                     United States Court of Appeals
                           FOR THE EIGHTH CIRCUIT
                                   ___________

                                   No. 98-2961
                                   ___________

Helm Financial Corporation,           *
a California corporation,             *
                                      *
             Appellant,               *
                                      *
       v.                             * Appeal from the United States
                                      * District Court for the
MNVA Railroad, Inc.; Dakota,          * District of Minnesota
Missouri Valley & Western Railroad,   *
Inc.; Larry C. Wood; Diane Wood,      *
                                      *
             Appellees.               *
                                 ___________

                              Submitted: May 14, 1999

                                  Filed: May 1, 2000
                                   ___________

Before McMILLIAN, BRIGHT and FAGG, Circuit Judges.
                           ___________

McMILLIAN, Circuit Judge.

      Helm Financial Corp. (Helm) appeals from an order entered in the District Court1
for the District of Minnesota denying its motion for summary judgment. Helm
Financial Corp. v. MNVA Railroad, Inc., Civil No. 97-1342 (DSD/JMM) (D. Minn.


      1
      The Honorable David S. Doty, United States District Judge for the District of
Minnesota.
June 24, 1998) (order). For reversal, Helm argues that the district court erred in
denying its motion for summary judgment because the transfer of DMVW stock
constituted an unlawful preference and a breach of their common law fiduciary duty.
Defendants MNVA Railroad, Inc. (MNVA), Dakota, Missouri Valley & Western
Railroad, Inc. (DMVW), and Larry C. Wood and Diane Wood argue that the district
court did not err in denying Helm’s motion for summary judgment because there were
genuine issues of material fact in dispute and because, as a matter of Minnesota law,
creditors do not have a common law cause of action for breach of fiduciary duty against
corporate directors or officers for unlawful distribution of corporate assets to
shareholders, absent self-dealing or preferential treatment. For the reasons discussed
below, we hold that we have appellate jurisdiction and we affirm the order of the
district court.

      The district court had subject matter jurisdiction over this case under 28 U.S.C.
§ 1332 (diversity jurisdiction). We have appellate jurisdiction under 28 U.S.C. § 1291.

       The following statement of facts is taken in large part from the district court
order. Helm is a locomotive and railcar leasing company and a judgment creditor of
MNVA. It is a California corporation with its principal place of business in California.
MNVA is a Minnesota corporation with its principal place of business in Minnesota.
It was incorporated in July 1986 and operated a short-line freight railroad in Minnesota
and North Dakota. Larry and Diane Wood were officers and directors and major
shareholders of MNVA. DMVW is a North Dakota corporation organized in 1990,
with its headquarters in Bismarck, ND, and a wholly-owned subsidiary of MNVA;
DMVW operated several spans of railroad trackage in North Dakota under a long-term
lease agreement with the Soo Line Railroad.

       In August 1994 MNVA agreed in principle to the terms of a letter of intent with
Pioneer Railcorp (Pioneer) under which Pioneer agreed to acquire MNVA’s operating
assets by purchasing MNVA’s stock. MNVA decided to spin off DMVW to MNVA

                                          -2-
shareholders as part of the reorganization of MNVA in connection with the sale to
Pioneer. In October 1994 the deal between MNVA and Pioneer was restructured as
a sale of assets instead of a stock purchase. On November 21, 1994, MNVA
determined that it would be able to pay its debts in the ordinary course of business after
the proposed distribution of DMVW stock to MNVA shareholders (as required by
Minn. Stat. § 302A.551 subd. 1) and approved the distribution of DMVW stock to the
existing MNVA shareholders in proportion to the percentage of stock they owned in
MNVA. No consideration was paid to MNVA for the distribution of DMVW stock.
DMVW became an independently-operated entity after the distribution. In December
1994 MNVA sold its assets to Pioneer for the assumption of some secured debts and
$1.00 and thereafter ceased operations.

       According to MNVA, during the course of winding up its affairs, it was unable
to pay all of its creditors in full because it experienced an “unexpected shortfall” after
losing several substantial claims, including one against the Minnesota Department of
Transportation for reimbursement of track rehabilitation expenses. In May 1996, Helm
obtained a state court judgment against MNVA for railcar leasing fees in the amount
of $96,028.00, plus interest, and attorney’s fees and costs.

