This opinion will
be unpublished and
may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (2004).
IN COURT OF APPEALS
Alex C. Eschweiler,
Charles C. Eschweiler,
July 11, 2006
File No. CT 03-19940
Ralph V. Mitchell, Jr., Lapp, Libra, Thomson, Stoebner &
Pusch, Chartered, One
120 South Sixth Street,
Marshall H. Tanick, Stephen H. Parsons, Mansfield, Tanick
& Cohen, P.A., 1700 U.S. Bank Plaza South, 220 South Sixth Street,
Minneapolis, MN 55402 (for appellant)
and decided by Halbrooks,
Presiding Judge; Minge,
Judge; and Dietzen, Judge.
U N P
U B L I S H E D O P I N I O N
Appellant challenges the district
court’s (1) dissolution and winding up of his partnership; (2) determination of
accord and satisfaction; and (3) limitation on the length of the trial. Although we conclude that respondent gave
notice of dissociation from the partnership, the district court did not err in ordering
a judicial dissolution and winding up or in finding accord and satisfaction. We further conclude that the district court’s limits
on the trial were not an abuse of discretion or a violation of appellant’s
right to procedural due process. We affirm.
Charles Eschweiler (Chad)
challenges the district court’s order dissolving E & D Partnership in which
he and respondent Alex Eschweiler, his half-brother, were equal partners. Chad
lived near Minneapolis and Alex lived in Texas. The partnership rents apartments in two
properties in Minneapolis. The partnership was formed in February 1986
by Alex, Chad, and Jack Davis and is
governed by a written partnership agreement.
the terms of the partnership agreement, Davis
was the managing agent of the partnership and received ten percent of the gross
rents as compensation. In 1988, Davis sold his share of the partnership to Alex and Chad, and resigned
as managing agent. A replacement
managing agent was not designated; Eschweilers attempted to divide management
duties. Alex prepared financial
information, and Chad
oversaw maintenance of the buildings and dealt with tenants. Management of the properties and the
partnership was a source of ongoing conflict between the parties. Alex asserted that Chad
failed to keep organized records or supply financial information on a timely
basis and that Chad
used partnership funds for personal expenses.
requested that he be compensated as the managing agent; Alex refused. The partnership agreement provided that a
replacement managing agent could be designated by majority vote and that
disagreements could be settled by majority vote. As Chad and Alex had equal shares, there
was no majority to resolve differences.
several years of wrangling, Alex believed that he and Chad had
reached a verbal understanding in January 2003. Alex attempted to summarize the agreement in
an email, that among other items stated that Chad was to receive a $3,000 lump
sum payment for prior management services and a $240 monthly fee starting
January 2003. Chad wrote himself several checks consistent
with these terms. However, the parties
never formalized their agreement and their relationship deteriorated. During 2003, repairs required by the insurer of
the properties were not made and the insurance was not renewed. The insurance company initially sent letters
informing him of its requirements. Alex
did not become aware of the problems until several months later.
October 11 and 13, 2003, Alex sent Chad a fax and an email indicating his deep frustrations
with Chad and his determination to terminate or withdraw from the partnership
by the end of the year. Chad did not
respond. On October 23, 2003, Alex’s
attorney sent Chad a letter summarizing the situation, stating that Alex wished
to end the partnership, and stating that unless Chad notified him within five
days that he was willing to negotiate a resolution to the situation, legal
proceedings to dissolve the partnership would be brought. On December 3, 2003, Chad sent Alex
a letter stating that he intended to buy Alex’s partnership share pursuant to
the partnership agreement.
December 9, 2003 (46 days after his attorney’s letter), Alex brought suit complaining
of deadlock, mismanagement, failure to pay taxes and insurance, improper
handling of funds and requesting an accounting, judicial dissolution of the
partnership, and, by an amended complaint, damages for breach of the
partnership agreement. Chad answered
that Alex could not seek judicial dissolution because Alex had withdrawn from
the partnership by his October communications and was therefore bound by the
withdrawal procedures in the partnership agreement. Chad also filed a counterclaim for
management fees. Following a bench
trial, the district court concluded that Alex had not withdrawn from the
partnership, that the parties had reached an accord and satisfaction on the
management fees owed to Chad,
and that the economic purpose of the partnership was unreasonably frustrated,
making it impracticable to carry on the partnership business. The district court ordered the partnership
dissolved and appointed a receiver to liquidate the partnership’s assets and
distribute the proceeds. Chad appeals.
