Preview
27-CV-24-9768
Filed in District Court
State of Minnesota
6/24/2024 11:20 AM
STATE OF MINNESOTA DISTRICT COURT
COUNTY OF HENNEPIN FOURTH JUDICIAL DISTRICT
CASE TYPE: CONTRACT
MANY RIVERS APARTMENTS LIMITED
PARTNERSHIP and MANY RIVERS SUMMONS
WEST LIMITED PARTNERSHIP,
Plaintiffs, CIVIL ACTION NO. ____________
v.
FLEETHAM ADVANTAGE, INC. d/b/a
PERENNIAL MANAGEMENT,
Defendant.
This Summons is directed to (name of Defendant):
_Fleetham Advantage, Inc. d/b/a Perennial Management___________________.
1. You are being sued. The Plaintiffs have started a lawsuit against you. The Complaint is
attached to this Summons. Do not throw these papers away. They are official papers that start a
lawsuit and affect your legal rights, even if nothing has been filed with the court and even if
there is no court file number on this Summons.
2. You must BOTH reply, in writing, AND get a copy of your reply to the
person/business who is suing you within 21 days to protect your rights. Your reply is called
an Answer. Getting your reply to the Plaintiffs is called service. You must serve a copy of your
Answer or Answer and Counterclaim (Answer) within 21 days from the date you received the
Summons and Complaint.
ANSWER: You can find the Answer form and instructions on the MN Judicial Branch
website at www.mncourts.gov/forms under the “Civil” category. The instructions will explain in
detail how to fill out the Answer form.
3. You must respond to each claim. The Answer is your written response to the
Plaintiffs’ Complaint. In your Answer you must state whether you agree or disagree with
each paragraph of the Complaint. If you think the Plaintiffs should not be given everything
they asked for in the Complaint, you must say that in your Answer.
4. SERVICE: You may lose your case if you do not send a written response to the
Plaintiffs. If you do not serve a written Answer within 21 days, you may lose this case by
default. You will not get to tell your side of the story. If you choose not to respond, the Plaintiffs
1
27-CV-24-9768
Filed in District Court
State of Minnesota
6/24/2024 11:20 AM
may be awarded everything they asked for in their Complaint. If you agree with the claims
stated in the Complaint, you don’t need to respond. A default judgment can than be entered
against you for what the Plaintiffs asked for in the Complaint.
To protect your rights, you must serve a copy of your Answer on the person who signed
this Summons in person or by mail at this address:
_David L. Shulman, Shulman Buske Reams PLLC, 126 North Third St., #402, Minneapolis, MN
55401.
5. Carefully read the Instructions (CIV301) for the Answer for your next steps.
6. Legal Assistance. You may wish to get legal help from an attorney. If you do not have
an attorney and would like legal help:
Visit www.mncourts.gov/selfhelp and click on the “Legal Advice Clinics” tab to get
more information about legal clinics in each Minnesota county.
Court Administration may have information about places where you can get legal
assistance.
NOTE: Even if you cannot get legal help, you must still serve a written Answer to protect
your rights or you may lose the case.
7. Alternative Dispute Resolution (ADR). The parties may agree to or be ordered to
participate in an ADR process under Rule 114 of the Minnesota Rules of Practice. You must still
serve your written Answer, even if you expect to use ADR.
Dated: June 24, 2024 SHULMAN BUSKE REAMS PLLC
/s/ David L. Shulman
David L. Shulman (#260721)
Craig Buske (#390941)
Shulman Buske Reams PLLC
126 North Third St., Suite 402
Minneapolis, MN 55401
Tel: 612-870-7410
david@shulmanbuske.com
craig@shulmanbuske.com
ACKNOWLEDGEMENT
The undersigned hereby acknowledges that sanctions may be imposed under Minn. Stat.
§549.211.
/s/ David L. Shulman
David L. Shulman
2
27-CV-24-9768
Filed in District Court
State of Minnesota
6/24/2024 11:20 AM
STATE OF MINNESOTA DISTRICT COURT
COUNTY OF HENNEPIN FOURTH JUDICIAL DISTRICT
CASE TYPE: CONTRACT
MANY RIVERS APARTMENTS LIMITED
PARTNERSHIP and MANY RIVERS COMPLAINT
WEST LIMITED PARTNERSHIP,
Plaintiffs, CIVIL ACTION NO. ____________
v.
FLEETHAM ADVANTAGE, INC. d/b/a JURY TRIAL DEMANDED
PERENNIAL MANAGEMENT,
Defendant.
Plaintiffs Many Rivers Apartments Limited Partnership and Many Rivers West Limited
Partnership bring this action against Fleetham Advantage, Inc. d/b/a Perennial Management
(“Fleetham”) for breach of contract, fraud, and an accounting, and for violations of the
Prevention of Consumer Fraud Act, Minn. Stat. § 325F.69. In support of their claims for
damages and equitable relief, Plaintiffs allege the following:
PARTIES
1. Plaintiff Many Rivers Apartments Limited Partnership (“Many Rivers East”) is a
Minnesota limited partnership with its principal place of business in Minneapolis, Minnesota.
