Bradley v. Bradley

Decision Date29 October 1996
Docket NumberNo. C4-96-825,C4-96-825
Citation554 N.W.2d 761
PartiesRobert H. BRADLEY, Respondent, v. William O. BRADLEY, Appellant.
CourtMinnesota Court of Appeals

Syllabus by the Court

1. A redeeming co-tenant may foreclose his equitable lien on another co-tenant's interest in the property without consulting him where the co-tenant fails to exercise the right of redemption within his redemption period.

2. Nonredeeming co-tenant was not denied due process where district court declined to provide either evidentiary hearing on redeeming, foreclosing co-tenant's motion for summary judgment, or an additional redemption period, where no genuine issue of material fact existed and the nonredeeming co-tenant had opportunity to make full discovery, present all relevant evidence, and exercise his right to redemption, but failed to do so 3. Where redeeming co-tenant's acquisition and necessary improvement costs, together with the value of his services rendered in connection with the property, exceed the benefits of possession of the property, other co-tenant is required to contribute one-half of redeeming co-tenant's necessary improvement costs before asserting his own redemption rights.

D. Charles Macdonald, Julie Knox Chosy, Faegre & Benson, Minneapolis, for respondent.

Joe A. Walters, O'Connor & Hannan, Minneapolis, for appellant.

Considered and decided by AMUNDSON, P.J., TOUSSAINT, C.J., and FOLEY, J.

OPINION

FOLEY, Judge. *

Respondent Robert Bradley sued appellant William Bradley seeking foreclosure on an equitable lien. Respondent moved for summary judgment, which the district court granted. On appeal, appellant argues that the district court erred as a matter of law in (1) granting respondent's motion for summary judgment, (2) denying appellant an evidentiary hearing and an additional redemption period, and (3) requiring appellant to contribute one-half of respondent's acquisition and necessary improvement costs in order to assert his claim to the property. We affirm.

FACTS

On January 24, 1983, Robert Bradley, William Bradley, and TCR Corporation (TCR) purchased the subject property. As part of the purchase price, the Bradleys and TCR assumed the obligations under a bond issued to finance the previous owner's purchase of the property and secured by a mortgage on the property. The Bradleys are brothers, but they have not spoken with each other for over seven years. At the time of purchasing the property, each held 50 percent of the shares of TCR. By quitclaim deed dated July 18, 1990, TCR conveyed its interest in the property to the Bradleys as tenants in common.

Sometime between 1992 and 1995, CC Commercial Delaware LLC (CCC) acquired the bond and mortgage. The Bradleys defaulted on the payments due under the bond, and CCC began foreclosure proceedings on the mortgage. On or about March 1, 1995, CCC notified the Bradleys of the impending foreclosure sale. A sheriff's sale of the property took place on June 27, 1995, when CCC purchased the property for $3,000,000.

Neither of the parties tried to prevent the foreclosure. Nor did they participate in the foreclosure sale. On August 17, 1995, respondent purchased the property from CCC for $2,000,000, and then notified appellant of appellant's possible rights in the property. At least three times during the six months following the sale of the property to CCC, respondent asked appellant whether he would participate in ownership of the property. Appellant requested certain documents from respondent concerning the property, but did not communicate to respondent any intent to participate in ownership of the property.

On January 2, 1996, respondent filed suit in Brown County district court to foreclose his equitable lien on appellant's interest in the property. Appellant counterclaimed, seeking an accounting from respondent and a declaratory judgment concerning appellant's interest in the property. Respondent moved for summary judgment on his request for an order of foreclosure. The district court heard arguments on respondent's motion on March 11, 1996, and by judgment dated March 20, 1996, granted summary judgment. Respondent purchased appellant's interest in the property at foreclosure sale on May 28, 1996, for $1,042,767.12.

ISSUES
I. Did the district court err in granting summary judgment on respondent's request

for foreclosure where respondent did not consult with appellant before purchasing the property from CCC?

II. Did the district court deprive appellant of due process by granting respondent's motion for summary judgment without an evidentiary hearing and denying appellant an additional redemption period?
III. Did the district court err by requiring appellant to contribute one-half of respondent's acquisition and necessary improvement costs incurred in connection with the property before asserting his rights in the property?
ANALYSIS

On an appeal from summary judgment, the reviewing court must ask whether any genuine issues of material fact exist and whether the lower court erred in its application of the law. State by Cooper v. French, 460 N.W.2d 2, 4 (Minn.1990). Where the material facts are not in dispute, a reviewing court need not defer to the district court's application of the law. Hubred v. Control Data Corp., 442 N.W.2d 308, 310 (Minn.1989). However, the grant of equitable relief is within the sound discretion of the district court, such that a reviewing court will reverse the grant of equitable relief only upon a showing of a clear abuse of discretion. Nadeau v. County of Ramsey, 277 N.W.2d 520, 524 (Minn.1979).

