David A. Davenport
Affordable housing is vitally necessary in our country – I help clients preserve it.
Contact: P /612.604.6716E /email@example.com
The University of Tulsa College of Law, J.D., with honors, 1998
College of Charleston, B.S., Psychology; B.A., Political Science, with honors, 1992
- Phi Beta Sigma, member since 1990
U.S. District Court, D. Minn., 1999
U.S. Court of Appeals, 8th Cir., 2006
I was trained to be a trial lawyer. As a young associate, I tried my first solo case to a jury in 2003. Since then, I have had many jury and bench trials across the United States, all of which, combined, give me a skill set that allows me to help my clients solve their problems, whether they are partnership disputes in the Low Income Housing Tax Credit (“LIHTC”) industry, a construction, real estate or land use dispute, a shareholder dispute, or some other business, commercial or intellectual property dispute. While amicable, negotiated business-to-business resolutions are ideal, I also understand that not all disputes can be resolved this way; some problems can only be fixed through judicial intervention, arbitration or some other form of dispute resolution. My clients rely on the seasoned approach and easy communication with judges and juries that comes with 20-plus years of trial court experience, in more than 25 states across the country.
My practice is keenly focused on helping real estate developers, including non-profit and for-profit developers, in the LIHTC industry preserve affordable housing. What started as helping clients enforce their rights through litigation has since evolved to also include counseling clients on best practices for “year-15” contract provisions and rights, all aimed at avoiding future disputes as new LIHTC deals are being syndicated, negotiated, and eventually reduced to writing in complex partnership agreements. I also conduct client-focused training, often with asset management and development staff, where we evaluate contracts, develop disposition strategies, and work together toward achieving limited partner exits following the end of the LIHTC year-15 Compliance Period.
Because I also believe that almost no problem, whether settled amicably or fought hard before a jury, lies on the shoulders of one person, I take a team-oriented approach and involve my clients – working with them rather than for them. It is also of paramount importance that I understand my clients’ businesses, and know “the deal” and intentions from which the problem arose, so that I may work to achieve the most optimal outcome for my clients. Throughout the process, I look to provide effective, efficient solutions to complex issues facing my clients, and I bring a direct approach to complicated disputes and emotionally charged situations.
Outside of work, my wife, kids and I enjoy all that the outdoors has to offer, including winter sports, hunting, camping, hiking, and biking.
A Groundbreaking Moment in My Career
In 2013, I realized that significant changes were occurring in the Low Income Housing Tax Credit (“LIHTC”) or affordable housing industry, and I set out to determine why. As the industry has matured and changed over the years, there has been an increase in disputes that arise near the end of the 15-year Compliance Period. I purposefully shifted my practice to focus on representing real estate developers who are general or managing partners in the LIHTC industry, and I have a particular expertise in litigating partnership exit and “year-15” disputes. These specialized exit disputes involve extremely complicated transactions, new and existing parties, and parties whose objectives have changed since inception of the partnerships. Adding to these complex issues is the fact that this is still a relatively young industry insofar as partner disputes are concerned, thus there is very little specific case law to look to in order to resolve these disputes.
In the years since, I have been on the forefront representing clients in these matters, in many cases helping to actually create that much-needed case law. Throughout more than three dozen lawsuits and disputes affecting more than 100 LIHTC properties, the outcomes and precedents we achieved on behalf of our clients are already working to frame future cases and negotiations, as well as inform future LIHTC partnership agreements. Despite the multitude of existing issues surrounding year-15, we continue to uncover even more emerging controversies in this area. Some of the issues that have arisen in these Year-15 exit disputes include:
- Disputes over Purchase Options, Put and Call Rights, and Rights of First Refusal
- Fair Market Value and Appraisal Disputes
- Disputes over Purchase Option Price Determinations
- Ownership Interest Disputes
- Capital Transaction Disputes
- Capital Account Disputes
- Disputes concerning Forced Sale Rights
- Project Refinance Disputes
- Limited Partner Removal Initiatives
- Qualified Contract Issues
I have a deep understanding of the LIHTC program in general, including its purpose and intent, as well as the finance vehicles used by LIHTC developers and the underwriting strategies employed by investors. I use this understanding, combined with my extensive experience representing business owners in partnership disputes, to advise clients on their rights, obligations and duties under their partnership agreements and other operative documents to avoid litigation, if possible, and to fiercely litigate for their rights, if necessary.
In addition, I firmly believe that industry participants must work together to take control of the problems that have emerged in recent years due to the emergence of “The Aggregator,” and frequently speak and write on the subject nationally. I also serve on the National Housing Trust Preservation Working Group, a national coalition dedicated to the preservation of multifamily housing for low-income families.
