Athena 2004, LLC, Respondent,

This opinion is nonprecedential except as provided by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
A20-0333

Athena 2004, LLC,
Respondent,

vs.

LC Rochester, Inc., et al.,
Appellants.

Filed February 1, 2021
Reversed and remanded
Connolly, Judge

Olmsted County District Court
File No. 55-CV-18-3303

Daniel J. Heuel, O’Brien & Wolf, LLP, Rochester, Minnesota (for respondent)

Ken D. Schueler, John T. Giesen, Dunlap & Seeger, P.A., Rochester, Minnesota (for
appellants)

Considered and decided by Reyes, Presiding Judge; Connolly, Judge; and Gaïtas,
Judge.

NONPRECEDENTIAL OPINION
CONNOLLY, Judge
On appeal following a court trial in this breach -of-contract action arising from an
agreement to construc t and lease a restaurant building, appellant -tenant argues that the

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district court erred in applying the disproportionate -forfeiture exception to excuse a
condition precedent contained in the lease agreement. By notice of related appeal,
respondent-landlord argues that the district court’s award of attorney fees was erroneous.
Because the district court improperly applied the disproportionate-forfeiture exception, we
reverse and remand.
FACTS
Appellant LC Rochester, Inc. is a corporation that owns and operates Little Caesars
pizza franchises in Rochester, Minnesota, and Mason City, Iowa. Appellant Tom Gommels
is the president and a majority shareholder of LC Rochester, and appellant Nathan Aaland is
a minority shareholder. Respondent Athena 2004 is th e owner of Eastwood Plaza, a
commercial shopping center located in Rochester.
Because Gommels desired to open a second Little Caesars in Rochester, LC Rochester
and Athena 2004 entered into a lease agreement (the lease) on June 18, 2014, whereby LC
Rochester agreed to lease a new stand-alone building to be constructed in the Eastwood Plaza
parking lot. Under the terms of the lease, Athena 2004 was required to “Substantially
Complete all of Landlord’s Work, on or before September 1, 2014.” Exhibit C to the lease
provided the following list of items that consisted of “Landlord’s Work”: (A) “[n]ewly
constructed building detached from the existing Shopping Center”; (B) restrooms “equipped
with a lavatory, toilet, mirror, soap-dispenser, towel-dispenser, paper-dispenser, and flooring
and wall materials”; (C) “400 amp, 3-phase, 208/240 volt, 4-wire electrical service to the rear
of the Premises to include all panels and circuit breakers”; (D) gas line to the oven location;
(E) HVAC system that is warranted by Athena 2004 for one year; (F) “T-bar ceiling system

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with tile and lay-in light fixtures”; (G) underground plumbing system; (H) flooring for the
premises; (I) water heater; (J) grease trap; (K) “[c]onduit for telephone and exterior signage”;
(L) insulation of exterior walls and roof; and (M) glass in windows and doors. The lease also
provided that the “Premises shall not be considered ‘Substantially Complete’ until” LC
Rochester “obtained a certificate of occupancy (or local equivalent) with respect to
Landlord’s Work for the Premises.” (Emphasis omitted.) The lease further provided that LC
Rochester would receive two days’ rent as liquidated damages for each day that substantial
completion of Athena 2004’s work extended beyond September 15, 2014. Finally, the lease
stated that LC Rochester was entitled to deduct any accrued liquidated damages against all
rent coming due under the lease.
It is undisputed that Athena 2004 failed to substantially complete its work by the
September 1, 2014, deadline set forth in the lease. In light of the delay of the construction
project, the parties entered into an addendum to the lease (the addendum) on October 10,
2016. The addendum acknowledged that Athena 2004 missed the deadline to substantially
complete its work, but stated that Athena 2004 intended to substantially complete its work by
December 1, 2016. The addendum also stated that if, Athena 2004 substantially completed
its work by the new deadline of December 1, 2016, LC Rochester would “waive its right to
enforce the Liquidated Damages Clause” in the lease. Finally, the addendum provided:
The amendments to the Lease . . . are contingent upon
[Athena 2004’s] Work being Substantially Completed by
[December 1, 2016]. In the event [Athena 2004] fails to
Substantially Complete [its] Work by [December 1, 2016],
(i) each of the amendments to the Lease . . . shall be considered
void ab initio, and (ii) [LC Rochester’s] right to enforce the
Liquidated Damages Clause shall be deemed fully restored.

