Preview
27-CV-18-19659
Filed in District Court
State of Minnesota
4/24/2019 4:20 PM
STATE OF MINNESOTA DISTRICT COURT
COUNTY OF HENNEPIN TENTH JUDICIAL DISTRICT
CASE TYPE: CIVIL OTHER
Ryan Lazenby, and Court File No. 27-CV-18-19659
Temaca Irrigation LLC, (The Hon. Joseph Klein)
Plaintiffs,
VS. MEMORANDUM IN RESPONSE TO
DEFENDANTS’ MOTION FOR A
TEMPORARY INJUNCTION AND
AMENDMENT OF THE SCHEDULING
ORDER
Guadalupe Gomez, James Gomez
Temaca Lawn Sprinkler's, Inc. d.b.a.
Temaca Lawn Sprinklers,
Defendants.
Plaintiffs submit this Response to Defendants’ “Notice of Motion and Motion for
Temporary Injunction, New Hearing Date and Award of Attorney Fees”. Defendants are not
entitled to the extraordinary remedy 0f a temporary injunction because they cannot show their
remedy at law is inadequate, or that they will suffer irreparable injury absent such relief.
Moreover, Defendants’ motion is based upon an Amended Complaint that they have not sought or
obtained leave t0 file. That Complaint contains claims that would not survive summaryjudgment,
and therefore Defendants should not be allowed leave t0 file it. Plaintiffs respectfillly ask that
Defendants’ motion be denied in its entirety.
ARGUMENT
I. Defendants’ Motion for Temporarv Relief.
Motions for Temporary Injunctions are governed by Minnesota Rule 0f Civil Procedure
65.02. See Minn. R. CiV. P. 65.02. Temporary injunctions are an extraordinary remedy. Queen
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City C0nst., Inc. v. City ofRochester, 604 N.W.2d 368, 372 (Minn. Ct. App. 1999). Irreparable
injury must exist before a court can grant a temporary injunction. Cherne Indus., Inc. v. Grounds
& Associates, Ina, 278 N.W.2d 81, 92 (Minn. 1979). The purpose of a temporary injunction is
t0 maintain the status quo 0f a matter in controversy until a trial 0n the merits so that the effect of
any judgment shall not be impaired by the acts 0f the parties during the litigation. Pickering v.
Pasco Mktg., Inc, 228 N.W.2d 562 (Minn. 1975); Metropolitan Sports Facilities Comm’n v.
Minnesota Twins Partnership, 638 N.W.2d 214 (Minn. App. 2002). Temporary injunctions are
designed to preserve current relationships until a trialcan be held on the merits. Sanbom Mfg. C0.
v. Currie, 500 N.W.2d 161 (Minn. App. 1993).
A motion for a temporary injunction must consider five factors enumerated in the decision
ofDahlberg Bros. v. Ford Motor C0., 137 N.W.2d 314 (Minn. 1965). The Dahlberg factors are:
“(1) the nature and background 0f the relationship between the parties preexisting the dispute
giving rise to the request for relief; (2) the harm to be suffered by plaintiff if the temporary restraint
is denied as compared to that inflicted on defendant if the injunction issues pending trial;(3) the
likelihood that one party 0r the other Will prevail on the merits When the fact situation is Viewed
in light 0f established precedents fixing the limits of equitable relief; (4) the aspects 0f the fact
situation, if any, which permit or require consideration 0f public policy expressed in the statutes,
State and Federal; and (5) the administrative burdens involved in judicial supervision and
enforcement of the temporary decree.” Id. at 321-322.
Here, Defendants have not submitted any memorandum 0f law or made any arguments
under the Dahlberg factors. Plaintiffs are left to speculate as t0 Defendants” basis for their motion.
The relief sought by Defendants in their submissions consists 0f an order restraining Plaintiffs
from operating in the lawn irrigation business in general, prohibiting Plaintiffs from encumbering
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assets, and for Plaintiff t0 escrow funds totaling $5,039.66. Defendants’ Proposed Order seeks
additional relief including an order requiring Plaintiffs to escrow all funds received from their
irrigation business.
Defendants essentially seek to put Plaintiffs out of business Via an injunction that is
purportedly to maintain the status quo. The requested relief would not maintain the status quo.