       In June 1997 Helm filed this complaint in federal district court against MNVA,
DMVW, and the individual officers and directors of MNVA (Larry and Diane Wood,
Jeffrey Alan Wood, Gilbert A. Gillette, Bennett J. Brown, and Patrick J. Neaton),
alleging that the distribution of DMVW stock to MNVA shareholders defrauded
MNVA’s creditors in violation of the Minnesota Uniform Fraudulent Transfer Act
(UFTA), Minn. Stat. § 513.41-.51, and constituted an unlawful preference of
defendants as officers, directors, shareholders, and fiduciaries over MNVA’s creditors
in breach of their fiduciary duty to creditors. Helm alleged that the spin off left MNVA
insolvent because DMVW was MNVA’s most valuable asset. Defendants filed an
answer. Helm later dismissed Gillette and settled with Jeffrey Alan Wood and Brown.
Helm then filed a motion for summary judgment.

                                           -3-
       On June 24, 1998, the district court denied Helm’s motion for summary
judgment. The district court first denied summary judgment on the UFTA claim,
holding the UFTA did not apply to the spin off of DMVW stock through a stock
distribution by MNVA to its shareholders. See slip op. at 5-6, citing Minnesota Model
Business Corporation Act, Minn. Stat. § 302A.551 subd. 3(d) (providing that the UFTA
does not apply to distributions of stock made by a corporation to shareholders). The
district court next denied summary judgment on Helm’s claim that Larry and Diane
Wood and Neaton breached their fiduciary duties owed as officers and directors to
MNVA’s creditors by distributing DMVW stock to MNVA shareholders and thereby
preferring themselves over those creditors when MNVA was insolvent or on the verge
of insolvency. First, the district court held that Minnesota corporations statutes do not
create such a fiduciary duty to creditors based solely on shareholder status and limit
such fiduciary duty to officers and directors. See id. at 7. With respect to officers and
directors, the district court held that Minnesota cases do not extend such a fiduciary
duty over distributions to shareholders. See id. at 8 (citing Minnesota cases and noting
that Minnesota statutes provide liability for illegal distributions but Helm did not allege
statutory claim).

       The district court also denied Helm’s motion for summary judgment against
Neaton because he was not an officer or director of MNVA at the time he allegedly
received payments for certain corporate debts. See id. The district court also found
that there was a genuine issue of material fact with respect to whether a certain
payment by MNVA to DMVW on January 21, 1997, was an unlawful preference in
violation of the Woods’ fiduciary duty as directors or officers of MNVA and DMVW.
See id. at 9.

      Helm then voluntarily dismissed the remaining claims except those based on the
UFTA and breach of fiduciary duty. On July 15, 1998, the district court entered an
order and judgment, based on the parties’ stipulation, dismissing with prejudice the
claims against Neaton, dismissing without prejudice the January 1997 payment claim,

                                           -4-
and stating that the June 24 order constituted a “final adjudication upon the merits of
[Helm’s] remaining undismissed claims.” Id., slip op. at 2 (July 15, 1998). Helm
appealed.

       We first consider whether we have appellate jurisdiction. As noted above, the
district court denied Helm’s motion for summary judgment on the UFTA and breach
of fiduciary duty claims. In general, denials of summary judgment are interlocutory and
thus not immediately appealable. However, this denial of summary judgment was not
really an interlocutory order because it had the effect of terminating any further
consideration of the UFTA and breach of fiduciary duty claims in the district court.
See, e.g., Libbey-Owens-Ford Co. v. Blue Cross & Blue Shield Mutual, 982 F.2d 1031,
1034 (6th Cir.) (Libbey), cert. denied, 510 U.S. 819 (1993); EEOC v. Sears, Roebuck
& Co., 839 F.2d 302, 354 n.55 (7th Cir. 1988). Helm then voluntarily dismissed the
remaining claims, some with and some without prejudice, in order to expedite appellate
review. The voluntary dismissal must be considered in light of the earlier denial of
Helm's motion for summary judgment. In general, neither party may appeal from a
voluntary dismissal because it is not an involuntary adverse judgment. However, when
a party voluntarily dismisses its claims with prejudice in order to expedite appellate
review, the dismissal is a final judgment which can be immediately appealed. See, e.g.,
Libbey, 982 F.2d at 1034; Raceway Properties, Inc. v. Emprise Corp., 613 F.2d 656,
657 (6th Cir. 1980) (per curiam). In this circuit the voluntary dismissal can be without
prejudice. See, e.g., Missouri v. Coeur d’Alene Tribe, 164 F.3d 1102, 1105-07 (8th
Cir.), cert. denied, 119 S. Ct. 2400 (1999); Chrysler Motors Corp. v. Thomas Auto
Co., 939 F.2d 538, 540 (8th Cir. 1991). But see, e.g., Chappelle v. Beacon
Communications Corp., 84 F.3d 652, 654 (2d Cir. 1996) (comparing cases from other
circuits and holding plaintiff cannot appeal from dismissal of some claims when balance
of claims have been voluntarily dismissed without prejudice).

