## Facts

- SCI Minnesota Funeral Services, Inc. owned all stock of Crystal Lake Cemetery Association, which operated three cemetery/funeral properties in Minnesota.
- In 2005, SCI sold all Crystal Lake stock to Corinthian Enterprises, LLC in a transaction intentionally structured as a stock sale.
- Corinthian then sold the Crystal Lake stock to Washburn-McReavy Funeral Corporation under a share purchase agreement.
- Crystal Lake also owned two vacant parcels (Burnsville, Minnesota and Lakewood, Colorado) worth about $2 million, which were not identified by the negotiating teams at the time of the transactions.
- After closing, SCI and Corinthian asserted the parties never intended the vacant parcels to be included and claimed their transfer occurred by mistake.
- SCI and Corinthian sued Washburn seeking equitable relief: rescission or reformation of the stock/share purchase agreements to exclude the vacant parcels.

## Issues

1. Whether a stock sale agreement may be rescinded for mutual mistake or lack of mutual assent when the alleged mistake concerns undisclosed corporate assets that affect the stock’s value.
2. Whether the agreements may be reformed to exclude the parcels based on mutual mistake, or unilateral mistake plus fraud or inequitable conduct.
3. Whether summary judgment for the buyer was proper where information about the disputed assets was available to the seller and no fraud or inequitable conduct was shown.

## Decision

- The Minnesota Supreme Court affirmed summary judgment for Washburn.
- Rescission was denied because the alleged mistake concerned the value of the stock (the corporation’s asset composition), not the identity of what was sold (all shares).
- Rescission based on lack of mutual assent was denied because the parties mutually assented to the transfer of the stock as written, and no contrary shared understanding was shown.
- Reformation was denied because appellants failed to prove the written agreements diverged from the parties’ shared intent due to mutual mistake, and there was no fraud or inequitable conduct by Washburn.
- The court reviewed the summary judgment ruling de novo as to whether the legal requirements for rescission or reformation were met.

## Legal Principles

- In a stock sale, the purchaser acquires the corporation with its assets and liabilities unless particular assets are expressly excluded.
- A mutual mistake that relates only to the value of what is exchanged generally does not justify rescission; in a stock sale, unknown or misunderstood corporate assets typically implicate stock value rather than the contract’s subject matter.
- Rescission for lack of mutual assent requires proof that the parties did not agree on the same bargain at formation; clear written terms transferring all shares weigh against a no-assent claim.
- Reformation requires proof of a valid prior agreement reflecting the parties’ true intent, a written instrument that fails to express that intent, and that the failure resulted from mutual mistake or a unilateral mistake induced by fraud or inequitable conduct.
- Reformation is unavailable to correct a unilateral oversight absent fraud or inequitable conduct by the opposing party.

## Conclusion

The court held that where parties intentionally structure a transaction as a stock sale, a later-discovered misunderstanding about corporate assets is treated as a value mistake and does not support rescission, and reformation requires proof of a shared intent excluded from the writing or fraud-based inducement—neither of which was shown.


SCI Minn. Funeral Servs., Inc. v. Washburn-McReavy Funeral Corp., 795 N.W.2d 855 (Minn. 2011)