Demo Unlimited Inc. v. Peterson

1

Demo Unlimited Incorporated, et al., Respondents, v. Ross Peterson, Appellant.

No. A23-1633

Court of Appeals of Minnesota

July 29, 2024

This opinion is nonprecedential except as provided by Minn. R Civ. App. P. 136.01, subd. 1(c).

Hennepin County District Court File No. 27-CV-21-11526

Matthew R. Hartranft, Matthew R. Doherty, Alexander D Schwartz, Brutlag, Trucke & Doherty, P.A., Plymouth, Minnesota (for respondents)

Ross Peterson, Stillwater, Minnesota (self-represented appellant)

Considered and decided by Ross, Presiding Judge; Reyes, Judge; and Smith, John, Judge. ^[*]

Reyes Judge

Appellant challenges the district court's declaratory judgment that he had no interest in respondent-corporation, arguing that he should receive a new trial because (1) procedural irregularities adversely impacted his trial rights; (2) newly discovered evidence discredits the district court's findings; and (3) the evidence does not support the district court's decision. Alternatively, appellant argues that the district court should have amended certain factual findings that he asserts are not supported by the record. We affirm.

FACTS

In November 2002, two brothers, appellant Ross Peterson and respondent Erik Peterson, incorporated respondent Demo Unlimited, Inc. (Demo), with each brother assuming 50% ownership of the corporation. In 2007, Ross and Erik^[1] reached an oral agreement under which Ross would receive $100,000 in exchange for his interest in Demo (the agreement). Following the agreement, Ross continued to work for Demo from 2007 to 2018, during which time he received a salary, benefits, and a series of 25 disputed payments that totaled $117,000. The last payment Ross received was a $20,000 check with a memo reading "Final Payment." Believing that the disputed payments were redemption payments that satisfied his obligation under the agreement, Erik demanded that Ross transfer his remaining stock shares in Demo. Ross refused, arguing that the disputed payments were not made to redeem his interest in Demo, but to reimburse him for services he provided to Demo.

Erik and Demo (collectively, respondents) brought an action against Ross in which they sought, in part, a declaratory judgment that (1) an enforceable redemption agreement existed between Ross and respondents; (2) the 25 disputed payments to Ross satisfied Erik's obligations under the agreement; and (3) Erik was now the sole shareholder of Demo. The case proceeded to a court trial beginning in November 2022.

At trial, the district court received numerous exhibits documenting the parties' financial transactions and heard testimony from Erik, Ross, Ross's wife, and several Demo employees. Following trial, the district court granted respondents' requested declaratory relief, determining that the parties had an enforceable agreement, that Ross was no longer a Demo officer following the agreement, and that Ross had surrendered his interest in Demo by accepting $104,000 in redemption payments. Ross filed a motion for a new trial under Minn. R. Civ. P. 59.01 or amended findings under Minn. R. Civ. P. 52.02, which the district court denied.

This appeal follows.

DECISION

I. The district court did not abuse its discretion by denying Ross's motion for a new trial.

Self-represented on appeal, Ross incorporates by reference and supplements the arguments made by his counsel in the motion for a new trial or amended findings filed in district court. Ross argues that he should be granted a new trial under Minn. R. Civ. P. 59.01 because (1) procedural irregularities adversely impacted his trial rights; (2) newly discovered evidence shows that he did not agree to surrender his interest in Demo; and (3) the evidence does not support the district court's findings and ultimate determination. See Minn. R. Civ. P. 59.01 (a), (d), (g). We address each argument in turn.

Motions for a new trial should be granted "cautiously and sparingly" by a district court. Baker v. Amtrak Nat'l R.R. Passenger Corp., 588 N.W.2d 749, 753 (Minn.App. 1999). Because the district court "has the feel of the trial," we generally defer to its "broad discretion in deciding whether to grant a new trial." Vangsness v. Vangsness, 607 N.W.2d 468, 472 (Minn.App. 2000) (quotation omitted).

A. The district court did not commit any procedural irregularities warranting a new trial.

Ross appears to contend that the district court committed numerous procedural irregularities throughout his trial, including (1) relying on excluded evidence in its order granting declaratory relief to respondents; (2) failing to "recognize the respondents as separate entities;" (3) allowing respondents to change legal theories without filing a motion to amend under Minn. R. Civ. P. 15.02; and (4) committing judicial misconduct by demonstrating bias in favor of respondents. We are not persuaded.

