A20-0480

This opinion is nonprecedential except as provided by
Minn. R. Civ. App. P. 136.01, subd. 1(c).

STATE OF MINNESOTA
IN COURT OF APPEALS
A19-1914
A20-0480

Mork and Associates, Inc., et al., Plaintiffs (A19-1914),
Co-Appellants (A20-0480),

vs.

Willow Run Partners, et al.,
Respondents,

Rodney Vlach, et al.,
Respondents,

Florence Francis,
Appellant.

Filed March 1, 2021
Affirmed in part, reversed in part, and remanded
Bryan, Judge

Hennepin County District Court
File No. 27-CV-16-13631

Scott D. Hillstrom, Guardian Law Group, Northfield, Minnesota (for co -appellants Mork
and Associates, et al.)

Thomas J. Radio, Felhaber Larson, Minneapolis, Minnesota (for respondents Willow Run
Partners, et al.)

Daniel M. Mohs, Daniel Mohs, Esq., Ltd., Minneapolis, Minnesota (fo r respondents
Rodney Vlach, et al.)

Paul W. Chamberlain, Ryan R. Kuhlmann, Chamberlain Law Firm, Wayzata, Minneso ta
(for appellant Florence Francis)

Considered and decided by Bryan, Presiding Judge; Ross, Judge; and Florey, Judge .

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NONPRECEDENTIAL OPINION
BRYAN, Judge
In this partnership-distribution dispute, appellant asserts that the district court made
the following errors: (1) the district court misinterpreted the provisions of the limited
partnership agreement regarding distribution of liquidated assets; (2) the district court made
erroneous findings of fact concerning the managing g eneral partner’s alleged liability
regarding required disclosures and overseeing co-respondents; (3) the district court made
erroneous findings of fact regarding the validity of co-respondents’ purchase of a limited
partnership interest; (4) the district court awarded costs and disbursements against her; and
(5) the district court denied her motion to show cause for an order requiring the managing
general partner to carry out the distributions. Co-appellants also assert that the district
court abused its discretion in taxing costs against them. Finally, respondent/cross-appellant
Willow Run Partnership asserts that the district court abused its discretion when it declined
to award the full amount of its expert-witness fees.
First, we address the primary dispute: the interpretation of the limited partnership
agreement. We conclude that because no distributions had been made as of the time of
dissolution, the plain language of the partnership agreement requires that the limited
partners receive an amount equal to their initial contributions before calculating the amount
available for remaining distributions. We reverse the district court’s order on that basis
and remand for entry of judgment and distribution of proceeds consistent with this opinio n.
Second, we conclude that the district court did not clearly err in making its findings of fact
regarding the managing general partner’s alleged liability. Third, we conclude tha t the

3
district court did not clearly err in making its findings of fact regarding the validity of co -
respondents’ partnership interest. Finally, we conclude that because appellant prevail s on
the first issue, respondents are not the prevailing parties , and we reverse the taxation of
costs and disbursements. Given these conclusions, we need not address the remaining
issues presented.
FACTS
In 1973, the parties to th is action formed a limited partnership called Willow Run
Partners (WRP). Respondent Dempsey Mork1 was the managing general partner for
respondent WRP. WRP’s sole purpose was to develop and operate a 78-unit residential
apartment building in Wilmar, Minnesota (the project). The project operated under
Housing and Urban Development (HUD) guidelin es to provide low -income housing to
qualifying tenants. In October 2016, WRP sold the proj ect for $3,265,000, y ielding net
proceeds of $2,090,710 and triggering the liquidation provisions of the Limited Partnership
Agreement (LPA).
After the sale of the project, co-appellant and general partner M&A brought suit
against respondents WRP, Rodney and Diane Vlach (the Vlachs), Dempsey Mork, and an
entity controlled by Dempsey Mork which was substituted for M&A as a general partner
(collectively respondents). Among other allegations, M&A accused the Vlachs of
embezzling money from the project. M&A pleaded the following four counts: (1) a claim
for breach of cont ract for failing to pay distributions in accordance with th e liquidatio n

1 To distinguish respondent Dempsey Mork from Mork and Associates, Inc. (M&A) and
other members of the Mork family, we refer to him by his first and last name.

