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    Lowell W. GUNDERSON, Appellant, v. ALLIANCE OF COMPUTER PROFESSIONALS, INC., et al., Respondents.
    No. C1-00-1484.
    Court of Appeals of Minnesota.
    May 22, 2001.
    Review Granted July 24, 2001.

      Richard T. Ostlund, Randy G. Gulliek-son, Lindquist & Vennum P.L.L.P., Minneapolis, for appellant.
    Mary A. Rice, Shannon M. McDonough, Fafinski Mark & Johnson, P.A., Eden Prairie, for respondents.
    Considered and decided by ANDERSON, P.J., LANSING and HALBROOKS, JJ.
   OPINION

LANSING, Judge

Lowell Gunderson appeals from summary judgment dismissing his action against Alliance of Computer Professionals, Inc. (ACP), and denying his motion for a fair-value buyout. Gunderson’s action arises from the termination of his employment with ACP and his involuntary removal as shareholder, officer, and director. Gunderson challenges the dismissal of both his common-law breach-of-employment-contract claim and his claim of unfairly prejudicial conduct under Minn.Stat. § 302A.751, subd. 1(b)(3) (1998).

Because we conclude as a matter of law that Gunderson’s employment was at will, we affirm the district court’s dismissal of Gunderson’s breach-of-employment-contract claim. We also affirm the district court’s determination that ACP did not unfairly prejudice Gunderson in his capacity as a shareholder by enforcing the buy-sell agreement to remove him as shareholder and to repurchase his stock or by running the corporation in an unfairly prejudicial manner. But because we conclude that disputed issues of material fact remain on whether ACP unfairly prejudiced Gunderson in his capacity as a shareholder-employee by terminating his employment, we reverse the dismissal of Gunderson’s unfairly-prejudicial-eonduet claim and the premature denial of his motion for a fair-value buyout as it relates solely to his reasonable expectations as a shareholder-employee, and we remand.

FACTS

ACP is a computer-consulting firm founded by Daniel and Sandy Jones in 1994. Shortly after the company was founded, Lowell Gunderson became a shareholder, officer, director, and employee of ACP. Gunderson played a critical role in developing the company. He drafted and filed the articles of incorporation, assumed responsibility for the company’s day-to-day operations and financial affairs, and became its marketing director. To get ACP “off and running,” he also guaranteed capital purchases, the company’s business credit card, a note for equipment, and an operating line of credit. Gunder-son received an annual salary and a year-end bonus.

As part of a graduate-school assignment for which he received credit, Gunderson drafted a business plan for ACP. The plan contemplated that Daniel Jones would contribute technical knowledge and a network of computer associates and potential clients to ACP. Gunderson, on the other hand, would contribute administrative and financial services to the company and its consultants and would act as the company’s marketing director during the first year of operations. The goal under the plan was to develop name recognition during the first seven years and to sell the company thereafter. But none of the other shareholders or the board of directors ever learned of the business plan.

In early 1996, Bradley Gilbert, Robert Johnson, and Andrew Valles became shareholders and directors of ACP. Hoping that the addition of new shareholders would benefit ACP, Gunderson diluted his 50% interest in the company to allow Gilbert, Johnson, and Valles each to acquire a 10% interest.

In July 1996, ACP hired Sandy Foley to be its marketing director. Both the shareholders and the board participated in the decision to hire Foley. Gunderson voluntarily transferred his recruiting duties to her and became responsible only for managing the company’s financial affairs.

Early in 1997, Jones recruited Michael Folken, a personal friend with an excellent track record in marketing and sales, to head the marketing division. The shareholders recognized that ACP was at a plateau and would benefit from Folken’s hiring. By a straw vote at an informal meeting, they agreed to hire Folken. Because ACP could not compensate Folken, Jones proposed that Folken join ACP as a shareholder and agreed to transfer 10% of his interest to him. The board agreed.

After Folken was hired, Gunderson, Jones, and Folken met monthly over lunch to discuss operational and financial matters. At these meetings, they often made decisions affecting the corporation. Gun-derson and Jones also continued to meet alone to discuss the company.

In June 1997, the board of directors unanimously approved a buy-sell agreement, which all the shareholders signed. Gunderson took an active role in drafting the agreement. He selected the attorney who represented the company and worked from a standard buy-sell agreement the attorney provided. To the standard agreement, Gunderson added a clause permitting the involuntary withdrawal of shareholders by a ¾ vote of the total number of shareholders. Gunderson also proposed a buyout provision under which the value of a withdrawing shareholder’s shares would be determined by the length of time the shareholder had held the shares. If the withdrawing shareholder had held his or her shares less than five years, the value of the shares would be the amount the shareholder paid for the shares plus 5% interest per year. If the shareholder had held his or her shares more than five years, the value of the shares would be the withdrawing shareholder’s proportionate share of the corporation’s book value as of the end of the preceding fiscal year. The buy-sell agreement gave ACP the first option to purchase a withdrawing shareholder’s shares.

In late 1997 or early 1998, Gunderson requested that ACP hire an administrative assistant to assume his daily financial duties so that he could move into recruiting. Pursuant to Gunderson’s request, the ACP board hired Barb Prescher in July 1998. After transferring his daily financial responsibilities to Prescher and working with her for three weeks to ease her transition into the company, Gunderson moved into recruiting. Shortly after assuming her duties, Prescher set up lockboxes for company deposits and a computer password for files containing financial information.

In April 1998, Valles resigned his position as secretary, claiming that Folken and Jones had assumed control of the corporation and were acting without board approval and in disregard of board decisions. In August 1998, Jones approached Valles to begin discussions about Valles’s departure from ACP. Shortly after, Valles and Jones reached a tentative termination agreement, which Jones presented to the board for approval. Pursuant to the agreement, ACP paid Valles $20,000 for his stock and as severance.

In October 1998, Jones asked Gunderson to leave ACP. Jones claimed that Gunder-son’s departure was in the corporation’s best interests because Gunderson was dishonest, worked short and unpredictable hours, failed to produce qualified recruits, failed to draw the corporation’s bylaws, was often late for meetings, refused to move his office from home to ACP, and spent too much time working on business related to Gunderson & Associates, his own consulting firm. After being asked to leave, Gunderson secretly copied company files containing financial information. In early November, the board voted to terminate Gunderson as an employee and to remove him as shareholder, director, and officer.

Relying on the valuation provision of the buy-sell agreement, the board offered Gunderson $2,300 for his stock. Gunder-son’s appraiser valued the company as of December 31, 1998 at $5,100,000 and Gun-derson’s ownership interest at $1,133,000. ACP’s appraiser valued the company at $1,700,000 and Gunderson’s interest at $175,000 after applying a minority discount. Gunderson declined the board’s repurchase offer.

In January 1999, Gunderson brought this action against ACP, seeking “compensatory, consequential, special, liquidated, and/or punitive damages and other relief’ under the Minnesota Business Corporation Act and “factually related common-law claims.” ACP moved for summary judgment, and Gunderson moved for a fair-value buyout under Minn.Stat. § 302A.751, subd. 2 (1998). The court granted summary judgment in ACP’s favor and denied Gunderson’s motion for a court-ordered buyout. In granting summary judgment, the court reasoned that Jones’s alleged assurance that Gunderson “would always be taken care of’ and Folken’s alleged exhortation to “stick with me and I will make you rich when we sell the company” provided an inadequate factual basis for a breach-of-employment-contract claim. The court also concluded that Gunderson’s remaining claims were unsupported by fact or law. In denying Gunderson’s motion for a fair-value buyout, the court concluded that the buy-sell agreement was reasonable and, therefore, binding. This appeal followed.

ISSUES
I. As a matter of law, did ACP breach an oral contract of continuing employment by terminating Gunder-son’s employment?
II. As a matter of law, did ACP act in a manner unfairly prejudicial toward Gunderson in his capacity as a shareholder, in violation of Minn. Stat. § 302A.751, subd. 1(b)(3) (1998), by enforcing the parties’ buy-sell agreement to remove Gun-derson as a shareholder and to repurchase his stock at less than its fair market value or by otherwise operating the corporation in a manner unfairly prejudicial to him?
III. Do genuine issues of material fact remain on whether, by terminating Gunderson’s employment, ACP acted in a manner unfairly prejudicial toward him in his capacity as a shareholder-employee in violation of Minn.Stat. § 302A.751, subd. 1(b)(3)?

ANALYSIS

On appeal from a district court’s grant of summary judgment, we consider whether genuine issues of material fact remain for trial and whether the district court erred in its application of the law. State by Cooper v. French, 460 N.W.2d 2, 4 (Minn.1990). In so doing, we 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).

I

Common Law Claim for Breach of Employment Contract

Gunderson first argues the district court erred in dismissing his breach-of-employment-contract claim on summary judgment because genuine issues of material fact remain on whether Jones’s and Folken’s assurances of job security resulted in an oral agreement that, absent just cause for dismissal, Gunderson’s employment would continue as long as he remained a shareholder or until the corporation was sold. We disagree.

In the absence of an express or implied agreement to the contrary or sufficient consideration in addition to the services to be rendered, Minnesota law presumes that employment for an indefinite term is at will. Skagerberg v. Blandin Paper Co., 197 Minn. 291, 294-95, 266 N.W. 872, 874 (1936); Aberman v. Malden Mills Indus., Inc., 414 N.W.2d 769, 771 (Minn.App.1987) (stating that “[u]nless otherwise agreed between the parties, the employment relationship is at will”). Even a contract for permanent employment is presumed to be for an indefinite term at will, absent an express or implied stipulation of duration. Pine River State Bank v. Mettille, 333 N.W.2d 622, 628 (Minn.1983); Aberman, 414 N.W.2d at 771. The at-will doctrine “allows an employer to terminate an employee with or without just cause in the absence of an agreement limiting the employee’s discharge to just cause or specifying the term of employment.” Sandra L. Schlafge, Comment, Pedro v. Pedro: Consequences for Closely Held Corporations and the At Will Doctrine in Minnesota, 76 Minn. L.Rev. 1071, 1081 (1992) (footnotes omitted).

To overcome the presumption that employment is at will, an employee must present objective evidence that the employer clearly intended to create a lifetime-employment contract. Aberman, 414 N.W.2d at 771. Typically, an employee must establish clear and unequivocal language by the employer evidencing an intent to provide job security. See, e.g., Degen v. Investors Diversified Servs., Inc., 260 Minn. 424, 428, 110 N.W.2d 863, 866 (1961) (concluding that employer’s statement that employee should consider his job “a career situation” fell “far short of establishing a lifetime contract”).

