Mid-Century Ins Co v. North Star Auto, et al

Filing 33

ORDER. IT IS HEREBY ORDERED that Defendant Maas Motors, Inc.'s Motion for Release of Unclaimed Funds 28 is GRANTED, and the Clerk of Court shall transfer $13,500 from the Unclaimed Funds Account and disburse that amount to: Maas Motors , Inc., in care of its attorney, Lee W. Mosher, Davern McLeod & Mosher LLP, Suite 180 Valley Square Corporate Center, 7500 Olson Memorial Highway, Golden Valley, Minnesota 55427.LET JUDGMENT BE ENTERED ACCORDINGLY. (Written Opinion). Signed by Chief Judge Michael J. Davis on 12/19/13. (GRR) cc: KU/Financial. Modified on 12/19/2013 (lmb).

UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
Mid-Century Insurance Co.,
Plaintiff,
ORDER
Civil File No. 89-245 (MJD/FLN)

v.
North Star Auto, et al.,
Defendants.

This matter is before the Court on Defendant Maas Motors, Inc.’s Motion
for Release of Unclaimed Funds. [Docket No. 28] Maas Motors, Inc. (“Maas”)
claims that it is entitled to the remaining $13,500 of unclaimed funds currently
held in this case. Having considered this unopposed request along with the files
and records in this case, the Court will grant Maas’ claim and release funds in
that amount.
This matter arose out of the 1988 bankruptcy of Nord Motor Company
(“Nord”), which was insured by Plaintiff Mid-Century Insurance Company. On
December 1, 1988, Plaintiff filed a Complaint in Interpleader in the United States
Bankruptcy Court for the District of Minnesota. The Complaint was filed to
allow Plaintiff to transfer the proceeds of a $25,000 Minnesota Motor Vehicle
Dealer Bond to the Clerk of Court, so that the various claimants in this action
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would be required to interplead and determine their respective rights to the
proceeds of the $25,000 bond. Plaintiff took this action due to the multiple claims
made by various parties concerning entitlement to the proceeds.
This action was subsequently transferred to the District Court on March
27, 1989. On June 21, 1989, Plaintiff deposited $25,000 with the Clerk of Court.
[Docket No. 7.] This $25,000 constituted the Bond proceeds which were the
subject of the Interpleader action. Ultimately, the claims of the defendants were
never adjudicated, and on January 29, 1993 the case was closed because it had
been pending for three years, with no action for over a year. [Docket No. 13.]
Consequently, the $25,000 proceeds of the bond were never distributed.
On January 12, 2011, the Court ordered that the defendants in this action
would have thirty (30) days to submit a claim explaining their entitlement to the
bond proceeds which were the subject of this action. [Docket No. 14.] Notice
was provided electronically and by mail to the various defendants.
After nearly a year, only one of the defendants had responded to the
Court’s notice. On February 10, 2011, the Court received a letter from Joseph
Stark related to his 1988 claim in this matter. [Docket No. 17.] The record

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reflected that no party had ever objected to Stark’s claim for $7,500. The Court
released $7,500 to Stark.
On July 31, 2013, the Court received a motion to release $4,000 in funds
from Defendant Cyrus Juneau. [Docket Nos. 23-25] No party ever filed an
objection to Juneau’s claim. In September 2013, the Court released $4,000 to
Juneau.
On November 13, 2013, Maas filed the current Motion for Release of
Unclaimed Funds. Maas noted that it was a Minnesota corporation in the
business of wholesale used motor vehicle sales. (R. Maas Aff. ¶ 2.) In 1988, Maas
transferred possession of certain used automobiles to Nord for Nord to inspect
and potentially purchase and then resell through Nord’s used car dealership.
(Id. ¶ 4.) Under the arrangement between Maas and Nord, if Nord decided to
purchase a particular vehicle, a contract would be prepared and then Maas
would transfer the title to Nord. (Id.) Maas claims that, instead, while Nord had
possession of these vehicles, Nord sold them directly to Nord’s customers. (Id. ¶
5.) Nord then issued Maas checks as payment for the vehicles. (Id. ¶ 6.)
However, Nord stopped payment on all of the checks and did not otherwise pay
for the vehicles. (Id.) Maas claims that, in total, Nord owed it $24,151.37. (Id.; R.