Many Rivers East is the owner of a low-income housing development in Minneapolis called
“Many Rivers East Apartments.” American Indian Community Development Corporation
(“AICDC”) is the general partner of Many Rivers East. AICDC is a Minnesota non-profit
corporation.
2. Plaintiff Many Rivers West Limited Partnership (“Many Rivers West”) is a
Minnesota limited partnership with its principal place of business in Minneapolis, Minnesota.
1
27-CV-24-9768
Filed in District Court
State of Minnesota
6/24/2024 11:20 AM
Many Rivers West is the owner of a low-income housing development in Minneapolis called,
“Many Rivers West Apartments.” AICDC, through a 100% owned subsidiary, is the general
partner of Many Rivers West.
3. Fleetham is a property management company with its principal executive office
in Minneapolis, Minnesota.
CONDUCT GIVING RISE TO VIOLATIONS OF LAW
4. Many Rivers West and Many Rivers East collectively provide 81 units of low-
income housing to Minneapolis residents. The State of Minnesota, acting through the Minnesota
Housing Finance Agency (“MHFA”), is the mortgage lender for both housing developments.
5. Many Rivers West and Many Rivers East contracted with Perennial
Management, LLC – the predecessor to Fleetham – to provide management services for Many
Rivers West Apartments and Many Rivers East Apartments pursuant to separate contracts for
each development (“Management Agreements”). As the manager of Many Rivers West
Apartments and Many Rivers East Apartments, Perennial Management, LLC was responsible
for leasing the units, collecting rents, maintaining financial records, and paying bills, including
the mortgage loan payments to MHFA, among other duties.
6. The Management Agreements required Perennial Management, LLC to provide
Many Rivers West, Many Rivers East, and MHFA detailed monthly financial reporting for the
two developments. Within 15 days of the close of each month, the Management Agreements
required Perennial Management, LLC to provide to Many Rivers West, Many Rivers East, and
MHFA a monthly operating report comparing actual and budgeted income and expenses for the
month and year to date, a monthly aged schedule of accounts receivable and accounts payable, a
2
27-CV-24-9768
Filed in District Court
State of Minnesota
6/24/2024 11:20 AM
monthly analysis of security deposits and cash reconciliations, an itemized list of rent
delinquencies, and a monthly occupancy report (collectively “Monthly Financial Reporting”).
7. The Management Agreements required that Perennial Management, LLC provide
an annual financial report prepared by a Certified Public Accountant within 60 days of the close
of the calendar year.
8. The Management Agreements required Perennial Management, LLC to have
separate bank accounts for Many Rivers West Apartments and Many Rivers East Apartments
and to have each account designated “Operating Receipts and Expense Account” for the
development. The Management Agreements also required that Perennial Management, LLC
maintain separate accounts for each development for holding tenant security deposits.
Importantly, the Management Agreements required that Many Rivers West and Many Rivers
East be signatories on these accounts.
9. Under the Management Agreements, the management fees for Perennial
Management, LLC had to be approved by Many Rivers West and Many Rivers East.
10. Under the Management Agreements, Perennial Management, LLC agreed to be
bound by the provisions of Minnesota Chapter 462A, the regulations of the MHFA, and the
terms contained in the loan documents signed by Many Rivers West and Many Rivers East with
MHFA, which include an assignment of rents to MHFA as security for the loans. Because of
this, MHFA was a signatory on the Management Agreements.
11. In approximately April 2023, Fleetham acquired Perennial Management, LLC
and assumed its obligations under the Management Agreements.
12. Prior to Fleetham’s acquisition, Perennial Management, LLC had performed in
compliance with the terms of the Management Agreements.
3
27-CV-24-9768
Filed in District Court
State of Minnesota
6/24/2024 11:20 AM
13. Fleetham has not provided any of the Monthly Financial Reporting to Many
Rivers West, Many Rivers East, and MHFA for any month in 2024 despite repeated requests
from all parties.
14. On March 25, 2024, MHFA emailed Fleetham that it had not received the
Monthly Financial Reporting for February; the January 2024 Monthly Financial Reporting had
also not yet been provided. Fleetham did not respond.
15. On March 27, MHFA emailed Fleetham that it had not received the Monthly
Financial Reporting for January and February and that this monthly reporting was due on the
15th of each month. MHFA explained to Fleetham the significance of this monthly data to
stakeholders in publicly-financed housing developments. MHFA demanded the Monthly
Financial Reporting by the end of the day.
16. That same day, the owner of Fleetham emailed MHFA that she would provide
the data the next day, March 28. That statement was false, and the owner knew it was false when
she made it.
17. On March 28, MHFA emailed Fleetham to ask when the Monthly Financial
Reporting would be ready. The owner of Fleetham responded, “I’m trying – I really am…” On
March 29, the owner of Fleetham emailed, “Closer…” This statement was false, and the owner
of Fleetham knew it was false when she made it.
