Court Opinion

ID: 9685687
Source: CourtListenerOpinion
Date Created: 2023-08-24 14:57:22.134502+00
Date Added: 2024-06-11T18:18:09.493167
License: Public Domain

YETKA, Justice
(dissenting).
I respectfully dissent. I do so because I believe that the lead opinion is fundamentally anchored in Miller v. Miller, 301 Minn. 207, 222 N.W.2d 71 (1974), which was decided before significant legislative changes to the Minnesota Business Corporation Act. The opinion fails to recognize that, in 1981 and 1983, the legislature totally overhauled corporation law in Minnesota with the intent and effect of precluding actions of the sort undertaken in this ease by the respondents. While the law previously may have allowed the business community much latitude in dealings among its members, the current statutes reflect an attempt to change that practice. Instead of continuing to allow the “sea of sharks” to prey on one another, our legislature has imposed on business practices in this state a higher standard of civility and ethics. Specifically, I cannot be a party to a majority opinion which condones or permits the type of activity exhibited in these proceedings. I believe our law was intended to prevent such predatory and self-serving behavior by officers of a corporation and designed to protect the shareholders who hire officers to serve the best interests of the corporation.
In 1979, when The Advisory Task Force on Minnesota Corporation Law undertook the task of developing a proposal to revise and modernize our state’s business corporation law, it envisioned the fundamental functions of that law to be “substantial flexibility and informality in matters of procedure, together with substantial disclosure of and accountability for the corporate actions resulting from those procedures.” Advisory Task Force on Minnesota Corporation Law, Report to the Senate of the State of Minnesota of 1981 at 14 (1980) (reprinted in Minnesota Statutes Annotated (West 1985 Special Pamphlet)). By affirming the trial court’s partial summary judgment in this case, thereby allowing the respondents to escape accountability, the majority is violating the spirit and intent of the Minnesota Business Corporation Act. I would find that PJ Acquisition does have standing to bring claims arising out of the Mike Lynn employment contract and has set forth sufficient issues of material fact to avoid summary judgment on its claims relating to the Boyer stock transfers and right-of-first-refusal agreements.
I.
The trial court found that appellant lacked standing to pursue claims arising out of the 1984 Lynn employment contract and the alleged misuse of corporate assets by certain respondents prior to July 21, 1986. The majority reaches the same conclusion by recognizing that the relief requested by appellant is in favor of the corporation, Vikings II, and concluding, therefore, that the action is derivative and must comply with the requirements of Minn.R.Civ.P. 23.06, i.e., “contemporaneous ownership” and “demand on board.”
It should first be noted that appellant has standing to bring claims arising out of the Mike Lynn employment contract even as a derivative action under Rule 23.06. Appellant alleges that, at a Board of Directors’ meeting on September 2, 1987, the directors voted to affirm Lynn’s employment contract prospectively and that the vote was taken in bad faith, fraudulent, illegal and unfairly prejudicial to Vikings II shareholders. The amended complaint also alleges the futility of further demand on the Board of Directors to remedy this course of action. Appellant was a shareholder when the Lynn contract was affirmed and should be able to bring a regular derivative action for injury to the corporation after that date.
More importantly, appellant states a cause of action for breaches of the appro*14priate standards of conduct by respondent directors and officers based on the provisions of Minn.Stat. ch. 302A. I would hold that, despite the derivative nature of the relief appellant requests, most of its claims fall under chapter 302A and should be allowed to proceed to trial.
Minn.Stat. § 302A.467 provides:
If a corporation or an officer or director of the corporation violates a provision of this chapter, a court in this state may, in an action brought by a shareholder of the corporation, grant any equitable relief it deems just and reasonable in the circumstances and award expenses, including attorneys’ fees and disbursements, to the shareholder.
Minn.Stat. § 302A.467 (1988). The reporter’s notes to section 302A.467 state: “This section gives the courts wide discretion in determining the relief to be granted and the situations in which relief should be ordered.” Minn.Stat.Ann. § 302A.467 (West 1985) (Reporter’s Notes).
