This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480A.08, subd. 3 (2002).

 

STATE OF MINNESOTA

IN COURT OF APPEALS

A03-1856

 

In the Matter of:  Indenture of Trust, dated October 1, 1985,

between Minneapolis Community Development Agency and

National City Bank of Minneapolis, as Trustee,

Relating to the $10,000,000 Commercial Development Revenue Bonds,

Series 1985 (Crown Mill Project) 

 

 

Filed July 27, 2004

Affirmed

Randall, Judge

 

            Hennepin County District Court

File No. C1-91-57

 

Mark A. Greenman, Greenman & Ostrom, 301 Fourth Avenue South, Suite 270, Minneapolis, MN  55415 (for appellant Ross Dworsky)

 

Bonnie L. Wilkins, John M. LeFevre, Jr., Larry M. Wertheim, Kennedy & Graven, Chartered, 200 South Sixth Street, Suite 470, Minneapolis, MN  55402 (for respondent Marshall & Isley Trust Co.)

 

            Considered and decided by Wright, Presiding Judge, Randall, Judge, and Kalitowski, Judge.

U N P U B L I S H E D  O P I N I O N

RANDALL, Judge

On appeal from an order denying his motion to vacate an order approving a settlement agreement for lack of jurisdiction, appellant Ross Dworsky argues that (1) the trustee’s failure to mail him notice of hearing was a jurisdictional defect; (2) he was a known beneficiary trustee; and (3) the trustee was required to mail him notice of hearing under Minn. Stat. § 501B.18 (2002).  We affirm.

FACTS

 

            Canal Street Limited Partnership (Partnership) is the owner of the Crown Roller Mill Building located in Minneapolis.  The construction and rehabilitation of this building was financed, in part, by the issuance of $10,000,000 in bonds.  In connection with the issuance of the bonds, the Minneapolis Community Development Center and trustee National City Bank of Minneapolis entered into an Indenture of Trust dated October 1, 1985.  Respondent Marshall & Isley Trust Company became the successor trustee for the Indenture.[1]  The bonds were issued under the terms of a loan agreement that was secured by a mortgage, a security agreement, and an assignment of rents and leases. 

            In 1989, the Partnership went into default under the loan agreement.  The Partnership filed for bankruptcy and developed a reorganization plan, which provided that the bond debt would be restructured as a cash-flow mortgage.  In 2002, the Partnership sued respondent, alleging that it should receive credit for prepayment of the bond debt in the amount of $2.8 million.  Respondent filed a counterclaim against the Partnership, requesting the district court to determine whether the bondholders were entitled to excess cash flow from the Partnership. 

            Appellant Ross Dworsky became involved in the litigation between respondent and the Partnership.  In a September 2002 letter to respondent, appellant asserted that he was the majority bondholder under the trust and urged respondent to take certain positions regarding the Partnership’s obligation to the bond debt.  Appellant held his bonds with broker Miller, Johnson & Kuehn (MJK).  In November 2002, appellant entered into an agreement with respondent to fund the litigation on behalf of him and the other bondholders.[2] 

            According to respondent’s attorney, John LeFevre, appellant attended a portion of the trial in April 2003.  In his affidavit, LeFevre stated that when settlement discussions commenced, appellant participated in the initial discussion, and respondent kept him informed of the status of the negotiations.  LeFevre also stated that after a tentative settlement agreement was reached, appellant reviewed the proposed settlement agreement with LeFevre in LeFevre’s law office. 

On June 3, 2003, the Partnership and respondent entered into a settlement agreement to resolve the lawsuit.  On June 12, after the agreement was executed, LeFevre sent a copy of the settlement agreement to appellant and informed him that the agreement would be presented to the court for approval.  The letter was addressed to appellant’s home address and stated that “[i]f you intend to object to the proposed settlement, then you will have an opportunity to do so in the course of the court process.” 

Because a trust was involved, court approval of the settlement agreement was required.  On June 18, 2003, respondent filed a “Petition for Court Order” under Minn. Stat. § 501B.16 (2002) to approve the agreement.  On June 20, 2003, the district court issued an “Order for Hearing,” indicating that a hearing on respondent’s petition would take place on July 16, 2003.  The court also stated that:

A copy of this order for hearing shall be published, at least 20 days before the date of the hearing, once in Finance and Commerce, the legal newspaper for Hennepin County, which is the county in which the Petition is filed, and shall be mailed, at least 15 days before the date of the hearing, to those beneficiaries of the Indenture who are known to or are reasonably ascertainable by the Petitioner at the last known address of said beneficiaries, all in accordance with Minn. Stat. § 501B.18.

