A05-865

BargainQuest, Inc.,

Respondent,

vs.

The RiverBank MN - Chisago Lakes,

Appellant.

Filed April 25, 2006

Reversed and remanded

Willis, Judge

Chisago County District Court

File No. C6-02-856

Mark N. Jennings, Jennings, DeWan, Miller & Anderson, LLC, 6338 Main Street, P.O. Box 8, North Branch, MN 55056-0008 (for respondent)

D. Sherwood McKinnis, Lindberg & McKinnis, P.A., 2211 Main Street South, Cambridge, MN 55008 (for appellant)

Considered and decided by Willis, Presiding Judge; Stoneburner, Judge; and Collins, Judge.*

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

WILLIS, Judge

On appeal from the district court’s grant of judgment notwithstanding the verdict, appellant bank argues that the jury’s verdict should be reinstated because there was reasonable evidentiary support for the jury’s determination that appellant was not negligent and that appellant did not convert respondent’s property. Because we conclude that there was reasonable evidentiary support for the verdict, we reverse and remand for reinstatement of the jury’s verdict and the entry of judgment.

FACTS

In 1996, respondent BargainQuest, a liquidation business of which Kerry Lund was the sole shareholder, obtained three loans from appellant RiverBank. They were: (1) loan number 42790, in the amount of $108,000, which was secured by real estate, (2) loan number 42791, in the amount of $25,000, which was secured by real estate and by BargainQuest’s inventory, equipment, and accounts receivable, and (3) loan number 43252, in the amount of $10,000, which was secured by BargainQuest’s inventory, equipment, and accounts receivable. In 2000, BargainQuest defaulted on the loans. RiverBank hired attorney James Casterton to institute a foreclosure action on loan numbers 42790 and 42791, the two loans secured by real estate. The foreclosures occurred on July 20, 2001, and August 3, 2001.

RiverBank president Dean Perry also hired attorney Thurl Quigley to bring an action on behalf of the bank on the third loan, number 43252, to recover the pledged inventory, equipment, and accounts receivable. Quigley requested that RiverBank send him the documentation for the loan. On June 26, 2001, RiverBank mistakenly faxed Quigley the documentation for loan numbers 42790 and 42791, the loans secured by real estate (and, in the case of loan number 42791, BargainQuest’s inventory, equipment, and accounts receivable), rather than the documentation for loan number 43252. On June 28, 2001, Quigley filed a summons and complaint, styled as a replevin action, that alleged that RiverBank was entitled to BargainQuest’s inventory, equipment, and accounts receivable because BargainQuest had defaulted on loan numbers 42790 and 42791. Quigley attached to the complaint the documentation for those loans that the bank had provided to him. The complaint made no reference to loan number 43252.

On August 3, 2001, Casterton, in reviewing court documents in preparation for the second foreclosure sale, discovered that Quigley had referred to the wrong loans in the replevin complaint. Casterton testified that he either spoke with Quigley or left a message for him about the matter but that he did not contact RiverBank regarding his discovery.

On August 9, 2001, Quigley filed a motion in the replevin action, asking that RiverBank have immediate possession of the personal property described in the complaint. In support of the motion, Perry submitted an affidavit that referred to the wrong loan and thereby stated the wrong amount remaining unpaid.

On August 15, 2001, the court issued an order to show cause and a temporary restraining order in the replevin action. The order set a November 26 hearing date and provided that, with regard to BargainQuest’s inventory, equipment, and accounts receivable, pending the hearing BargainQuest was restrained and enjoined from “selling, transferring, bargaining, conveying, encumbering, disposing, or secreting said property from plaintiff.”

On August 28, RiverBank served BargainQuest with the replevin summons and complaint, the order to show cause, and the temporary restraining order. The next day, BargainQuest contacted Quigley and demanded that the replevin action be dismissed because the debts on the loans referred to in the complaint had already been satisfied by the foreclosure action. Quigley then spoke with Casterton, who confirmed that the replevin complaint referred to the wrong loans. On August 29 or 30, Quigley spoke with Perry, and they decided to dismiss the replevin action and subsequently did so.

In May 2002, RiverBank brought a new action against BargainQuest for its default on loan number 43252, styled as a breach-of-contract claim; the complaint referred to the correct loan. BargainQuest counterclaimed for negligence and conversion alleged to have occurred because of the prior replevin action. BargainQuest asserted that before it received service in the replevin action, it had entered into an oral contract to sell its inventory to a third party, the temporary restraining order prevented the sale from occurring, and that BargainQuest later sold its inventory for an amount less than the amount agreed to in the oral contract. Before trial, the parties stipulated that, inter alia, if the jury found for BargainQuest, the amount of damages would be $44,475.40.

Because the parties settled RiverBank’s claims before trial, BargainQuest’s counterclaims were the only issues tried. The jury returned a special verdict that found for RiverBank on both the negligence and conversion claims. BargainQuest moved for judgment notwithstanding the verdict (JNOV) or, in the alternative, a new trial. The district court granted BargainQuest’s motion for JNOV, finding that RiverBank was liable as a result of both negligence and conversion. The district court determined that the jury’s verdict was not justified by the evidence and was contrary to the law as instructed by the court. RiverBank appeals.

