Brooklyn Park Hotel Properties, LLC, Appellant,

This opinion will be unpublished and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
A18-0033

Brooklyn Park Hotel Properties, LLC,
Appellant,

vs.

Percy Pooniwala,
Respondent,

Ashok Shetty, et al.,
Respondents.

Filed May 29, 2018
Affirmed
Reilly, Judge

Hennepin County District Court
File No. 27-CV-11-15340

Diana Y. Morrissey, Paul M. Floyd, Wa llen-Friedman & Floyd, P.A., Minneapolis,
Minnesota; and

David A. Lutz, Lutz Law Firm, Minneapolis, Minnesota (for appellant)

Chad McKenney, Bradley D. Hendrikson, Maple Grove, Minnesota (for respondent Percy
Pooniwala)

Jaren L. Johnson, Johnson La w Office, PLLC, Minneapolis, Minnesota (for respondents
Ashok Shetty, et al.)

Considered and decided by Larkin, Presiding Judge; Bjorkman, Judge; and Reilly,
Judge.

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U N P U B L I S H E D O P I N I O N
REILLY, Judge
Appellant challenges the district c ourt’s award of summary judgment for
respondents, claiming the court erred when it determined appellant was not the true party
in interest to respondents’ personal guarantie s. Because we determine appellant has no
claim to the personal guaranties and respondent is entitled to summary judgment as a matter
of law, we affirm.
FACTS
In 2003, appellant Brooklyn Park Hotel Properties, LLC, renovated a hotel property
it had recently purchased in Brooklyn Park (Hotel). The Brooklyn Park Economic
Development Authority (the Authority) entered into a series of agreements with appellant
to assist the renovations, including an agreement to issue a Tax Increment Financing Note
(TIF Note) (collectively the TIF Agreemen t). Appellant was to receive semiannual
payments from the TIF Note until the year 2031 as reimbursement for past property taxes
paid. In return, appellant pr omised to make improvements to the Hotel and meet certain
standards in maintaining and operating the Hotel. Appellant obtained a loan from US Bank
for $1.6 million (US Bank Loan ) to fund the renovations. With the consent of the
Authority, appellant assigned its rights under the TIF Agreement to US Bank to secure the
US Bank Loan. Under the assignment, the Authority was to make all TIF Note payments
directly to US Bank until the US Bank loan was paid in full.
In subsequent years, the Hotel was not profitable and had a number of maintenance
issues. In 2009, appellant listed the Hotel for sale. After months of negotiations and

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several amended purchase agreements, appe llant and Grand Rios Investments, LLC
(Buyer), entered into an agreem ent for the sale of the Hotel (Hotel Purchase Agreement)
and transfer of the TIF Agreement (TIF Purchase Agreement) and the US Bank Loan (US
Bank Agreement) to Buyer (collectively, the Agreemen ts). Respondents Pooniwala,
Shetty, and Maripally were listed as Partners of the Buyer. Appellant sold the Hotel to
Buyer for $5.5 million on October 9, 2009.
Respondents personally guaranteed th e payment and performance of Buyer’s
obligations under the TIF Purchase Agreement and the US Bank Loan. In the event of
default, respondents agreed to individual liability of $150,000 and a collective liability of
$450,000. The guaranties stated that, as long as the US Bank loan remained unpaid, any
amount paid by respondents pursuant to their guaranties would be paid directly to US Bank.
The guaranties would only be released if the outstanding balance of the purchase price for
the TIF Purchase Agreement was equal to or less than $1,150,000, and no default had
occurred.
Shortly after the sale, Buyer discovered a number of issues with the Hotel. The
Agreements went into default. The Hotel became inoperable, 1 and Buyer conveyed the
Hotel to a creditor to sa tisfy an obligation unrelated to th is appeal. In January 2012, US
Bank sent a letter to respondents demandi ng payment under their personal guaranties.
Respondents did not make payments to US Bank, and US Bank did not bring any further
collection actions against them.

