Peters v. Great W. Bank, Inc.

• Decision Date: 28 January 2015
• Docket Number: No. 27145.,27145.
• Citation: 859 N.W.2d 618
• Parties: Laura PETERS, Plaintiff and Appellant, v. GREAT WESTERN BANK, INC., Defendant and Appellee.
• Court: South Dakota Supreme Court

859 N.W.2d 618

Laura PETERS, Plaintiff and Appellant

v.GREAT WESTERN BANK, INC., Defendant and Appellee.

No. 27145.

Supreme Court of South Dakota.

Considered on Briefs on Jan. 12, 2015.

Decided Jan. 28, 2015.

Todd A. Schweiger, Rapid City, South Dakota, Attorney for plaintiff and appellant.

Michael V. Wheeler, DeMersseman Jensen Tellinghuisen, Stanton & Huffman, LLP, Rapid City, South Dakota, Attorneys for defendant and appellee.

Opinion

GILBERTSON, Chief Justice.

[¶ 1.] Laura Peters appeals the circuit court's denial of her motion to compel discovery on Great Western Bank (the Bank), as well as the court's granting of summary judgment in favor of the Bank. She asserts that the Bank was required to join her as a defendant in two foreclosure actions and that additional time for discovery was necessary for her to answer the Bank's motion for summary judgment. We affirm.

Facts and Procedural History

[¶ 2.] In March 2003, Peters obtained a default judgment against Barker & Little, Inc. (BLI)—a South Dakota corporation.¹ BLI was a general partner in Barker & Little Limited Partnership III (BLLP). Doug Hamilton owned or operated BLI and BLLP, as well as a number of other entities including Barker & Little Manufactured Homes, Inc. (BLMHI). BLI was the operating entity for the management of rental properties, including property titled to BLLP. The Bank extended a line of credit to BLI secured, in part, by mobile homes and rent-to-own contracts owned by BLMHI.

[¶ 3.] In 2008, the Bank initiated foreclosure proceedings against BLLP and BLMHI. In its action against BLLP, the Bank sought to foreclose on a real estate mortgage; against BLMHI, the Bank sought to recover the mobile homes and rent-to-own contracts used as collateral on the line of credit extended to BLI. Because of BLI's relationship with both entities, the Bank named BLI as a codefendant in each action. The Bank and Hamilton privately negotiated a settlement agreement. Pursuant to that agreement, the various Hamilton-owned entities transferred real and personal property to the Bank. The Bank did not join Peters as a defendant or otherwise notify her of these foreclosure actions.

[¶ 4.] Upon learning of the Bank's foreclosure actions involving BLI, Peters initiated this action against the Bank, alleging fraud, conversion, deceit, and unjust enrichment. Peters made a motion to compel discovery, and the Bank responded with a motion for summary judgment. The circuit court granted the Bank's motion and denied Peters's motion as moot. Peters appeals, raising two issues:

1. Whether the Bank was required to join Peters as a defendant in its foreclosure actions against BLI, BLLP, and BLMHI.

2. Whether the circuit court should have granted Peters additional time for discovery prior to ruling on the Bank's motion for summary judgment.

Standard of Review

[¶ 5.] Our standard of review on summary judgment is as follows:

In reviewing a grant or a denial of summary judgment under SDCL 15–6–56(c), we must determine whether the moving party demonstrated the absence of any genuine issue of material fact and showed entitlement to judgment on the merits as a matter of law. The evidence must be viewed most favorably to the nonmoving party and reasonable doubts should be resolved against the moving party. The nonmoving party, however, must present specific facts showing that a genuine, material issue for trial exists. Our task on appeal is to determine only whether a genuine issue of material fact exists and whether the law was correctly applied. If there exists any basis which supports the ruling of the trial court, affirmance of a summary judgment is proper.

Saathoff v. Kuhlman, 2009 S.D. 17, ¶ 11, 763 N.W.2d 800, 804 (quoting Pellegrino v. Loen, 2007 S.D. 129, ¶ 13, 743 N.W.2d 140, 143). We review “[a] circuit court's refusal to grant additional discovery prior to awarding summary judgment ... for abuse of discretion.” Stern Oil Co. v. Border States Paving, Inc., 2014 S.D. 28, ¶ 24, 848 N.W.2d 273, 281.

Analysis and Decision

[¶ 6.] Peters alleges the Bank committed conversion and was unjustly enriched by obtaining property to which she had a superior claim. She also alleges that the Bank committed fraud and deceit by failing to name her as a defendant. However, the only persons that a foreclosure plaintiff must join as a defendant, under South Dakota law, are those who have “an interest in, or lien on, the mortgaged property as of the date of filing the action [.]” SDCL 21–49–15. Thus, all of Peters's causes of action are premised on the assertion that Peters had a claim to the foreclosure property; consequently, all of Peters's causes of action turn on the same question: Whether Peters had an interest in, or lien on, property included in the Bank's foreclosure actions against BLI, BLLP, and BLMHI as of the date the Bank filed those actions.

