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Bassford Remele represented Seven Acquisition LLC ("Seven"), which owned the Seven Sushi and Steakhouse, located on the corner of Seventh Street and Hennepin Avenue in downtown Minneapolis, in a dispute with its landlord. The landlord claimed that Seven owed over one hundred thousand dollars in past due rent. Seven claimed that the landlord owed it close to $1 million based on damages sustained by Seven as a result of the landlord’s failure to repair a leaky roof. The case was arbitrated in front of Retired Judge John McShane in February 2020. Judge McShane issued an award in favor of Seven in the amount of $826,000. Shortly after the arbitration, the landlord stopped making his mortgage payments and the mortgage lender brought a foreclosure action, naming Seven as a defendant. Before Seven was added as a defendant, the lender and landlord stipulated to the appointment of a receiver. The receiver brought a motion to compel Seven to pay rent. Seven argued that the receiver’s claim for rent payments was subject to the lease’s arbitration clause and asserted the defense of recoupment.
The District Court granted the receiver's motion, holding that the receiver was not bound by the terms of the lease between Seven and the landlord because the receiver was not a party to that lease. Seven appealed and the Minnesota Court of Appeals reversed, holding that the “receiver ‘stands in the shoes’ of the party whose property is subject to the receivership,” and therefore is subject to the rights and duties of the contract under which the receiver is suing. Accordingly, the receiver was bound by the arbitration clause found in the lease between landlord and tenant. Wilmington Tr., Nat’l Ass’n v. 700 Hennepin Holdings, LLC, 971 N.W.2d 750, 758 (Minn. Ct. App. 2022), review granted (May 31, 2022), aff'd, No. A21-0963, 2023 WL 2995121 (Minn. Apr. 19, 2023).
The Minnesota Supreme Court affirmed the Court of Appeals decision, confirming that “because the receiver stands in the shoes of the person over whose property the receiver is appointed—including that person's duties in the lease—a receiver is bound by an arbitration provision in the lease agreement between the person whose property the receiver is appointed and the other party to the lease.” Wilmington Tr., Nat'l Ass'n v. 700 Hennepin Holdings, LLC, No. A21-0963, 2023 WL 2995121, at *9 (Minn. Apr. 19, 2023)
Contact Andrew Marshall for more information.
Andrew has more than 35 years of trial experience representing a spectrum of clients in commercial, construction, and employment litigation, as well as personal injury claims. As an accomplished litigator and a Minnesota State Bar Association Board Certified Civil Trial Law Specialist, Andrew has tried more than 60 jury trials in Minnesota and Wisconsin state and federal courts, also representing corporations, organizations, and individuals in appellate courts, and arbitration and mediation venues. He currently represents a multi-billion dollar global retailer in general liability matters, a multinational information technology company in products liability matters, and a number of Minneapolis night clubs in liquor liability matters. Andrew also represents commercial and residential property owners and condominium and townhome associations in construction and premises liability matters as well as claims arising under the Minnesota Common Interest Ownership Act (MCIOA). He is a member of the American Board of Trial Advocates.
Bassford Remele proudly serves as local and national counsel for many major corporations and Fortune 500 Companies and is a go-to litigation firm representing local, national, and international clients in state and federal courts across the region.
Bassford Remele | May 11, 2023
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