Court: Court of Appeals of Minnesota; December 15, 1986; Minnesota; State Appellate Court
Respondents Bradford Schools, Inc. and Minneapolis Business College, Inc. initiated legal action against appellant Opal Maetzold for breach of contract, breach of warranty, and negligent and fraudulent misrepresentation following a stock sale in which Bradford Schools acquired all capital stock of Minneapolis Business College from Maetzold for $147,500 under a Stock Purchase Agreement. Maetzold, who held key positions at the College, made several warranties regarding the College’s financial condition and compliance with applicable laws, including accurate financial statements, absence of undisclosed liabilities, and proper approval for financial assistance programs.
The Stock Purchase Agreement included an indemnification provision (Section 6.2), where Maetzold agreed to indemnify Bradford Schools for damages resulting from any inaccuracies in her representations. Bradford Schools sought partial summary judgment on the breach of contract and warranty claims, supported by an affidavit from Jim Zillman, who alleged that Maetzold provided inflated financial information to the U.S. Department of Education, resulting in erroneous financial aid qualifications for students. The trial court granted partial summary judgment in favor of Bradford Schools, which Maetzold is appealing. The appellate court has reversed the trial court's decision and remanded the case for further consideration.
An investigation into the Minneapolis Business College revealed a liability of $22,762.00 for BEOG overawards during the 1978-79 and 1979-80 school years, attributed to improper calculations by former owner Opal Maetzold. Bradford Schools repaid the U.S. Department of Education due to these overpayments and also became liable for unrefunded student loans from 1978 to August 31, 1981. Maetzold denied the claims against her, but her affidavit lacked specific facts to support her opposition to summary judgment. The trial court referenced Minnesota Rules of Civil Procedure Rule 56.05, stating that the burden is on the moving party to show no genuine issue of material fact exists for summary judgment to be granted. Respondents claimed Maetzold had committed to indemnify Bradford Schools for liabilities, but this was contingent on any misrepresentation or breach of warranty by Maetzold. Since the evidence presented by respondents did not sufficiently demonstrate that Maetzold's representations regarding BEOG and student loans were false or breached, there remained a genuine issue of fact. Consequently, the trial court's summary judgment was reversed and the case remanded for further proceedings.