[¶ 7.] Peters argues that her status as a judgment creditor of BLI gave her an “interest”—within the meaning of SDCL 21–49–15 —in the foreclosure property because that property could have been sold to satisfy her judgment. As noted above, South Dakota law requires “[a]ll persons having an interest in, or lien on, the mortgaged property as of the date of filing the action ... be named as defendants in the action.” SDCL 21–49–15. We have not previously construed the meaning of “interest” as it appears in SDCL 21–49–15. Therefore we apply our usual approach to statutory construction.

The purpose of statutory construction is to discover the true intention of the law, which is to be ascertained primarily from the language expressed in the statute. The intent of a statute is determined from what the Legislature said, rather than what the courts think it should have said, and the court must confine itself to the language used. Words and phrases in a statute must be given their plain meaning and effect.

City of Rapid City v. Estes, 2011 S.D. 75, ¶ 12, 805 N.W.2d 714, 718 (quoting State ex rel. Dep't of Transp. v. Clark, 2011 S.D. 20, ¶ 5, 798 N.W.2d 160, 162). Further, the Legislature has commanded that “[w]ords used [in the South Dakota Codified Laws] are to be understood in their ordinary sense [.]” SDCL 2–14–1.

[¶ 8.] The meaning of the word “interest,” as used in SDCL 21–49–15, is more restrictive than Peters suggests. Dictionaries seem to offer two types of definitions for the word “interest.” The first definition broadly describes “[t]he object of any human desire”; the second, “all or part of a legal or equitable claim to or right in property[.]” Black's Law Dictionary 934 (10th ed.2014). There is no doubt that Peters desired access to the foreclosure property in order to satisfy her judgment. However, it is difficult to imagine that an actual lienholder would have had any less of a desire to obtain that property. Thus, a definition of “interest” broad enough to include a general judgment creditor would also include lienholders. However, the inclusion of the phrase “or lien on” in SDCL 21–49–15 clearly indicates that two sets of persons must be joined as defendants: (1) those with an interest in the mortgaged property; and (2) those with a lien on the mortgaged property. If the second set is defined as a subset of the first—i.e., if the word “interests” is defined in such a way that includes lienholders—then the phrase “or lien on” is redundant. Because “[w]e assume that the Legislature intended that no part of its statutory scheme be rendered mere surplusage[,]” Faircloth v. Raven Indus., Inc., 2000 S.D. 158, ¶ 6, 620 N.W.2d 198, 201, we reject Peters's broad interpretation of the word “interest.” We think it clear that the Legislature intended SDCL 21–49–15 to require the joining of persons who have a legal claim to, or lien on, the property subject to foreclosure itself, rather than merely a money judgment that might be satisfied by the sale of that property.

[¶ 9.] Peters does not have an interest in the foreclosure property. Peters has not asserted any legal claim to, or right in, the property itself—e.g., she does not purport to hold any present or future estate in, or option to purchase, the foreclosure property. Instead, Peters simply obtained a default money judgment against BLI entitling her to the payment of $24,230.90. Such a judgment does not, in itself, give Peters a right to BLI's property. We decided a similar issue well over a century ago in Yetzer v. Young, 3 S.D. 263, 52 N.W. 1054 (1892). In that case, a judgment creditor sought to intervene in a foreclosure action brought by a third party against her judgment debtor. At the time, section 4886 of the Dakota Compiled Laws permitted a person to intervene in a lawsuit if that person had “an interest in the matter in litigation[.]” Id. at 267, 52 N.W. at 1055.² The plaintiff asserted “that as a simple judgment creditor she had such ‘an interest in the matter in litigation’ as entitled her to intervene [.]” Id. She argued that “the object of [the third party's] action was to get possession of the goods, to appropriate them to the payment of their alleged mortgage, and thus reduce and divert the fund out of which she might otherwise collect her judgment, and that she was directly interested in preventing this.” Id. We rejected the plaintiff's argument, noting that “[t]he subject-matter of the litigation was [the third party's] right to take the goods under their mortgage. It went only to the possession. In this question [plaintiff] could not be concerned, unless she had some interest in the goods that might be affected by such change of possession.” Id. Here, like in Yetzer, Peters's interest in the foreclosure property is not a direct claim of right to the property itself; rather, the property merely constitutes a “fund out of which she might otherwise collect her judgment [.]” Id. Similarly, we hold that Peters did not have an interest in the foreclosure property at issue here within the meaning of SDCL 21–49–15.

[¶ 10.] Yetzer notwithstanding, Peters argues that our decision in First Nat'l...