General statements about job security, company policy, or an employer’s desire to retain an employee indefinitely are insufficient to overcome the presumption that employment is at will. See, e.g., Ruud v. Great Plains Supply, Inc., 526 N.W.2d 369, 370-72 (Minn.1995) (concluding that, even in the context of discussions about becoming a store manager, statement that “[gjood employees are taken care of’ was not sufficiently definite to establish a permanent-employment contract). In ascertaining the nature of the employment relationship, courts must consider, among other things, the written and oral negotiations of the parties and the particular circumstances at issue. Eklund v. Vincent Brass & Aluminum Co., 351 N.W.2d 371, 376 (Minn.App.1984), review denied (Minn. Nov. 1, 1984).

The evidence Gunderson has presented is insufficient as a matter of law to sustain a finding that Jones’s alleged assurances of job security clearly evidenced his intent to create a lifetime-employment contract. On the contrary, viewed in the light most favorable to Gunderson, the evidence establishes that Gunderson’s employment was for an indefinite term and hence terminable at the will of either party with or without cause. Jones’s alleged statement that Gunderson “would always be taken care of’ is too vague and indefinite to create an agreement that Gunder-son would remain employed as long as he was a shareholder or until the company was sold.

In fact, Jones’s alleged statement is similar to statements Minnesota courts have consistently deemed insufficient to overcome the presumption of at-will employment. See, e.g., Cedarstrand v. Lutheran Broth., 263 Minn. 520, 523, 117 N.W.2d 213, 216 (1962) (concluding that employer’s promise to give employees “job[s] as tong-as they wished until retirement” was insufficient to create more than at-will employment); Aberman, 414 N.W.2d at 771-772 (concluding that employer’s promise that “I will always take care of you, you will always be with Malden” was insufficient to establish permanent-employment contract); Dumas v. Kessler & Maguire Funeral Home, Inc., 380 N.W.2d 544, 547 (Minn.App.1986) (concluding that supervisor’s statement to employee that they would “retire together” was insufficient as a matter of law to constitute agreement that employee could be discharged only for cause). Folken’s alleged statement exhorting Gunderson to “stick with me and I will make you rich when we sell the company” is similarly insufficient to establish a basis for Gunderson’s breaeh-of-employment-contraet claim.

Alternatively, Gunderson argues that he provided additional consideration beyond his employment services sufficient to create an implied contract for permanent employment by personally guaranteeing ACP’s credit line and by departing from his previous employment to devote himself primarily to ACP. We disagree. To come within the independent-consideration exception to the at-will doctrine, consideration must be both uncharacteristic of the employment relation and regarded by the parties as consideration for a promise of job security. See Degen, 260 Minn. at 429-30, 110 N.W.2d at 867 (concluding that acceptance of salary reduction, forbearance of employment, and contributions to pension plan were insufficient to constitute additional consideration); Skagerberg, 197 Minn, at 300-03, 266 N.W. at 876-78 (concluding that forbearance of a lucrative consulting practice to accept new position did not constitute sufficient additional consideration to create implied contract limiting discharge to good cause); Dumas, 380 N.W.2d at 546 (stating that consideration for a promise of permanent employment must be regarded by the parties as such and must be the product of negotiation and mutual bargaining).

Gunderson’s personal guaranty was insufficient additional consideration to create an implied contract for permanent employment. First, the guaranty was not additional consideration uncharacteristic of the employment relationship because Gun-derson was not only an employee but was also a shareholder. Shareholders commonly guarantee corporate loans. Second, the record contains no indication that the parties regarded Gunderson’s personal guaranty as consideration for a promise of permanent employment or that the guaranty was conditioned upon Gunderson continuing as an employee as long as he remained a shareholder. Cf. Bussard v. College of St. Thomas, Inc., 294 Minn. 215, 223-24, 200 N.W.2d 155, 160-61 (1972) (reversing summary judgment for employer where employee donated $350,000 in stock to employer on condition that he would continue as publisher of company employer had purchased). The loan guaranties in this case are thus not indicative that the parties contemplated anything other than at-will employment.

The same is true of Gunder-son’s departure from his previous employment to devote himself primarily to ACP. Under Minnesota law, forbearance of either participation in an established business or work opportunities does not, by itself, constitute sufficient additional consideration to create an implied contract limiting discharge to good cause. See Skagerberg, 197 Minn. at 301, 266 N.W. at 877; Aberman, 414 N.W.2d at 772; see also Ingle v. Glamore Motor Sales, Inc., 140 A.D.2d 493, 528 N.Y.S.2d 602, 604 (1988) (refusing to find implied contract to dismiss only for cause in absence of evidence that employer induced employee to leave previous employment with assurances that he could not be discharged except for cause), aff'd, 73 N.Y.2d 183, 538 N.Y.S.2d 771, 535 N.E.2d 1311 (1989). Gunderson has not demonstrated that Jones induced him to leave his previous employment with assurances of job security. Gunderson’s mere expectation that by guaranteeing ACP’s credit line he would secure continuing employment does not establish an enforceable agreement. See Ingle, 528 N.Y.S.2d at 604.

Gunderson last claims that the district court erred in dismissing his breach-of-employment-contract claim summarily because breach-of-employment-contract claims may not be dismissed on summary judgment. We disagree. Gun-derson’s claim is inconsistent with well-established Minnesota law. See, e.g., Ruud, 526 N.W.2d at 371-73 (dismissing breach-of-employment-contract claim on summary judgment); Aberman, 414 N.W.2d at 772-73 (same); see also Harris v. Mardan Bus. Sys., Inc., 421 N.W.2d 350, 354-55 (Minn.App.1988) (affirming partial summary judgment on breach-of-fiduciary-duty and breach-of-employment-contract claims), review denied (Minn. May 18, 1988).

Because the evidence establishes as a matter of law that Gunderson’s employment was at will, the district court properly dismissed Gunderson’s breach-of-employment-contract claim.

II

Claim of Unfair Prejudice Toward Gun-derson in his Capacity as a Close-Corporation Shareholder

Gunderson next argues that the controlling shareholders acted in an unfairly prejudicial manner toward him in his capacity as a closely-held-corporation shareholder, in violation of Minn.Stat. § 302A.751, subd. 1(b)(3) (1998). Specifically, Gunderson argues that the controlling shareholders frustrated his reasonable expectations as a shareholder by enforcing the buy-sell agreement’s involuntary-dismissal clause to remove him as a shareholder, by voting him out as officer and director, by offering to repurchase his stock at an unreasonably low price under the terms of the buy-sell agreement, and by failing to follow board directives or to seek board approval for decisions affecting the corporation. Gun-derson seeks equitable relief or a fair-value buyout under MinmStat. § 302A.751, subd. 2 (1998). We conclude that Gunder-son’s claim is unsupported by the record and the applicable law.

Section 302A.751 allows courts to grant equitable relief to a shareholder in a corporation that is not publicly held when the directors or those in control of the corporation have “acted in a manner unfairly prejudicial” toward the shareholder in his or her capacity as shareholder or director. MinmStat. § 302A.751, subd. 1(b)(3). The legislature enacted section 302A.751 in 1981 in recognition that, given the lack of a ready market for their shares, minority shareholders in closely held corporations required enhanced protections. See 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) (noting that the Minnesota Business Corporations Act’s provisions applicable to closely held corporations are characterized by “greatly enhanced shareholder protection”).

Although the statute does not define the phrase “in a manner unfairly prejudicial toward * * * shareholders,” we have interpreted the phrase to mean conduct that frustrates the reasonable expectations of all 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. Berreman v. West Publ’g. Co., 615 N.W.2d 362, 374 (Minn.App.2000), review denied (Minn. Sept. 26, 2000). This interpretation is supported by the remedial provision in subdivision 3a, which specifically identifies reasonable expectations as a factor courts must consider in granting relief:

Considerations in granting relief involving closely held corporations. In determining whether to order equitable relief, dissolution, or a buy-out, the court shall take into consideration the duty which all shareholders in a closely held corporation owe one another to act in an honest, fair, and reasonable manner in the operation of the corporation and the reasonable expectations of all shareholders as they exist at the inception and develop during the course of the shareholders’ relationship with the corporation and with each other. For purposes of this section, any written agreements, including employment agreements and buy-sell agreements, between or among shareholders or between or among one or more shareholders and the corporation are presumed to reflect the parties’ reasonable expectations concerning matters dealt with in the agreements.

MinmStat. § 302A.751, subd. 3a (1998).

In addition to directing courts to consider reasonable expectations, subdivision 3a directs courts to accord presumptive power to written agreements among shareholders or between shareholders and the corporation. Id. We conclude, consistent with the legislature’s deference to written agreements, that courts may rely on written or oral agreements among shareholders or between shareholders and the corporation in determining whether shareholder expectations are reasonable. See Advisory Task Force Report, supra, (recognizing that deference to the parties’ “actual associative bargain” is among the “fundamental functions of a sound business corporation law”). Courts may also look to a course of dealing that implies an agreement. Cf, e.g., Minn.Stat. § 51A.02, subd. 3 (2000) (stating that “agreement” means bargain of parties found in contractual language or by implication from other circumstances including course of dealing).

In the absence of specific agreements, reasonable expectations may be determined by reference to the understandings “that would normally be expected to result from associative bargaining.” Berreman, 615 N.W.2d at 374 (quoting Advisory Task Force Report, supra) (referring to goal of providing rules that would result from associative bargaining in absence of actual associative bargain). These imputed understandings or “hypothetical investment bargains” envision or make assumptions about the understandings objectively reasonable close-corporation shareholders would have reached if, at the venture’s inception, they had bargained over how their investments should be protected. Douglas K. Moll, Shareholder Oppression in Close Corporations: The Unanswered Question of Perspective, 53 Vand. L.Rev. 749, 798 (2000) [hereinafter Perspective].

An additional touchstone for identifying reasonable expectations is the standard of conduct identified in the common law as fiduciary duty and referred to in subdivision 3a as “the duty which all shareholders in a closely held corporations owe one another to act in an honest, fair, and reasonable manner in the operation of the corporation.” Minn.Stat. § 302A.751, subd. 3a. The common law fiduciary duty, sometimes called the “duty of good faith and fair dealing,” embraces both substantive obligations that focus on the outcomes of shareholder conduct and procedural obligations that focus on process. Daniel S. Kleinberger, Why Not Good Faith? The Foibles of Fairness in the Law of Close Corporations, 16 Wm. Mitchell L.Rev. 1143,1156 (1990).

