Leland Bertsch, et al., Appellants,

This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (2016).

STATE OF MINNESOTA
IN COURT OF APPEALS
A16-1420

Leland Bertsch, et al.,
Appellants,

vs.

Charles Phillip Ehlen,
Respondent.

Filed May 8, 2017
Reversed and remanded
Halbrooks, Judge

Stearns County District Court
File No. 73-CV-14-4391

John L. Greer, Kelly A. Larson, Hughes Mathews Greer, P.A., St. Cloud, Minnesota (for
appellants)

Christopher R. Grote, Jessica L. Meyer, Lindquist & Vennum PLLP, Minneapolis,
Minnesota (for respondent)

Considered and decided by Cleary, Chief Judge; Halbrooks, Judge; and Jesson,
Judge.
U N P U B L I S H E D O P I N I O N
HALBROOKS, Judge
Appellants challenge the district court’s dismissal of their breach-of-contract claim
and denial of their posttrial motions for amended findings and conclusions and a new trial,
arguing that the district court erred by (1) interpreting “permitted assigns” as an

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unambiguous requirement that the non -assigning party to the purchase agreement must
consent to an assignment, (2) sua sponte raising a new issue after the close of evidence at
trial, (3) improperly shifting the burden of proving the validity of the assignment, and
(4) concluding that the interpretation of “permitted assigns” was litigated at trial. Because
we conclude that the term “permitted assigns” is ambiguous and that, when read in context,
did not require the consent of the non-assigning party, we reverse and remand.
FACTS
In 1996, appellants Leland Bertsch and Thomas Dowhan, respondent Charles Philip
Ehlen, and P.H. acquired property in Hawaii as tenants in common. Appellants and Ehlen
each owned an undivided 28.57% interest in the property, and P.H. owned an undivided
14.29% interest in the property. P.H. died in 2011.
After attempts to sell P.H.’s interest in the property were unsuccessful, his estate
commenced a partition action on the property in Hawaii and named appellants and Ehlen
as defendants. Ehlen did not participate in the partition action , but a ppellants actively
participated. P.H.’s estate engaged in ongoing negotiations to sell P. H.’s interest in the
property.
While the partition action was pending, P.E., Ehlen’s son and a longtime business
associate of appellants, entered into discussions with Ehlen about purchasing Ehlen’s
interest in the property so that “he could assist in breaking the owners’ stalemate [in the
partition action] and facilitate future development of the Property.” Ehlen and P.E. entered

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into a purchase agreement for the sale of Ehlen’s 28.57% interest in the property in July
2013.1
The proposed closing date was January 6, 2014, which was 180 days after execution
of the purchase agreement. The purchase agreement stated that Ehlen “hereby sells and
agrees to convey to [P.E.], and assigns,” his interest in the property. The purchase
agreement also mentioned “permitted assigns” in two separate clauses:
6. No Third Party Beneficiaries . This Agreement
shall not confer any rights or remedies upon any person other
than the parties hereto and their respective successors and
permitted assigns.

7. Succession and Assignment . This Agreement
shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and permitted assigns.

After further consideration and before the closing date, P.E. decided that he did not
want an ownership interest in the property because it was too complicated and “a messy
deal.” Consequently, P.E. transferred to appellants his interest as buyer in the purchase
agreement through an assignment agreement on December 13, 2013. Ehlen learned of the
assignment on December 20, 2013, and did not consent to it.
In anticipation of closing and pursuant to the purchase agreement, appellants placed
$1,048,000 in escrow. Ehlen did not transfer his interest in the property to appellants.
Appellants filed suit against Ehlen for breach of contract, alleging that they had a
right through a valid assignment to enforce the purchase agreement . They demanded

1 Ehlen and P.E. entered into a “nearly identical” purchase agreement in May 2013, but
this earlier agreement expired because they did not close within the required 60-day period
specified in that agreement.

