Federal Land Bank of St. Paul v. Obermoller

• Citation: 429 N.W.2d 251
• Decision Date: 06 September 1988
• Docket Number: No. C4-88-505,C4-88-505
• Parties: The FEDERAL LAND BANK OF SAINT PAUL, Respondent, v. Larry OBERMOLLER, et al., Appellants.
• Court: Minnesota Court of Appeals

Page 251

429 N.W.2d 251

The FEDERAL LAND BANK OF SAINT PAUL, Respondent, v. Larry OBERMOLLER, et al., Appellants.

No. C4-88-505.

Court of Appeals of Minnesota.

Sept. 6, 1988.

Review Denied Oct. 26, 1988.

Syllabus by the Court

1. The parties' claims in an unlawful detainer action may be determined by summary

judgment if the parties are not prejudiced by the proceedings, there are no genuine issues of material fact, and either party is entitled to judgment as a matter of law.

2. A party may not assert a private cause of action under the Farm Credit Amendments Act or its regulations.

3. A party is precluded from asserting an equitable claim based on alleged improper notice of homestead designation rights if the issue was addressed in an earlier appeal.

4. The retaliatory eviction statute does not apply in an unlawful detainer action when no landlord-tenant relationship existed.

5. The right of first refusal does not entitle the property owner to retain possession of land if the mortgagee is entitled to possession in an unlawful detainer action.

Brian J. Murphy, Quarnstrom, Doering, Pederson, Leary & Murphy, P.A., Marshall, for respondent.

Ronald R. Frauenshuh, Jr., Ortonville, for appellants.

Heard, considered, and decided by NIERENGARTEN, P.J., and FOLEY and SCHUMACHER, JJ.

OPINION

NIERENGARTEN, Judge.

This is an appeal from a judgment granting the respondent bank's motion for summary judgment in its unlawful detainer action. The appellant property owners contend summary judgment proceedings do not apply in unlawful detainer actions and assert there are genuine issues of fact and valid defenses which preclude summary judgment. We affirm.

FACTS

Appellants Larry and Connie Obermoller borrowed $399,000 from the respondent Federal Land Bank of Saint Paul (Bank). As security for the loans, the Obermollers executed two mortgages on farmland they owned. The Obermollers defaulted on the mortgages, the Bank began foreclosure proceedings in February 1986, and a foreclosure sale was scheduled for April 23, 1986. The Obermollers requested mandatory debt mediation under Minnesota's Farmer-Lender Mediation Act. Although the Bank assumed the mediation act did not apply and proceeded with the April foreclosure sale, the Bank participated in mediation sessions in June and July 1986. The mediation sessions were unsuccessful and the parties failed to reach an agreement.

In July 1986, this court concluded the Farmer-Lender Mediation Act applied to foreclosure proceedings pending on the effective date of the act. See Laue v. Production Credit Association of Blooming Prairie, 390 N.W.2d 823 (Minn.Ct.App.1986). Consequently, the Bank reinstituted foreclosure proceedings in September 1986 by publishing foreclosure notices. The Obermollers requested the district court to declare the April and November foreclosure sales invalid, alleging the Bank failed to negotiate in good faith and had not given the required notice of mediation rights. The Obermollers also applied for a temporary injunction quashing the November foreclosure sale. The district court's denial of the request for an injunction was affirmed by the court of appeals. See Obermoller v. Federal Land Bank of Saint Paul, 409 N.W.2d 229 (Minn.Ct.App.1987), pet. for rev. denied (Minn. Sept. 18, 1987).

On November 12, 1986, the Obermollers initiated a second action claiming that the Bank's foreclosure proceedings were invalid and that the Bank's alleged failure to cooperate in mediation and its publication of the April sale interfered with contracts and their ability to continue farming operations. The Obermollers claimed they did not assert their homestead set-aside rights because they believed the second foreclosure was invalid. The Bank subsequently purchased the Obermollers' property at the November 25, 1986 foreclosure sale. The district court found the Obermollers failed to present any evidence of bad faith by the Bank during mediation and granted the Bank's motion for summary judgment.

