judgment order, the district court observed that Rollins did not base his due process claim on any state action. See Ben-Yonatan v. Concordia College Corp., 863 F.Supp. 983, 987 (D.Minn.1994) (threshold inquiry is whether colleges’ actions constitute state action). On appeal, Rollins asserts that count I was based on a common-law cause of action and that the trial court erroneously analyzed the count as if it were a constitutional claim.

Rollins correctly notes that in Abbariao v. Hamline Univ. Sch. of Law, 258 N.W.2d 108, 113 (Minn.1977), the supreme court endorsed a common-law duty on the part of a private university not to expel students in an arbitrary manner. In Abbar-iao, an expelled Hamline law student brought a complaint for relief “both at common law and under the due process clause of the Federal Constitution.” Id. at 110. The district court dismissed the suit for failure to state a claim upon which relief could be granted. Id. at 111. The supreme court reversed, ruling that the complaint sufficiently alleged state action so as to render improper dismissal of plaintiffs constitutional claim at that stage in the proceeding. Id. at 111-12. Concerning the common law claim, the Abbariao court stated:

Plaintiff alternatively cites a common-law duty on the part of the law school not to expel students in an arbitrary manner. In Gleason v. University of Minnesota, 104 Minn. 359, 116 N.W. 650 (1908), we held that a university may not arbitrarily expel a student. A law student had been dropped, per resolution of the executive committee of the Board of Regents, for deficiency in his work and charged with certain insubordinate acts towards the faculty. He alleged that the resolution was adopted, without notice to him and without providing him a hearing, at an ex parte meeting where no evidence was taken, that the action resulted from prejudice and personal feeling toward him, and that he had not violated any university rules. The district court overruled a demurrer to the student’s petition for a writ of mandamus ordering his reinstatement, and on appeal by the university, we affirmed. Defendants attempt to distinguish the Gleason decision by suggesting that the university treated Gleason more arbitrarily than Hamline treated plaintiff. The difference goes to satisfaction of the university’s duty, not to its existence.
The requirements imposed by the common law on private universities parallel those imposed by the due process clause on public universities. We need not delineate them here other than to state that academic deficiencies per se are not subject to judicial review. Plaintiff alleged, inter alia, that his expulsion was precipitated by a discriminatory grading procedure. As such, the complaint charges arbitrary conduct to Hamline officials and states a claim for which relief may be granted.

Abbariao, 258 N.W.2d at 112-13.

Following Abbariao, we hold that common law imposes a duty on the part of private universities not to expel students in an arbitrary manner. Cf. Harvey v. Palmer College of Chiropractic, 363 N.W.2d 443, 444 (Iowa App.1984) (citing Abbariao in ruling that “a private university may not expel a student arbitrarily, unreasonably, or in bad faith”). Even though CSU was subject to a common law duty not to expel students in an arbitrary manner, however, the undisputed facts on the record nonetheless support summary judgment. As the district court observed:

[Rollins] was given notice of the hearing and the reasons for his suspension. He then had the opportunity to explain his actions at the February 8, 2000 disciplinary hearing. Moreover, [Rollins] was given opportunities after the hearing to present a proposal to CSU to allow him to join a new cohort group.
[Rollins’s] failure to be reinstated as a student at CSU falls completely on his own shoulders. Robinson made perfectly clear to [Rollins] what he needed to do in order to be reinstated as a student at CSU. [Rollins] failed to do so for his own personal reasons. Irrespective of why [Rollins] failed to submit a proposal regarding his joining a new cohort group, his failure to do so resulted in CSU not reinstating him as a student at CSU. CSU’s actions towards [Rollins] establish that CSU was fair with [Rollins]. CSU’s offer to allow [Rolllins] to join a new cohort group if he simply presented an acceptable proposal that addressed that issue establishes CSU’s good faith toward [Rollins].

After a careful review of the record, we agree that nothing in the record supports the suggestion that CSU treated Rollins in any manner except fairly and in good faith. Because the record taken as a whole could not lead a rational trier of fact to find for Rollins, there is no genuine issue of material fact so as to survive summary judgment. See DLH, Inc., 566 N.W.2d at 69. Accordingly, we affirm summary judgment as to count I.