18. On April 4, MHFA again emailed Fleetham’s owner to ask for the Monthly
Financial Reporting for January and February and to inform Fleetham that the March Monthly
Financial Reporting was due April 15.
4
27-CV-24-9768
Filed in District Court
State of Minnesota
6/24/2024 11:20 AM
19. On April 5, the owner of Fleetham responded, “I am to submit the first quarter all
together on 4/15 as our system will be fully integrated and we can operate back to a normal
pace.” This statement was false, and the owner of Fleetham knew it was false when she made it.
20. On April 16, MHFA emailed the owner of Fleetham to ask for the December
2023 through March 2024 Monthly Financial Reporting. Fleetham did not respond.
21. On April 25, MHFA emailed the owner of Fleetham to request the Monthly
Financial Reporting for January through March, emphasizing, “It is critical that you send the
operating reports in as soon as possible!” The owner of Fleetham responded that she was sorry
she had “failed.”
22. On April 29, AICDC emailed Fleetham offering to convert Fleetham’s financial
data into the format used by MHFA. Fleetham did not respond. On May 9, AICDC again
requested financial data from Fleetham. Fleetham did not respond.
23. On May 21, 2024, AICDC’s Chief Financial Officer went in person to
Fleetham’s office to attempt to obtain the financial data after his phone calls to Fleetham went
unanswered. The Fleetham employee he encountered stated that he had nothing to provide and
that all the information was held by Fleetham’s owner.
24. AICDC was copied on the emails between MHFA and Fleetham concerning the
Monthly Financial Reporting.
25. Many Rivers West and Many Rivers East relied on the false statements from
Fleetham concerning the Monthly Financial Reporting and delayed in replacing Fleetham as its
management company because of their reliance on those statements. This resulted in hundreds
of thousands of dollars in rent being paid to Fleetham by tenants of Many Rivers West
Apartments and Many Rivers East Apartments.
5
27-CV-24-9768
Filed in District Court
State of Minnesota
6/24/2024 11:20 AM
26. Because of Fleetham’s conduct, on April 26, 2024, AICDC, on behalf of Many
Rivers East and Many Rivers West, gave Fleetham notice that it was terminating the
Management Agreements effective June 30, 2024. MHFA approved the termination of the
Management Agreements.
27. On May 2, AICDC requested that Fleetham provide the replacement management
company with access to the YARDI data for Many Rivers West Apartments and Many Rivers
East Apartments. YARDI is computer software used by property management companies to
manage property data. It includes data on tenants, rental income, and property expenses, among
other items.
28. Fleetham did not respond to the request for the YARDI data.
29. Because the June 30 transition to a new management company was imminent, on
May 31, AICDC again requested the YARDI data. Fleetham responded,
I will NOT provide you data just so you have data – if that’s wrong, then call me
wrong… I will not sign over our database to another company – I will not. The
data is ours.
30. In November and December 2023 and in February, May, and June 2024,
Fleetham was delinquent in making the monthly mortgage loan payments to MHFA for Many
Rivers West Apartments and Many Rivers East Apartments.
31. By email dated May 22, 2024, the owner of Fleetham stated that the May
mortgage payments for Many Rivers West Apartments and Many Rivers East Apartments had
been sent by mail to MHFA. This statement was false, and she knew it was false when she made
it.
32. The bank accounts established by Fleetham for Many Rivers West Apartments
and Many Rivers East Apartments do not have Many Rivers West and Many Rivers East as
6
27-CV-24-9768
Filed in District Court
State of Minnesota
6/24/2024 11:20 AM
signatories on them. This has prevented Many Rivers West and Many Rivers East from obtaining
financial information about the housing developments.
33. On information and belief, since January 2024, Fleetham has received in excess of
$500,000 in rental income from Many Rivers West Apartments and Many Rivers East
Apartments collectively. Fleetham has not accounted for any of the funds received.
INJURY AND DAMAGE TO PLAINTIFFS
34. By reason of Defendant’s unlawful conduct described hereinabove, Plaintiffs have
sustained loss and damage, including, but not limited to, the following:
a. Plaintiffs have lost access to revenue from Many Rivers West
Apartments and Many Rivers East Apartments;
b. Plaintiffs have been in default under mortgage loans with MHFA;
c. Plaintiffs have been forced to expend resources in attempting to
obtain information and data from Defendant;
d. Plaintiffs have lost the management fees paid to Defendant;
e. Plaintiffs have been delayed in switching management companies;
f. Plaintiffs have incurred, and will continue to incur, attorneys’ fees
and costs in the maintenance of this action; and
g. Plaintiffs may have sustained other losses, the extent of which is
unknown because of the unlawful conduct of Defendant.
The precise amount of Plaintiffs’ damages is at present undetermined, but their damages are
believed to be in excess of $50,000. The precise amount will be proved to and found by the trier
of fact in this action.
