This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (2004).
IN COURT OF APPEALS
New Hope One LLC,
Nielsen's Equipment & Design, Inc., et al.,
Hennepin County District Court
File No. HC-05-08-11521
Howard Roston, Patrick B. Steinhoff, Malkerson Gilliland Martin LLP, Suite 1900, U.S. Bank Plaza, 220 South Sixth Street, Minneapolis, MN 55402 (for respondent)
Timothy R. Maher, Boris Parker, Saliterman & Siefferman, P.C., Suite 2000, U.S. Bank Plaza, 220 South Sixth Street, Minneapolis, MN 55402 (for appellant)
Considered and decided by Peterson, Presiding Judge; Halbrooks, Judge; and Minge, Judge.
Appellant challenges the summary judgment ordering its eviction and denial of its motion for a continuance. Because the lease that governed appellant’s subtenancy was terminated as a result of the mortgage foreclosure, the district court did not err in granting summary judgment on respondent’s eviction petition. Similarly, because appellant did not have a valid lease, the district court did not err in dismissing appellant’s counterclaims nor did it abuse its discretion by denying appellant’s motion for a continuance.
is an appeal from summary judgment granted by the district court in favor of
respondent New Hope One, LLC (
January 21, 2000, D&L executed a second mortgage secured by the
D&L defaulted on the first mortgage, and Anchor Bank initiated a
foreclosure. Anchor Bank purchased the
the expiration of the redemption period,
first issue is whether the district court erred in granting summary judgment
[T]here is no genuine issue of material fact for trial when the nonmoving party presents evidence which merely creates a metaphysical doubt as to a factual issue and which is not sufficiently probative with respect to an essential element of the nonmoving party’s case to permit reasonable persons to draw different conclusions.
Inc. v. Russ, 566 N.W.2d 60, 71 (
A. Leases after Foreclosure
district court granted summary judgment for
common law, a mortgage foreclosure extinguishes subordinate leases on the
property. Geo. Benz & Sons v.
Nielsen’s lease was subordinate to the foreclosed mortgage, Nielsen’s lease was
extinguished. Because ViroGen’s
possessory interest in the
B. Contractual Limits
urges that this conclusion should be modified because of provisions in various
agreements. Where the contract is clear
and unambiguous, “the reviewing court cannot go beyond the language of the
contract in interpreting it.” S O Designs USA, Inc. v. Rollerblade, Inc.,
620 N.W.2d 48, 53 (
1. Financing Agreement
points out that
2. Lease Subordination
ViroGen also points to the terms of the various subordination agreements among the parties. First, Nielsen’s lease with D&L provides that if “the interests of [D&L] under this Lease shall be transferred by reason of foreclosure . . . [and] if requested by the Purchaser, [Nielsen] agrees to attorn to the Purchaser, including the mortgagee under any such mortgage if it be the Purchaser, as its Landlord.” (Emphasis added.) The Lease Subordination Agreement further provides that if Anchor Bank did not terminate the lease upon a foreclosure of its mortgage, Nielsen was required to attorn to and recognize Anchor Bank, “its successors and assigns, or any purchaser at the foreclosure sale (a “New Owner”), as its substitute lessor under the Lease.” ViroGen asserts that if Nielsen successfully attorned, then Anchor Bank would not disturb its tenancy under the Lease.
ViroGen argues that its rights are analogous to Nielsen’s by terms of the lease and sublease. It reasons that because the Lease Subordination Agreement requires Nielsen (and by extension, ViroGen) to attorn to a new owner, including a new owner after a foreclosure sale, because ViroGen was offering to attorn when it sent New Hope rent checks, and because New Hope accepted and cashed the checks, New Hope had accepted ViroGen’s implicit offer to attorn and had accepted ViroGen as its tenant. ViroGen contends that the attornment language in the Lease Subordination Agreement supersedes the common law rule that foreclosure of a mortgage extinguishes a subordinate lease.
Dictionary defines “attorn” as “[t]o agree to be the tenant of a new
landlord.” Black’s Law Dictionary 124 (7th ed. 1999). First, this definition indicates that the
tenant has a duty to recognize a new landlord where the tenant has agreed to
attorn. Yet, the definition does not
suggest that a new landlord must accept a tenant who attempts to attorn. Second, Nielsen’s lease with D&L provides
that if D&L’s interest is transferred as a result of a foreclosure sale,
Nielsen agrees to attorn if requested to
do so by the purchaser. Therefore,
Nielsen’s lease, of which ViroGen’s sublease is derivative, provides that the
tenant has a duty to attorn when requested to do so. The concept of attornment detailed in the Lease
Subordination Agreement should be similarly understood, as the agreement was
executed in the context of Nielsen’s lease.
Thus, ViroGen may have had a duty to attorn, but not an absolute right
to burden a new fee-simple owner of the
stated earlier, the foreclosure sale extinguished Nielsen’s lease and created a
second issue is whether the district court erred in dismissing ViroGen’s
counterclaims. ViroGen asserted two
unlawful detainer action “usually does not bar subsequent actions involving
title or equitable rights of the parties.”
Lilyerd v. Carlson, 499 N.W.2d
803, 812 (
If [Anchor Bank] or a New Owner becomes the owner of the [Quebec property] as a result of a foreclosure sale . . . , [Nielsen] shall have no claim against [Anchor Bank] or the New Owner resulting from, and [Anchor Bank] and the New Owner shall not be liable for, any act, omission, and/or breach of the Lease by any prior or subsequent landlord under the Lease.
Applying this language to the
earlier analysis of
third issue is whether the district court abused its discretion in denying
ViroGen’s motion for a continuance to conduct additional discovery. Denial of a motion to continue for additional
discovery is reviewed for an abuse of discretion.
utilize a two-part test to determine whether to grant a continuance: (1)
whether the party seeking the continuance has been diligent in obtaining or
seeking discovery; and (2) whether the party is seeking the continuance in the
good faith belief that material facts will be uncovered, or whether the party is
merely engaging in a fishing expedition.
Rice v. Perl, 320 N.W.2d 407,
ViroGen challenges the district court’s consideration of the affidavit to Mark
Lauffenburger, Anchor Bank’s senior vice president. ViroGen moved the district court for a
continuance to conduct a deposition of Lauffenburger, which the district court
denied. ViroGen, however, does not
identify the information it seeks to obtain via further discovery. The affidavit essentially mirrors the
 D&L and Anchor Bank subsequently executed a second mortgage. For ease of discussion, both Anchor Bank mortgages are referred to as first mortgage to reflect that Anchor Bank was the most senior creditor of D&L.
ViroGen’s claim that it had a nondisturbance agreement with
Eviction actions are special proceedings that usually do not include
consideration of ancillary matters related to title and disputes between the
parties based on other considerations. See Lilyerd
v. Carlson, 499 N.W.2d 803, 812 (