1 The roof collapsed in 2011 and the Hotel went out of business.

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Appellant commenced this action seek ing payment from respondents on their
guaranties. Appellant moved for summary judgment, arguing that respondents owed it the
full amount of their guaranties plus 10% interest from the date the action was commenced.
Respondents argued that appellant is not the real party in interest and has not suffered any
damages. The district court granted summa ry judgment for respondents, finding that
appellant was not the real party in interest, and dismissed appellant’s claims with prejudice.
This appeal followed.
D E C I S I O N
I. Respondents are entitled to judgment as a matter of law because appellant did
not have a claim for relief with respect to respondents’ personal guaranties.

On appeal from summary judgment, this court reviews the record to determine
whether there is any genuine issue of material fact and whether the district court erred as a
matter of law. Dahlin v. Kroening , 796 N.W.2d 503, 504-05 (Minn. 2011). When
reviewing questions of law, we give no deference to the district court. Modrow v. JP
Foodservice, Inc. , 656 N.W.2d 389, 393 (Minn. 2003). The interpretation of an
unambiguous contract is a question of law. Roemhildt v. Kristall Dev., Inc., 798 N.W.2d
371, 373 (Minn. App. 2011), review denied (Minn. July 19, 2011). When the language of
the contract is clear and unambiguous, we enforce the agreement of the parties as expressed
in the contract. K & R Holdings, LLC v. Auto-Owners Ins. , 907 N.W.2d 658, 661 (Minn.
App. 2018) (quotation and citation omitted).
Although the parties framed and analyzed the legal issue as whether appellant is a
real party in interest, we characterize the issue as whether appellant has a contractual right

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to recover under the guaranties. The terms of the relevant contracts are clear and
undisputed. Under the TIF Purchase Agreemen t, appellant sold “all of [its] rights under
the TIF Agreement” to Buyer. In return, Buyer agreed to pay $1.75 million for the TIF
Agreement in a series of installments, and buyer agreed to perform all of appellant’s
obligations under the TIF Agreement, which included repaying the US Bank Loan. The
parties agreed that, should Buyer default on the TIF Purchase Agreement, the remaining
balance of the purchase price would immediat ely become due and payable to appellant.
Furthermore, in the US Bank Agreement, the parties agreed that US Bank was “granted
and currently holds a perfected first lien security interest in the TIF Note and the [TIF
Agreement] and all proceeds therefrom to secure the Loan and . . . any right or interest of
the Buyer . . . in the TIF Note . . . [or] proceeds thereof is subject and subordinate to the
Bank’s rights therein and under this Agreement.”
Respondents each signed a personal guara nty guarantying the Buyer’s obligations
to appellant under the Agreements. Each personal guaranty further provided that:
. . . [W]hile any Liabilities . . . remain unpaid under the [US
Bank Loan], any amounts paid hereunder are paid directly to
[US Bank] in accordance with the [Agreements], the total
liability of Guarantor . . . sha ll be limited to $150,000, and
provided, further, so long as no default . . . has occurred under
[the Agreements] Guarantor’s liability hereunder shall be
automatically terminated and extinguished at such time as the
unpaid balance of the Purchase Price under the TIF Note Sale
Agreement is reduced to $1,150,000.

The Agreements contemplated that the TIF Note paymen ts would continue to be
received and applied to the US Bank Loan, so long as the Buyer operated the Hotel in
accordance with the TIF Agreement. Once the US Bank Loan was paid in full, any excess

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TIF Note payments were to be paid to appellant. However, it is undisputed that the Buyer
did not operate the Hotel in accordance with the TIF Agreem ent, the US Bank Loan has
not been paid in full, and the TIF Note payments ended.2
Viewing the Agreements as a whole, the personal guaranties were designed to
ensure the US Bank Lo an was paid in full. Appellant could recover under the personal
guaranties only if the US Bank Loan was paid in full. The record reflects that the US Bank
Loan has an unpaid balance of $1,374,941.72. Therefore, any amount recoverable under
the personal guaranties would be paid to US Bank, not appellant.
In summary, because the US Bank Loan has not been paid in full, appellant is not
entitled to recover under the guaranties, and respondents are entitled to summary judgment
as a matter of law.
Affirmed.

2 Appellant cannot recover under a theory of a “continuing interest” in the TIF Agreement
or the TIF Note, because appellant assigned a ll of its rights in the TIF Agreement to the
Buyer in the TIF Purchase Agreement. Likewise, appellant does not gain the right to sue
under the guaranties simply because US Bank’s right to sue respondents expired.