 

On June 21, 2003, a copy of the order for hearing was published in Finance and Commerce, which is the legal newspaper for Hennepin County.  On June 27, respondent prepared a notice of the order for hearing for all parties listed on its bond register.  The bond register refers to each of the outstanding bonds by CUSIP number and states both the name and the address of the record owner of each bond.  Notice was mailed to all bond owners at the last known address as identified in the bond register.

On June 30, 2003, Bonnie Wilkins, another attorney for respondent, stated that she and appellant specifically discussed the upcoming hearing scheduled for July 16.  Appellant told Wilkins that he wanted the Partnership’s financial information so he could decide whether to object to respondent’s petition.  Wilkins agreed to provide appellant with a recent Partnership monthly report, which appellant stated that he would pick up at her law office.  Although appellant came to pick up the financial documents a few days later, the documents were instead inadvertently mailed to appellant.  According to Wilkins, she and appellant again discussed the upcoming hearing while the financial documents were being photocopied for appellant. 

In his affidavit, LeFevre also stated that on July 15, 2003, the day before the hearing, he spoke with appellant in a telephone conversation and reminded him that the court hearing was scheduled for the following day. 

            On July 16, the district court held a hearing on respondent’s petition for court approval of the settlement agreement.  It is undisputed that appellant did not attend the hearing and did not receive the notice respondent sent to persons listed in its bond register.  In its order issued the same day, the district court found that:

Copies of the Order for Hearing, and of the Disclosure Statement prepared at the Trustee’s direction, were mailed on June 27, 2003, to all of the Bondholders of the Bonds set forth on the Bondholder list, who constitute all beneficiaries of the trust who are known to or reasonably ascertainable by the Trustee, at the last known address of said beneficiaries. 

 

The court concluded that respondent had complied with all the procedural requirements under Minn. Stat. § 501B.18 and approved the settlement agreement. Respondent subsequently mailed copies of the notice of filing the July 16 order in the same manner as it mailed copies of the order for hearing.

            Appellant appealed the district court’s July 16 order to this court, but later dismissed the appeal.  Appellant then moved the district court for an order vacating its July 16 order.  Appellant argued that because respondent failed to mail him notice of the order for hearing as required under Minn. Stat. § 501B.18, the court lacked jurisdiction to grant respondent’s petition.  The district court denied appellant’s motion.  The court concluded that respondent satisfied its obligations as trustee under the statute, and that the court had jurisdiction to issue its July 16 order.  The district court also noted that appellant was not listed in the bond register and that appellant had actual notice of the hearing.  This appeal follows.

D E C I S I O N

 

1.      Appealable Order

 

            As a preliminary matter, respondent argues that this court does not have jurisdiction to consider this appeal.  Appellant appeals from an order denying his motion to vacate a previous judgment by the district court.  Respondent argues that because an appeal from an order denying a motion to vacate is not appealable by statute or under the decisions of the Minnesota appellate courts, it is not authorized under Minn. R. Civ. App. P. 103.03.  

            Generally, an order denying a motion to vacate a final judgment is not appealable.  Angelos v. Angelos, 367 N.W.2d 518, 519 (Minn. 1985).  “The word ‘final’ when used to designate the effect of a trial court’s judgment or order means that the matter is conclusively terminated so far as the court issuing the order is concerned.”  City of Chaska v. Chaska Township, 271 Minn. 139, 142, 135 N.W.2d 195, 197 (1965).  Typically, “[t]he proper appeal from a final judgment is from the underlying judgment itself.”  Carlson v. Panuska, 555 N.W.2d 745, 746 (Minn. 1996) (citation omitted).         But, in some cases denials of motions to vacate may be appealable.  See Fink v. Shutt, 445 N.W.2d 869, 870 (Minn. App. 1989).  “The critical factor is whether [the] defendant participated in the original action so that an appeal from the judgment would also raise the propriety of its vacation.”  Spicer v. Carefree Vacations, Inc., 370 N.W.2d 424, 425 (Minn. 1985).  The denial of a motion to vacate a default judgment is not appealable when the appealing party appeared and participated in the underlying action.  Carlson, 555 N.W.2d at 747.