7
27-CV-24-9768
Filed in District Court
State of Minnesota
6/24/2024 11:20 AM
VIOLATIONS OF LAW
COUNT I: BREACH OF CONTRACT
35. Plaintiffs repeat and reallege the allegations contained in the foregoing
paragraphs of this Complaint as if fully set forth herein.
36. Defendant breached the Management Agreements by failing to provide the
Monthly Financial Reporting to Plaintiffs and MHFA, by failing to make mortgage loan
payments on time, by withholding data from Plaintiffs and its new management company, and
by not including Plaintiffs as signatories on its bank accounts for Many Rivers West Apartments
and Many Rivers East Apartments.
37. As a direct and proximate result of the aforementioned acts and omissions of
Defendant, Plaintiffs are entitled to recover such actual damages as they show themselves to have
sustained and the trier of fact shall find, and such other and further relief as may be available under
law.
COUNT II: FRAUD
38. Plaintiffs repeat and reallege the allegations contained in the foregoing
paragraphs of this Complaint as if fully set forth herein.
39. Defendant made false statements of material fact when it repeatedly represented
to Plaintiffs and MHFA that the Monthly Financial Reporting would be provided by certain
dates and that it had mailed a check for the mortgage loan payment, knowing that the Monthly
Financial Reporting would not be provided and that the check had not been mailed. Defendant
intended for Plaintiffs and MHFA to rely on those false statements, and Plaintiffs relied on them
to their detriment.
8
27-CV-24-9768
Filed in District Court
State of Minnesota
6/24/2024 11:20 AM
40. As a direct and proximate result of the aforementioned acts and omissions of
Defendant, Plaintiffs are entitled to recover such actual damages as they show themselves to have
sustained and the trier of fact shall find, and such other and further relief as may be available under
law.
COUNT III: VIOLATIONS OF PREVENTION OF CONSUMER FRAUD ACT
41. Plaintiffs repeat and reallege the allegations contained in the foregoing
paragraphs of this Complaint as if fully set forth herein.
42. Defendant violated the Prevention of Consumer Fraud Act, Minn. Sat. § 325F.69,
when it engaged in fraud, misrepresentation, and deceptive practices by making false statements that
it would provide the Monthly Financial Reporting and by preventing Plaintiffs and MHFA from
accessing financial data for Many Rivers West Apartments and Many Rivers East Apartments.
Defendant intended that Plaintiffs and MHFA rely on its false statements and deceptive practices so
that it could continue to receive rental payments from residents of the two housing developments.
43. Plaintiffs have standing under Minnesota Statute section 8.31 to pursue this claim
for violations of the Prevention of Consumer Fraud Act because the State of Minnesota has a
financial interest in Many Rivers West Apartments and Many Rivers East Apartments, and the
public will benefit from an action to enjoin the fraudulent and deceptive practices of Defendant, a
property management company managing a significant number of low-income housing units.
44. As a direct and proximate result of the aforementioned acts and omissions of
Defendant, Plaintiffs are entitled to recover such actual damages as they show themselves to have
sustained and the trier of fact shall find, and such other and further relief as may be available under
law, including an order enjoining the unlawful business practices of Defendant.
9
27-CV-24-9768
Filed in District Court
State of Minnesota
6/24/2024 11:20 AM
COUNT IV: ACCOUNTING
45. Plaintiffs repeat and reallege the allegations contained in the foregoing
paragraphs of this Complaint as if fully set forth herein.
46. The Management Agreements require Defendant to provide the Monthly Financial
Reporting and to make available to Plaintiffs all financial, tenant, and building data for Many Rivers
West Apartments and Many Rivers East Apartments. Defendant has failed and refused to provide
this data. Plaintiffs therefore bring this claim for an accounting to obtain an order directing
Defendant to provide to Plaintiffs all financial, tenant, and building data for Many Rivers West
Apartments and Many Rivers East Apartments.
PRAYER FOR RELIEF
WHEREFORE, Plaintiffs respectfully pray:
A. That the actions of Defendant complained of herein be determined and adjudged
to be violative of the rights of Plaintiffs under the Minnesota common law and in violation of
the Prevention of Consumer Fraud Act;
B. That judgment be entered in favor of Plaintiffs and against Defendant for their
actual damages;
C. That Defendant’s deceptive and fraudulent business practices be enjoined;
D. That disgorgement of Defendant’s profits be ordered;
E. That Defendant be ordered to account for all financial, tenant, and building data
for Many Rivers West Apartments and Many Rivers East Apartments;
F. That Plaintiffs be granted their costs, expenses, and reasonable attorneys incurred
in this action; and
10
27-CV-24-9768
Filed in District Court
State of Minnesota
6/24/2024 11:20 AM
G. That any other further and appropriate relief available under the law be awarded
as this Court finds appropriate.
JURY DEMAND
Plaintiffs hereby demand trial by jury of all issues properly triable thereby.
