United States Court of Appeals

FOR THE EIGHTH CIRCUIT

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No. 10-2757

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Green Tree Servicing, LLC, a *

Delaware Limited Liability Company, *

*

Plaintiff - Appellee, *

*

v. *

*

DBSI Landmark Towers, LLC, a *

Delaware Limited Liability Company, *

*

Defendant, *

* Appeal from the United States

Pillsbury-Landmark Towers, LLC; * District Court for the

Howells-Landmark Towers, LLC; * District of Minnesota.

R&R-Landmark Towers, LLC; Plastic- *

Landmark Towers, LLC; Paredero- *

Landmark Towers, LLC; Sensenbaugh- *

Landmark Towers, LLC; Bsites- *

Landmark Towers, LLC; Ineichen- *

Landmark Towers, LLC; Garcia- *

Landmark Towers, LLC; Cusenza- *

Landmark Towers, LLC; Usalis- *

Landmark Towers, LLC; Barry- *

Landmark Towers, LLC; Bainter- *

Landmark Towers, LLC; SGB- *

Landmark Towers, LLC; Maxwell- *

Landmark Towers, LLC; M. O’Donnell- *

Landmark Towers, LLC; L. O’Donnell- *

Landmark Towers, LLC; Etzel- *

Landmark Towers, LLC; Karleskint- *

Landmark Towers, LLC; Brundidge- *

Landmark Towers, LLC; Venturi- *
1

The Honorable James M. Rosenbaum, United States District Judge for the

District of Minnesota, now retired.

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Landmark Towers, LLC; Edwards- *

Landmark Towers, LLC; Sharp- *

Landmark Towers, LLC; SMG- *

Landmark Towers, LLC; DND- *

Landmark Towers, LLC; Cattaneo- *

Landmark Towers, LLC; Chaikin- *

Landmark Towers, LLC; A. Cusenza- *

Landmark Towers, LLC, *

*

Defendant Third Party Plaintiffs- *

Appellants, *

*

v. *

*

Green Tree Investment Holdings II, *

LLC, *

*

Third Party Defendant - *

Appellee. *

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Submitted: March 15, 2011

Filed: August 30, 2011

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Before SMITH, ARNOLD, and SHEPHERD, Circuit Judges.

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SHEPHERD, Circuit Judge.

The owners of Landmark Towers, a 25-story building in downtown St. Paul,

Minnesota, appeal the district court’s1

 grant of summary judgment in favor of Green

Tree Servicing, LLC (Green Tree), permitting Green Tree to vacate office space it
2

The 28 tenants in common are: Pillsbury-Landmark Towers, LLC; HowellsLandmark Towers, LLC; R&R-Landmark Towers, LLC; Plastic-Landmark Towers,

LLC; Paredero-Landmark Towers, LLC; Sensenbaugh-Landmark Towers, LLC;

Bsites-Landmark Towers, LLC; Ineichen-Landmark Towers, LLC; Garcia-Landmark

Towers, LLC; Cusenza-Landmark Towers, LLC; Usalis-Landmark Towers, LLC;

Barry-Landmark Towers, LLC; Bainter-Landmark Towers, LLC; SGB-Landmark

Towers, LLC; Maxwell-Landmark Towers, LLC; M. O’Donnell-Landmark Towers,

LLC; L. O’Donnell-Landmark Towers, LLC; Etzel-Landmark Towers, LLC;

Karleskint-Landmark Towers, LLC; Brundidge-Landmark Towers, LLC; VenturiLandmark Towers, LLC; Edwards-Landmark Towers, LLC; Sharp-Landmark Towers,

LLC; SMG-Landmark Towers, LLC; DND-Landmark Towers, LLC; CattaneoLandmark Towers, LLC; Chaikin-Landmark Towers, LLC; and A. Cusenza-Landmark

Towers, LLC. 

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subleased from the owners’ tenant, DBSI Landmark Towers Leaseco, LLC (DBSI

Leaseco). We affirm. 

I.

