Wilmington Trust, National Association, Respondent,

STATE OF MINNESOTA
IN COURT OF APPEALS
A21-0963

Wilmington Trust, National Association,
Respondent,

vs.

700 Hennepin Holdings, LLC,
Respondent,

Gregg Williams, as receiver for 700 Hennepin Holdings, LLC,
Respondent,

Anytime Restoration, Inc.,
Defendant,

Seven Acquisition, LLC,
Appellant.

Filed March 7, 2022
Reversed and remanded
Segal, Chief Judge

Hennepin County District Court
File No. 27-CV-20-11149

Mark W. Vyvyan, Kyle W. Ubl, Fredrikson & Byron, P.A., Minneapolis, Minnesota (for
respondent Wilmington Trust, National Association)

Thomas F. DeVincke, Malkerson Gunn Martin LLP, Minneapolis, Minnesota (for
respondent 700 Hennepin Holdings, LLC)

Michael W. Kaphing, Taft Stettinius & Hollister LLP, Minneapolis, Minnesota (for
respondent Gregg Williams)

Mark R. Bradford, Andrew L. Marshall, Bassford Remele, P.A., Minneapolis, Minnesota
(for appellant)

Considered and decided by Segal, Chief Judge; Ross, Judge; and Larkin, Judge.
2
SYLLABUS
When a receiver appointed under the receivership statute, Minn. Stat. §§ 576.21-.53
(2020), seeks to enforce provisions of an executory contract that was entered into before
the receivership, the receiver is bound by a mandatory arbitration provision in the contract
to the same extent that the party subject to the receivership would have been bound but for
the receivership.
OPINION
SEGAL, Chief Judge
Appellant Seven Acquisition, LLC (Seven) is a tenant in a building subject to a
mortgage held by respondent Wilmington Trust, National Association. Wilmington Trust
brought a forec losure action against its mortgagor, respondent 700 Hennepin Holdings,
LLC (700 Hennepin) , the owner of the building . Pursuant to a stipulation between
Wilmington Trust and 700 Hennepin, the district court appointed a limited receiver,
respondent Gregg Wi lliams (the receiver), with the power to collect rent from Seven,
among other powers.
Seven challenges a district court order granting the receiver’s motion to direct the
payment of rent by Seven. Seven asserts that the district court erred by determining that
(1) the receiver was not bound by a mandatory arbitration provision in the lease between
Seven and 700 Hennepin, and (2) Seven could not assert a defense of recoupment to the
rent-payment motion. Because we conclude that the receiver is bound by the arbitration
provision in the lease to the same extent as 700 Hennepin would have been but for the
receivership, we reverse and remand.
3

