This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (2006).
IN COURT OF APPEALS
United Prairie Bank –
Haugen Nutrition & Equipment, LLC, et al.,
United Prairie Bank –
Haugen Nutrition & Equipment, LLC, et al.,
Filed May 22, 2007
Reversed and remanded
Cottonwood County District Court
File Nos. 17-CV-05-213, 17-CV-06-247
Joseph D. Roach, Patrick S. Williams, Jeffrey A. Abrahamson, Briggs and Morgan, P.A., 2200 IDS Center, 80 South Eighth Street, Minneapolis, MN 55402 (for respondent)
John E. Mack, Mack & Daby, P.A., P.O. Box 302, New London, MN 56273 (for appellants)
Considered and decided by Willis, Presiding Judge; Klaphake, Judge; and Shumaker, Judge.
U N P U B L I S H E D O P I N I O N
After the court denied respondent’s motion for summary judgment on the issue of whether or not the parties had created an equitable mortgage, the court, believing the parties agreed nevertheless to confer upon it the authority to decide the issue on that same record, granted a declaratory judgment to respondent. Because the parties did not clearly confer upon the court the authority to decide a disputed fact issue, we reverse and remand.
What began as the district court’s denial of the respondent’s partial summary-judgment motion became, without a trial, the court’s award of a declaratory judgment in respondent’s favor. The appellants claim that this award was error, that a genuine issue of material fact exists for trial, and that the declaratory judgment resulted from a misunderstanding among the parties and the court as to both the scope of the summary judgment and the scope of the court’s authority to decide as it ultimately did.
The following facts, which are
either undisputed or, if disputed, are supported by admissible evidence in
compliance with Minn. R. Civ. P. 56, show that appellants Leland Haugen and
Ilene Haugen owned a farm in
At UPB, the Haugens spoke with Theodore Devine, UPB’s vice-president and loan officer. He did not think UPB could lend the amount of money the Haugens requested but advised the Haugens that the entire refinancing could be accomplished through incorporating their business and selling their property to a third party, such as Devine’s friend Mark Sahli. In its memorandum in support of its order denying UPB’s partial summary-judgment motion, the court described the alleged plan as follows:
Ted Devine . . . advised [the Haugens] to convey their respective ownership in the Real Property to a new business entity, Haugen Nutrition & Equipment, LLC. Pursuant to this advisement and upon their own personal judgment, the Real Property was conveyed by them to Mark Sahli on September 12, 2003 via warranty deed. On the same day, Mark Sahli reportedly entered into a contract for deed with Haugen Nutrition & Equipment, LLC. Said contract for deed was signed by Ilene Haugen [for the corporation], . . . and notarized by Ted Devine. Thereafter, on October 15, 2004 the Sahlis conveyed their rights in the Real Property to [UPB] via warranty deed (in connection with their mortgage of the Real Property to [UPB] on August 29, 2003).
UPB eventually brought a quiet-title action and then moved for summary judgment on its claim that it owned the Haugen farmland. The Haugens contended that everyone involved in the refinancing plan understood and intended that the conveyance of the property to UPB was to create an equitable mortgage and not to transfer ownership of the real estate.
In its memorandum, the court stated:
The next matter for determination is whether there are genuine issues of material fact as to the existence of an equitable mortgage between [UPB] and Haugen Nutrition & Equipment, LLC. The [Haugens] assert that the actions of Mark Sahli, [UPB], and themselves constitute an equitable mortgage relationship. The Court agrees.
The court then analyzed the law of equitable mortgages, ruled that “there are genuine issues of material fact as to the existence of an equitable mortgage arrangement between [UPB] and Haugen Nutritional & Equipment, LLC[,]” and denied the motion for partial summary judgment.
UPB then moved for amended findings and for leave to file an amended complaint. In its supporting memorandum, UPB averred that the record was complete on the issue of equitable mortgage and requested the court to determine that issue. The Haugens’ attorney responded by letter indicating that he had a conflict with the hearing date set for UPB’s motions, that he believed it to be “highly probable that the trier of fact would find the transaction to be one which created an equitable mortgage . . . ,” and stated:
What I would propose is that the Court determine, on the basis of what is before it, what facts it believes would determine one way or another, whether an equitable mortgage exists, and set a hearing on the same date as [the Haugens’] motion for partial summary judgment, for another partial summary judgment to be heard on this issue. I suspect that any outstanding facts likely can be supplied by one party or both. Then the Court would be in a position to determine the equitable mortgage issue with finality and also determine what terms should be incorporated in that mortgage, should it decide that an equitable mortgage has been created.
