This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480A.08, subd. 3 (1996).

STATE OF MINNESOTA

IN COURT OF APPEALS

C3-96-1643

Brian P. Norris,

Appellant,

vs.

BankAmerica Business Credit, Inc.,

a Delaware corporation, et al.,

Respondents.

Filed April 1, 1997

Affirmed

Davies, Judge

Norton, Judge, Dissenting

Hennepin County District Court

File No. 9413897

Eric J. Magnuson, Rider, Bennett, Egan & Arundel, 2000 Metropolitan Centre, 333 S. Seventh St., Minneapolis, MN 55402 (for Appellant)

Phillip Gainsley, Phillip Gainsley Law Office, 701 Fourth Ave. S., Suite 527, Minneapolis, MN 55415-1600 (for Appellant)

Thomas E. Harms, Susan Rester Miles, John J. Choi, Hessian, McKasy & Soderberg, P.A., 4700 IDS Center, Minneapolis, MN 55402 (for Respondents)

Considered and decided by Norton, Presiding Judge, Kalitowski, Judge, and Davies, Judge.

U N P U B L I S H E D O P I N I O N

DAVIES, Judge

Appellant challenges summary judgment, contending the district court erred in ruling as a matter of law that appellant's right of first refusal had not been triggered. We affirm.

FACTS

Appellant Brian Norris sold his company to The Palaru Corporation. Respondent Security Pacific Business Credit, Inc. (Security Pacific), the predecessor in interest to respondent BankAmerica Business Credit, Inc. (the bank), served as the asset-backed lender for the transaction. At the sale, Norris and Security Pacific entered into an agreement granting Norris the right of first refusal to repurchase the company. The agreement provides:

In the event Grantor [now the bank[1]] acquires title to the Property, directly or indirectly, including but not limited to, through the acquisition of the stock of any corporation controlling such property * * *, Grantor shall not, directly or indirectly, grant, sell, transfer, exchange, assign, lease, encumber, give or otherwise dispose of the Property * * * except (i) to an affiliate of Grantor or (ii) in accordance with the terms and conditions stated herein and until at least sixty (60) days after it has given written notice to Grantee of its intention to make any such disposition (a "Sale Notice").

When Palaru later experienced financial difficulties, it worked out a liquidation plan and, with the approval of the bank, sold to a third party. Norris was not accorded a right of first refusal.

Norris brought this action against the bank, alleging breach of the right-of-first-refusal agreement. The bank moved for summary judgment, contending that it never had "directly or indirectly" acquired title to the property at issue and, thus, the obligation to accord Norris the right of first refusal had not been triggered. The district court determined that Norris failed to present any evidence showing that the bank ever directly gained title to the property and that the bank's directions to Palaru's officers did not constitute an indirect acquisition of title. Concluding that none of the bank's actions had triggered the right of first refusal, the court granted summary judgment and dismissed Norris's claim.

D E C I S I O N

Norris challenges summary judgment, arguing that it was a question for a jury whether the bank had acquired title to corporate assets contemplated by the contract. On review of summary judgment, this court must determine whether any genuine issues of material fact exist and whether the district court erred in its application of the law. Wartnick v. Moss & Barnett, 490 N.W.2d 108, 112 (Minn. 1992). We must view the evidence in the light most favorable to Norris, the party against whom judgment was granted. Fabio v. Bellomo, 504 N.W.2d 758, 761 (Minn. 1993).

Norris contends that the district court erred in ruling that the bank never acquired direct or indirect title of Palaru's assets. We disagree. Under the plain language of the contract, the right of first refusal was triggered only if the bank "acquire[d] title" to corporate property "directly or indirectly."

"Indirectly" may, in this contract, be ambiguous, but the word "title" is unambiguous and the case turns on that term. In interpreting an unambiguous contract, the court must ascertain the parties' intent from the plain meaning of its language. Metropolitan Sports Facilities Comm'n v. General Mills, Inc., 470 N.W.2d 118, 123 (Minn. 1991). "A party cannot alter unequivocal language of a contract with speculation of an unexpressed intent of the parties." Id.

Title is defined as

the means whereby the owner of lands has the just possession of his property. The union of all the elements which constitute ownership.

Black's Law Dictionary 1485 (6th ed. 1990).

The clear language of the agreement required the bank to notify Norris only if it acquired "title" to Palaru's assets. Even though the record contains evidence that the bank exercised significant control over Palaru's management during the liquidation process, that control did not constitute title. The Palaru Corporation continued to hold title to its assets until it conveyed them directly to a third party. The bank never foreclosed its security interest.