D E C I S I O N

RiverBank argues that the district court erred by granting BargainQuest’s motion for JNOV. A district court should grant JNOV only when, “viewing the evidence in the light most favorable to the nonmoving party, the verdict is manifestly against the entire evidence” or when, “despite the jury’s findings of fact the moving party is entitled [to] judgment as a matter of law.” Pouliot v. Fitzsimmons, 582 N.W.2d 221, 224 (Minn. 1998). The decision to grant or deny a motion for JNOV is a question of law, which this court reviews de novo. Diesen v. Hessburg, 455 N.W.2d 446, 449 (Minn. 1990). When considering a motion for JNOV, the district court must take into account all of the evidence in the case; the court must view that evidence in a light most favorable to the verdict; and “the court may not weigh the evidence or judge the credibility of the witnesses.” Lamb v. Jordan, 333 N.W.2d 852, 855 (Minn. 1983). If a jury verdict has any reasonable evidentiary support, both the district court and this court must accept it as final. Brubaker v. Hi-Banks Resort Corp., 415 N.W.2d 680, 683 (Minn. App. 1987), review denied (Minn. Jan. 28, 1988).

RiverBank contends that the record contains reasonable evidentiary support for the jury’s verdict that RiverBank was not negligent. The district court instructed the jury that negligence “is the failure to use reasonable care” and “occurs when a person does something that a reasonable person would not do or fails to do something that a reasonable person would do.” Neither party challenges the sufficiency of the jury instructions.

At trial, BargainQuest asserted that it was injured by RiverBank’s negligence because BargainQuest had entered into an oral agreement to sell its inventory to a third party; the temporary restraining order issued in connection with a complaint that did not refer to the proper loan prevented BargainQuest from completing the sale; and BargainQuest later sold the inventory at auction for a lesser amount. The jury had before it a copy of the agreement by which BargainQuest gave RiverBank a security interest in, inter alia, BargainQuest’s inventory in connection with loan number 43252. The security agreement provides that BargainQuest will not dispose of the inventory except in the ordinary course of business at its fair market value or at a minimum price established between RiverBank and BargainQuest. The president of BargainQuest testified that (1) the fair market value of the inventory was approximately $242,000, (2) BargainQuest had orally contracted to sell the inventory to a third party for approximately $65,000, and (3) BargainQuest had not contacted RiverBank with regard to its attempt to sell the inventory. Because the evidence shows that BargainQuest’s proposed sale of the inventory was in violation of RiverBank’s security interest, the jury could reasonably conclude that BargainQuest suffered no injury from interference with the sale. Therefore, even though the replevin complaint referred to the wrong loans, there was reasonable evidentiary support for the jury’s finding of no negligence on the part of RiverBank. There is also a legal basis for the finding. To prevail on a negligence claim, a plaintiff must prove (1) the existence of a duty of care, (2) a breach of that duty, (3) injury proximately caused by the breach, and (4) damages. Gilbertson v. Leininger, 599 N.W.2d 127, 130 (Minn. 1999). Injury and damages are separate elements of a negligence claim. Therefore, the fact that the parties stipulated to the amount of damages if the jury found for BargainQuest has no effect on whether BargainQuest proved that it was injured.

RiverBank also argues that the district court erred by granting BargainQuest’s motion for JNOV on the conversion claim. Conversion is a willful act, done without lawful justification, that interferes with property so that a person entitled to the property is deprived of its use and possession. Larson v. Archer-Daniels-Midland Co., 226 Minn. 315, 317, 32 N.W.2d 649, 650 (1948).

It is not necessary to a conversion that there should be a manual taking of the thing in question by the defendant. Nor is it necessary that it should be shown that he has applied it to his own use. Does he exercise a dominion over it in exclusion or in defiance of the plaintiff’s rights? If he does, that is, in law, a conversion, be it for his own or another person’s use.

McDonald v. Bayha, 93 Minn. 139, 141-42, 100 N.W. 679, 680 (1904). The district court instructed the jury that “[p]ersonal property is converted if the person exercises control over an owner’s personal property in a way that is contrary to the owner’s right to the personal property, or intentionally deprives the owner of possession of the property permanently or for an indefinite period of time.” The jury found that RiverBank had not converted BargainQuest’s property.

We determine that there also is reasonable evidentiary support for the jury’s finding that there was no conversion. Evidence showed that (1) BargainQuest was in default on loan number 43252 and (2) BargainQuest had granted RiverBank a security interest in all of BargainQuest’s inventory in connection with that loan. And although RiverBank identified the wrong loans in its first action, and ultimately dismissed that complaint, the jury heard testimony that the complaint could have been amended to refer to the correct loan. Thus, because RiverBank had a security interest in BargainQuest’s inventory, and BargainQuest was in default of the loan that the inventory secured, there was evidence supporting the jury’s verdict that RiverBank did not exercise control over BargainQuest’s inventory in a way that was contrary to BargainQuest’s right to the inventory.

Because we conclude that the district court erred by granting JNOV, we reverse and remand for reinstatement of the jury’s verdict and the entry of judgment.

Reversed and remanded.

* Retired judge of the district court, serving as judge of the Minnesota Court of Appeals by appointment pursuant to Minn. Const. art. VI, § 10.