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Maas Aff., Ex. 1, Feb. 10, 1989 Proof of Claim.) It requests payment of $13,500,
the remaining amount held by the Court.
On July 29, 1996, the Minnesota Secretary of State administratively
dissolved Maas. (R. Maas Aff. ¶ 8.) Ronald Maas was the President and sole
shareholder of Maas at the time that the corporation was dissolved. (Id. ¶¶ 1, 9.)
Currently, Ronald Maas is a principal in a different licensed motor vehicle
wholesale business. (Id. ¶ 8.)
First, the Court addresses whether Maas’ claim, prosecuted by Ronald
Maas, is viable given Maas’ dissolution. “After a corporation has been dissolved,
any of its former officers, directors, or shareholders may assert or defend, in the
name of the corporation, any claim by or against the corporation.” Minn. Stat.
302A.783. Ronald Maas was the last President and sole shareholder of Maas. (R.
Maas Aff. ¶ 1.) Thus, he has standing to assert a claim in Maas’s name. “[T]he
plain language of Minn. Stat. § 302A.783 does not include a finite limitation on
the time period following the corporation’s dissolution in which the corporation
or its shareholders may bring a legal claim.” Firstcom, Inc. v. Qwest Corp., No.
Civ. 04–995 (ADM/AJB), 2004 WL 2315289, at *3 (D. Minn. Oct. 13, 2004). Thus,
although Maas dissolved in 1996, Minnesota law does not bar the current claim.

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Next, the Court addresses the merits of Maas’ claim. Under Minnesota
Statute § 168.27, subdivision 24, Nord was required to maintain a bond
“conditioned on the faithful performance by the licensee of the obligations
imposed on persons engaged in motor vehicle transactions by the laws of this
state, including the conduct required of a licensee by this section and other
sections governing the sale or transfer of motor vehicles.” Minnesota courts hold
that this statute provides coverage under the bond “for a violation of obligations
imposed upon it in connection with the sale or transfer of a motor vehicle.”
Minneapolis Auto Auction, Ltd. v. Spicer Auto Sales, Inc., 439 N.W.2d 23, 25
(Minn. 1989). A “dealer’s issuance of checks without sufficient funds for the
purchase of vehicles constitutes such a violation as to invoke the protection of the
bond.” Id. In this case, the record shows that Nord issued checks without
sufficient funds to pay for the purchase of vehicles from Maas. Thus, Maas is
entitled to claim its loss against the bond.
The Court concludes that Maas is entitled to recover the $13,500 it seeks
against the remaining bond funds. There are now no remaining funds for this
matter held in the Court’s Unclaimed Funds Account. Given that no objections
and no other claims have been made in the twenty-four years that the funds have

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been held in the Court’s account, the Court holds that any other potential
claimants have now waived their claims on the bond. The Court will entertain
no further claims.
IT IS HEREBY ORDERED that Defendant Maas Motors, Inc.’s Motion for
Release of Unclaimed Funds [Docket No. 28] is GRANTED, and the Clerk of
Court shall transfer $13,500 from the Unclaimed Funds Account and disburse
that amount to: Maas Motors, Inc., in care of its attorney, Lee W. Mosher, Davern
McLeod & Mosher LLP, Suite 180 Valley Square Corporate Center, 7500 Olson
Memorial Highway, Golden Valley, Minnesota 55427.

LET JUDGMENT BE ENTERED ACCORDINGLY.

Date: December 19, 2013

s/ Michael J. Davis
Michael J. Davis
Chief Judge
United States District Court

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