Nor did the bank acquire title when it took brief custody of the assets to protect the property on which it had a security interest. The bank immediately returned the property to Palaru. This was the lawful action of a party with a security interest, not the action of a holder of title.[2]

Even assuming the facts are as alleged by Norris, the district court properly ruled that the bank had no duty to offer Norris the right of first refusal. Summary judgment for the bank was proper.

Affirmed.

NORTON, Judge (dissenting).

I respectfully dissent because Norris has raised an issue of fact regarding the bank's acquisition of title. See Minn. R. Civ. P. 56.03 (summary judgment is warranted only when no genuine issues of material fact exist and when party is entitled to judgment as matter of law). Under the parties' right of first refusal agreement, the bank had a duty to notify Norris if it "directly or indirectly" acquired title to Palaru's corporate property.

The majority has held that the bank had no obligation to notify Norris because the bank's limited control over Palaru's assets did not amount to any form of title. I agree with the majority that the bank never took direct title by foreclosing on the loan, but, nevertheless, I believe a fact question arises whether the bank's conduct during the liquidation process reached the level of indirect title that invoked the bank's duty to notify Norris of the impending sale. We can assume that the language of the right of first refusal required more than the security interest alone to constitute "indirect" title because the bank took a security interest in the corporate assets concurrent with Norris's right of first refusal. But what actually would create "indirect title" is unknown; the term is undefined in the parties' contract and is ambiguous due to their conflicting arguments over its interpretation. Disagreement between parties over the interpretation of a writing they negotiated "may be tantamount to a finding of ambiguity." Erickson v. Erickson, 449 N.W.2d 173, 178 (Minn. 1989) (finding ambiguity when parties disagreed over terms of dissolution decree that had incorporated verbatim portion of marital termination agreement that parties had negotiated).

Furthermore, the majority has determined the title issue as a matter of law even though Norris has presented sufficient evidence regarding the bank's conduct to raise a question of fact over indirect title. The record shows that the bank was the engine behind the liquidation effort. The bank hired security guards to lock up Palaru's corporate offices. Under the liquidation plan, all residual Palaru administrators and staff were "acting for the benefit of" of the bank and were under the bank's supervision. The bank went so far as to encourage Palaru to play the two bidders against one another in order to obtain the highest price in the sale. Arguably, the bank's conduct and control of corporate assets during liquidation constituted indirect title. Contrary to the district court and the majority, this record does not establish, as a matter of law, that the bank lacked indirect title. Whether the bank's conduct in conjunction with its security interest constituted indirect title is a genuine issue of material fact for the jury to determine. See Marso v. Mankato Clinic, 278 Minn. 104, 114, 153 N.W.2d 281, 288 (1967) (construction of ambiguous language is question of fact).

Finally, the majority has erroneously construed the parties' contract so as not to give meaning to the term "indirect title" nor to give effect to the parties' distinction between direct and indirect title. See Chergosky v. Crosstown Bell, Inc., 463 N.W.2d 522, 526 (Minn. 1990) (court should construe contract to give effect to all terms and avoid rendering provisions meaningless). In focusing only on the term "title," the majority fails to address the parties' inclusion of the modifiers "direct" and "indirect." The inclusion of the broader term "indirect title" suggests that the parties may have chosen the language to give Norris more opportunity for notice. Norris has raised a question of fact for the trial court. Therefore, I believe summary judgment for the bank was improper.

[ ]1 As Security Pacific's successor in interest, the bank took over the rights and duties of the agreement.

[ ]2 The dissent requires a direct response, but one that does not fit neatly into the opinion--thus this footnote.

The dissent makes much of the fact that the parties have not defined what they mean by title acquired "indirectly." We are, we concede, left to speculate over what the parties had in mind by use of the term "indirectly" (if anything beyond title through a subsidiary, the one illustration given in the contract).

In any event, what the parties said in the contract was "title," not "control." The bank did exercise significant control through the leverage obtained under its security interest. But control is not title. The bank never foreclosed its security interest, nor did anyone do anything else that would give title to the bank (or to a subsidiary, or a partnership it owned, or a straw man, or a receiver, or a trustee).

This is a case for summary judgment because, taking the facts as Norris asserts them to be, we are left with the legal question of whether those facts can support the conclusion that the bank acquired title. The facts in no way do so.