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The parties dispu ted whether Athena 2004 substantially completed its work by
December 1, 2016. But LC Rochester was able to open for business on January 17, 2017. In
April 2018, Athena 2004 brought this action against LC Rochester for unpaid rent. LC
Rochester counterclaimed, alleging that Athena 2004 breached the “Lease and Addendum”
by failing to substantially complete its work by December 1, 2016. LC Rochester also sought
liquidated damages under the lease. Both parties sought attorney fees under the lease.
At t rial, evidence was presented that the following work was not substantially
completed by December 1, 2016: (1) restrooms; (2) 400 amp, 3-phase, 208/240 volt, 4-wire
electrical service at the rear of the premises, including all panels and circuit breakers; (3) gas
line; (4) HVAC system warrantied by Athena 2004 for one year; (5) T-bar ceiling with tile
and lay-in light fixtures; (6) underground plumbing system; (7) flooring; and (8) insulation of
exterior walls and roof. In addition, evidence was presented that the building has not been
approved by Rochester Building and Safety. Although evidence was presented that LC
Rochester eventually undertook some of Athena 2004’ s responsibilities in completing
“Landlord’s Work,” Gommels testified that he did not intentionally delay completion of the
work he undertook in order to invoke the liquidated damages clause of the lease.
The district court determined that Athena 2004 “breached the addendum . . . by failing
to substantially complete the ‘Landlord’s Work’ by December 1, 2016.” In making this
finding, the district court credited Gommels’s testimony, and found “no merit” to Athena
2004’s argument of intentional delay. T he district court found that “Gommels should not
have needed to take on any of ‘Landlord’s Work,”’ and that the “evidence supports that had
he not done so, the project would have been even more delayed.” But the district court

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determined that the breach “was not material,” because the “majority of construction work
was completed by or within a few weeks of the December 1, 2016 deadline, ” and “LC
Rochester was able to open [its] restaurant relatively close to the timeframe it sought, which
was the first week of January 2017.” As such, the district court found that the “addendum to
[the] lease controls.” The district court then determined that LC Rochester is “entitled to
damages from the anticipated delay of opening—the first week of January 2017, to the date
of opening—January 17, 2017,” as well as “damages for charges incurred in completing
‘Landlord’s Work.’” The district court also determined that LC Rochester “b reached the
addendum to [the] lease by failing to pay rent” and, therefore, Athena 2004 is “entitled to
damages for nonpayment of rent from January 2017 to November 2018.” The district court
concluded that because the “evidence in the record is insufficient on the issue of damages,”
further proceedings were required on the issue of damages.
Following a hearing on the issue of damages, the district court awarded Athena 2004
$44,064.85 for nonpayment of rent and additional fees and expenses. The district court also
awarded damages to LC Rochester in the amount of $5,421.13 for “buildout expenses” and
lost profits. Finally, the district court stated that it would address the parties’ requests for
attorney fees after they move “for relief in accordance with Minn. R. Gen. Prac. 119.”
Both parties moved for an award of attorney fees and costs, and LC Rochester moved
for amended findings or, in the alternative, a new trial. To support its motion for amended
findings, LC Rochester argued that the district court erred in determining that the addendum
controls and that Athena 2004’s breach was not material. Specifically, LC Rochester argued
that, because the December 1, 2016, deadline in the addendum was a condition precedent that

