Obermoller v. Federal Land Bank of St. Paul, C5-86-2226
| Decision Date | 07 July 1987 |
| Docket Number | No. C5-86-2226,C5-86-2226 |
| Citation | 409 N.W.2d 229 |
| Parties | Larry R. OBERMOLLER, et al., Appellants, v. FEDERAL LAND BANK OF SAINT PAUL, Respondent. |
| Court | Minnesota Court of Appeals |
Syllabus by the Court
1. Where reversal of a trial court order could affect a mortgage foreclosure redemption period, the fact that the sale has already occurred does not make the issue moot on appeal.
2. The trial court did not abuse its discretion in denying debtors' request for a temporary injunction based on the creditor's lack of good faith where the mediator had not filed an affidavit finding bad faith and debtors did not present sufficient evidence to support such a finding.
3. This court will not address the issue of homestead partition for separate sale because that issue was not raised before the trial court.
Bob A. Goldman, Tuveson, Goldman & Nelson, Albert Lea, for appellants.
Brian J. Murphy, Dennis H. Simpson, Quarnstrom, Doering, Pederson, Leary & Murphy, Marshall, for respondent.
Heard, considered and decided by LANSING, P.J., and HUSPENI and RANDALL, JJ.
The trial court denied the application of appellants Larry and Connie Obermoller for a temporary injunction to halt the foreclosure sale of their farm. Appellants argue that the trial court abused its discretion and that they should be allowed to set aside their homestead for a separate sale. Respondent has moved to dismiss the appeal on the grounds of mootness. We address the merits and affirm.
Respondent, the Federal Land Bank of Saint Paul, held a mortgage on certain farm land owned by appellants. On February 22, 1986, respondent published notice of a foreclosure sale of this land, to be held April 23, 1986. On March 22, 1986, the Minnesota Farmer-Lender Mediation Act, Minn.Stat. Secs. 583.20-32 (1986), became effective. Appellants attempted to take advantage of this new law by filing a debtor mediation request on April 16, 1986.
Respondent, however, proceeded with the April 23 foreclosure sale on the assumption that the legislation did not apply to proceedings commenced before its enactment. Despite this sale, respondent also participated in mediation in June and July of 1986. In July 1986, this court issued its opinion in Laue v. Production Credit Association, 390 N.W.2d 823 (Minn.Ct.App.1986), holding the farmer-lender mediation act applied even where foreclosure proceedings were already pending on the date the act became effective. Respondent continued to mediate, but also maintained the position that the retroactivity issue was on appeal to the Minnesota Supreme Court and, if Laue was reversed, the April 23 foreclosure sale would be valid. 1
Appellants and respondent were unsuccessful in mediating a settlement and on September 17, 1986, respondent filed notice of a second mortgage foreclosure sale. This sale was to be held November 25, 1986. On November 12, 1986, appellants served a summons and complaint on respondent, seeking to have both the April foreclosure sale and the upcoming November foreclosure sale declared invalid because respondent had not negotiated in good faith and had not given the requisite notice of mediation rights under Minn.Stat. Sec. 581.05. Appellants also requested damages in excess of $50,000.
On November 13, 1986, appellants applied for a temporary injunction to quash the upcoming November 25 foreclosure sale. A hearing was held on November 21, 1986. Appellants' only challenges to the foreclosure sale were that respondent failed to give notice of the right to mediation and that respondent did not participate in the mediation proceedings in good faith. The trial court refused to issue a temporary injunction, concluding that appellants had failed to demonstrate any probability of success on the merits because their underlying action was based on respondent's bad faith and no evidence of bad faith had been presented. The trial court also found appellants had failed to show irreparable harm would result from the sale since they could still institute an action under the mortgage foreclosure statutes to have the sale set aside.
1. Does the occurrence of the foreclosure sale render this appeal moot?
2. Did the trial court abuse its discretion in denying appellants' application for a temporary injunction?
3. Should this case be remanded to allow appellants to set aside their homestead for a separate sale?
An issue is moot and will not be considered by this court:
When the affirmance or reversal of an order made in the course of the proceeding would make no difference in respect of the controversy on the merits * * *.
Barnes v. Macken, 252 Minn. 412, 416, 90 N.W.2d 222, 226 (1958). Also, if during the appeal process an intervening event occurs "which renders it impossible to grant any relief or which makes a decision unnecessary," the appeal will be dismissed. Id.
Respondent contends that appellants' claim on appeal, that the trial court erred in not issuing an injunction halting the sale, is moot because the foreclosure sale has already taken place. Respondent argues that Moore v. McDonald, 165 Minn. 484, 205 N.W. 894 (1925), is similar to the present case and should control. We disagree. In Moore, petitioners were denied a temporary injunction that would have halted the building of a bridge. By the time the case reached the supreme court, the bridge had already been built. The supreme court found the appeal was moot because a reversal would accomplish nothing. Id. at 485, 205 N.W. at 895.
The present case is distinguishable because no such irreversible action has occurred. The redemption period has been running since November 1986. If this court were to agree with appellants that an injunction should have issued, the November foreclosure sale could be voided, resulting in, at least, a delayed redemption period. A reversal of the trial court's order could result in some relief to appellants, and therefore this court will address the merits of the appeal.
The issuance of a temporary injunction is largely a matter of judicial discretion. Paradata of Minnesota, Inc. v. Fox, 356 N.W.2d 852, 854 (Minn.Ct.App.1984), pet. for rev. denied, (Minn. Feb. 6, 1985). The limited question on appeal is whether the trial court's denial of the injunction constitutes a clear abuse of discretion. Bud Johnson Construction Co. v. Metropolitan Transit Commission, 272 N.W.2d 31, 32 (Minn.1978). This court views the facts alleged in the pleadings and the affidavits in the light most favorable to the party who prevailed below. Id. at 33.
In the present case the trial court refused to issue the temporary injunction primarily because of its assessment that appellants had failed to show bad faith and therefore were unlikely to prevail on the merits in their underlying action which was also based on respondent's bad faith in mediation. Minn.Stat. Sec. 583.27, subd. 1 provides:
The parties must engage in mediation in good faith. Not participating in good faith includes: (1) a failure on a regular or continuing basis to attend and participate in mediation sessions without cause; (2) failure to provide full information regarding the financial obligations of the parties and other creditors; (3) failure of the creditor to designate a representative to participate in the mediation with authority to make binding commitments within one business day to fully settle, compromise, or otherwise mediate the matter; (4) lack of a written statement of debt restructuring alternatives and a statement of reasons why alternatives are unacceptable to one of the parties; (5) failure of a creditor to release funds from the sale of farm products to the debtor for necessary living and farm operating expenses; or (6) other similar behavior which evidences lack of good faith by the party. A failure to agree to reduce, restructure, refinance, or forgive debt does not, in itself, evidence lack of good faith by the creditor.
Minn.Stat. Sec. 583.27, subd. 2, sets out a procedure for a mediator to report a party's lack of good faith in mediation by filing an affidavit with the director and the parties. In its accompanying memorandum, the trial court emphasized that the mediator had not filed an affidavit. As the trial court noted, mediation proceedings are unrecorded, and therefore without such an affidavit a determination of bad faith is very difficult.
Appellants claim, however, that an affidavit from the mediator is not necessary to prove their claim of bad faith because there are several aspects of respond...
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