Courts and commentators have recognized that, in certain cases involving closely held corporations, the reasons for distinguishing between derivative and direct ac-' tions do not exist and, therefore, actions which could otherwise be characterized as derivative should be treated as an individual action. See Watson v. Button, 235 F.2d 235, 237 (9th Cir.1956); § 7.01(d) of ALI Principles of Corporate Governance: Analysis and Recommendations (Tent. Draft No. 8, Apr. 15, 1988). The basic purpose of Rule 23.06 is to prevent “strike suits,” that is, a suit brought by a plaintiff who purchased a nominal interest in a corporation in order to bring a lawsuit. See Schreiber v. Bryan, 396 A.2d 512, 516 (Del.Ch.1978). Although strike suits are a legitimate concern in cases such as Schreiber1 which involve large, publicly traded corporations, the same concerns are invalid in the context of closely held corporations. It is difficult to believe that an investor with litigious motives would intentionally purchase the shares of an oppressed or “frozen out” shareholder in a closely held corporation for which no ready market for resale of the shares exists. A court finding that a plaintiff brought a strike suit may exercise equitable powers under section 302A.751 to deny relief. Thus, the flexible remedy created by the legislature is readily adaptable to meet the concerns which Rule 23.06 was designed to address if they are present. Accordingly, I believe that section 302A.751 was intended to supersede Rule 23.06 in cases involving closely held corporations.
Appellant clearly alleges violations of chapter 302A. Section 302A.251 outlines the standard of conduct for directors:
A director shall discharge the duties of the position of director in good faith in a manner the director reasonably believes to be in the best interests of the corporation, and with the care an ordinarily prudent person in a like position would exercise under similar circumstances.
Minn.Stat. § 302A.251, subd. 1 (1988). The identical standard is applicable to officers of a corporation via Minn.Stat. § 302A.361. The reporter’s notes once again are helpful:
Directors have great powers over the corporation, and few restrictions. The most important restriction on their power is the duty to comply with the standard of conduct set forth in this section.
* * ⅝ sjc * *
* * * Majority shareholders may also be required to conduct themselves in certain ways with respect to other shareholders * * *. These standards are not specifically defined in this statute, because the courts must be free to continue to make determinations of the applicable *15duty on the basis of the facts in each case.
Minn.Stat.Ann. § 302A.251 (West 1985) (Reporter’s Notes).
With the above provisions in mind, appellant can establish a legal basis for its allegations relating to excessive compensation, use of corporate assets for personal purposes and the Lynn employment contract without having to prove that they fall within the continuing wrong exception to derivative claims. Essentially, the trial court erred by applying the Minn.R.Civ.P. 23.06 requirements to breach-of-fiduciary-duty claims brought under chapter 302A.
Admittedly, appellant was not a shareholder when some of the alleged violations unrelated to the Lynn employment contract occurred and lacks standing to assert those claims even under chapter 302A. However, continüing violations of chapter 302A by respondents provide a valid basis for this shareholder complaint even if they do result from wrongful conduct which took place initially before July 21, 1986. The continuing-wrong theory was discussed at length by this court in Vista Fund v. Garis, 277 N.W.2d 19, 24-26 (Minn.1979). In Vista, we observed that, under the continuing-wrong theory, the contemporaneous ownership requirement of Rule 23.06
may be satisfied if the wrong is a continuing one, as where the particular wrong spans his ownership of stock or new elements in a pattern of wrongful conduct occur after acquisition of his stock and the wrong has not completely occurred and been terminated prior to the stock acquisition.
Id. at 25 (quoting 13 W. Fletcher, Cyclopedia of the Law of Corporations § 5982 at 426 (rev.perm.ed. 1970)) (emphasis added). The 1983 amendments to chapter 302A manifest a legislative judgment that traditional principles of corporate law designed to address lawsuits faced by large corporations, such as the contemporaneous ownership requirement of Rule 23.06, do not adequately protect minority shareholders in closely held corporations.
In light of the amendments to chapter 302A enacted after this court’s decision in Vista Fund v. Garis, 277 N.W.2d 19 (Minn.1979), and given the unique nature of closely held corporations, I would hold that the continuing-wrong exception to Minn.R. Civ.P. 23.06 applies to the claims concerning the Lynn employment contract. The allegations concerning the Lynn employment contract raise genuine issues of material fact as to the validity of the contract. Specifically, there are genuine issues of fact with respect to whether the contract was executed and approved by a majority of disinterested directors or shareholders.
