Appeals court upholds Lund buyout ruling and fair value determination

Lund v. Lund, 2019 Minn. App. LEXIS 16 (Jan. 14, 2019) (Lund II)

A protracted Minnesota buyout dispute involving the heirs to a local grocery store empire, Lunds & Byerlys, may have reached the end following a recent ruling from the state appeals court. The reviewing court upheld the trial court’s decision to grant the minority shareholder’s request for a buyout as well as the court's fair value determination. 

This intrafamily dispute centered on three family businesses, the Lund entities, including a chain of upscale grocery stores that operate in the Twin Cities’ area. The opposing parties are two of the founder’s four grandchildren. The plaintiff, Kim Lund, indirectly owns a 25% interest in the entities. The key defendant, Tres Lund, is Kim’s brother. He is the only one among the siblings who is actively involved in running the companies.

Starting in the early 1990s, Kim informed Tres and other executives in charge of the Lunds entities that she was looking for an “exit strategy.” When her efforts to structure a separation of the assets went nowhere, she sued Tres, the companies, and several other individuals. In 2016, the district court granted Kim’s buyout motion. In 2017, the court ordered a valuation trial that made big news as it featured two veteran appraisers who arrived at significantly different valuations of the businesses. The judge, well-versed in appraisal jurisprudence, decided the value gap indicated bias on each expert’s part in favor of the party who paid the expert’s fee. The court, therefore, performed its own appraisal and achieved a fair value that landed somewhere between the expert's figures. 

Both parties objected to aspects of the trial court’s rulings. The appeals court, in affirming most of the trial court's findings, lauded the latter for its efforts to achieve a fair and equitable valuation.

Find out more about the recent appeals court ruling here.