On March 27, 2019, the Minnesota Supreme Court denied review in the Lunds litigation that spanned more than four years and resulted in the largest reported fair value buyout award to a minority shareholder in Minnesota under Minn. Stat. §302A.751 (Section 751).1 The history leading to the litigation, the litigation itself, and the courts’ decisions in the case offer many important lessons for all private company business owners, business lawyers, and business litigators.2
In December 2014, Kim Lund, as a 25 percent beneficial owner, commenced a Section 751 case based upon the frustration of her reasonable expectations of liquidity and financial independence from the Lunds and Byerlys grocery store businesses. She commenced a lawsuit against the companies and her brother, Tres Lund—who was in control of the businesses—after 20 years of clearly articulating her expectation of an exit plan (specifically, that her beneficial ownership interests in the companies be separated from the family business so she could engage in charitable and philanthropic pursuits). The Lund family worked on developing an exit plan without any indication that Kim could not get out as an owner or that the family wealth equally gifted to her by her grandparents and father would have to remain invested in the Lund’s enterprise indefinitely. Kim’s expectations, as well as her siblings’ and the companies’ support of those expectations, were confirmed in numerous documents, many of which included the words of her siblings and company management. Ultimately, after 18 months of discovery, the district court granted Kim Lund’s buyout motion, ordering that she was entitled to a fair value buyout because her brother, Tres Lund, and the companies frustrated her reasonable expectations to financial independence and liquidity.3 Read more.