The record in this case consists of the pleadings and affidavits. In its amended complaint, appellant alleges the basis for its continuing-wrong theory of recovery in considerable detail. Appellant alleges that, in March of 1984, Lynn proposed a new contract for himself to Winter. The contract called for greatly increased compensation and a “golden parachute” clause under which he would be paid the same compensation even if he ceased to be employed. The amended complaint alleges that Winter refused to sign the contract on the grounds that “the President of General Motors did not make that much money.” The amended complaint further alleges that Lynn fraudulently told Skoglund and Steele that Winter had previously agreed to the terms of the proposed contract in order to obtain their oral agreement to it. The appellant also alleges that Lynn ultimately obtained Skoglund’s and Steele’s support for the proposed contract terms by preparing a “Unanimous Consent of the Vikings’ Directors,” which incorporated the proposed terms into Lynn’s contract and provided Skoglund and Steele each with a promotion and a $50,000 per year increase in salary. Appellant further alleges that Lynn presented the unanimous consent form to Winter with the others’ signatures on it and said, “Sign it or you will be O-U-T, out.” After Winter protested, Lynn then handed Winter the Notice of Special Meeting of the Board of Directors of Vikings II, Inc., to be held in 4 days. Later, after receiving assurances that he would remain president for life with no decrease in compensation, Winter signed the unanimous consent. Finally, the complaint specifically *16alleges that the contract is void pursuant to Minn.Stat. § 302A.255; that, with respect to the September 2, 1987 affirmance, all the material facts regarding Lynn’s contract were not fully disclosed or known to the directors; and that the respondent directors have continued and perpetuated Lynn’s wrongful assumption of power and excessive compensation arrangements.
The affidavit of Skoglund offered in support of respondents’ motion for summary judgment is silent as to the allegations concerning Lynn’s contract. By contrast, the affidavit of Geoffrey P. Jarpe, counsel for appellant, offered in opposition to the motion for summary judgment specifically states that, pursuant to the “Unanimous Consent” of April 1984, Lynn, Skoglund, and Steele all received significant monetary benefits, participated in the decision to benefit themselves, and were three of the five directors to sign the document authorizing the changes to Lynn's contract. The September 2, 1987 vote to affirm the Lynn employment contract is the “new element” which occurred after appellant purchased the stock and makes the alleged wrong a continuing one. A shareholder must be able to pursue claims of wrongful conduct against the controlling shareholders, and chapter 302A ensures this by providing shareholders with a more flexible, equitable route than the pursuit of a derivative action.
I believe that appellant has stated a cause of action under Minn.Stat. § 302A.255 (director conflict of interest) and common law and has presented genuine issues of material fact as to whether the Lynn employment contract was void from the beginning. If the contract was void from the beginning, and, yet, payments were and continue to be made under it, these payments constitute a continuing wrong as each payment constitutes a violation of sections 302A.251 and 302A.361 (director and officer standard of conduct). Accordingly, I would hold that the trial court improperly granted summary judgment with respect to the claims involving Lynn’s employment contract.
Contrary to the majority’s position, the mere fact that appellant asks for relief resembling that usually sought in a derivative action does not render its claims derivative. Also, assuming that the majority’s analysis of the complaint is accurate and appellant never alleges a direct injury to itself as a shareholder, such an omission does not defeat a claim premised on the provisions of chapter 302A.2 The ability to bring a claim under this chapter does not depend on the type of injury suffered and whether it is direct or derivative, but, rather, stems from the occurrence of the misconduct by the corporation, officer or director. All that section 302A.467 requires is that a provision of the chapter be violated and the suit be brought by a shareholder. Because courts are allowed to grant any equitable relief they deem just and reasonable, it is perfectly plausible that such relief might mirror the remedies of a derivative action.
There is another factor the trial court should consider. I doubt whether any party would dispute the proposition that, if Winter still owned the stock which he sold to PJ, he would have the right to bring this lawsuit. If that is so, it is illogical to hold that the right to such a lawsuit is lost to his successors. The lead opinion makes much of the argument that the cause of action is derivative. Why should not successors-in-interest to a block of stock have the same rights as their assignor? This is particularly so in a closed corporation where the stock is not broadly held by the public and is a good example of where the legislature, by amending chapter 302A, intended to allow a trial court to be flexible in allowing such a suit.
*17II.
