Lorenzo Tejeda, et al., Respondents,

This opinion is nonprecedential except as provided by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
A25-0093

Lorenzo Tejeda, et al.,
Respondents,

vs.

David Maceda,
Appellant.

Filed August 11, 2025
Reversed and remanded
Worke, Judge
Concurring specially, Johnson, Judge

Hennepin County District Court
File No. 27-CV-24-9044

Steven R. Little, SRL Law, PLLC, St. Paul, Minnesota (for respondents)

Aaron R. Thom, Samantha J. Ellingson, Thom Ellingson, PLLP, Minneapolis, Minnesota
(for appellant)

Considered and decided by Johnson, Presiding Judge; Worke., Judge; and Smith,
Tracy M., Judge.
NONPRECEDENTIAL OPINION
WORKE, Judge
Appellant challenges a district court decision to deny his motion for advancement
under Minn. Stat. § 322C.0408 (2024). Appellant argues that the district court erred
because “the facts then known” did not “preclude indemnification,” and therefore do not
bar advancement. See Minn. Stat. § 322C.0408, subd. 3(2). Because the district court
2
relied on disputed allegations in the pleadings that do not preclude indemnification, we
reverse and remand for proceedings consistent with this opinion.
FACTS
Respondents Lorenzo Tejeda and Catrina’s II, LLC, sued appellant David Maceda
in April 2024. Respondents’ complaint set forth the following allegations. Tejeda,
Maceda, and a third individual 1 formed the LLC and opened a restaurant in St. Anthony,
Minnesota. Between 2018 and 2023, Maceda made a series of unauthorized payments
from the LLC’s credit-card and checking accounts. He also fraudulently endorsed a check
from the federal government. Based on the foregoing allegations, respondents asserted
claims for breach of fiduciary duty, conversion, and unjust enrichment . Respondents also
sought an order to disassociate Maceda as a member of the LLC.
In his answer, Maceda admitted that he was a member of the LLC. However, he
denied that any charges he put on the LLC credit card, or payments from the checking
account, were unauthorized. He also denied that he fraudulently endorsed the check from
the federal government. Furthermore, Maceda alleged that he “made substantial personal
sacrifices to attempt to keep the restaurant afloat,” often working 12 - or 14-hour shifts to
perform his management duties. To manage the cost of business, “Maceda hired his family
members to perform tasks.” Maceda alleged that when he told Tejeda that the restaurant
had insufficient cashflow to continue operating, Tejeda refused to put any more money into
the restaurant and stated that if the restaurant had to close, Maceda should do so “without

1 The third individual is not a party to this litigation.
3
paying off its debt, vendors, staff, or payroll.” However, Maceda was unwilling to
withhold wages, and around November 2023, he paid staff for the final time from the
LLC’s checking account.
Based on the foregoing allegations, Maceda denied liability for all the counts in
respondents’ complaint and asserted counterclaims for breach of contract and unjust
enrichment. He also requested a court -ordered buy-out of his membership interest in the
LLC or judicial dissolution of the LLC.
In their answer to Maceda’s counterclaims, respondents denied , among other
allegations, that (1) Maceda hired family to help manage the restaurant, (2) Tejeda told
Maceda not to pay staff should they need to close the restaurant, and (3) Maceda paid staff
for the final time out of the LLC checking account.
Maceda sent a letter to the LLC requesting that it advance his litigation expenses
under Minn. Stat. § 322C.0408. However, the LLC denied the request. Maceda then filed
a motion in district court to compel the LLC to provide advancement despite its denial .
Maceda argued that he was entitled to advancement because respondents sued him in his
official capacity; the LLC’s operating agreement did not limit advancement; he provided
the LLC with a written request for advancement, which the LLC rejected; and none of “the
facts then known” would “preclude indemnification.” See Minn. Stat. § 322C.0408,
subd. 3. Maceda noted that, although respondents “made a number of allegations against
[him], these are mere allegations— which [he] vehemently disputes.” To support his
motion, Maceda provided a copy of the LLC’s operating agreement. The operating
agreement guaranteed LLC managers and governors indemnification “as required or
4
permitted” under Minnesota law and did not impose any limits on advancement. Maceda
also attached a written demand to the LLC, whereby he expressed a good-faith belief that
he satisfied the criteria for indemnification.
In November 2024, the district court issued an order denying the motion for
advancement. The district court reasoned as follows:
Maceda’s Answer and Counterclaim acknowledges that Tejeda
told him that if Catrina’s had to close, Maceda should close it
without paying staff or payroll. Maceda states that he was
‘unwilling to withhold from Catrina’s St. Anthony’s staff the
money they had already earned, and . . . wrote paychecks to
staff from Catrina’s II checking account.’ Maceda also
acknowledged that he hired his family members as staff at
Catrina[’]s. Paying his family from Catrina’s checking
account in preference to retaining funds within the business
represents a failure to act in good faith, indicates he received
an improper benefit from his actions . . . and establishes that he
knew his actions were not in the interests of Catrina’s. Thus,
the facts currently known demonstrate that Maceda is not
eligible for indemnification.