2. Count II alleged that CSU’s actions were “a breach of the contractual obligations implicitly or expressly included in [CSU’s] Student Handbook.” The district court noted that an

examination of the Student Conduct Code in the Student Handbook reveals that there was no exchange of promises between CSU and its students sufficient to create a contract between [CSU and Rollins].

The district court further stated that

[e]ven if the CBM Student Handbook is considered a contract between [Rollins] and CSU, none of CSU’s actions towards [Rollins] breached any contractual obligations it had with [Rollins].

Minnesota courts are generally reluctant to find contractual obligations between students and their schools based upon student handbooks. In Abbariao, the supreme court stated that “[e]lements of the law of contracts have been applied to the student-university relationship, but rigid importation of contractual doctrine has been rejected.” 258 N.W.2d at 113; see also Zellman v. Independent Sch. Dist. No. 2758, 594 N.W.2d 216, 219 (Minn.App.1999) (student handbook not a unilateral contract), review denied (Minn. July 28, 1999). The Abbariao court affirmed the dismissal of the plaintiffs contractual claim, noting that plaintiffs insistence on exact compliance a student bulletin’s representations “likely should be regarded as interfering beyond an acceptable degree in [the university’s] discretion to manage its affairs.” 258 N.W.2d at 114. In Ross v. University of Minn., 439 N.W.2d 28, 34 (Minn.App.1989), review denied (Minn. July 12, 1989), this court stated:

In Abbariao the Minnesota Supreme Court found that the school bulletin did not constitute a contract between the school and the student which required strict compliance with every provision.

Following Abbariao and also Ross, we hold that the student handbook in this case did not constitute a contract between the school and the student that required strict compliance with every provision.

Regardless, the student conduct code in the CBM student handbook gives CSU the right “to preserve for all of its students an environment that is conducive to academic pursuit, social growth and individual discipline.” It provides that students are expected to act responsibly and that CSU reserves the right to discipline those whose conduct is in violation of university standards, listing 17 examples of conduct subject to disciplinary action, including four recited to Rollins in the initial February 1, 2000 suspension letter.

Regarding process, the student conduct code provides that CSU may suspend students pending a formal administrative hearing. A student has a right to assistance at the administration hearing but does not have the right to have an attorney represent him at the hearing. Once the decision from the administrative hearing is made, the student has the right to appeal the decision to CSU’s president. The student conduct code provides that the “decision of the President will be final.”

We concur with the district court’s decision that CSU substantially complied with the student conduct code in this case. Rollins was afforded a hearing and appeal as provided by the. student conduct code in the student handbook. Even if the student handbook constituted a contract between the university and Rollins, summary judgment on the contractual claim was appropriate as a matter of law. Because the record taken as a whole could not lead a rational trier of fact to find in Rollins’s favor, there is no genuine issue of material fact so as to survive summary judgment. See DLH, Inc., 566 N.W.2d at 69. Accordingly, we affirm summary judgment as to count II.

DECISION

The district court did not err in granting summary judgment in favor of CSU. Although common law imposes a duty on the part of private universities not to expel students in an arbitrary manner, Rollins presented no evidence of genuine material fact to survive summary judgment. Further, the student handbook did not create a contract between CSU and Rolllins; even if it did, Rollins presented no evidence that any of CSU’s actions towards Rollins breached any contractual obligation.

Affirmed.


author: PER CURIAM.

text:
    2001 ND 86
    In The Matter of The Application For Disciplinary Action Against Henry H. HOWE, a Member of the Bar of the State of North Dakota. Disciplinary Board of the Supreme Court of the State of North Dakota, Petitioner v. Henry H. Howe, Respondent.
    No. 20000341.
    Supreme Court of North Dakota.
    May 3, 2001.

      Paul W. Jacobson, Disciplinary Counsel, Bismarck, for petitioner.
    Chad C. Nodland, Chad C. Nodland, P.C., Bismarck, for respondent.
   PER CURIAM.

[¶ 1] Henry H. Howe filed objections to the report of the hearing panel before the Disciplinary Board, which concluded Howe violated N.D.R. Prof. Conduct 1.3, 1.4, and 3.2. We conclude there is clear and convincing evidence of Howe’s violations, and we suspend him from the practice of law for 120 days and order him to pay costs in the amount of $4,953.39.