- Successfully represented a non-profit affordable housing developer to achieve its mission to preserve affordable housing through the enforcement of a right of first refusal (“ROFR”) provided under the LIHTC program. The firm’s client—Opa-Locka Community Development Corporation, Inc.—prevailed over its partners (commonly known as Hallkeen Development or Management) who sought to sell a 216-unit affordable housing development located in Miami-Dade County, known as Aswan Village, to a third-party investment firm without first involving OLCDC or honoring its ROFR. Through a summary judgment decision, the Florida Court issued a decisive ruling in favor of OLCDC on all issues before it and confirmed that, under Section 42 of the United States Code, a non-profit’s ROFR is not conditioned upon the receipt of any third-party offer or contract to purchase the development. Instead, the Court confirmed that all that is necessary to trigger enforcement of a Section 42 ROFR is for the owner of the affordable housing development to manifest an intent or willingness to sell the development. And, because the contract giving OLCDC its Section 42 ROFR contained no other conditions for enforcement, it was not necessary for the owner of the development to have received or entered into an enforceable purchase agreement before OLCDC’s ROFR was triggered. The Court granted OLCDC summary judgment, dismissed all claims and defenses presented by the Hallkeen defendants, and ordered them to specifically perform under the ROFR by transferring Aswan Village to OLCDC under the Section 42 minimum purchase price. A trial on damages is pending, wherein OLCDC will seek to recover more than $1 million.
- Representation of the general partner of Berkshire Club Partners, Ltd., who had exercised its option to purchase the limited partner interests in a LIHTC partnership in the Orlando, Florida area pursuant to a contractually mandated process providing for a formulaic option price at fair market value. At the time, ownership and control of the limited partner interests had changed from what it was initially when the project was financed and the limited partner interests were managed and controlled by Hunt Capital Partners (“Hunt”). Despite the general partner’s full compliance with the partnership agreement and option process, Hunt caused the limited partner to refuse to accept the tendered option proceeds, sought to monetize a positive capital account balance of more than $5.3 million through the option purchase price, and later declared alleged defaults under the partnership agreement to support an initiative to remove the general partner in order to prevent the acquisition of the limited partner interests. Prior to this, the general partner had never been accused to be in default of its obligations, never had any performance issues raised, and had diligently served as general partner for more than 15 years, delivering the anticipated tax and other benefits to the preceding limited partner. Our team obtained a summary judgment ruling, which found that the parties’ option process and formulaic fair market value option price would be enforced. The court held that there were no grounds to remove the general partner from the partnership and that the option purchase price is determined “as if there were a hypothetical sale of the Project, not as if the Partnership were being dissolved or liquidated” as the limited partner argued. As a result, the court rejected the limited partner’s arguments that the option price must include credit for a capital account balance. The Court also found that the limited partner’s alleged defaults, lodged to remove the general partner and prevent the option, were also found to be “baseless and intended to deprive” the general partner of its rights, further ordering the immediate transfer of the limited partner interests to the general partner and reserving jurisdiction to later enter a damages order and an award of attorney’s fees to the general partner.
- Representation of Centennial Partners, an affiliate of Milwaukee, Wisconsin based real estate developer Wimmer Communities, in a LIHTC Year-15 Exit dispute involving a 97-unit affordable senior housing development in Oak Creek, Wisconsin, owned by Centennial, LLC. The dispute centered around Centennial Partners’ effort to exercise and close on its option to purchase the limited members’ ownership interests in Centennial, LLC. The limited members were ORC Tax Credit Fund 10, LLC and SCDC, LLC, both managed by and affiliated with Wentwood Capital Advisors, LP (“Wentwood”). Through Wentwood, the limited members refused to sell their ownership interests in Centennial, LLC to Centennial Partners for fair market value and sought, instead, to recover a more than $1 million positive capital account balance in the form of a cash payment. In December 2018, a Milwaukee County Circuit Court granted summary judgment to Centennial Partners, confirming that its exercise and pursuit of its purchase option was not a capital transaction, and therefore did now allow for consideration of a positive capital account when determining the fair market value of the limited members’ ownership interests in Centennial. Following this decision, the case went to a jury trial on Centennial Partners’ claims of breach of contract and breach of the duty of good faith and fair dealing. The jury was also asked to determine the fair market value of the limited member interests in Centennial, as well as Centennial Partners’ claim for damages. On behalf of the limited members, Wentwood sought a more than $1.7 million purchase price for the ownership interests, while Centennial Partners argued that $500,005.00 was the fair market value. After a four-day jury trial and only 40 minutes of deliberations, the jury agreed with Centennial Partners and returned a favorable verdict. The jury found that the limited members had breached the Operating Agreement and violated their duty of good faith and fair dealing owed to Centennial Partners. As a result, the jury awarded Centennial Partners $470,000.00 in damages. The jury also agreed with Centennial Partners that the fair market value of the limited member interests was $500,005.00, resulting in Centennial Partners only needing to pay $30,005.00 for the limited member interests, which was further decreased by certain court related costs. The more than $1 million positive capital account balance remained with Centennial.