The other facts alleged in Maceda’s pleadings and
affidavits suggest that there may be ameliorating
circumstances that, if proven at trial, might justify his actions
and entitle him to indemnification, but the Court cannot weigh
disputed facts at this stage.

(Citations omitted.)
Maceda appealed.
DECISION
On appeal, Maceda argues that the district court erred by denying his motion for
advancement under Minn. Stat. § 322C.0408. He contends that, contrary to the district
court’s order, “the facts then known” did not “preclude indemnification” and therefore do
5
not bar advancement. See Minn. Stat. § 322C.0408, subd. 3(2). We review de novo a
district court’s decision to deny advancement. Reichel Foods, Inc. v. Taylor, No. A24-
0396, 2024 WL 3935001, at *3 (Minn. App. Aug. 26, 2024)2 (citing Asian Women United
of Minn. v. Leiendecker, 789 N.W.2d 688, 690 (Minn. App. 2010)).
“Advancement refers to the right to immediate interim relief from the personal out-
of-pocket financial burden of paying the significant on-going expenses inevitably involved
with investigations and legal proceedings.” Id. at 691. The related concept of
indemnification refers to reimbursement for financial losses after litigation ends. Id. When
individuals are parties to lawsuits by reason of their official capacity with a business or
nonprofit, advancement and indemnification protect those parties from the personal cost of
financing litigation. See id. Accordingly, Minnesota has a series of statutes that govern
when and how businesses and nonprofits are to provide advancement and indemnification
to personnel. See Minn. Stat. §§ 322C.0408 (limited liability companies), 317A.521 (2024)
(nonprofit corporations), 302A.521 (2024) (business corporations). Businesses and
nonprofits may eliminate, limit, or qualify their obligation to provide advancement or
indemnification through their governing documents. Minn. Stat. §§ 322C.0408, subd. 4,
317A.521, subd. 4, 302A.521, subd. 4.
Despite the interlocutory nature of an appeal from an order denying advancement,
such orders are immediately appealable through the collateral-order doctrine. Leiendecker,

2 This opinion is nonprecedential and, therefore, not binding. To the extent we cite
nonprecedential opinions, we do so only as persuasive authority. See Minn. R. Civ. App.
P. 136.01, subd. 1(c).
6
789 N.W.2d at 690. This is because, unless received promptly, parties lose the benefit of
advancement by making a different set of critical decisions on representation and litigation
strategy than they otherwise would. See id.
Here, because Maceda requested advancement from an LLC, section 332C.0408
applies.3 That section states that:
[I]f a person is made or threatened to be made a party to a
proceeding, the person is entitled, upon written request to the
limited liability company, to payment or reimbursement by the
limited liability company of reasonable expenses, including
attorney fees and disbursements, incurred by the person in
advance of the final disposition of the proceeding:
(1) upon receipt by the limited liability company of a
written affirmation by the person of a good faith belief that the
criteria for indemnification . . . have been satisfied and a
written undertaking by the person to repay all amounts so paid
or reimbursed by the limited liability company, if it is
ultimately determined that that the criteria for indemnification
have not been satisfied; and
(2) after a determination that the facts then known to
those making the determination would not preclude
indemnification under this section.

Minn. Stat. § 322C.0408, subd. 3 (emphasis added). As relevant here, a party is entitled to
indemnification if
with respect to the acts or omissions of the person complained
of in the proceeding, the person . . .
(2) acted in good faith;
(3) received no improper personal benefit[;] . . .