Those in control of closely held corporations have a substantive obligation, for instance, not to withhold dividends or use corporate assets preferentially. See, e.g., Crosby v. Beam, 47 Ohio St.3d 105, 548 N.E.2d 217, 221 (1989) (stating that majority shareholders breached fiduciary duty by using their controlling power to give themselves benefits not enjoyed by the minority shareholders); Kleinberger, supra, at 1157 (stating that “[i]t is substantively unfair and a breach of fiduciary duty for a controlling shareholder or group of shareholders to appropriate overmuch of the enterprise’s economic benefits” or to “ ‘freeze out’ minority shareholders, either directly (e.g., by cutting dividends and selectively cutting salaries) or indirectly (e.g., by siphoning off assets to other ventures)”).

All close-corporation shareholders have a procedural obligation, on the other hand, not to engage in oppressive or unfair negotiating tactics that may otherwise “conform to the rough ‘moral[s] of the marketplace.’ ” Id. at 1160 (quoting Justice Cardozo’s famous admonition in Meinhard v. Salmon, 249 N.Y. 458, 164 N.E. 545, 546 (1928)); see Fewell v. Tappan, 223 Minn. 483, 494, 27 N.W.2d 648, 654 (1947); Evans v. Blesi, 345 N.W.2d 775, 779-81 (Minn.App.1984) (concluding that the use of surprise, bluster, and intimidation to persuade a minority shareholder to sell out violated the duty of good faith and fair dealing), review denied (Minn. June 12, 1984). Close-corporation shareholders must similarly refrain from arbitrarily exercising discretion or veto power. See, e.g., Smith v. Atlantic Properties, Inc., 12 Mass.App.Ct. 201, 422 N.E.2d 798, 803 (1981) (holding that a shareholder who repeatedly and unjustifiably exercised his contractual right to veto any declaration of dividends was liable to the corporation for damages resulting from the unwarranted retention of earnings). Likewise, close-corporation shareholders owe each other a duty of loyalty, which encompasses an obligation to act with complete candor in their negotiations with each other. See, e.g., Berreman, 615 N.W.2d at 371 (recognizing a fiduciary obligation to disclose material information about the corporation); see also Helms v. Duckworth, 249 F.2d 482, 487 (D.C.Cir.1957) (recognizing a fiduciary duty to disclose ulterior motives).

Because whether a shareholder’s reasonable expectations have been frustrated is essentially a fact issue, summary judgment on Gunderson’s unfair-prejudice claim is appropriate only if no rational factfinder could find either that the controlling shareholders frustrated his reasonable expectations as a shareholder by enforcing the provisions of the buy-sell agreement to remove him as shareholder and to repurchase his stock for $2,300 or that they operated the corporation in an unfairly prejudicial manner. After careful review we conclude that, on this record, no rational factfinder could make such a finding.

Gunderson’s expectations as a shareholder are presumptively reflected in the buy-sell agreement as to matters covered by the agreement. See Minn.Stat. § 302A.751, subd. 3a. We recognize that written agreements are not dispositive of shareholder expectations in all circumstances. See Berreman, 615 N.W.2d at 374. Often, shareholder expectations arise from understandings that are not expressly stated in the corporation’s documents. See In re Application of Topper, 107 Misc.2d 25, 433 N.Y.S.2d 359, 365 (N.Y.Sup.Ct.1980) (“[I]n a close corporation the bargain of the participants is often not reflected in the corporation’s charter, by-laws nor even in separate signed documents.”); see also Moll, Perspective, 53 Vand. L.Rev. at 754, 798 (suggesting that reasonable expectations be defined by reference to “the understandings that would have been reached by objectively reasonable close corporation shareholders if, at the inception of the venture, they had bargained over how their investments should be protected”).

But written agreements should, nonetheless, be honored to the extent they specifically state the terms of the parties’ bargain. The written agreement in this case specifically provided for the involuntary removal of shareholders with or without cause. It also set forth a method for valuing a departing shareholder’s stock, which Gunderson proposed to “protect ACP if a partner [left] in a more or less hostile manner.” The agreement was an arm’s-length transaction. Gunderson spearheaded it and actively participated in drafting it. In fact, he proposed the very provision that authorized his involuntary removal, and urged the board to adopt it. He also selected the attorney who assisted the corporation in drafting the agreement. Given Gunderson’s immediate and significant involvement in the preparation of the agreement, no rational factfinder could conclude that the agreement did not reflect his reasonable expectations as a shareholder. See Blank v. Chelmsford Ob/ Gyn, P.C., 420 Mass. 404, 649 N.E.2d 1102, 1105 (1995) (stating that “[questions of good faith and loyalty with respect to rights on termination or stock purchase do not arise when all the stockholders in advance enter into agreements for the purchase of stock of a withdrawing or a deceased stockholder”).

Furthermore, Minnesota courts are required to honor shareholder agreements setting the purchase price of shares, unless the court determines that the price is unreasonable under all the circumstances. Minn.Stat. § 302A.751, subd. 2 (1998). The controlling shareholders offered Gunderson $2,300 for his shares pursuant to the buy-sell agreement. The district court correctly concluded that the contractual price was reasonable under all the circumstances. As mentioned previously, the buy-sell agreement was an arm’s-length transaction. The shareholders had a legitimate business reason for agreeing to the provision under which Gunderson’s shares were priced. And they all assumed the same risk. That the valuation method the shareholders agreed on resulted in a contractual purchase price lower than the appraised value of Gunder-son’s stock does not, by itself, establish a claim for breach of fiduciary duty. Cf, e.g., Maschmeier v. Southside Press, Ltd., 435 N.W.2d 377, 382 (Iowa Ct.App.1988) (“We agree with the defendants that a contractual formula price is enforceable even if the formula price is less than its fair market value.”); Evangelista v. Holland, 27 Mass.App.Ct. 244, 537 N.E.2d 589, 592-93 (1989) (holding that shareholder agreement was enforceable even though price to be paid under the agreement was lower than stock’s market value); Gallagher v. Lambert, 74 N.Y.2d 562, 549 N.Y.S.2d 945, 549 N.E.2d 136, 137-38 (1989) (affirming an award of book value pursuant to the terms of a termination-triggered buyout agreement and noting that the defendant had “fulfilled its fiduciary duty” by abiding by the terms of the agreement); Ingle, 528 N.Y.S.2d at 604 (concluding that “a fiduciary duty does not arise out of a shareholders’ agreement * * * where the minority shareholder has assented to a mandatory repurchase-upon-termination-of-employment clause”).

Thus, in the absence of evidence that the controlling shareholders used the buy-sell agreement manipulatively to force the sale of Gunderson’s shares, the facts do not support Gunderson’s claim that the controlling shareholders frustrated his reasonable shareholder expectations by enforcing the buy-sell agreement. Cf. A.W. Chesterton Co. v. Chesterton, 907 F.Supp. 19, 23-25 (D.Mass.1995) (holding that majority shareholders were entitled to preliminary injunctive relief against minority shareholder’s coercive scheme to force the corporation to repurchase his shares under a first-refusal provision in company’s articles of organization, even though minority shareholder acted within the letter of the corporate documents).

Gunderson’s claim that Jones and Folken frustrated his reasonable expectations as a shareholder by failing to follow board directives and to obtain board approval for decisions affecting the corporation similarly fails. Ordinarily, shareholders in a typical close corporation have a reasonable expectation that the controlling shareholders will follow board directives and will seek board approval for decisions affecting the corporation. But the circumstances underlying the formation of a close corporation and the shareholders’ practice thereafter may change that expectation and alter the shareholders’ fiduciary duty.

The expectation that shareholders would routinely follow board directives and seek approval for decisions affecting the corporation changed at ACP. From the outset, ACP operated informally, without either a budget or corporate bylaws. Gun-derson testified that he, Folken, and Jones met monthly to discuss corporate issues and made decisions affecting the corporation without first seeking board approval. He could not, therefore, have had a legitimate expectation that the controlling shareholders would routinely seek board approval for decisions affecting the corporation. In the absence of conduct that wrongfully frustrates legitimate shareholder expectations, the failure routinely to seek board approval for corporate decisions is insufficient to support a claim under Minn.Stat. § 302A.751, subd. 1(b)(3). See Masinter v. WEBCO Co., 164 W.Va. 241, 262 S.E.2d 433, 442 (1980) (concluding that “[mjere procedural irregularity in the holding of corporate meetings * * * is not alone sufficient to constitute a cause of action under a 'freeze-out’ theory”).

More important, Gunderson acquiesced in the decisions he claims Jones and Folken made without first obtaining board approval. Gunderson cannot now conveniently premise a claim of unfairly prejudicial conduct on the very practice in which he participated routinely without objection. Cf. Brenner v. Berkowitz, 134 N.J. 488, 634 A.2d 1019, 1029 (1993) (stating that a “court could reasonably determine that unfairness would result if a minority shareholder were permitted to seek judicial intervention after years of acquiescence or participation in the alleged misconduct”); Masinter, 262 S.E.2d. at 443 (stating that shareholder who acquiesced in corporate informality by participating in it without dissent will not thereafter be permitted to challenge it).

Even if Gunderson’s claim had a legal basis, it lacks a factual basis. Contrary to Gunderson’s allegation, the board participated in the decision to hire Mike Folken and to allow Jones to transfer 10% of his stock to him. By Gunderson’s own admission, the board also participated in the decision to lease additional space. Gun-derson signed the leases himself, believing, based on conversations with other shareholders, that he had the requisite authority and that specific board approval was not necessary. Gunderson’s mismanagement claim thus lacks a factual basis.

Gunderson alternatively claims that ACP breached its duty of loyalty by failing to disclose that (1) the attorney who represented the corporation’s interests in the preparation of the buy-sell agreement had a conflict of interest, (2) Gunderson was giving up significant minority-shareholder rights under the agreement, and (3) the agreement could be used unfairly to defeat his reasonable expectations as a shareholder. Gunderson’s claim lacks a legal basis. The duty to disclose does not extend to obvious matters. Gunderson was a seasoned businessman. He took an active role in drafting the buy-sell agreement and selected the attorney who represented the corporation. Most important, Gunderson proposed the provisions he now claims defeated his reasonable expectations, and he urged the board to adopt them. Accordingly, he had knowledge of the information he claims ACP failed to disclose in violation of its fiduciary duty to him. His claim that the controlling shareholders violated their fiduciary duty of loyalty therefore fails.