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provisions of the LPA; (2) a request for judicial intervention to require dissolution and
equitable distributions pursuant to Minnesota Statutes section 302A.751, subdivisions 2, 3
(2020); (3) a claim for breach of the managing general partner’s fiduciary duty; and (4) a
request for an order requiring a forensic audit and an accounting of all property, funds,
distributions, transfers, and profits from WRP.2 M&A also sought a temporary restrainin g
order (TRO) to prevent Dempsey Mork from handling proceeds from the sale.
Soon after, appellant Florence Francis, a limited partner in WRP, intervened in the
action, joining claims one, three, and four of M&A’s complaint.3 Francis and M&A sought
appointment of a receiver to replace Dempsey Mork as managing general partner, distribute
the sale proceeds, and dissolve the partnership. Respondents raised a counterclaim for
tortious interference with a prospective business relationship against M&A. The district
court granted the request to appoint a receiv er to ta ke control of the project proceeds, pay
creditor claims, and determine the amount of distributions each class of partners should
receive under the LPA. Based on the appointment, the parties waived all claims against

2 The district court addressed claims for breach of the implied duty of good faith and fair
dealing; that Dempsey Mork violated Minnesota Statutes section 321.0408, subdivisio ns
(b)(2), (d) (2020 ); and that Dempsey Mor k breached the LPA by allowing the Vlachs to
purchase a limited partnership interest. N one of these is raised on appeal, and we decline
to address them. We also decline to address factual assertions that may have occurred after
the district court issued the order, such as allegations raised during oral argument. See
Mitterhauser v. Mitterhauser , 399 N.W .2d 664, 667 (Minn. App. 1987) (c oncluding that
this court “cannot base its decision on matters outside the record on appeal” ).
3 In Francis’s intervention pleading, she stated her intent to join counts one, three, and four,
but then appears to have inadvertently stated that she did not j oin count three. Given
Francis’s argument regarding breach of fiduciary duty before the district court and this
court, we construe her intervention pleading as joining counts one, three, and four.

5
each other and agreed to limit their legal dispute to the distributions of the project sale
proceeds recommended by the receiver.
The receiver conducted an investigation into WRP’s records and reviewed the LPA.
Ultimately, the receiver concluded that under the LPA, the limited partners were entitled
to distribution of their original capital contribution of $188,000 before the sale proceeds
were split with the general partners. The receiver also concluded that Dempsey Mork was
grossly negligent in his management of WRP and should be personally liable for the
embezzlement by the Vlachs. The parties disputed the receiver’s conclusions and the
district court held an evidentiary hearing scheduled over several months to determine
whether to accept the receiver’s recommended distributions.
The district court issued an order interpreting the LPA and accepting some, but not
all of the receiver’s recommended distributions. The district court disagreed with the
receiver regarding the interpretation of the LPA and concluded that the proceeds should be
equally distributed to the limited and general partnership classes. The district court also
determined that Dempsey Mork was not liable for his management of WRP or his oversight
of the Vlachs. Further, the district court determined that the Vlachs obtained a valid
partnership interest in WRP when they purchased the partnership interest from a previous
limited partner.
Given the issues raised on appeal, we first summarize the legal dispute regarding
the parties’ competing interpretations of the liquidation provisions of the LPA. Second,
we describe the evidence presented and the district court’s findings regarding the
management of WRP and the Vlachs’ embezzlement. Third, we outline the trial evidence

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and the district court’s findings regarding the transfer of a limited partnership interest to
the Vlachs. Finally, we briefly summarize the procedural developments leading up to this
appeal.
A. Liquidation under the LPA
The LPA defined two classes of partners: limited partners and general partners. The
limited partner s provided initial funding to WRP with capital contributions, totaling
$188,000, and took a passive role in WRP operations. The general partners contributed
$166.66 each, and were tasked with managing WRP and the project. Section 7.6 of the
LPA governs d istribution of the sale proceeds and provides a s pecific process to be
followed:
Liquidation. Unless the assets and liabilities of the
Partnership are transferred to a successor Entity pursuant to
Section 7.4, upon dissolution of the Partnership, after adequate
provision shall be made for the payment of the debts and
obligations of the Partnership, excluding all Residual Receipts
Notes issued by the Partnership, the remaining assets of the
Partnership shall be distributed as follows:

First, such assets sh all be distributed to the class
comprised of the Limited Partners up to the amount, if any, by
which the aggregate capital contributions of such Partners
exceed the aggregate distributions made to such Partn ers
pursuant to this Agreement.