3 We note that Maceda can pursue advancement even though the LLC itself is among the
parties that sued him. See Minn. Stat. § 322C.0408, subd. 1(d) (defining “[p]roceeding” to
include “a proceeding by or in the right of the limited liability company”); see Leiendecker,
789 N.W.2d at 693 (interpreting nearly identical language under Minn. Stat. § 317A.521
(2008) to allow advancement from a nonprofit when the nonprofit was an opposing party
in the litigation).
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(5) in the case of acts or omissions occurring in the official
capacity . . . reasonably believed that the conduct was not
opposed to the best interests of the limited liability
company.

Minn. Stat. § 322C.0408, subd. 2(a). The extent to which a party is entitled to advancement
or indemnification is subject to limitations in an LLC’s articles of organization or operating
agreement. Id., subds. 3-4.
Once an LLC receives a written request for advancement, the LLC decides
internally whether the requesting party satisfies subdivision 3. See id., subd. 6(a)(1)-(2).
If the LLC denies advancement, the requesting party may pursue relief in district court.
Id., subd. 6(a)(3). Then, if the requesting party meets “the burden of establishing” that it
satisfies subdivision 3, the district court orders the LLC to provide advancement despite
the LLC’s previous denial. Id. In sum, “[i]f the district court determines that the party
seeking advancement has satisfied [all] procedural requirements [under subdivision 3(1)],
that the [LLC] did not prohibit or impose conditions on advancements or indemnification,
and that no known facts preclude indemnification, the district court must order the [LLC]
to advance fees accordingly.” CorVascular Diagnostics, LLC v. Talcott, No. A16-2048,
2017 WL 3687504, at *3 (Minn. App. Aug. 28, 2017), rev. granted (Minn. Nov. 14, 2017)
and appeal dismissed (Minn. Dec. 18, 2017).
Here, the parties do not dispute that Maceda satisfied the procedural requirements
for advancement under subdivision 3(1), nor do they dispute that the LLC’s governing
documents did not limit his entitlement to advancement or indemnification. Rather, the
sole issue on appeal is whether the district court properly applied subdivision 3(2) to
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determine whether “the facts then known” would “preclude indemnification,” and thereby
bar advancement.
In CorVascular, we interpreted the phrase “the facts then known” to exclude
“[u]ndetermined or disputed factual issues.” See id. (interpreting predecessor LLC-statute
to section 322.0408, which included nearly identical language). We interpreted the phrase
“would not preclude” to require “the facts then known” to “not certainly disqualify the
requesting party” from indemnification. Id. Ultimately, we reversed the district court’s
order denying advancement and remanded for further proceedings because the district court
erroneously considered disputed facts, and no undisputed facts would have precluded
indemnification. Id. at *4. We find CorVascular persuasive and apply its reasoning to this
case.
Here, in its order denying advancement, the district court stated that (1) Maceda
“hired his family members as staff at [the restaurant]”; (2) “Tejeda told [Maceda] that if
[the restaurant] had to close, Maceda should close it without paying staff or payroll”;
(3) and Maceda withdrew money from the LLC’s checking account to pay staff for the
final time. From those facts, the district court inferred that Maceda paid his family money
from the LLC’s “checking account in preference to retaining funds within the business, ”
which “represents a failure to act in good faith,” “indicates he received an improper benefit
from his actions,” and “establishes that he knew his actions were not in the best interests
of [the LLC].”
We conclude that the district erred by determining that “the facts then known ”
would “preclude indemnification.” See Minn. Stat. § 322C.0408, subd. 3. First, the district
9
court erroneously relied on disputed allegations to identify “the facts then known” because
it relied on facts that respondents themselves denied in their answer to Maceda’s
counterclaims. Second, even if those allegations were undisputed, we are unconvinced that
they would, by themselves, “certainly disqualify” Maceda from indemnification. See
CorVascular, 2017 WL 3687504, at *3. Although Maceda states in his answer that he
“hired his family members to perform tasks,” nowhere does he say that the staff he paid
for the final time in November 2023 were in fact family. And even if they were family,
such an act would not necessarily constitute the kind of improper behavior that would
preclude indemnification, particularly when employers have a legal obligation to pay
employees the wages that they earn. See Minn. Stat. § 181.101(a) (2024).
When Maceda moved for relief from the district court, he demonstrated that the
LLC’s governing documents in no way limited advancement or indemnification and
provided a copy of his written demand to the LLC. He stressed that he “vehemently
dispute[d]” respondents’ allegations against him and argued that “the facts then known”
would not “preclude indemnification.” See Minn. Stat. § 322C.0408, subd. 3(2).
Nevertheless, the district court relied on disputed allegations in Maceda’s answer—
allegations that even if undisputed would not “certainly disqualify” him from
indemnification—to deny advancement. See CorVascular, 2017 WL 3687504, at *3.
Because the district court erred, we reverse and remand for proceedings consistent with
this opinion.
Reversed and remanded.
CS-1

