James Klingelhutz, individually and o/b/o the Klingelhutz Family Limited Partnership, Appellant,

This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (2018).

STATE OF MINNESOTA
IN COURT OF APPEALS
A19-1472

James Klingelhutz, individually and o/b/o the
Klingelhutz Family Limited Partnership,
Appellant,

vs.

John Klingelhutz,
Respondent,

Gary Klingelhutz,
Respondent.

Filed August 31, 2020
Affirmed
Johnson, Judge

Carver County District Court
File No. 10-CV-18-355

James Klingelhutz, Waconia, Minnesota (pro se appellant)

Phillip R. Krass, Patrick B. Steinhoff, Malkerson Gunn Martin LLP, Minneapolis,
Minnesota (for respondent Gary Klingelhutz)

Considered and decided by Connolly, Presiding Judge; Johnson, Judge; and Larkin,
Judge.
U N P U B L I S H E D O P I N I O N
JOHNSON, Judge
A family limited partnership was established in 1994 with the primary purpose of
owning, managing, and potentially selling two farm properties located in Carver County .

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The partnership sold the properties in three transactions in 2016, 2017, and 2018. One of
the general partners sued the other two general partners, alleging, among other things, that
they breached their fiduciary duties by agreeing to sell the properties for less than fair
market value. The district court entered summary judgment in favor of the defendants. We
affirm.
FACTS
In 1994, Daniel Klingelhutz, Mary Ann Klingelhutz, and six other persons entered
into a written agreement to form the Klingelhutz Family Limited Partnership. At the time
of its formation, the partnership had three general partners: Daniel, Mary Ann, and James
Klingelhutz. Gary Klingelhutz and John Klingelhutz later replaced their parents, Mary
Ann and Daniel, as general partners after they passed away in 2005 and 2010.
From the beginning , the partnership has owned two parcels of real property. The
parties refer to the two properties as Farm 1 and Farm 2. Farm 1 consists of a farmhouse
and 160 acres of land . Farm 2 consists of approximately 70 acres of land and has been
treated as consisting of two sub -parcels, which we will call Farm 2A, which is
approximately 34 acres in size, and Farm 2B, which is approximately 36 acres in size. The
express purpose of the partnership is, among other things, “to acquire, farm, operate, lease,
manage, own, sell, exchange, or otherwise dispose of or derive economic benefit from” the
partnership’s properties. The partnership agreement provides that the partnership “shall be
dissolved” upon the occurrence of any of six specified events, one of which is the sale or
disposition of all or substantially all of the partnership’s assets.

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In 2015, the partners collectively decided that they wanted to sell the properties and
“cash out.” The partnership hired a former Chaska city administrator with experience in
residential development to facilitate the sale of Farm 2. He negotiated an agreement by
which the partnership would sell Farm 2A to a development company for $1,950,000. The
partners approved the sale , and the general partners executed a written agreement in
February 2016.
In June 2016, all partners signed an agreement stating that they previously had
“authorized the sale of the partnership assets ” and that Gary was “designated as the
managing general partner” and was “authorized to sign all documents to complete the sale
of” the partnership’s properties. During the next year and a half, the partnership attempted
to sell Farm 1 and Farm 2B. In early 2017, Gary executed an agreement to sell Farm 1 for
$1,600,000.
In December 2017, an attorney representing James sent a letter to Gary and John in
which he demanded that “the Partnership bring claims against Gary and John Klingelhutz
for their numerous breaches of the contractual and fiduciary duties that they hold towards
the Partnership, as well as for conversion and misappropriation of Partnership assets.” The
demand was based on the attorney’s assertion that Gary and John had “breached their
fiduciary duties by negotiating sales of Farm 1 and Farm 2 . . . at sale prices far below
market values.” The attorney stated that if the partnership did not comply with the demand,
“James Klingelhutz [would] have no choice but to make derivative demands on the
Partnership’s behalf, as well as claims individually.”