Appellant concedes that no issues of material fact exist relevant to the summary judgment. He argues instead that the district court erred as a matter of law in granting respondent the equitable remedy of foreclosure, denying appellant an evidentiary hearing and an additional redemption period, and requiring contribution as to all costs incurred by respondent in connection with the property. Accordingly, this court reviews de novo the grant of foreclosure under the abuse of discretion standard, and the adequacy of process provided and the amount of contribution required.

I. Right of Redemption

A purchaser of property at a foreclosure sale takes title subject to an equitable right of redemption in the previous owners of the property. See Kirsch v. Scandia American Bank, 160 Minn. 269, 272, 199 N.W. 881, 882 (1924) (co-tenant who redeems land at foreclosure sale has equitable lien on his co-tenant's one-half). A party may redeem its interest in property lost through foreclosure sale by reimbursing all of the repurchaser's acquisition costs, or if another co-tenant has already redeemed the property, by paying that co-tenant the portion of the redemption money attributable to the later-redeeming co-tenant's interest in the property. See, e.g., Buettel v. Harmount, 46 Minn. 481, 482-83, 49 N.W. 250, 251 (1891) (holding former co-tenant entitled to redeem through contribution of one-half the redemption money). A co-tenant who repurchases property lost through foreclosure takes subject to his co-tenant's right of redemption. Kirsch, 160 Minn. at 272, 199 N.W. at 882. The right of redemption lasts six months from the date of the foreclosure sale. Minn.Stat. § 580.23, subd. 1 (1994).

Here, CCC purchased the property at foreclosure sale. Respondent then exercised his right of redemption and took title to the property, subject to appellant's continuing right of redemption. Appellant, in contrast, did not exercise his right of redemption during the six months following the property's foreclosure sale. Appellant's right of redemption lapsed, respondent's title became paramount to that of appellant, and respondent was entitled to a foreclosure sale of appellant's interest in the property. Upon expiration of the right of redemption, a redeeming co-tenant's title becomes paramount to that of a nonredeeming co-tenant. Holterhoff v. Mead, 36 Minn. 42, 45, 29 N.W. 675, 677 (1886).

Oppressive Conduct

Appellant argues that the district court should have denied respondent's motion for summary judgment on the ground that respondent's allegedly "oppressive conduct" barred the grant of the equitable remedy of foreclosure. Appellant contends that respondent's conduct was oppressive because respondent breached a fiduciary duty that he allegedly owed appellant.

Co-tenancy gives rise to a duty of the co-tenants "to sustain, or at any rate not to assail, the common interest." Oliver v. Hedderly, 32 Minn. 455, 456, 21 N.W. 478, 478 (1884). This duty does not, however, preclude one co-tenant from redeeming both his and another co-tenant's interest in property sold at foreclosure, regardless of whether the purchasing co-tenant consults with another co-tenant before redemption, because the "mortgage or interest of the purchaser is to be redeemed as an entirety, or not at all." Buettel, 46 Minn. at 482-83, 49 N.W. at 251. Because a co-tenant does not breach the duty owed among co-tenants by redeeming the entire estate, respondent did not breach his duty as a co-tenant by redeeming his and appellant's interests in the property.

If respondent breached a fiduciary duty, then that duty arose out of the parties' relationship not as co-tenants, but as partners. A partnership is an association of two or more persons to carry on an activity as co-owners for profit. Cyrus v. Cyrus, 242 Minn. 180, 184, 64 N.W.2d 538, 541 (1954). "There is no arbitrary test for determining whether a partnership exists * * * ." Wormsbecker v. Donovan Constr. Co., 251 Minn. 277, 284, 87 N.W.2d 660, 664 (1958) (citing Cyrus, 242 Minn. at 183, 64 N.W.2d at 541). Minnesota courts have generally not found a partnership to exist absent a contract between the alleged partners. See, e.g., Wallner v. Schmitz, 239 Minn. 93, 95, 57 N.W.2d 821, 823 (1953) (a partnership is a contractual relationship); Georgens v. Federal Deposit Ins. Corp., 406 N.W.2d 95, 97 (Minn.App.1...

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