I

[¶ 2] Howe was admitted to practice law in North Dakota on July 27, 1973; he has remained a member of the Bar, except for a 90-day suspension in 1977. In December 1996, Deborah L. Johnson entered into a retainer agreement with Howe for legal services involving modification of her divorce judgment to increase child support, reallocation of past medical costs and insurance, and a set-off against an equity payment due her former husband following the sale of marital property awarded to Johnson. Howe initiated a motion; a hearing was held; and in February 1997, the court awarded Johnson $3,487 as reimbursement for insurance. Howe failed to reduce this award to judgment over the next two years, although Johnson contacted Howe in an effort to have him complete the matter.

[¶ 3] In January 1999, Johnson discussed with Howe her intention to refinance her home, and she requested Howe to reduce her $3,487 award to judgment. Howe promised to complete the matter in a timely manner so the loan refinancing could take place as scheduled. Johnson applied for refinancing, and her loan officer, Michael Benson, locked in an interest rate of 6-3/8 percent. Johnson and Benson discussed the money award owed to Johnson from her former husband, and Johnson informed Benson that Howe was working on that matter. Benson called Howe, while Johnson was in his office, and explained what they needed Howe to do and that the loan rate was locked in through March 23, 1999. Howe assured Benson the matter would be resolved no later than the end of February. In a letter to Johnson, dated February 26, 1999, Howe confirmed that he had spoken with the judge and would submit a judgment form to the court. The day before the expiration of the interest rate lock-in date, Howe faxed two letters to the abstract company and suggested closing the loan without the post-divorce matters completed. However, nothing was resolved before the March 23rd deadline when the 6-3/8 percent interest rate expired. Subsequently, Johnson hired another attorney who secured an order for judgment for the post-divorce award on April 30, 1999. Johnson then sought refinancing in June or July of 1999, but by that time the interest rate had increased to 7-1/2 percent. The difference in the interest payments over the 15-year loan was $5,670; Johnson also incurred an additional appraisal fee of $75.

[¶ 4] When Johnson retained Howe, she paid him $200 and paid an additional $500 through March 1997. The retainer agreement stated Howe’s law firm would send “itemized bills from time to time.” The only bill Johnson ever received was dated February 14, 1999, more than two years after Johnson hired Howe as her attorney. When Johnson came to Howe’s office to talk about the bill, Howe made no mention of fees needing to be paid at that time.

[¶ 5] A Petition for Discipline was served on Howe in November 1999. The matter was heard by a hearing panel of the Disciplinary Board. The panel concluded Howe violated Rule 1.3, N.D.R. Prof. Conduct, for failing to diligently and promptly reduce to judgment Johnson’s $3,487 post-divorce award; Rule 1.4, N.D.R. Prof. Conduct, for failing to make reasonable efforts to keep Johnson reasonably informed about the status of the matter and for failing to communicate the costs of his representation; and Rule 3.2, N.D.R. Prof. Conduct, for failing to reasonably expedite reduction of the $3,487 award to judgment. The panel also concluded Howe’s misconduct was aggravated by his prior disciplinary history and further aggravated by similar misconduct for which he was previously disciplined in 1998, 1995, and 1991. The panel recommended suspending Howe from the practice of law for 60 days and requiring Howe to pay costs of $4,010.24, plus costs of the transcript of the hearing. Howe filed objections to the panel’s recommendations, and disciplinary counsel filed a supplemental affidavit of costs and expenses listing the amount of $943.15 for the hearing transcript expense.

II

[¶ 6] We review disciplinary proceedings de novo on the record. In re Disciplinary Action Against Keller, 2000 ND 221, ¶ 8, 620 N.W.2d 156. In the context of disciplinary proceedings, de novo means we accord due weight to the findings, conclusions, and recommendations of the hearing panel, but we do not act as a mere “rubber stamp.” Id. Because the hearing panel has heard the witnesses and observed their demeanor, we give special deference to its findings on matters of conflicting evidence, and we consider each disciplinary case on its own facts to decide what discipline is warranted. In re Disciplinary Action Against McDonald, 2000 ND 87, ¶ 13, 609 N.W.2d 418. Disciplinary counsel must prove each alleged violation of the disciplinary rules by clear and convincing evidence. N.D.R. Lawyer Discipl. 3.5(C),(D); see also In re Disciplinary Action Against Dvorak, 2000 ND 98, ¶ 8, 611 N.W.2d 147.