JOHNSON, Judge (concurring specially)
I concur in the opinion of the court insofar as it concludes that this court should
reverse and remand to the district court for further proceedings. But my reasons for that
disposition are substantially different from those stated in the opinion of the court. In my
view, the LLC statute does not confine a district court to the undisputed facts when the
district court rules on a motion for advancement. When making that decision, the district
court should be free to weigh the evidence, to hold the party seeking advancement to his
or her burden of establishing eligibility for an advancement, and to find the relevant “facts
then known to” the district court. Accordingly, I respectfully disagree with my colleagues
about the applicable law and, consequently, the nature of further proceedings on remand.
As stated in the opinion of the court, a party may be entitled to indemnification or
advancement only if the person “acted in good faith,” “received no improper personal
benefit,” and “reasonably believed that [his or her] conduct was not opposed to the best
interests of the limited liability company.” Minn. Stat. § 322C.0408, subd. 2(a)(2), (3), (5)
(2024); see also id., subd. 3. In this case, the court reasons that the district court erred on
the ground that it “erroneously relied on disputed allegations to identify ‘the facts then
known,’” including “facts that respondents . . . denied in their answer to Maceda’s
counterclaims.” Supra at 9.
The court’s analysis is not compelled by the text of the statute. To the contrary, the
statutory text suggests a different approach, for two reasons.

CS-2

A.
First, the statutory phrase “the facts then known to those making the determination,”
Minn. Stat. § 322C.0408, subd. 3(2), does not expressly require a district court to accept a
narrow set of facts that are not disputed by either party. Rather, the statute requires the
district court to base the advancement determination on “the facts then known to” the
district court. Id. District courts routinely weigh evidence, resolve conflicts in the
evidence, and make findings of fact. If the legislature had intended for district courts to
decide advancement motions based solely on facts that are not disputed by either party, the
legislature would have chosen different language to make that point clear.
Furthermore, it is not uncommon for district courts to make preliminary findings to
resolve pre-trial issues. For example, “the facts on which [a] trial court acts in granting a
temporary injunction are, by the nature of the situation, provisional.” Dahlberg Bros., Inc.
v. Ford Motor Co., 137 N.W.2d 314, 321 (Minn. 1965); see also Whitaker v. 3M Co., 764
N.W.2d 631, 638 (Minn. App. 2009) (stating that “factual findings at the class-certification
stage are not binding on the ultimate trier of fact”), rev. denied (Minn. July 22, 2009). The
LLC statute’s emphasis on the timing of the district court’s advancement determination
(“then”) implies that the facts known at the time of the advancement determination are not
binding on the court or the parties throughout the pendency of the case but, rather, are only
preliminary or provisional in nature.
It must be remembered that the “facts then known to those making the
determination” language applies to all persons and entities with statutory authority to
determine a person’s eligibility for an advancement, including an LLC’s board of
CS-3

governors, an LLC’s special legal counsel, and an LLC’s members. See Minn. Stat.
§ 322C.0408, subd. 6(a)(1)-(2). Thus, if “the facts then known to” a district court are
limited to the undisputed facts (as the court reasons), the same presumably would be true
when a person initially seeks advancement directly from an LLC. See id., subd. 6(a)(1)-
(2), (b). In that event, the LLC’s decisionmakers would be required to disregard facts
known to the company but disputed by the person seeking an advancement.
1
B.
Second, the statute expressly imposes an evidentiary burden on the party seeking
advancement, which further indicates that a district court’s advancement determination
should be based on a weighing of the evidence and factual findings. To be specific, the
statute provides that the person seeking advancement bears “the burden of establishing that
the person is entitled to” advancement. Id., subd. 6(a)(3) (emphasis added). Minnesota
appellate courts frequently use the word “establish” to describe an evidentiary burden with

