SCI Minnesota Funeral Services, Inc. v. Washburn-McReavy Funeral Corp.

Summary

The Minnesota Supreme Court considered whether parties to a stock sale could obtain rescission or reformation after discovering that the corporation owned two vacant lots that were transferred with the stock. The court held that rescission was unavailable under Minnesota precedent governing stock sales and that there was mutual assent to transfer all of the corporation’s stock, including its assets. The court also held that the parties failed to establish the elements required for reformation and affirmed summary judgment for Washburn-McReavy.

Holdings

1. When a district court decides on cross-motions for summary judgment that the legal requirements for rescission or reformation are not met based on undisputed facts, the appellate court reviews those legal determinations de novo.
2. Rescission is unavailable where parties to a stock sale are mistaken about the nature, extent, or value of the corporation's assets, absent fraud, inequitable conduct, or a mistake concerning the actual existence or identity of the stock.
3. The parties objectively assented to the sale and transfer of all of Crystal Lake's issued and outstanding stock, and that stock transfer included the corporation's assets, including the vacant lots; rescission was therefore unavailable for lack of mutual assent.
4. Appellants were not entitled to reformation because they could not prove that the agreements failed to express the parties' true intentions due to a mutual mistake; SCI had the contractual ability to exclude the lots, and any failure to do so was at most a unilateral mistake without fraud or inequitable conduct.

Questions Presented

1. What standard of review applies to a grant of summary judgment determining equitable claims for rescission and reformation when the material facts are undisputed?
2. Whether appellants were entitled to rescission based on mutual mistake concerning the assets transferred in a stock sale.
3. Whether appellants were entitled to rescission based on lack of mutual assent.
4. Whether appellants established the elements required for reformation based on mutual mistake.

Disposition

affirmed