This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480A.08, subd. 3 (2000).







William R. Kochlin, et al.,





Norwest Mortgage, Inc., et al.,




Filed July 31, 2001


Halbrooks, Judge


Hennepin County District Court

File No. 972945


James W. Rude, Felhaber Larson Fenlon & Vogt, 601 2nd Avenue South, Suite 4200, Minneapolis, MN 55402; and


Rodney A. Wilson, Wilson Law Office, P.A., 701 Fourth Avenue South, Suite 500, Minneapolis, MN 55415 (for appellants)


Alan H. Maclin, Mark G. Schroeder, Brent R. Lindahl, Briggs & Morgan, P.A., 2200 First National Bank Building, 332 Minnesota Street, St. Paul, MN 55101 (for respondents)


            Considered and decided by Halbrooks, Presiding Judge, Schumacher, Judge, and Willis, Judge.

U N P U B L I S H E D   O P I N I O N


            Appellants sued because respondents did not automatically cancel appellants’ private mortgage insurance (PMI) when the loan-to-value ratio on appellants’ mortgage reached 80%.  Appellants prevailed at trial.  Appellants now challenge the district court’s refusal to certify a class action.  Respondents challenge the denial of their motions for summary judgment, directed verdict, JNOV, and a new trial.  We affirm. 


            The mortgage of the property owned by appellants William and Rose Kochlin stated that they were required to pay PMI premiums, “if any,” for the life of the mortgage and that this requirement could be altered by written agreement with the lender.  Appellants’ loan-approval conditions document (LACD) stated that PMI was to be paid “until” the loan-to-value ratio (LTV) for the property reached 80%.  When appellants’ LTV reached 80%, the PMI was not automatically cancelled.  Appellants sued respondents Norwest Bank and Norwest Mortgage (collectively Norwest) seeking to recover the PMI premiums paid after their LTV reached 80% and sought to certify a class action.  The district court denied (a) appellants’ motion to certify a class under Minn. R. Civ. P. 23.02(a)(1), a later motion to certify under Minn. R. Civ. P. 23.02(c), and a subsequent oral motion to certify a class; (b) Norwest’s motions for summary judgment, directed verdict, and (after a verdict for appellants) Norwest’s motion for JNOV; and (c) Norwest’s motion for a new trial.  Appellants appeal the denial of class certification.  Norwest appeals the denial of summary judgment, directed verdict, JNOV, and a new trial. 



            The district court ruled that under the reasoning of Washington v. Vogel, 158 F.R.D. 689 (M.D. Fla. 1994), appellants’ request to certify a class action under Minn. R. Civ. P. 23.02(c) was untimely because it was not made when appellants had previously sought to certify a class under Minn. R. Civ. P. 23.02(a)(1).[1]  Appellants note that under Minn. R. Civ. P. 23.03(a), an order regarding certification “may be altered or amended before a decision on the merits,” that Vogel was partially based on the requesting party’s failure to satisfy a federal rule requiring certification requests to be made within 90 days of the filing of the complaint, and that Minnesota lacks a time limit for certification requests.  But Minnesota does require resolution of certification requests “[a]s soon as practicable.”  Minn. R. Civ. P. 23.03(a).  Therefore, a party seeking certification must do so as soon as practicable.  See State ex rel Neighbors Organized in Support of the Env’t v. Dotty, 396 N.W.2d 55, 57 (Minn. App. 1986) (noting, where timing of certification request not at issue, request is to be made “as soon as practicable”).  Here, appellants concede that their second certification request could have been made with their first request.  The trial court found that appellants’ failure to do so “was a matter of strategy.”  Because appellants’ second motion was not made “as soon as practicable,” we will not reverse on this point. 

