A06-868 United Prairie Bank v. Haugen Nutrition & Equipment, LLC, No. A06-722 (Minn. App. 5/22/2007)
| Decision Date | 22 May 2007 |
| Docket Number | No. A06-722.,A06-722. |
| Parties | A06-868 United Prairie Bank — Mountain Lake, Respondent, v. Haugen Nutrition & Equipment, LLC, et al., Appellants (A06-722), United Prairie Bank — Mountain Lake, Respondent, v. Haugen Nutrition & Equipment, LLC, et al., Appellants (A06-868). |
| Court | Minnesota Court of Appeals |
Appeal from the District Court, Cottonwood County, File Nos. 17-CV-05-213, 17-CV-06-247.
Joseph D. Roach, Patrick S. Williams, Jeffrey A. Abrahamson, Briggs and Morgan, P.A., (for respondent)
John E. Mack, Mack & Daby, P.A., (for appellants)
Considered and decided by Willis, Presiding Judge; Klaphake, Judge; and Shumaker, Judge.
UNPUBLISHED OPINION
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 Cottonwood County, subject to a mortgage held by the Bank of Canby. The Haugens had financial problems, and they went to respondent United Prairie Bank (UPB) to try to obtain refinancing of their indebtedness.
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 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.
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...
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