Second, any bala nce of such assets shall be applied to
the payment of Residual Receipts Notes up to an amount equal
to the aggregate unpaid amount thereof.

Third, any balance of such assets shall be distributed to
the General Partner 4 up to the amount, if any, by which t he

4 While the reference is singular, the LPA defined the term “General Partner” to includ e
multiple general partners, in the event that the partnership should ever have more than one.

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aggregate capital contributions of such Partner exceed the
aggregate distributions made to such Part ner pursuant to this
Agreement.

Fourth, any balance of such assets shall be distrib uted
50% to the class comprised of the Limited Partners, and 50%
to the General Partner.

The receiver concluded that under the first step, the limited partners should receive their
capital contributions, $188,000, because there had been no prior distributions made to
them. After proceeding with steps two and three, the re ceiver then recommended an equal
distribution of the remaining amount to the limited and general partnership classes.
After the close of the evidentiary hearing, the district court disagreed with the
receiver’s interpretation. The district court concluded that the multi-step priority-
distribution schedule in the LPA was “moot” because the sale proceeds more than covered
the limited partners’ initial capital contributions. The district court split the sale proceeds
equally between the limited and general partnership classes. M&A and Francis disagree
with the district court and respondents ’ interpretation. They agree with the receiver and
believe that because no distributions had been made as of the time of dissolution, the plain
language of the LPA requires that the limited partners receive an amount equal to their
initial contributions before determining the amount leftover for the equal distributions to
the two classes of partners.
B. Evidence Presented Regarding Management of WRP
At the evidentiary hearing, the district court received extensive testimony and
documentary evidence regarding the management of WRP. The evidence presented
established that Dempsey Mork was the managing general partner of WRP , and had

8
“exclusive manageme nt and control of the business of the Partnership.” The LPA
authorized Dempsey Mork to delegate his powers and obligations to other s under his
supervision. For the first few years, Dempsey Mork managed the project himself. In June
1977, however, Dempsey Mork hired and delegated the day-to-day management of WRP’s
project to the Vlachs. Dempsey Mork also hired an accountant to assist him.
The accountant maintained records and filed mandatory annual audits with HUD
for 29 years on WRP’s behalf. Meanwhile, Rodney Vlach performed property
maintenance, showed apartments, rented apartments, and executed leases while Diane
Vlach performed “bookkeeper” duties. The Vlachs were also responsible for
communications with HUD and faxed monthly reports to HUD to ensure the project was
in compliance. The Vlachs worked for Dempsey Mork for 39 years. Throughout that time,
Rodney Vlach testified that Dempsey Mork had “[v]ery little” role in managing the
building and only visited the project three times. Dempsey Mork testified that during the
39 years that he worked with the Vlachs he thought “they were terrific” and he “couldn’t
be more pleased” because they were “very, very good” at managing the property and “they
did everything [h e] asked without reservation.” Dempsey Mork also testified that the
accountant they used for 29 years never found an irregularity or impropriety in the financial
documents.
In 2005, the project underwent an extensive renovation. According to Dempsey
Mork, the Vlachs were “instrumental” in securing funding and renovating the project.
During the renovation, Diane purchased items for the project using a WRP credit card that
she would then pay from the WRP checking account. Some larger purchases, such as

9
dishwashers for the units, were supposedly made through Diane’s personal credit card and
then paid by WRP. Dempsey Mork testified that he did not see credit card statements or
bills for the dishwashers, but that he asked the Vlachs about any discrepancies that he saw
and their descriptions s eemed in order. In addition, Dempsey Mork explained that, while
he saw “smaller amounts” being taken out of WRP’s funds, the auditors and HUD sai d it
seemed to be appropriate.
During the renovation, the accountant took “an exceptional number of records” t o
his office to complete the annual audit. The accountant failed to file the audit and retained
the documents. Dempsey Mork asked for the documents several times, but the accountant
never complied and could not be found. Dempsey Mork even went to the ac countant’s
home to search for the missing records, but did not find them. After the accountant died,
WRP was unable to locate the records. Because the accountant disappeared with the
financial records, Dempsey Mork and the Vlachs were unable to file timely annual audits
with HUD for several years. Throughout the project, Dempsey Mork ensured that the
partners received their annual K -1 tax forms.
In 2009, HUD initiated a lawsuit against WRP and the Vlachs for late filin gs
between 2003 and 2007 —the filings missed due to the accountant’s disappearance. HUD
eventually determined that it was impossible to get the records to refile , in part based on
the accountant’s passing. But the government requested to be repaid for excess rents 5 that