Instead, it would end Plaintiffs’ business, presumably out of spite and Without long-term benefit
t0 Defendants. Defendants currently d0 not have any counterclaims, and even if leave to amend
is granted, they are unlikely to succeed on their requests for relief. Even if the Court were to find
in Defendants’ favor at trial, an award 0f monetary damages would adequately compensate them.
Defendants requested preliminary injunction should be denied.
1. Relationship between the Parties
Plaintiff Lazenby and Defendant Guadalupe Gomez had a contractual relationship related
t0 the purchase 0f the business in question. Nothing regarding the relationship of the parties favors
granting Defendants’ requested preliminary injunction.
2. Balance 0f the Harms
The second factor t0 be weighed by the court is the harm suffered by the moving party if
the injunction is denied versus the harm suffered by the party that is enjoined. Here, granting
Defendants’ requested injunction would likely harm both parties, and therefore itshould be denied.
In order to obtain an injunction, Defendants “must establish that legal remedies are
inadequate and that an injunction must issue t0 prevent great and irreparable injury.” Metro. Sports
Facilities Comm’n v. Minnesota Twins P'ship, 638 N.W.2d 214, 222 (Minn. Ct. App. 2002); see
also St. Jude Med, Inc. v. Carter, 913 N.W.2d 678, 683 (Minn. 2018). The movant’s own poor
financial state is generally not grounds for a temporary injunction. See Haley v. Forcelle, 669
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N.W.2d 48, 56 (Minn. Ct. App. 2003) (“Further, insufficiency 0f savings 0r difficulty in obtaining
other employment generally will not support a finding 0f irreparable injury”).
Here, Defendants” primary rationale for injunctive relief appears to be that Guadalupe
Gomez may suffer financial distress if the injunction is not granted and that Plaintiffs will be
enriched by their continued use 0f the business in question. Defendants have a remedy for this,
monetary damages as part 0f a final adjudication 0n the merits. As such, Defendants cannot show
that they do not have an adequate remedy at law, and a temporary injunction should not be granted.
See St. Jude Med, Ina, 913 N.W.2d at 683 (Minn. 2018).
Moreover, the requested injunction does far more than provide Defendants some fimds t0
help Guadalupe Gomez’s financial situation. Defendants’ proposed injunction would:
restrain Plaintiffs Ryan Lazenby and Temaca Lawn Sprinklers, Inc. d.b.a. Temaca
Lawn Sprinklers, now operated as Temaca Irrigation, LLC (“Temaca”) and any
agent 0r associated person associated with Plaintiff Ryan Lazenby and Temaca,
from providing irrigation and irrigation- related services t0 Temaca customers
(Notice of Motion and Motion for Temporary Injunction, New Hearing Date and Award 0f
Attorney Fees). In their proposed Order, Defendants also request that:
any monetary compensation or receivables received or retained by Plaintiffs as a
result of the operation 0f Temaca Irrigation LLC 0r related irrigation types of
services shall be sent to counsel for Defendants and placed in an escrow account t0
be maintained by counsel for Defendants
(Proposed Temporary Injunction,) (sic). The net effect of these requests would be t0 destroy
Plaintiffs’ business by enjoining the operation thereof and directing the few accounts receivable
still outstanding to Defendants. This would end Temaca Irrigation, LLC and severely harm
Plaintiffs.
’
In contrast, the requested reliefwould not ultimately benefit Defendants. Ending Plaintiffs
business provides them no monetary benefit. That is, unless Defendants have entered the lawn
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irrigation business as alleged in Plaintiffs’ Complaint. Plaintiffs submit this may be the real
motivation behind the requested relief. Defendants’ attempted use of this motion t0 clear the way
for their own prohibited conduct is fithher addressed below.
Defendants may obtain some funds if Plaintiffs’ accounts receivable are intercepted and
directed towards them. However, destroying the business will ultimately be a futile exercise that
benefits no one. IfDefendants were t0 ultimately obtain a judgment, their requested injunction
would likely have mined their primary means 0f obtaining satisfaction. Destroying Plaintiffs’
business is utterly inappropriate at this preliminary state.