The lease agreements at issue in this case arise from a complex real estate

transaction that DBSI, Inc., and its affiliates commonly structure in order to generate

revenue. DBSI, a tenant in common syndicator, or an affiliate—here DBSI Landmark

Towers, LLC (DBSI Landmark)—acquires commercial property and leases it to

another affiliate—here DBSI Leaseco. The affiliate subleases the property to a

tenant—here Green Tree—and then DBSI sells fractional interests in the property to

multiple parties as tenants in common—here 28 tenants in common (collectively the

“TIC”).2

 The leasing DBSI affiliate acts as landlord, receiving a management fee in

exchange for collecting rent and paying operating expenses.
3

Green Tree named DBSI Landmark as a defendant in this lawsuit, but DBSI

Landmark has not appeared other than to file a “Suggestion of Bankruptcy” with the

district court. DBSI Landmark has no part in this appeal.

4

We refer to the TIC as the owner/master landlord that entered the relevant

contracts as the successor in interest of DBSI Landmark through the TIC’s purchase

of Landmark Towers.

5

The concept of attornment originates from feudal law, where the lord needed

the tenant’s consent before transferring or selling his reversion or remainder in the

property. Raines v. Hindman, 71 S.E. 738, 739 (Ga. 1911). The English common-law

rule of attornment was never part of the common law in the United States, Jones v.

Rigby, 43 N.W. 390, 390 (Minn. 1889), and is known now only as part of the

esoterica of feudal property law. As a modern term of art, “attorn” simply means

“[t]o agree to be the tenant of a new landlord.” Black’s Law Dictionary 147 (9th ed.

2009).

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In this case, DBSI Landmark3

 purchased Landmark Towers and then flipped its

interest to the TIC. Prior to the sale, DBSI Leaseco leased the building. The master

lease agreement between the TIC4

 and DBSI Leaseco permitted DBSI Leaseco to

sublease the office space, but required any sublease to contain a provision providing

for the subtenant to attorn5

 to the TIC if the sublease were terminated for any reason.

DBSI Leaseco subleased to Green Tree, and the sublease agreement contained Exhibit

G, in which Green Tree agreed to attorn to the TIC when the TIC “terminates the

Master Lease” or “otherwise succeeds to the interest of [DBSI Leaseco] under the

foregoing Lease.” App’x at 372.

DBSI Leaseco voluntarily filed for bankruptcy, and the master lease with the

TIC and sublease with Green Tree were ordered rejected by the bankruptcy court. In

its motion to reject, DBSI Leaseco stated that the sublease would be terminated as a

result of the rejection of the sublease. Green Tree responded that it intended to treat

the sublease as terminated under 11 U.S.C. § 365(h), which provides the

circumstances under which the lessee of a debtor-lessor may treat a lease as

terminated by virtue of the debtor-lessor’s rejection of the lease. DBSI Leaseco did
6

We note that the parties agree Minnesota law governs to the extent principles

of contract law dictate the result in this case. 

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not object, but the TIC did, asserting that the terms of the sublease required Green

Tree to attorn to the TIC. Green Tree sought a declaratory judgment from Minnesota

state court that it could treat the sublease as terminated and vacate Landmark Towers.

The TIC removed the case to the United States district court and cross-claimed for a

declaratory judgment affirming the sublease. Green Tree and the TIC submitted cross

motions for summary judgment, and the district court granted Green Tree’s motion.

The TIC appeal, and we affirm.

II.

We review a district court’s grant of summary judgment de novo, Mwesigwa

v. DAP, Inc., 637 F.3d 884, 887 (8th Cir. 2011), and we will affirm if “there is no

genuine dispute as to any material fact and the movant is entitled to judgment as a

matter of law.” Fed. R. Civ. P. 56(a). “We may affirm on any basis supported by the

record.” Schoelch v. Mitchell, 625 F.3d 1041, 1046 (8th Cir. 2010).6

 

Green Tree contends that under 11 U.S.C. § 365(h), it may treat the sublease as

terminated. Under section 365(h):

If the trustee rejects an unexpired lease of real property under which the

debtor is the lessor [and] if the rejection by the trustee amounts to such

a breach as would entitle the lessee to treat such lease as terminated by

virtue of its terms, applicable nonbankruptcy law, or any agreement

made by the lessee, then the lessee under such lease may treat such lease

as terminated by the rejection[.]

11 U.S.C. § 365(h)(1)(A)(i). The statute entitles Green Tree to treat the sublease as

terminated if DBSI Leaseco’s rejection of the sublease constituted a breach that would

allow Green Tree to treat the sublease as terminated under the sublease’s terms or
7

This is true regardless of whether DBSI Leaseco’s rejection constituted a

material breach under the terms of the sublease. Mutual rescission means that both

parties agree to terminate the contract irrespective of its provisions. See Busch v.