5 HUD projects require excess rents, which is the amount of income collected greater than
the basic gross rent potential, be returne d to HUD on a monthly basis unless HUD
authorizes the retention of that income. 24 C.F.R. § 236.60(a)-(c).

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WRP owed for the years between 2005 and 2010. The investigation also unveiled that the
Vlachs personally embezzled over $100,000 from WRP between 2005 and 2011. As a
result, the federal government also filed suit against the Vlachs for using project funds f or
personal purchases and for making payments on their personal credit card s. Once the
embezzlement was discovered in June 2016 , Dempsey Mork fired the Vlachs. In August
2016, the HUD lawsuit settled, and WRP and the Vlachs agreed to pay $510,000 to the
United States.
Based on the evidence presented, the district court found that Dempsey Mork
performed his duties in good faith, was not liable for breaching any duties owed to the
limited partners, and was not guilty of misconduct. The district court explained that it had
seen “no evidence or even an allegation that Dempsey [Mork] was in league” with the
Vlachs. In addition, the Vlachs had been “trusted employees who provided good service
to WRP for decades, and [ Dempsey Mork] had no reason to suspect them .” The district
court also rejected the characterization that Dempsey Mork was stealing from the company
and denied the limited partners access to financial information. Instead, the district court
determined that there was no claim that any limited partners were denied access to financial
information, no evidence that Dempsey Mork misappropriated funds, and no basis to find
that Dempsey Mork deliberately covered up the underlying theft. The district court
concluded that “no link has been established between specific decisions or action by
Dempsey [Mork] and identifiable damages.”
The district court then addressed each allegation of wrongdoing made against
Dempsey Mork, determining that Dempsey Mork reasonably believed that the HUD

11
settlement was advantageous to WRP, that none of the payments made at closing relating
to operating deficits was improper, and that the decision to set aside proceeds from the sale
to pay trade debt and attorney fees w as reasonable and in good faith . While the district
court acknowledged evidence that Dempsey Mork ’s 40 -year performance “was not
perfect,” the district court saw no evidence that Dempsey Mork failed to meet the duties
that he owed to the partnership and that no specific decision or conduct by Dempsey Mork
could be considered misconduct.
C. Evidence Presented Regarding t he Krelitz Transfer
Section 8.2 of the LPA outlines the limited partners’ right of first refusal when
selling an interest:
(a) Except as otherwise provided in this Agreement, no
Limited Partner shall transfer, sell, assign, give or otherwise
dispose of his Partnership Interest or a part thereof, whether
voluntarily or by operation of law, or at judicial sale or
otherwise, to any Person, unless such Limited Partner first
(i) obtains the consent of the General Partner to do so; and
(ii) notifies all the Partners of his intention to do so and offers
to sell in writing such Partnership Interest or such part thereof
to the General and Limited Partners at a price and upon terms,
specified in such offer, whi ch are no less favorable to such
Partners than those upon which such Limited Partner certifies
he is willing to sell a third party whose name and address shall
be specified in such offer. . . .

(b) The provisions of Section 8.2(a) shall not apply to
the transfer or assignment by a Limited Partner of all or a part
of his Partnership Interest to a Person who is otherwise a
Partner.