Dated: June 24, 2024 SHULMAN BUSKE REAMS PLLC
/s/ David L. Shulman
David L. Shulman (#260721)
Craig Buske (#390941)
Shulman Buske Reams PLLC
126 North Third St., Suite 402
Minneapolis, MN 55401
Tel: 612-870-7410
david@shulmanbuske.com
craig@shulmanbuske.com
ACKNOWLEDGEMENT
The undersigned hereby acknowledges that sanctions may be imposed under Minn. Stat.
§549.211.
/s/ David L. Shulman
David L. Shulman
11
Preview
27-CV-24-9768 Filed in District Court State of Minnesota 6/24/2024 11:20 AM STATE OF MINNESOTA DISTRICT COURT COUNTY OF HENNEPIN FOURTH JUDICIAL DISTRICT CASE TYPE: CONTRACT MANY RIVERS APARTMENTS LIMITED PARTNERSHIP and MANY RIVERS SUMMONS WEST LIMITED PARTNERSHIP, Plaintiffs, CIVIL ACTION NO. ____________ v. FLEETHAM ADVANTAGE, INC. d/b/a PERENNIAL MANAGEMENT, Defendant. This Summons is directed to (name of Defendant): _Fleetham Advantage, Inc. d/b/a Perennial Management___________________. 1. You are being sued. The Plaintiffs have started a lawsuit against you. The Complaint is attached to this Summons. Do not throw these papers away. They are official papers that start a lawsuit and affect your legal rights, even if nothing has been filed with the court and even if there is no court file number on this Summons. 2. You must BOTH reply, in writing, AND get a copy of your reply to the person/business who is suing you within 21 days to protect your rights. Your reply is called an Answer. Getting your reply to the Plaintiffs is called service. You must serve a copy of your Answer or Answer and Counterclaim (Answer) within 21 days from the date you received the Summons and Complaint. ANSWER: You can find the Answer form and instructions on the MN Judicial Branch website at www.mncourts.gov/forms under the “Civil” category. The instructions will explain in detail how to fill out the Answer form. 3. You must respond to each claim. The Answer is your written response to the Plaintiffs’ Complaint. In your Answer you must state whether you agree or disagree with each paragraph of the Complaint. If you think the Plaintiffs should not be given everything they asked for in the Complaint, you must say that in your Answer. 4. SERVICE: You may lose your case if you do not send a written response to the Plaintiffs. If you do not serve a written Answer within 21 days, you may lose this case by default. You will not get to tell your side of the story. If you choose not to respond, the Plaintiffs 1 27-CV-24-9768 Filed in District Court State of Minnesota 6/24/2024 11:20 AM may be awarded everything they asked for in their Complaint. If you agree with the claims stated in the Complaint, you don’t need to respond. A default judgment can than be entered against you for what the Plaintiffs asked for in the Complaint. To protect your rights, you must serve a copy of your Answer on the person who signed this Summons in person or by mail at this address: _David L. Shulman, Shulman Buske Reams PLLC, 126 North Third St., #402, Minneapolis, MN 55401. 5. Carefully read the Instructions (CIV301) for the Answer for your next steps. 6. Legal Assistance. You may wish to get legal help from an attorney. If you do not have an attorney and would like legal help: Visit www.mncourts.gov/selfhelp and click on the “Legal Advice Clinics” tab to get more information about legal clinics in each Minnesota county. Court Administration may have information about places where you can get legal assistance. NOTE: Even if you cannot get legal help, you must still serve a written Answer to protect your rights or you may lose the case. 7. Alternative Dispute Resolution (ADR). The parties may agree to or be ordered to participate in an ADR process under Rule 114 of the Minnesota Rules of Practice. You must still serve your written Answer, even if you expect to use ADR. Dated: June 24, 2024 SHULMAN BUSKE REAMS PLLC /s/ David L. Shulman David L. Shulman (#260721) Craig Buske (#390941) Shulman Buske Reams PLLC 126 North Third St., Suite 402 Minneapolis, MN 55401 Tel: 612-870-7410 david@shulmanbuske.com craig@shulmanbuske.com ACKNOWLEDGEMENT The undersigned hereby acknowledges that sanctions may be imposed under Minn. Stat. §549.211. /s/ David L. Shulman David L. Shulman 2 27-CV-24-9768 Filed in District Court State of Minnesota 6/24/2024 11:20 AM STATE OF MINNESOTA DISTRICT COURT COUNTY OF HENNEPIN FOURTH JUDICIAL DISTRICT CASE TYPE: CONTRACT MANY RIVERS APARTMENTS LIMITED PARTNERSHIP and MANY RIVERS COMPLAINT WEST LIMITED PARTNERSHIP, Plaintiffs, CIVIL ACTION NO. ____________ v. FLEETHAM ADVANTAGE, INC. d/b/a JURY TRIAL DEMANDED PERENNIAL MANAGEMENT, Defendant. Plaintiffs Many Rivers Apartments Limited Partnership and Many Rivers West Limited Partnership bring this action against Fleetham Advantage, Inc. d/b/a Perennial Management (“Fleetham”) for breach of contract, fraud, and an accounting, and for violations of the Prevention of Consumer Fraud Act, Minn. Stat. § 325F.69. In support of their claims for damages and equitable relief, Plaintiffs allege the following: PARTIES 1. Plaintiff Many Rivers Apartments Limited Partnership (“Many Rivers East”) is a Minnesota limited partnership with its principal place of business in Minneapolis, Minnesota. Many Rivers East is the owner of a low-income housing development in Minneapolis called “Many Rivers East Apartments.” American Indian Community Development Corporation (“AICDC”) is the general partner of Many Rivers East. AICDC is a Minnesota non-profit corporation. 