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The partnership did not assert claims against Gary or John. In April 2018, James
commenced this action against Gary and John . James alleged direct claims on his own
behalf and derivative claims on behalf of the partnership. James pleaded legal theories of
breach of fiduciary duty , breach of contract , judicial dissolution, unjust enrichment, and
waste. Gary and John counterclaimed for a declaration that their actions were consistent
with the partnership agreement and for a judicial dissolution.
While the lawsuit was pending in the district court, the partnership continued to try
to sell Farm 2B. In July 2018, the partnership executed an ag reement to sell Farm 2 B to
DDK Construction, Inc. (DDK) for $1,360,000. DDK is a construction company owned
by Durene Klingelhutz, who is a limited partner of the partnership and is John’s wife.
In November 2018, Gary and John moved for summary judgment on all of James’s
claims except his claim for a judicial dissolution. In March 2019, the district court granted
the motion in part and ordered the entry of partial summary judgment in favor of Gary and
John. In July 2019, the p arties stipulated to the dismissal of all of their remaining claims
with prejudice.
James appeals. After James filed the notice of appeal, John filed a bankruptcy
petition. This court stayed the appeal with respect to John. Nonetheless, we will proceed
to consider the appeal with respect to James’s claims against Gary.1

1James was represented by counsel on appeal during the briefing stage and at oral
argument. His attorney filed a notice of withdrawal on August 17, 2020 . See Minn. R.
Civ. App. P. 143.05, subd. 2. Accordingly, James presently is pro se. We note the general
rule that a limited partnership must be represented by a licensed attorney in any court
proceeding. Hinckley Square Assocs. v. Cervene , 871 N.W.2d 426 , 428-31 (Minn. App.
2015). But that requirement is not implicated here because the Klingelhutz Family Limited

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D E C I S I O N
A district court “shall grant a motion for summary judgment if the movant shows
that there is no genuine issue as to any material fact and the movant is entitled to judgment
as a matter of law. ” Minn. R. Civ. P. 56.01. A genuine issue of material fact exists if a
rational trier of fact, considering the record as a whole, could find for the nonmoving party.
Frieler v. Carlson Mktg. Grp., Inc., 751 N.W.2d 558, 564 (Minn. 2008). This court applies
a de novo standard of review to the district court’s legal conclusions on summary judgment
and views the evidence in the light most favorable to the party against whom summary
judgment was granted. Commerce Bank v. West Bend Mut. Ins. Co., 870 N.W.2d 770, 773
(Minn. 2015).
I. Claim of Breach of Fiduciary Duty
James argues that the district court erred by concluding that there is no genuine issue
of material fact with respect to his claim of breach of fiduciary duty.
James seeks to prove that Gary breached his fiduciary duty by agreeing to sell Farm
2A and Farm 2B at prices below their fair market value. James relies on an exhibit that
consists of excerpts of a written appraisal that was prepared for him in March 2017 ,
approximately one year before this action was commenced . The appraiser valued Farm 2
(i.e., Farm 2A and Farm 2B) at $5,100,000 as of September 15, 2016. The district court
considered the appraisal but determined that it did not create a genuine issue of mate rial

Partnership is not a party to this appeal. James sought to assert derivative claims on behalf
of the limited partnership, but the district court did not allow James to go forward on behalf
of the limited partnership, and we have not disturbed that ruling.

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fact for three reasons. First, the district court stated that James’ exhibit is improper because
it consists of “only four, non -sequential pages of [the] 115-page report. ” Second, the
district court stated that the excerpts did not include “explanations of the appraisal
procedures used ” so as to enable the court “to determine the relevance of the report ’s
conclusions.” And third, the district court stated that James’s deposition testimony “makes
clear that the report ’s assumptions are erroneous ” because the appraiser did not consider
the fact that the amount of developable land was less than the amount of tillable farmland.
The district court concluded that James had not submitted evidence sufficient to create a
genuine issue of material fact that he had sustained damages, which the district court stated
is “an essential element of the claim.”
On appeal, James argues that the district court erred by rejecting the appraisal and
concluding that he had insufficient evidence of damages. In response, Gary argues that the
district court properly determined that James did not submit admissible evidence of
damages. Gary argues in the alternative that James did not submit evidence sufficient to
create a genuine issue of material fact as to whether Gary breached his fiduciary duties.
James’s reply brief does not address Gary’s alternative argument. Gary’s alternative
argument aligns with his primary argument in the district court, which was that he is
entitled to summary judgment on James’s fiduciary-duty claim on the ground that he did
not commit a breach of his fiduciary duties . On appeal, this court may affirm a grant of
summary judgment if it can be sustained on any ground that was argued both to the district
court and to this court. Day Masonry v. Indep. Sch. Dist. No. 347, 781 N.W.2d 321, 331
(Minn. 2010). Accordingly, we will first consider Gary’s alternative argument.