D E C I S I O N
first issue is whether the district court erred in judicially dissolving the
partnership, appointing a receiver, and ordering liquidation. Minnesota
partnership law recognizes
that a partner may dissociate from a partnership at will at any time by
expressing his decision to withdraw. Minn. Stat. § 323A.6-01(1)
(2002). In circumstances defined in Minn. Stat. §
323A.8-01 (2002), dissociation by one partner results in dissolution and
winding up of the partnership business under article 8 of the Uniform Partnership
Act (U.P.A.). Minn. Stat. § 323A.6-03(a) (2002).
of the circumstances described in article 8 triggering the dissolution and
winding up of a partnership business is an application by a partner and a
judicial determination that
(i) the economic purpose of the
partnership is likely to be unreasonably frustrated;
(ii) another partner has engaged in
conduct relating to the partnership business which makes it not reasonably
practicable to carry on the business in partnership with that partner; or
(iii) it is not otherwise reasonably
practicable to carry on the partnership business in conformity with the
Minn. Stat. § 323A.8-01(5). In general, the partnership agreement governs
the partnership. Minn. Stat. § 323A.1-03(a) (2002). But the agreement cannot alter the right to
dissociate or the right to a judicial dissolution if the foregoing statutory
criteria are met. Minn. Stat. § 323A.1-03(b)(6), (8) (2002).
The E & D partnership
agreement provides for withdrawal, buyout, and dissolution of the partnership
9.2 Withdrawal. Any partner may elect to withdraw from the
partnership upon giving each of the other partners six months’ prior written
notice. Upon the partner’s withdrawal, the remaining partners may, at their option,
purchase the withdrawing partner’s interest for its value as determined
under paragraph 9.5. Otherwise, the
remaining partners shall dissolve and liquidate the partnership.
. . .
9.5 Valuation. The value of a partner’s interest is equal to
the partner’s partnership share times the net worth of the partnership. . .
. If there is a dispute over the gross
value of real or personal property owned by the partnership, [or] the value of
partnership assets, a qualified appraiser or appraisers shall be selected by agreement of a withdrawing partner and the
remaining partner, or in the case of a deceased or bankrupt partner, by the
remaining partners. Appraisers’ fees
shall be paid out of partnership funds as an operating expense.
(Emphasis added.) These provisions allow for the orderly
departure of a partner. However, they
are dependent upon the partners agreeing on value or an appraiser to establish value,
and they are subject to the statutory right of one partner to dissociate and to
require a winding up. Cf. Minn. Stat. § 323A.8-01. In this case, the relationship between the
partners had collapsed. The modest
partnership provisions are not adequate to overcome these difficulties.
district court found that, due to Alex and Chad’s “incredible difficulty
communicating with each other” and constant opposition to each other, the
standards for judicial dissolution were met.
does not challenge this conclusion.
argues that dissolution and winding up was improper because Alex had withdrawn
from the partnership before requesting that remedy and that Alex was obliged to
proceed with the withdrawal process in the partnership agreement.
We first consider
the district court’s factual finding that Alex had not withdrawn from the
partnership. “Findings of fact, whether
based on oral or documentary evidence, shall not be set aside unless clearly
erroneous, and due regard shall be given to the opportunity of the trial court
to judge the credibility of the witnesses.”
R. Civ. P. 52.01.
a fax dated October 11, 2003, Alex described several of his concerns about Chad’s participation
in the partnership and stated, “Therefore, I am formally informing you that I
intend to withdraw from E & D partnership.”