The same is true of Gunderson’s claim that the majority shareholders breached their duty to act fairly and honestly by conspiring to preclude him from having a meaningful role in corporate management. The record conclusively establishes that Gunderson met regularly with Jones and Folken to discuss the corporation and that he prepared the corporation’s financial statements and presented them to the board through September 1998. Barb Prescher, hired at Gunderson’s request to take over his daily financial responsibilities, prepared and presented the statements thereafter. Gunderson admitted in deposition testimony that the lockbox system he now claims prevented him from auditing company deposits allowed for quicker and more reliable deposits and was a good idea. He also admitted that he had no factual basis for his claim that the controlling shareholders had anything to do with the password Prescher set up to gain access to the computer program containing the corporation’s financial information. Moreover, the record contains no evidence that Prescher denied him access to information he requested.

Because the record conclusively establishes that the controlling shareholders acted consistently with the reasonable expectations of all shareholders in their capacity as shareholders, the district court properly dismissed Gunderson’s claim that ACP acted in a manner unfairly prejudicial toward him in his capacity as shareholder.

Ill

Claim of Unfair Prejudice Toward Gun-derson as a Shareholder-Employee

Gunderson next argues that by terminating his employment, the controlling shareholders acted in a manner unfairly prejudicial to him in his capacity as a shareholder-employee. Specifically, Gun-derson claims that the at-will-employment doctrine notwithstanding, the district court erred in dismissing his claim of unfairly prejudicial conduct because, at a minimum, an issue of material fact remains on whether ACP frustrated his reasonable expectations as a shareholder-employee by terminating his employment.

MinmStat. § 302A.751, subd. 1(b)(3), specifically recognizes that closely-held-corporation shareholders may obtain equitable relief when “the directors or those in control of the corporation have acted in a manner unfairly prejudicial toward [them] in their capacity] as * * * employees of a closely held corporation.” MinmStat. § 302A.751, subd. 1(b)(3). To survive summary judgment on his claim that the controlling shareholders unfairly prejudiced him in his capacity as a shareholder-employee, Gunderson must establish, at a minimum, that genuine issues of material fact remain on whether the controlling shareholders frustrated his reasonable expectations as a shareholder-employee by terminating his employment.

Typical close-corporation shareholders commonly have an expectation of continuing employment with the corporation. Pedro v. Pedro, 489 N.W.2d 798, 802 (Minn.App.1992) (Pedro II) (stating that the reasonable expectations of close-corporation shareholders include a job, a salary, and a significant place in management), review denied (Minn. Oct. 20, 1992); Pedro v. Pedro, 463 N.W.2d 285, 289 (MinnApp.1990) (Pedro I) (stating that “the primary expectations of minority shareholders include an active voice in [the] management of the corporation and input as an employee”), review denied (Minn. Jan. 24, 1991). In fact, because of the unique characteristics of close corporations, employment is often a vital component of a close-corporation shareholder’s return on investment and a principal source of income. See Kleinberger, supra, at 1148 (describing the unique characteristics of close corporations). The discharge of a shareholder-employee may thus be grounds for equitable relief. See Minn.Stat. Ann. § 302A.751 reporter’s notes 1982-84 (West 1985) (noting that the statute includes “the discharge of a shareholder-employee as a ground [for relief], if that discharge was ‘unfairly prejudicial’ ”).

Accordingly, even though Gunderson was an at-will employee and, therefore, not wrongfully discharged in the breach-of-contract or tort sense, his employment termination triggers a separate inquiry into whether ACP unfairly prejudiced Gunder-son in his capacity as a shareholder-employee. The doctrine of employment-based shareholder oppression is distinct from the wrongful-termination doctrine, and the analysis under the separate doctrines should attempt to protect close-corporation employment and, at the same time, respect the legitimate sphere of the at-will rule.

The wrongful-termination doctrine affords discharged employees of all corporations a remedy in the form of wages and/or reinstatement, regardless of whether they are also shareholders, if they can establish the existence of an express or an implied contractual agreement or a promise inducing reliance. Deborah A. Schmedemann, Fired, Employees and/or Frozen-Out Shareholders (An Essay), 22 Wm. Mitchell L.Rev. 1435, 1439-46 (1996); Schlafge, supra, at 1086. But see Pedro I, 463 N.W.2d at 289-90 (suggesting that a close-corporation shareholder’s reasonable expectation of employment with the corporation, rather than a contractual agreement, is an appropriate basis for a wrongful-termination claim despite the at-will doctrine); Schlafge, supra, at 1089-96 (concluding that the Pedro I court “extended the law too far in its efforts to compensate a sympathetic plaintiff’). The threshold question in wrongful-termination cases, therefore, is whether a contractual agreement or a promise inducing reliance existed.

The oppression doctrine, on the other hand, affords closely-held-eorporation shareholders relief when the controlling shareholders frustrate their reasonable expectations as shareholder-employees. See Berreman, 615 N.W.2d at 374. Accordingly, the threshold question in the context of a claim of shareholder oppression based on the termination of employment is whether a minority shareholder’s expectation of continuing employment is reasonable.

Not all expectations of continuing employment are reasonable. For example, shareholders who sign buyout agreements permitting termination of employment for any reason and obligating shareholders to sell their shares to the corporation upon termination of employment would not likely have a reasonable expectation of continuing employment. See, e.g., In re Apple, 224 A.D.2d 1016, 637 N.Y.S.2d 534, 535 (1996) (stating that a terminated employee who signed an agreement binding him to sell his stock to the company after discontinuing his employment with the corporation for any reason “cannot be heard to argue that he had a reasonable expectation that he would be employed * * * for life”); Ingle, 528 N.Y.S.2d at 604 (same). Similarly, an employee who has no capital investment in the corporation but either buys a small percentage of stock through periodic company offerings or receives a small percentage of stock as part of a compensation package most likely lacks a reasonable expectation of continuing employment. Cf. e.g., Merola v. Exergen Corp., 423 Mass. 461, 668 N.E.2d 351, 354 (1996) (holding the evidence was insufficient to support finding that majority shareholder breached his fiduciary duty by terminating employment of shareholder-employee who purchased stock through periodic company offerings because “there was no general policy regarding stock ownership and employment, and there was no evidence that any other stockholders had expectations of continuing employment because they purchased stock,” that employment was a source of de facto dividends, or that the employee was required to buy stock as a condition of employment); Harris, 421 N.W.2d at 353 (holding, without mentioning reasonable expectations, that a close-corporation shareholder who acquired a small percentage of stock as part of compensation package but did not invest capital in the venture did not stand in a fiduciary relation with the shareholder who founded and funded the venture).

An expectation of continuing employment is reasonable in the first instance if “continuing] employment can fairly be characterized as part of the shareholder’s investment.” Douglas K. Moll, Shareholder Oppression v. Employment at Will in the Close Corporation: The Investment Model Solution, 1999 U. Ill. L.Rev. 517, 551-52 (1999) (proposing an “investment model of oppression” under which “oppression liability arises when the value of a shareholder’s investment is harmed” and stating that the proper inquiry in loss-of-employment oppression cases is “whether the shareholder reasonably expected that her investment in the venture entitled her to continued employment with the close corporation”) (footnote omitted). Factors to be considered in determining whether shareholders reasonably expected that their investment would entitle them to continuing employment include, among others, whether a shareholder’s salary and benefits constitute de facto dividends and whether procuring employment with the corporation was a significant reason for investing in the business. See id. at 547-51 (noting that “in the close corporation setting, a job can be part of an investment in a de facto dividend sense and in a procurement of employment sense”) (footnotes omitted).

Additionally, to be reasonable, an expectation of continuing employment must be known and accepted by other shareholders. See Minn.Stat. § 302A.751, subd. 3a (directing courts to consider the expectations of all shareholders in awarding relief); Meiselman v. Meiselman, 309 N.C. 279, 307 S.E.2d 551, 563 (1983) (stating that privately held expectations are not reasonable); Moll, Perspective, supra, at 776 (stating that “[a] protected ‘reasonable expectation’ does not arise until * * * the court is satisfied that all of the investors shared a basic understanding * * * at the venture’s inception”) (emphasis added). Accordingly, a claim of oppression or unfairly prejudicial conduct may not be predicated on the failure to fulfill a minority shareholder’s “subjective hopes and desires in joining the venture.” In re Dissolution of Kemp & Beatley, Inc., 64 N.Y.2d 63, 484 N.Y.S.2d 799, 473 N.E.2d 1173, 1179 (1984). Instead, “oppression should be deemed to arise only when the majority conduct substantially defeats expectations that, objectively viewed, were both reasonable under the circumstances and * * * central to the [minority shareholder’s] decision to join the venture.” Id.

Expectations of continuing employment must also be balanced against the controlling shareholder’s need for flexibility to run the business in a productive manner. See, e.g., Wilkes v. Springside Nursing Home, Inc., 370 Mass. 842, 353 N.E.2d 657, 663 (1976) (expressing concern that the “untempered application of the strict good-faith standard * * * will result in the imposition of limitations on legitimate action by the controlling group in a close corporation which will unduly hamper its effectiveness in managing the corporation in the best interests of all concerned,” and concluding that no breach of fiduciary duty occurs if “the controlling group can demonstrate a legitimate business purpose for its action”); Brenner, 634 A.2d at 1033 (concluding that “[a] shareholder’s expectation of employment must be balanced against the corporation’s ability to run its business efficiently”); Moll, Perspective, supra, at 776 (suggesting that “the propriety and justifiability of the majority’s conduct [must be taken into account] to the extent that the majority’s proffered justification sheds light on whether the minority’s expectation was reasonable in the circumstances at issue”) (footnote omitted).