Defendants request to enj oin Plaintiffs from encumbering or transferring business assets is
likewise unnecessary. Defendants’ have n0 evidence any such conduct isoccurring and, even if
they did, have not identified how itwould harm them. Moreover, the equipment in question was
already paid for by the initial $63,000.00 payment from Plaintiff Lazenby t0 Defendant Guadalupe
Gomez. (Verified Complaint Exhibit A.) The business purchase agreement contains n0 security
agreement covering these assets. (Id.) Defendants have not shown how this requested relief will
benefit them, and restraining Plaintiffs’ ability to utilize their assets harms Plaintiffs.
This factor weighs in favor of denying Defendants’ requested injunction.
3. Likelihood 0f Success
Defendants currently do not have any counterclaims and cannot succeed 0n the merits until
they are granted leave to amend their December 2018 Answer. Defendants’ notice of motion and
motion does not invoke Minnesota Rule 0f Civil Procedure 15 or request leave to file an Amended
Answer and Counterclaims. Plaintiffs would oppose any such motion if itwere brought. These
issues are further addressed below in Section III.
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Even if Defendants were granted leave t0 amend their Answer, they stillcannot establish a
likelihood 0f success on the merits for their added claims. Defendants’ filings state claims for
breach 0f contract, unjust enrichment, and fraud. Defendants’ counterclaims sound primarily in
breach of contract arising out of the parties’ business purchase agreement. First, Defendants’
submissions do not address whether Defendant Guadalupe Gomez committed a material breach 0f
the employment contract that excused Plaintiffs’ performance. Plaintiffs’ Verified Complaint and
December 0f 2018 submissions establish that Defendant Guadalupe Gomez violated the restrictive
covenant contained in the purchase agreement. This is a material breach of the agreement that
allowed Plaintiffs to withhold performance and sue for damages. See BOB Acres, LLC v.
Schumacher Farms, LLC, 797 N.W.2d 723, 728 (Minn. Ct. App. 201 1) (defining a material breach
as a breach that is “significant enough to permit the aggrieved party to elect t0 treat the breach as
total (rather than partial), thus excusing that party from fithher performance and affording itthe
right to sue for damages.”) (internal quotations omitted). Second, Defendants’ motion seeks t0
prevent Plaintiffs from operating in the lawn irrigation business. Defendants have essentially
asked the Court to enforce a non-compete agreement. However, there is no non-compete binding
Plaintiffs in the Agreement. (Plaintiffs’ Verified Complaint Exhibit A.) Defendants seek to turns
the parties’ contract on its head. As noted above, this request is likely tailored t0 give them an
edge in their unfair competition with Plaintiffs.
Even if the Court disagreed With the above analysis at trial,Defendants would stillonly be
entitled to monetary damages. Defendants’ breach 0f contract damages, if successful, would be
the amount 0f payments Defendants would have received under the contract minus any offset the
Court finds for Defendants’ own breach. Peters v. Mut. Ben. Life Ins. C0., 420 N.W.2d 908, 915
(Minn. Ct. App. 1988) (“the appropriate measure of damages for breach of contract is that amount
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which will place the plaintiff in the same situation as if the contract had been performed”).
Defendants appear to be laboring under the assumption that a breach 0f contract claim would allow
them to retake the business sold t0 Plaintiff Lazenby. This is not the correct measure of damages
under Minnesota law.
Defendants’ fraud claims likewise face substantial issues at trial. Defendants’ argument
appears t0 be that Plaintiff Lazenby falsely agreed t0 execute certain amendments t0 the purchase
agreement in order t0 induce Defendant Guadalupe Gomez into entering into it. Although
Defendant claims at least one witness to these representations, it isDefendants’ bare assertion
against Plaintiff Lazenby’s word for purposes of this motion. Plaintiffs submit this is insufficient
evidence to support the extraordinary relief sought in itsmotion. Moreover, even ifthe Court were
to agree with Defendants 0n their fraud claims, the proper measure of damages under this count
would likewise be monetary, “out ofpocket damages.” Hughes v. Sinclair Mktg., Inc. , 389 N.W.2d
194, 199 (Minn. 1986).
Defendants’ other counterclaims for breach of employment contract and conversion fail t0
state a valid claim, and are addressed in Section III below. Defendants’ unjust enrichment claim
in Count V largely tracks with their breach 0f contract claim and is not grounds for an injunction.