- Representation of Downtown Action to Save Housing (D.A.S.H.), a Seattle-based non-profit affordable housing developer in a Year-15 LIHTC dispute with Investor Limited Partners, managed by and affiliated with Boston Financial Investment Management (“BFIM”), involving three affordable housing communities, and three separate but nearly identical partnership agreements, each of which contained a detailed buyout option that would allow D.A.S.H. to purchase the entire ownership interests of three limited partners at the end of the 15-year Compliance Period. When D.A.S.H. attempted to exercise its buyout options, the limited partners refused, through BFIM, despite D.A.S.H. having met all of the requirements of the buyout options, including relying on the assessment of fair market value by an appraiser all parties had agreed upon. According to the limited partners, they refused D.A.S.H.’s buyouts because they did not agree with the fair market valuation of their ownership interests in the three Partnerships. The Federal Court ruled in D.A.S.H.’s favor on summary judgment, determining that the limited partners (“Investment Partnerships”) had breached the partnership agreements by failing to sell their ownership interests to D.A.S.H. According to the Court, “[n]either the partnership agreements nor the buyout options entitled the Investment Partnerships to subjectively disagree with the appraised [fair market value] of their interests and then hold out for what they believed to be a more accurate price.” The Court further ordered the Investment Partnerships to transfer their limited partner and special limited partner interests in each of the three Partnerships to D.A.S.H. for a collective $70,000. Rather than go to trial to recover damages, D.A.S.H. agreed to resolve the matter with BFIM and received an assignment of all of the limited partner interests, along with the limited partner interests in an additional partnership, for no payment.
- Represented Arch Apartment Management, LLC in a Year-15 LIHTC litigation. Arch was attempting to acquire the Investor Members’ interests in the Company, pursuant to its purchase option in the Operating Agreement. However, the Investor Members, managed by and affiliated with Wentwood, were demanding more than $1 million for those interests. Our team argued, and the Court agreed, that Arch was to pay only $44,911, which would place the Investor Members in the same after-tax cash position they would be in if the Company sold the underlying Apartment Complex at the appraised fair market value. Shortly after Arch prevailed on these and other important LIHTC industry issues, the Court also issued an order in a related case, which the Investor Members had filed in retaliation against two of Arch’s owners individually. Pursuant to that order, the Investor Members were required to pay attorney’s fees and costs, thereby confirming for Arch and its owners that the retaliatory suit claiming breaches of fiduciary duty and self-dealing was entirely frivolous and without merit. The district court decision was affirmed by the Minnesota Court of Appeals.
- Representation of CommonBond Communities, a long-standing non-profit affordable housing developer in Minnesota, who was looking to exercise a right of first refusal to purchase its partner’s interest in an affordable housing project for seniors at a fixed and discounted price, based on the project’s existing debt and taxes owed. CommonBond’s limited partner in the development project sought, instead, to require CommonBond to pay market value for the property, thus putting the future of the senior-based affordable housing project in jeopardy by making it too expensive to continue to operate. We demonstrated to the court that the original contract, drafted 20 years prior, had a mutual mistake in it, which lead to the court’s ultimate decision to reform the contract to allow CommonBond to buy the property at the lower price and continue to operate the senior home.
- Representation of Pelican Rapids Leased Housing Associates I, L.P., a local partnership and affiliate of a large, national affordable housing developer, in a year-15 exit dispute involving an investor limited partner’s refusal to consent to a refinance of project debt. The refinance was needed to avoid the Partnership’s default on its long-term debt financing obligations that were scheduled to mature, but the investor limited partner, managed by and affiliated with Alden Torch Financial, was refusing consent for the refinance and demanding to be paid the return of its invested amount in exchange for exiting the partnership to nullify the need for its consent for a refinance. Our team successfully obtained an injunction allowing for a short-term refinance without the investor’s consent, which was then followed approximately six months later by a favorable summary judgment order finding that the investor limited partner had unreasonably and unlawfully withheld consent to refinance as a means to obtain rights that it otherwise did not have (i.e., a forced buy-out of its interests).
