Hunter v. Anchor Bank, N.A.
| Decision Date | 23 December 2013 |
| Docket Number | A13-0515 |
| Court | Minnesota Court of Appeals |
| Parties | Margaret Ann Hunter, Appellant, v. Anchor Bank, N.A., Respondent, Emigrant Mortgage Company, Inc., Respondent. |
Affirmed in part, reversed in part, and remanded
Washington County District Court
Ryan R. Dreyer, Eric G. Nasstrom, Morrison Sund PLLC, Minnetonka, Minnesota (for appellant)
Kristine K. Nogosek, Stein & Moore, P.A., St. Paul, Minnesota (for respondent Anchor Bank, N.A.)
Christina M. Snow, Michael R. Sauer, Wilford, Geske & Cook, P.A., Woodbury, Minnesota (for respondent Emigrant Mortgage Company, Inc.)
Considered and decided by Smith, Presiding Judge; Johnson, Judge; and Rodenberg, Judge.
If two separate parcels of land secure one mortgage, each parcel must be sold separately at a foreclosure sale, as required by Minnesota Statutes section 580.08, and thefailure to strictly comply with this requirement causes a non-compliant foreclosure sale to be void.
In 2004, Margaret Hunter borrowed money from Anchor Bank, N.A., to purchase a home for her adult son. The loan was secured by a mortgage on the son's home and on Hunter's home. Anchor Bank assigned the loan and mortgage to Emigrant Mortgage Company, Inc. In 2011, after the loan went into default, Emigrant Mortgage conducted a foreclosure by advertisement pursuant to section 580.05 of the Minnesota Statutes. But the homes encumbered by the mortgage were sold together, contrary to section 580.08, which requires that separate mortgaged parcels be sold separately at a foreclosure sale.
In 2012, Hunter commenced this action against Anchor Bank and Emigrant Mortgage by a multi-count complaint. Hunter sought, among other things, a judgment setting aside the foreclosure sale because the two separate properties were sold together in one foreclosure sale. Hunter later moved to amend the complaint to plead additional claims. The district court entered summary judgment in favor of Anchor Bank and Emigrant Mortgage and denied Hunter's motion to amend the complaint.
We conclude that the district court erred by granting summary judgment to Emigrant Mortgage with respect to Hunter's claim to set aside the foreclosure sale because the foreclosure-by-advertisement statutes require strict compliance such that a non-compliant foreclosure sale is void. We also conclude that the district court did not err by granting summary judgment to Anchor Bank and Emigrant Mortgage with respectto four other claims alleged in the complaint. We further conclude that the district court did not err by denying Hunter's motion to amend the complaint to allege an additional claim. Therefore, we affirm in part, reverse in part, and remand for further proceedings on Hunter's claim to set aside the foreclosure sale.
In February 2004, Hunter and Anchor Bank entered into a loan agreement by which Anchor Bank lent Hunter $265,000, which she used to purchase a home for her son in the city of Newport, in Washington County. As security for the note, Hunter executed and delivered to Anchor Bank a mortgage encumbering the son's home and her own home, which is located in the city of Inver Grove Heights, in Dakota County. Anchor Bank promptly assigned its interest in the note and mortgage to Emigrant Mortgage. The mortgage and the assignment were filed with the Washington County Recorder's Office and the Dakota County Recorder's Office.
Hunter later defaulted on the loan by failing to make payments. In July 2011, Emigrant Mortgage commenced a foreclosure by advertisement. Notice of a foreclosure sale in Washington County was published for six consecutive weeks. In February 2012, Emigrant Mortgage purchased both properties together at the foreclosure sale.
In August 2012, Hunter commenced this action against Anchor Bank and Emigrant Mortgage. In her complaint, she alleged six claims: (1) fraud and misrepresentation, (2) negligent misrepresentation, (3) promissory estoppel, (4) mutual mistake, (5) defective foreclosure sale, and (6) financial exploitation of a vulnerable adult. In November 2012, Hunter moved to amend her complaint to both add and removeclaims. She sought to allege the following claims in the proposed amended complaint: (1) fraud and misrepresentation, (2) negligent misrepresentation, (3) promissory/equitable estoppel, (4) defective foreclosure sale, (5) reformation of mortgage, and (6) violations of the federal Truth in Lending Act (TILA).
In August 2012, Emigrant Mortgage moved to dismiss Hunter's complaint for failure to state a claim on which relief can be granted. See Minn. R. Civ. P. 12.02(e). In November 2012, Anchor Bank moved for judgment on the pleadings or, alternatively, for summary judgment. See Minn. R. Civ. P. 12.03, 56.02. The district court converted both of the respondents' motions into motions for summary judgment.
