This opinion will be unpublished and

 may not be cited except as provided by

Minn. Stat. § 480A.08, subd. 3 (1998).






The Bank of New York as Trustee

Under the Pooling and Servicing

Agreement dated as of November

30, 1994, Series 1994-D,







Stephen D. Larson,

a/k/a Steve Larson, a single person,


Bank One Milwaukee, N.A.,



Filed April 18, 2000


Toussaint, Chief Judge


Becker County District Court

File No. C9981414


Lance Heisler, Sinclair, Evans, Hunt, Heisler & Fritz, P.A., 910 Lincoln Avenue, Detroit Lakes, MN 56501 (for respondent)


Stephen D. Larson, 13639 Barbara Beach Lane, Detroit Lakes, MN 56501 (Pro se appellant)


Bank One Milwaukee, 111 E. Wisconsin Avenue, P.O. Box 2033, Milwaukee, WI 53201 (defendant)


Considered and decided by Toussaint, Chief Judge, Kalitowski, Judge, and Huspeni, Judge.*

U N P U B L I S H E D  O P I N I O N

TOUSSAINT, Chief Judge

            On October 5, 1994, appellant executed a first note and mortgage-encumbering property described as “Lot 15, Barbara Beach, Becker County, Minnesota.  Lot sixteen (16), Barbara Beach, Becker County, Minnesota.”  After the first note and mortgage was assigned to respondent, appellant executed a second note and mortgage on the same property in favor of Bank One Milwaukee.  Appellant defaulted on his monthly mortgage payments and respondent initiated foreclosure proceedings on lot 16.  Following the foreclosure sale, a sheriff certificate of sale was executed for lot 16.  On December 9, 1998, realizing it had foreclosed only on lot 16, respondent commenced this action seeking to reform or rescind the mortgage foreclosure on equitable grounds because it held security interests in both lots. 

Following negotiations, the parties reached a settlement agreement at a hearing on respondent’s summary judgment motion.  In an April 5, 1999 order, the district court rescinded the sheriff certificate of sale and set forth the settlement agreement enabling appellant to refinance the property at a substantial reduction of the mortgage balance owed.  To allow appellant the opportunity to refinance, the district court stayed its order until April 15, 1999.

In response to appellant’s April 13, 1999 ex parte letter to the court requesting that the district court rescind its order incorporating the settlement agreement, an order was issued an April 14, 1999 staying its April 5, 1999 order.  On April 22, 1999, the district court held a second hearing on respondent’s summary judgment motion and scheduled a third for July 23, 1999.  Following the third hearing, the district court issued an order: (1) granting respondent’s summary judgment motion, (2) lifting the stay on the April 5, 1999 order, and (3) denying appellant’s motion to compel discovery. 

Appellant seeks review of the district court’s order granting respondent’s motion for summary judgment and allowing respondent to re-foreclose its mortgage.  Because the district court did not err in applying the law and there was no genuine issue of material fact, we affirm.


            On an appeal from a grant of summary judgment, this court must determine whether there are any genuine issues of material fact and whether the district court erred in applying the law.  State by Cooper v. French, 460 N.W.2d 2, 4 (Minn. 1990) (citation omitted).  The reviewing court must view the evidence in the light most favorable to the party against whom judgment was granted.  Fabio v. Bellomo, 504 N.W.2d 758, 761 (Minn. 1993) (citation omitted).  No genuine issue of material fact exists “[w]here the record taken as a whole could not lead a rational trier of fact to find for the nonmoving party.  DLH, Inc. v. Russ, 566 N.W.2d 60, 69 (Minn. 1997) (quoting Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 1356 (1986)).  A genuine issue for trial must be established by substantial evidence.  Id. at 69-70 (citing Murphy v. Country House, Inc., 307 Minn. 344, 351, 240 N.W.2d 507, 512 (1976)).


In determining whether to set aside a foreclosure on equitable grounds, courts consider four equities:

(1) A blameless plaintiff fallen into serious error * * *, which promises a disastrous result, wholly unintended by any of the parties to the transaction *
* *; (2) absence of negligence of the person seeking relief; (3) defendants with knowledge of the [mortgagee’s] mistake attempting to secure by inequitable conduct an unconscionable advantage of plaintiff and to enrich themselves unjustly at [mortgagee’s] expense; [and] (4) the ability of the court to restore the status quo as to all the interests involved.


Pole v. Trudeau, 516 N.W.2d 217, 221 (Minn. App. 1994) (citing Peterson v. First Nat’l Bank of Ceylon, 162 Minn. 369, 379, 203 N.W. 53, 56-57 (1925); see also TCF Banking & Sav., F.A. v. Loft Homes, Inc., 439 N.W.2d 735 (Minn. App. 1989) (applying Peterson); review denied (Minn. June 21, July 12, 1989). 