In response to the parties’ respective filings, the court held a telephone conference with the attorneys. UPB’s attorney told the court that it had all the facts before it, that the “issue as to whether this is a contract for deed or equitable mortgage is, of course, one for the court to decide, even if there are any disputed facts. I have . . . none more to give the Court.” Haugens’ attorney indicated that nothing UPB’s lawyer had said was untrue, but that there might be facts that have to be determined at trial and he “at least would appreciate knowing what facts the Court believes would be unresolved and as are necessary to determine this issue.”
Thereafter, the court granted a declaratory judgment to UPB holding, among other things, that the Haugens “failed in their burden to prove, by clear and convincing evidence, that an equitable mortgage was created between United Prairie Bank and Haugen Nutrition and Equipment based upon the evidence within the record.” UPB then brought an unlawful-detainer action, the court issued a writ of recovery, and this appeal followed.
D E C I S I O N
On appeal, the Haugens contend that they did not concede authority to the district court to decide the issue of equitable mortgage on the record submitted. Rather, they argue that their attorney requested the court’s advice on what facts might be needed to decide that issue, and they revert to the court’s original denial of UPB’s motion for partial summary judgment. They provide no standard of review for guidance in determining their appeal.
UPB argues that the parties
conferred upon the court the authority to decide the matter on the record, and
requested that the court do so. Because
the court made its decision upon the assumption that the parties conceded its
authority to do so, and made findings of fact to support that decision, UPB
offers as the proper standard of review the question of whether the court’s
findings were clearly erroneous and whether the court erred in its conclusions
of law. Citizens State Bank of
Hayfield v. Leth, 450 N.W.2d 923, 925 (
On the issue of whether or not the
parties’ agreements, transactions, and conveyances resulted in an equitable mortgage,
the court denied UPB’s partial summary judgment, thereby holding that there
were fact questions to be resolved before that issue could be determined. Absent certification by the district court, the
denial of a summary-judgment motion is generally not appealable and is not
subject to review until the action is concluded.
Despite a court’s determination on summary judgment that a fact issue exists for trial, there is no legal prohibition against the parties to an action agreeing that the record is as complete as possible and that the court may, on that record, draw such conclusions of law and order such relief as is appropriate.
UPB believed that the parties had submitted the matter on the record that existed when the court denied the summary-judgment motion. The court also obviously believed the same thing. The Haugens thought otherwise. Thus, the first issue for us is whether it can fairly be said that the parties conferred upon the court the authority to decide the matter of the equitable mortgage on the record before it, which incidentally had not been supplemented after the court found that the very same record showed fact issues for trial.
Litigants have a right to a trial
except where there are no genuine fact issues to be litigated or where it is
clear as a matter of law that a certain outcome is compelled, and courts must
not deny that right without clear authority to do so. See
Martens v. Minn. Mining & Mfg. Co., 616 N.W.2d 732, 739 (Minn. 2000)
(stating that dismissal is proper where a complaint fails to state a claim upon
which relief may be granted); Fabio v. Bellomo, 504 N.W.2d 758, 761 (
In the attorneys’ telephone
conference with the court, counsel for UPB suggested that, in a summary-judgment
posture, the court could resolve even disputed fact issues. This, of course, was incorrect. See
DLH, Inc. v. Russ, 566 N.W.2d 60, 70 (
UPB also argues that, no matter what approach is taken to this appeal, ultimately the court’s ruling is correct because the Haugens have indeed failed to show by clear-and-convincing evidence that the parties to the various transactions intended to create an equitable mortgage.
But recognizing that we are
reviewing the posture of this case at the summary-judgment stage, the Haugens
had no burden in response to UPB’s partial summary-judgment motion to show that
clear-and-convincing evidence existed on the issue of the equitable
mortgage. See Schroeder v.
Thus, we reverse all rulings subsequent to the court’s denial of UPB’s summary-judgment motion, and we remand the case for reinstatement at that stage of the proceedings.
Reversed and remanded.