BPG Grand Oak Building Retail Investors, LLC, Respondent,

This opinion will be unpublished and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
A16-1955

BPG Grand Oak Building Retail Investors, LLC,
Respondent,

vs.

Webster Jacob, LLC, et al.,
Appellants,

Roger R. Hatzenbuehler, et al.,
Defendants.

Filed June 26, 2017
Affirmed
Kirk, Judge

Dakota County District Court
File No. 19HA-CV-15-2899

Christopher L. Lynch, Christopher J. Knapp, Barnes & Thornburg LLP, Minneapolis,
Minnesota (for respondent)

Ronald J. Walsh, Walsh Law, Bloomington, Minnesota (for appellants)

Considered and decided by Ross, Presiding Judge; Hooten, Judge; and Kirk, Judge.
U N P U B L I S H E D O P I N I O N
KIRK, Judge
Appellants tenant and guarantor challenge the district court’s grant of summary
judgment in favor of respondent commercial landlord on its breach-of-lease and breach -
of-guaranty claims, arguing that the court erred in finding that respondent owed no duty to

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disclose to appellants the highway construction that was planned near the leased premises.
Appellants also challenge the court’s construction of guarantor liability. We affirm.
FACTS
On September 27, 2013, appellant tenant Webster Jacob, LLC (Webster Jacob)
entered into a retail lease agreement with respondent landlord BPG Grand Oak Building
Retail Investors , LLC (BPG) for the purpose of opening a restaurant in Eagan (leased
premises). The parties executed amendments to the lease on January 15, 2014 and
December 15, 2014, the first of which added a joint guaranty. Appellant guarantor Ronald
Jacob ( Jacob) agreed to be jointly and severally liable with co -guarantors Roger
Hatzenbuehler and Patrick Trepanier for Webster Jacob’s obligations under the lease.1 The
restaurant fully opened for business in May 2014. From June 2014 to October 2014,
construction took place on the highways near the leased premises, impacting access to the
restaurant. Webster Jacob stopped paying rent for the leased premises in September 2014.
In June 2015, BPG filed a successful evicti on action against Webster Jacob and regained
possession of the leased premises. On August 17, 2015, BPG filed a breach-of-lease action
against Webster Jacob and a breach-of-guaranty action against Jacob and his co-guarantors.
Webster Jacob and Jacob (collectively appellants) counterclaimed, arguing that BPG knew
about the planned highway construction prior to signing the lease and had a duty to disclose

1 Section six of the guaranty provide d that the guarantors “shall be jointly and severally
liable” and for such purposes, the word guarantor “shall be construed to refer to each of
the undersigned parties separately.” Section seven stated that the “maximum liability under
this [g]uaranty with respect to each [g]ua rantor shall be [$110,000], plus any costs,
including reasonable attorneys’ fees, incurred to enforce this [g]uaranty.”

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that information to appellants because it impacted the suitability of the leased premises for
its intended use as a restaurant.
In the March 29, 2016 order for judgment, the district court found that BPG owed
no duty to disclose to appellants and that no genuine issues of material fact remained as to
appellants’ breach—Webster Jacob defaulted on the rent and the guarantors were liable as
a result. The district court granted summary judgment against appellants and dismissed
their counterclaims as a matter of law .2 Judgment was entered against Webster Jacob for
the outstanding rent and related costs, and against Jacob and Hatzenbuehler jointly and
severally “in an amount up to $110,000, plus attorney’s fees and costs incurred enforcing
the [g]uaranty.”3 Because BPG asserted a claim within one year of the February 28, 2014
commencement date, under section seven of the guaranty, the maximum amount of liability
was $110,000. Subsequently, BPG successfully moved the district court to reconsider its
construction of individual guarantor liability , and on June 3, 2016 , the court entered an
amended judgment against Jacob individually, “in an amount up to $110,000, plus
attorney’s fees and costs incurred enforcing the [g]uaranty.”4 Appellants filed two previous
appeals in this matter that were dismissed by this court. Final judgment dismissing the
claims against Jacob’s co -guarantors was entered on October 11, 2016. This appeal
follows.