In 2002, a limited partner, Philip Krelitz, sought to sell his partnership interest in
WRP. Krelitz’s attorney wrote to Dempsey Mork that the “Krelitz family has decided that,

12
since it is unable to sell its interest to another partner, it wishes to abandon its interest. ”
The Vlachs received a copy of this letter and reached out to Dempsey Mork and Krelitz’s
attorney to express their interest in purchasing a share of the partnership. A month later,
the Vlachs entered into a sales agreement with Krelitz to purchase their 11.875% limited
partner interest for $750 (Krelitz Transfer Agreement).6 The Krelitz Transfer Agreement
stated that a letter was sent on May 28, 2002 , notifying all WRP partners of Krelitz’s
intention to sell his interest and that no partners had responded to the letter to exercise their
right of first refusal:
By letter dated May 28, 2002, a nd in accordance with Section
8.2 of the Partnership Agreement, the General Partner notified
all of the Partners of the Partnership of the Selling Partner’s
intention to sell the Transferred Interest, and of the Transferred
Interest’s availability for purc hase. As no Partners have
responded to this notification, the undersigned General Partner
hereby waives on behalf of the Partnership any further right of
first refusal under Section 8.2 of the Partnership Agreement,
and the General Partner hereby consents to the terms of the sale
of the Transferred Interest in accordance with Section 8.2 of
the Partnership Agreement.

Francis, who inherited her husband’s interest when he passed, testified that she never
received the letter referenced in the Krelitz Transfer Agreement, and that she would have
purchased Krelitz’s interest for $750 if she had received notice of his intent to sell.

6 Two years later, the Vlachs purchased additional interests in WRP. On September 13,
2004, the Vlachs purchased the limited partner interest of D. B., a limited partner at WRP.
Through this purchase, the Vlachs acquired an additional 5.9375% interest in WRP for
$900. Two days later the Vlachs entered into another sale agreement with V.O. for a
5.9375% interest in WRP for $900. The validity of thes e interests are not contested on
appeal, because, as stated in section 8.2(b) the notice provisions of the LPA do not apply
to transfers of a partnership interest to a pe rson who is already a partner.

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The district court found that the plain language of the Krelitz Transfer Agreement
was sufficient evidence that “Dempsey [Mork] gave written notice to the partners in May
2002.” The district court balanced this evidence against Francis’s testimony that she
received no notice. Ultimately, the district court discounted Francis’s testimony and gave
greater weight to the Krelitz Transfer Agreement: “faced with documentary evidence of
notice versus the unsupported recollection of a witness that something did not happen 16
years ago, the Court finds that the documentary evidence of notice to be more per suasive. ”
The district court concluded that the Krelitz transfer was valid, and the Vlachs were entitled
to distributions under the receivership. The district court also concluded that the Vlachs ’
distributions were to be paid directly to the federal government pursuant to the settlemen t
agreement.
D. Post-Hearing Motions and Appeal
Francis moved for amended findings, or a new trial, disputing the findings and
conclusions regarding the interpretation of the LPA, the validity of the Vlachs’ interest in
WRP, and Dempsey Mork’s alleged breach of fiduciary duties. M&A moved for further
proceedings regarding the general partners’ interests. The district court denied the motions.
Meanwhile, WRP applied for taxation of costs and disbursements as the prevailing party ,
including expert-witness fees . Francis also subsequently moved the court for an order to
show cause given Dempsey Mork’s failure to distribute proceeds. After a hearing, the
district court issued an order concluding that respondents were the prevailing party and
entitled to taxation of costs and disbursements including a portion of its requested expert-
witness fees. The district court also denied Francis’s motion to show cause.

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Francis and M&A appeal from the resulting judgment, contesting the district court’s
interpretation of the LPA, the factual findings regarding Dempsey Mork’s conduct, the
factual findings regarding the Vlachs’ partnership interest, and the taxation of costs and
disbursements against them. WRP appeals from the district court’s order awarding less
than one-half of the requested expert-witness fees.
DECISION
I. Interpretation of the LPA
The primary issue on appeal is the interpretation of the LPA regarding distributio n
of sale proceeds owed to each class of partners under the LPA. Francis argues that the
district court erred by ignoring the unambiguous contractual language requiring the
sequence of calculations. Because the LPA unambiguously outlines a priority repayment
process, we agree with Francis and reverse.
When the language of a contract “ is c lear and unambiguous, we enforce the
agreement of the parties as expressed in the language of the contract.” Dykes v. Sukup Mfg.
Co., 781 N.W.2d 578, 582 (Minn. 2010 ). “[W]hen a contractual provision is clear and
unambiguous, courts should not rewrite, m odify, or limit its effect by a strained
construction.” Valspar Refinish, Inc. v. Gaylord’s Inc. , 764 N.W.2d 359, 364 -65 (Minn.
2009). We interpret contractual language de novo. Id. at 364.
Here, the parties disagree over the interpretation of section 7.6 of the LPA which
provides that a specific sequence of four calculations be followed, starting with a
distribution to the limited partners equal to the amount of their initial contributions: “First,
such assets shall be distributed to the class c omprised of the Limited Partners up to the