FACTS
In January 2017, Seven entered into a lease to operate a restaurant in the building
located at 700 Hennepin Avenue (the building) in downtown Minneapolis. 700 Hennepin
purchased the building and assumed the lease with Seven in November 2017.
When 700 Hennepin purchased the building, it had an inspection performed by a
structural engineer. The engineer noted that there were obvious signs of “water leaking at
the roof level” and recommended that 700 Hennepin further investigate and repair the leak.
700 Hennepin did not act on the recommendation . Beginning in January 2018, the water
leaks became increasingly frequent and intense, with water leaking into various areas of
the restaurant.
Despite Seven’s request that 700 Hennepin make repairs to prevent the leaks, 700
Hennepin failed to do so. In 2019, a pipe burst and caused extensive water damage to the
restaurant, requiring Seven to close for several days for repairs. Seven asked 700 Hennepin
to provide the name of its insurer so that Seven could submit a claim for the water damage.
700 Hennepin did not provide the information. Seven then submitted the claim through its
own insurer, causing a substantial increase in Seven’s annual insurance premiums.
Seven withheld rent payments because it believed that 700 Hennepin was
responsible for the cost of the repairs and Seven’s revenue losses. 700 Hennepin then filed
an eviction action in housing court, alleging that Seven owed over $100,000 in rent. Seven
initiated a separate action in district court seeking an order to compel arbitration of the
dispute and enjoin the eviction action. The district court granted the relief sought by Seven,
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based on its determination that the lease unambiguously required the parties to arbitrate the
dispute.
The parties submitted the matter to arbitration, and the arbitrator determined that
700 Hennepin was responsible under the lease for maintenance and repairs to the building’s
roof, that it had failed to satisfy those obligations, and that Seven was entitled to an award
of damages in excess of $900,000 for business losses and the increase in Seven’s insurance
premiums. The arbitrator also awarded 700 Hennepin approximately $140,000 in unpaid
rent and determined that the eviction action should be dismissed. The district court
confirmed the award and directed that judgment be entered in favor of Seven in the net
amount of $826,070.84.
Shortly before the confirmation of the award, Wilmington Trust, the mortgagee of
700 Hennepin, commenced a foreclosure action in district court against 700 Hennepin .
Wilmington Trust did not initially name Seven as a party in the foreclosure action . The
district court, based on a stipulation between Wilmington Trust and 700 Hennepin, signed
an order appointing the receiver and granting him , among other powers, “[t]he power to
oversee all collection of rent s and cash flow.” The receiver then sent a letter to Seven
seeking payment of $44,199.95, which the receiver claimed as the amount of rent due since
the date the receiver was appointed. Seven disputed th e rent claim and asserted that a
landlord default had occurred because the roof still leaked and Seven was continuing to
incur losses as a result.
In response, Wilmington Trust amended the foreclosure action to name Seven as a
party. The amended complaint alleged that Seven was in default under the lease because
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it failed to make rent payments and that “upon completion of the f oreclosure of [the
commercial mortgage], Seven’s tenancy will be foreclosed and Seven shall have no further
rights to possession of the Property.” The receiver then filed a “Motion for Order Directing
Payment of Rent.”
Seven opposed the motion on two grounds. First, Seven argued that the receiver’s
claims were subject to the terms of the lease and that the lease required that the dispute be
submitted to arbitration for resolution, not to the court. Second, Seven argued that it was
entitled to assert the common-law defense of recoupment to the receiver’s claim for rent.
The district court rejected both arguments and granted the receiver’s motion to
direct the payment of rent. The district court reasoned that the receiver could not be
required to submit the rent dispute to arbitration because the receiver was not a party to the
lease and had not agreed to the arbitration provision . The district court explained that
compelling arbitration “would necessarily abrogate the Receiver’s ability to ex ercise his
court-appointed authority” to collect rents and protect Wilmington Trust’s “property
interests as a mortgag [ee].” Following th e same line of reasoning, the district court
concluded that Seven could not assert recoupment as a defense to the rece iver’s claim for
rent because the arbitration-award judgment was against 700 Hennepin, Seven’s landlord,
not the receiver.
Seven appeals the district court’s order directing the payment of rent.
ISSUE
Did the district court err in determining that the receiver was not subject to the
arbitration clauses in the lease?
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ANALYSIS
Seven asserts as its primary issue in this appeal that the district court erred when it
failed to require the receiver to submit its claim for rent to arbitration as required b y the
lease between Seven and 700 Hennepin. Seven contends that this court need not address
its second issue—that the district court erred by determining that Seven was not entitled to
assert a defense of recoupment—if we rule in Seven’s favor that the dispute is arbitrable.
The issues in this appeal are subject to de novo review by this court. See Glacier Park Iron
Ore Props., LLC v. U.S. Steel Corp. , 961 N.W.2d 766, 771 (Minn. 2021) ( stating that
determining whether a party has agreed to arbitrate a dispute presents a question of contract
interpretation subject to de novo review); Aaron Carlson Corp. v. Cohen, 933 N.W.2d 63,
69 (Minn. 2019) (stating that issues of statutory interpretation are reviewed de novo).
Seven maintains that the receiver is required to submit the dispute to arbitration
because the receiver’s rights against Seven arise from the lease between Seven and 700
Hennepin, and the receiver has no greater rights than those accorded 700 Hennepin under
the lease. Seven c ontends that, if 700 Hennepin would have been required to submit the
demand for the payment of rent to arbitration, then the receiver is likewise bound. Seven
argues that the district court erred in its interpretation of the receivership statute, Minn.
Stat. §§ 576.21-.53, and that the statute does not give the court the authority to override the
arbitration provision in the lease.
The lease here contain s two arbitration provisions, one govern ing the remedies
available to the landlord in the event of a tenant default, and the second governing the
remedies available to the tenant in the event of a landlord default. The provision governing
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the landlord’s remedies (the arbitration provision) provides, in relevant part, that if the
landlord claims that the tenant is in default and the tenant disputes the default in good faith,
then “Landlord shall not exercise any of its remedies provided herein but shall, as its sole
remedy, submit such dispute to binding arbitration.” The corresponding section for the
tenant similarly provides that, in the event the tenant claims the landlord is in default and
the landlord disputes the alleged default in good faith , then “Tenant shall not offset or
deduct any amounts from any installments of Rent but shall, as its sole remedy submit such
dispute to binding arbitration.” A later section of the lease establishes the applicable
procedures for any resulting arbitration.
Seven argues that the receiver’s claim for unpaid rent asserts a “tenant defa ult”
under the lease ,1 which Seven has in good faith disputed. Seven contends that the lease
thus require s the receiver, “ as its sole remedy, ” to “submit such dispute to binding
arbitration to be conducted under the arbitration provisions as set forth in this Lease.”
Seven emphasizes that the district court interpreted these same provisions in Seven’s action
against 700 Hennepin and determined that the lease is “clear and unambiguous” and “is a
binding agreement which requires the parties to arbitrate their current disputes.”
The receiver argues , and the district court agreed, that he is not subject to the
arbitration provision because: (1) the district court has the exclusive authority to determine
all controversies relating to the receivership property, and (2) the receiver “is not a party