2 The district court properly treated responden t’s motion to dismiss appellant s’
counterclaims and affirmative defenses as a motion fo r summary judgment, as the court
considered information outside the pleadings. Minn. R. Civ. P. 12.02.
3 Per stipulation, the district court dismissed the claims against Trepanier on December 22,
2015.
4 A stipulation for dismissal of the claims against Hatzenbuehler was filed on May 9, 2016.

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D E C I S I O N
I. The district court properly applied the law when it found that BPG owed no
duty to Webster Jacob to disclose a condition outside the leased premises.

This court reviews the district court’s legal conclusions on summary judgment de
novo, viewing the evidence in the light most favorable to the party against whom summary
judgment was granted. Commerce Bank v. W. Bend Mut. Ins. Co. , 870 N.W.2d 7 70, 773
(Minn. 2015). “In doing so, we determine whether the district court properly applied the
law and whether there are genuine issues of material fact that preclude summary
judgment.” Riverview Muir Doran, LLC v. JADT Dev. Grp., LLC , 790 N.W.2d 167, 170
(Minn. 2010) (citation omitted).
The existence of a legal duty is generally a question of law for the court to
determine. Larson v. Larson, 373 N.W.2d 287, 289 (Minn. 1985). In Minnesota, one party
to a transaction generally has no duty to disclose material facts to another party absent
special circumstances. Graphic Commc’ns Local 1B Health & Welfare Fund “A” v. CVS
Caremark Corp., 850 N.W.2d 682, 695 (Minn. 2014); Klein v. First Edina Nat’l Bank, 293
Minn. 418, 421, 196 N.W.2d 619, 622 (1972). Minnesota courts have been “reluctant to
impose a duty to disclose material facts in arm’s -length business transactions between
commercial entities.” Driscoll v. Standard Hardware, Inc. , 785 N.W.2d 805, 813 (Minn.
App. 2010), review denied (Minn. Sept. 29, 2010). The Minnesota Supreme Court has
articulated three special circumstances where a duty to disclose may arise : (1) a person
who “speaks must say enough to prevent his words from misleading the other party”; (2) a
person “who has special knowledge of material facts to which the other party does not have
access may have a duty to disclose th[o]se facts to the other party”; and (3) a person “who

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stands in a confidential or fiduciary relation to the other party to a transaction must disclose
material facts.” Klein, 293 Minn. at 421, 196 N.W.2d at 622.
Here, appellants concede that the three special circumstances articulated in Klein
are not present . This was an arms -length commercial transaction between two
sophisticated business entities represented by commercial real estate brokers. And t he
evidence in the record supports the conclusion that respondent had no special knowledge
that was not also available to the public.5 But appellants argue that the Klein factors are
not exclusive and that, under Vermes, a landlord has a “basic” duty to provide enough
information to a prospective commercial tenant so that the tenant is able to assess the
suitability of a location for its particular business use. Vermes v. Am. Dist. Tel. C o., 312
Minn. 33, 40 -41, 251 N.W.2d 101, 105 (1977). This court need not decide whether the
“basic” duty in Vermes supplements Klein or falls within the existing special knowledge
prong, because the case at hand is distinguishable from Vermes. The tenant in Vermes
leased the premises for use as a jewelry store, and the landlord failed to sufficiently inform
the tenant about the thin ceiling located above the spot intended for the store’s vault, which
ultimately allowed burglars to enter the vault from above. Id. at 35-36, 251 N.W.2d at 102.
The Vermes court found that the greater physical security required by a jewelry store is a
“peculiar” need, and thus the lease’s exculpatory clause could not absolve the landlord of
liability for failing to dis close the nonobvious feature. Id. at 40-41, 251 N.W.2d at 105.
The court explained:

5 Information about all current construction projects on Minnesota highways is available
on the Minnesota Department of Transportation’s (MNDOT) website, including a search
engine to select a project by specific highway.

