Schwartz Law Firm 2026-07-14T12:52:39Z https://www.schwartzlawfirmpa.com/feed/atom/ WordPress /wp-content/uploads/sites/1204239/2025/03/cropped-favicon-schwartz512-32x32.png On Behalf of Schwartz Law Firm <![CDATA[The litigation risks of freezing out a minority owner]]> https://www.schwartzlawfirmpa.com/?p=47124 2026-07-13T04:23:27Z 2026-07-14T12:52:39Z What it means to freeze out a minority owner A freeze-out occurs when majority owners use their control to reduce a minority owner's role in the business. Actions that may become part of a freeze-out dispute include:
  • Excluding the owner from management decisions
  • Limiting the owner's access to financial records
  • Removing the owner from an operating role
  • Changing compensation to benefit majority owners
  • Restricting the owner's role in major company decisions
Courts usually look at the parties' conduct as a whole. One decision may not create liability. A series of decisions, however, may support a legal claim.

Why freeze-out claims lead to litigation

If you limit a minority owner's role, that owner may believe the ownership interest no longer has value. This concern may grow if the owner no longer receives company information, takes part in key decisions or shares in the company's financial benefits. The claims in these cases depend on state law and the type of business entity. Litigation may include allegations of breach of fiduciary duty, minority oppression or other wrongful conduct. Courts usually look at the history between the owners and the events that gave rise to the dispute.

How owner disputes can affect the business

Disputes between owners rarely stay between the owners. Litigation may require employees to gather records, answer discovery requests and appear in court. It may also pull management's attention away from running the business and draw the attention of employees, customers or vendors. For companies with substantial revenue and long-standing business relationships, owner disputes can affect customers, lenders and other stakeholders. What begins as an effort to limit one owner's role may grow into a dispute that affects daily operations and future business plans.]]> On Behalf of Schwartz Law Firm <![CDATA[Can my business partner fire me if I own part of the company?]]> https://www.schwartzlawfirmpa.com/?p=47114 2026-06-17T07:19:34Z 2026-06-11T14:24:16Z When a termination crosses the legal line Even if your company's internal rules give majority owners the power to hire and fire, they cannot use that authority in bad faith. When partners terminate you simply to push you out or force you to sell your shares at a steep discount, it is known as a squeeze-out. This type of termination cuts off your income and removes you from management without a legitimate business reason. Under Minnesota law, this behavior frequently violates your reasonable expectations as a co-owner. Even if the board tries to fix the issue after the fact by retroactively approving the decision, it does not eliminate your legal rights.

What you can do when your partner pushes you out

You do not have to accept a forced exit or an unfair severance package. When your co-owners abuse their position and act against your interests, a court can intervene with several possible remedies:
  • Buyout: A judge can order the company or the remaining owners to buy your shares at a fair value, usually calculated based on the date you file your lawsuit.
  • Back compensation: A court can compel the company to pay the lost wages and benefits that were wrongfully withheld from you.
  • Dissolution: In severe cases, a court may order the full dissolution of the business.
The strength of your case often comes down to how quickly you act and how well you document the events leading up to your termination.

What the right legal support can do for your case

Minority shareholder disputes in Minnesota involve complex legal standards governing unique factual situations. An experienced trial attorney can help you understand which remedies apply to your situation and advocate for everything you put into the business.]]> On Behalf of Schwartz Law Firm <![CDATA[What counts as shareholder oppression in Minnesota?]]> https://www.schwartzlawfirmpa.com/?p=47112 2026-06-26T08:35:30Z 2026-05-13T07:09:11Z The statutory standard Under Minnesota Statute 302A.751, a court can step in when those running a closely held corporation act fraudulently, illegally or in a manner "unfairly prejudicial" to one or more shareholders. That third category is where most oppression cases live. It reaches far broader than fraud. Minnesota law defines a closely held corporation as one with no more than 35 shareholders of record. If your business fits that definition and you hold a minority interest, this statute is the foundation of your rights.

