A05-193

Case Credit Corporation,

Respondent,

vs.

Hydra-Mac, Inc., et al.,

Appellants.

Filed October 25, 2005

Affirmed

Worke, Judge

Pennington County District Court

File No. C5-04-662

Daniel A. Haws, Kelly S. Hadac, Murnane, Conlin, White & Brandt, P.A., 444 Cedar Street, Suite 1800, St. Paul, MN 55101 (for respondent)

Michael C. Mahoney, Mahoney & Emerson, Ltd., 539 East Lake Street, Wayzata, MN 55391 (for appellants)

Considered and decided by Lansing, Presiding Judge; Stoneburner, Judge; and Worke, Judge.

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

WORKE, Judge.

On appeal from the district court’s sua sponte grant of summary judgment in this eviction proceeding, appellants argue (a) they were entitled to a jury trial under Minn. R. Civ. P. 38.01; (b) the sua sponte summary judgment was not preceded by adequate notice to appellants under Fed. Land Bank of St. Paul v. Obermoller, 429 N.W.2d 251 (Minn. App. 1988), review denied (Minn. Oct. 26, 1988); (c) fact issues precluded summary judgment; and (d) the district court’s ruling terminated interests in the property without due process of law. Because the district court did not err in granting sua sponte summary judgment, we affirm.

FACTS

Respondent Case Credit Corporation has been engaged in litigation with appellants Magnum Resources, Inc. (MRI) and Hydra-Mac, Inc. (HMI) for several years, pursuing a judgment in excess of $3 million. A summary of the parties’ history is set forth in Case Credit Corp. v. Magnum Res., Inc., No. A03-1734, 2004 WL 2049769 (Minn. App. Sept. 13, 2004), review denied (Minn. Dec. 14, 2004). This is the third appeal, and it pertains to property located at 1110 Pennington Avenue South, Thief River Falls, Minnesota.

Appellant MRI is the parent corporation of appellant HMI. On July 28, 1995, HMI conveyed all of its assets to MRI. On July 31, 1995, MRI became the fee owner of the property by reason of an unrecorded deed from HMI. Thereafter, MRI allowed HMI to continue to act as if HMI had ownership rights to the building.

In December 1998, Frances Peterson obtained a judgment against MRI and HMI in the amount of $62,500 (Peterson judgment). The Peterson judgment was docketed in Pennington County in February 1999 and attached to the property. On March 1, 2001, respondent purchased the Peterson judgment to obtain the superior lien on the property. Respondent foreclosed on the Peterson judgment on August 6, 2002. Respondent was the successful bidder at the resulting sheriff’s sale, subject to the redemption rights of MRI, HMI, or their assigns for a period of 12 months. Respondent also paid a substantial amount in back taxes on the property in order to protect its interest.

During the one-year redemption period, respondent filed a declaratory-judgment action against appellants seeking a determination by the district court that MRI owned the property. On March 17, 2003, the district court entered default judgment in favor of respondent because appellants failed to appear at the first scheduled pretrial hearing. The district court found that MRI became the fee owner of the property on July 31, 1995, by way of the unrecorded deed and that HMI has given up “its ownership, or other interests, or title” to the property as of that date. On April 30, 2003, pursuant to a request by appellants, the district court vacated the default judgment and scheduled a trial date. However, appellants failed to appear at the new pretrial hearing scheduled for September 8, 2003. On September 15, 2003, as a result of appellants’ failure to appear at the pretrial, the district court reinstated the original default-judgment order that had been entered on March 17, 2003. Because appellants had not redeemed the property by August 6, 2003, respondent became the fee owner of the property. On November 13, 2003, appellants filed their notice of appeal in the declaratory-judgment matter. In September 2004, this court affirmed the district court’s reinstatement of the default judgment in favor of respondent. See Case Credit, 2004 WL 2049769.

Despite respondent’s adjudicated ownership interest in the property, appellants refused to vacate the premises. On November 19, 2004, respondent filed an unlawful-detainer action against appellants, and five days later, appellants filed a notice of removal to federal court. On January 5, 2004, the United States District Court sanctioned appellants for improperly filing the notice of removal and remanded the matter to district court.