      We hold that the “expedite review” exception applies to this case. The denial
of summary judgment in effect terminated any further consideration of Helm’s breach

                                          -5-
of fiduciary duty claim because the district court held that, as a matter of law,
defendants as officers and directors did not breach their fiduciary duty owed to
creditors when they spun off DMVW to MNVA shareholders. Helm’s voluntary
dismissal of its remaining claims, in order to expedite appellate review, in effect made
the denial of summary judgment a final judgment for purposes of appeal. The July 15
order recognized this by stating that the denial of summary judgment constituted a final
adjudication on the merits of the UFTA and breach of fiduciary duty claims. See
Libbey, 982 F.2d at 1034 (holding appellant’s voluntary dismissal was immediately
appealable in light of earlier denial of motion for partial summary judgment which had
effect of terminating appellant’s principal cause of action). Cf. Chrysler Motors Corp.
v. Thomas Auto Co., 939 F.2d at 540 (holding appellant’s voluntary dismissal without
prejudice of remainder of case made grant of motion for partial summary judgment final
for purposes of appeal).

       We review de novo the district court’s summary judgment decision, applying the
same standard as the district court. Summary judgment is appropriate if the pleadings,
depositions, answers to interrogatories, and admissions on file, together with the
affidavits, if any, show that there is no genuine issue as to any material fact and that the
moving party is entitled to judgment as a matter of law. See Fed. R. Civ. P. 56(c). We
also review de novo the district court’s interpretation of state law. See Salve Regina
College v. Russell, 499 U.S. 225, 231 (1991).

       For reversal, Helm argues that the district court erred in holding that, as a matter
of law, defendants did not breach their fiduciary duty owed to creditors when they
transferred DMVW stock to MNVA shareholders. (Helm has not pursued its UFTA
claims on appeal. See Reply Brief for Appellant at 1; Brief for Appellant in Support
of Appellate Court Jurisdiction at 1 n.1.) This is a legal argument. Helm argues that,
under Minnesota common law, the officers and directors of an insolvent corporation
breach their fiduciary duty owed to creditors if they approve a transfer of corporate
assets under which the officers and directors recover more than general creditors of the

                                            -6-
corporation. Corporate officers and directors cannot grant themselves a preference
over creditors. See Snyder Electric Co. v. Fleming, 305 N.W.2d 863, 869 (Minn.
1981) (en banc) (Snyder Electric); Swanson v. Tomlinson Lumber Mills, 239 N.W.2d
216, 221 (Minn. 1976) (en banc) (Swanson). Helm thus argues that defendants’
decision to spin off DMVW to MNVA shareholders secured an advantage to
themselves (and others) at the expense of corporate creditors solely because of their
relation to the corporation and that, but for the DMVW spin-off, MNVA would have
been able to pay it and the other creditors.

       Defendants argue that the district court did not err in holding that, under
Minnesota common law, officers and directors are liable to the corporation, but not
creditors, for unlawful distributions of corporate assets to shareholders. Defendants
acknowledge that Minnesota law holds officers and directors to be fiduciaries for the
benefit of a corporation’s creditors, but argue that such a duty arises only when the
corporation is nearly or actually insolvent and only to the limited extent that they are
prohibited from securing for themselves, as creditors, a preference over other creditors.
See, e.g., In re Metropolitan Cosmetic & Reconstructive Surgical Clinic, P.A., 115
B.R. 185, 187 (Bankr. D. Minn. 1990) (citing Minnesota cases); St. James Capital
Corp. v. Pallet Recycling Assocs. of North America, Inc., 589 N.W.2d 511, 515 (Minn.
Ct. App. 1999) (St. James Capital); Honn v. Coin & Stamp Gallery, Inc., 407 N.W.2d
419, 422 (Minn. Ct. App. 1987) (Honn); B & S Rigging & Erection, Inc. v. Wydella,
353 N.W.2d 163, 167-68 (Minn. Ct. App. 1984). Defendants thus argue that no
fiduciary duty arose because the distribution of DMVW stock to defendants was a
distribution of corporate assets to shareholders and not a repayment of a debt owed to
defendants as creditors. Defendants also argue that summary judgment was not
appropriate because whether the distribution of DMVW stock left MNVA nearly or
actually insolvent, or whether defendants knew, or reasonably should have known, that
insolvency was likely to occur as a result of the distribution, was a genuine issue of
material fact.


