The estate of the late Ken Macke, former CEO of Dayton Hudson Corp. (now Target Corp.) has survived lawsuits that sought to collect millions in loan guarantees that Macke and other directors made in 2002 while on the board of Burnsville-based PureChoice.
The Minnesota Supreme Court recently declined to review lower court decisions against PureChoice, a maker of sensors that monitor air quality and energy use.
Macke, who died in 2008 at age 69, joined the board of PureChoice in 1997, after his retirement from Dayton Hudson in 1994.
In 2002, Macke and two other directors signed personal guarantees and invested through debt and equity, as part a capital-raising effort. By 2003, Macke, who had suffered from Parkinson's disease and mental deterioration, sought to revoke his guarantee; resigned as a director and, through his lawyer and a series of letters, said he had "no recollection of signing the guarantee."
As M&I bank moved to collect on an outstanding $2 million loan in 2006, a judge exempted Macke from any liability because his competency was at issue. Macke, who was then represented by his wife, Kathleen, subsequently signed a settlement agreement among M&I and PureChoice and other directors that required Macke to pay $1 million and concede his PureChoice stock options.
After the settlement, PureChoice sued Ken Macke's son Jeff, a money manager and market commentator, alleging that he had interfered with the company subordinated debt offering and for pulling his father's support. Jeff Macke, concerned about his father's legal exposure, had said back in 2003 that he was going to legally "pound and kill" PureChoice, according to court statements. A federal judge dismissed the suit against Jeff Macke after his father's death in 2008.
PureChoice subsequently filed suit claiming that it was a creditor of Macke's estate, based on his 2002 guarantee. Hennepin County District Judge Gary Larson granted the Macke estate's request to dismiss the suit .in 2009.
"We convinced Judge Larson that this [suit] needed to be dismissed based on the settlement agreement," said George Eck of Dorsey & Whitney, the Macke estate lawyer. "Macke paid $1 million and gave up options. His family thought this was done. Then they get sued by PureChoice for $32 million. We won hook, line and sinker, and it now has been affirmed by the Minnesota Court of Appeals [in January]. And the Supreme Court refused to review that decision."