On January 13, 2005, the district court held a hearing in the eviction action, which included arguments from both sides as to who was entitled to ownership of the property. Respondent provided the district court with the foreclosure documents demonstrating that respondent became the fee owner of the property by operation of law on August 6, 2003, after appellants failed to redeem within the one-year statutory period. Appellants demanded a jury trial, stating that they wanted to “be careful” with regard to the ownership of the property. During the hearing, the district court commented that it appeared that the only issues in dispute were questions of law, and questioned the attorneys regarding whether summary judgment would be appropriate. At the close of the hearing, the district court directed the parties to submit proposed findings within one week.

On January 20, 2005, the district court issued its order finding that respondent was entitled to immediate possession of the property. The same day, respondent obtained a writ of recovery of the premises, which was served on appellants on January 24, 2005. On January 26, 2005, appellants sought an emergency writ of prohibition from this court, to obtain a stay pending appeal and restrain the enforcement of the writ of recovery. This court denied relief, noting that no appeal had been filed, appellants had not posted the appropriate bond, and appellants failed to show that their ordinary remedies of appeal and posting of a supersedeas bond were inadequate. Appellants now appeal the district court’s January 20, 2005 judgment.

D E C I S I O N

On appeal from summary judgment, this court asks (1) whether there are any genuine issues of material fact and (2) whether the district court erred in its application of the law. State by Cooper v. French, 460 N.W.2d 2, 4 (Minn. 1990). This court reviews de novo whether a genuine issue of material fact exists and whether the district court erred in its application of the law. STAR Ctrs., Inc. v. Faegre & Benson, L.L.P., 644 N.W.2d 72, 77 (Minn. 2002). The party opposing summary judgment must demonstrate “that specific facts are in existence which create a genuine issue for trial.” Moundsview Indep. Sch. Dist. No. 621 v. Buetow & Assocs., 253 N.W.2d 836, 838 (Minn. 1977). On appeal, this court must view the evidence in the light most favorable to the party against whom judgment was granted. STAR Ctrs., 644 N.W.2d at 77.

Notice of Summary Judgment

Appellants argue that they were prejudiced by lack of the notice that summary judgment would be considered. Minn. R. Civ. P. 56.03 provides, “[s]ervice and filing of the motion [for summary judgment] shall comply with the requirements of Rule 115.03 of the General Rules of Practice for the District Courts, provided that in no event shall the motion be served less than 10 days before the time fixed for the hearing.” Here, neither party made a formal motion for summary judgment; the district court entered summary judgment sua sponte.

A district court may, sua sponte, grant summary judgment under the same circumstances it would grant a party’s motion fo r summary judgment. Del Hayes & Sons, Inc. v. Mitchell, 304 Minn. 275, 280, 230 N.W.2d 588, 591-92 (1975). Appellants argue that the district court must be certain that the lack of notice does not prejudice the objecting party by reviewing the seven factors set forth in Fed. Land Bank of St. Paul v. Obermoller, 429 N.W.2d 251 (Minn. App. 1988), review denied (Minn. Oct. 26, 1988). At the January 13 hearing, the district court made clear its intention to dispose of the matter by summary judgment. During the hearing, the district court asked appellants’ attorney, “What question of fact would you put to the jury? Everything you’ve just outlined for me is a question of law.” Appellants’ counsel responded: “I’m not entirely certain what the facts at issue would be at this point in time.” Appellants’ counsel further stated:

If the [c]ourt decides that they want to go with a summary judgment, and I’m not conceding that that is necessarily the case at this time, I would just like to state very briefly that the delay is because we need to make sure that the right of possession belongs to Case.

While appellants concede that the transcript of the hearing is devoid of any discussion of remaining material-fact questions, they argue that the transcript is replete with their objections to a sua sponte ruling. However, a detailed review of the transcript does not reveal any objections by appellants to a sua sponte ruling, and appellants do not cite any portion of the transcript that contains their objections. Because appellants did not raise the lack of notice issue at the hearing, this issue may not be raised on appeal. Benedict v. Benedict, 361 N.W.2d 429, 431-32 (Minn. App. 1985) (holding that this court need not consider issues that were not raised before the district court).