            Noting that certification orders can be altered after an initial denial, appellants allege that their second certification motion cannot be untimely.  The authorities cited by appellants to support their argument are distinguishable.  See Elster v. Alexander, 608 F.2d 196, 197 (5th Cir. 1979) (refusing to treat improper appeal of denial of class certification as petition for mandamus and noting that order regarding certification is open to modification throughout trial); Pettco Enter. v. White, 162 F.R.D. 151, 154-56 (M.D. Ala 1995) (certifying class, where there was no objection, after previously denying certification).  Generally, a certification decision will not be altered absent changed circumstances or new information.  2 Herbert B. Newberg & Alba Conte, Newberg on Class Actions § 7.47 (3d ed. 1992).  Here, because the basis for appellants’ second motion could have been incorporated in the initial motion, no changed circumstances underscored the second motion.  We affirm the determination that appellants’ second certification motion was untimely[2]


            A party seeking class certification must, among other things, satisfy Minn. R. Civ. P. 23.02.  See Streich v. American Family Mut. Ins. Co., 399 N.W.2d 210 (Minn. App. 1987) (discussing certification process), review denied (Minn. Mar. 25, 1987).  Rule 23.02(c) allows certification if common questions of law or fact “predominate over any questions affecting only individual members” of the proposed class and a class action is superior to other methods of resolving the controversy.  The trial court ruled that the common issues of the LACD and its impact on PMI termination “d[id] not predominate” and that a class action was “not superior to other means for the fair and efficient resolution of this case.” 

            Appellants allege that under Streich and Forcier v. State Farm Mut. Auto. Ins. Co., 310 N.W.2d 124 (Minn. 1981), the jury verdict in their favor establishes predominance under rule 23.02(c).  In those cases, liability was determined as a matter of law.  Streich, 399 N.W.2d at 214-15; Forcier, 310 N.W.2d at 128.  Here, the trial court denied both parties’ motions for summary judgment because, among other things, fact issues existed regarding liability.  Those fact issues related to the meaning of the contract language regarding PMI termination and to the parties’ conduct.  The mortgage in this case stated that the PMI-termination conditions could be altered by written agreement or applicable law.  While the potential proposed class included people with the same LACD that appellants signed, the existence of other PMI-related documents for other members of the proposed class was not excluded.  Therefore, the fact that this jury concluded that the combination of appellants’ contract language and conduct allowed appellants to recover does not necessarily mean that other borrowers with other language and/or conduct would also recover.  Therefore, we decline to reverse on this point. 

            Appellants claim that Norwest never alleged the existence of non-LACD documents addressing PMI termination and to assume the existence of such agreements is inconsistent with the policy favoring resolution of doubt in favor of class certification.  E.g., Streich, 399 N.W.2d at 218; Forcier, 310 N.W.2d at 130.  But the burden is on appellants to show certification is proper, not on Norwest to show that it is improper.  Peterson, 618 N.W.2d at 826.  Questions exist regarding the existence and terms of other documents that might alter PMI termination.  To the extent that the parties dispute what was, was not, or might have been produced in discovery regarding the possible existence of such documents, we note that discovery issues are within the trial court’s wide discretion.  Shetka v. Kueppers, Kueppers, Von Feldt and Salmen, 454 N.W.2d 916, 921 (Minn. 1990). 

            Appellants also allege that the portion of the order denying their second certification motion, that held that the requirement of predominance is absent, is inconsistent with the first order that held that common questions existed and that those common questions were typical of those to be presented by potential class members.  The trial court correctly recognized that it is “far more demanding” to show that common questions will predominate in trial than it is to show the existence of common questions.  Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 622-24, 117 S. Ct. 2231, 2249-50 (1997).  The trial court explicitly rejected the idea that a finding of the existence of common questions necessarily meant that those questions would predominate in the litigation.  The order denying appellants’ first motion stated that the commonality requirement was satisfied because the “core issue” was the “interpretation of the mortgage contract” and, because all members of the proposed class had mortgages originating with the same lender, “it is logical that the terms of their mortgage contracts will be similar with respect to the requirement for [PMI].”  The order denying the second motion, however, states the common issue as “the legal interpretation of the conditions [of the LACD].”  Because the two orders identify different questions as the crux of the litigation, we reject any allegation that application of res judicata requires that the trial court’s ruling on predominance was determined by the first order’s commonality and typicality rulings.[3] 

            Citing Kleiner v. First Nat’l Bank of Atlanta, 97 F.R.D. 683 (N.D. Ga. 1983), appellants note that cases arising from form contracts are “routinely certified” as class actions.  While Kleiner states that “claims arising from interpretations of a form contract appear to present the classic case for treatment as a class action, and breach of contract cases are routinely certified as such[,]” it does so in the context of addressing the lower threshold of the commonality requirement of Fed. R. Civ. P. 23.01 rather than the predominance requirement of rule 23.02(c) at issue here.  97 F.R.D. at 692 (citations omitted).  Moreover, because the mortgage allows the PMI requirements to be altered by written agreement, absent information on the existence and content of non-LACD agreements, it is not clear that all members of the proposed class have the same PMI-termination terms.

