Moreno v. Wells Fargo Bank, N.A.

• Decision Date: 08 April 2013
• Docket Number: A12-1620
• Citation: Moreno v. Wells Fargo Bank, N.A., A12-1620 (Minn. App. Apr 08, 2013)
• Parties: Monti A. Moreno, et al., Appellants, v. Wells Fargo Bank, N.A., Respondent, Central Bank, Respondent, Land Title, Inc., Respondent, Chicago Title Insurance Company, Respondent.
• Court: Minnesota Court of Appeals

Monti A. Moreno, et al., Appellants,

v.Wells Fargo Bank, N.A., Respondent,Central Bank, Respondent,Land Title, Inc., Respondent,Chicago Title Insurance Company, Respondent.

A12-1620

STATE OF MINNESOTA IN COURT OF APPEALS

Filed April 8, 2013

This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480A.08, subd. 3(2012).

Affirmed

Schellhas, Judge

Washington County District Court

FileNo. 82-CV-11-1855

Richard L. Morris, Aaron Michael Lorentz, Morris Law Group, P.A., Edina, Minnesota (for appellants)

Charles F. Webber, Faegre Baker Daniels LLP, Minneapolis, Minnesota (for respondentWells Fargo Bank, N.A.)

T. Chris Stewart, Garth G. Gavenda, Anastasi & Associates, P.A., Stillwater, Minnesota (for respondent Central Bank)

James E. Blaney, Blaney & Ledin, Ltd., Lake Elmo, Minnesota (for respondentLand Title, Inc.)

Bradley N. Beisel, Beisel & Dunlevy, P.A., Minneapolis, Minnesota (for respondentChicago Title Insurance Company)

Considered and decided by Worke, Presiding Judge; Stoneburner, Judge; and Schellhas, Judge.

UNPUBLISHED OPINION

SCHELLHAS, Judge

Appellants challenge the district court's grant of summary judgment, dismissing their claims against respondents.We affirm.

FACTS

This appeal arises out of a mortgage obtained by appellantsMonti Moreno and Nancy Moreno on real estate located in Marine on St. Croix.The Morenos' relevant involvement with the property began in April 2003 when appellant Revocable Trust Agreement of Nancy A. Moreno purchased 22 acres of real estate located at 14890 Ostrum Trail North in Marine on St. Croix, consisting of four contiguous parcels described in a single metes-and-bounds description (the property).To secure short-term financing for the purchase of the property, the trust¹ conveyed a mortgage to respondent Central Bank.The mortgage encumbered all of the property, i.e., parcels one through four, plus the Morenos' residence in Stillwater and other real estate in Stillwater.Respondent Land Title closed the mortgage on behalf of Central Bank.In connection with the mortgage financing, appellants purchased an owner's title-insurance policy and mortgagee's title insurance for Central Bank through Land Title, acting as agent forrespondent Chicago Title.Chicago Title issued the final owner's title-insurance policy to "Nancy A. Moreno, Trustee of the Revocable Trust Agreement of Nancy A. Moreno dated October 1, 1997," on November 4, 2003.The policy insured title to the property for $420,000.

On January 27, 2004, the trust transferred its interest in parcels one and three of the property to the Morenos, who refinanced the 2003 mortgage with respect to those parcels and conveyed a new mortgage to Central Bank to secure a loan of $333,700.By its terms, the 2004 mortgage encumbered parcels one and three of the property.Unlike the 2003 mortgage, it did not encumber parcels two and four of the property or the Morenos' Stillwater real estate.Land Title closed the 2004 mortgage on behalf of Central Bank, and Central Bank immediately assigned the loan to respondentWells Fargo.

Sometime in 2007, the Morenos attempted to sell parcel three but were unsuccessful because parcel three was encumbered by the 2004 mortgage in favor of the assignee-mortgagee, Wells Fargo.Maintaining that the 2004 mortgage encumbrance against parcel three was erroneous, the Morenos unsuccessfully sought a release of parcel three from Wells Fargo.²The Morenos also sought assistance from Central Bank and Land Title and claimed that Land Title suggested that they contact Chicago Title in regard to their 2003 title-insurance policy.On September 17, 2007, the Morenos sent a claim letter to Chicago Title on the basis that title to parcel three of the property wasunmarketable because it was encumbered—erroneously—by Wells Fargo's mortgage.The Morenos claimed that the legal description for the mortgage was changed at the mortgage closing.Chicago Title denied the Morenos' claim on two bases: (1) the trust, not the Morenos, was the named insured in the title policy and, upon the trust transferring its interest to the Morenos, the title policy terminated under its own terms; and (2) the allegedly erroneous legal description attached to the 2004 mortgage occurred after the effective date of the policy, November 4, 2003, and was outside the insurance coverage because the policy only insured covered deficiencies in title that occurred prior to its effective date of November 4, 2003.