III

[¶ 7] Howe raises several objections to the hearing panel’s findings and conclusions. Howe insists he “did everything he could” to represent Johnson and to keep her apprised of the case status. We are unpersuaded by Howe’s arguments supporting each of his objections.

A

[¶ 8] Howe argues the hearing panel findings, contained in Paragraphs 3, 4, 5, and 6 of their report, fail to accurately and completely set out the factual record of the case, as presented at the hearing and through argument. Howe also contends the factual basis presented at the hearing fails to meet the required burden of proof in establishing his misconduct by clear and convincing evidence.

[¶ 9] Paragraphs 3, 4, 5, and 6 in the report of the hearing panel state:

3. How[e] initiated a motion with the court in Grand Forks County. A hearing was held on February 20, 1997, at which Howe appeared with Johnson and her ex-husband appeared with his attorney. On February 24, 1997, the court issued a memorandum decision. Part of the memorandum found that Johnson would be awarded a money judgment against her ex-husband in the amount of $3,487, as reimbursement for supplemental insurance. The award of the $3,487 to Johnson was not reduced to judgment by Howe. Johnson attempted to contact Howe over the next two years in an effort to complete the matter.
4. In January, 1999, Johnson contacted [Howe] in regard to refinancing the home. [Howe] promised to complete the matter concerning the award of the $3,487 and the other issues in a timely manner so that the loan refinancing could take place at the scheduled time in March, 1999. [Howe] did not do so. As a result, Johnson incurred an additional $5,670 in interest costs over the life of the fifteen year loan and an additional $75 in appraisal fee.
5. Howe failed to diligently expedite reduction to judgment of the $3,487 awarded to Johnson in the February 24, 1997, memorandum decision of the court. That lack of diligence occurred between January 1998 and March 23, 1999. The lack of diligence and failure to expedite the litigation was particularly evident between January, 1999, and March 23, 1999. During that time, Howe gave assurance to Johnson that the award from the memorandum decision could be reduced to judgment and the matter resolved so that Johnson could obtain refinancing for her home by the closing date of March 23, 1999. However, Howe failed to diligently work on the matter, as he had promised.
6.Howe failed to make reasonable efforts to keep his client reasonably informed about the status of the matter between January 1998, and March 23, 1999. The lack of communication was particularly evident between January, 1999, and March 23, 1999. During that time Howe gave assurance to Johnson that the award from the memorandum decision could be reduced to judgment and the matter resolved so that Johnson could obtain refinancing for her home. However, Howe failed to communicate to his client that he was not diligently working on the matter, as he had promised. The lack of communication is also reflected by Howe’s failure to communicate the costs of his representation, in. that he did not present a bill for legal services to Johnson until February 14, 1999.

[¶ 10] Howe claims these findings are erroneous, incomplete, inaccurate, unfair, and “leave[ ] a huge gap” in the evidence because the hearing panel does not address additional facts. Specifically, Johnson’s former husband filed a motion to reconsider the trial court’s award of $3,487, as it appeared to be in error since Johnson had testified the back insurance amount she was entitled to was only $1,120. Howe was concerned about responding to the motion because Johnson could not support the $3,487 amount. Howe claims Johnson was “very ambivalent” about pursuing the matter because she could not justify the award, and Howe and Johnson “seemed to be in agreement that they should take no action.” Howe alleges the $3,487 award was ineligible for reduction to judgment because it was not a final decision since there was a pending motion.

[¶ 11] In addition, the 1997 flood hit Grand Forks, inundating Howe’s office, and one month later, Howe and his wife suffered injuries in a car accident. Johnson called Howe in December 1997 and indicated she was having problems with her daughter and “didn’t want to do anything in court until the problems with her daughter were resolved.” In November 1998, Johnson contacted Howe to get the process restarted as the problems with her daughter were resolved. Then in January 1999, when Johnson informed Howe about home refinancing and the interest lock-in date, Howe expressed concern to Johnson that she had only paid $700 and had not made any further payments. Howe told Johnson he would be willing to send a couple of letters regarding the home refinancing matter, but Howe could not take additional action without a financial commitment from Johnson. Howe received no further payments from Johnson, so Howe took no additional action to reduce the award to judgment.