2. Plaintiff Many Rivers West Limited Partnership (“Many Rivers West”) is a Minnesota limited partnership with its principal place of business in Minneapolis, Minnesota. 1 27-CV-24-9768 Filed in District Court State of Minnesota 6/24/2024 11:20 AM Many Rivers West is the owner of a low-income housing development in Minneapolis called, “Many Rivers West Apartments.” AICDC, through a 100% owned subsidiary, is the general partner of Many Rivers West. 3. Fleetham is a property management company with its principal executive office in Minneapolis, Minnesota. CONDUCT GIVING RISE TO VIOLATIONS OF LAW 4. Many Rivers West and Many Rivers East collectively provide 81 units of low- income housing to Minneapolis residents. The State of Minnesota, acting through the Minnesota Housing Finance Agency (“MHFA”), is the mortgage lender for both housing developments. 5. Many Rivers West and Many Rivers East contracted with Perennial Management, LLC – the predecessor to Fleetham – to provide management services for Many Rivers West Apartments and Many Rivers East Apartments pursuant to separate contracts for each development (“Management Agreements”). As the manager of Many Rivers West Apartments and Many Rivers East Apartments, Perennial Management, LLC was responsible for leasing the units, collecting rents, maintaining financial records, and paying bills, including the mortgage loan payments to MHFA, among other duties. 6. The Management Agreements required Perennial Management, LLC to provide Many Rivers West, Many Rivers East, and MHFA detailed monthly financial reporting for the two developments. Within 15 days of the close of each month, the Management Agreements required Perennial Management, LLC to provide to Many Rivers West, Many Rivers East, and MHFA a monthly operating report comparing actual and budgeted income and expenses for the month and year to date, a monthly aged schedule of accounts receivable and accounts payable, a 2 27-CV-24-9768 Filed in District Court State of Minnesota 6/24/2024 11:20 AM monthly analysis of security deposits and cash reconciliations, an itemized list of rent delinquencies, and a monthly occupancy report (collectively “Monthly Financial Reporting”). 7. The Management Agreements required that Perennial Management, LLC provide an annual financial report prepared by a Certified Public Accountant within 60 days of the close of the calendar year. 8. The Management Agreements required Perennial Management, LLC to have separate bank accounts for Many Rivers West Apartments and Many Rivers East Apartments and to have each account designated “Operating Receipts and Expense Account” for the development. The Management Agreements also required that Perennial Management, LLC maintain separate accounts for each development for holding tenant security deposits. Importantly, the Management Agreements required that Many Rivers West and Many Rivers East be signatories on these accounts. 9. Under the Management Agreements, the management fees for Perennial Management, LLC had to be approved by Many Rivers West and Many Rivers East. 10. Under the Management Agreements, Perennial Management, LLC agreed to be bound by the provisions of Minnesota Chapter 462A, the regulations of the MHFA, and the terms contained in the loan documents signed by Many Rivers West and Many Rivers East with MHFA, which include an assignment of rents to MHFA as security for the loans. Because of this, MHFA was a signatory on the Management Agreements. 11. In approximately April 2023, Fleetham acquired Perennial Management, LLC and assumed its obligations under the Management Agreements. 12. Prior to Fleetham’s acquisition, Perennial Management, LLC had performed in compliance with the terms of the Management Agreements. 3 27-CV-24-9768 Filed in District Court State of Minnesota 6/24/2024 11:20 AM 13. Fleetham has not provided any of the Monthly Financial Reporting to Many Rivers West, Many Rivers East, and MHFA for any month in 2024 despite repeated requests from all parties. 14. On March 25, 2024, MHFA emailed Fleetham that it had not received the Monthly Financial Reporting for February; the January 2024 Monthly Financial Reporting had also not yet been provided. Fleetham did not respond. 15. On March 27, MHFA emailed Fleetham that it had not received the Monthly Financial Reporting for January and February and that this monthly reporting was due on the 15th of each month. MHFA explained to Fleetham the significance of this monthly data to stakeholders in publicly-financed housing developments. MHFA demanded the Monthly Financial Reporting by the end of the day. 16. That same day, the owner of Fleetham emailed MHFA that she would provide the data the next day, March 28. That statement was false, and the owner knew it was false when she made it. 17. On March 28, MHFA emailed Fleetham to ask when the Monthly Financial Reporting would be ready. The owner of Fleetham responded, “I’m trying – I really am…” On March 29, the owner of Fleetham emailed, “Closer…” This statement was false, and the owner of Fleetham knew it was false when she made it. 18. On April 4, MHFA again emailed Fleetham’s owner to ask for the Monthly Financial Reporting for January and February and to inform Fleetham that the March Monthly Financial Reporting was due April 15. 