BDS Laundry Management Company, Appellant,

This opinion is nonprecedential except as provided by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
A20-1223

BDS Laundry Management Company,
Appellant,

vs

Haven, LLC, et al.,
Respondents,

ABC Corporation, et al.,
Defendants.

Filed May 17, 2021
Affirmed
Gaïtas, Judge

Hennepin County District Court
File No. 27-CV-20-6347

Mark V. Steffenson, Henningson & Snoxell, Ltd., Maple Grove, Minnesota (for appellant)

Justice Ericson Lindell, Greenstein Se llers PLLC, Minneapolis, Minnesota (for
respondents)

Considered and decided by Gaïtas, Pr esiding Judge; Segal, Chief Judge; and
Kalitowski, Judge.


 Retired judge of the Minnesota Court of A ppeals, serving by appoi ntment pursuant to
Minn. Const. art. VI, § 10.
2
NONPRECEDENTIAL OPINION
GAÏTAS, Judge
In this dispute over non-renewal of an apartment-complex laundry-room lease,
appellant-lessee BDS Laundry Management Co. (BDS) challenges the district court’s rule
12.02(e) dismissal of its breach-of-contract and declaratory-judgment claims. BDS argues
that the district court erred as a matter of law first, by concluding that the contract between
BDS and respondent-lessor Haven, LLC (Haven ) did not provide a right of first refusal;
and second, by disregarding Ha ven’s alleged failure to prov ide BDS with a competitor’s
lease. We affirm.
FACTS1
This case involves a laundry-room lease between BDS and Haven. BDS is in the
business of leasing laundry-room space in ap artment complexes to provide coin-operated
or card-operated laundry equipment to reside nts. Haven owns two apartment complexes
in Anoka, and respondent Steven Scott Management, Inc., manages these complexes as an
agent of Haven. BDS rented laundry-room space in the two Anoka apartment complexes
under a seven-year lease that began on Febr uary 25, 2013, and expi red on February 24,
2020 (the lease).
The lease contains a para graph labeled “Non-Renewal Rights” that provides as
follows:

1 For the purposes of reviewing a dismissal under rule 12.02(e), we accept the facts alleged
in the complaint as true and construe them in the light mo st favorable to the nonmoving
party. See DeRosa v. McKenzie, 936 N.W.2d 342, 346 (Minn. 2019).
3
NON-RENEWAL RIGHTS. If this Lease is not renewed and
Lessor desires to continue making laundry equipment available
to its tenants by (I) leasing the Premises to another person or
entity to provide laundry eq uipment, (II) re nting laundry
equipment, or (III) purchasing laundry equipment, Lessor may
do so pursuant to a good faith commercially reasonable lease,
rental agreement, or purchase order. For a lease or rental
agreement, “commercially re asonable” shall mean, among
other things, a lease with a term of sufficient length to enable
Lessee to recover any investment in equipment and other costs
associated with performing its obligations under the lease or
rental agreement, plus reasonable overhead and profit. Lessor
shall provide Lessee with an executed copy of any such lease,
rental agreement, or purchas e order, and Lessee shall have
thirty days from the receipt of such executed copy to notify
Lessor that it will substantially match the terms of such lease,
rental agreement or purchase order.