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“A breach of fiduciary duty claim consists of four elements: duty, breach, causation,
and damages.” Hansen v. U.S. Bank Nat’l Ass’n, 934 N.W.2d 319, 327 (Minn. 2019). The
fiduciary duties of a general partner of a limited partnership are constrained by the limited-
partnership statute: “The only fiduciary duties that a general partner has to the limited
partnership and the other partners are the duties of loyalty and care ,” as those duties are
described in the statute. Minn. Stat. § 321.0408(a) (2018). The statute provides,
A general partner ’s duty of loyalty to the limited
partnership and the other partners is limited to the following:

(1) to account to the limited partnership and hold as
trustee for it any property, profit, or benefit derived by the
general partner in the conduct and winding up of the limited
partnership’s activities or derived from a use by the general
partner of limited partnership property, including the
appropriation of a limited partnership opportunity;

(2) to refrain from dealing with the limited
partnership in the conduct or winding up of the limited
partnership’s activities as or on behalf of a party having an
interest adverse to the limited partnership; and

(3) to refrain from competing with the limited
partnership in the conduct or winding up of the limited
partnership’s activities.

Minn. Stat. § 321.0408(b) (2018). The statute also provides, “A general partner’s duty of
care to the limited partnership and the other partners . . . is limited to refraining from
engaging in grossly negligent or reckless conduct, intentional misconduct, or a knowing
violation of law.” Minn. Stat. § 321.0408(c) (2018).
These statutorily defined duties “govern[] relations among the partners and between
the partners and the partnership ” only “[t]o the extent the partnership agreement does not

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otherwise provide.” Minn. Stat. § 321.0110(a) (2018). Subject to certain limitations, “the
partnership agreement governs relations among the partners and between the partners and
the partnership.” Id. One limitation is that a partnership agreement may not “eliminate the
duty of loyalty under section 321.0408 .” Minn. Stat. § 321.0110(b)(5) (2018).
Nonetheless, a partnership agreement may “identify specific types or categories of
activities that do not violate the duty of loyalty, if not manifestly unreasonable .” Minn.
Stat. § 321.0110(b)(5)(A). Another limitation is that a partnership agreement may not
“unreasonably reduce the duty of care under section 321.0408(c) .” Minn. Stat.
§ 321.0110(b)(6) (2018).
In this case, t he partnership agreement contains at least two provisions that are
pertinent to James’s claim of breach of fiduciary duty. Paragraph 6.5 provides:
In making any decision with respect to . . . the timing of
any sale of Partnership Property, terms of sale of Partnership
Property, . . . and other matters, each General Partner may
consider such General Partner ’s own business judgment and
risk evaluation, the impact of such decision on such General
Partner’s own financial interest in the Partnership, and other
factors, all as evaluated in such General Partner ’s sole
discretion.
In addition, paragraph 6.2 provides, “The Partnership may contract or otherwise deal with
any Partner or related Person without limitation.”
Together, the statute and the partnership agreement imposed few constraints on
Gary’s management of the partnership and gave him broad discretion to enter into an
agreement to sell partnership property. James offered no evidence that Gary breached his
duty of loyalty in any of the three ways specified in the statute: by mishandling t he