[¶ 12] A review of the record indicates the trial court’s memorandum decision granted a $3,487 award to Johnson, which Howe failed to reduce to judgment. The record reflects Johnson’s attempts to have the matter completed, particularly after January 1999 when she was refinancing her home. Both Johnson and her banker testified that Howe assured them the matter would be taken care of in time to meet the interest rate lock-in deadline. Documentary evidence also includes Howe’s letter to Johnson in which he assured Johnson he could reduce the award to judgment before the closing date for the home refinancing. The record shows that once Johnson secured another attorney, the award was reduced to judgment within a few weeks. We conclude the hearing panel properly made no findings regarding the flood and car accident, because these events were not relevant to Howe’s failure to reduce the award to judgment almost two years later, after repeated requests by Johnson to revolve the matter. Despite Howe’s protestations that he “did about all he could to keep Johnson apprised of the case status,” the hearing panel found Howe did not do the work he promised, and the only bill Johnson ever received from Howe was sent more than two years after Johnson retained Howe. See In re Disciplinary Action Against McDonald, 2000 ND 87, ¶ 13, 609 N.W.2d 418 (deferring to the hearing panel’s findings on matters of conflicting evidence and considering each disciplinary case on its own facts to decide what discipline is warranted).

[¶ 13] We conclude the hearing panel’s findings are complete, discussing relevant facts which support Howe’s misconduct by clear and convincing evidence.

B

[¶ 14] Howe asserts the hearing panel clearly erred in concluding he violated Rules 1.3, 1.4, and 3.2, N.D.R. Prof. Conduct, based on the panel’s erroneous findings. Howe suggests perhaps his representation of Johnson was “imperfect,” but how his conduct “can be an ethics violation is a mystery.” We conclude there is nothing mysterious in the hearing panel’s conclusions, based on clear and convincing evidence, that Howe violated the North Dakota Rules of Professional Conduct.

1

[¶ 15] Rule 1.3, N.D.R. Prof. Conduct, provides: “A lawyer shall act with reasonable diligence and promptness in representing a client.” The comment to Rule 1.3 directs lawyers to “act with commitment and dedication to the interests of the client” and to “carry through to conclusion all matters undertaken for a client.” N.D.R. Prof. Conduct 1.3 cmt. The comment offers a cogent explanation for this rule: “Perhaps no professional shortcoming is more widely resented than procrastination. A client’s interests often can be adversely affected by the passage of time or the change of conditions.... ” Id.; see also In re Disciplinary Action Against Seaworth, 1999 ND 229, ¶ 25, 603 N.W.2d 176 (citing the rationale underlying Rule 1.3, N.D.R. Prof. Conduct).

[¶ 16] The hearing panel’s findings detail clear and convincing evidence of Johnson’s attempts to have Howe reduce to judgment her favorable award for supplemental medical insurance; the passage of over two years without Howe fulfilling his duty to carry this matter through to conclusion; and the adverse effects of Howe’s procrastination in the form of increased refinancing interest ratés and additional appraisal fees incurred by Johnson. See Seaworth, 1999 ND 229, ¶¶ 26, 29, 603 N.W.2d 176 (concluding an attorney lacked reasonable diligence in representing a client when the attorney failed to respond to at least 13 letters regarding the client’s claim, so the claim remained unresolved for years).

[¶ 17] We conclude Howe was neither reasonably diligent nor prompt in reducing Johnson’s $3,487 award to judgment.

2

[¶ 18] Rule 1.4, N.D.R. Prof. Conduct, governs attorney communications with the client:

(a) A lawyer shall make reasonable efforts to keep a client reasonably informed about the status of a matter. A lawyer shall promptly comply with a client’s reasonable requests for information.
(b) A lawyer shall explain matters related to the representation to the extent reasonably necessary to permit the client to make informed decisions.

The guiding principle of Rule 1.4 regarding attorney communications with the client is that the attorney “should fulfill reasonable client expectations for information.” N.D.R. Prof. Conduct 1.4 cmt.