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A commercial tenant will often have specific needs peculiar to
his business which will require the premises to be leased to
have certain attributes. . . . In cases where suitability factors
might not be obvious upon casual inspection, as with
ineffective air conditioning if the premises were inspected in
winter, it would be a basic duty of the landlord to inform the
prospective tenant of any qualities of the premises which might
reasonably be undesirable from the tenant’s point of view.

Id.
Here, it is undisputed that a casual inspection of the leased premises would not have
revealed the planned highway construction. But unlike in Vermes, the planned highway
construction was outside the leased premises and not a condition o f, on, or within the
leased premises. The nearby highway construction was a condition of an adjacent area
not under the landlord’s control and did not make the actual property unsuitable for
appellants’ intended use as a restaurant. The court in Vermes found a duty to disclose by
the landlord because a nonobvio us physical attribute o f the property itself made it
unsuitable for the tenant’s particular use and was undiscoverable by the tenant through
casual inspection. While it is reasonably foreseeable that road construction adjacent to a
commercial property may affect access, BPG had no control over the timing , length, or
extent of the nearby highway construction. BPG was not a guarantor to Webster Jacob
that construction would never take place nearby. See Gunhus, Grinnell v. Engelstad, 413
N.W.2d 148, 152 (Minn. App. 1987) (finding that a commercial lease was not
unconscionable when a landlord did not, and could not , misrepresent that a property’s
utilities or taxes would never increase because such expenses were not within the
landlord’s control and because the tenant was an experienced businessman and could not
have justifiably relied on such a representation), review denied (Minn. Nov. 24, 1987).

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We decline to conclude that reasonable access is a “peculiar” business need of a
restaurant. Nearly all brick-and-mortar businesses require reasonable access. And r oad
construction is a fact of life in Minnesota. BPG had no knowledge of the planned highway
construction prior to signing the lease that was not also available to the public .6
Additionally, as an experienced restaurateur for over 30 years, Jacob knew the importance
of reasonable access, and he, or his commercial real estate agent , should have done their
due diligence by verifying whether any road construction projects were planned nearby.
See Krueger v. Farrant, 29 Minn. 385, 388, 13 N.W. 158, 159 -60 (1882) (“The tenant is
the party most interested in understanding the risks which he will assume in exposing his
goods to injury from the elements. It is incumbent on him to exercise proper care and
precaution in the selection and leasing of tenements to be occupied by him.”). There are
no genuine issues of material fact here that present an exception to the general rule that
there is no duty to disclose material facts in an arms -length commercial transaction.
Neither Klein, Vermes, nor Minnesota law imposed a duty on BPG to disclose public facts
about conditions adjacent to the leased premises not under BPG’s control.
II. We decline to address appellants’ challenge to the construction of individual
guarantor liability.

Appellants also challenge the district court’s int erpretation of Jacob’s individual
guarantor liability in the June 3, 2016 amended judgment. The court found that the “clear
and unambiguous” language of the guaranty obligated Jacob to pay up to $110,000, plus

6 BPG does not dispute that it first received notice of the planned highway construction in
a November 9, 2012 letter from the City of Eagan, but that letter merely described the
project and related noise study; it did not specify a start date or provide further details.
Other correspondence received by BPG, if at all, was sent after the lease was signed.

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attorney fees and costs. Appellants claim that the guaranty was “ambiguous” and that
“genuine issues of fact” remain, but they failed to offer support from the record or law. We
decline to reach this issue in the absence of adequate briefing. State, Dep’t of Labor and
Indus. v. Wintz Parcel Dri vers, Inc., 558 N.W.2d 480, 480 (Minn. 1997) ; see Ganguli v.
Univ. of Minnesota, 512 N.W.2d 918, 919 n.1 (Minn. App. 1994) (declining to address
issues unsupported by legal analysis or citation).
Affirmed.