6
was not fulfilled, the lease controls. LC Rochester argued that, under the terms of the lease,
Athena 2004’s failure to substantially complete the landlord’s work within the required time
excused LC Roc hester’s obligation to pay rent and entitled LC Rochester to liquidated
damages.
The district court applied the disproportionate -forfeiture exception adopted by the
supreme court in Capistrant v. Lifetouch Nat’l Sch. Studios, Inc. , 916 N.W.2d 23 (Minn.
2018), and determined that the condition precedent set forth in the lease addendum was not
material because LC Rochester was able to open within 17 day s of its target date of
January 17, 2017. The district court also found that LC Rochester’s liquidated damages claim
was “extreme” when measured against its purpose to allow a January 1 opening because the
claim “exceeded $260,000 and would have resulted in the forfeiture of rent” for a period of
eight and a half years. Thus, the district court denied LC Rochester’s motion for amended
findings of fact or, in the alternative, a new trial.
In the same order, the district court det ermined that Athena 2004 was entitled to
attorney fees under the paragraph 25(d) of the lease because LC Rochester breached the lease
addendum. The district court also determined that LC Rochester was entitled to attorney fees
under paragraph 32(a) of the lease because Athena 2004 was in breach. But, after using the
lodestar method for determining the reasonableness of the requested attorney fees, the district
court found that the “amount of attorney fees and costs sought by both parties is excessive
considering the success achieved.” The district court also found that it could not “determine
the number of hours reasonably expended on litigation based on the evidence in the record.”
The district court, therefore, elected to “reduce the attorney fees and costs sought to account

7
for the limited success” of the parties, and awarded attorney fees and costs in the amount of
$10,000 to Athena 2004 and $1,000 to LC Rochester. LC Rochester subsequently appealed
and Athena 2004 filed a notice of related appeal.
DECISION
LC Rochester challenges the district court’s denial of its motion for amended
findings. “Upon motion of a party . . ., the court may amend its findings or make additional
findings, and may amend the judgment accordingly if judgment has been entered.” Minn.
R. Civ. P. 52.02. This court reviews a “district court’s decision whether to grant a motion
for amended findings for an abuse of discretion.” Landmark Cmty. Bank, N.C. v.
Klingelhutz, 927 N.W.2d 748, 754 (Minn. 2019); see Stroh v. Stroh, 383 N.W.2d 402, 407
(Minn. App. 1986) (“[T]he purpose of a motion to amend conclusions is to permit the
[district] court a review of its own exercise of discretion.”). A district court abuses its
discretion if “its decision is based on an erroneous view of t he law or is against logic and
the facts in the record.” Thompson v. Schrimsher , 906 N.W.2d 495, 500 (Minn. 2018)
(quotation omitted).
“A condition precedent is a contract term that calls for the performance of some act
or the happening of some event after the contract is entered into, and upon the performance
or happening of which the promisor’s obligation is made to depend .” Capistrant, 916
N.W.2d at 27 (quotation omitted). “‘[I]f the event required by the condition does not occur,
there is no brea ch of contract.”’ Id. (quoting 451 Corp. v. Pension Sys. for Policemen &
Firemen, 310 N.W.2d 922, 924 (Minn. 1981)). The general rule is that “conditions must

8
be literally met or exactly fulfilled, or no liability can arise on the promise qualified by the
condition.” Id. at 27-28 (quotation omitted).
In Capistrant, however, the supreme court recognized a limited exception to the
general rule regarding conditions precedent. Id. at 29. In that case, the supreme court
stated that “[t]o the extent that t he non -occurrence of a condition would cause
disproportionate forfeiture, a court may excuse the non-occurrence of that condition unless
it was a material part of the agreed exchange.” Id. at 28 (quotation omitted).
LC Rochester maintains that the Dece mber 1, 2016 , deadline contained in the
addendum was a condition precedent and that, under the general rule, conditions precedent
are always material. LC Rochester acknowledges the disproportionate-forfeiture exception
discussed in Capistrant, but argues that the district court improperly applied that exception
because (A) it was not pleaded or properly raised, and (B) the circumstances of this case
do not warrant its application. Thus, LC Rochester argues that the language i n the
addendum does not control and that, under the lease, it is entitled to liquidated damages.1