In March 2011, appellants sued respondents, seeking various forms of relief.The district court granted summary judgment to respondents on all claims.

This appeal follows.

DECISION

"On appeal from summary judgment, we must review the record to determine whether there is any genuine issue of material fact and whether the district court erred in its application of the law."Dahlin v. Kroening, 796 N.W.2d 503, 504(Minn.2011).The district court properly grants summary judgment "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits . . . show that there is no genuine issue as to any material fact and that either party is entitled to a judgment as a matter of law."Minn. R. Civ. P. 56.03.We conduct a de novo review of the district court's summary judgment decision.Riverview Muir Doran, LLC v. JADT Dev. Grp., LLC, 790 N.W.2d 167, 170(Minn.2010).We"view the evidence in the light mostfavorable to the party against whom judgment was granted."RAM Mut. Ins. Co. v. Rohde, 820 N.W.2d 1, 6(Minn.2012)(quotations omitted).

Summary Judgment to Central Bank

Appellants sued Central Bank on claims of slander of title, defamation, and negligence.The district court granted summary judgment to Central Bank, concluding that the claims were barred by statutes of limitations, the parole-evidence rule, and the statute of frauds.The court also concluded that the claims failed on their merits.Because we conclude that the district court properly granted summary judgment on the statute-of-limitations grounds, we do not reach the district court's other grounds for dismissing appellants' claims against Central Bank.

The district court concluded that the six-year statute of limitations under Minn. Stat. § 541.05(2012)³ barred appellants' negligence claim and that the two-year statute of limitations under Minn. Stat. § 541.07(1)(2012) barred appellants' defamation and slander-of-title claims.Appellants argue that the court erred in its application of the statutes of limitations because Central Bank waived the statute-of-limitations defense when it failed to raise it in its answer and that, even if properly raised, the statutes of limitations did not bar appellants' claims against Central Bank.

A statute of limitations is an affirmative defense.Minn. R. Civ. P. 8.03.A "failure to plead an affirmative defense, without later amendment of the pleading, waives the defense."Rehberger v. Project Plumbing Co., 295 Minn. 577, 578, 205 N.W.2d 126, 127(1973).The Eighth Circuit has stated that this "pleading requirement is intended to give the opposing party both notice of the affirmative defense and an opportunity to rebut it" and therefore has "eschewed a literal interpretation of the Rule that places form over substance."First Union Nat'l Bank v. Pictet Overseas Trust Corp., 477 F.3d 616, 622(8th Cir.2007);seeBlonder-Tongue Labs., Inc. v. Univ. of Ill. Found., 402 U.S. 313, 350, 91 S. Ct. 1434, 1453(1971)(noting that purpose of requiring pleading of affirmative defenses of res judicata and estoppel is to "give the opposing party notice" of affirmative defense and "chance to argue" that it should not be imposed);Snyder v. City of Minneapolis, 441 N.W.2d 781, 788(Minn.1989)(noting that Fed. R. Civ. P. 8(c) is "identical" to Minn. R. Civ. P. 8.03, considering policies underlying rule 8.03, and stating that rule 8(c)"serves the purpose of giving the opposing party notice of the defense and an opportunity to argue why his claim should not be barred completely."(quotation omitted))."Where the language of the Federal Rules of Civil Procedure is similar to language in the Minnesota civil procedure rules, federal cases on the issue are instructive."T.A. Schifsky & Sons, Inc. v. Bahr Constr., LLC, 773 N.W.2d 783, 787 n.3(Minn.2009).

Negligence Claim

The district court concluded that the six-year statute of limitations began to run on appellants' negligence claim on the date on which appellants executed the 2004mortgage, January 24, 2004, and that therefore the period within which to assert a negligence claim had expired by 2011, when appellants attempted to assert their negligence claim.

Central Bank did not specifically raise the statute-of-limitations affirmative defense in its answer to appellants' complaint; it merely pleaded that appellants' claims were "barred in whole, or in part, as a result of [their] failure to state a claim against Central for which relief can be granted" and "reserve[d] the right to assert additional affirmative defenses, as may be determined during the course of additional investigation and discovery in this litigation."But Central Bank did raise the statute-of-limitations defense in its memorandum of law supporting its motion for summary judgment as to appellants' negligence claim, and appellants addressed the merits of the defense in their responsive memorandum.

The district court concluded that summary judgment based on the statute of limitations was appropriate even if it was not initially pleaded by Central Bank.Because the parties litigated the issue by consent, we agree."'Issues litigated by either express or implied consent are treated as if they had been raised in the pleadings.'"Septran, Inc. v. Indep. Sch. Dist. No. 271, Bloomington, Minn., 555 N.W.2d 915, 919(Minn. App.1996)(quotingRoberge v. Cambridge Coop. Creamery Co., 243 Minn. 230, 234, 67 N.W.2d 400, 403(1954)), review denied (Minn. Feb. 26, 1997)."Consent may be...