The court of appeals again affirmed. This court concluded the Bank's publication of the April 1986 foreclosure sale could not have injured the Obermollers because the Farmer-Lender Mediation Act was not effective until March 22, 1986 and because the Obermollers did not request mediation until April 16, 1986, which was several days after the published notices ceased. See Obermoller v. Federal Land Bank of St. Paul, No. CX-87-2085, (unpublished) slip op. at 3 (Minn.Ct.App. May 10, 1988), pet. for rev. denied (Minn. June 29, 1988). This court also concluded the Obermollers' failure to preserve their homestead rights was "an intentional, strategic decision" which did not give rise to any claim for relief.

The Obermollers did not exercise their right to redeem the property and the one-year redemption period expired on November 25, 1987. Approximately thirty days prior to the expiration of the redemption period, the Bank's attorney sent a letter to the Obermollers' lawyer asking counsel to inform the Obermollers that their right to possess the property ended on November 26, 1987. The Obermollers did not vacate the property.

The Bank instituted an unlawful detainer action on January 22, 1988 when it served a summons and complaint on the Obermollers; it also served a notice of motion and motion for summary judgment on the Obermollers at the same time. The Obermollers' attorney made a "formal demand for a jury trial pursuant to the rules" at a February 5, 1988 hearing. Trial was scheduled for February 10, 1988.

The hearing on the summary judgment motion was held on February 9, 1988. The Obermollers served an amended answer with the Bank and the court at the beginning of the hearing. They also submitted an affidavit from their former attorney and a letter from five state legislators which purportedly indicated the legislature's intent regarding former property owners' right of first refusal under Minn.Stat. § 500.24, subd. 6 (1986). The Bank also submitted various affidavits and documents in support of its summary judgment motion including certified copies of the mortgages and the affidavits of publication.

The Obermollers' attorney objected to the submission and acceptance of the parties' affidavits, in part because the expedited trial procedures under the unlawful detainer statute conflicted with the notice and filing requirements of the rules of civil procedure governing summary judgment proceedings. The Obermollers' attorney also objected later suggesting the summary judgment motion "wasn't proper," "wasn't served right," and was brought "in violation of the Rules of Civil Procedure." Although the court suggested both parties could agree to continue the trial which was scheduled to begin the next day, neither party would consent to an extension.

The Bank argued that the only issues for determination in unlawful detainer proceedings are whether the facts alleged in the complaint are true, and asserted there were no genuine issues of material fact regarding the Obermollers' right to possess the property. The Obermollers argued they had entered into an oral rental agreement with the Bank which allowed them to retain possession and that the issues of rental agreement and consideration were fact issues for trial. They also asserted the letter from the Bank's attorney advising the Obermollers' lawyer that the Obermollers' redemption period was about to expire was a notice to quit and that they were entitled to retain possession because of the Bank's alleged reprisal motives. The Obermollers claimed the Bank's notice of foreclosure was invalid and asserted they did not exercise their right of homestead designation because the Bank's notice of homestead designation allegedly was "vague and ambiguous" and confusing. Finally, the Obermollers claimed they had an equitable right under state and federal law to remain on the property until the Bank decided to sell the property and afforded them an opportunity to exercise their right of first refusal.

The court found the parties participated in "several mediation sessions pursuant to the Minnesota Farm Mediation Act" and that the Obermollers were served with notices of mortgage foreclosure sale on September 24, 1986. The court found the notices of mortgage foreclosure sale were published for eight consecutive weeks from September 24 to November 12, 1986, that the foreclosure sale occurred on November 25, 1986, and that the Bank purchased the property. The court also found the Obermollers' interest in the property terminated upon expiration of the redemption period on November 25, 1987. According to the court, the Obermollers were notified "at least thirty days prior to the commencement of this action of the termination of such tenancy" but failed to vacate the property and continued to possess the property. Finally, the court found there were "no genuine issues of material fact before the Court concerning the action for unlawful detainer." (emphasis added). The court concluded:

[T]he matter is properly before the Court in an action for unlawful detainer; that notices of such action have been properly served upon the [Obermollers]; and that notices therefore, including motions for summary judgment, have been properly served upon the [Obermollers].

The court concluded the Obermollers could not assert counterclaims in an unlawful detainer action and that the Bank was entitled to judgment against the Obermollers "in the form of a writ of restitution of the premises" because the Bank showed "there are no genuine issues of material fact." The court stated that the Obermollers' only denials with respect to the factual validity of the mortgage foreclosure addressed the specific dates of the mediation sessions and the notice of homestead designation. According to the court, the unlawful detainer action only applied to the November 1986 foreclosure sale and the certified copies of the foreclosure sale notices contained the homestead designation...