            Appellants allege that because the jury resolved the ambiguity in the PMI-termination language in their favor, potential variations in state law regarding PMI cancellation should not have been a basis on which to deny certification.  If a contract is ambiguous, extrinsic evidence may be used to determine its meaning.  The terms of a contract are generally fact questions for the jury.  Blackburn, Nickels & Smith, Inc. v. Erickson, 366 N.W.2d 640, 643 (Minn. App. 1985), review denied (Minn. June 24, 1985).  Here, the trial court denied summary judgment on liability because fact questions existed about ambiguous PMI terms and the parties’ conduct was relevant to resolving that ambiguity.  Because the evidence of parties’ conduct could reasonably vary from case to case, we cannot say that this jury’s determination should be dispositive for all claims.  Appellants also allege that it was error to base denial of certification on the existence of different PMI statutes because (1) most of the statutes cited by the trial court were enacted after this lender stopped using this PMI language, (2) none of the statutes are retroactive, and (3) the statutes do not alter pre-existing contract rights.  But contract rights depend on the meaning of the contract.  Here, because the PMI portion of the contract was ambiguous, its meaning was a fact question partially dependent upon the conduct of the parties to the contract.  The contract rights of other alleged members of the proposed class, if any, were unclear.  Absent a determination of what those rights were, the existence and extent of any impact of the various state statutes cannot be assessed. 

            In denying certification, the trial court stated that Minnesota residents may be entitled to greater damages under Minn. Stat. § 47.20, subd. 14 (1998), than if the PMI was cancelled under the terms of their mortgage contract.  Appellants allege this ruling misreads the statute.  The statute was repealed and rewritten shortly after denial of the second motion.  1999 Minn. Laws ch. 151, §§ 11, 49.  Both the past and present versions of the statute require lenders to pay “[a]ny refund or rebate for unearned [PMI] premiums” to the person who makes the mortgage payment.  Minn. Stat. § 47.20, subd. 14(b) (1998); Minn. Stat. § 47.207, subd. 5(b) (2000).  The trial court’s reading of the prior statute is consistent with the language of “any refund or rebate.”  Cf. Minn. Stat. § 645.16 (2000) (requiring courts to give statutes their ordinary meaning). 

            The trial court ruled that, under Keating v. Phillip Morris, Inc., 417 N.W.2d 132 (Minn. App. 1987), the different damage calculations required for each mortgage weighed against a determination that the predominance requirement had been satisfied.  Keating states:

Thus in cases where the fact of injury and damage breaks down in what may be characterized as “virtually a mechanical task,” “capable of mathematical or formula calculation,” the existence of individualized claims for damages seems to offer no barrier to class certification on grounds of manageability.  On the other hand, where the issue of damages and impact does not lend itself to such a mechanical calculation, but “requires separate mini-trial[s],” of an overwhelming large number of individual claims, courts have found that the “staggering problems of logistics” thus created “make the damage aspect of [the] case predominate,” and render the case unmanageable as a class action.


Id. at 137 (quoting Windham v. American Brands, Inc., 565 F.2d 59, 68 (4th Cir. 1977) (footnotes omitted), cert. denied, 435 U.S. 968, 98 S. Ct. 1605 (1978)).  Appellants allege that the damages here are the PMI premiums paid after the LTV reached 80% and that all of the information needed to make those determinations is available.  The trial court concluded that “separate mini-trials” would be needed because of the differences in state laws, the contract terms regarding PMI termination, and (for some borrowers) the payment history, length of loan, and possible breach of a mortgage contract (e.g., not making payments) to arguably justify a subsequent breach by Norwest (not terminating PMI).  The impact of state law on a contract depends at least in part on the terms of the contract.  Here, the ambiguity of the PMI terms rendered the meaning of those terms a fact question.  Resolution of those facts depended at least partially on the various potential parties’ conduct.  Similarly, the existence and impact of multiple breaches of the same contract would also require individual determination.  We conclude that the trial court did not err in its rulings. 