1 Athena 2004 asserts that LC Rochester did not raise the enforceability of the condition
precedent at trial. Indeed, the district court found that LC Rochester’s argument in its
motion for amended findin gs “has shifted.” It is well settled that an issue is raised “ too
late” if it is first raised in a motion for a new trial or in a motion for amended findings. See
Antonson v. Ekvall, 186 N.W.2d 187, 189 (Minn. 1971) (stating that a new issue cannot be
raised in a motion for a new trial); see also Allen v. Cent. Motors, Inc., 283 N.W. 490, 492
(Minn. 1939) (stating that a new fact issue cannot be raised in a motion for amended
findings). But Athena 2004 does not spec ifically argue that LC Rochester’s condition -
precedent argument is not properly before this court. And the record reflects that, in its
closing argument to the district court, LC Rochester argued that the addendum was a
condition precedent. Moreover, LC Rochester has maintained throughout the proceedings
that it is entitled to liquidated damages under the lease. As such, LC Rochester’s condition-
precedent argument is properly before us.

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A. Was the disproportionate-forfeiture exception properly pleaded?
In civil cases, our adversary system follows “the principle of party presentation.”
Greenlaw v. United States , 554 U.S. 237, 243, 128 S. Ct. 2559, 2564 (2008). Under this
principle, parties are relied upon “to frame the issues for decision and assign to courts the
role of neutral arbiter of matters the parties present .” Id., 128 S. Ct. at 2564 (emphasis
added). In other words, “[c]ourts do not, or should not, sally forth each day looking for
wrongs to right. We wait for cases to come to us, and when they do we normally decide
only questions presented by the parties.” Id. at 244, 128 S. Ct. at 2564 (quotation omitted).
LC Rochester asserts that Athena 2004 “did not raise the disproportionate-forfeiture
[exception] in its pleading,” nor was that issue tried. LC Rochester argues that , because
the disproporti onate-forfeiture was not raised by Athena, the distric t court improperly
relied on the exception. We agree.
The record reflects that Athena 2004 did not plead the disproportionate -forfeiture
exception, nor did Athena 2004 mention the disproportionate-forfeiture exception in its
posttrial submissions. And the record reflects that LC Rochester neither raised, nor
discussed, the disproportionate -forfeiture exception. Although LC Rochester cited
Capistrant in the memorandum supporting its motion for amended findings, it did not cite
the case for a disproportionate-forfeiture proposition. Rather, Capistrant was cited as part
of a string cite for the general rule that if conditions precedent are not literally met or
exactly fulfilled, no liability can arise on the promise qualified by the condition. By
applying the disproportionate-forfeiture exception when it was never raised by any of the

10
parties, the district court violated the principle of party presentation. Therefore, the district
court erred by relying on the disproportionate-forfeiture exception discussed in Capistrant.
B. Was the disproportionate-forfeiture exception properly applied?
Even if the disproportionate -forfeiture exception discussed in Capistrant had been
properly raised, the district court abused its discretion by applying it in this case. The issue
in Capistrant involved an employment contract between the parties that required the
employee to immediately deliver to the employer all of the employer’s property that was
in the employee’s possession or control at the end of his employment. 916 N.W.2d at 25.
The employment agreement provided that , if the employee breached this provision, the
employer would “be entitled to terminate [the employer’s] obligation to make payments of
Residual Commission that have not yet been paid” to the emplo yee. Id. Twenty-eight
years after the employment agreement was signed, the employee retired. Id. At the time
of his retirement, the employee was ow ed “millions of dollars” in commission. Id. at 28.
When the employee asserted his right to his commissions, the employer demanded that the
employee return documents that he had in his possession, and the employee returned the
documents within three business days of the request. Id. at 25-26. The employer, however,
refused to pay the commissions, arguing that its obligation to pay was excused because the
employee had failed to comply with the return-of-property clause. Id. at 26.
On appeal, the supreme court recognized the “‘general rule’ that ‘conditions must
be literally met or exactly fulfilled, or no liability can arise on the promise qualified by the
condition.’” Id. at 28 (quoting 13 Richard A. Lord, Williston on Contracts § 38.6 (4th ed.
2013)). But the supreme court stated that it had “never explicitly decided whether the

