Tesfaye Shikur, 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This opinion is nonprecedential except as provided by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
A24-0001

Tesfaye Shikur,
Respondent,

vs.

Eric Halverson, et al.,
Appellants.

Filed August 12, 2024
Affirmed in part and reversed in part
Wheelock, Judge

Ramsey County District Court
File No. 62-CV-19-1170

Chad McKenney, Bradley D. Hendrikson, Donohue McKenney, Ltd., Maple Grove,
Minnesota (for respondent)

Nathan M. Hansen, Willernie, Minnesota (for appellants)

Considered and decided by Wheelock, Presiding Judge; Ede, Judge; and Halbrooks,
Judge.*
NONPRECEDENTIAL OPINION
WHEELOCK, Judge
In this second appeal from a district court’s final judgment in a breach-of-lease
action, appellants contend that the district court erred by awarding damages that are

* Retired judge of the Minnesota Court of Appeals, serving by appointment pursuant to
Minn. Const. art. VI, § 10.
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unsupported by the record and by awarding attorney fees to a non-prevailing party.
Because the district court’s damages award is not supported by the record, we reverse in
part. But because respondent was the prevailing party and appellants do not argue that the
attorney-fee award was unreasonable, we affirm in part.
FACTS
This is the second appeal in this breach- of-lease action brought by respondent
Tesfaye Shikur against appellants Erik1 and Jeffrey Halverson.2 We discussed the facts of
the case fully in the first appeal, Shikur v. Halverson, No. A21-0959, 2022 WL 829362
(Minn. App. Mar. 21, 2022). We now focus only on the facts relevant to this appeal.
On February 21, 2015, Shikur purchased the assets of a convenience store that leased
space in a building (the property) owned by the Halversons . Shikur paid $136,882 for the
assets and signed a lease agreement with Erik for the property. The lease required that Erik
care for and maintain the “roof, exterior walls, and structural foundation” of the property.
Approximately three or four months after Shikur began operating the convenience store in
2015, the roof began leaking and continued to do so until early 2019, when Shikur was forced
to vacate the property. Shikur’s handwritten records indicate that the convenience store
operated throughout much of that period. Before he vacated the property, Shikur liquidated

1 Erik’s name was erroneously spelled “Eric” when the case was filed in the district court.
We defer to his preferred spelling.

2 Jeffrey was dismissed from this action pursuant to our opinion in the first appeal. See
Shikur, 2022 WL 829362, at *3 (concluding that the district court erred by holding Jeffrey
liable under the lease). The decision and judgment on appeal thus affect only Erik, and
although both Halversons appealed, just Erik filed a brief. To avoid confusion, we refer to
the individual brothers by their first names.
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and sold most of the store’s “stuff.” On February 21, 2019, Shikur sued the Halversons for,
among other things, breach of the lease.
The district court held a bench trial. In its initial findings of fact, conclusions of law,
and order for judgment , the district court determined that the Halversons had materially
breached the lease by failing to repair the roof, there by excusing Shikur from his obligations
under the lease. Shikur, 2022 WL 829362, at *2. It awarded Shikur loss-of-business damages
of $136,882 and security -deposit damages of $2,300, but specifically concluded that Shikur
failed to meet his burden of proof for future damages. Id.
The Halversons appealed from the order, arguing in relevant part that the district court’s
damages award was erroneous “because there was no evidence presented at trial of the value
of the business at or near the time of the breach.” Id. at *5 (quotation marks omitted). We
agreed, observing:
Shikur presented no evidence of the value of his business before
the breach and after the breach. In fact, the district court failed to
explain why Shikur’s business should be valued at the amount he
paid for it in 2015 when it also rejected the claim for lost profits
for 2016 and 2017. It only seems logical that if the business was
not turning a profit in 2017, it would be worth less than Shikur
paid for it in 2015. Thus, without any evidence demonstrating the
value of Shikur’s business at the time of the breach, a conclusion
that it is worth the amount he paid for it is mere speculation.