[¶ 19] The hearing panel’s findings demonstrate by clear and convincing evidence Howe’s failure to explain to Johnson that he was not following through with his assurances of reducing the award to judgment. Howe did not fulfill his duty to communicate to Johnson, so she was unable to make an informed decision to timely secure another attorney to complete this matter before the interest rate lock-in expired. Moreover, Howe’s own retainer agreement to provide legal services to Johnson stated his law firm would send “itemized bills from time to time.” Nevertheless, the record shows Howe did not send Johnson a bill for more than two years, yet he then used her lack of payment as an excuse not to continue his representation of Johnson. See In re Disciplinary Action Against Anseth, 1997 ND 66, ¶¶ 10, 25, 562 N.W.2d 385 (determining an attorney violated Rule 1.4, N.D.R. Prof. Conduct, by failing to file a corrected order and by failing to inform his client about the incomplete status of the case).

[¶ 20] We conclude Howe did not make reasonable efforts to keep Johnson reasonably informed about the status of reducing her award to judgment or about billing information, nor did Howe explain these matters to the extent reasonably necessary to permit Johnson to make informed decisions.

3

[¶ 21] Rule 3.2, N.D.R. Prof. Conduct, provides: “A lawyer shall make reasonable efforts to expedite litigation consistent with the interests of the client.” Litigants should have their disputes promptly resolved, as “[dilatory practices bring the administration of justice into disrepute.” N.D.R. Prof. Conduct 3.2 cmt.

[¶ 22] Howe’s failure to reduce a favorable monetary award to judgment for two years, during which time Johnson requested his assistance in resolving this matter, demonstrates that Howe did not make reasonable efforts to expedite the litigation consistent with the interests of his client. When Johnson decided to refinance her home in January 1999, Howe promised both Johnson and her banker that the matter would be resolved in time for Johnson to avail herself of the locked-in interest rate. However, Howe did not get the work done and then sent two faxes to the abstract company the day before the deadline, suggesting the loan be closed despite his failure to complete the post-divorce matter.

[¶ 23] We conclude the record is replete with clear and convincing evidence of Howe’s dilatory practices and lack of reasonable efforts to expedite the litigation by refusing to bring to resolution the legal matter Johnson retained him to complete.

C

. [¶ 24] Howe claims the hearing panel erred by not reciting the applicable standard of proof to reach the conclusion that his conduct violated the North Dakota Rules of Professional Conduct.

[¶ 25] The applicable standard of proof for evidence of misconduct in disciplinary proceedings has been consistently enunciated in our case law, as expressly established in Rule 3.5, N.D.R. Lawyer Discipl. The applicable subsections of Rule 3.5 provide:

(C) Standard of Proof. Disposition of formal charges of misconduct ... must be supported by clear and convincing evidence.
(D) Burden of Proof [Disciplinary] [c]ounsel has the burden of proof in proceedings seeking discipline.... The lawyer has the burden of proof in proceedings seeking reinstatement. ...

We review disciplinary proceedings against attorneys de novo on the record under a clear and convincing standard of proof. In re Disciplinary Action Against Dooley, 1999 ND 184, ¶ 12, 599 N.W.2d 619.

[¶ 26] We conclude the hearing panel did not err in failing to recite the burden of proof for Howe’s disciplinary proceedings; the applicable standard is frequently specified in case law and plainly stated in Rule 3.5(C),(D), N.D.R. Lawyer Discipl.

D

[¶ 27] Howe argues the hearing panel erred in determining aggravating factors without determining the specific basis for application of each factor. Howe challenges the panel’s lack of explanation for aggravation of his misconduct and lack of explanation of why his prior 1977 and 1988 disciplinary sanctions were relevant.

[¶ 28] Aggravating circumstances in disciplinary proceedings are defined as “any considerations or factors that may justify an increase in the degree of discipline to be imposed.” N.D. Stds. Imposing Lawyer Sanctions 9.21. The following factors may be considered in aggravation: prior disciplinary offenses, a pattern of misconduct, and multiple offenses. N.D. Stds. Imposing Lawyer Sanctions 9.22. Furthermore, when there has been prior discipline, N.D. Stds. Imposing Lawyer Sanctions 8.2 provides:

Suspension is generally appropriate when a lawyer has been reprimanded for the same or similar misconduct and engages in further similar acts of misconduct that cause injury or potential injury to a client, the public, the legal system, or the profession.