            The district court rejected appellant’s motion to vacate, reasoning that respondent complied with the procedural requirements under Minn. Stat. § 501.18, and the court had jurisdiction to consider the matter.  The court also concluded that appellant had actual notice of the hearing.  But, whether appellant had actual knowledge of the hearing and consciously declined an opportunity to join the proceedings is irrelevant.  See Spicer, 370 N.W.2d at 425 (stating that “[t]he appealability of an order refusing to vacate a default judgment does not depend on whether a defendant had actual knowledge of the suit before the time to appeal from the judgment has expired.”).  Although appellant may have participated in some parts of the prior litigation between respondent and the Partnership, he did not participate in the petition for court approval of the settlement agreement.  Appellant claims he never received notice of the hearing.  Therefore, appealing the denial of his motion to vacate is the only method by which his arguments can be presented for appellate review.  Appellant has the right to appeal from the order denying his motion to vacate, and, thus, we have jurisdiction to consider this appeal.

2.  Notice Requirement

            Appellant argues that the district court did not have jurisdiction to approve the settlement agreement between respondent and the Partnership because the procedural requirements under Minn. Stat. § 501B.18 (2002) were not properly followed.  He contends that respondent failed to mail him notice of the hearing regarding respondent’s petition to approve the settlement agreement.  We disagree.

            The denial of a motion to vacate will not be disturbed absent an abuse of discretion.  Foerster v. Folland, 498 N.W.2d 459, 460 (Minn. 1993).  On appeal, we review the district court’s findings of fact under “a clearly erroneous” standard.  First Trust Co. v. Union Depot Place, 476 N.W.2d 178, 181 (Minn. App. 1991), review denied (Minn. Dec. 13, 1991).

            A trustee of an express trust may petition the district court for an order with respect to matters enumerated in Minn. Stat. § 501B.16 (2002).  A trustee may petition the district court for an order “to construe, interpret, or reform the terms of a trust, or authorize a deviation from the terms of a trust.”  Minn. Stat. § 501B.16(4).  A trustee may also petition the court “to instruct the trustee, beneficiaries, and any other interested parties in any matter relating to the administration of the trust and the discharge of the trustee’s duties.”  Minn. Stat. § 501B.16(23).  The district court has in rem jurisdiction once it assumes jurisdiction of the trust.  Minn. Stat. § 501B.24.  “The primary function of the court in exercising jurisdiction over trusts is to preserve them and to secure their administration according to their terms.”  In re Trusts of Campbell, 258 N.W.2d 856, 868 (Minn. 1977).  After a hearing, the district court “shall make an order it considers appropriate.”  Minn. Stat. § 501B.21 (2002). 

            Questions of statutory construction are reviewed de novo.  Burkstrand v. Burkstrand, 632 N.W.2d 206, 209 (Minn. 2001).  A fundamental rule of statutory construction is to initially consider specific language and its natural and most obvious meaning.  State v. Edwards, 589 N.W.2d 807, 810 (Minn. App. 1999), review denied (Minn. May 18, 1999).  However, when a statute is reasonably susceptible to more than one meaning, it is ambiguous and subject to statutory interpretation.  Westchester Fire Ins. Co. v. Hasbargen, 632 N.W.2d 754, 756 (Minn. App. 2001).  The goal of statutory interpretation is to ascertain and effectuate legislative intent.  Minn. Stat. § 645.16 (2002).
            Minn. Stat. § 501B.18 (2002) states:

Upon the filing of a petition under section 501B.16, the court shall, by order, fix a time and place for a hearing, unless notice and hearing have been waived in writing by the beneficiaries of the trust then in being. Unless waived, notice of the hearing must be given as follows: (1) by publishing, at least 20 days before the date of the hearing, a copy of the order for hearing one time in a legal newspaper for the county in which the petition is filed; and (2) by mailing, at least 15 days before the date of the hearing, a copy of the order for hearing to those beneficiaries of the trust who are known to or reasonably ascertainable by the petitioner. In the case of a beneficiary who is a minor or an incapacitated person as defined in section 525.54 and for whom a conservator, guardian, or guardian ad litem known to the petitioner has been appointed, notice must be mailed to that fiduciary. Notice may be given in any other manner the court orders.