The reasonable expectations test

Minnesota stands out in how courts measure unfair conduct. Judges look at what each shareholder reasonably expected when they bought in. They also look at how those expectations evolved as the relationship unfolded. In a family business or small partnership, those expectations often include a paying job, a real seat at major decisions and a share of the company's success that scales with growth. When the majority defeats those expectations without a legitimate business reason, the conduct can be unfairly prejudicial. That holds true even if the majority broke no clear law. Written agreements matter here. Courts give significant weight to buy-sell agreements, employment contracts and shareholder agreements as evidence of the parties' reasonable expectations, though they are not automatically controlling in every case.

What conduct courts have recognized as oppression

Minnesota courts have found unfair prejudice in many situations, including these:
  • Firing a shareholder-employee from a position they reasonably expected to hold long-term
  • Cutting off distributions or dividends while the majority owners keep drawing salaries or perks
  • Excluding a minority owner from management and major decisions
  • Refusing to share financial records the law entitles the shareholder to inspect
  • Diluting a minority owner's stake through self-dealing transactions
No single act guarantees a winning case, and context matters. A pattern of conduct often carries more weight than any one decision.

What a court can order

Once a shareholder proves oppression, Minnesota courts have broad equitable powers. Buy-outs are the most common remedy in a minority oppression claim. When a court orders one, it typically directs the company or controlling owners to redeem the minority's interest at the statute's "fair value" standard. The Minnesota Supreme Court has held that, absent extraordinary circumstances, courts determine fair value without a marketability discount. That can mean a meaningfully higher number than an oppressive majority might offer privately. Courts still keep discretion to apply discounts when the facts of a case justify them. Courts can also order injunctions to stop ongoing misconduct, return of misappropriated funds or, as a last resort, dissolution of the corporation.

How quickly minority shareholders need to act

Minnesota generally applies a six-year statute of limitations to oppression claims. When that clock starts depends on the specific theory of the case and the facts involved. That question alone can become its own dispute. Evidence ages quickly. Witnesses leave the company, emails get archived and the majority often use the delay to build their own narrative. If you suspect the majority is failing to meet your reasonable expectations, start documenting now. Keep communications, financial records, board materials and a clear timeline of events. Minnesota law gives oppressed minority shareholders a real path to relief through the courts. That path runs through litigation, and litigation runs on provable facts. Acting early gives a judge a stronger record to review.]]> On Behalf of Schwartz Law Firm <![CDATA[Understanding shareholder oppression under Minnesota law]]> https://www.schwartzlawfirmpa.com/?p=47110 2026-04-08T11:00:49Z 2026-04-13T11:00:06Z A minority shareholder in a closely held corporation often finds themselves in a vulnerable position. Unlike a public stock, you cannot simply sell your shares on an open exchange if you feel unhappy with how the company runs. This lack of a market forms the foundation of shareholder oppression laws. Minnesota law protects minority owners from unfairly prejudicial conduct by those in control. This protection goes beyond illegal acts like fraud. Instead, the law focuses on shareholders' reasonable expectations.

What counts as oppressive or unfairly prejudicial?

The courts examine the core understandings the owners had when they started or joined the business. Common examples of oppression include:
  • The freeze-out: Majority owners remove a minority shareholder from the board. Even with at-will employment, courts may find a violation if the job was key to the shareholder's return.
  • Dividend starvation: Majority owners withhold distributions while increasing their own pay.
  • Information blockades: Majority owners deny access to corporate books or financials.
  • Waste of assets: Owners use company funds for personal expenses or non-business luxuries.
These actions often show a clear effort to push out a partner and lower the value of their investment. When the majority benefits itself at the minority's expense, that qualifies as oppression.

What legal remedies are available?