The trial court also granted summary judgment on “all claims arising out of the alleged fiduciary duties owed by the defendant directors to the Corporation pertaining to the transfer of the Boyer Voting Stock and certain non-voting stock.” The lead opinion classifies this claim as one for usurpation of a corporate opportunity and would affirm the trial court’s finding that there was no corporate opportunity as a matter of law. Appellant recognizes the general rule that the opportunity to acquire available corporate stock is not a corporate opportunity, but argues that there is a question of fact as to whether Vikings II has a pre-existing policy or practice of acquiring its own stock. It is important to remember the role of the trial court at this stage of the litigation. Its function on a motion for summary judgment is not to resolve issues of fact, but to determine whether they exist. Schmidt v. Smith, 299 Minn. 103, 107, 216 N.W.2d 669, 671 (1974); Simonson Cashway Co., Inc. v. Merickel Constr. Co., Inc., 391 N.W.2d 903, 905 (Minn.App.1986). Additionally, all doubts and factual inferences must be resolved against the moving party, who also bears the burden of showing that there is no genuine issue of material fact. Grondahl v. Bulluck, 318 N.W.2d 240, 242 (Minn.1982); Barilla v. Clapshaw, 306 Minn. 437, 439, 237 N.W.2d 830, 831 (1976). Whether the past practice of the corporation in acquiring its own stock was done for corporate purposes, as appellant alleges, or merely to preserve the shareholders’ relative positions of ownership, as respondents assert, is a question of fact. It is neither the function of this court nor the trial court on a summary judgment motion to evaluate the impact the relationship of the parties has on this issue or determine whether they considered the acquisition of corporate stock a corporate opportunity. These are questions better left to the trier of fact.
Moreover, appellant correctly argues that the trial court erred by assuming that the only breach-of-fiduciary-duty issue raised by the Boyer stock agreements was whether the purchase of the stock was a corporate opportunity. Certainly, that is one basis on which a claim could be sustained, but appellant advances other grounds as well. In particular, appellant alleges that Mike Lynn and the other directors, by supporting his efforts, “promoted and advanced his private, personal interests, instead of and at the expense of the rights and interests of Vikings II and its shareholders.” The amended complaint explains the allegations in detail and alleges that:
In pursuing the transactions of August 4 and 5,1986, [relating to the Boyer trusts] and May 22, 1987 [formation of BWDL to purchase Boyer stock], Lynn subordinated or disregarded his fiduciary duties of good faith, loyalty, fidelity and fair dealing to Vikings II and its shareholders in favor of his personal and private interests. In so doing, Lynn acted and continues to act in bad faith, contrary to the best interests of Vikings II, without the care that an ordinarily prudent person would exercise under similar circumstances, and in a fraudulent, illegal, and unfairly prejudicial manner toward shareholders of Vikings II. Moreover, said transactions also involved and served the personal and private interests of all of the other defendant directors, leaving no one to act for and protect Vikings II with respect thereto.
The thrust of appellant’s argument appears to involve the self-serving nature of respondents’ involvement in the Boyer stock agreements. While appellant should be allowed to pursue a claim based on the usurpation of a corporate opportunity, Minn.Stat. ch. 302A also provides separate grounds for relief.
In addition to the Minn.Stat. §§ 302A.251 (directors’ standard of conduct), 302A.361 (officers’ standard of conduct) and the remedial provisions of section 302A.467 discussed earlier, other sections of the act figure predominantly in appellant’s claims relating to the Boyer stock. Specifically, appellant states a claim under section 302A.255, which concerns a director’s conflict of interest. The language of the statute is quite lengthy, but the reporter’s *18notes summarize and explain the law embodied therein:
This section does not replace the existing case law in this state with regard to corporate opportunity. * * * Instead, it deals solely with apparent or actual conflicts of interest inherent in transactions between the corporation and the director or any other organization in which the director participates as a director, officer, or other representative or has a material financial interest. Transactions of this sort will not be void or voidable if the director establishes that the transaction is fair or if certain disclosures are made and certain consents are received. This section states explicit standards for meeting those requirements. This does not mean that all transactions that do not comply with this section are automatically void or voidable, and the courts are free to deal with those transactions on a case-by-case basis.
Minn.Stat.Ann. § 302A.255 (West 1985) (Reporter’s Notes). The facts and allegations set forth in the amended complaint relating to Mike Lynn's attempt to gain control of Vikings II through the establishment of a “sham” trust and agreements with other directors and shareholders designed to promote his personal interests clearly support appellant’s claim under section 302A.255.