11
breach of a condition precedent must be material in order to relieve the non-breaching party
of its obligation under the contract.” Id. The supreme court then acknowledged section
229 of the Restatement, which provides: “‘To the extent that the non -occurrence of a
condition would cause disproportionate forfeiture, a court may excuse the non-occurrence
of that condition unless it was a material part of the agreed exchange.”’ Id. (quoting
Restatement (Second) of Contracts § 229). The supreme court determined that in the
“unique context” of the circumstances presented in the case, it was appropriate to look to
guidance from section 229 because it “reflects our reluctance to enforce forfeitures.” Id.
The supreme court then stated that section 229 “ consists of two prongs: (1) whether the
occurrence of the condition was a material part of the agreed exchange and (2) a
proportionality analysis that balances the risk to be protected with the amount to be
forfeited.” Id. at 29 (citing Restatem ent (Second) of Contracts § 229 cmts. b -c). The
supreme court concluded that “the record in this case does not allow resolution of the
materiality question as a matter of law” and therefore remanded the case “to allow the
district court to resolve the materiality question in the first instance.” Id. at 30-31.
LC Rochester challenges the district court’s application of the disproportionate-
forfeiture exception to the circumstances presented in this case , arguing that, although the
supreme court adopted the dispro portionate-forfeiture exception in Capistrant, it
simultaneously limited the exception to the “unique circumstances” of that case. Whether
to apply the disproportion ate-forfeiture exception is discretionary. Id. at 31 ( explaining
that “‘the rule is, of n ecessity, a flexible one, and its application is within the sound
discretion of the court’” (quoting Restatement (Second) of Contracts § 229 cmt. b)).

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The supreme court in Capistrant stated that the circumstances in that case were
“unique” and that the condition precedent operated “differently than the conditions at issue
in our cases applying the general rule” because (1) the “parties had been performing under
the contract for 28 years before the condition became operative,” (2) the “condition came
into play only as the parties’ employment relationship was ending,” and (3) “the
consequence of failing to comply with the return-of-property clause would be the forfeiture
of millions of dollars.” Id. at 28 (emphasis added).
LC Rochester contends that the “ context” in this case “is much different than that
in Capistrant, in three ways”: (1) the “condition was unequivocal and unmistakable”;
(2) the condition was “recent”; and (3) the condition was “between commercial businesses
negotiating at arms -length.” LC Rochester argues that , in light of these differences, the
district court abused its discretion by applying the exception rather than the general rule.
We agree that the circumstances presented in this case do not warrant application of
the disproportionate-forfeiture exception discussed in Capistrant. The condition precedent
at issue in Capistrant involved an employment contract, whereas the condition in this case
involved a commercial lease, which is an entirely different type of agreement. Moreover,
the supreme court in Capistrant specifically noted that the “ case is not about liquidated
damages because [the employer] does not contend that the residua l commission amount
forfeited by [the employee’s] breach accurately represents the damages caused by [the
employer’s] failure to return its property.” Id. at 26 n.2 (emphasis added). In contrast, the
lease at issue in this case contained a bargained -for liquidated-damages clause, which
represented the amount of damages LC Rochester would incur if the substantially complete