1 A “tenant default” is defined in the lease as including Seven’s failure “to pay any
installment of any amount payable by [Seven] to Landlord hereunder” within ten days of
the due date if it remains unpaid for at least five days after notice of late payment has been
provided by the landlord to Seven.
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to the Lease and never agreed to arbitrate cl aims related to the Receivership Property .”
The receiver argues, in the alternative, that his claim is not within the scope of the matters
subject to the arbitration provision. We address each argument below.
Scope of the District Court’s Authority Under the Receivership Statute
In support of his argument that the district court had the authority pursuant to the
receivership statute to override the arbitration provision of the lease, the receiver asserts
that the statute gives the district court the “exclusive authority to determine all
controversies, including the Receiver’s claim for rent.” The statue provides:
The court has the exclusive authority to direct the
receiver and the authority over all receivership property
wherever located including, without limitation, authority to
determine all controversies relating to the collection,
preservation, improvement, disposition, and distribution of
receivership property, and all matters otherwise arising in or
relating to the receivership, the receivership property, the
exercise of the receiver ’s powers, or the performance of the
receiver’s duties.

Minn. Stat. § 576.23 (emphasis added). The receiver claims that this section empowers the
district court to override provisions in an executory contract.
Seven argues, however, that, under Minn. Stat. § 576.45, subd. 1, a receiver
succeeds not only to the rights, but also the duties of the party subject to receivership. That
section of the receivership statute provides: “Unless a court orders otherwise, a receiver
succeeds to all of the rights and duties of the respondent under any executory contract.”
Minn. Stat. § 576.45, subd. 1. The “respondent” under this subdivision is 700 Hennepin,
and leases are expressly include d within the definition of executory contracts in the
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receivership statute. 2 Seven maintains that submitting the rent dispute to arbitration
constitutes a duty under the lease and that, because 700 Hennepin would have been required
to arbitrate such a dispute, the receiver is likewise bound to submit the dispute to
arbitration.
The receiver opposes Seven’s argument, claiming that it ignores the proviso at the
start of Minn. Stat. § 576.45, subd. 1, “[u]nless a court orders otherwise .” The receiver
maintains that, in this case , the district court “ordered otherwise” and that the order was
within the court’s authority under the receivership statute.
We are not persuaded by the receiver’s contention. We note, first, that the authority
of the courts under the receivership statute is limited by Minn. Stat. § 576.22(d), which
provides that “[u]nless explicitly displaced by this chapter, the provisions of other statutory
law and the principles of common law remain in full force and effect and supplement the
provisions of this chapter.” This provision makes clear the intended limits of the authority
of the courts when imposing a receivership. And here, established law dictates that a
receiver “stands in the shoes ” of the party whose property is subject to the receivership.

2 Minn. Stat. § 576.21(s) defines “respondent” as “the person over whose property the
receiver is appointed.” And Minn. Stat. § 576.21(d) defines “executory contract” as

a contract, including a lease, where the obligations of both the
respondent and the other party to the contract are unperformed
to the extent that the failure of either party to complete
performance of its obligations would constitute a material
breach of the contract, thereby excusing the other party ’s
performance of its obligations under the contract.