(Emphasis added).

            Appellant argues that because he was a known beneficiary under the language of the statute, respondent was required to personally mail him notice of the order regarding respondent’s petition for court approval of the settlement agreement.  Respondent argues that mailing notice to all bondholders listed in its bond register complied with the notice requirement under the statute.  Respondent contends that its standard practice is to use the bond register for purposes of determining bond ownership and addresses when it sends notice and monetary distributions. 

            The statute uses the language “known to” or “reasonably ascertainable.”  Minn. Stat. § 501B.18 (2002).  Here, respondent sent notice to all beneficiaries who were listed in its bond register.  Respondent’s bond register did not identify appellant personally as a bondholder, and, thus, respondent apparently sent notice to MJK, appellant’s broker.  Therefore, respondent’s standard practice of using the bond register for purposes of mailing notice to the bondholders fulfills the notice requirements of the statute.  Further, the statute states that “[n]otice may be given in any other manner the court orders.”  Minn. Stat. § 501B.18.  The district court directed respondent to mail copies of the notice of hearing to “those beneficiaries of the Indenture,” and the Indenture itself directs respondent to those names listed in the Bond Register.  The Indenture of Trust specifically states that:

The Bond Register shall contain a record or every Bond at any time authenticated hereunder, together with the name and address of the Holder thereof, the date of authentication, the date of transfer or payment, and such other matters as are appropriate for the Bond Register in the estimation of the Trustee.

            Although appellant concedes that it is an acceptable practice to send notice to a nominee when the beneficial owner is unknown, he argues that because respondent had independent knowledge that he was a beneficiary, it should have sent him personal notice.  The district court did not specifically determine whether respondent was aware of appellant’s status as a beneficiary.  In its order denying appellant’s motion to vacate, the district court stated “[a]rguably the better practice for [respondent] would have been to mail a copy of the Order for Hearing to both [appellant] personally and to the registered owner of the bonds he claimed to own.”  However, even assuming respondent had actual notice that appellant was a beneficiary of the trust, it was still reasonable for respondent to send notice only to the names listed in its bond register.  It would be impractical to first require the petitioner to determine if the person listed in its bond register holds the bonds as a nominee or beneficiary, and then send notice to all the nominees as well as to the actual beneficiaries it discovered, assuming it could determine their addresses.  We conclude that it was reasonable for respondent and the district court to determine that mailing notices to all the bondholders listed in the bond register would satisfy the notice requirement.   

Appellant, as a bondholder, had a right to be treated fairly.  The record gives no indication that he was not.  There is no issue of prejudice.  As respondent points out, the district court found that appellant’s actual notice of the hearing cured any technical defects in the mailing.  On these facts, we agree with respondent.

Appellant failed to show any real prejudice by his failure to receive mailed notice.  The record shows that appellant was kept advised and had actual knowledge of the hearing.  At the hearing regarding appellant’s motion to vacate, appellant did not dispute that he and respondent’s attorneys discussed the July 16 hearing.  Appellant simply maintains that regardless of his actual notice and lack of ability to show substantial prejudice, respondent committed a substantial error by failing to mail him notice of the hearing.  We disagree.  Appellant participated in the litigation and was aware of the settlement agreement.  Although it is puzzling that appellant did not receive notice of the order for hearing because he had received other documentation from respondent in the past, one of the documents he did receive was a copy of the settlement agreement, which, importantly, stated that it needed court approval.  Respondent’s attorneys then had several discussions with appellant about the date of the hearing and its proceedings.  Appellant had actual notice of the hearing.  He now chooses to argue that he did not “receive notice” in the mail.  We cannot say that appellant was treated unfairly, and we are not sure what relief appellant is really after.

            We conclude that respondent complied with the notice requirements under Minn. Stat. § 501B.18 (2002) and that appellant failed to show any prejudice from respondent’s failure to mail him personal notice of the hearing.  The district court had jurisdiction to grant respondent’s petition.  Respondent substantially complied with the notice
requirements set forth in Minn. Stat. 501B.18.  The district court did not abuse its discretion by denying appellant’s motion to vacate.

            Affirmed.



[1]  The record is unclear as to when respondent became successor trustee.

[2]  As part of the agreement, appellant agreed to advance respondent $150,000 for attorney fees.