4 27-CV-24-9768 Filed in District Court State of Minnesota 6/24/2024 11:20 AM 19. On April 5, the owner of Fleetham responded, “I am to submit the first quarter all together on 4/15 as our system will be fully integrated and we can operate back to a normal pace.” This statement was false, and the owner of Fleetham knew it was false when she made it. 20. On April 16, MHFA emailed the owner of Fleetham to ask for the December 2023 through March 2024 Monthly Financial Reporting. Fleetham did not respond. 21. On April 25, MHFA emailed the owner of Fleetham to request the Monthly Financial Reporting for January through March, emphasizing, “It is critical that you send the operating reports in as soon as possible!” The owner of Fleetham responded that she was sorry she had “failed.” 22. On April 29, AICDC emailed Fleetham offering to convert Fleetham’s financial data into the format used by MHFA. Fleetham did not respond. On May 9, AICDC again requested financial data from Fleetham. Fleetham did not respond. 23. On May 21, 2024, AICDC’s Chief Financial Officer went in person to Fleetham’s office to attempt to obtain the financial data after his phone calls to Fleetham went unanswered. The Fleetham employee he encountered stated that he had nothing to provide and that all the information was held by Fleetham’s owner. 24. AICDC was copied on the emails between MHFA and Fleetham concerning the Monthly Financial Reporting. 25. Many Rivers West and Many Rivers East relied on the false statements from Fleetham concerning the Monthly Financial Reporting and delayed in replacing Fleetham as its management company because of their reliance on those statements. This resulted in hundreds of thousands of dollars in rent being paid to Fleetham by tenants of Many Rivers West Apartments and Many Rivers East Apartments. 5 27-CV-24-9768 Filed in District Court State of Minnesota 6/24/2024 11:20 AM 26. Because of Fleetham’s conduct, on April 26, 2024, AICDC, on behalf of Many Rivers East and Many Rivers West, gave Fleetham notice that it was terminating the Management Agreements effective June 30, 2024. MHFA approved the termination of the Management Agreements. 27. On May 2, AICDC requested that Fleetham provide the replacement management company with access to the YARDI data for Many Rivers West Apartments and Many Rivers East Apartments. YARDI is computer software used by property management companies to manage property data. It includes data on tenants, rental income, and property expenses, among other items. 28. Fleetham did not respond to the request for the YARDI data. 29. Because the June 30 transition to a new management company was imminent, on May 31, AICDC again requested the YARDI data. Fleetham responded, I will NOT provide you data just so you have data – if that’s wrong, then call me wrong… I will not sign over our database to another company – I will not. The data is ours. 30. In November and December 2023 and in February, May, and June 2024, Fleetham was delinquent in making the monthly mortgage loan payments to MHFA for Many Rivers West Apartments and Many Rivers East Apartments. 31. By email dated May 22, 2024, the owner of Fleetham stated that the May mortgage payments for Many Rivers West Apartments and Many Rivers East Apartments had been sent by mail to MHFA. This statement was false, and she knew it was false when she made it. 32. The bank accounts established by Fleetham for Many Rivers West Apartments and Many Rivers East Apartments do not have Many Rivers West and Many Rivers East as 6 27-CV-24-9768 Filed in District Court State of Minnesota 6/24/2024 11:20 AM signatories on them. This has prevented Many Rivers West and Many Rivers East from obtaining financial information about the housing developments. 33. On information and belief, since January 2024, Fleetham has received in excess of $500,000 in rental income from Many Rivers West Apartments and Many Rivers East Apartments collectively. Fleetham has not accounted for any of the funds received. INJURY AND DAMAGE TO PLAINTIFFS 34. By reason of Defendant’s unlawful conduct described hereinabove, Plaintiffs have sustained loss and damage, including, but not limited to, the following: a. Plaintiffs have lost access to revenue from Many Rivers West Apartments and Many Rivers East Apartments; b. Plaintiffs have been in default under mortgage loans with MHFA; c. Plaintiffs have been forced to expend resources in attempting to obtain information and data from Defendant; d. Plaintiffs have lost the management fees paid to Defendant; e. Plaintiffs have been delayed in switching management companies; f. Plaintiffs have incurred, and will continue to incur, attorneys’ fees and costs in the maintenance of this action; and g. Plaintiffs may have sustained other losses, the extent of which is unknown because of the unlawful conduct of Defendant. The precise amount of Plaintiffs’ damages is at present undetermined, but their damages are believed to be in excess of $50,000. The precise amount will be proved to and found by the trier of fact in this action. 7 27-CV-24-9768 Filed in District Court State of Minnesota 6/24/2024 11:20 AM VIOLATIONS OF LAW COUNT I: BREACH OF CONTRACT 35. Plaintiffs repeat and reallege the allegations contained in the foregoing paragraphs of this Complaint as if fully set forth herein. 