            Because appellants have not shown that the trial court erred in concluding that common questions would not predominate in this litigation, we need not address appellants’ other challenges to the denial of certification.  We note, however, that the possible applicability of different statutes of limitation for claims arising in different states and the possible over-breadth of the proposed class, raise questions about whether a class action is a “superior” method of resolving the claims of the class members. 


            Norwest alleges the trial court should have granted its motions for summary judgment, directed verdict, and JNOV.  The standards for these motions are similar.  Howie v. Thomas, 514 N.W.2d 822, 825 (Minn. App. 1994) (stating standards for summary judgment and directed verdict are “similar”); American Mach. & Tool Co., Inc. v. Strite-Anderson Mfg. Co., 353 N.W.2d 592, 598 (Minn. App. 1984) (stating directed verdict and JNOV have “same standard”), review denied (Minn. Sept. 12, 1984).  Summary judgment is appropriate if (1) there are no genuine issues of material fact and (2) one party is entitled to judgment as a matter of law.  State by Cooper v. French, 460 N.W.2d 2, 4 (Minn. 1990).  On appeal from a denial of summary judgment, we view the record in the light most favorable to the nonmoving party.  Fabio v. Bellomo, 504 N.W.2d 758, 761 (Minn. 1993). 

            We reject Norwest’s argument that Norwest Mortgage was entitled to judgment because it lacked privity with appellants.  Norwest Bank owned appellants’ mortgage and Norwest Mortgage acted as Norwest Bank’s agent.  Also, it appears that Norwest Mortgage is to be compensated by Norwest Bank for any loss Norwest Mortgage incurred within the scope of its agency.  Hollandale Mktg. Ass’n v. Goemat, 245 Minn. 154, 161, 72 N.W.2d 376, 380 (1955).  Even if the lack of privity argument were accepted, Norwest Mortgage was not harmed by any failure to dismiss it.  See Minn. R. Civ. P. 61 (requiring harmless error to be ignored). 

            Norwest alleges that the LACD was a condition precedent to, and not a part of, the mortgage and that the mortgage unambiguously required PMI to be paid for the life of the mortgage.  A condition precedent is “to be performed before the agreement of the parties becomes operative.”  Lake Co. v. Molan, 269 Minn. 490, 498, 131 N.W.2d 734, 740 (1964).  A “condition” that appellants pay PMI until the LTV reached 80% could not be accomplished before the loan was made and the property mortgaged.  While Norwest cites cases for the proposition that the terms of a loan-commitment letter are not terms of a mortgage, there is no indication that any of those cases involve what its own expert admitted is the singularly peculiar LACD used here. 

            Norwest alleges that the LACD “says nothing about” terminating PMI and therefore, even if the LACD is part of the mortgage contract, it does not render the PMI termination conditions ambiguous.  The LACD states that the PMI “[will] remain in force until the loan balance is reduced to 80% of the original value.”  (Emphasis added.)  While the LACD may not use the word “terminate,” the reasonable interpretation is that the PMI terminates when the LTV reaches 80%. 

            Norwest alleges that appellants waived their claim to back-PMI premiums by not requesting PMI be cancelled, despite the fact that appellants had all of the information to do so.  Generally, waiver is a jury question.  Engstrom v. Farmers & Bankers Life Ins. Co., 230 Minn. 308, 312, 41 N.W.2d 422, 424 (1950).  Here, that question was put to the jury with the instruction that Norwest requested and the jury explicitly rejected the idea. 

            Norwest also alleges that, under Carson v. Cochran, 52 Minn. 67, 53 N.W. 1130 (1892), appellants cannot recover back-PMI premiums because appellants, “without any mistake of fact,” voluntarily paid those premiums.  Norwest also argued that appellants are estopped from recovering because, by continuing to pay the PMI premiums, they induced Norwest to continue collecting and forwarding those premiums to its PMI insurer.  The record shows that appellants believed that it was Norwest’s obligation to automatically reduce the mortgage payment by the amount of the PMI premium at the appropriate time.  Appellants’ position is consistent with both the LACD’s statement that PMI would continue “until” the LTV reached 80% and with the statement in the Truth in Lending Disclosure that the mortgage payment would be reduced by an amount equal to the PMI premium in January 1996. 