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specific performance or damages. Following cross motions for summary judgment, the
district court concluded that genuine issues of material fact existed concerning the validity
of the assignment, appellants’ readi ness to close, appellants ’ entitl ement to specific
performance, and the purchase price if it awarded specific performance to appellants.
Following a bench trial, the district court dismissed appellants’ claim with prejudice.
The district court concluded that appellants were ready to close but, because it determined
that the assignment was invalid , the district court denied specific performance and
determined that appellants acquired no rights to enforce the purchase agreement . The
district court interpreted the term “permitted assigns” in the purchase agreement to mean
that Ehlen’s consent was necessary for any assignment to be valid. Absent Ehlen’s consent,
the assignment was invalid. It also found that (1) on the date of closing, appellants were
“ready, willing and able to proceed with the closing as scheduled,” (2) Ehlen “did not make
a good faith effort to complete the transaction ,” and (3) the collateral issues Ehlen raised
“were pretexts.”
Appellants moved the district court for amended findings of fact and conclusions of
law or, in the alternative, for a new trial. The district court denied appellant’s posttrial
motions after a hearing. In its posttrial order, the district court concluded that the term
“permitted assigns ” was a valid and enforceable limitation on assignment because
“permitted” sufficiently demonstrated the parties’ intent to require consent of the non -
assigning party to the purchase agreement. The district court also stated that appellants
failed to prove an element of their claim —that they had a valid assignment—and because
the issue was litigated at trial, appellants suffered no prejudice. This appeal follows.

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D E C I S I O N
Appellants argue that the district court er red by finding that the term “permitted
assigns” unambiguously requires consent from the non -assigning party to the underlying
purchase agreement and that its interpretation is contrary to caselaw . “Contract
interpretation is a question of law which we re view de novo.” Travertine Corp. v.
Lexington-Silverwood, 683 N.W.2d 267, 271 (Minn. 2004). “The determination of whether
a contract is unambiguous depends on the meaning assigned to the words and phrases in
accordance with the apparent purpose of the con tract as a whole.” Halla Nursery, Inc. v.
City of Chanhassen, 781 N.W.2d 880, 884 (Minn. 2010). “The language of a contract is
ambiguous if it is susceptible to two or more reasonable interpretations.” Dykes v. Sukup
Mfg. Co., 781 N.W.2d 578, 582 (Minn. 2010). We are required “to construe a contract as
a whole so as to harmonize all provisions, if possible, and to avoid a construction that
would render one or more provisions meaningless.” Stiglich Constr., Inc. v. Larson , 621
N.W.2d 801, 803 (Minn. App. 2001), review denied (Minn. Mar. 27, 2001).
Here, the purchase agreement states that it “shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and permitted assigns.” The
agreement does not define the term “permitted assigns” or use it in any other context. The
district court concluded that the term “permitted assigns” is unambiguous and interpreted
it as a limited restriction on assignment that requires the non -assigning party to the
purchase agreement to consent to an assignment.
Appellants argue that the term “permitted assigns” is ambiguous because it could
mean either permitted by law or permitted by the assignor. “To permit” is defined as “[t]o

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consent to formally ; to allow (something) to happen [especially] by an official ruling,
decision, or law” or to “allow or admit of <if the law so permits>.” Black’s Law Dictionary
1322 (10th ed. 2014) (emphasis added). We agree with appellants that the term “permitted
assigns” is ambiguous in the context of this purchase agreement because it could either
require consent from the non-assigning party or serve to limit potential assignees to those
permitted by law.
“[W]here [contract] language is ambiguous, resort may be had to extrinsic evidence,
and constr uction then becomes a question of fact for the jury, unless such evidence is
conclusive.” Bari v. Control Data Corp. , 439 N.W.2d 44, 47 (Minn. App. 1989), review
denied (Minn. July 12, 1989). We need not determine whether conclusive evidence
demonstrates which reasonable interpretation the parties intended , because we conclude
that the term “permitted assigns” by itself does not manifest the parties’ intent to restrict
assignability. See Lipka v. Minn. Sch. Emps. Ass’n, Local 1980 , 550 N.W.2d 618, 622
(Minn. 1996) (“[J]udicial restraint bids us to refrain from deciding any issue not essential
to the disposition of the particular controversy before us.”).
The general rule in Minnesota is that contract rights are assignable unless prohibited
by statute, by contract, or if “the contract involves a matter of personal trust or confidence.”
Travertine Corp. , 683 N.W.2d at 270. An enforceable anti -assignment provision in a
contract “defeat[s] an o therwise valid assignment.” Stand Up Multipositional Advantage
MRI, P.A. v. Am. Family Ins. Co., 889 N.W.2d 543, 548 (Minn. 2017). The purpose of an
anti-assignment clause “is to protect the contracting party from dealing with parties he has
not chosen to do business with.” Travertine Corp., 683 N.W.2d at 271. While we do not