36. Defendant breached the Management Agreements by failing to provide the Monthly Financial Reporting to Plaintiffs and MHFA, by failing to make mortgage loan payments on time, by withholding data from Plaintiffs and its new management company, and by not including Plaintiffs as signatories on its bank accounts for Many Rivers West Apartments and Many Rivers East Apartments. 37. As a direct and proximate result of the aforementioned acts and omissions of Defendant, Plaintiffs are entitled to recover such actual damages as they show themselves to have sustained and the trier of fact shall find, and such other and further relief as may be available under law. COUNT II: FRAUD 38. Plaintiffs repeat and reallege the allegations contained in the foregoing paragraphs of this Complaint as if fully set forth herein. 39. Defendant made false statements of material fact when it repeatedly represented to Plaintiffs and MHFA that the Monthly Financial Reporting would be provided by certain dates and that it had mailed a check for the mortgage loan payment, knowing that the Monthly Financial Reporting would not be provided and that the check had not been mailed. Defendant intended for Plaintiffs and MHFA to rely on those false statements, and Plaintiffs relied on them to their detriment. 8 27-CV-24-9768 Filed in District Court State of Minnesota 6/24/2024 11:20 AM 40. As a direct and proximate result of the aforementioned acts and omissions of Defendant, Plaintiffs are entitled to recover such actual damages as they show themselves to have sustained and the trier of fact shall find, and such other and further relief as may be available under law. COUNT III: VIOLATIONS OF PREVENTION OF CONSUMER FRAUD ACT 41. Plaintiffs repeat and reallege the allegations contained in the foregoing paragraphs of this Complaint as if fully set forth herein. 42. Defendant violated the Prevention of Consumer Fraud Act, Minn. Sat. § 325F.69, when it engaged in fraud, misrepresentation, and deceptive practices by making false statements that it would provide the Monthly Financial Reporting and by preventing Plaintiffs and MHFA from accessing financial data for Many Rivers West Apartments and Many Rivers East Apartments. Defendant intended that Plaintiffs and MHFA rely on its false statements and deceptive practices so that it could continue to receive rental payments from residents of the two housing developments. 43. Plaintiffs have standing under Minnesota Statute section 8.31 to pursue this claim for violations of the Prevention of Consumer Fraud Act because the State of Minnesota has a financial interest in Many Rivers West Apartments and Many Rivers East Apartments, and the public will benefit from an action to enjoin the fraudulent and deceptive practices of Defendant, a property management company managing a significant number of low-income housing units. 44. As a direct and proximate result of the aforementioned acts and omissions of Defendant, Plaintiffs are entitled to recover such actual damages as they show themselves to have sustained and the trier of fact shall find, and such other and further relief as may be available under law, including an order enjoining the unlawful business practices of Defendant. 9 27-CV-24-9768 Filed in District Court State of Minnesota 6/24/2024 11:20 AM COUNT IV: ACCOUNTING 45. Plaintiffs repeat and reallege the allegations contained in the foregoing paragraphs of this Complaint as if fully set forth herein. 46. The Management Agreements require Defendant to provide the Monthly Financial Reporting and to make available to Plaintiffs all financial, tenant, and building data for Many Rivers West Apartments and Many Rivers East Apartments. Defendant has failed and refused to provide this data. Plaintiffs therefore bring this claim for an accounting to obtain an order directing Defendant to provide to Plaintiffs all financial, tenant, and building data for Many Rivers West Apartments and Many Rivers East Apartments. PRAYER FOR RELIEF WHEREFORE, Plaintiffs respectfully pray: A. That the actions of Defendant complained of herein be determined and adjudged to be violative of the rights of Plaintiffs under the Minnesota common law and in violation of the Prevention of Consumer Fraud Act; B. That judgment be entered in favor of Plaintiffs and against Defendant for their actual damages; C. That Defendant’s deceptive and fraudulent business practices be enjoined; D. That disgorgement of Defendant’s profits be ordered; E. That Defendant be ordered to account for all financial, tenant, and building data for Many Rivers West Apartments and Many Rivers East Apartments; F. That Plaintiffs be granted their costs, expenses, and reasonable attorneys incurred in this action; and 10 27-CV-24-9768 Filed in District Court State of Minnesota 6/24/2024 11:20 AM G. That any other further and appropriate relief available under the law be awarded as this Court finds appropriate. JURY DEMAND Plaintiffs hereby demand trial by jury of all issues properly triable thereby. Dated: June 24, 2024 SHULMAN BUSKE REAMS PLLC /s/ David L. Shulman David L. Shulman (#260721) Craig Buske (#390941) Shulman Buske Reams PLLC 126 North Third St., Suite 402 Minneapolis, MN 55401 Tel: 612-870-7410 david@shulmanbuske.com craig@shulmanbuske.com ACKNOWLEDGEMENT The undersigned hereby acknowledges that sanctions may be imposed under Minn. Stat. §549.211. /s/ David L. Shulman David L. Shulman 11