The lease also provides that it “contains the entire agreement of the parties with respect to
the subject matter of [the lease] and s upersedes any and all prior contracts and
understandings between the parties with respect to the same.”
Haven sent BDS a letter in November 2019 that confirmed the lease term would end
in February, but indicated that BDS could submit a written proposal for a new lease. BDS
responded with a written propos al in January 2020. Two mo nths later, BDS received a
letter from Haven that demanded BDS remove its equipment from th e apartment laundry
rooms on May 4, 2020. Believing that Haven had entered a new lease with a competitor,
BDS requested a copy of the competitor’s offer, citing its right under the non-renewal rights
section of the lease. Haven refused to provide a copy. BDS offered to shorten to 10 days
the 30-day period that the non-renewal rights cl ause of the lease gives BDS to review the
competitor’s lease, but Haven again declined.
4
BDS commenced this lawsuit, asserting th ree counts: (I) “Breach of Lease–Specific
Performance”; (II) “Breach of Lease–Damages” ; and (III) “Declaratory Judgment.” The
complaint alleges that Haven breached the lease by denying BDS its contractual right “to
substantially match the competing offer and ob tain a new lease for the Properties if it did
so.” As to specific performance and declar atory judgment, the complaint seeks a court
determination that the lease provides BDS a “right of first refusal” that compels Haven to
enter into a new lease with BDS if BDS substantially matches the competitor’s lease.
Haven moved to dismiss the complaint for failure to state a claim upon which relief
may be granted under Minnesot a Rule of Civil Procedure 12. 02(e). In doing so, Haven
argued that the lease did not create a right of first refusal compelling it to enter into a new
lease with BDS. Haven also suggested that any issue regarding its failure to provide a copy
of the competitor’s lease was “moot” be cause, after the laws uit commenced, Haven
provided the document to BDS.
After a hearing, the district court grante d Haven’s motion to dismiss the complaint.
The district court concluded that the plain and unambiguous language of the lease does not
create a right of first refusal, but instead “an opportunity for BDS, after the Lease expires,
to submit a bid to match a competitor’s bid for a new laundry room lease,” which Haven
may then accept or reject. Based on this dete rmination, the district court dismissed the
complaint in its entirety with prejudice.
Haven appeals.
5
DECISION
A complaint must “contain a short and plai n statement of the claim showing that the
pleader is entitled to relief and a demand for judgment for the relief sought.” Minn. R. Civ.
P. 8.01. The district court may, upon motion, dismiss a complaint that “fail[s] to state a
claim upon which relief can be granted.” Minn. R. Civ. P. 12.02(e). Dismissal under rule
12.02(e) is only proper “if it appears to a certainty that no facts, which could be introduced
consistent with the pleading, exist which would support gr anting the relief demanded.”
Finn v. All. Bank, 860 N.W.2d 638, 654 (Minn. 2015) (quotation omitted). It is “immaterial
whether or not the plaintiff can prove the facts alleged.” Martens v. Minn. Mining & Mfg.
Co., 616 N.W.2d 732, 739 (Minn. 2000).
Appellate courts review de novo whether a complaint sets forth a legally sufficient
claim for relief under rule 12.02(e). DeRosa, 936 N.W.2d at 346. In doing so, we consider
only the facts alleged in the co mplaint, accepting those facts as true and construing all
reasonable inferences in favor of the nonmoving party. Id.; see also Sipe v. STS Mfg, Inc.,
834 N.W.2d 683, 686 (Minn. 2013). We consider the complaint as a whole, “including the
facts alleged throughout the complaint and the attachments to the complaint.” Hardin Cty.
Savs. Bank v. Hous. & Redev. Auth., 821 N.W.2d 184, 192 (Minn. 2012); see Minn. R. Civ.
P. 10.03 (“A copy of any written instrument which is an exhibit to a pleading is a part of
the statement of claim . . . set forth in the pleading.”). The review ing court is not bound
by any legal conclusions stated in the complaint. Finn, 860 N.W.2d at 653-54.
Additionally, if the complaint contains a contract-based claim, “the court ‘may
consider the entire written contract when the complaint refers to the contract and the
6
contract is central to the claims alleged.’” Baker v. Best Buy Stores, LP, 812 N.W.2d 177,
180 (Minn. App. 2012) (quoting In re Hennepin Cty. 1 986 Recycling Bond Litig. , 540
N.W.2d 494, 497 (Minn. 1995)), review denied (Minn. Apr. 25, 2012). Contract claims
that rely on an interpretation contrary to the unambiguous language of a written agreement
are properly dismissed under rule 12.02(e). See id. at 182. Unless an ambiguity exists, the
construction and effect of a contract is a question of law that we review de novo. See
Trondson v. Janikula, 458 N.W.2d 679, 681 (Minn. 1990); Travertine Corp. v. Lexington-
Silverwood, 683 N.W.2d 267, 271 (Minn. 2004).
Minnesota courts “have long recognized th e right of parties to freely contract, and
will enforce legal rights according to contract terms.” Dyrdal v. Golden Nuggets, Inc., 689
N.W.2d 779, 784 (Minn. 2004). Accordingly, our goal in interpreting a contract “is to
determine and enforce the in tent of the parties.” Motorsports Racing Plus, Inc. v. Arctic
Cat Sales, Inc., 666 N.W.2d 320, 323 (Minn. 2003). When the terms of a written agreement
are clear and unambiguous, a court determines the intent of the parties based on the plain
language of the document. See Halla Nursery, Inc. v. City of Chanhassen , 781 N.W.2d
880, 884 (Minn. 2010). Ambiguity exists only “when the language of a written document,
by itself, is reasonably susceptible to more than one meaning.” Trondson, 458 N.W.2d at
681. “[W]hen a contractual provision is clear and unambiguous, courts should not rewrite,
modify, or limit its effect by a strained construction.” Travertine Corp., 683 N.W.2d at
271. And pursuant to the parol evidence rule, “evidence outside a written document may
not be used to vary or contradict the unambiguous terms of the document.” Webb v. Webb,
360 N.W.2d 647, 649 (Minn. App. 1985).
7
BDS argues that the district court erred in dismissing its complaint by:
(1) determining that BDS did not have a right of first refusal under the lease and
(2) disregarding Haven’s alleged failure to provide BDS with the competitor’s lease. We
examine each challenge in turn.
I. The lease did not provide BDS with a right of first refusal.