Model Corp., 708 N.W.2d 546, 551-52 (Minn. App. 2006). 

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Minnesota law. Id. Here, irrespective of section 365(h), principles of contract law

dictate that DBSI Leaseco and Green Tree are no longer required to perform their

obligations to each other under the sublease. DBSI Leaseco indicated its intent that

the sublease be terminated during the bankruptcy proceedings, when in its motion to

reject it asserted that the sublease would be terminated upon the court’s approval of

the rejection. App’x at 109. Green Tree indicated its intent that the sublease be

terminated in the form of a tenant estoppel certificate, which it provided to DBSI

Leaseco. App’x at 244-45. Accordingly, DBSI Leaseco and Green Tree mutually

rescinded the sublease, and thus neither party is required to perform its obligations to

the other under the contract. See Minn. Ltd. v. Pub. Utils. Comm’n of Hibbing, 208

N.W.2d 284, 285-86 (Minn. 1973) (holding that mutual rescission “requires an intent

to rescind on the part of both parties” and that such intent “may be inferred from the

attendant circumstances”).7

 

If DBSI Leaseco and Green Tree were the only parties to the sublease, this

would end the inquiry. Although most of Green Tree’s legal obligations under the

sublease are owed to DBSI Leaseco, Green Tree also undertook obligations to the TIC

through the attornment provision, and DBSI Leaseco could not excuse Green Tree’s

performance of these obligations on the TIC’s behalf. Contrary to Green Tree’s

arguments, nothing in section 365(h) indicates that a debtor-lessor’s rejection of a

lease extinguishes a third party’s rights and obligations under the lease. Cf. In re

Modern Textile, 900 F.2d 1184, 1191-92 (8th Cir. 1990) (interpreting 11 U.S.C.

§ 365(g) and holding that a lessor can look to the guarantor of a lessee-debtor’s lease

obligation despite the rejection of the lease in bankruptcy). 
8

Although the TIC seeks to enforce a provision in the sublease in which Green

Tree agreed that the sublease was “subject and subordinate” to the master lease, Green

Tree made this promise to DBSI Leaseco, not to the TIC. Accordingly, the TIC

cannot enforce it unless the sublease’s attornment provision was triggered here.

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We first reject Green Tree’s argument that the TIC cannot enforce any

purported contractual obligations because the parties are not in privity of contract.

Green Tree is correct that the TIC must be in privity of contract with Green Tree to

enforce the sublease, Wurm v. John Deere Leasing Co., 405 N.W.2d 484, 486 (Minn.

Ct. App. 1987), and that ordinarily privity does not exist between a master landlord

and a sublessee, Warnert v. MGM Props., 362 N.W.2d 364, 367 (Minn. Ct. App.

1985). Here, however, the sublease contains promises between the TIC and Green

Tree via the attornment provision, and therefore the parties are in privity of contract

regardless of their status as master landlord and sublessee.

The dispositive question here is whether Green Tree must attorn to the TIC.8

The sublease’s attornment provision requires Green Tree to attorn to the TIC only

when the TIC “terminates the Master Lease” or “otherwise succeeds to the interest of

[DBSI Leaseco] under the foregoing Lease.” Neither of these events occurred here.

First, DBSI Leaseco, not the TIC, rejected the master lease in bankruptcy. Second,

the TIC did not “succeed to the interest” of DBSI Leaseco in the sublease. Although

the TIC assumed some of DBSI Leaseco’s responsibilities as landlord by virtue of the

master lease’s terms, DBSI Leaseco never assigned its contractual interest in the

sublease to the TIC prior to DBSI Leaseco’s voluntary extinguishment of its rights.

The TIC could not succeed to an interest in the sublease that no longer existed

regardless of DBSI Leaseco’s continuing obligations under the master lease or the

TIC’s assumption under the master lease of DBSI Leaseco’s duties as landlord. The

only surviving contractual interest in the sublease is the TIC’s right to attornment,

which, unfortunately for the TIC, is triggered only when the TIC “succeeds to the

interest” of DBSI Leaseco. Thus, the sublease does not require Green Tree to attorn

to the TIC here. 
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III.

Accordingly, we affirm the district court’s grant of summary judgment in favor

of Green Tree.

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