Alex then identified three options for dealing with the deteriorating
relationship. In conclusion, Alex wrote,
“I plan on aggressively removing myself from this situation, with my desire to
be removed by December 31, 2003.” On
October 13, 2003, Alex sent Chad
an email stating his concerns about the properties being uninsured and the
partnership’s financial shortcomings. In
the email, Alex stated, “I am formally informing you that I am withdrawing from
the partnership,” and stated that he would “take any and all actions necessary
to protect my investment” if Chad
did not respond to his concerns within 72 hours. Finally, Alex’s attorney sent Chad a
letter dated October 23, 2003. The
letter states that Alex had notified Chad of his intention to withdraw,
and had also identified “alternative[s] to withdrawal.” The letter restates these alternatives, requests
respond within five days indicating his “willingness to enter into a negotiated
resolution,” and states that absent such a response Alex would seek judicial
to these communications 40 days later (on December 3), indicating his intent to
purchase Alex’s share of the partnership pursuant to the partnership agreement
and his willingness to negotiate for a qualified neutral real estate
appraiser. Alex brought this suit on December
district court found that these communications, “when read in their entirety
and appropriate context, merely amount to intentions
or proposals to withdraw and list
various options for disposing of [Alex’s] interest in E&D.” The meaning of these letters and emails in
the context of the parties’ larger relationship is a factual issue and we
accord the district court’s factual findings great deference. See Minn. R. Civ. P. 52.01. However, on their face, these letters and
emails clearly express Alex’s decision to end his involvement with Chad in this venture
by December 31, 2003, if not in October.
Cf. Minn. Stat. § 323A.1-02 (2002) (defining
generally the notice provisions of the U.P.A.).
Although the communications leave open all alternatives for
dissociation, they constitute notice by Alex of his dissociation from the
partnership, subject to prompt agreement on the terms of the dissociation from
the partnership. Based on the language
used, we conclude that it was clearly erroneous for the district court to
determine that Alex’s communications did not convey a decision to dissociate
from the partnership by the end of 2003.
B. Election of remedies
that by dissociating from the partnership without demanding judicial
dissolution and winding up, Alex made an election of remedies. Chad
argues that under the partnership agreement and the U.P.A., Alex’s withdrawal
to acquire Alex’s interest in the partnership valued as of October 2003 and
precluded Alex from seeking judicial dissolution. Whether there has been an election of
remedies is a question of law, which we review de novo. Christensen
v. Eggen, 577 N.W.2d 221, 224 (Minn.
the doctrine of election of remedies, a party must choose one of two or more
inconsistent remedies that the law permits based on the same set of facts. Id. The
purpose of the doctrine is to prevent double recovery for one act of
wrongdoing. Id. But “if inconsistent remedies are sought and
it is doubtful which one will bring relief, a party may claim either or both
alternatively until one affords a remedy and the claimant is not bound by his
election until one remedy is pursued to a determinative conclusion.” Nw.
State Bank, Osseo v. Foss, 293 Minn.
171, 177, 197 N.W.2d 662, 666 (1972).
no legal precedent for the assertion that a partner who has given notice of
dissolution cannot subsequently demand judicial dissolution and winding up. Here there is ambiguity over whether Alex was
dissociating as of the end of the year 2003 or in October and there is
uncertainty over the mechanics and conditions of his withdrawal. Regardless, Chad did not respond until after
Alex’s attorney wrote about the withdrawal demanding a prompt response or threatening
legal action. Legal action included
judicial dissolution. Chad responded
late. Failing to obtain a prompt
response and concluding that his protracted attempts to resolve his differences
had failed, Alex sought judicial dissolution and winding up. This suit was filed before the end of 2003;
the same timeframe as the effective date of dissociation. Such action was not inconsistent with the
notice of dissociation which Alex gave Chad.
most, Alex took the risk that the district court would find that there were not
adequate grounds for judicial dissolution.
