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STATE OF MINNESOTA IN COURT OF APPEALS A09-935 SCI Minnesota Funeral Services, Inc., et al., Appellants, vs. Washburn-McReavy Funeral Corporation, et al., Respondents. Filed March 16, 2010 Affirmed Larkin, Judge Dissenting, Worke, Judge Dakota County District Court File No. 19HA-CV-08-1902

Patrick R. Martin, Kelly A. Moffitt, Fulbright & Jaworski, L.L.P., Minneapolis, Minnesota (for appellants) Kevin M. Decker, Jonathan P. Schmidt, Briggs & Morgan, P.A., Minneapolis, Minnesota (for respondents)

Considered and decided by Wright, Presiding Judge; Worke, Judge; and Larkin, Judge. SYLLABUS A contract for the sale of corporate stock may not be reformed or rescinded merely because the parties were mistaken about the nature, extent, or value of the corporations assets, so long as the information was available to the party seeking relief and there was no fraud or inequitable conduct on the part of the party opposing relief.

OPINION LARKIN, Judge Appellants claim that the district court erred by refusing to reform or rescind the parties agreements concerning the sale of corporate stock, arguing that reformation or rescission is warranted based on the parties mutual mistake regarding the underlying corporate assets. Because appellants are not entitled to either form of relief, we affirm. FACTS This appeal arises out of the sale of the capital stock of Crystal Lake Cemetery Association (Crystal Lake), a Minnesota corporation. At the time of the sale, appellant SCI Minnesota Funeral Services, Inc. owned all of the issued and outstanding common and preferred stock of Crystal Lake, except for 13.2 shares of preferred stock.1 Crystal Lake owned and operated three cemetery and funeral-home businesses: Crystal Lake Cemetery/Crematory, Dawn Valley Funeral Home/Memorial Park, and Glen Haven Memorial Gardens. Crystal Lake also owned two vacant parcels of real property: an approximately 8-acre parcel in Burnsville and an approximately 3.6-acre parcel in Lakewood, Colorado. On July 20, 2005, SCI sold all of its shares of Crystal Lake stock to appellant Corinthian Enterprises, LLC, for one million dollars. The parties intentionally structured
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These 13.2 shares of preferred stock are owned by six shareholders. These shareholders became entitled to receive cash in the sum of $1,926.36 per share as a result of a merger transaction in 1994. But the shareholders could not be located at that time and have not since been located. SCI warrants that these shareholders "are not entitled to receive more than the aforesaid $1,926.36 per share for each such share, if and when any of them may be located and produce their shares for delivery in consummation of the merger transaction." 2

the transaction as a stock sale, instead of an asset sale, to allow Crystal Lake to continue operating as a for-profit corporation under Minnesota law.2 On that same date,

Corinthian sold the Crystal Lake stock to respondent Washburn-McReavy Funeral Corporation, pursuant to a share-purchase agreement, for one million dollars. The stocksale agreement between SCI and Corinthian, and the share-purchase agreement between Corinthian and Washburn, expressly granted SCI the right, prior to closing, to remove from Crystal Lake all assets that were not utilized in or related to the operation of Crystal Lakes cemetery businesses in their present form. At the time of the transactions, none of the SCI, Corinthian, and Washburn representatives who was involved in the transactions was aware that Crystal Lake owned the Burnsville and Colorado parcels. The stock-sale agreement between SCI and

Corinthian provides for "[l]egal descriptions of all real property owned or leased by" Crystal Lake, and the descriptions therein do not include the Burnsville and Colorado parcels. Similarly, the share-purchase agreement between Corinthian and Washburn does not mention or legally describe the Burnsville and Colorado parcels. The parties agree that the parcels were not utilized in the operation of the Crystal Lake cemetery and funeral-home businesses and that the value of the two parcels is approximately two million dollars--twice the price paid for the Crystal Lake stock. In 2008, SCI conducted title searches in connection with a potential sale of the two parcels and discovered that the parcels were titled to Crystal Lake and were therefore
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Minn. Stat.

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