Accordingly, an expectation of continuing employment is not reasonable and oppression liability does not arise when the shareholder-employee’s own misconduct or incompetence causes the termination of employment. See, e.g., Exadaktilos v. Cinnaminson Realty Co., 167 N.J.Super. 141, 400 A.2d 554, 562 (Law Div.1979) (no oppression liability found when minority shareholder failed to satisfy the condition precedent to employment in the company, namely, “that he learn the business”); Kemp, 484 N.Y.S.2d at 806, 478 N.E.2d 1173 (observing that “the minority shareholder whose own acts, made in bad faith and undertaken with a view toward forcing an involuntary dissolution, give rise to the complained-of oppression should be given no quarter in the statutory protection”); Gimpel v. Bolstein, 125 Misc.2d 45, 477 N.Y.S.2d 1014, 1017, 1019-20 (N.Y.Sup.Ct.1984) (observing that “[i]t was clearly not wrongful for the corporate victim of a theft to exclude the thief from the councils of power” and noting that “the only expectation [a terminated shareholder-employee who stole from the company] could reasonably entertain were those of a discovered thief: ostracism and prosecution”); see Moll, Perspective, supra, at 776 (suggesting that a reasonable expectation is protected only when “the court is satisfied that all of the investors intended th[e] basic understanding [reached at the venture’s inception] to persist in the post-inception circumstances that arise”).

Gunderson claims he had a reasonable expectation of continuing employment as a matter of law by virtue of his shareholder status, the business plan, and Jones’s alleged promises of job security. On these facts, we cannot agree. Any expectation Gunderson had based on the business plan is unreasonable because the shareholders never adopted the plan or even learned of it. Jones’s alleged promises, however, may be probative of Gun-derson’s claim that his expectation of continuing employment was reasonable, even though the promises were insufficiently definite to create a contractual agreement. See Schmedemann, supra, at 1452 n. 99 (“Presumably an ‘expectation’ is more easily formed than an ‘agreement.’”). But because the buy-sell agreement does not address the parties’ expectations on employment matters and the record is insufficiently developed, we conclude that genuine issues of material fact remain on whether Gunderson reasonably expected that his investment in ACP would entitle him to continuing employment with the corporation and whether any expectation of employment he may have had was altered by the parties’ subsequent dealings or by Gunderson’s alleged misconduct.

Accordingly, we reverse the district court’s dismissal of Gunderson’s claim for unfairly prejudicial conduct as it relates solely to his reasonable expectations as a shareholder-employee, and we remand for further proceedings on that claim.

DECISION

Because the record conclusively establishes as a matter of law that Gunderson’s employment was at-will and could, therefore, be terminated at the will of either party with or without cause, the district court properly dismissed Gunderson’s common-law breach-of-employment-contract claim. Likewise, the district court properly dismissed Gunderson’s first statutory claim that the controlling shareholders acted in a manner unfairly prejudicial toward him in his capacity as a shareholder by enforcing the buy-sell agreement. But Gunderson’s second statutory claim, that the controlling shareholders acted in a manner unfairly prejudicial toward him in his capacity as an employee, is adequately supported by evidence raising issues of material fact on whether Gunderson had a reasonable expectation of continuing employment, and thus summary judgment on that claim was not appropriate. The denial of the fair-value buyout motion was premature.

Affirmed in part and reversed and remanded in part.


source: Caselaw Access Project

license: Public Domain

text:
    CHANCELLOR MANOR, Respondent, v. Patsy THIBODEAUX, Appellant.
    No. C7-00-1599.
    Court of Appeals of Minnesota.
    May 22, 2001.

      Chad McKenney, Donahue McKenney & Harlan, Ltd., Minneapolis, MN (for respondent).
    Lisa Hollingsworth, Michael Hagedorn, Prior Lake, MN (for appellant).
    Considered and decided by TOUSSAINT, Chief Judge, SHUMAKER, Judge, and PORITSKY, Judge.
   OPINION

PORITSKY, Judge

Appellant Patsy Thibodeaux was living in a Department of Housing and Urban Development (HUD)-subsidized housing project owned by respondent Chancellor Manor. Chancellor Manor terminated Thibodeaux’s subsidy and lease agreement, alleging that she violated her lease agreement by failing to report income from two different jobs. Thibodeaux did not vacate the premises, and Chancellor Manor filed an unlawful detainer proceeding. The district court found that Thibodeaux had broken the terms of the rental agreement and ordered that a writ of restitution could issue immediately. We reverse and remand.

FACTS

In April 1999, Thibodeaux filled out an initial eligibility questionnaire as part of the process to rent an apartment from Chancellor Manor. Chancellor Manor is a HUD-subsidized housing project. Thibo-deaux entered into a lease with Chancellor Manor in July 1999. Thibodeaux signed a lease outlining the regulations for maintaining the subsidized rental assistance. The lease requires, in paragraph 19(a), that tenants notify Chancellor Manor if “[a]ny adult member of the household who was reported as unemployed on the most recent certification or recertification obtains employment” or “[t]he household’s income cumulatively increases $40 or more a month.” At the time Thibodeaux entered into the lease, she was paying $119 in rent and was unemployed. Thibo-deaux’s sole source of income was Minnesota Family Investment Program (MFIP) assistance in the amount of $437 a month.

The lease further provides, in paragraph 27(b), that:

Any termination of the Agreement by the Landlord must be carried out in accordance with HUD regulations, State and local law, and the terms of this Agreement. The Landlord may terminate this Agreement only for * * * the Tenant’s material noncompliance with the terms of this Agreement.

In April 2000, Thibodeaux was informed that she would need to start her annual recertification process. While processing the recertification, Chancellor Manor discovered that Thibodeaux had been employed in the second and third quarters of 1999 and had failed to report this employment. Chancellor Manor discovered that Thibodeaux had worked at Rainbow Foods from July 1999 to October 1999 and then at Cub Foods from the end of October until December 1999. It was estimated that Thibodeaux made approximately $133 a week from these jobs. Chancellor Man- or sent a letter to Thibodeaux in May 2000, notifying her of the noncompliance and lease violations resulting from the unreported income. The letter informed Thi-bodeaux that her subsidy would be retroactively terminated back to August 1,1999, and that her lease would be terminated as of June 30, 2000.

On May 31, 2000, Thibodeaux met with the property manager of Chancellor Man- or to appeal the decision to terminate her subsidy and lease. Thibodeaux explained that she did not report the income from her two jobs to Chancellor Manor because she thought that the income she had made from the two jobs was substantially equivalent to the amount she had been receiving from MFIP. Thibodeaux stated that she did not think she needed to report the income because she had not worked at either job for very long.

Chancellor Manor sent a letter to Thibo-deaux on June 6, 2000, denying her appeal and affirming that Thibodeaux’s rental subsidy would be terminated effective May 31, 2000, and that her lease would be terminated effective June 30, 2000. When Thibodeaux did not vacate the premises, an unlawful detainer was filed on July 19, 2000. An evidentiary hearing was held, and the district court found: “[Thibo-deaux] has broken the terms of the rental agreement and [Thibodeaux] has failed to vacate the property after notice to do so.” The court concluded that a writ of restitution could issue immediately.

ISSUE

In an unlawful detainer proceeding in which the landlord, alleging the tenant’s material noncompliance with the terms of the lease, seeks to oust a tenant from HUD-subsidized housing, must the trial court make a specific finding on the issue of material noncompliance?

ANALYSIS

An appellate court may not reverse a trial court due to mere disagreement with its findings. Rather, we will reverse a lower court’s findings of fact only when those findings are clearly erroneous. Findings of fact are considered clearly erroneous only if they are not reasonably supported by the evidence.

Fletcher v. St. Paul Pioneer Press, 589 N.W.2d 96, 102 (Minn.1999) (citing Minn. R. Civ. P. 52.01). “If there is reasonable evidence to support the district court’s findings, we will not disturb them.” Rogers v. Moore, 603 N.W.2d 650, 656 (Minn.1999) (citation omitted).

In general in an unlawful detainer case, if the district court rules in favor of the landlord, the findings may be in the statutory language provided by Minn.Stat. § 504B.355 (2000): the court finds that “the facts alleged in the complaint are true, and the plaintiff shall recover possession of the premises and the defendant(s) shall vacate the premises immediately.” But there is an exception in cases involving HUD-subsidized housing. HUD regulations are part of the lease. These regulations govern, among other things, the grounds upon which the landlord can terminate the lease. The provision that applies to the present case, found in paragraph 27(b) of the lease and quoted above, allows the landlord to terminate only upon “the tenant’s material noncompliance with the terms” of the lease. (Emphasis added.) Although the regulations do not equate material noncompliance with fraud, the regulations state that in cases where a tenant fails to disclose changes in income or household residents, to be a material noncompliance the failure must have been fraudulent. See HUD Handbook 4350.3: Occupancy Requirements of Subsidized Multifamily Housing Programs, § 5-19.

“[I]t is important to differentiate tenant errors, which may be thought of as unintentional program violations, from fraud.” Id. at 5-19(a). “Fraud is deceit or trickery deliberately practiced in order to gain some advantage dishonestly. Fraud is an intentional deception; it cannot be committed accidentally.” Id. at 5 — 19(b). Providing false information is a material noncompliance with the lease and is grounds for termination of tenancy, but it must be shown that the tenant violated the law by intentionally misstating or withholding some material information. Id. at 5 — 19(c), (d).

If the failure to report is due to the tenant’s misunderstanding of the rules or simply forgetting to report, the failure is not a material noncompliance. See id. at 5-19(a) (stating that tenant error, which occurs when tenant misunderstands or forgets the rules, is distinguishable from fraud). Thus, to rise to the level of material noncompliance, a failure to report must be fraudulent, i.e., a deliberate omission for the purpose of gaining some advantage. Consequently, in cases involving HUD-subsidized housing where the landlord alleges the tenant’s failure to report material information, there must be a finding as to whether or not the failure to report was fraudulent.

In this case, the trial court did not make a finding on the issue of whether Thibo-deaux’s failure to report her earnings was fraudulent. Therefore, we remand for additional findings, and if appropriate, additional evidence on that issue.

One final issue deserves comment. In her brief, Thibodeaux cites Hazelton v. Commissioner of Dep’t of Human Servs., 612 N.W.2d 468, 471 (Minn.App.2000), for the proposition that, in this case, the landlord must prove fraud by clear and convincing evidence. The reference to the clear-and-convincing standard in Hazelton was based on 7 C.F.R. § 273.16(e)(6), which was issued by the United States Department of Agriculture and which governs terminations from the food stamp program. We have not been referred to any similar regulations promulgated by HUD that govern terminations from a subsidized housing program. Consequently, we conclude that the level to which the landlord must prove fraudulent failure to report is by a preponderance of the evidence. See State by Humphrey v. Alpine Air Prods., 500 N.W.2d 788, 790-91 (Minn. 1993) (“Minnesota common law also favors the use of the preponderance of the evidence standard in a civil fraud case. * * * We hold that unless otherwise indicated by the legislature, the standard of proof in all fraud cases is the preponderance of the evidence standard.”).