If a court finds the majority acted unfairly, it has broad power to fix the problem. Under Minnesota law, a court can order:
  • A buy-out: The court forces the company or majority owners to buy the minority's shares at fair value. This usually means full value with no minority discount.
  • Injunctions: The court orders the majority to stop harmful actions.
  • Dissolution: In extreme cases, the court orders the company to close and sell its assets.
Courts often prefer a buyout to keep the business running and protect the minority shareholders. This helps the departing owner keep full value. Business breakups can be complex. An attorney can review your situation, gather evidence, and determine if someone violated your rights. They can take action in court to protect your investment and pursue a fair outcome.]]> On Behalf of Schwartz Law Firm <![CDATA[Can minority rights turn into legal liability in Minnesota?]]> https://www.schwartzlawfirmpa.com/?p=47102 2026-03-10T10:01:45Z 2026-03-13T10:00:40Z In Minnesota, minority owners in a business have strong legal rights. These rights protect them from unfair treatment by the people who own most of the company. The law usually protects these small-scale owners from unfair treatment. However, there are rare times when a minority owner's actions can lead to legal trouble.

When blocking a decision causes trouble

The law expects business owners to act in good faith. This means they should act honestly and not try to hurt the company just to help themselves. Most of the time, minority owners have the right to vote against major changes. These changes might include selling the company or taking out a large loan. Problems can start if a minority owner uses their power to "squeeze" the company. For example, imagine a minority owner refuses to sign a needed paper unless the company gives them a private cash payment. If this action hurts the business and serves no real business purpose, a court might find it unfair. Under Minnesota law, a court can step in if an owner's conduct unfairly prejudices the others.

Do minority owners have special duties?

Many people think only the majority owners have fiduciary duties. A fiduciary duty is a legal promise to act in the best interest of the group. In Minnesota, the rules for minority owners depend on the extent of their actual power. If a minority owner acts only as an investor and does not help run the company, they usually do not owe these duties to the other owners. The Minnesota Supreme Court decided this issue in Advanced Communication Design, Inc. v. Follett. However, if a minority owner helps manage the business or has sufficient power to control a major decision, a court might find they owe a duty of loyalty. If they use that power to compete with the company or share secrets, others could sue them.

Staying safe

Business fights can become very expensive. The best way to avoid a lawsuit is to create a clear written agreement. If you are a minority owner, you need to know when your no vote is a right and when others might see it as a breach of fairness. Speaking with a lawyer early can help keep a small disagreement from turning into a long court battle.]]> On Behalf of Schwartz Law Firm <![CDATA[What triggers forced buyouts in shareholder disputes?]]> https://www.schwartzlawfirmpa.com/?p=47100 2026-02-09T08:52:52Z 2026-02-12T08:52:03Z Forced buyouts don’t happen just because shareholders disagree. They happen when the conflict hits a legal threshold. In Iowa, the law outlines specific situations where a court can step in and force one party out. Here’s what typically triggers that kind of litigation.

Shareholder misconduct

Buyouts often start with serious misconduct, such as fraud, embezzlement or using business assets for personal gain. Those actions become even more damaging when they violate legal duties to the company. If you're dealing with a partner whose behavior is damaging the business and you can prove it, the court may treat that as a valid reason to push them out and protect what’s left.

Oppression of minority shareholders

If majority owners shut you out of key decisions, withhold financial records or cut off distributions, that may count as shareholder oppression, and Iowa law gives you the right to take action. When the majority uses their power to isolate or harm a minority owner, the court may view that as grounds for a forced buyout, especially in closely held corporations where there's no easy way to exit.

Deadlock between owners

In 50/50 partnerships or tight ownership groups, total deadlock can grind business operations to a halt. If you and your co-owner can’t agree on major decisions and the business is suffering because of it, the court can step in and order one of you to buy the other out so things can move forward again.

When litigation becomes necessary

If you’ve tried to move forward but your business partner refuses to engage, blocks decisions or takes actions that harm the company, then litigation may be the only tool left to protect your stake. Iowa law offers you a path forward. However, it takes strategy and documentation to make the case. Early advice from someone who knows the system can change the course. You don’t have to stay stuck in a situation that no longer works.]]> On Behalf of Schwartz Law Firm <![CDATA[Common ways business leaders breach their fiduciary duties]]> https://www.schwartzlawfirmpa.com/?p=47098 2026-01-12T19:29:29Z 2026-01-14T10:06:25Z How do business leaders breach their fiduciary duties? Breaches of fiduciary duty occur when business leaders and other people in a fiduciary position break their legal promise to act with their company’s best interests in mind. Being wary of when these breaches might occur can save a company from suffering huge losses.

