Congratulations to Oakdale, Minnesota lawyers Michael D. Schwartz and Brandon M. Schwartz for a victory in a closely held company dispute on behalf of Dan Ashbach, a member of North Star Processing, a limited liability company, who sought fairer treatment than he seems to have gotten from his business partners. Ashbach brought the case claiming breaches of fiduciary duty. The case went to trial before a consensual special magistrate (see Minn. Rule of General Practice, 114.02(a)(2)).
Ashbach appealed his victory, seeking to build upon it. He won on appeal, in part.
The case was fairly straightforward. Ashbach was part of a business, NSP. Others in the NSP business wanted to expand but Ashbach was unwilling to give a personal guaranty on a loan so the business was unable, at first, to undertake the expansion. So others in the NSP business took it upon themselves to expand, setting up another business, NSH for the purpose. Other NSP members were alleged to have depleted NSP resources in favor of NSH, thereby harming Ashbach and harming NSP.
The case is a useful primer in the sometimes complicated area of closely held company disputes.
The case also has a useful footnote on the challenge of adjudicating disputes with secret and confidential information in our public Minnesota Court of Appeals. Minnesota litigators may want to review footnote 1.