Count VI is addressed in Section IV below. Defendants’ defamation claims do not state any actual
damages apart from attorneys’ fees, which are addressed in Section V below. None 0fthese counts
could function as the basis of the requested preliminary injunction.
Defendants currently do not have any counterclaims upon which they could prevail. Even
if the Court were t0 grant Defendants leave to amend their Answer, Defendants have not shown a
high likelihood of success on the merits. Moreover, even if Defendants were t0 prevail, they
would only be entitled to monetary damages. Destroying Plaintiff Lazenby’s business by
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preventing him from operating does nothing t0 preserve the status quo and would be a remedy
exceeding that available to Defendants at trial. Defendants have not established a likelihood of
success 0n the merits, and their motion should be denied.
5. Administrative Burden
If Defendants’ injunction were granted, the Court would have to supervise the redirection
0f Plaintiffs’ funds and accounts receivable t0 Defendants. This would require the Court t0 insert
itself into Defendants’ accounts and finances. This is n0 small task. The Court would also have
to interpose itself into Defendants’ business relations to ensure he is not operating in the field of
lawn irrigation. Therefore, this factor weighs against grating Defendants’ proposed injunction.
6. Bonding
Defendants’ motion paperwork does not address a proposed bond as required by Minnesota
Rule 0f Civil Procedure 65.03. (“No temporary restraining order 0r temporary injunction shall be
granted except upon the giving 0f security by the applicant”) Defendants seek t0 destroy
Plaintiffs’ business without providing any security whatsoever. A bond of at least $300,000.00
would be necessary to protect Plaintiffs’ interest in the business. This figure is based on the value
of the business at the time 0f sale and Plaintiffs’ work increasing itsvalue.
II. Defendants’ Motion t0 Amend the Scheduling Order.
Defendants seek amendment of the Court’s scheduling order t0 move the date 0f trial
closer. Defendants’ argument is primarily based on claims of financial hardship. If the Court
were to bump up trial every time a party had financial hardship and wanted a quicker decision,
nearly every trial would be referred to the expedited litigation track. See MN ST GEN PRAC Rule
1. This case involves a business purchase, Violation 0f a non—compete agreement, and allegations
0f lost business revenue. The matters involved require discovery and a full district court process.
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Defendants have not presented any legal basis for amending the scheduling order to move up the
trial date. Defendants’ request should therefore be denied.
III. Defendants’ Pleadings.
Defendants’ requests raise the issue 0f Whether they have counterclaims upon which
temporary relief could be granted. Defendants’ original answer was executed 0n December 12,
2018 and served upon Plaintiffs around that time. Their Answer was filed around December 31,
2018. On March 20, 2019 another document named “Response to Plaintiff‘s Request for
Temporary Injunction, Answer to Plaintiff’s Verified Complaint and Defendant’s Motion for
Temporary Relief and Defendant’s Verified Complaint” was filed and served, along With a
document named “Supplement t0 Defendant’s Response to Plaintiff‘s Verified Complaint and
Supplement t0 Defendant’s Verified Complaint”. The second of these filings contained a prayer
for relief, but no causes of action. Served on April 17, 2019, contemporaneously with Defendants”
pending “Notice of Motion and Motion for Temporary Injunction, New Hearing Date and Award
0f Attorney Fees”, isa document entitled “Amended Verified Complaint” dated April 16, 2019.
This document does not purport t0 answer any of the claims in Plaintiff’ s Complaint, but appears
t0 function as a stand-alone Complaint.
Under Minnesota Rule of Civil Procedure 15.01, 20 days after service 0f an Answer, that
Answer may only be amended by “leave of the Court” or “written consent of the adverse party.”
Defendants’ March and April pleadings were filed over 20 days after their Answer and require
either leave 0f the Court or written consent from Plaintiffs. Plaintiffs have never been asked for
nor given such consent. The Court has likewise not granted Defendants leave to amend.
Defendants’ March and April filings are not valid pleadings under the Minnesota Rules 0f Civil
Procedure.