In Romkey v. Saumweber, very similar to the present case, the Minnesota Supreme Court granted re-foreclosure on equitable grounds because the foreclosing attorney mistakenly omitted certain lots covered by the mortgage in the foreclosure documents.  170 Minn. 438, 439-40, 212 N.W. 816, 816 (1927); see also Peterson, 162 Minn. at 379, 203 N.W. at 56-57 (allowing re-foreclosure even though mortgagee’s attorney was “mistaken” and careless); Anderson v. Peterson’s North Branch Mill, Inc., 503 N.W.2d 517, 519 (Minn. App. 1993) (applying four equities announced in Peterson to grant equitable re-foreclosure).  The mortgage in Romkey covered parcels of land in a specified block described as “lots one (1) to seven (7), inclusive.”  170 Minn. at 439, 212 N.W. at 816.  The foreclosing attorney mistakenly prepared the foreclosure notice and record to read “lots one (1) and seven (7) inclusive.” Id.  (alteration in original).  While the court stated “[t]he use of ‘inclusive’ as a part of the mistaken description introduced an element of patent ambiguity,” it concluded that the ambiguity was so obvious that a person not familiar with the foreclosure would still recognize the mistaken description.  Id.  In granting re-foreclosure, the court stated:

It is clearly a case of unilateral mistake by the attorney who conducted the foreclosure.  Candidly he has assumed the whole responsibility.  The mistake being so obvious and the rectification of it so easy without injury to plaintiff, equity clearly justifies the relief granted defendant.  It consists simply of vacating the foreclosure and a decree for another by action.


Id. at 439-40, 212 N.W. at 816.

Like the attorney in Romkey, who candidly assumed responsibility for the erroneous foreclosure, respondent’s attorney candidly admitted it was his unilateral, unintended mistake.  Because the mortgage encumbered both lots and the affidavits of respondent’s attorney and servicer show that respondent always intended to foreclose on both lots, the record supports the district court’s conclusion that the erroneous foreclosure resulted from the unilateral, unintended mistake of respondent’s attorney.

In addition, the record shows unjust enrichment and disastrous result that will occur unless respondent is allowed to re-foreclose its mortgage.  While the first mortgage was originally executed for $67,600, appellant owed over $73,000 as of April 15, 1999.  Lot 16, appraised at $20,000, is an undersized lot not suitable for building without a variance due to Becker County zoning regulations.  There is no record evidence of the appraisal information for lot 15.  But, the combined appraisal value of both lots was $84,500.  As the district court concluded, unless respondent is allowed to re-foreclose the first mortgage on equitable grounds, appellant will continue to possess lot 15, the more valuable residential parcel, subject only to a first mortgage in favor of Bank One.  Because the record demonstrates that this disastrous result was obviously neither contemplated nor intended by the parties and is clearly the result of the foreclosing attorney’s unilateral mistake, the first two equities are satisfied.

            As to the third equity, this court explained that “[t]he offensive behavior in [Romkey and Peterson] involved the mortgagor, aware of a mistake, attempting to redeem property for a fraction of its real value.” Loft Homes, 439 N.W.2d at 738.  Appellant’s response to respondent’s complaint demonstrates that he consciously chose not to refinance the mortgage because he was aware that the foreclosure documents only required him to give up half of his property, while extinguishing his mortgage and allowing him to keep his house.  Moreover, despite settlement proposals allowing appellant to refinance the $100,000 first mortgage debt for less than $80,000 and release the second mortgage for $5,000,[1] appellant refused to refinance the mortgage throughout settlement negotiations.  While the district court did not discuss appellant’s knowledge of the foreclosing attorney’s mistake, his response to the complaint and conduct throughout settlement negotiations shows he knew of the error in the foreclosure documents and intended to secure an unconscionable, substantial benefit from the mistake and unjustly enrich himself.  Romkey and its progeny forbid such inequitable conduct.

Regarding the final equity, re-foreclosure is only appropriate if the court is able to “restore the status quo as to all of the interests involved.”  Pole, 516 N.W.2d at 221 (citations omitted); see also Anderson, 503 N.W.2d at 519 (granting re-foreclosure because no parties would be prejudiced).  The factors most critical to determining whether the status quo can be restored are: (1) the mortgagor’s detrimental reliance upon the foreclosure; and (2) existence of any rights subsequently acquired by a third party.  Loft Homes, 439 N.W.2d at 739.  While appellant will lose his home if re-foreclosure is permitted, he can reinstate the mortgage by paying the amount owed to respondent for the last two and one half years appellant has lived on the property in default.  In addition, Bank One, the second mortgagee in this matter, concedes respondent’s right to re-foreclose and no other third party interests will be prejudiced by re-foreclosure.  Because appellant did not detrimentally rely on the foreclosure and no interests will be prejudiced, allowing respondent to re-foreclose its mortgage on both parcels will put each party in the position each would have been in but for the erroneous foreclosure.

In summary, the district court did not err in applying the law and there was no genuine issue of material fact bearing on any of the four equities.  Therefore, the district court properly granted summary judgment.


Respondent argues that appellant unjustifiably breached the settlement agreement reached in the March 15, 1999 hearing on respondent’s summary judgment motion.  Because the district court found the equitable re-foreclosure line of cases dispositive, it did not reach the issue of whether the parties had reached a settlement agreement.  Therefore, this court need not address the settlement agreement issue on appeal.  See Hoyt Inv. Co. v. Bloomington Commerce & Trade Center Assocs., 418 N.W.2d 173, 175 (Minn. 1988) (explaining that undecided questions are not usually amenable to appellate review).


*  Retired judge of the Minnesota Court of Appeals, serving by appointment pursuant to Minn. Const. art. VI, § 10.

[1] Realizing the limited equity in the property, Bank One agreed to accept $5,000 for a release of the $73,579.62 debt remaining on the second mortgage.