[¶ 29] The panel received evidence of five prior disciplines for Howe’s misconduct, spanning from 1977 to 1998, with the most recent three occurrences all •including lack of diligence or lack of communication:

Private Reprimand ... on November 13, 1991 ... for violation of Rule 1.3, [N.D.R. Prof. Conduct], for failing to proceed with reasonable diligence and promptness in regard to discovery.
Admonition ... on June 30, 1995 ... for violation of Rule[s] 1.1 and 1.3, [N.D.R. Prof. Conduct], for failing to diligently pursue the client’s case and failing to comply with the Federal Tort Claims Act.
Admonition ... on April 8, 1998 ... for violation of Rule 1.4, [N.D.R. Prof. Conduct], for failing to communicate with his client.

Because of the similarity in these incidents of misconduct, they were appropriately considered by the hearing panel as aggravating factors. We also conclude the older disciplinary actions against Howe in 1977 and 1988 were relevant in establishing a pattern of misconduct by Howe. See In re Disciplinary Action Against Dvorak, 2000 ND 98, ¶ 20, 611 N.W.2d 147 (considering as relevant aggravating circumstances four prior disciplinary actions, dating from 1989 to 1998, as well as multiple offenses in the current proceeding).

[¶ 30] We conclude the hearing panel did not err in considering Howe’s entire record of disciplinary sanctions as aggravating circumstances relevant to his current misconduct.

E

[¶ 31] Howe contends the hearing panel erred in failing to consider, determine, and recite mitigating factors, such as his lack of a dishonest or selfish motive and evidence of personal or emotional problems caused by the flood and the car accident. Howe argues the delay between the time of all these circumstances and the disciplinary action has disadvantaged him because the witnesses would have had a better recollection of the facts. Finally, Howe asserts the hearing panel should have considered that his prior disciplinary sanctions in 1977 and 1988 were far apart and relatively remote in time.

[¶ 32] Mitigating circumstances are any considerations or factors which may justify a reduction in the degree of discipline imposed. N.D. Stds. Imposing Lawyer Sanctions 9.31. Mitigating factors may include: absence of a dishonest or selfish motive; personal or emotional problems; character or reputation; delay in disciplinary process which is prejudicial to the respondent; interim rehabilitation; imposition of other penalties or sanctions; and remoteness of prior offenses. N.D. Stds. Imposing Lawyer Sanctions 9.32.

[¶ 33] Despite Howe’s assurances to Johnson and her banker that he would reduce the award to judgment by the closing deadline, by his own admission Howe “never took action” because Johnson “never paid the bill.” Thus, we con-elude Howe’s misconduct is not mitigated by an absence of selfish motive; clearly, Howe placed his financial interests over the interests of his client despite his verbal and written assurances he would complete the matter. Nor is Howe’s misconduct mitigated by personal or emotional problems related to the flood and car accident, because these events occurred in the spring of 1997. The hearing panel found Howe’s lack of diligence occurred from January 1998 until March 1999. Howe’s argument that his character or reputation should be considered as mitigating factors also fails, as Howe’s prior five disciplinary sanctions demonstrate a reputation punctuated by misconduct. In addition, Howe has failed to show any prejudice from any delay in this disciplinary process and failed to establish he has rehabilitated himself. Finally, in light of Howe’s disciplinary history involving continuous incidents of misconduct, the 1977 and 1988 disciplinary proceedings are not remote but highly relevant to establishing a pattern of misconduct. See In re Disciplinary Action Against Rau, 533 N.W.2d 691, 694 (N.D.1995) (warning that mitigating factors do not justify or excuse the attorney’s misconduct, nor shield the attorney from professional responsibility; rather, they are considered merely as explanations of the lawyer’s conduct in order to temper the imposed sanction).

F

[¶ 34] Howe’s final objection is to the hearing panel’s recommendation that he pay costs in the amount of $4,010.24. Howe insists the hearing panel clearly erred in arbitrarily setting attorney fees at $75 per hour, as that figure has no statutory basis and is not supported by any finding or conclusion of the panel. Howe objected to disciplinary counsel’s affidavit of costs and expenses, arguing the judiciary was usurping executive and legislative power by imposing fees in attorney disciplinary proceedings without a legislative enactment. Howe claimed that disciplinary counsel was “unjustly enrichfing] himself through the disciplinary process,” and that imposing mandatory costs and billing attorney fees at $75 per hour “amounts [to] nothing less tha[n] a veritable ‘Georgia Speed Trap’ situated on the legal road-map.”