If that result obtained, Alex might be obliged to withdraw in the
framework of article 7 of the U.P.A. and allow Chad the option to purchase with
the timetable and process described in the partnership agreement. See
Minn. Stat. §
323A.1-03(a) (providing that the partnership agreement governs the partnership). However, the district court decided that an
adequate basis existed for a judicial dissolution and winding up. Chad does not dispute and we
conclude that the record supports this determination.
sum, we conclude Alex was not precluded by the doctrine of election of remedies
from seeking judicial dissolution and that the district court did not err in
judicially dissolving the partnership, appointing a receiver to handle the
dissolution, and winding up of the partnership.
also questions the date as of which Alex’s share is valued. Having determined that judicial dissolution
is proper, we conclude that the date of Alex’s dissociation from the
partnership and the date of dissolution do not determine or freeze the value of
Alex’s interest. He is entitled to his
share upon ultimate liquidation pursuant to Minn. Stat. § 323A.8-07 (2002).
second issue is whether the district court clearly erred in finding an accord
and satisfaction for Chad’s
claim for management fees. Whether
parties reached an accord and satisfaction is a question of fact. Webb
Bus. Promotions, Inc. v. Am. Elecs. & Entertainment Corp., 617 N.W.2d
67, 73 (Minn.
2000). Factual findings on accord and
satisfaction “will not be reversed on appeal unless they are ‘manifestly and
palpably’ contrary to the evidence.” Id. (quoting Butch Levy Plumbing & Heating, Inc. v.
Sallblad, 267 Minn.
283, 293, 126 N.W.2d 380, 387 (1964)).
enforceable accord and satisfaction arises where a party, against whom a breach
of contract is claimed, proves the following:
(1) the party, in good faith, tendered
an instrument to the claimant as full satisfaction of the claim; (2) the
instrument or an accompanying written communication contained a conspicuous
statement to the effect that the instrument was tendered as full satisfaction
of the claim; (3) the amount of the claim was unliquidated or subject to a bona
fide dispute; and (4) the claimant obtained payment of the instrument.
617 N.W.2d at 73 (citing Minn. Stat. § 336.3-311(a), (b) (2004)). Mutual agreement of the parties to enter into
an accord and satisfaction is also required, but if the four elements are
present, that requisite intent is presumed as a matter of law. Id. at
76. The party denying the existence of
an accord and satisfaction must rebut the presumption by showing, for example,
that ambiguity precluded mutual agreement.
and Alex discussed the terms of a new partnership agreement in January
2003. Alex claims to have summarized the
agreed upon terms in an email on January 22, 2003. According to the email, Chad would
receive a “one time lump sum” of $3,000 “for all prior work, efforts, and
savings” that he had put into the properties from their purchase until December
31, 2002. Chad would also assume the title of
property manager and would receive $240 per month for performing these
duties. Alex proposed the $240 figure by
deducting the external accountant’s fees from the ten percent management fee
previously paid to Davis.
Chad wrote an E
& D check on April 16, 2003, made payable to himself, for $960. On the check’s memo line, Chad wrote “Jan. – Apr. ’03 mgmt
240 × 4 = 960.” On May 12, 2003, Chad
left a telephone message with Alex announcing his intention to write a check to
himself for $3,000. In response, on May
13, 2003, Alex forwarded a copy of the January 22, 2003 email for Chad’s review,
and wrote that the parties had additional issues to address. Chad wrote two E & D checks,
both dated May 13, made payable to himself in the amounts of $240 and
$3,000. In the note sections of these
wrote “mgmt – May ‘03” and “mgmt per agreement,” respectively. Chad wrote another E & D check
to himself for “mgmt,” in the amount of $240, on July 30, 2003.
district court concluded that Alex tendered an agreement to Chad for full satisfaction of the claim for past
management fees, that the amount of the claim was in dispute, and that Chad obtained
payment consistent with the offer. The
district court therefore found that the $3,000 check constituted an accord and
satisfaction for management fees through December 31, 2002, and that the monthly
checks for $240 constituted an accord and satisfaction for management fees for
the first half of 2003.
that he never intended the checks to constitute full settlement of his past and
present claims for management fees. But Chad appeared to subscribe to the arrangement
proposed by Alex when Chad
announced his intent to write a check for management fees for exactly the
amount proposed by the emails and identified the checks as fees for “mgmt” and
“mgmt per agreement.” Chad testified at trial that these
checks were only intended to satisfy a portion of the fee he was owed, and explained
that the check amounts matched the amounts in the agreement only by
coincidence. But the district court found
this explanation not to be credible.