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partnership’s profits, by acting on behalf of a person whose interests are adverse to the
partnership, or by competing with the limited partnership. See Minn. Stat. § 321.0408(b).
James offered no evidence that Gary breached his duty of care by “engaging in grossly
negligent or reckless conduct, intentional misconduct, or a knowing violation of law.” See
Minn. Stat. § 321.0408(c). The undisputed evidence indicates that Gary did not exceed the
broad discretion granted to him in the partnership agreement to determine “the timing” and
“terms” of a sale of partnership property based on his “business judgment and risk
evaluation.” Even his decision to sell Far m 2B to DDK, which is owned by Durene, is
justified by the provision in the partnership agreement authorizing him to “contract or
otherwise deal with any Partner or related Person without limitation. ” Accordingly, we
conclude that there is no genuine dispute of material fact as to whether Gary breached his
fiduciary duty by selling Farm 2A and Farm 2B. This conclusion is a sufficient basis for
affirming the district court ’s grant of summary judgment on James’s claim of breach of
fiduciary duty. See Day Masonry, 781 N.W.2d at 331.
Thus, the district court did not err by granting Gary’s motion for summary judgment
with respect to James’s claim of breach of fiduciary duty.
II. Claims of Unjust Enrichment and Waste
James also argues that the district court erred by concluding that there is no genuine
issue of material fact with respect to his claims of unjust enrichment and waste.
The district court determined that these claims should fail for several reasons. First,
the district court reasoned that James cannot prevail on his unjust -enrichment claim
because the parties ’ relationship was governed by contract. Second, t he district court

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reasoned that Gary’s actions did not confer any special benefit on himself. Third, the
district court reasoned that James cannot prove that Gary sold partnership property for less
than fair market value. Fourth, the district court reasoned that James did not establish that
Gary obtained valuable personal property to which he was not entitled.
On appeal, James challenges only one of the district court ’s reasons for disposing
of these claims—the third reason. Because he has not challenged the other three reasons,
and because each reason independently is dispositive of his claims, he cannot establish that
the district court erred. See Hunter v. Anchor Bank, N.A., 842 N.W.2d 10, 17 (Minn. App.
2013), review denied (Minn. Mar. 18, 2014). In any event, these claims plainly are barred
by paragraph 6.4 of the partnership agreement, which provides, “Neither the Partnership
nor any partners shall have any claim against any General Partner by reason of any act or
omission of any General Partner, except acts constituting gross negligence, or acts
undertaken in bad faith or in breach of fiduciary duty.” The facts on which James’s claims
are based do not amount to gross negligence, bad faith, or breach of fiduciary duty.
Thus, the district court did not err by granting Gary’s motion for summary judgment
with respect to James’s claims of unjust enrichment and waste.
III. Indemnification of Attorney Fees
James also argues that the district court erred by concluding that there is no genuine
issue of material fact with respect to his claim Gary breached his fiduciary duty by
arranging for the partnership to indemnify him for the attorney fees he has incurred in
defending against this lawsuit.

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The district court reasoned that this claim is without merit in light of paragraph 6.4
of the partnership agreement, which provides, in part,
The Partnership . . . shall indemnify, defend and hold
the General Partners harmless against any claim, liability or
expense (including attorneys ’ fees) incurred by them in
connection with the organization, operation, management or
liquidation of the Partnership, its business or Property, except
liabilities which are the specific responsibility of the General
Partners under this Agreement.
James argues that the district court erred on the ground that general partners are
entitled to indemnification only with respect to “claims brought against them solely by the
fact that they are general partners ” but not with respect to “claims brought against [them]
as a result of their specific responsibilities as general partners. ” James’s argument is
inconsistent with the plain language of paragraph 6.4, which requires the partnership to
indemnify a general partner who is sued for actions taken “in connection with the
organization, operation, management or liquidation of the Partnership , its business or
Property.” James’s lawsuit against Gary is based on actions Gary took to sell real property
owned by the partnership. The partnership plainly was obligated to indemnify Gary.
Thus, the district court did not err by granting Gary’s motion for summary judgment
with respect to James ’s claim that Gary breached his fiduciary duty by arranging for the
partnership to indemnify him for the attorney fees he has incurred in defending against this
lawsuit.
Before concluding, we note that James has made two additional arguments that need
not be addressed in light of our disposition of the arguments discussed above. First, James
argues that the district court erred by dismissing his derivative claims on the ground that

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he does not have standing. That issue is moot because we have determined that all of the
claims alleged by James fail on the merits . Second, James argues that the district court
erred by not allowing him to supplement the record with additional evidence concerning
the value of Farm 2. That issue also is moot because we have determined that James does
not have evidence sufficient to create a genuine issue of material fact as to whether Gary
breached his fiduciary duty, regardless of whether his evidence creates a genuine issue of
material fact concerning damages.
In sum, the district court did not err by granting Gary’s motion for partial summary
judgment on James’s claims.
Affirmed.