                                          -7-
      We agree with the district court that, under Minnesota law, defendants did not
breach their fiduciary duty as officers and directors to creditors like Helm.

              Directors and officers may make loans to their corporations and
      they may use the same methods as other creditors to collect bona fide
      corporate debts owed to them, but only so long as the corporation is
      solvent. When a corporation is insolvent, or on the verge of insolvency,
      its directors and officers become fiduciaries of the corporate assets for the
      benefit of creditors.

Snyder Electric, 305 N.W.2d at 869. This is because “[a]s fiduciaries, they cannot by
reason of their special position treat themselves to a preference over other creditors.”
Id. Thus, “as fiduciaries to the corporation’s creditors, the officers and directors of an
insolvent corporation cannot approve ‘a transfer or encumbrance of corporate assets
. . . , the effect of which is to enable the director or officer to recover a greater
percentage of his [or her] debt than general creditors of the corporation with otherwise
similarly secured interests.’” Association of Mill & Elevator Mutual Insurance Co. v.
Barzen International, Inc., 553 N.W.2d 446, 451 (Minn. Ct. App. 1996), citing Snyder
Electric, 305 N.W.2d at 869. The fiduciary duty of an insolvent corporation’s directors
and officers to preserve and protect the assets of the corporation does not extend
beyond the prohibition against self-dealing or preferential treatment. See St. James
Capital, 589 N.W.2d at 514-15.

      Even assuming for purposes of analysis that the distribution of DMVW stock left
MNVA nearly or actually insolvent, or that defendants knew, or reasonably should
have known, that insolvency was likely to occur as a result of the distribution, no
breach of fiduciary duty occurred because defendants did not treat themselves to a
preference over Helm and other creditors. (There are no allegations of self-dealing by
defendants.) As noted above, the Minnesota Supreme Court in Snyder Electric defined
unlawful preferences for corporate officers and directors as “a transfer or encumbrance
of corporate assets . . . , the effect of which is to enable the director or officer to

                                           -8-
recover a greater percentage of his [or her] debt than general creditors of the
corporation with otherwise similarly secured interests.” 305 N.W.2d at 869. Here,
there was no debt and thus no preference; defendants were not creditors of MNVA.
This fact distinguishes the present case from the cases cited by Helm, in which, as
noted by the district court, the corporate insider was either a corporate creditor (Snyder
Electric, 305 N.W.2d at 869 (payment of antecedent debts owed to corporate insider);
Honn, 407 N.W.2d at 421 (recovery on promissory notes)) or in a similar position
(Swanson, 239 N.W.2d at 220 (extension of debt to one family corporation by a second
family corporation which indirectly benefited corporate insider); B & S Rigging, 353
N.W.2d at 168 (payment favoring debtor that claimed secondary liability of corporate
insiders)). The transfer of DMVW stock was not a repayment of a debt owed to
defendants as creditors (and thus potentially an unlawful preference), but instead a
distribution of corporate assets to defendants as shareholders.

       We hold that the district court correctly held that, as a matter of law, Helm failed
to establish that the transfer of DMVW stock constituted an unlawful preference and
a breach of defendants’ common law fiduciary duty to creditors. Accordingly, we
affirm the order of the district court.



BRIGHT, Circuit Judge, concurring and dissenting.

       As judgment creditor of MNVA, the Appellant contends that the Woods,
shareholders/officers/directors of MNVA, transferred to themselves as MNVA
shareholders "MNVA's most significant income-producing asset"— ownership of
DMVW. Appellant's Br. at 5. Appellant argues that this asset, but for the transfer to
the Woods as shareholders, would have been paid to MNVA's creditors, and thus the
transfer of corporate assets to the Woods was to the detriment of the corporation's
creditors and to the benefit of the Woods as officers and directors of MNVA.