13
deadline was not satisfied. The differences between this case and Capistrant are significant
and, based on these significant differen ces, there is no indication that application of the
disproportionate-forfeiture exception should be applied here.
Moreover, the disproportionate-forfeiture exception is only applicable if the agreed
term is not material. Id. at 28 (“To the extent that the non-occurrence of a condition would
cause disproportionate forfeiture, a court may excuse the non-occurrence of that condition
unless it was a material part of the agreed exchange.” (quotation omitted) ). A
determination of whether the occurrence of the condition was a material part of the agreed
exchange focuses on the root or essence of the contract. See BOB Acres, LLC v.
Schumacher Farms, LLC, 797 N.W.2d 723, 728 (Minn. App. 2011) (stating that a “material
breach goes to the root or essence of th e contract” (quotation omitted)), review dismissed
(Minn. Aug. 12, 2011). “A material breach is a breach of contract that is significant enough
to permit the aggrieved party to elect to treat the breach as total (rather than partial), thus
excusing that party from further performance and affording it the right to sue for damages.”
Id. (quotation omitted).
Here, the plain language of the lease required Athena 2004 to substantially complete
its work by September 1, 2014. The lease also provides that if Ath ena 2004 failed “to
complete [its] work and deliver possession of the premises to [LC Rochester] on or prior
to September 15, 2014, [LC Rochester] shall have the right, at any time prior to the date
that [Athena 2004’s] work is substantially complete and a ccepted by [LC Rochester], to
terminate this lease upon written notice to [Athena 2004].” (Emphasis added.) The
provision allowing LC Rochester to terminate the lease if Athena 2004’s work was not

14
completed by the established deadline indicates that the substantial-completion deadline
was material because Athena 2004’s failure to substantially complete its work excused LC
Rochester’s performance under the agreement. See BOB Acres , 797 N.W. 2d at 728 -29.
Although the ad dendum extended the deadline by which Athena 2004’s work must be
completed, it did not change the significance of Athena 2004 substantially completing its
work by the agreed-upon deadline.
Additionally, the lease contained a liquidated -damages provision. That provision
states that, if Athena 2004’s work was not substantially completed by the specified deadline
and LC Rochester accepted possession of the premises despite Athena 2004’s failure to
substantially complete its work by the deadline, “there shall accrue for the benefit of [LC
Rochester], as liquidated damages, two . . . days rent . . . for each day that completion of
[Athena 2004’s] work is delayed . . ., and [LC Rochester] shall be entitled to deduct any
such accrued amounts until applied in full against all rent coming due under th[e] lease.”
But LC Rochester’s ent itlement to liquidated damages wa s eliminated if Athena 2004
substantially completed its work by the new deadline contained in the addendum. The
elimination of LC Rochester’s ability to claim liquidated damages under the lease if Athena
2004 substantially completed its work by the agreed -upon deadline further indicates that
the substantial-completion deadline was a material part of the agreement. The refore, the
district court abused its discretion by determining that the breach of the substantial -
completion deadline was not material.
Because the district court abused its discretion by applying the disproportionate -
forfeiture exception, the general rule regarding conditions precedent becomes applicable.

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As stated above, that rule requires that conditions “be literally met or exactly fulfilled, or
no liability can arise on the promise qualified by the condition.” Capistrant, 916 N.W.2d
at 27-28 (quotation omitted).
Here, the addendum states that the “amendments to the lease . . . are contingent upon
[Athena 2004’s] Work being Substantially Completed by” December 1, 2016, and that , if
Athena 2004 fails to substantially complete i ts work by the new deadline, “each of the
amendments to the lease . . . shall be considered void ab initio.” The plain language of the
addendum indicates that the addendum is a condition precedent because, if Athena 2004’s
work were not substantially completed by the new deadline, the addendum would become
void and the lease would control. See id. at 27 (“A condition precedent is a contract term
that calls for the performance of some act or the happening of some event after the contract
is entered into, and upon the performance or happening of which the promisor’s obligation
is ma de to depend .” (quotation omitted)). Athena 2004 does not disagree that the
addendum constitutes a condition precedent. Moreover, the district court found that
Athena 2004 did not substantially complete its work by the deadline set forth in the
addendum, and that finding is supported by the record. As such, LC Rochester is entitled

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to claim liquidated damages under the clear language of the lease.2 We, therefore, reverse
and remand for proceedings not inconsistent with this opinion.3
Reversed and remanded.

2 Although we hold by this opinion that the liquidated -damages pro vision of the lease
applies, we take no position, one way or the other, as to whether that provision constitutes
a penalty under Minnesota law.
3 Because we reverse the decision of the district court, we need not address Athena 2004’s
attorney-fees argument raised in its notice of related appeal. That issue will need to be
reconsidered following proceedings on remand.