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Defendants currently have no motion to amend pending before the Court. Neither
Defendants’ Notice 0f Motion and Motion nor Proposed Order reference Rule 15.01. Defendants
submitted no memorandum 0f law referencing case law under Rule 15 .0 1
,
and made n0 arguments
in favor 0f amendment. Despite this, Plaintiffs Will briefly outline Why Defendants’ latest filings
should not be allowed as an amended pleading.
First, Defendants’ current April 2019 pleading makes n0 Answer t0 Plaintiffs’ original
claims. Defendants presumably seek t0 have two 0r three separate pleadings, a December 2018 0r
March 2019 Answer and an April 2019 Complaint. This does not comport with Rule 7.01 which
allows only certain types 0f pleadings: a “complaint and an answer” and, under certain
circumstances, a third “reply.” Clarity is required on What exactly Defendants maintain are valid
pleadings in this case.
Minnesota Rule 0f Civil Procedure 15.01 allows amendment ofpleadings When “justice so
requires.” Subsequent case law has expounded on this standard and outlined When motions to
amend should be denied. Motions to amend should be denied when they result in prejudice to the
other party. Voicestream Minneapolis, Inc. v.RPC Properties, Ina, 743 N.W.2d 267, 272 (Minn.
2008). Moreover, motions t0 amend should be denied When the proposed amendment cannot
survive a summaryjudgment motion. Rosenberg v. Heritage Renovations, LLC, 685 N.W.2d 320,
332 (Minn. 2004).
Several 0f Defendants’ newly listed claims are legally insufficient, and could not withstand
a summary judgment motion under Minnesota Rule of Civil Procedure 56. Defendants lista claim
for conversion in Count II of their Complaint. Defendants cursorily assert that Plaintiffs converted
Temaca Lawn Sprinklers and the assets 0f the purchased business. Conversion is the willful
interference with another’s property. Williamson v. Prasciunas, 661 N.W.2d 645, 649 (Minn. Ct.
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App. 2003). “The elements of common law conversion are: (1) plaintiff holds a property interest;
and (2) defendant deprives plaintiff ofthat interest.” Id. When property is held “lawful as a matter
0f contract right” there can be n0 conversion. Erickson v. Midland Nat. Bank & Tr. C0. 0f
Minneapolis, 285 N.W. 61 1,612 (Minn. 1939). Here, there is no dispute Plaintiff holds Temaca
Irrigation LLC and the assets of the business purchased from Defendants Guadalupe Gomez
lawfillly by Virtue 0f the parties” business purchase agreement. Defendants have not shown that
contract isvoid, and therefore they have n0 grounds for stating a conversion claim. Defendants’
conversion claim would not withstand summary judgment.
Count VII of Defendants’ April Complaint states acount for “Violation 0f Employment
Agreement in Purchase Agreement and False Accusations 0f Violations of a Non-Compete.” (sic)
This count requests lost wages and wage reductions arising out of Guadalupe Gomez’s termination
from Temaca Irrigation, LLC. The Complaint refers to the Purchase Agreement as the source 0f
the purported Employment Agreement. There is no employment term found in the signed purchase
agreement. (Exhibit A to Plaintiff’s Verified Complaint.) The executed Agreement contains an
integration clause. (Id.) The April 28, 20 1 7 unsigned and unenforceable Gene Shavik amendment,
Which Plaintiffs believe Defendants are alluding t0, does reference Plaintiffs employing Defendant
Guadalupe Gomez at a weekly salary 0f $ 1 ,000.00. Because the Shavik amendment is unexecuted,
and the original agreement was completely integrated, the parol evidence rule bars enforcement of
any employment terms found in therein. See Apple Valley Red—E—Mix, Inc. v. Mills- Winfield Eng'g
Sales, Ina, 436 N.W.2d 121, 123 (Minn. Ct. App. 1989).
Additionally, there isn0 term of employment in the unexecuted document. The most that
could be created would be an at-Will employment relationship. See Gunderson v. All. ofComputer
Professionals, Ina, 628 N.W.2d 173, 181 (Minn. Ct. App. 2001) (noting Minnesota’s presumption
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of at will employment dealing with an indefinite term). As such, Plaintiffs had the right t0
terminate Defendant Guadalupe Gomez’s employment at any time, without cause. Id. Defendants
have not stated a valid claim for Violation of an employment agreement, and any such claim would
not survive summary judgment. Such an amendment t0 Defendants’ pleadings should be denied.