BDS’s requests for relief in the complaint rely on the premise that the lease contains
a “right of first refusal.” The district c ourt determined that th e plain and unambiguous
language of the lease creates no such right , and accordingly dismissed the claims. We
begin with an instructive background on ri ghts of first refusal before analyzing BDS’s
specific arguments.
A right of first refusal traditionally refers to “[a] potential buyer’s contractual right
to meet the terms of a third party’s higher offer.” Black’s Law Dictionary 1586 (11th ed.
2019). Such a right “limits th e right of the owner to disp ose freely of its property by
compelling the owner to offer it first to the party who has the first right to buy” (or lease)
the property. Dyrdal, 689 N.W.2d at 784 (quotation omitted ). The right is similar to an
option;2 it typically becomes an option if a tri ggering condition precedent occurs, such as
that “the owner must have received a bona fide offer from a third party which he or she is
willing to accept.” Park-Lake Car Wash, Inc., v. Springer , 352 N.W.2d 409, 411 (Minn.
1984). “An option to purchase or an option to renew a lease must, like any other contract,

2 An option refers to “[a]n offe r that is included in a formal or informal contract; esp., a
contractual obligation to keep an offer open for a specified period, so that the offeror cannot
revoke the offer during that period.” Black’s Law Dictionary, supra, at 1319.
8
be definite and certain in its terms or pr ovide a method of ascertaining the terms with
certainty.” King v. Dalton Motors, Inc., 109 N.W.2d 51, 51-52 (Minn. 1961). Contractual
phrases that, through “continued and repeated use in real esta te transactions,” signal the
existence of such a right include “first option,” “right of first refusal,” or “first chance to
buy.” Id. at 53.
Here, the parties’ lease does not contain any of the phrases typically understood to
confer a right of first refusal. It does not contain the phrase “right of first refusal,” nor does
it discuss an “option” or first priority for BDS to re-lease the properties. To the contrary,
the lease specifically provides that, in the event it is not renewed, Haven may, if it wishes
to continue making laundry equipment available to its tenants, lease the properties to a new
person or entity pursuant to a good faith, commercially reasonable lease.
If Haven enters such a lease, it “shall pr ovide [BDS] with an executed copy . . . and
[BDS] shall have thirty days from the receipt of such executed copy to notify [Haven] that
it will substantially match the terms of such lease.” Nowhere does the lease state that
Haven must terminate the third-party leas e and enter a new lease with BDS if BDS
substantially matches the terms of the third-pa rty lease. The only mandatory language in
the non-renewal rights clause is that Haven “shall” provide BDS with an executed copy of
the third-party lease and BDS “shall” have 30 days to notify Haven that it will match the
terms. On its face, this language is not sufficiently definite to create a right of first refusal
for BDS. See King, 109 N.W.2d at 51-52.
BDS nonetheless contends that the plain lang uage of the lease creates a right of first
refusal—which ripens into an option if Haven enters a good faith, commercially reasonable
9
lease with a third party—through the use of the word “match.” In other words, BDS asserts
that if Haven enters a new lease with a third party and provides that lease to BDS, such
action constitutes an “offer” that can then be “unilaterally” accepted by BDS via
substantially matching the terms of the third-party lease. In support of its interpretation of
the term “matches,” BDS cites two Minnesota cases and two cases from other jurisdictions.
In Park-Lake Car Wash , the parties entered into a le ase for real property that
provided that “Lessor shall not sell either the leased premises or the said adjoining premises
without first giving Tenant the privilege to purchase the same at the best bona fide offer by
the lessor [sic] at any time during the period or extended period of this lease.” 352 N.W.2d
at 410. The lease went on to provide specific timing requirements and payment
requirements in regards to the best bona fide offer. Id. There was no dispute in Park-Lake
Car Wash that the lease language created a right of first refusal in favor of the tenant. See
id. at 412. Instead, the dispute regarded “whether the tenant . . . properly exercised its right
of first refusal under the lease to purchase the leased premises so as to be entitled to specific
performance of the contract thereby created.” Id. at 411. In other words, the court analyzed
whether the tenant had sufficiently “match[ed]” the terms of the bona fide third-party offer;
it did not consider whether the word “match”—not present in the relevant contract language
there—created a contractual right of first refusal. See id. at 411-12.
In Minar v. Skoog, the parties similarly did not dispute whether the contract at issue
created a right of first refusal. 50 N.W.2d 300 (Minn. 1951 ). There, the lease provided,
“If the lessor elects to sell said building, the lessees shall have the first option of purchasing
the same.” Id. at 301 (emphasis added). Again, th e dispute regarded whether the lessee
10
sufficiently exercised the right of first refusal, specifically through unequivocal acceptance.
Id. at 302. Indeed, the supreme court explained that it would “assume, without so deciding”
that the option in the lease was “sufficiently definite” so as to create a valid contract. Id.
at 301. Nowhere did the court interpret the term “match.”
The cases that BDS cites from other jurisd ictions have no precedential value. But
even if considered for persua sive value, they similarly fa il to support BDS’s proposition
that “the word ‘match’ consistently has been found by courts to have the plain and ordinary
meaning of creating a right of first refusal.” See In re Estate of Owen , 855 N.E.2d 603,
606 (Ind. App. 2006); Miller v. LeSea Broad., Inc., 87 F.3d 224, 225-27 (7th Cir. 1996).3