[¶ 35] Unless otherwise ordered by the court or hearing panel, costs and expenses of disciplinary proceedings must be assessed against the lawyer if discipline is imposed, including, but not limited to, costs of investigations, service of process, witness fees, and a court reporter’s services. N.D.R. Lawyer Discipl. 1.3(D). We review the disciplinary counsel’s affidavit of costs incurred to ensure such costs, expenses, and attorney fees are reasonable. In re Disciplinary Action Against Boughey, 1999 ND 205, ¶ 13, 602 N.W.2d 268. Recently, we have approved as reasonable an affidavit of disciplinary counsel’s costs and expenses billing his attorney time at $75 per hour. See In re Disciplinary Action Against [Bruce R.] Howe, 2001 ND 7, ¶¶ 16-17, 621 N.W.2d 361.

[¶ 36] We conclude disciplinary counsel’s attorney fees, billed at $75 per hour, are reasonable and may be assessed against Howe, as we are imposing discipline for his violations of the North Dakota Rules of Professional Conduct. Howe is also reasonably required to pay $4,010.24 to cover the costs of the disciplinary proceeding, as well as $943.15 for the cost of the hearing transcript.

IV

[¶ 37] The disciplinary counsel had proposed that the hearing panel recommend a six-month suspension of Howe’s license to practice law in North Dakota. Ultimately, the hearing panel recommended suspending Howe from the practice of law for 60 days. Although disciplinary counsel has not argued for an increased suspension before this court, we reject the hearing panel’s recommendation and impose a suspension of 120 days. See In re Disciplinary Action Against [Bruce R.] Rowe, 2001 ND 7, ¶¶ 12, 15, 621 N.W.2d 361 (rejecting the hearing panel’s recommended 30-day suspension and imposing a six-month suspension, because “the length of a suspension is a decision for this Court to make”).

[¶ 38] Howe has appeared before the Disciplinary Board six times during his legal career. This disciplinary history weighs heavily against accepting the hearing panel’s recommendation of only a 60-day suspension. See In re Disciplinary Action Against Dvorak, 2000 ND 98, ¶ 21, 611 N.W.2d 147 (warning that disciplinary orders are not “empty noise,” but are intended to protect the public). In Dvorak, we imposed a one-year suspension when Dvorak had a history of four prior disciplinary actions and unlawfully had obstructed another party’s access to evidence by intimidating threats. Id. at ¶¶ 9, 21. We also have suspended an attorney’s license to practice law for six months as a result of making false statements and engaging in conduct involving dishonesty, fraud, deceit, and misrepresentation, when he did not have a prior disciplinary record. See [Bruce R.] Howe, 2001 ND 7, ¶¶ 10, 15, 621 N.W.2d 361; see also In re Disciplinary Action Against Boughey, 1999 ND 205, ¶¶ 9-10, 602 N.W.2d 268 (imposing a six-month suspension for an attorney who made unauthorized transfers from client trust accounts); In re Disciplinary Action Against McDonald, 2000 ND 87, ¶¶ 30, 41, 609 N.W.2d 418 (suspending an attorney for six months and one day for making false statements and offering evidence which he knew was false). We acknowledge that a lengthy suspension is grave punishment, yet we also have recognized an attorney’s deliberate use of false testimony or falsified evidence in a judicial proceeding is antithetical to the standards of the legal profession. See McDonald, at ¶ 36.

[1139] Here, Howe’s misconduct involves failure to diligently represent and communicate with Johnson, as well as failure to expeditiously reduce to judgment Johnson’s favorable monetary award after Howe’s express promise to do so. In view of Howe’s extensive prior disciplinary history, we conclude 120 days is an appropriate period of suspension.

V

[¶ 40] We order Howe suspended from the practice of law for 120 days commencing June 1, 2001, and we order him to pay $4,953.39 for the costs and expenses of the disciplinary proceedings, including the cost of the hearing transcript,

[¶ 41] VANDE WALLE, C.J., KAPSNER, MARING, NEUMANN, JJ., and HUNKE, S.J.

[¶ 42] The Honorable MAURICE R. HUNKE, S.J., sitting in place of SANDSTROM, J., disqualified.