Under Minn. R. Civ. P. 59.01(a), a moving party may receive a new trial if an "[i]rregularity in the proceedings of the court . . . or any order or abuse of discretion" deprived that party of a fair trial. An irregularity is defined as a "failure to adhere to a prescribed rule or method of procedure not amounting to an error in a ruling on a matter of law." Boschee v. Duevel, 530 N.W.2d 834, 840 (Minn.App. 1995) (quotation omitted), rev. denied (Minn. June 14, 1995).

As an initial matter, the only irregularity addressed by Ross's motion for a new trial was that the district court's order improperly relied on excluded evidence. As a result, Ross's remaining irregularity arguments are forfeited on appeal. Sauter v. Wasemiller, 389 N.W.2d 200, 201 (Minn. 1986) ("A post-trial motion for a new trial [under] Minn. R. Civ. P. 59.01 raising individual errors allegedly occurring at trial is a prerequisite to appellate review of those errors.").^[2]

Ross's remaining argument is that the district court could not have made certain factual findings without relying on exhibits listing Demo's shareholder distributions that were offered, but not admitted, into evidence. The challenged findings include the district court's summary of the payments Ross received under the agreement and its finding that there was no imbalance between the distributions Erik and Ross received before the agreement between 2006 and 2007.

We conclude that the district court did not need to rely on excluded evidence when issuing its findings of fact. Ross testified that he received each of the payments listed in the district court's findings and the district court therefore did not need to rely on the excluded exhibits for that information. Additionally, Erik testified that he and Ross received approximately the same distributions from Demo before the agreement and that he had worked with Demo's tax consultant to ensure that there was no discrepancy in Demo's distributions to himself and Ross. See Butler v. Jakes, 977 N.W.2d 867, 871 (Minn.App. 2022) ("We defer to the district court's credibility determinations ....").

Because ample evidence beyond the excluded exhibits supports the district court's findings, Ross's argument fails.

B. There is no newly discovered evidence warranting a new trial.

Ross argues that newly discovered evidence in the form of bank loans obtained on Demo's behalf, for which he was a signatory, proves that he was not removed as an officer following the agreement and that he did not agree to transfer his interest in Demo. Ross's argument is unavailing.

A district court may grant a new trial based on newly discovered evidence if the new evidence (1) is "material" and (2) "with reasonable diligence could not have been found and produced at the trial." Minn. R. Civ. P. 59.01(d). Determining whether these requirements have been met is within the district court's discretion. Frazier v. Burlington N. Santa Fe Corp., 811 N.W.2d 618, 631 (Minn. 2012).

In his sworn declaration to the district court, Ross stated that, "[a]fter trial and the [district court's] decision in this matter, I attempted to get information about my role in [Demo's] bank loans and accounts with Anchor Bank. Anchor Bank was purchased by Old National Bank." On appeal, Ross claims that, although he was unable to obtain the loan information in his pretrial discovery efforts concerning Old National Bank, he realized after trial that he had not performed any bank-records searches "for Demo Unlimited or loans with his name" and that he was able to acquire the loan documents after performing those searches.

Here, the district court determined that Ross failed to exercise reasonable diligence by not obtaining this evidence before trial. The record supports the district court's determination. Not only did Ross delay searching for the loan information until "[a]fter trial and the [district court's] decision," but he failed to explain why he could not have searched for the information before trial. See Henderson v. Bjork Monument Co., 24 N.W.2d 42, 46 (Minn. 1946) (noting that new trial is not warranted if "the same diligence which led to the discovery of the new evidence after trial would have discovered it had such diligence been exercised prior thereto") (quotation omitted). The district court therefore did not abuse its discretion by denying Ross's motion for a new trial based on newly discovered evidence.^[3] Minn. R. Civ. P. 59.01(d); Frazier, 811 N.W.2d at 631.

C. The district court's decision is supported by the evidence.

Ross asserts that he should receive a new trial because the evidence presented at trial failed to demonstrate that (1) the parties had an enforceable agreement between them and (2) respondents satisfied their obligations under the agreement. We are not convinced.

A new trial should not be granted for insufficient evidence under Minn. R. Civ. P. 59.01(g)...