15
amount, if any, by which the aggregate capital contributions of such Partners exceed the
aggregate distributions made to such Partn ers pursuant to this Agreement. ” In the fourth
and final calculation, the LPA pro vides for an equal division of assets between the limited
and general partners: “ Fourth, any balance of such assets shall be distributed 50% to the
class comprised of the Limited Partners, and 50% to the General Partner. ” The district
court interpreted Se ction 7.6 to mean that the repayment priority was “moot” because the
total sale proceeds exceeded the initial contributions. The district court, therefore, equally
distributed the sale proceeds to the limited and general partners. Francis argues that the
district court’s interpretation “contradicts LPA Section 7.6’s plain language and modifies
its effect.”
We agree with Francis for four reasons. First, the language in step one states that
“assets shall be distributed to the . . . Limited Partners up to the amount, if any, by which
the aggregate capital contributions of such Partners exceed the aggregate distributions
made to such Partners pursuant to this Agreement.” (Emphasis added.) The use of the past
tense in the verb “made” unambiguously refers to past distributions already made to the
limited partners under the LPA; the language does not include sale proceeds that were not
yet distributed.7 Second, the clause sets forth a numerical order of distributions that are to
occur first, second, third, and fourth. The use of a numerical order unambiguously requires
distributions and calculations to occur in a specific sequence. Third, each step is to be paid
from “any balance” remaining from the previous step. Such language clearly states that

7 It is undisputed that the limited partners never received a distribution prior to this action.

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the prior step must be fully completed before the remaining balance can be calculated and
used for the next distribution. Fourth, the provisions in step one are not moot. Under the
district court’s interpretation, the class of general partners receive a windfall at the expense
of the limited partners. Because the competing interpretations yield different distributio n
amounts paid to each partnership class, the specific calculation sequence is not moot.
Accordingly, b ecause the plain language of the contract requires that the limited
partners receive their initial capital contributions before other distributions are made, we
reverse the district court’s interpretation of the LPA. In addition, we remand to the district
court to enter judgment and order distributions consistent with this opinion.
II. Findings of Fact Regarding Dempsey Mork’s Liability
Francis argues that the district court erred when it found that Dempsey Mork was
not liable for breaching any fiduciary duty owed to the limited partners. Because the record
supports the district court’s findings, the findings are not clearly erroneous.
Minnesota recognizes statutory, common law, and contractual fiduciary duties. A
general partner’s statutory fiduciary duty to the limited partnership and the other partners
“is limited to refraining from engaging in grossly negligent or reckless conduct, intentio nal
misconduct, or a knowing violation of law.” Minn. Stat. § 321.0408(c) (20 20). The LPA
also limited Dempsey Mork’s liability to conduct that constituted gross negligence. See
Minn. Stat. § 321.0110(a) (20 20) (establishing that s ubject to certain limitations, “the
partnership agreement governs relations among the partners and between t he partners and
the partnership”). Section 11.2 of the LPA provides that no “ Partner shall have any claim
against the General Partner by reason of any act or omission of the General Partner ,

17
provided that such acts or omissions were performed in good faith and that the General
Partner was not grossly negligent or guilty of misconduct .” Under section 4.1(v), the
general partner will “indemnify and h old the Partnership harmless fro m any loss, damage
or liability due to, or arising out of, the General Partner’s fraud or gross negligence.”
The parties do not dispute whether Dempsey Mork owed a fiduciary duty to the
limited partners.8 Instead, the parties dispute the district court’s findings. Specifically,
Francis argues that contrary to the district court ’s findings, the evidence established the
following facts: (1) Dempsey Mork failed to exercise sufficient oversight over the Vlachs ;
(2) Dempsey Mork failed to maintain financial records; and (3) Dempsey Mork failed to
disclose Krelitz’s intention to sell his limited partnership interest. These arguments present
questions of fact reviewed for clear error. Pedro v. Pedro , 489 N.W.2d 798, 801 (Minn.
App. 1992), review denied (Minn. Oct. 20, 1992) . Findings of fact are clearly erroneous