                                           -9-
       Such a legerdemain in corporate finance is perfectly legitimate under Minnesota
corporation law in limited circumstances. A distribution, such as the stock transfer
here, is permitted only when "the corporation will be able to pay its debts in the
ordinary course of business after making the distribution and the board does not know
before the distribution is made that the determination was or has become erroneous."
MINN. STAT. § 302A.511, Subd. 1.

       Appellant's claim, however, was not brought under the Minnesota Business
Corporation Act, Minn. Stat. §§ 302A.001- .917. The Appellant instead specifically
relies on Minnesota common law for its claim, and on this appeal it raises one issue:
Whether the Woods, serving as officers and directors of MNVA, breached their
fiduciary duty to the Appellant as creditor when they distributed MNVA's assets to
themselves as majority shareholders to the detriment of MNVA's creditors. The
Appellant asserts that the district court erred in determining as a matter of law the
Woods did not breach their fiduciary duty when they transferred all the DMVW stock
to themselves.

       Neither party cites any case law in which the Minnesota appellate courts have
specifically stated that officers and directors, such as the Woods, do or do not have a
fiduciary obligation to creditors when the officers and directors make a distribution to
shareholders that has the effect of preferring shareholders' rights to creditors' rights.
Appellant cites to authority wherein the Minnesota appellate courts have held that in
the context of extending the corporation a loan, "[w]hen a corporation is insolvent, or
on the verge of insolvency, its directors and officers become fiduciaries of the corporate
assets for the benefit of creditors." Snyder Elec. Co. v. Fleming, 305 N.W.2d 863, 869
(Minn. 1981). See also Swanson v. Tomlinson Lumber Mills, Inc., 239 N.W.2d 216,
221 (Minn. 1976) (stating that the pertinent issue is "whether the directors or officers
have secured an advantage to themselves at the expense of corporate creditors solely
because of their relation to the corporation"); (Honn v. Coin & Stamp Gallery, Inc., 407
N.W.2d 419, 422 (Minn. App. 1987) (recognizing that while shareholders, directors

                                          -10-
and officers are not prohibited from making loans to the corporation, "such transactions
are closely scrutinized to insure that they were entered in good faith with a view toward
benefiting the corporation and its creditors").

       Although these cases concern loans to a corporation and not the specific
transaction at issue here, the principle underlying the rule that officers and directors
should not use their unique role to advantage "themselves at the expense of corporate
creditors[,]" Swanson, 239 N.W.2d at 221, applies here.

        Whether the transaction was a loan or a distribution, when officers or directors
act to the detriment of a corporate creditor to benefit themselves, they have breached
their fiduciary duty to the creditors. They have used their special role in the
corporation to obtain a preference over the creditors. After all, in the ordinary
liquidation of a corporation, the creditors get paid before redemption of shares of stock.
Here, the transaction put assets into the hands of the stockholders to the ultimate
detriment of creditors, thus endowing the officers and directors with an advantage over
other creditors.

       In this case, a claim of a breach of fiduciary duty may be asserted against the
Woods if, at the time of the spin-off, the Woods knew or should have known that the
assets of the corporation were insufficient to pay the claims of creditors. As the
Swanson court noted:

             The relationship between corporate officers and directors and the
      creditors of a corporation is not altogether clear. While it is said that
      corporate officers and directors are not trustees for corporate creditors
      and owe them no fiduciary duty, 3 Fletcher, Cyclopedia Corporations
      (Rev. vol. 1965) § 849, it appears that this statement is subject to the
      qualification that there be sufficient assets to pay their claims.




                                          -11-
Id. at 220. Whether the Woods breached their fiduciary duty to the Appellant is a fact
issue to be resolved at trial, not as a matter of law. Thus, the district court properly
denied Appellant summary judgment, but on remand it must resolve the issue of the
alleged breach of fiduciary duty as a fact issue.

       Accordingly, I would affirm the order denying summary judgment to the
Appellant. I would reverse, however, the trial court's determination that the Woods are
free of any fiduciary duties to the creditor as a matter of law and would remand this
case for further proceedings consistent with this opinion.



      A true copy.

             Attest:

                CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT.




                                         -12-