- Representation of Cottages of Stewartville and Stewartville Development Corporation, a local partnership and affordable housing developer, in a year-15 exit dispute involving another affordable housing project. The dispute arose after the investor limited partner, managed by and affiliated with Wentwood, fully exhausted the tax credits available to the partnership and sought to exit the partnership with a forced sale of the project by unreasonably withholding consent to allow the general partner to refinance project debt. Successfully obtained an injunction and court order that allowed his clients to refinance the project debt without the investor limited partner’s consent and prohibited the investor limited partner from involuntarily removing his client from the partnership. Following the injunction, the case proceeded to a trial more than a year later. Ultimately, the Court ruled in favor of our clients and confirmed that the investor limited partner had unreasonably withheld consent to refinance.
Practicing Construction & Real Estate Litigation
I represent clients in construction and real estate litigation, helping clients achieve the outcomes they deserve and seek, and actively explore potential solutions and strategies with clients before litigation begins. I also work to minimize the number of legal issues my clients must deal with so they can focus on their businesses.
- Representation of Chase Real Estate, Inc. (“Chase”) in a real estate development dispute with an adjoining land owner concerning Chase’s proposed development of a high end, 172 unit, luxury apartment complex, with 8,000 square feet of retail space, on an undeveloped lot in Burnsville’s Heart of the City. The undeveloped lot had originally been approved for development by the City of Burnsville in 2004 but had remained a vacant eye-sore until Chase, with the approval of the City of Burnsville, sought to purchase and develop the empty lot. The disgruntled adjoining land owner sued Chase, along with the City of Burnsville and the owner of the undeveloped lot, in order to prevent Chase’s proposed development, and asserted a variety of claims, including claims for declaratory judgment, breach of contract, and violations of the City of Burnsville’s zoning requirements. After extensive discovery, Chase, along with the City of Burnsville and owner of the undeveloped lot, prevailed on summary judgment with the Court dismissing all of the claims. Nicollet Plaza, LLC v. Chase Real Estate, Inc. et al., 19HA-CV-17-1764 (Dakota County). The landowner appealed to the Minnesota Court of Appeals, who affirmed the summary judgment decision on July 29, 2019. The landowner then petitioned the Minnesota Supreme Court. That petition was denied on October 15, 2019. As a result, the development is back on track and Chase may proceed with the purchase and development of the vacant land with a high-end, luxury, four-story mixed-use apartment development. This will finally complete the original vision for this key section of Burnsville’s Heart of the City. Nicollet Plaza, LLC, vs. Chase Real Estate, Inc. et al., Minnesota Court of Appeals A18-1864.
- Representation of a large residential and commercial real estate developer in a matter involving allegations of fraud, in which we successfully secured a $6.5 million settlement on behalf of our client.
- Representation of Pioneer-Endicott, LLC, and others, in what began as a mechanic’s lien action filed against our client by a construction contractor, and ended with a favorable settlement for our client. Under the settlement, the contractor made a cash payment and was required to provide mandatory repairs and remediation work related to several design defect and warranty based claims. Later, when the repairs and remediation work were not provided nor satisfactorily performed, our client received an additional, substantial monetary payment.
- Representation of St. Paul Leased Housing Associates IV, an affiliate of Dominium Development & Acquisition, in a land use dispute involving more than a dozen residents seeking to challenge and overturn a conditional use permit issued by the City of St. Paul for the development and construction of an affordable housing project approved by the St. Paul Heritage Preservation Commission. We successfully secured summary judgment, ensuring that the project could be developed and constructed as planned and on schedule.
Local Litigation Star
Benchmark Litigation, 2016-2020
Practicing Shareholder Disputes
I represent clients in partnership and shareholder disputes. In these complicated and often emotional “corporate divorces,” I help clients find practical solutions that work for their businesses.
- Representation of a local business owner in a shareholder dispute concerning the ownership and operation of a Shopping Mall. Our client, along with other shareholders of the Mall, leased space in the Mall and operated individual businesses. Our client was the President of the Mall’s Board for more than a decade, but was then suddenly removed from his position and sued for alleged breaches of fiduciary duties, among other things, in an effort to strip him and his wife of their 28% ownership interests in the Mall. After extensive discovery, we obtained summary judgment for our client on all but one claim and our client’s counterclaims and third-party claims survived summary judgment. On the eve of trial, our client’s adversaries finally folded and we obtained a victory for our client, which included a substantial cash payment.
- Representation of a partner in a real estate holding company, with a variety of holdings and related interests, in which we obtained the appointment of a receiver to take control of and operate the holding company in a manner consistent with the best interests of the partnership rather than in the best interests of the managing partner adverse to our client. Ultimately, we were able to secure a court approved settlement under which our client became the sole owner of the holding company.
