Cold Spring Granite Company: A Rock-Solid Defense
September 7, 2011
Cold Spring Granite Company, one of the world's largest quarriers and fabricators of granite, had two lawsuits brought against it in Stearns County (Minnesota) District Court for alleged mistreatment of former minority shareholders.
The first case, Kahlert v. Cold Spring Granite Company, was resolved in 2006 when summary judgment was granted in favor of Cold Spring dismissing the action, confirming a decision by a Special Litigation Committee appointed by Cold Spring's board of directors which concluded that legal action was unwarranted.
The second action, U.S. Bank, N.A. as Trustee v. Cold Spring Granite Company, alleged that a reverse stock split and redemption of fractional shares by Cold Spring in 2006 violated Minnesota law and was based on an improper valuation of the company.
Cold Spring Granite Company turned to Bill Pentelovitch for representation in both matters, and Bill, along with Maslon colleagues including Marty Fallon and former Maslon partner Wayne Moskowitz, defended the claims throughout discovery, trial, and appeals to both the Minnesota Court of Appeals and the Minnesota Supreme Court.
In May 2009, the team conducted a 10-day trial in front of Hon. Robert H. Lynn, Special Master for the Stearns County district court. Judge Lynn issued Recommended Findings of Fact, Conclusions of Law and Order for Judgment which found in favor of Cold Spring Granite Company on all counts. Those Findings of Fact, Conclusions of Law and Order were adopted in their entirety by the Stearns County District Court in December 2009.
Plaintiffs appealed to the Minnesota Court of Appeals in February 2009, which affirmed the trial court decision in all respects in September 2010. Plaintiffs then petitioned the Minnesota Supreme Court for further review. The Minnesota Supreme Court granted that petition and the appeal was heard by the state’s highest court in April 2011. On September 7, 2011, the Minnesota Supreme Court issued a unanimous decision affirming the court of appeals’ decision.
This decision of the Minnesota Supreme Court is legally significant in many respects, and suffice it to say—will be viewed by future litigants as a seminal case in Minnesota’s minority shareholder jurisprudence.