Minnesota Divorcing Couple Also Divorce from the Paint-Stripping Business

Minnesota case law summary: Divorce.

In re Marriage of Brenda Ellen Nygaard vs. Jeffrey Merlin Nygaard. MN Divorce

Brenda Ellen Nygaard and Jeffrey Merlin Nygaard were married in 1986 and divorced in McLeod County, Minnesota, in 2011. They agreed to all issues and the divorce was by a stipulated judgment. In 2012, the wife brought a motion to reopen the judgment.

Since 1992, the husband and wife had owned Nygaard Enterprises, a company that stripped paint from equipment and vehicles. Each spouse owned half of the company's stock. The wife handled the financial affairs of the company, and the husband was the CEO and worked in the company's day-to-day operations.

The wife claimed that the husband locked her out of the business in 2010. According to the husband, the wife had withdrawn large amounts of money from the company for her own use and kept the husband from finding out. He also alleged that she did things such as remove keys from company vehicles, which caused problems and kept the company from getting one important job.

In 2011, a court appointed a receiver, and the business was ultimately shut down. The husband began a new business, Nygaard Industrial Painting. The wife alleged that an employee of the old company was paid to do work for the new company prior to the shut down of the old business. The wife also alleged that the husband failed to tell the receiver about some work that the old company had done for 3M, and that he threatened potential bidders when the old company's land was auctioned off prior to the shutdown. A court in an earlier case had found that the husband had intimidated a potential bidder, and that court awarded the wife damages.

She also alleged that the husband rigged the bid prices when the old company's equipment was sold, in an effort to get the equipment at less than market value, and that she was unable to bid because the husband withheld her paycheck.

In this appeal, the wife argued that the trial court in the divorce case should have addressed her claims of breach of fiduciary duty. Her allegations were in terms of the husband using the company's business opportunities for his own benefit.

The Court of Appeals examined the trial court's findings and concluded that the issue had, indeed, been addressed. Even though the trial court had not used the words "fiduciary duty" in the findings, they did address the wife's claims.

On the issue of the company employee being used to perform services for the new company, the Court of Appeals also examined the trial court's findings and concluded that the issue had been properly addressed and resolved. It also found that the wife had not established her claim that company funds had been diverted, and found that the company equipment had, indeed, been purchased at fair market value. Finally, the Court of Appeals examined the allegations of fraud, and concluded that the trial court had correctly found that there was no fraud.

For these reasons, the Court of Appeals affirmed.

No. A13-0276 (Minn. Ct. App. Feb. 3, 2014).

Please see the original opinion for the court's exact language.


Richard P. Clem is an attorney and continuing legal education (CLE) provider in Minnesota. He has been in private practice in the Twin Cities for 25 years. He has a J.D., cum laude, from Hamline University School of Law in St. Paul and a B.A. in History from the University of Minnesota. His reported cases include: Asociacion Nacional de Pescadores a Pequena Escala o Artesanales de Colombia v. Dow Quimica de Colombia, 988 F.2d 559, rehearing denied, 5 F.3d 530 (5th Cir. 1993), cert. denied, 510 U.S. 1041 (1994); LaMott v. Apple Valley Health Care Center, 465 N.W.2d 585 (Minn. Ct. App. 1991); Abo el Ela v. State, 468 N.W.2d 580 (Minn. Ct. App. 1991).

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