Chad claims he is entitled to ten percent of
gross rents from the time Davis
left the partnership in 1988. Since the
gross rents for the 15-year period were estimated at $500,000, Chad claims he
is owed over $50,000 plus substantial interest and that it is unrealistic to
conclude that he would accept $3,000 for such a large claim. But Chad
was never formally appointed as the managing agent of the partnership, did not
perform all of the duties that Davis
was to perform, and was in a protracted struggle with Alex over what, if any,
payment he should receive. He faced the
risk of no payment under Minn. Stat. § 323A.4-01(h) (2002). Under the circumstances, Chad’s argument
that no reasonable person would accept such a small percentage of the amount claimed
is not compelling. We conclude that the district court
reasonably found that the Webb
requirements were satisfied. Chad wrote himself checks for amounts that Alex
intended to be full satisfaction of Chad’s claim. In the context in which Chad made out the
checks, including the amounts and the check memos, Chad understood or should
have understood that the checks were intended to be full satisfaction of the
claim. The claim was a matter of a bona
fide dispute. In cashing the checks, Chad obtained
payment. In sum, we conclude the
district court’s determination of an accord and satisfaction was not clearly
third issue is whether Chad
was denied due process when the district court restricted the amount of
evidence he was able to present. Claims
of denial of due process are reviewed de novo.
Zellman ex rel. M.Z. v. Indep.
Sch. Dist. No. 2758, 594 N.W.2d 216, 220 (Minn. App. 1999), review denied (Minn. July 28, 1999).
process guarantees a party “reasonable notice, a timely opportunity for a
hearing, the right to be represented by counsel, an opportunity to present
evidence and argument, the right to an impartial decisionmaker, and the right
to a reasonable decision based solely on the record.” Humenansky
v. Minn. Bd.
of Med. Exam’rs, 525 N.W.2d 559, 565 (Minn. App. 1994), review denied (Minn. Feb. 14, 1995). At the same time, the “mode, manner, and
method of receiving testimony is a matter resting almost wholly in the
discretion of the trial court.” Manion v. Tweedy, 257 Minn. 59, 67-68, 100 N.W.2d 124, 130 (1959). Further, without violating the right of
procedural due process, a court may exclude evidence based on “considerations
of undue delay, waste of time, or needless presentation of cumulative
evidence.” Minn. R. Evid. 403. The existence of any prejudice is “difficult
to assess without an offer of proof” of a witness’s probable testimony. In re
Estate of Olsen, 357 N.W.2d 407, 413 (Minn. App. 1984), review denied (Minn. Feb. 27, 1985).
district court gave notice to both parties that they would have to complete the
trial on March 11, 2005. On that day, Chad’s counsel indicated his concern that he
might be unable to call all of his witnesses by the end of the day,
specifically identifying Gary Lundgren and Geneva Eschweiler, and direct
examination of Chad. The district court stated that it would not
allow an additional day of trial because Chad’s
attorney’s questioning had been “very, very slow” and because Chad had been given “plenty of
opportunity to question.”
the trial concluded, Chad’s
counsel called and examined Geneva Eschweiler.
Chad’s counsel was
also able to resume direct examination of Chad. The only witness whom Chad indicated
that he wished to call but did not was Gary Lundgren. Lundgren was to testify about the labor he
performed on the partnership properties. Chad does not explain why this
testimony would have altered the result of the trial. Given the direct examination of witnesses that
Chad was able to conduct,
his extensive opportunity to cross-examine Alex’s witnesses, and his failure to
make an offer of proof regarding the testimony he would have presented or show
that the district court’s limitation prejudiced the presentation of his case; we
due process rights were not violated.