DECISION

The decision of the trial court is reversed, and the case is remanded for further findings and, in the court’s discretion, additional evidence.

Reversed and remanded.

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

      . MFIP is the state-run replacement of the federal AFDC welfare program.


author: HANSON, Judge.

text:
    Gina Marie GERDING, Petitioner, Appellant, v. COMMISSIONER OF PUBLIC SAFETY, Respondent.
    No. C7-00-2185.
    Court of Appeals of Minnesota.
    June 12, 2001.
    Review Denied Aug. 15, 2001.

      Samuel A. McCloud, Kelly Vince Grif-fitts, Shakopee, MN, (for appellant).
    Michael A. Hatch, Attorney General, Darren L. Dejong, Assistant Attorney General, State of Minnesota, St. Paul, MN, (for respondent).
    Considered and decided by WILLIS, Presiding Judge, HANSON, Judge, and FOLEY, Judge.

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

   OPINION

HANSON, Judge.

On appeal from an order sustaining the revocation of her driver’s license, appellant challenges the district court’s conclusion that a traffic stop did not violate her constitutional rights. She argues that the hanging of an object from her rear vision mirror was not unlawful, and thus did not justify the stop, because there was no evidence that the object obstructed her vision. She also argues that the information the officer received from an identified citizen informant was insufficient to provide the officer with a reasonable suspicion of criminal activity. We affirm.

FACTS

On October 20, 1999, a citizen informant reported to Officer Cantu that she saw several individuals in a motel parking lot, standing around a silver Saturn with open containers of alcohol. When Cantu arrived, he saw a Ford Escort leaving the parking lot. He pulled up behind it and noticed an object hanging from its rear vision mirror. He stopped the car based on that object. He ultimately arrested the driver, appellant Gina Marie Gerding, for driving under the influence of alcohol.

Appellant sought judicial review of the subsequent revocation of her driver’s license. At the implied consent hearing, appellant challenged the legality of the stop. The district court held that Cantu was justified in stopping the car based on his observation of an object hanging from the car’s rear vision mirror, in violation of Minn.Stat. § 169.71, subd. 1 (1998). The court also held that the information Cantu received from the citizen informant provided a legitimate, independent basis for the stop.

ISSUES

1. Does Minn.Stat. § 169.71, subd. 1 (1998) prohibit the suspension of any object between the driver and the windshield, regardless of whether that object obstructs the driver’s vision?
2. Was an identified private citizen’s tip that a group of people had open containers in a parking lot sufficient to provide a legitimate basis for a stop?

ANALYSIS

The Fourth Amendment to the United States Constitution and Article I of the Minnesota Constitution prohibit unreasonable searches and seizures by the government. U.S. Const, amend. IV; Minn. Const, art. I, § 10. Under the Fourth Amendment, police officers may, however, make limited, warrantless investigative stops of vehicles when there is a “particularized and objective basis for suspecting the particular person stopped of criminal activity.” State v. Pike, 551 N.W.2d 919, 921-22 (Minn.1996).

While the factual basis required to support a stop for a routine traffic check is minimal, the stop must not be the product of “mere whim, caprice, or idle curiosity.” State v. Harris, 572 N.W.2d 333, 337 (Minn.App.1997) (quotation omitted). Instead, it must be based on “specific and articulable facts which, taken together with rational inferences from those facts, reasonably warrant [the] intrusion.” Pike, 551 N.W.2d at 921-22 (quoting Terry v. Ohio, 392 U.S. 1, 21, 88 S.Ct. 1868, 1880, 20 L.Ed.2d 889 (1968)). “In reviewing a district court’s determinations of the legality of a limited investigatory stop, we review questions of reasonable suspicion de novo.” State v. Britton, 604 N.W.2d 84, 87 (Minn.2000) (citation omitted).

I.

Gerding argues that Minn.Stat. § 169.71, subd. 1 prohibits objects suspended from the rear vision mirror only if the object obstructs the driver’s proper vision. The district court concluded that the statute’s plain meaning prohibits suspending any object whatsoever, without regard to whether it obstructs the driver’s vision.

The interpretation of statutes is a' question of law, which this court reviews de novo. Brookfield Trade Ctr., Inc. v. County of Ramsey, 584 N.W.2d 390, 393 (Minn.1998). When construing a statute, our goal is to ascertain and effectuate the legislature’s intent. Tuma v. Comm’r of Econ. Sec., 386 N.W.2d 702, 706 (Minn.1986). This court must give effect to a statute’s plain meaning when the words are unambiguous. Id.

Minn.Stat. § 169.71, subd. 1 provides:

No person shall drive or operate any motor vehicle with a windshield cracked or discolored to an extent to limit or obstruct proper vision, or, except for law enforcement vehicles, with any objects suspended between the driver and the windshield, other than sun visors and rear vision mirrors, or with any sign, poster, or other nontransparent material upon the front windshield, sidewings, side or rear windows of such vehicle, other than a certificate or other paper required to be so displayed by law, or authorized by the state director of the division of emergency management, or the commissioner of public safety.

(Emphasis added).

The statute’s plain meaning is unambiguous, effective and certain: while some window cracks and discoloration are permissible, no objects other than sun visors or rearview mirrors may be suspended between the driver and the windshield. The words in the statute — “to an extent to limit or obstruct proper vision”' — -modify only “a windshield cracked or discolored,” they do not modify “any objects suspended.”

This plain reading is supported by the statute’s legislative history. In 1959, the legislature added the critical words, shown in italics:

No person shall drive or operate any motor vehicle with a windshield cracked or discolored to an extent to limit or obstruct proper vision, or with any objects suspended between the driver and windshield, other than sun visors and rear vision mirrors, or with any sign, * * *

1959 Minn. Laws ch. 174, § 1; 1959 Minn. Laws ch. 521, § 11. Then, in 1993, the legislature added the following italicized exception:

No person shall drive or operate any motor vehicle with a windshield cracked or discolored to an extent to limit or obstruct proper vision, or, except for law enforcement vehicles,with any objects suspended between the driver and windshield, other than sun visors and rear vision mirrors, or with any sign, * * *.

1993 Minn. Laws ch. 26, § 10.

Each of these amendments carves out specific exceptions and must be read to exclude other exceptions. Thus, the statute prohibits all suspended objects not covered by the specific exceptions. The first amendment defines the permissible objects that may be suspended between the driver and the windshield. The second amendment further separates the provision against cracked or discolored windshields that obstruct vision from the provision prohibiting suspended objects.

Here, there is no claim that the stop was unconstitutionally pretextual. Further, there is no challenge to the district court’s finding that Cantu observed the suspended object before stopping Gerding. Because the object suspended from Gerding’s rear vision mirror violated Minn.Stat. § 169.71, subd. 1, the officer’s stop was justified. See State v. George, 557 N.W.2d 575, 578 (Minn.1997) (“Ordinarily, if an officer observes a violation of a traffic law, however insignificant, the officer has an objective basis for stopping the vehicle.”).

II.

Because we conclude that the suspension of an object from Gerding’s rear vision mirror justified the stop, we need not consider whether the information from the citizen informant provided an independent basis for the stop.

DECISION

When the officer observed an object suspended from Gerding’s rear vision mirror, in violation of Minn.Stat. § 169.71, subd. 1, he had an objective basis for stopping Gerding’s vehicle.

Affirmed.

      . At oral argument, appellant argued that the statute would be unconstitutional if it were otherwise interpreted. To challenge a statute’s constitutionality, a party must raise the issue before the lower court and notify the attorney general of the intended challenge in a timely fashion. Minn. R. Civ.App. P. 144; Irwin v. Surdyk’s Liquor, 599 N.W.2d 132, 137 (Minn. 1999). Appellant did not challenge the constitutionality of the statute in the district court or in her appellate briefs. As a result, we will not address this issue.

      . The Fourteenth Amendment's equal protection clause prohibits intentional, discriminatory enforcement of laws. State v. Hyland, 431 N.W.2d 868, 872 (Minn.App.1988). A stop that amounts to intentional, discriminatory enforcement of the law is unconstitutionally pretextual. In this context, pretextual does not mean that the officer’s real motivation for the stop differed from the reason given to justify the stop. Absent discriminatory enforcement, a stop with an objective basis is lawful regardless of the officer's subjective motivations. State v. Everett, 472 N.W.2d 864, 867 (Minn.1991) (rejecting a broader concept of ''pretextual” previously enunciated in State v. Haven, 269 N.W.2d 849 (Minn.1978)).

      . The parties cite to four unpublished opinions of this court that involved stops for violation of Minn.Stat. § 169.71, subd. 1. Of course, these opinions are not precedential. Dynamic Air, Inc. v. Bloch, 502 N.W.2d 796, 800 (Minn.App.1993). Moreover, none of these cases specifically addressed the proper interpretation of the statute; each affirmed the district court's determination of the legality of the stop under its peculiar facts. Three turned on whether the stop was pretextual of a motivation to racially discriminate. See State v. Klemenko, No. C0-00-584, 2000 WL 1528688 (Minn.App. Oct. 17, 2000); State v. Pacas, No. C7-99-1109, 1999 WL 1256374 (Minn.App. Dec. 28, 1999); and State v. Hardy, No. C3-94-813, 1994 WL 495094 (Minn.App. Sept. 13, 1994). The fourth turned on the credibility of the police officer’s claim that he actually saw the object before the stop. See State v. Patterson, No. C6-97-1730, 1998 WL 372778 (Minn.App. July 7, 1998).


author: TOUSSAINT, Chief Judge.

text:
    Byrdie K. REIERSON, Relator, v. CITY OF HIBBING, Respondent.
    No. C8-00-1871.
    Court of Appeals of Minnesota.
    June 19, 2001.

      Mitchell John Brunfelt, John M. Colosi-mo, Colosimo, Patchin, Aronson & Kear-ney, Virginia, for relator.
    Patricia Ytzen Beety, League of Minnesota Cities, St. Paul, for respondent.
    Considered and decided by TOUSSAINT, C.J., CRIPPEN and HANSON, JJ.
   OPINION

TOUSSAINT, Chief Judge.

Relator Byrdie Reierson seeks review of the Hibbing City Council’s decision to terminate her employment. Relator contends that (1) the decision to terminate her employment was unfair and lacked due process because the city improperly relied on hearsay and other vague comments to support its decision; (2) there was insufficient evidence in the record to support its decision; (3) she was not given the documents that she was entitled to under the Data Practices Act; and (4) the city council did not make written findings. We affirm.