3 In the Indiana Court of Appeals case, a decedent’s will provided that:

If at any time [the] 80 acres or any part thereof shall be placed
for sale, then my friends Rodney and Carol Logan shall be
permitted first opportunity to purchase the real estate or they
shall be given the opportunity to match any offer made for the
purchase of the real estate.

Owen, 855 N.E.2d at 607. The court analyzed whether the will language created a valid
right of first refusal, as opposed to a “related right of preemption.” Id. at 612. The court
ultimately held that the “oppor tunity to purchase” clause cr eated a right of preemption,
while the “opportunity to ma tch” clause created a ri ght of first refusal. Id. at 612.
Importantly thou gh, the will in Owen regarded the right-holde r’s pre-sale abilities—it
involved their ability to match an offer , not their ability to ma tch an already-executed
contract as in this case currently before us. See id. at 606. Specific contract language
governs the rights of contracting parties, and the language examined in Owens significantly
differs from the lease language we consider here. See Dyrdal, 689 N.W.2d at 784. In other
words, we disagree that, based on the Owen case, the term “mat ch” is commonly
understood to signal a right of first refusal.

In BDS’s second extra-jurisdictional case, Miller, the parties again did not dispute whether
the relevant contract language created a right of first refusal. 87 F.3d at 225-27. The
contract at issue gave the plaintiff—a televi sion-station employee—the right, for as long
as he was employed by the defendant and fo r two years after, to “match” any offer to
11
Ultimately, BDS has not shown that the term “match” is commonly understood to
convey a right of first refusa l. In the absence of author ity supporting that specific
interpretation, we will not read a first-refusal right into a cont ract that does not otherwise
contain one. See Travertine Corp., 683 N.W.2d at 271 (“[W]hen a contractual provision
is clear and unambiguous, courts should not rewrite, modify, or limit its effect by a strained
construction.”). We therefore conclude, as did the district court, that the contract here
permits BDS only the opportunity to present an offer that matches the terms of a third-
party contract, which Haven can then either accept or reject.
BDS further objects that interpreting the non-renewal rights clause to allow Haven
to accept or reject a matching offer from BDS renders this clause “meaningless.” Haven
counters that this is not true, as the right to see a competitor’s terms and then make a
matching offer has value. Ev en though this right has less va lue than the right that BDS
desires—to compel Haven to accept BDS’s matc hing terms—it is a fundamental rule of
contract law that parties may contract freel y and courts must enforce the terms of the
contract. Dyrdal, 689 N.W.2d at 784. Accordingly, when the contract fails to use language
sufficient to confer a right of first refusal, we will not read one in to provide greater value
to BDS. Travertine Corp., 683 N.W.2d at 271.