(Emphasis added.)
10
See Merrill v. Zimmerman, 188 N.W. 1019, 1022 (Minn. 1922) (noting that “by vi rtue of
his appointment as receiver” the receiver “stands in [the receivership entity’s] shoes”); see
also Kelley v. Coll. of St. Benedict, 901 F. Supp. 2d 1123, 1128 (D. Minn. 2012) (observing
that the receiver “stands in the shoes of the receivership entity” (quotation omitted) ); 65
Am. Jur. 2d Receivers § 233 (2021) (setting out the black letter principle that a receiver
generally “stands in the shoes of the person or entity in receivership and can assert only
those claims which the person or entity could have asserted ” and “has no greater rights or
powers than the person or entity in receivership would have” (footnotes omitted)).
Second, we do not agree with the receiver’s argument that the phrase at the
beginning of Minn. Stat. § 576.45, subd. 1 , “[u]nless the court orders otherwise ,”
authorized the district court to override the arbitration provision. The district court here
made no particularized determination based on the circumstances of this case. Instead, the
district court essentially concluded that no receiver is bound by an arbitration provision
unless the receiver has personally agreed to the provision. If this was the case, the
exception would swallow the rule and the “duties” portion of Minn. Stat. § 576.45, subd. 1,
would be rendered largely meaningless, contrary to the canons of statutory construction .
Am. Fam. Ins. Grp. v. Schroedl, 616 N.W.2d 273, 277 (Minn. 2000) (noting that “[a] statute
should be interpreted, whenever possible, to give effect to all of its provisions; no word,
phrase, or sentence should be deemed superfluous, void, or insignificant” (quotation
omitted)); see also Minn. Stat. § 645.16 (2020) (providing that “[e]very law shall be
construed, if possible, to give effect to all its provisions”).
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We thus conclude that the scope of authority granted courts under the receivers hip
statute is not so broad as to authorize the district court’s order here, particularly in light of
the strong preference in the law favoring arbitration. See City of Brooklyn Center v. L. Enf’t
Lab. Servs., Inc., 635 N.W.2d 236, 241 (Minn. App. 2001), rev. denied (Minn. Dec. 11,
2001); see also Johnson v. Piper Jaffray, Inc., 530 N.W.2d 790, 798 (Minn. 1995) (stating
that “any doubts concerning the scope of arbitrable issues should be resolved in favor of
arbitration” (citing Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24-
25 (1983)).
Receiver Never Agreed to the Arbitration Provision

The receiver’s next argument is that he cannot be compelled to submit to arbitration
because he is not a party to the lease and never agreed to the arbitration provision. The
receiver cites to the supreme court’s opinion in Glacier Park, 961 N.W.2d at 771, to the
effect that parties ca nnot be required to submit to arbitration in the absence of a valid
agreement to arbitrate. The receiver’s reliance on Glacier Park is inapposite. As explained
above, the receiver stands in the shoes of 700 Hennepin in this case and, because 700
Hennepin agreed to arbitrate disputes over a tenant default, the receiver is likewise bound
even though the receiver, himself, is not a party to the lease.3

3 The district court makes note of the fact that, under the “actual terms of the lease, there
is no mention of a receiver being subject to the agreement between Se ven and 700
Hennepin.” A section of the lease , however, expressly addresses Seven’s rights with
respect to a mortgagee of the building. This section specifically states that Seven shall not
be required to sign any subordination agreement in favor of a mortgagee unless it includes
a provision that, “so long as no Tenant Default exists,” Seven’s rights under the lease “shall
not be terminated or otherwise disturbed by virtue of [the] . . . mortgagee succeeding to the
interest of Landlord hereunder through foreclosure .” Thus, notwithstanding the fact that
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Additionally, while there is no Minnesota caselaw directly on point, a number of
courts in other jurisdictions have determined that a receiver may be compelled to arbitrate
based on a binding arbitration clause in a contract assumed by the receiver. We find the
reasoning in these cases persuasive.
For example, the Oklahoma Court of Civil Appeals rejected the same argument
the receiver makes here—that a receiver was not bound by an arbitration agreement that
predated the receivership because the receiver did not sign the agreement. Medeiros Rev.
Tr. v. Morgan Stanley Smith Barney LLC, 446 P.3d 533, 536-37 (Okla. Civ. App. 2019).
In rejecting that argument, the court explained that “[t]he receiver is the representative of
the court regarding the right of possession of property, but the right to receive it derives
from the entity that has been place d in receivership. A receiver’s claims are subject to
the claims and defenses possessed by all interested parties.” Id. at 536 (citation omitted).
The court then concluded that, by making a claim for the benefit of a receivership entity
that had contrac ted with another entity, the receiver’s interest was subject to the
agreements in that contract, which included an arbitration provision. Id. at 537. Because
the agreement to arbitrate was entered into by the receivership entity prior to the
receiver’s appointment, the receiver was also bound to honor the arbitration provision .
Id.