Perhaps the provision of chapter 302A which provides appellant with the broadest ground on which to seek relief is section 302A.751. The statute reads in part:
A court may grant any equitable relief it deems just and reasonable in the circumstances or may dissplve a corporation and liquidate its assets and business:
* * 4s * * *
(b) In an action by a shareholder when it is established that:
* * * * * *
(2) the directors or those in control of the corporation have acted fraudulently, illegally, or in a manner unfairly prejudicial toward one or more shareholders in their capacities as shareholders, directors, or officers, or as employees of a closely held corporation;
[[Image here]]
Minn.Stat. § 302A.751, subd. 1(b)(2) (1988). As initially adopted in 1981, subdivision 1(b)(2) used the words “persistently unfair” instead of today’s “unfairly prejudicial.” See Minn.Stat. § 302A.751, subd. 1(b)(2) (1982). The reporter’s notes outline the general intent of the section: “In the past the courts may have been reluctant to order intermediate relief absent some sort of statutory authority. This section provides explicit statutory authority; that authority is meant to be used.” Minn.Stat.Ann. § 302A.751 (West 1985) (Reporter’s Notes). When amended to its present form in 1983, this section of chapter 302A was changed, along with other provisions, to reflect the legislature’s concern that minority shareholders be protected more than they were under current law.3 “Unfairly prejudicial” was designed to liberalize the remedies available to oppressed shareholders. Professor Joseph Olson of Hamline Law School explained the language change to a Senate subcommittee as “offering the courts a new term in the context of expanded powers.” Hearing on S.F. 964 before Senate Judiciary Committee, Judicial Administration Subcommittee, 1983 Minn.Leg-is., April 6 (audiotape). Professor Olson also explained that “[t]he broad scope of Section 751 reflects the Legislature’s trust in the ability of the judiciary to achieve equitable results on the facts appearing in individual cases.” Olson, Statutory Changes Improve Position of Minority Shareholders in Closely-Held Corporations, The Hennepin Lawyer, Sept.-Oct. 1983, at 11. Shareholders, especially minority shareholders, have a right to be pro*19tected from the mistreatment of those who control the corporation. Chapter 302A in general and section 751 specifically are designed to guarantee that protection.
The legislature has assisted the courts in determining what is “unfairly prejudicial” by including in section 751 a subdivision relating to the duties of a shareholder in a closely held corporation:4
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 the shareholders as they exist at the inception and develop during the course of the shareholders’ relationship with the corporation and with each other.
Minn.Stat. § 302A.751, subd. 3a (1988).
When section 751 is applied to allegations in the amended complaint concerning the Boyer trusts and agreements, it is clear that there exists an issue of material fact whether respondent officers, directors and shareholders acted in a manner unfairly prejudicial towards PJ. The fiduciary duties outlined in section 302A.751, subdivision 3a necessarily apply to a corporation like Vikings II, which has only three voting shareholder interests. A breach of those duties by the controlling group may be unfairly prejudicial towards the other shareholders. The Minnesota Business Corporation Act was designed to protect vulnerable minority shareholders from exactly the type of unfair oppressive conduct which appellant alleges in this case.
III.
Appellant alleges that respondents acted in a fraudulent, illegal and unfairly prejudicial manner and otherwise breached their fiduciary duties by refusing to pursue and enforce a right of first refusal in favor of Vikings II with regard to the purchase of the Boyer stock. Appellant argues that the December 1985 agreement between Skoglund and the Boyer trustees, in essence, reactivated the 1977 and 1984 right-of-first-refusal agreements which this court held unenforceable in Winter v. Skoglund, 404 N.W.2d 786 (Minn.1987). The trial court dismissed appellant’s claims on the basis of collateral estoppel.
I would find that there remains a question of fact as to the intent of Skoglund and the Boyer trustees when they included language in the December 1985 agreement validating the earlier right-of-first-refusal agreements. If they intended to create a night of refusal in favor of Vikings II in that document or were under the belief that such a right existed, they breached their fiduciary duty to the corporation by not trying to enforce it. Moreover, because there are questions of law and fact surrounding the effect of the December 1985 agreement, the respondents were under a duty to act in the corporation’s best interest and advocate its enforcement.
Appellant should have the opportunity to litigate the effect of respondents’ actions occurring after the facts considered in Winter which relate to a right of first refusal. The simple fact that respondents vigorously asserted that such a right existed in the Winter litigation, whereas now, even after formally acknowledging the right in subsequent documents, they seek to avoid the obligation, suggests a breach of fiduciary duty.'
In conclusion, the voting shareholders in Vikings II owe a duty towards one another to act in good faith in an honest, fair and reasonable manner with the best interests of the corporation in mind. Chapter 302A has provided minority shareholders a remedy to abuses of corporate control and oppression that did not exist in Minnesota before 1981. Appellant must be given an opportunity to pursue its claims.