IV. Defendants Have N0 Right t0 the Converted Settlement Payments.
In their Complaint and Request for a Temporary Injunction, Defendants claim damages
and seek temporary relief for a purported Violation 0f the Court’s Order. Plaintiffs have not
violated any Court Order. Defendants admit to intercepting checks totaling $5,039.66 covering
amounts owed t0 Plaintiff Temaca Irrigation LLC by third-party customers and then refusing t0
turn over those funds to their rightful owner.
In December of 20 1 9, Plaintiffs moved for temporary relief regarding these funds and other
sums held by Defendants in Violation of the parties” restrictive covenant. Plaintiffs sought t0
escrow any funds possessed by Defendants related t0 lawn irrigation services, including the
intercepted checks. (Proposed Order for Injunction 1]XIII.) At the Injunction hearing, counsel for
Defendants brought copies of the checks. The Court orally ordered the checks held in escrow,
and allowed Plaintiffs an opportunity t0 conduct discovery and inspect the checks. The Court
later issued a written order denying Plaintiffs’ request for an Injunction in itsentirety. This Order’s
application to the escrowed checks was unclear, but it appeared to deny alltemporary relief sought
by Plaintiffs and presumably superseded the Court’s oral Order regarding the checks.
After the December 2018 hearing, many of the checks held by Defendants expired,
resulting in their makers receiving stop payment notices. Plaintiffs did not make collection
attempts upon the customers Who remitted the intercepted checks. (Lazenby Affidavit at 1] 4.)
However, several 0f Plaintiffs’ customers reached out to determine why payment was stopped on
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their checks. (Id. at 116.) Three 0f these customers remitted replacement checks 0f $95.00 directly
to Plaintiffs. Plaintiffs cashed these checks. (Id. at 1]12.)
Plaintiffs’ conduct did not Violate any Court Order. Plaintiffs are unaware of any Order
that prevents Plaintiffs from accepting new payments from their customers. Nevertheless,
Plaintiffs will escrow the $285.00 in received payments if the Court so orders.
V. Defendants Cannot Recover Attorney’s Fees.
In Minnesota, attorneys’ fees may only be awarded ifauthorized in a statute 0r contract.
Schwickert, Inc. v. Winnebago Seniors, Ltd, 680 N.W.2d 79, 87 (Minn. 2004); Horodenski v.
Lyndale Green Townhome Ass'n, Ina, 804 N.W.2d 366, 371 (Minn. Ct. App. 201 1). Defendants
point to neither statutory nor contractual authorization for their attorneys’ fees request. Moreover,
they point t0 no authority whatsoever allowing a recovery of attorneys’ fees on a motion for a
preliminary injunction. Defendants have n0 legal basis for recovering attorneys” fees, and their
motion should be denied.
CONCLUSION
Defendants’ request for temporary relief is based 0n counterclaims that do not yet exist,
and the motion should be denied for that reason alone. Even if the Court allows amendment of
Defendants’ pleadings, Defendants have not shown the type of irreparable injury necessary for the
Court t0 issue the extraordinary remedy of a temporary injunction. The requested relief will not
maintain the status quo, and is inconsistent With the remedies available to Defendants if they are
allowed leave to amend their complaint. Likewise, Defendants’ requested amendments to
scheduling order and attorneys’ fees are legally baseless, and should be denied. Plaintiffs’
respectfully request Defendants’ motion be denied in its entirety.
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BURNS & HANSEN, P.A
Dated: April 24, 2019 By: KirkA. Tisher
Erik F. Hansen, ID# 303410
ehansen@bumshansen.com
Kirk A. Tisher, ID# 0397712
ktisher@burnshansen.com
8401 Wayzata Boulevard, Suite 300
Minneapolis, MN 55426
Telephone (952) 564-6262
Facsimile (952) 564-6263
ACKNOWLEDGMENT
Plaintiffs acknowledge that costs, disbursements, and reasonable attorneys’ and Witness
fees may be awarded to the opposing party pursuant t0 Minn. Stat. § 549.21 1. subd. 2.
Dated: April 24, 2019 s/ Kirk A. Tisher
Kirk A. Tisher, ID# 0397712
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