Common ways leaders breach fiduciary duties

Typically, when a business leader breaches their duty to the company, they do it to benefit themselves, their families and other businesses they may have ties to. There are many ways this can be achieved, including:
  • Self-dealing: Making decisions that benefit the leader instead of the company
  • Misusing funds: Stealing and using company money and assets for personal gain
  • Breaching trust: Sharing private information, revealing trade secrets, leaking client lists and taking advantage of information learned through a business leader’s position
  • Working with competitors: Owning or working for a competitor while keeping a high-level position in a company
  • Neglect: Making poor decisions without properly checking the risks
  • Lack of transparency: Hiding factors that can affect business decisions
  • Malicious intentions: Making choices intended to harm the company
In Minnesota, business leaders caught breaching their duties are liable to pay for any losses. The court may also require them to give up any profit they have made using misused funds or assets. They are also likely to lose their position within the company or face criminal charges.

Preventing breaches of fiduciary duty

It can be difficult to understand shareholder disputes, and identifying when a business leader potentially breaches their duties can be challenging without guidance from a legal professional.  ]]> On Behalf of Schwartz Law Firm <![CDATA[How can you prevent a breach of fiduciary duty?]]> https://www.schwartzlawfirmpa.com/?p=47060 2025-12-11T10:39:20Z 2025-12-16T10:38:00Z A breach of fiduciary duty is what happens when a business leader breaks their legal promise to act in the best interests of the company, typically by prioritizing their own. This often comes at the expense of the company. When business leaders abuse their position of trust, they may face serious legal consequences. This includes:
  • Paying for financial losses from lost profits and damaged reputation
  • Giving up any profits made by misusing assets
  • Losing their leadership position in the company
  • Facing criminal charges
To minimize the risk of such breaches of trust, a guardian must learn what their fiduciary duties require of them, what steps they can take to keep assets separate and who to consult for legal advice. 

Familiarize yourself with your fiduciary duties

One of the best ways to prevent a breach is to understand what being a good guardian means. This means learning about fiduciary duties:
  • Duty of loyalty: Focus on the well-being of their beneficiary above their own.
  • Duty of care: Make important decisions with the beneficiary’s best interests in mind.
  • Duty of good faith: Act in a manner that is honest, fair and reasonable with the beneficiary. 
  • Duty of prudence: Protect the privacy of the beneficiary, keeping their information secure and confidential.
  • Duty to disclose: Share all information that can affect their beneficiary’s interests. 
A guardian who is familiar with their duties has an obligation to uphold them to the best of their abilities, ensuring that the well-being of the company takes top priority.

Always keep assets separate

Commingling fiduciary assets with personal funds can potentially lead to a breach. This is often caused by self-dealing, improper asset distribution, asset misappropriation and asset mismanagement, as all of these factors can cost beneficiaries a lot of money. Acting with due diligence by keeping assets separate and using dedicated accounts makes accounting and auditing smoother. Being open and honest makes it easier for both parties to track their assets and monitor important transactions.