the word “receiver” does not appear, the lease contemplated the very situation that
occurred, foreclosure of 700 Hennepin’s mortgage. And the lease explicitly provides that
Seven’s rights, which would include the arbitration provision, “shall not be terminated or
otherwise disturbed” by a foreclosure action.
13
The Indiana Supreme Court has similarly concluded that “the receiver succeeds to
the rights of the [receivership entity] as he finds it, and that includes any arbitration
obligations the [receivership entity] has incurred.” ISP.com LLC v. Theising, 805 N.E.2d
767, 775 (Ind. 2004).4
Here too, while the source of the receiver’s authority to collect rent in the place of
700 Hennepin arises from the receivership statute, the actual rent payments are only owed
by reason of the lease. Thus, as in the above-cited cases, the receiver here is making a
claim on behalf of the receivership entity based on a contract entered into by the
receivership entity prior to the receivership. And we reach the same conclusion —that a
receiver in these circumstances is subject to an arbitration provision to the same extent the
receivership entity would be if no receiver had been appointed.
Scope of Matters Subject to Arbitration

The receiver’s final argument is that, even if he is subject to the arbitration provision
in the lease, his claim is for unpaid rent, not to terminate the lease or Seven ’s right to
possession of the leased space. The receiver contends that the arbitration provision, by its
terms, is only triggered by actions to “cancel and terminate” the lease or “terminate
Tenant’s right t o possession only without terminating [the] lease.” He argues that the

4 See also Javitch v. First Union Sec., Inc., 315 F.3d 619, 627 (6th Cir. 2003)
(concluding that receiver is “bound” to arbitration clauses “to the same extent that
the receivership entities would have been absent the appointment of the receiver”);
Ommen v. Milliman, Inc., 941 N.W.2d 310, 316 (Iowa 2020) (“The liquidator, standing
in [the receivership entity’s] shoes, may not avoid a contractual arbitration agreement
. . . .”), cert. denied, 141 S. Ct. 1462 (2021); Rich v. Cantilo & Bennett, LLP, 492 S.W.3d
755, 762 (Tex. Ct. App. 2016) (“[T]he Receiver, standing in the shoes of [the company],
is bound by the arbitration agreement to the same extent that [the company] is bound.”).
14
dispute, therefore, falls outside the scope of the arbitration provision because he was
seeking to collect rent, rather than to exercise either of those remedies.
The receiver’s argument, however, fails to take into account the fact that
Wilmington Trust amended its foreclosure action and, through the amended action, is
seeking to terminate the lease and Seven’s right to possession of the leased space. Thus,
regardless of whether the receiver’s interpretation of the lease —that the arbitration
provision is only triggered by an effort to terminate the lease or Seven ’s right to
possession—is correct, those c laims have been asserted against Seven in this case.
Moreover, under established law, “[a]ny doubt s about arbitrability should be resolved in
favor of arbitration.” Kilcher v. Dale, 784 N.W.2d 866, 870 (Minn. App. 2010). We thus
reject the receiver’s argument concerning the scope of the arbitration clause.5
DECISION
The receiver in this case is subject to the arbitration provision in the lease agreement
between Seven and 700 Hennepin, the receivership entity. The district court therefore erred
in granting the receiver’s motion to direct the payment of rent, and we reverse and remand
for further proceedings consistent with this opinion.
Reversed and remanded.

5 With regard to the second issue asserted by Seven, whether Seven is entitled to assert a
defense of recoupment, we agree with Seven that we need not address this issue in light of
our determination that the receiver’s claims must be submitted to arbitration.