I also strongly suggest that one of the equitable remedies the trial court should consider is to impose a constructive trust in favor of Vikings II with regard to the corporation’s stock indirectly controlled by *20Mike Lynn. Constructive trusts are designed to correct abuses of fiduciary relationships and force a conveyance to prevent unjust enrichment. See Wright v. Wright, 311 N.W.2d 484, 485 (Minn.1981); Gerdin v. Princeton State Bank, 414 N.W.2d 765, 768 (Minn.App.1987). If it is found at trial that Mike Lynn usurped a corporate opportunity or otherwise violated his fiduciary duties to Vikings II or its shareholders, equity requires that he be precluded from benefiting from his misconduct. Any property or profit he received from taking improper advantage of his fiduciary relationship should be subject to a constructive trust in favor of the corporation.
It is possible that a trial will reveal that corporate history requires an equal division of the corporation’s stock between the two competing interests. While counsel for the Lynn interest suggests that such a result would be detrimental, it is certainly no more destructive to the corporation or shareholders than the current litigation. A remedy placing the shareholders back on equal grounds, as they were before Mike Lynn’s entanglement, would force compromises between the two groups for their own benefit as well as the good of the corporation and the public.
In conclusion, I would hold:
1. That the trial court’s granting of summary judgment on the facts before it was premature;
2. That the leading opinion places too great an emphasis on the Miller case, which is no longer the law in Minnesota after the passage of chapter 302A;
3. That, even if there is merit in the holding of the leading opinion that PJ’s claims are derivative, PJ retains the same rights Winter, its assignor, would have had to bring suit and, on that ground alone, the trial court’s action was erroneous; and
4. That there is not enough in the record in this case to determine what PJ knew and when it knew it. Accordingly, the continuing-wrong exception to the contemporaneous ownership requirement may apply in this case, at least with respect to the Lynn employment contract.
In any event, since the majority agrees that a remand of this case is necessary to determine whether there was a right of first refusal to purchase Viking stock, why not adjudicate all the issues raised in this lawsuit, including:
(1) abuse of corporate control and breach of fiduciary duty by Lynn;
(2) claimed abuse of corporate control and assets by officers and directors;
(3) impropriety and abuse of corporate control in connection with the Lynn employment contract;
(4) the claimed excessive compensation and use of corporate assets for non-corporate use.
I believe that the public is getting fed up with unethical conduct and misuse of funds whether by public officials or business entities which dominate major sporting events paid for by the public both directly and indirectly. In response to these public concerns, the legislature addressed the type of disruptive and manipulative misconduct exhibited in this case by amending chapter 302A, which the leading opinion either choses to ignore or misinterpret. I would reverse the trial court and remand for trial on all issues. Since the trial court must go into great detail on the corporate operations for the past ten years on remand, it would be well advised to consider all issues at that time in the interest of judicial economy.

. Schreiber involved litigation relating to a contract between the Pennzoil company and its affiliates. Although the lead opinion characterizes Schreiber as "factually strikingly similar” to the present case because of issues relating to the amendment of the contract, majority at 7, it ignores the facts that Schreiber did not involve a closely held corporation and the details of the allegedly wrongful contract were fully disclosed in a prospectus. See Schreiber at 512 & n. 2. Unlike in Schreiber, there is nothing in the record indicating what appellant knew about the Lynn employment contract that justifies granting summary judgment on claims relating to the Lynn contract. Accordingly, the Schreiber analysis simply does not apply.

. Appellant does allege a direct injury as a result of Lynn's negotiation and execution of the agreements surrounding the Boyer trust. Its brief to this court states: "Lynn’s activities in pursuit of his personal enrichment and extension of personal power had the effect of diminishing the value of the shareholders’ (including PJ) investment in the Corporation, and diminishing the ability of PJ as a voting shareholder of the Corporation to exercise influence over its affairs."

. In introducing the 1983 amendment to the House committee, Representative Bob Ellingson stated: "What we’re doing with this bill in some sections is guaranteeing those shareholder rights, especially for minority shareholders.” Hearings on H.F. 1021 before House Commerce and Economic Development Committee, 1983 Minn.Legis., April 19 (audiotape). Other shareholder protections of the 1983 amendments included protection of cumulative voting rights and pre-emptive share purchase rights. See 1983 Minn.Laws ch. 368.

. Under Minnesota law, a closely held corporation is a corporation which does not have more than 35 shareholders. Minn.Stat. § 302A.011, subd. 6a (1988).