8 The parties did not make any legal arguments distinguishing the various sources of
fiduciary duties under Minnesota law or individually analyzing the elements of a claim for
breach of a contractual fiduciary duty as separate from claims for breaches of st atutory or
common law fiduciary duties. Nor did the parties present arguments regarding the extent
to which parties can limit certain common law duties by contract, such as the duty to
disclose material facts. See Appletree Square I Ltd. P’ship v. Investmark, Inc., 494 N.W.2d
889, 892-93 (Minn. App. 1993) (concluding that a partnership can limit the ir duties of
disclosure in the partnership agreement), review denied (Minn. Mar. 16, 1993) ; see also
Minn. Stat. § 321.0110 (2020) (discussing waivable and nonwaivable statutory partnership
protections). We need not determine the specific contours of each type of legal claim here
because the parties in this case dispute the district court’s factual findings regarding what
Dempsey Mork did and knew . In addition , we note that the parties waived all pleaded
claims and agreed to limit their dispute to the fairness of the distributions made under the
receivership. Although the district court addressed each element of each claim and
counterclaim raised in the pleadi ngs, we limit our review to the issue that survived the
parties’ waiver: the fairness of the distributions recommended by the receiver. The district
court’s findings regarding Dempsey Mork’s conduct relates to this issue.

18
only if the reviewing court is “left with the definite and firm conviction that a mistake has
been made.” Fletcher v. St. Paul Pioneer Press , 589 N.W.2d 96, 101 ( Minn. 1999)
(quotation omitted).
We find no clear error in the district court’s findings rega rding Dempsey Mork’s
supervision of the Vlachs. Dempsey Mork testified that he worked with the Vlachs for 39
years and that he had no reason to suspect wrongdoing. Dempsey Mork thought that the
Vlachs were “very, very good” at managing the property and explained that the accountant
used by WRP for 29 years never found an irregularity or impropriety in the financial
documents. Similarly, Dempsey Mork stated that while he observed “smaller amounts”
being taken out of WRP’s funds, the auditors and HUD said it seemed to be appropriate.
Dempsey Mork testified that when he asked the Vlachs about payments going to their credit
cards, they told him it was for material related to the project’s renovation and he believed
everything was in order. This evidence supports the district court’s findings that Dempsey
Mork was not in league with the Vlachs, who had been trusted employees and who
provided good service to WRP for decades. Dempsey Mork took the accountant, auditors,
and HUD at their word, and the district court concluded that Dempsey Mork had no reason
to suspect the Vlachs.
We also find no clear error in the district court’s findings regarding Dempsey
Mork’s maintenance of financial records. Dempsey Mork testified that he delegated his
bookkeeping duties to an accountant who properly filed records for 29 years. And when
the accountant “disappeared,” Dempsey Mork asked for the records back, went to the
accountant’s home to search for records, and inquired with HUD to attempt to remedy the

19
missing records. Dempsey Mork also testified that while a few annual reports could not
be recovered, he and the Vlachs continued to submit monthly documents to HUD and
annual notices to the partners as required. Dempsey Mork also provided annual K -1s to
the partners. Based on this evidence, the district court did not err in finding that Dempsey
Mork did not fail in any duty to maintain financial records.
Finally, regarding the argument that Dempsey Mork failed to disclose Krelitz’s
intention to sell his interest, we conclude that the evidence supports the district court’s
finding that the limited par tners received due notice of Krelitz’s intention to sell. The
district court considered evidence of timely notice, including the plain language of the
Krelitz Transfer Agreeme nt, which declared that written notice to the limited partners
occurred in May 2002. The district court balanced this evidence against Francis’s
testimony to the contrary, and found the “documentary evidence of notice to be more
persuasive” than “the unsupported recollection of a witness that something did not happen
16 years ago.” We do not reweigh conflicting evidence on appeal. Sefkow v. Sefkow , 427
N.W.2d 203, 210 (Minn. 1988).
After reviewing the evidence presented, we are not left with the firm conviction that
the district court made a mistake in its factual findings regarding Dempsey Mork’s liability.
III. Findings of Fact Regarding t he Validity of the Krelitz Transfer
Next, Francis argues that because Dempsey Mork did not notify the limited partners
of Krelitz’s intention to sell his partnership interest, the district court erred in conclud ing
that the Krelitz transfer was valid. For the reasons noted above, w e find no error in the
district court’s findings that proper notice was pro vided to the limited partners.