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“require that the parties use specific terms to preclude assignment ,” they must “include
something expressing their intent that the contract not be assignable.” Id. at 272 (citing
Wilkie v. Becker, 268 Minn. 262, 267, 128 N.W.2d 704, 707 (1964)). And if “a contract
prohibits assignment in very specific and unmistakable terms, any purported assignment is
void.” Id. at 273.
Here, the district court concluded, and Eh len maintains, that the word “permitted”
unmistakably manifests the parties’ intent to restrict assignment of the purchase agreement
unless the non-assigning party to the purchase agreement consents. The district court held
that “permitted” unambiguously indicates that permission is required and concluded that
the parties must have intended the phrase to require the non -assigning party’s consent
because the parties to the assignment would have already consented to the assignment.
Appellants argue that this language is insufficient to constitute a restriction on assignment
because the language does not sufficiently manifest such intent, and it “lack[s] the same
specificity, clarity, context, and scope” as the Travertine anti-assignment clause. We agree.
In Travertine, the supreme court addressed whether an anti -assignment clause in a
contract was valid and enforceable. Id. at 274. In its entirety, the anti -assignment clause
in Travertine provided: “This Agreement shall be binding on the parties and their
respective personal representatives, successors and assigns; provided, however, that the
rights and obligations of Berkey/Lennon shall not be assignable except that Berkey may
assign to Lennon or Lennon assign to Berkey such rights and obligations.” Id. at 269-70.
The supreme court determined that “‘shall’ reflects mandatory imposition” and therefore

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concluded that this language was enforceable because it was clear that the parties intended
to restrict the power to assign rights under the management agreement. Id. at 272.
In Stand Up, the supreme court examined an anti-assignment clause in an insurance
policy. 889 N.W.2d at 544, 548. That anti-assignment clause stated that “[i]nterest in this
policy may not be assigned without [American Family’s] written consent.” Id. at 548 (first
alteration in original) . The supreme court concluded that this language “unambiguously
demonstrates the intention of the parties that the benefits not be assigned.” Id.; see Life
Rehab Servs., Inc. v. Allied Prop. & Cas. Ins. Co., 616 F. Supp. 2d 924, 926, 928, 936 (D.
Minn. 2007) (concluding that “may not . . . is no less mandatory” than “shall” in insurance
policies).
Although the parties to an agreement need not include “specific terms” or “magic
words” to create an anti-assignment provision, the moving party must demonstrate that the
agreement contains some language “manifesting the intention of the parties that it shall not
be assigned.” Travertine, 683 N.W.2d at 272. This generally includes language of
mandatory imposition. E.g., Life Rehab Servs. , 616 F. Supp. 2d at 936; Stand Up, 889
N.W.2d at 548; Travertine, 683 N.W.2d at 272. This purchase agreement contains no such
language.
We also note that other jurisdictions have similarly concluded that the term
“permitted assigns” by itself does not clearly manifest the parties’ intention to restrict
assignment. Cf. Citibank (S.D.), N.A. v. F.D.I.C. , 857 F. Supp. 976, 981 (D.D.C. 1994)
(concluding that “permitted assigns” limited assignment only because the contract
contained a separate assignment and delegation clause that stated that “[n]o party may