In January 2013, the district court granted the respondents' motions and entered summary judgment in favor of Anchor Bank and Emigrant Mortgage on all claims pleaded in Hunter's complaint. The district court also denied Hunter's motion to amend the complaint. Hunter appeals.
I. Did the district court err by granting Emigrant Mortgage's motion for summary judgment with respect to Hunter's claim that the foreclosure sale is void?
II. Did the district court err by granting respondents' motions for summary judgment with respect to counts 1, 2, 3, and 4 of Hunter's complaint?
III. Did the district court err by denying Hunter's motion to amend the complaint?
Hunter first argues that the district court erred by granting Emigrant Mortgage's motion for summary judgment with respect to the fifth claim pleaded in the complaint, in which she sought to set aside the foreclosure sale.
The statute on which Hunter's argument is based provides as follows:
If the mortgaged premises consist of separate and distinct farms or tracts, they shall be sold separately, and no more farms or tracts shall be sold than are necessary to satisfy the amount due on such mortgage at the date of notice of such sale, with interest, taxes paid, and costs of sale.
Minn. Stat. § 580.08 (2012). It is undisputed that the foreclosure sale did not comply with this statute; the two mortgaged properties were sold together at the foreclosure sale, not in two separate sales. In dispute is the consequence of the non-compliance. Hunter argued to the district court that the non-compliant foreclosure sale is void. Emigrant Mortgage argued to the district court that the foreclosure sale is merely voidable and that Hunter cannot establish the facts necessary to void the sale. The district court agreed with Emigrant Mortgage, reasoning that the sale was voidable and that Hunter had failed to submit evidence of prejudice or good cause to void the sale. On appeal, the parties reiterate the arguments they made to the district court, which present questions of law.
This court applies a de novo standard of review to a district court's grant of a motion for summary judgment and determines whether genuine issues of material fact exist and whether the district court erred in applying the law. RAM Mut. Ins. Co. v. Rohde, 820 N.W.2d 1, 6 (Minn. 2012). We also apply a de novo standard of review to adistrict court's interpretation of a statute. Premier Bank v. Becker Dev., LLC, 785 N.W.2d 753, 758 (Minn. 2010).
Our interpretation of section 580.08 is guided by the supreme court's recent interpretation of another section of chapter 580 of the Minnesota Statutes. Earlier this year, the supreme court interpreted section 580.02 of the foreclosure-by-advertisement statutes in Ruiz v. 1st Fid. Loan Servicing, LLC, 829 N.W.2d 53 (Minn. 2013). In doing so, the supreme court described its approach to interpreting the foreclosure-by-advertisement statutes:
We construe the words and phrases in section 580.02(3) according to their plain and ordinary meaning, with the exception of technical words and phrases, which we construe according to their special meaning. In addition, if the words of a law in their application to an existing situation are free from all ambiguity, we will not disregard the letter of the law in order to pursue its spirit. A statute that is not reasonably susceptible to more than one interpretation is not ambiguous.
Id. at 57 (citations omitted).
The dispute in Ruiz concerned a mortgage holder's failure to record an assignment of a mortgage before commencing a foreclosure by advertisement, as required by section 580.02. Id. at 56. The question presented by the appeal was "whether a foreclosure by advertisement initiated by appellant . . . resulted in a valid foreclosure despite [appellant's] failure to comply with certain statutory requirements." Id. at 54. The court of appeals had held that the foreclosure-by-advertisement statutes "require strict compliance and that a foreclosing party's failure to strictly comply renders theforeclosure void." Id. (citing Ruiz v. 1st Fid. Loan Servicing, LLC, No. A11-1081, 2012 WL 762313 (Minn. App. Mar. 12, 2012), aff'd, 829 N.W.2d 53 (Minn. 2013)). In the supreme court, the mortgagee argued that "a foreclosing party need only substantially comply with the statutory requirements for foreclosure by advertisement" and that a substantially compliant foreclosure sale is voidable only if the mortgagor can establish prejudice. Id. at 56-57.
The supreme court analyzed the parties' arguments primarily by focusing on the plain language of the statute. Id. at 57-58. The court parsed the statute carefully by reviewing the definitions of the words used in section 580.02. Id. at 57. This mode of interpretation led the court to hold that section 580.02 "unambiguously mandates strict compliance." Id. at 58. The supreme court proceeded to determine that the mortgagor had not strictly complied with section 580.02 and that, as a consequence, the foreclosure sale was void. Id. at 58-59.
Four years earlier, in Jackson...
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...strictly complied with because it is not found in Chapter 580. This argument is not convincing. The court in Hunter v. Anchor Bank, N.A., 842 N.W.2d 10, 15 (Minn. Ct. App. 2013), review denied (Mar. 18, 2014), found that strict compliance is required for all statutes within Chapter 580, and......