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In addition, Francis’s argument misconstrues the LPA. Francis contends that
because Dempsey Mork or the Vlachs bear some responsibility for the alleged invalid
transfer, the district court should reduce the amount of their distribution and increase the
amount of the distribution to be made to Francis. Section 8.2(a) of the LPA , however,
requires the selling limited partner—not Dempsey Mork —to provide notice:
(a) Except as otherwise provided in this Agreement, no
Limited Partner shall transfer, sell, assign, give or otherwise
dispose of his Partnership Interest or a part thereof, whether
voluntarily or by operation of law, or at judicial sale or
otherwise, to any Person, u nless such Limited Partner first
(i) obtains the consent of the General Partner to do so; and
(ii) notifies all the Partners of his intention to do so and offers
to sell in writing such Partnership Interest or such part thereof
to the General and Limited Partners at a price and upon terms,
specified in such offer, which are no less favorable to such
Partners than those upon which such Limited Partner certifies
he is willing to sell a third party whose name and address shall
be specified in such offer.

Without conferring upon the Vlachs or Dempsey Mork a contractual duty to provide notice,
the amount of their distribution should be unaffected by compliance or breach of Section
8.2(a). Francis has not brought a breach of contract claim against Krelitz fo r failing to
provide notice. Given this contractual language, we are not persuaded by Francis’s
argument on this issue.9

9 Francis also argues that the la nguage of the Krelitz Transfer Agreement shows improper
notice. Section 11.1 of the LPA requires that all notices be “deemed properly given only
if sent by registered or cert ified United States mail. ” The Krelitz Transfer Agreement
declares that notice was made “[b]y letter dated May 28, 2002,” without reference to how
the letter was delivered. In the absence of such a reference, Francis argues that the Krelitz
Transfer Agreement cannot establish proper notice. Because there is no claim for breach
of contract against Krelitz, we need not determine whether substantial performance applies,
or whether the Krelitz Transfer Agreement demonstrates substantial performance. In

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IV. Determination of Prevailing Party and Remaining Issues
Francis, M&A, and WRP each appeal from the district court’s order taxing costs
and disbursements. We conclude that because the primary issue in the receivership is the
distribution of proceeds under the LPA , and because Francis prevailed on that issue on
appeal, the respondents are not the prevailing party. See Borchert v. Maloney, 581 N.W.2d
838, 840 (Minn. 1998) (noting that to determine the prevailing party, “ the general result
should be considered, and inquiry made as to who has, in the view of the law, succeeded
in the action” (quotation omitted)). Because respondents are not the prevailing party, we
reverse the decision to tax costs against appellants, including the award for WRP’s expert-
witness fees . See Minn. Stat. § 549.04 (20 20) (allowing “reasonable disbursements, ”
including fees, to the prevailing party in an action).
In light of our reversal of the district court’s order taxing costs and disbursements,
we decline to address the parties’ arguments regarding the applicability of section 549.04
to a proceeding involving the appointment of a receiver and regarding WRP’s cross-appeal
of the district court’s decision to reduce respondents’ claimed expert-witness fees .
Similarly, our decision to reverse and remand the distribution calculations under the LPA
renders moot the district court’s decision to deny Francis’s motion t o show cause against

addition, we are concerned that Francis lacks standing to bring such a challenge. Th e
consequences of invalidating the Krelitz t ransfer c ould require unwinding the sale and
reverting the interest back to Krelitz, not to the limited partnership generally or to Francis
specifically. We need not determine standing , however, because the dist rict court’s
findings are not clearly erroneous.

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respondents for failing to carry out the improperly calculated distributions, and we decline
to address arguments relating to that decision.
Affirmed in part, reversed in part, and remanded.