1The “facts then known to those making the determination” phrase first appeared in
a Minnesota statute in 1981, when the legislature and governor enacted the law that became
chapter 302A of the Minnesota Statutes. 1981 Minn. Laws ch. 270, § 84, at 1198 (enacting
Minn. Stat. § 302A.521 (Supp. 1981)). It appears that the phrase was borrowed from the
model business corporations act (MBCA). See Model Bus. Corp. Act § 8.53(a) (1969)
(Am. Bar Ass’n, revised 1984); Committee on Corporate Laws, Changes in the Model
Business Corporation Act Affecting Indemnification of Corporate Personnel, 36 Bus. Law
99, 99, 105 (1980). At the time of Minnesota’s adoption of the phrase, the MBCA used it
to guide a corporation’s voluntary, discretionary decision to advance expenses to a director
who was made a party to a legal proceeding, so long as the director satisfied certain criteria,
which are equivalent to the criteria in subdivision 3(1)-(2) of section 322C.0408. See
Model Bus. Corp. Act § 8.53(a). That version of the MBCA did not expressly allow a
director to request a court order for advancement according to the same criteria. See id.;
cf. Model Bus. Corp. Act § 8.54. Thus, the statutory phrase at the crux of this appeal
originally was not intended to apply to a court’s determination of a person’s eligibility for
indemnification and advancement.
CS-4

respect to some type of intermediate factual showing that is not an ultimate fact to be
proved at trial. See , e.g., State v. Letourneau, ____ N.W.3d ____, ____ n.3, 2025 WL
1888770, at *1 n.3 (Minn. July 9, 2025) (noting that state has “burden to establish critical
impact” to justify appellate jurisdiction over pre-trial appeal); State Farm Fire & Cas. v.
Aquila Inc., 718 N.W.2d 879, 886 (Minn. 2006) (discussing “which party bears the
evidentiary burden of establishing an exception to” statute of limitations or statute of
repose); Sigurdson v. Carl Bolander & Sons Co., 532 N.W.2d 225 , 228 (Minn. 1995)
(describing plaintiff’s “burden to establish a prima facie case” of discrimination under
human-rights act). In this situation, it is appropriate to apply the canon against surplusage,
which “dictates that we avoid interpretations that would render a word or phrase
superfluous, void, or insignificant.” Shefa v. Ellison, 968 N.W.2d 818, 825 (Minn. 2022)
(quotation omitted). T he court’s interpretation of section 322C.0408 fails to account for
and give meaning to the “burden of establishing” phrase in the last sentence of subdivision
6(a)(3).
This court has considered a similar advancement statute with “facts then known”
language. See Asian Women United v. Leiendecker, 789 N.W.2d 688, 690-94 (Minn. App.
2010) (applying Minn. Stat. § 317A.521, subd. 3 (2008)). But, importantly, the statute at
issue in Leiendecker (which governs non-profit corporations) did not impose an evidentiary
burden on the party seeking advancement. See id. at 691- 92; Minn. Stat. § 317A.521,
subd. 6(a)(5) (2008). In any event, the Leiendecker opinion does not require a district court
to limit the “facts then known” to the facts that are undisputed. In applying the “facts then
known” phrase, the Leiendecker opinion stated that a district court must “make an
CS-5

independent determination . . . whether the facts then known to the district court would not
preclude indemnification under section 317A.521.” 789 N.W.2d at 693. A truly
independent determination would be based on the district court’s own understanding of the
evidentiary record, not the parties’ self-interested allegations and presentations of facts.
It may be that, in some cases, a district court is unable to resolve all conflicts in the
parties’ evidence without a more extensive factual record or the benefits of cross-
examination. In that situation, a district court perhaps could refrain from making findings
on certain issues. But a district court should not be forbidden from making findings on
disputed factual issues when ruling on an advancement motion. A district court should
consider whether the party seeking advancement has satisfied his or her “burden of
establishing” an entitlement to advancement and should find “the facts then known to” the
district court. See Minn. Stat. § 322C.0408, subds. 3(2), 6(a)(3).
In sum, I would reverse and remand for further proceedings on Maceda’s
advancement motion, with instructions for the district court to make findings of relevant
facts and then determine whether those facts would or would not preclude indemnification.