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assign this Agreement to or delegate any of its f unctions hereunder to any other party
without the prior written consent of the other parties”); Garden State Bldgs., L.P. v. First
Fid. Bank, N.A., 702 A.2d 1315, 1321-22 (N.J. Super. Ct. App. Div. 1997) (concluding that
“permitted assigns” required consen t of the non -assigning party only because the clause
immediately after stated that “[n]o party hereto shall assign this Letter Agreement . . .
without the prior written consent of the other party hereto and any such assignment without
such consent shall be void”); Brown v. Osorio, 26 Haw. 118, 119 (1921) (concluding that
“permitted assigns” could not be construed as a restriction on assignment because a
restriction must be clearly expressed). Although these cases do not bind us, we find them
helpful in our analysis. See Hinckley Square Assocs. v. Cervene, 871 N.W.2d 426, 430
(Minn. App. 2015) (“Federal caselaw does not bind Minnesota courts . . . .”); In re Welfare
of Child of E.A.C., 812 N.W.2d 165, 174 (Minn. App. 2012) (“Though opinions from courts
of other states are not binding on Minnesota courts, they may have persuasive value.”) ,
review denied (Minn. Mar. 27, 2012).
We conclude that use of the term “permitted assigns” without additional restrictive
language does not clearly manifest the parties’ intent to restrict assignment in the purchase
agreement as Travertine requires. See 683 N.W.2d at 272. In the context of the entire
purchase agreement, it is not clear that the parties intended to restrict assignment by
requiring permission from the non-assigning party to the purchase agreement.
Appellants raise several other issues, including whether the district court improperly
shifted the burden of proving the validity of the assignment and whether the district court’s
interpretation of “permitted a ssigns” was litigated at trial. We do not reach these issues

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because they are not dispositive . See Lipka , 550 N.W.2d at 622. But we do note the
irregular manner in which the interpretation of the term “permitted assigns” was raised.
In their complaint, appellants alleged that P.E. assigned his rights under the purchase
agreement by valid assignment. Ehlen denied this allegation in his amended answer,
stating that he “lacks knowledge or information sufficient to form a belief about” the
validity of assignment. At summary judgment, Ehlen only challenged the validity of the
assignment by arguing that P.E. did not have donative intent. According to Ehlen, the only
fact question at trial affecting the validity of the assignment was whether P.E. had the
requisite donative intent. At no point did Ehlen argue that appellants lacked the right to
enforce the purchase agreement because he did not consent to the assignment.
During trial, Ehlen testified that he did not grant permission to anyone for the
assignment. Then, after the close of evidence and without prompting from either party, the
district court stated, “I take it, [defense counsel], there is an issue on whether this Purchase
Agreement was assignable in the first place without permission of Mr. Ehlen?” Ehlen’s
defense counsel answered in the affirmative. At the posttrial motions hearing, the district
court confirmed that it raised this issue sua sponte at the end of trial.
“[O]ur adversary system is designed around the premise that the parties know what
is best for them, and are responsible for advancing the facts and arguments entitling them
to relief.” Greenlaw v. United States , 554 U.S. 237, 244, 128 S. Ct. 2559, 2564 (2008)
(quotation omitted); see also State v. Hines, 270 Minn. 30, 40, 133 N.W.2d 371, 378 (1964)
(“Under the Anglo-American trial system, the parties and their counsel have the primar y
responsibility for finding, selecting and presenting evidence.”). And “we normally decide

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only questions presented by the parties.” Greenlaw, 554 U.S. at 244, 128 S. Ct. at 2564
(quotation omitted). “Where no judicial resources have been spent on the resolution of a
question, trial courts must be cautious about raising a preclusion bar sua sponte, thereby
eroding the principle of party presentation . . . .” Arizona v. California, 530 U.S. 392, 412-
13, 120 S. Ct. 2304, 2318 (2000). Moreover, like a party, a district court should not raise
a new issue after trial. See Antonson v. Ekvall, 289 Minn. 536, 539, 186 N.W.2d 187, 189
(1971) (stating that a claim was made “too late” when made for the first time in a motion
for a new trial); Allen v. Cent. Motors , 204 Minn. 295, 299, 283, N.W. 490, 492 (1939)
(stating that an issue was raised “too late” when first raised in a motion for amended
findings). Here, the district court should not have sua sponte raised the issue of consent in
the purchase agreement at the end of trial when appellants had no meaningful opportunity
to address it.
We conclude that the district court erred in finding that the term “permitted assigns”
created an enforceable restriction on assignment and reverse its judgment and
determination that the assignment was invalid. Because the district court found that
appellants are entitled to specific performance if the assignment is valid, we remand to the
district court for entry of judgment for appellants and calculation of the purchase price
pursuant to the district court’s alternative conclusions of law, stated in paragraphs 7 and 8
of its order.
Reversed and remanded.