Genuine Issues of Material Fact

Appellants argue that the district court erred by entering summary judgment because genuine issues of material fact still remain. Specifically, appellants argue that the district court relied on the “assumption that the foreclosure and sale of the property were legally valid as applied to MRI. While the validity of [a] foreclosure is a conclusion of law, the appellant contends that the facts underlying this assumption are in dispute.” In support of this argument, appellants contend that they can present evidence that (1) they did not act negligently in failing to redeem, (2) respondent was unjustly enriched at appellants’ expense, (3) restoration of the status quo in this case is easy, and (4) the district court’s ruling created a disastrous result.

Despite appellants’ argument that genuine issues of material fact remain, they fail to identify a single material fact that is in dispute. Aparty may not rest upon the mere averments or denials of his pleadings and may not rely on the possibility that he will be able to develop evidence at trial, but must present sufficient evidence to establish a material issue of disputed fact. Minn. R. Civ. P. 56.05; see also Rosvall v. Provost, 279 Minn. 119, 124, 155 N.W.2d 900, 904 (1968); Ahlm v. Rooney, 274 Minn. 259, 262-63, 143 N.W.2d 65, 68 (1966). Because appellants have failed to establish the existence of any issues of disputed fact and the law was correctly applied, the district court did not err in granting summary judgment sua sponte in favor of respondent.

Request for Jury Trial

Appellants argue that the district court erred by denying their request for a jury trial. Minn. R. Civ. P. 38.01 provides, “In actions for the recovery of money only, or of specific real or personal property, the issues of fact shall be tried by a jury, unless a jury trial is waived or a reference is ordered.” Further, under Minn. Stat. § 504B.335 (2004), either party may request a jury trial in an eviction action. Appellants had a right to a jury trial, but that right is not unconditional. State ex rel. Pillsbury v. Honeywell, Inc., 291 Minn. 322, 333, 191 N.W.2d 406, 413 (1971). “No constitutional or statutory right to a jury exists where there is no issue of fact.” Id. The facts in this case are undisputed and are susceptible to only one inference on the crucial issue in this case, namely, that respondent is the fee owner of the property. Based on the record, the district court did not err in denying appellants’ request for a jury trial and concluding the matter by granting sua sponte summary judgment in favor of respondent.

Due Process

Appellants argue that the district court’s sua sponte grant of summary judgment in favor of respondent deprived appellants of a property right without due process of law. Respondent argues that the doctrine of collateral estoppel precludes appellants from relitigating the issue of who owns the property. “Whether collateral estoppel is available is a mixed question of law and fact subject to de novo review.” In re Trusts Created by Hormel, 504 N.W.2d 505, 509 (Minn. App. 1993), review denied (Minn. Oct. 19, 1993). Collateral estoppel is the “issue preclusion” branch of the res judicata doctrine. Ellis v. Minneapolis Comm’n on Civil Rights, 319 N.W.2d 702, 703-04 n.3 (Minn. 1982). Further, collateral estoppel applies in cases where

(1) the issue was identical to one in a prior adjudication; (2) there was a final judgment on the merits; (3) the estopped party was a party or in privity with a party to the prior adjudication; and (4) the estopped party was given a full and fair opportunity to be heard on the adjudicated issue.

Id. at 704. Respondent contends that each of the collateral-estoppel elements has been fully satisfied. We agree. The issue of who owns the property was addressed in the declaratory-judgment action, where the district court specifically found that “[t]he ownership of the premises located in Pennington County has continually been disputed by various defendants. The [c]ourt has resolved that dispute in favor of Case [Credit] Corporation.” Appellants cannot dispute that the ownership issue was fully decided prior to the 2005 unlawful-detainer action. Further, the parties to the declaratory-judgment action were the same as those in the unlawful-detainer action. Finally, the declaratory-judgment action was affirmed on direct appeal in September 2004. See Case Credit Corp. v. Magnum Res., Inc., No. A03-1734, (Minn. App. Sept. 13, 2004), review denied (Minn. Dec. 14, 2004). In addition, after the appeal was final, appellants requested a stay in the declaratory-judgment action and were present at the hearing to argue their position. Appellants have been given a fair opportunity to be heard on the issue. The district court has made it very clear, based on all of the evidence presented, that respondent is the fee owner of the property. Because the elements of collateral estoppel have been met, appellants are precluded from relitigating ownership of the property.

Affirmed.