Practicing Business & Commercial Litigation
My business, commercial & intellectual property litigation practice includes software, licensing and contract litigation; intellectual property litigation, including copyrights, trademarks and patents; and non-competition/non-solicitation and trade secret litigation.
- Representation of Jodi Schwendimann, Cooler Concepts, and NuCoat in a patent infringement case spanning more than nine years where , we successfully proved during a ten-day jury trial that industry giant Arkwright Advanced Coating, Inc. (“AACI”) had willfully infringed Ms. Schwendimann’s patents covering single-step, iron-on image transfer sheets for dark colored t-shirts. We also successfully protected Ms. Schwendimann against allegations that she infringed, through her companies, patents owned by AACI by obtaining a verdict that included a determination that one of AACI’s patents was invalid.
- Representation of Candyland, Inc. in three separate trademark infringement matters relating to its CHICAGO MIX® popcorn, a unique blend of traditional, caramel, and cheese flavored popcorns. All three lawsuits were resolved very favorably for Candyland, including resulting in a permanent injunction barring further use of Candyland’s trademarks by Snyder’s-Lance Inc., CaramelCrisp, LLC (also known as Garrett Popcorn Shops) and Cornfields, Inc., which makes G.H. Cretors popcorn for retailers such as Costco, Whole Foods and Hy-Vee. The cases received wide-attention by local news outlines, including a syndicated story by CBS News Minneapolis and another story by Fox9 News.
- Representation of MJ Solutions GmbH, a patent owner who had licensed its patents to Arkwright Advanced Coatings, Inc., in an arbitration commenced by Arkwright seeking a judicial declaration that it was no longer required to make royalty payments under the license agreement and had been justified in its prior withholding of payments to MJ Solutions. After a week-long arbitration hearing, we successfully demonstrated that Arkwright was in breach of the license agreement and MJ Solutions was permitted to terminate the license agreement. The arbitrator agreed with our client’s case, rejected the relief Arkwright sought, awarded MJ Solutions over $500,000 in past due royalties and other damages, and permanently enjoined Arkwright from continuing to practice the patented technology. We successfully secured confirmation of the award in the United States District Court for the District of Minnesota and Arkwright is no longer manufacturing or selling the competing technology.
- Representation of Asset Marketing Services, Inc. and New York Mint, leaders in the numismatics industry with over 500 employees nationally, in matters involving theft of customer lists, customer information and other valuable trade secrets in which we successfully obtained temporary and permanent injunctive relief, among other remedies, against former employees and companies engaged in unfair competition and misappropriation of trade secrets.
- Representation of a well-established, small Minnesota business who manufactures and sells patented devices and dominates the market with their novel products. When a large, national competitor attempted to enter our client’s market with what was believed to be an inferior, non-infringing product they did so in conjunction with litigation initiatives and asserted, among other things, claims for false advertising under the Lanham Act. In response, our client asserted a number of counterclaims, including their own assertions of false advertising under the Lanham Act. After substantial discovery, which included depositions throughout the country, various market studies, product testing, and multiple expert reports and depositions on each side, the parties filed cross-motions for summary judgment and a variety of subsequent pre-trial motions, and other filings, in anticipation of a two-week jury trial. The week before trial, as the federal court began announcing its decisions on the various motions pending at the time during oral argument sessions, it became apparent that our client would, for all intents and purposes, be the plaintiff at trial rather than the defendant. Accordingly, the case was resolved on the eve of trial and our client was extremely pleased with the outcome.
The Best Lawyers in America©
Commercial Litigation, 2017-2020
Local Litigation Star
Benchmark Litigation, 2016-2020
Honors & Awards
The Best Lawyers in America©
Commercial Litigation, 2017-2020
Local Litigation Star
Benchmark Litigation, 2016-2020
Minnesota Super Lawyers®
Attorney of the Year
Minnesota Lawyer, 2013
Benchmark Litigation, 2015
Minnesota Super Lawyers®, 2004-2009, 2011
LexisNexis Martindale-Hubbell, Peer review ratings
Associations & Memberships
American Bar Association
American Intellectual Property Law Association
Federal Bar Association
Minnesota State Bar Association
Intellectual Property Section
Labor and Employment Law Section
Minnesota Intellectual Property Law Association
Hennepin County Bar Association
National Housing & Rehabilitation Association
National Council of State Housing Agencies
Affordable Housing Finance
Minneapolis Chamber of Commerce
Winthrop & Weinstine, P.A.
Board of Directors, 2019
National Housing Trust
Preservation Working Group
National Council of Housing Market Analysts
Certificate of Professional Designation