This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. ß 480A.08, subd. 3 (2004).






Arrowhead Bluffs, Inc., et al.,





Paul S. Blackburn,



Justin E. Blackburn, et al.,



Filed March 29, 2005

Reversed and remanded

Kalitowski, Judge


Wabasha County District Court

File No. C3-00-684


James P. Ryan, Jr., DeAnna J. Schleusner, Ryan & Grinde, Ltd., 407 14th Street Northwest, P.O. Box 6667, Rochester, MN† 55903-6667 (for appellants)


James R. Doran, William C. Weeding, Doran Law Office, 416 East Hennepin Avenue, Minneapolis, MN55414 (for respondent)


††††††††††† Considered and decided by Kalitowski, Presiding Judge; Klaphake, Judge; and Peterson, Judge.

U N P U B L I S H E D†† O P I N I O N


††††††††††† Appellants Arrowhead Bluffs, Inc. and its shareholders contend that the district court lacked jurisdiction to address the enforceability of respondent Paul Blackburnís contract interest in certain property because the case was final after an earlier appeal.† Accordingly, they assert the district court erred in denying their motion to vacate the judgment as void under Minn. R. Civ. P. 60.02(d).† We reverse and remand.


††††††††††† Arrowhead Bluffs and its shareholders brought a lawsuit against Justin Blackburn and respondent Paul Blackburn, among others, to have a note, a personal guarantee, and a mortgage lien set aside based on various fraud and misrepresentation claims (fraud action).† Arrowhead Bluffs, Inc. v. Blackburn, Nos. C8-03-301, A03-755 (Minn. App. Nov. 25, 2003), review denied (Minn. Feb. 17, 2004).† Justin Blackburn counterclaimed to enforce the note, guarantee, and lien.† After Arrowhead presented its evidence, the district court directed a verdict against Arrowhead on its fraud and misrepresentation claims.† Justin Blackburnís counterclaim went to the jury, which found against him.† After denial of posttrial motions, an appeal followed.† This court affirmed on November 25, 2003, and the supreme court denied the petition for review on February 17, 2004.† Arrowhead Bluffs, Nos. C8-03-301, A03-755.

††††††††††† Meanwhile, on April 22, 2003, Arrowhead commenced a new action, a proceeding subsequent to initial registration pursuant to Minn. Stat. ß 508.671 (2004), in an attempt to clear title of its land so that it could sell it.[1]† Arrowhead brought an order to show cause, seeking to discharge the mortgage of record and the lien, based on the jury verdict and judgment in its fraud action.† On May 13, 2003, the district court denied the motion on the ground that the appeal was pending.

††††††††††† On May 23, 2003, the parties entered into a stipulation backed by a letter of credit.† Essentially, the stipulation provided that the mortgage on most of Arrowheadís property would be released, so that Arrowhead could sell the land.† At the same time, the settlement provided for a payment to Paul and Justin Blackburn through a letter of credit if and when either obtained a valid, nonappealable judicial finding that the note, guarantee, and lien were enforceable.† The settlement provided that it could be filed in either the fraud action or the proceeding-subsequent-to-registration action.

††††††††††† In 2004, Paul Blackburn brought a motion in the fraud action for an order directing the bank to pay him $92,500 on the letter of credit, on the ground that under its terms, once a final, nonappealable order is entered finding the agreement enforceable, the letter of credit is payable without need for additional action.† At the hearing, Paul Blackburn also sought, in the alternative, a determination that he had an enforceable note, guarantee, and lien.† The district court held that the enforcement and validity of Paul Blackburnís contract interest in the property had been fully litigated and determined with finality in the fraud action, and that his contract interest was enforceable.† Arrowhead made a motion under Minn. R. Civ. P. 60.02(d) to vacate the judgment as void.† The district court denied the motion.† This appeal followed.

We conclude that there are several issues argued here on appeal that were not addressed by the district court, including:† (1) whether Paul Blackburn was required to file a compulsory counterclaim in the fraud action under Minn. R. Civ. P. 13.01; (2) whether the doctrines of res judicata or law of the case apply to preclude any claims brought now by Paul Blackburn to enforce the note, guarantee, and lien; (3) the effect of the decision of the earlier appeal in this case on Paul Blackburn, who had been dismissed as a defendant before trial was completed; and (4) whether the district court had jurisdiction over Paul Blackburnís claim or whether Blackburn was required to bring a separate action to have it resolved.

Because this court will not decide matters not argued and considered by the district court, Thiele v. Stich, 425 N.W.2d 580, 582 (Minn. 1988), we reverse and remand these issues to the district court to be addressed in such proceedings as the district court deems appropriate.

††††††††††† Reversed and remanded.

[1] Appellate courts generally apply the law as it exists at the time they rule on a case, unless a change in the law affects rights that were vested before the change.† See Interstate Power Co., Inc. v. Nobles County Bd. of Commírs, 617 N.W.2d 566, 575 (Minn. 2000).† Because there is no such change in Minn. Stat. ß 508.671, this opinion cites the current version thereof.