            A ruling on a motion for a new trial is not reversed absent an abuse of the trial court’s discretion.  Halla Nursery, Inc. v. Baumann-Furrie & Co., 454 N.W.2d 905, 910 (Minn. 1990).  Norwest alleges it was prejudiced by certain testimony regarding the meaning of the PMI termination conditions in the mortgage and LACD.  See Uselman v. Uselman, 464 N.W.2d 130, 138 (Minn. 1990) (allowing new trial for prejudicial evidentiary rulings).  An individual with the same mortgage and LACD that appellants had, testified that Norwest refunded the PMI premiums he had paid after his LTV reached 80%.  That witness’s testimony was relevant to address how Norwest (on at least one occasion) treated the documents in question.  Norwest also alleges it was prejudiced by the trial court’s refusal to let one of its witnesses testify about Norwest’s understanding of the LACD, despite the fact that the court let appellants’ counsel question the witness on the subject.  Counsel’s questioning was brief and showed that the witness disagreed with appellants’ reading of the LACD.  It is unclear how Norwest was prejudiced when the jury heard testimony that was consistent with Norwest’s theory of defense.  Norwest also challenges the use of a deposition of its general counsel, alleging that the deposition addressed Norwest’s practices regarding truth-in-lending disclosures rather than the practices of the mortgagee bank that later sold appellants’ mortgage to Norwest.  But the truth-in-lending disclosure is required in mortgage transactions and the portion of the deposition read at trial addressed the meaning of the information contained in the disclosure.  Norwest has not shown how the jury’s understanding of the required truth-in-lending disclosure caused prejudice.

            Norwest also alleges it was prejudiced by certain jury instructions and the special verdict form.  See Molkenbur v. Hart, 411 N.W.2d 249, 254 (Minn. App. 1987) (allowing new trial for prejudicial special verdict form); Gleeman v. Tripplet, 301 Minn. 504, 506, 222 N.W.2d 787, 788 (1974) (allowing new trial for prejudicial jury instructions).  Norwest alleges that the trial court erred by telling the jury that the contract included documents other than the mortgage and the note because the existence of a contract is a jury question.  This argument is a collateral attack on the trial court’s prior rejection of Norwest’s allegation that the LACD was not a part of, but a condition precedent to, the mortgage.  Neither party disputed that a mortgage contract was formed. 

            Lastly, Norwest alleges the trial court erred in directing the jury to construe the contract against Norwest because it did not draft the contract.  But Norwest is the assignee of the mortgage.  Generally, an assignee stands in no better shoes than the assignor.  Meyers v. Postal Finance Co., 287 N.W.2d 614, 617 (Minn. 1979).


[1]  Minn. R. Civ. P. 23 “closely parallels” and “follows” Fed. R. Civ. P. 23, and has done so since the 1968 revision of the Minnesota rule.  1 David F. Herr & Roger S. Haydock, Minnesota Practice § 23.2 (1998).  Therefore, “decisions under [the federal rule] may be of greater persuasive value than the Minnesota Supreme Court’s pre-1968 rulings.”  Id.


[2]  Appellants also allege that the trial court should have certified a class under Minn. R. Civ. P. 23.02(c) at the time of appellants’ first certification motion.  Appellants’ first motion did not seek certification under that rule.  Accepting this argument would be inconsistent with the fact that the burden of showing the propriety of certification is on the party seeking certification.  Peterson v. BASF Corp., 618 N.W.2d 821, 826 (Minn. App. 2000).  Also, the authority appellants cite in support of their argument is distinguishable.  See Marshall v. Electric Hose & Rubber Co., 68 F.R.D. 287, 290-92 (D. Del. 1975) (addressing basis for certification apparently put in issue by defendant); Weit v. Continental Ill. Nat’l Bank, 60 F.R.D. 5, 7 (N.D. Ill. 1973) (addressing all bases for certification under rule 23(b) where “all the elements required by Fed. R. Civ. P. 23(a) and 23(b) are conclusionally alleged”). 


[3]  For similar reasons we reject appellants’ allegations that the order denying the second motion is internally inconsistent because it finds that the commonality and typicality requirements are satisfied but fails to find that common questions predominate this matter.