FACTS

In October 1993, the City of Hibbing (the “city”) hired relator Byrdie Reierson as an administrative assistant. Relator signed an employment contract, which provided that she was an at-will employee, and as such, could be terminated “at any time, for any reason.” The contract also provided that the city would conduct an annual review of relator’s performance; until the year 2000, this review was not conducted. This contract was renewed in 1996 and 1997. In 1998, relator signed a new contract, where her position was changed to “confidential administrative executive secretary.” This contract also provided that relator could be terminated “at any time, for any reason.”

In July 1999, John Tourville became the new city administrator and relator’s direct supervisor. From July 1999 through August 2000, Tourville evaluated relator’s performance. According to Tourville, he was disappointed in relator’s performance, and he warned her about her productivity; Tourville did not document this warning. Tourville also claims that the interim city attorney warned relator about doing personal work on city time, but this warning was not documented either. In fact, relator’s personnel record does not show that the quality of her work or her work ethic was poor. Also, relator’s personnel record fails to show that she was reprimanded for her poor performance or that co-workers complained of her work.

In August 2000, Tourville prepared relator’s annual performance evaluation. Relator’s overall rating in the performance evaluation was “needs improvement.” The evaluation indicated that relator (1) completed agendas and minutes at the last minute, and that the June minutes were not completed in time to go out with the July agenda; (2) neglected the personnel files many were missing and most were inadequately maintained; (3) did not deliver phone messages on time and sometimes failed to deliver them altogether; (4) failed to complete assignments that she was ordered to do, such as reviewing existing files and updating the city code changes on the city’s web page; and (5) had difficulty supporting some of the other departments and staff due to her adversarial attitude.

Tourville further indicated that

[relator] has to be more accountable for her actions. She has not told the truth on several occasions to cover for her lack of follow through on various tasks. Knowing that she is capable of being less than truthful about her actions makes it extremely difficult to confide in her as a Confidential Administrative Executive Secretary regarding proprietary issues for the City of Hibbing and HEDA.

In addition, Tourville listed comments made by a council member, various department heads, and members of the secretarial staff. The common complaints were that (1) relator was not dependable or loyal; (2) there was no confidence in her as an employee; (3) relator did not follow instructions; (4) she failed to complete tasks in a timely manner; and (4) relator had an abrasive attitude and poor work quality.

As a result of this evaluation, on August 14, 2000, Tourville sent relator a letter informing her that she was being placed on paid leave pending the city council’s approval of the findings of the performance evaluation. Relator hired an attorney, who sent a letter to Tourville requesting to know the reasons for this action. On September 1, 2000, relator, her attorney, Tourville, and the Hibbing City attorney met to discuss the evaluation.

On September 5, 2000, the city council held a closed meeting to address relator’s performance evaluation. Relator and her attorney were present at that meeting. Tourville recommended that relator be terminated, relying on the reasons articulated in his evaluation. Relator, through her attorney, responded to Tourville’s comments. Her attorney explained that relator’s personnel file was “clean.” Specifically, he noted that any complaints of her performance through her seven years of employment, including those complaints noted by Tourville, were undocumented. In addition, he stated that relator should have been given an opportunity to improve her conduct. After relator’s response (through her attorney), she was asked to leave the room so that the council could make its decision.

After relator and her attorney left, the council raised their concern about the fact that relator’s personnel file was void of any complaints or evaluations. Tourville defended his recommendation to terminate relator by referencing additional evidence. Tourville claimed that the interim administrator had talked to relator about the impropriety of doing personal work on work time; he claimed that this fact was documented but not in relator’s personnel file. Moreover, he claimed that he had documentation about the fact that people had complaints to the prior administrator about relator and he did nothing about it; he acknowledges that he did not keep this documentation in relator’s personnel file. Relator was not privy to this information. The city council unanimously decided to terminate relator. On October 29, 2000, relator filed a writ of certiorari.

ISSUE

Was the Hibbing City Council’s decision to terminate relator arbitrary, oppressive, unreasonable, fraudulent, under an erroneous theory of law, or without any evidence to support it?

ANALYSIS

Relator challenges the city council's decision to terminate her employment. Our review on writ of certiorari is limited to an inspection of the record to determine the propriety of the city council’s jurisdiction and procedures and, with respect to the merits, to determine whether its decision was arbitrary, oppressive, unreasonable, fraudulent, or unsupported by evidence or applicable law. Dietz v. Dodge County, 487 N.W.2d 237, 239 (Minn.1992). As a reviewing court, we will not retry the facts or make credibility determinations. Senior v. City of Edina, 547 N.W.2d 411, 416 (Minn.App.1996). The decision will be upheld if the city council “furnished any legal and substantial basis for the action taken.” Id. (citation omitted).

Relator claims that the record which the city council relied on in deciding to terminate her employment is fraught with unfairness and procedural irregularities, and therefore, the city council’s decision was clearly unreasonable and arbitrary. In addition, relator claims that her due-process rights were violated because the city maintained a separate personnel file and she was denied its contents until after the city council decided to terminate her employment. Specifically, relator claims that the decision was unreasonable and arbitrary because (1) her personnel record was “clean”; (2) the evidence relied upon by the council was hearsay evidence, namely, comments made by seven other city employees; (3) until the day of the city council meeting, she was not aware that the three incidents relied on by Tour-ville were the reasons for his decision to recommend her termination; (4) it was improper for the city to use as a basis for her termination alleged incidents that occurred a year or more before the use of disciplinary action was imposed; and (5) the city council did not issue written findings for its decision to terminate relator. We find these claims to be without merit.

It is well-established law that an at-will employee can be fired for any reason, or no reason at all. Randall v. Northern Milk Products, Inc., 519 N.W.2d 456, 459 (Minn.App.1994). Here, relator and the city entered into an employment contract that provided:

Nothing in the agreement shall prevent, limit or otherwise interfere with the right of the Hibbing City Council to terminate the services of R[e]ierson at any time, for any reason(s), subject only to the provisions of this Agreement.

(Emphasis added). This language clearly indicates that relator was an at-will employee and could be fired for any reason. Accordingly, relator’s claim that her termination was unreasonable and arbitrary is without merit.

In addition, as an at-will employee, relator had no property interest in her job; thus, she was not entitled to due process. Board of Regents of State Colleges v. Roth, 408 U.S. 564, 578, 92 S.Ct. 2701, 2710, 38 L.Ed.2d 548 (1972). Accordingly, relator’s claim that her due-process rights were violated is also without merit. Based on these facts and the existing law, we conclude that the city council’s decision to terminate relator was not “arbitrary, oppressive, unreasonable, fraudulent, or unsupported by evidence or applicable law.”

DECISION

Because relator was an at-will employee, the City of Hibbing could terminate her employment for any reason and was not required to afford her any due process.

Affirmed.


author: DANIEL F. FOLEY, Judge

text:
    CURRIE STATE BANK, Respondent, v. Douglas SCHMITZ, Appellant.
    No. C3-00-2152.
    Court of Appeals of Minnesota.
    June 26, 2001.

      Renee C. Rubish, Charles W. Ries, Maschka, Riedy & Ries, Mankato, for respondent.
    William J. Wetering, Hedeen, Hughes, Wetering, & Kness, Worthington, for appellant.
    Considered and decided by SCHUMACHER, P.J., ANDERSON and FOLEY, JJ.
   OPINION

DANIEL F. FOLEY, Judge

Appellant challenges the district court’s entry of summary judgment in favor of respondent, arguing that a genuine issue of material fact existed regarding whether appellant’s lack of knowledge that respondent had granted extensions of time for payment of two promissory notes, cosigned by appellant, relieved appellant from liability. Appellant also argues that the district court erred in ruling that oral evidence of when and by whom the notes were to be paid was barred by the parol evidence rule. Although there is no genuine issue of material fact regarding whether appellant’s lack of knowledge that extensions had been granted relieved him from liability, we conclude that the oral agreement is not barred by the parol evidence rule and reverse and remand.

FACTS

Appellant Douglas Schmitz is part owner of Schmitz Grain. Schreier Brothers and Robert Leonard were Schmitz’s customers, whose accounts had outstanding balances owed to Schmitz Grain. In order to obtain payment on Shreier Brothers’s and Leonard’s accounts, Schmitz co-signed promissory notes for each party in favor of respondent Currie State Bank (the bank). Schmitz co-signed the Shreier Brothers note on April 19, 1996, and he co-signed Leonard’s note on May 8, 1996. Because Schmitz co-signed the notes, Shreier Brothers and Leonard were able to obtain lower interest rates on the notes.

The Shreier Brothers note was originally due in October 1996. Because Schreier Brothers was unable to pay, the bank granted three extensions of time for payment: December 1996; August 1997; and August 1998. Schreier Brothers made interest payments, but no funds were applied to the principal balance. Melvin and Robert Schreier, on behalf of Schreier Brothers, eventually petitioned for Chapter 7 bankruptcy, and they received a discharge of their debts on November 24, 1999.

Leonard’s note was originally due in December 1996. Because Leonard was unable to pay, the bank granted two extensions of time for payment: April 1997 and January 1998. Leonard made interest payments on the note, but no funds were applied to the principal balance. Leonard eventually petitioned for Chapter 7 bankruptcy, and he received a discharge from his debts on October 19,1999.

In April 1999, the bank sent Schmitz a letter informing him that payment of Leonard’s note was past due; this was the only notice Schmitz received regarding delinquency of the notes. In February 2000, the bank brought two actions against Schmitz seeking to collect payment for both notes. In August 2000, the bank moved for summary judgment.

Schmitz offered evidence of an oral agreement among himself, Schreier Brothers, and Leonard, in which each agreed that the notes would be paid by their original due dates from proceeds of livestock sales by Schreier Brothers and Leonard. Schmitz argued that the bank was aware of that oral agreement but did not apply any proceeds from the livestock sales to the notes, even though it had received enough money to satisfy both notes. Instead, the proceeds were applied to other obligations that Schreier Brothers and Leonard had with the bank.

The district court ruled that evidence of the oral agreement was barred by the parol evidence rule because it contradicted a term of the notes. The court granted the bank’s motion for summary judgment. Schmitz now appeals the summary judgment in favor of the bank.

ISSUES

1. Did the district court err in concluding that there was no genuine issue of material fact regarding whether appellant’s lack of knowledge of the extensions of time for payment relieved appellant from liability?