purchase the television station “upon the exact terms and conditions as contained in the
offer.” Id. at 225. The dispute turned on whether the term “exact” in the contract precluded
the plaintiff from claiming that the differences in his offer were immaterial. Id. at 225-27.
Like Owen, the Miller court did not determine whether the term “match” created a right of
first refusal, and the contract at i ssue permitted the plaintiff to match an offer—not an
already-executed contract. See id.
12
BDS also makes a variety of arguments ba sed on parol evidence, or evidence outside
the four corners of the lease. Specifically, BDS references the parties’ negotiations leading
up to the execution of the lease in 2013 and other leases between the same parties. But the
lease provides that it is “the entire agreemen t of the parties with respect to the subject
matter of [the lease] and supersedes any and all prior contracts and understandings between
the parties with respect to the same.” Absent ambiguity, “evi dence outside a written
document may not be used to vary or contradict the unambiguous terms of the document.”
Webb, 360 N.W.2d at 649. Here, the unambiguous language of the lease does not confer a
right of first refusal, so we will not look to the parties’ negotiations and other contracts to
discern their intent. See Apple Valley Red-E-Mix, Inc. v. Mills-Winfield Eng’g Sales, Inc.,
436 N.W.2d 121, 123 (Minn. App. 1989) (“Purs uant to general contract law, the terms of
a final and integrated written expression may not be contradicted by parol evidence of
previous understandings and negotiations for the purpose of varying or contradicting the
writing.” (quotation omitted)), review denied (Minn. Apr. 26, 1989).
In sum, the district court properly dismissed BDS’s claims as relying on an
erroneous interpretation of the lease in regards to a right of first refusal.
II. The complaint does not plead an inde pendent claim upon which relief can be
granted based on BDS’s failure to provide the competitor’s lease.

BDS next argues that the district court e rred by disregarding a “fundamental aspect”
of its breach of contract claim: that Haven refused to fu lfill its obligation under the lease
to provide BDS with the competitor’s lease. BDS asse rts that because the complaint
alleged a separate breach of contract clai m based on Haven’s failure to turn over the
13
competitor’s lease, this court must reverse the district court’s decision and remand for
further litigation.
Haven responds that it was not obligated to provide the comp etitor’s lease within
any particular timeframe under the plain language of the lease. It further contends that the
record before the district court reflected, a nd BDS does not dispute, that Haven provided
BDS the lease copy after this litigation commenced.4
“A breach of contract is a failure, without legal excuse, to perform any promise that
forms the whole or part of the contract.” Lyon Fin. Servs., Inc. v. Ill. Paper & Copier Co.,
848 N.W.2d 539, 543 (Minn. 2014). The el ements of a breach-of-contract claim are
“(1) formation of a contract, (2) performance by plaintiff of any co nditions precedent to
his right to demand performance by the defe ndant, and (3) breach of the contract by
defendant.” Id. (quotation omitted).
On appeal, BDS characterizes the failure to provide the competitor’s lease as an
independent breach-of-contract claim. But the complaint did not characterize this as an
independent contract violatio n. Instead, the complaint included the competitor-lease
requirement as a component of the broader right-of-first-refusal based claim. Specifically,
the complaint asks the distri ct court for an order requir ing Haven to provide BDS the

4 To support its assertion that it disclosed the third-party lease, Haven cites an email
attached to an affidavit that it filed in district court with its motion to dismiss the complaint.
Although “a court may consider documents refe renced in a complaint without converting
the motion to dismiss to one for summary judgment,” the court is not allowed to consider
additional documents attached to the motion to dismiss. N. States Power Co. v. Minn.
Metro. Council , 684 N.W.2d 485, 490-91 (Minn. 2004) (emphasis omitted). We
accordingly decline to consider the fact that Haven disclosed the lease after this litigation
commenced, and it has no bearing on our analysis.
14
competitor lease copy and, “if BDS substantia lly matches the competing offer, requiring
[Haven] to enter into a new lease with BD S containing the terms of the substantially
matching offer from BDS.”
As we have already explained, the partie s’ lease did not provide BDS with a right
of first refusal, or a right to force Haven to abandon its contract with the competitor and
enter one with BDS. Moreover, under the plain language of the lease, the competitor-lease
requirement merely facilitates the opportunity to match the competitor’s terms. BDS does
not request an opportunity to match, but inst ead requests that the court compel Haven to
enter into a new lease with BDS. Put differently, the complaint does not explain, nor does
BDS clarify on appeal, how Haven’s failure to provide the competitor’s lease could support
damages or other relief independent of the right-of-first-refusal argument. We accordingly
hold that the district court did not err by dismissing the complaint in its entirely for failure
to state a claim upon which relief can be granted. See Minn. R. Civ. P. 12.02(e).
Affirmed.