Sci Minnesota Funeral Services, Inc. v. Washburn-Mcreavy Funeral Corp.

795 N.W.2d 855 (2011)

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Nature of the Case

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Facts

SCI Minnesota Funeral Services, Inc. (P) sold Crystal Lake Cemetery Association (Crystal Lake) to Corinthian Enterprises, LLC (P) in a stock sale agreement. Corinthian subsequently sold and assigned Crystal Lake to Washburn-McReavy Funeral Corporation (D) in a share purchase agreement. Ps brought this action contending the parties did not intend to include the vacant lots in the sale of Crystal Lake, and they sought equitable relief to remedy this claimed mistake. The parent company of SCI placed several cemeteries and funeral homes on the market. Corinthian purchased some of these cemeteries and funeral homes. SCI and Corinthian agreed to structure the sale of Crystal Lake as a stock transaction as Minnesota law prohibits the acquisition of cemeteries for profit. No one involved in the transaction was aware that Crystal Lake's assets also included the two vacant lots. One lot is located in Colorado, and one lot is located in Burnsville. SCI either acquired or purchased the vacant lots for Crystal Lake several years prior to the Crystal Lake sale. A former employee of SCI testified that SCI purchased the Colorado land in the late 1990s for tax purposes 'as part of a like-kind exchange,' and it acquired the Burnsville land when it 'had been carved out of the asset sale of another cemetery property years ago.' SCI continued to pay property taxes on the Colorado lot after the 2005 sale of Crystal Lake. The parties agree that the value of the two lots is approximately $2 million. Corinthian then entered into a share purchase agreement with D in which Corinthian agreed to sell its outstanding shares of stock in Crystal Lake to D for $1 million. Corinthian assigned everything it received from SCI under the stock sale agreement to D. The share purchase agreement listed the three cemeteries-Crystal Lake Cemetery, Dawn Valley, and Glen Haven-as transferring to D. The language in either the stock sale agreement or the share purchase agreement neither expressly excluded nor included the vacant lots from the sale nor did they limit the sale of Crystal Lake's shares to the three cemeteries owned by Crystal Lake. Ps do not dispute that under the terms of the agreements, SCI could have removed the vacant lots from the assets of Crystal Lake prior to the transaction because the lots were not utilized in the operation of the cemetery business because the agreement provided that SCI 'shall and may cause to be removed' from the Crystal Lake sale all assets owned by Crystal Lake that are 'not utilized in or related to the operation of the Business in its present form.' D became aware sometime in 2007 or 2008 that it owned the Colorado lot. A potential purchaser called inquiring about the Colorado property and D's chief financial officer received a phone call from SCI requesting a quit claim deed for the property. D did not become aware that it was the owner of the Burnsville lot until this lawsuit was commenced. The district court granted D's motion for summary judgment and denied Ps' motion for summary judgment. The court held that it could not reform the agreements because the evidence did not satisfy the elements required for reformation. Ps were not entitled to rescission based on mutual mistake because a stock sale transfers all assets and liabilities unless specifically excluded. Ps appealed, and a divided court of appeals affirmed. This appeal resulted.