Id. (citation omitted). We also observed that the district court failed to find when the breach
occurred, further supporting our conclusion that the district court’s award of damages was an
abuse of discretion. Id. at *6. We therefore reversed the district court’s damages award and
remanded for the district court to determine
(1) the date of the breach of the lease, (2) the appropriate amount
of damages incurred at the time of the breach, which in turn must
be based on (3) the value of the business before the breach and
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after the breach. Such a valuation of the business must also
reflect (as the district court has already determined) that Shikur
has not proven future damages (in the form of lost profits).
Id.
On remand, the district court determined that the breach occurred on September 9,
2016, 60 days after Shikur provided Erik with written notice of the leak. It found that this was
a breach that continued until Shikur was forced to vacate the property in 2019. It determined
that, because there was “no evidence in the record of any loss in the business’ value” between
the time it was purchased in February 2015 and when the lease was initially breached in
September 2016, the value of the business was the same as the initial purchase price: $136,882.
The district court then found that , because the convenience store was rendered inoperable in
2019, forcing Shikur to vacate, the final value of the business was zero dollars . The district
court ordered that Erik pay Shikur $139,182, which represented the business -loss damages
plus the security-deposit damages, and Shikur’s costs and fees, including attorney fees.
The Halversons appeal.
DECISION
I. The district court’s damages award is not supported by the record.
A leases is a type of contract and therefore is subject to the general principles of contract
law. See RAM Mut. Ins. Co. v. Rohde , 820 N.W.2d 1, 14 (Minn. 2012). It is a plaintiff’s
burden to prove damages arising from the breach of a contract. See Canada by Landy v.
McCarthy, 567 N.W.2d 496, 507 (Minn. 1997) (“In an ordinary civil action, the plaintiff has
the burden of proving damages caused by the defendant by a fair preponderance of the
evidence.”). When reviewing a district court’s damages award, this court “consider[s] the
evidence in the light most favorable to the verdict” and will not set aside the award “unless it
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is manifestly and palpably contrary to the evidence.” Rayford v. Metro. Transit Comm’n,
379 N.W.2d 161, 165 (Minn. App. 1985) (quotation omitted), rev. denied (Minn. Feb. 14,
1986). Though a district court “need not adopt the exact figures of any witness in
determining damages,” its determination must be “within the mathematical limitations
established by the various witnesses and . . . otherwise reasonably supported by the
evidence as a whole.” Fudally v. Ching Johnson Builders, Inc., 360 N.W.2d 436, 439
(Minn. App. 1985) (quotation omitted). Damages that are too remote or based on
speculation or conjecture are not recoverable. Leoni v. Bemis Co., 255 N.W.2d 824, 826
(Minn. 1977). For this reason, the damages are not recoverable here.
We directed the district court to determine on remand the value of Shikur’s business
before and after the breach. Shikur, 2022 WL 829362, at *6. On remand, the district court
found that the prebreach value of the business was $136,882 and that the postbreach value
of the business was zero dollars. Neither of these findings is supported by evidence in the
record.
The district court’s finding as to the value of the business at the time the breach
began relies on evidence that is too remote in time. We considered a similar error in a
district court’s business valuation in Teachout v. Wilson, in which a district court
determined a business’s value at the time of the breach by relying on its sale price two and
one-half years after the breach. 376 N.W.2d 460, 464 (Minn. App. 1985). The district
court reasoned that, because the business was “substantially the same” at the time of the
breach and at the time of the sale, the sale price was an appropriate valuation of the business
at the time the breach occurred. Id. This court rejected that reasoning, however, and
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concluded that there was “no evidence of the fair market value of the business at or near
the time of the breach.” Id. The district court made the same error here when it based its
valuation finding on the sale price of the business more than 18 months prior to the time
the breach began. It employed the same erroneous reasoning as the district court in
Teachout, concluding that, because there was “no evidence in the record of any loss in the
business’ value” between the two periods, the value must be the same. We again conclude
that the valuation upon which the district court relied was too remote in time to support the
damages award.
The district court’s business valuation at the end of the breach is also unsupported
by the record. The district court reasoned that because Shikur’s business was rendered
inoperable as a result of the breach, the business’s final value must have been zero dollars.
But this finding is speculative. The promissory note included in the record for the 2015
sale of the business shows that Shikur entered into an “Asset Purchase Agreement” with
the previous owner for $136,882. There is nothing in the record to suggest that the assets
of the business were the same at the time Shikur was forced to vacate as they were when
he purchased the convenience store nearly four years earlier. In fact, the record reflects
that Shikur operated the business up until he vacated the property and had sold much of the
store’s inventory before then. We see nothing in the record that establishes the value of
the business’s assets at the end of the breach in 2019.
In the absence of any record support for the district court’s finding, we must
conclude that the award for loss-of-business damages is too speculative to be sustained.
Because Shikur failed to prove loss-of-business damages, he is not entitled to them, even
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though the district court found that Erik breached the lease. See Vault, Inc. v. Michael-Nw.
P’ship, 372 N.W.2d 7, 9 (Minn. App. 1985) (affirming district court’s refusal to award
speculative lost-profits damages for breach of commercial lease), rev. denied (Minn.
Sept. 13, 1985); cf. Park Nicollet Clinic v. Hamann, 808 N.W.2d 828, 833 & n.5
(acknowledging that, for purposes of stating a breach-of-contract claim, plaintiffs may not
have to allege damages).
II. Shikur is entitled to attorney fees.
Erik challenges the district court’s award of $47,575.50 in costs and attorney fees
under the lease agreement. The attorney-fee provision of the lease agreement provides:
In case suit should be brought for recovery of the premises or
for any sum due hereunder, or because of any act which may
arise out of the possession of the premises by either party, the
prevailing party shall be entitled to all costs incurred in
connection with such action, including a reasonable attorney’s
fee.

We review an attorney-fee award for an abuse of discretion. Becker v. Alloy Hardfacing
& Eng’g Co., 401 N.W.2d 655, 661 (Minn. 1987).
Erik argues only that Shikur is not the prevailing party because he failed to prove
loss-of-business damages. The argument ignores the fact that Shikur proved that Erik
breached the lease and that Shikur was entitled to damages for his withheld security
deposit. Erik does not contend that the amount of attorney fees awarded was unreasonable,
and his failure to do so forfeits any argument on that issue. See Waters v. Fiebelkorn, 13
N.W.2d 461, 464-65 (Minn. 1944) (“[O]n appeal error is never presumed. It must be made
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to appear affirmatively before there can be reversal. . . . [And] the burden of showing error
rests upon the one who relies upon it.”). We therefore affirm the attorney-fee award.
Affirmed in part and reversed in part.