2. Did the district court err in ruling that evidence of an oral agreement regarding when and by whom the promissory notes were to be paid was barred by the parol evidence rule?

ANALYSIS

On appeal from summary judgment, the reviewing court determines whether genuine issues of material fact exist and whether the district court erroneously applied the law. Gleason v. Metropolitan Council Transit Operations, 582 N.W.2d 216, 219 (Minn.1998). The reviewing 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). When deciding a purely legal issue, the reviewing court need not give deference to the district court’s decision. Frost-Benco Elec. Ass’n v. Minnesota Pub. Utils. Comm’n, 358 N.W.2d 639, 642 (Minn.1984).

I. Notice of Extensions

Schmitz argues that he is the guarantor of the promissory notes and that because the bank failed to give him notice of the extensions he should be released and discharged. The bank argues that Schmitz is not a guarantor and therefore is not afforded the protection of guaranty law. Instead, the bank argues that, as a co-signer of the notes, Schmitz is primarily liable for repayment. In making this argument, the bank asserts that Schmitz is a co-maker of the notes rather than merely an accommodation party on the liability of Schreier Brothers and Leonard. But the bank cites no authority or facts to support this proposition.

A guarantor of payment is “[o]ne who guarantees payment of a negotiable instrument when it is due without the holder first seeking payment from another party.” Black’s Law Dictionary 711 (7th ed.1999). In the present case, the promissory notes do not clearly identify the capacity in which Schmitz signed the notes. The supreme court, in deciding a similar dispute about whether parties to a note were co-makers or guarantors, looked to the terms of the agreement for resolution. Charmoll Fashions, Inc. v. Otto, 311 Minn. 213, 217, 248 N.W.2d 717, 719 (1976). In Charmoll, a section of the agreement, which was part of the promissory note, stated that “the undersigned do hereby jointly and severally guarantee the payment of the within note according to its terms and conditions.” Id. at 215, 248 N.W.2d at 718. The agreement also provided that

the holder hereof shall not be required to proceed against the maker hereof pri- or to proceeding to collect under this guarantee, but may proceed directly against the undersigned or any of them.

Id. The court concluded that this part of the agreement did not mean that the respondents were co-makers; rather

the purpose of such a sentence is to render the guaranty absolute as opposed to conditional in order that the holder may proceed directly against the guarantor without complying with the difficult, costly, and cumbersome common-law requirements of notice, demand, and suit against the maker, etc. which apply to conditional guaranties.

Id. at 218, 248 N.W.2d at 720 (citation omitted); see also Dahmes v. Industrial Credit Co., 261 Minn. 26, 33, 110 N.W.2d 484, 488-89 (1961) (stating guaranty contracts can be conditional or absolute; if absolute, then obligor becomes hable merely upon failure of debtor’s performance). Based on the language of the agreement, the court in Charmoll concluded that the respondents agreed only to guarantee payment of the note and were therefore guarantors rather than co-makers. Charmoll, 311 Minn. at 221, 248 N.W.2d at 721.

Like the language construed in Char-moll, the language in this case is part of the promissory notes. The language of the agreement in Charmoll is very similar to the language in the instant case. Here, the notes provide that “the undersigned (if more than one, jointly and severally) hereby unconditionally guarantees the prompt payment of the within Note.” In addition, the “notice to the cosigner” section of the note stated:

You are being asked to guarantee this debt. * * * If the borrower doesn’t pay the debt, you will have to. * * * The creditor can collect this debt from you without first trying to collect from the borrower.

Based on the similarity between the language of the agreement in Charmoll and the language in the instant case, we conclude that Schmitz signed the notes as a guarantor rather than a co-maker. Thus, contrary to the bank’s assertion, Schmitz is afforded the protection of guaranty law.

Next, we consider whether summary judgment was appropriate in light of Schmitz’s argument that he should be released and discharged from the guaranty contracts because he was unaware that the bank extended the time for payment of the notes.

The general rule is that when the time of payment is extended without a guarantor’s consent, the guarantor is released and discharged from the guaranty contract. Clark v. Otto B. Ashbach & Sons, Inc., 241 Minn. 267, 276, 64 N.W.2d 517, 523 (1954). But, in Clark, the only case Schmitz cites, the guarantors were “asked to guarantee the performance of an entirely different contract from the one originally made by the principal.” Id. at 276, 64 N.W.2d at 523. The principal obli-gor had negotiated with the creditor and entered into new contracts to which the guarantors were not parties. Id. Further, the language in the original contract was silent as to whether the creditor could grant an extension without providing notice to the guarantors. Id. at 269, 64 N.W.2d at 519. But it is clear that the court in Clark did not consider the new contracts to be extensions; rather, the court considered them to be entirely distinct. Id.

Here, the terms and conditions section of each note states that “[e]ach Borrower, endorser and guarantor * * * consents to any extensions and renewals hereof without notice.” Following the terms and conditions, there is space provided for the parties’ signatures, but Schmitz did not sign this section in either note. Schmitz did, however, sign the notes in two other places. First, Schmitz’s signature appears after the bolded statement that reads, “I AGREE TO THE TERMS SET OUT ON THE FRONT AND BACK OF THIS AGREEMENT.” Second, Schmitz’s signature appears in the “identification of debt” section after the statement that reads, “I acknowledge receipt and copy of this notice, the debtor’s agreement, and any separate agreement signed by me.”

Neither Schreier Brothers nor Leonard signed new promissory notes purporting to bind Schmitz as the guarantor. Instead, the bank is seeking to hold Schmitz liable for the original notes, which he specifically agreed to pay if Schreier Brothers and Leonard defaulted. In addition, the language of the notes appears to be plainly written. Parties who sign plainly written documents must be held liable, otherwise such documents “would be entirely worthless and chaos would prevail in our business relations.” Watkins Prod., Inc. v. Butterfield, 274 Minn. 878, 380, 144 N.W.2d 56, 58 (1966) (quotation omitted). Also, in the absence of misrepresentation, trick, or artifice, if a party has the ability to read a written contract and fails to do so, the party is still bound by it. Larson v. Sventek, 211 Minn. 385, 390, 1 N.W.2d 608, 611 (1941). We conclude that Schmitz cannot rely on the general rule regarding extensions and is bound by the language of the notes. Thus, there is no genuine issue of material fact as to whether Schmitz’s lack of knowledge that the bank had granted extensions of time for payment of the notes relieved him of liability.

II. Parol Evidence

Schmitz argues that the district court erred in ruling that evidence of an oral agreement that the notes would be paid from the livestock sale proceeds was barred by the parol evidence rule. In making this argument, Schmitz seems to be implying that, because his guaranties were for an unlimited duration, there is a fact issue as to whether that duration was unreasonable. Schmitz seems to assert that, because all parties to the notes, including the bank, “understood” that the notes were to be paid in 1996 and 1997 from the livestock sale proceeds, and because Schmitz was unaware of the extensions and did not learn that the notes were unpaid until 1999, evidence of the oral agreement would help to explain a reasonable time limit for his guaranties.

The parol evidence rule provides that terms

set forth in a writing intended by the parties as a final expression of their agreement with respect to such terms as are included thei-ein may not be contradicted by evidence of any prior agreement or of a contemporaneous oral agreement but may be explained or supplemented
* * * *
(b) by evidence of consistent additional terms unless the court finds the writing to have been intended also as a complete and exclusive statement of the terms of the agreement.

Minn.Stat. § 336.2-202 (2000).

Termination of a guaranty after a reasonable time may be implied if the contract does not contain any time limitation. Borg Warner Acceptance Corp. v. Shakopee Sports Ctr., Inc., 431 N.W.2d 539, 541 (Minn.1988). “This rule, however, only applies when the contract does not specifically include a date of expiration or a termination provision.” Id. Determining a reasonable time period for a guaranty contract presents a fact issue. Id. The guaranty should be “limited to a time which is reasonable, taking into consideration not merely the language of the guaranty, but all the circumstances of the case.” Continental Can Co. v. Lanesboro Canning Co., 180 Minn. 27, 28-29, 230 N.W. 121, 122 (1930) (quotation omitted).

The district court did not determine what would constitute a reasonable time limit for Schmitz’s guaranties, even though he argued this theory in his memorandum in opposition to the bank’s summary judgment motion. Instead, the court ruled that evidence of an oral agreement was barred because the agreement was contrary to the terms of the note. In making this ruling, the district court cited Northwestern State Bank v. Gangestad, 289 N.W.2d 449 (Minn.1979). The court relied on Gangestad for the proposition that a maker of a promissory note is barred by the parol evidence rule from showing that the parties orally agreed "that the notes would not be paid until a certain time or would only be payable out of the proceeds of certain sales.” Id. at 452.

Gangestad is distinguishable from the instant case for two reasons. First, Gan-gestad was the maker of a note, whereas Schmitz is only a guarantor. Second, and more importantly, the notes that Ganges-tad entered into were all payable on demand, whereas the notes in this case had specific due dates. Unlike Gangestad, whose offered evidence that the note would be paid at a certain time contradicted the payable-on-demand term of the note, Schmitz’s offered evidence was meant to further explain and supplement the due dates of the notes, which is allowed by the parol evidence rule. See Minn.Stat. § 336.2-202 (stating parol evidence is allowed to explain or supplement parties’ written agreement). The oral agreement was that the notes would be paid on their original due dates because Schreier Brothers and Leonard would be acquiring the necessary money from their livestock sales. Because Schmitz’s guaranties were for an unlimited duration, this evidence would help the court to define the reasonable time limit for the guaranties, based on the parties’ circumstances. Therefore, a genuine issue of material fact exists as to whether Schmitz’s guaranties should be enforced. Because the oral agreement explains and supplements the due dates of the notes and was not offered for the purpose of contradicting the dates, we conclude that the district court erred in ruling that this evidence was barred by the parol evidence rule.

DECISION

Even though the guaranty language contained in the notes authorized the bank to extend the time for repayment of the notes without providing notice to Schmitz, the district court should have considered the parties’ oral agreement in determining a reasonable time limit for the guaranties. Thus, the district court erred by granting summary judgment in favor of the bank.

Reversed and remanded.

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

      . "An accommodation party is one who signs the instrument in any capacity for the purpose of lending his name to another party to” the instrument. LeRoy v. Marquette Nat'l Bank, 277 N.W.2d 351, 354 (1979) (quotation omitted). An accommodation party's obligation to pay is based on the capacity in which the party signed the instrument. Minn.Stat. § 336.3-419(b) (2000).