Seek professional guidance

There are many situations where beneficiaries may feel that a breach has either occurred or is likely to occur. Business leaders who are not transparent, fail to communicate or make complex transactions involving assets may cause some anxiety – especially if the benefits seem one-sided in the fiduciary’s favor.  One of the best ways to prevent breaches is to consult a legal professional. Following the advice of an attorney can help beneficiaries who are unsure of how to proceed, especially when a trustee makes questionable actions. Consulting an attorney can also help beneficiaries who might have been misled or otherwise taken advantage of by their guardians. Guidance from legal professionals makes it easier to find signs and evidence of fiduciary breaches.   ]]> On Behalf of Schwartz Law Firm <![CDATA[Hidden fiduciary duties that spark fights in family businesses]]> https://www.schwartzlawfirmpa.com/?p=47048 2025-11-17T15:54:19Z 2025-11-18T09:14:21Z Family businesses are wonderful additions to communities because they create jobs for many. From the inside, the owners keep money within members and the decision-making close to home. However, close relationships are prone to legal tension when owners disagree about money or control. Minnesota courts treat these companies seriously, which means owners must follow strict fiduciary duties under specific statutes that apply to their business type. When someone ignores these duties, disputes rise fast. How hidden obligations shape daily decisions Family members trust each other instinctively, so they often miss the legal obligations that come with ownership. Fiduciary duties demand honesty and full disclosure during major business decisions. A simple misunderstanding can trigger conflict that affects everyone. It is easy to spot potential problems, but it becomes harder when those issues involve family members. Here are some examples of issues that resulted in costly legal battles for other family-owned businesses:
  • A co-owner hid financial records and refused to answer questions.
  • A family member funneled company money into side projects without informing the others.
  • A major co-owner, such as a parent, transferred shares to one child without notifying the others.
These actions created distrust and disrupted communication. Do not let this happen to you. If you can, periodically hold meetings to get updates on how each member is doing and if there are concerns that they want to talk about. The earlier you discuss potential problems, the more likely you can prevent them from escalating. Protect your business Disagreements in family-owned companies happen all the time. Talking things out helps in many situations, but some problems get too serious or confusing to resolve with a conversation. When that happens, litigation gives you a clear path to sort out rights, responsibilities and the future of the business. A lawyer can walk you through this process and help you understand what each owner must do under Minnesota law. With this structure in place, you protect the company’s stability and prevent bigger financial issues. ]]> On Behalf of Schwartz Law Firm <![CDATA[Shareholder Appraisal Litigation – Favorable Outcome for Plaintiff]]> https://www.schwartzlawfirmpa.com/?p=47049 2025-11-17T16:01:59Z 2025-10-24T14:57:35Z Schwartz Law Firm recently secured a highly favorable ruling in a complex shareholder appraisal dispute following a statutory merger for its Iowa based client (plaintiff). The case centered on the fair value of a minority shareholder’s stake in a closely held corporation operating in a niche industrial sector. After a multi-day bench trial and extensive post-trial briefing, the Court adopted the plaintiff’s valuation methodology and rejected the defendant’s inflated valuation claim. The defendant demanded tens of millions of dollars asserting a highly inflated valuation. The Court found that the actual fair value of the shares was consistent with recent arm’s-length transactions as asserted by plaintiff and significantly below the defendant’s demand. Key Takeaways: Credible Valuation Process: The plaintiff retained two independent valuation experts who used distinct methodologies and were kept siloed from each other to ensure impartiality. Their valuations were consistent and aligned with historical transactions. Arm’s-Length Transactions as Anchors: The Court gave substantial weight to multiple arm’s-length transactions involving the company’s stock — including a prior redemption, employee stock purchases, and a third-party investment — all of which supported the plaintiff’s valuation. Rejection of Inflated Valuation: The defendant’s expert was found to lack sufficient industry knowledge, failed to consider key financial and operational data, and ignored relevant market transactions. The Court found the expert’s valuation lacked credibility and gave it no weight. Good Faith Recognized: The Court concluded that the plaintiff acted in good faith throughout the process, including offering a per-share price above both expert valuations and recent third-party transactions. No Attorney Fees Awarded: The Court declined to award attorney fees or expert costs to either party, recognizing the plaintiff’s diligence and the defendant’s lack of bad faith in initiating the claim — though the final judgment was a clear win for the plaintiff. A Win for a Local Iowa Company and Its People This case wasn’t just about numbers — it was about protecting a company owned by hardworking Iowans. The business is run by dedicated employees who care deeply about their work, their community, and each other. This ruling affirms their integrity and shields them from an unjustified financial burden. The case was led by Brandon Schwartz of Schwartz Law Firm, who served as lead trial counsel and handled the matter from start to finish. His approach, understanding of valuation law, and command of the trial record helped secure this outcome. This case underscores the importance of transparent governance, methodical valuation practices, and the evidentiary power of real-world transactions in shareholder disputes. It also highlights how courts scrutinize expert credibility and reward parties who approach valuation disputes with integrity and rigor.]]>