Rabbe v. Farmers State Bank of Trimont
| Decision Date | 01 March 2021 |
| Docket Number | A20-0066,A20-0639 |
| Parties | Joel S. Rabbe, et al., Appellants, v. Farmers State Bank of Trimont, et al., Respondents, First Financial Bank in Winnebago, et al., Respondents. |
| Court | Minnesota Court of Appeals |
This opinion is nonprecedential except as provided by Minn. R. Civ. App. P. 136.01, subd. 1(c).
Affirmed
Martin County District Court
Richard E. Bosse, Law Offices of Richard E. Bosse, Chartered, Henning, Minnesota (for appellants)
Dustan J. Cross, Dean M. Zimmerli, Gislason & Hunter LLP, New Ulm, Minnesota (for respondents Farmers State Bank of Trimont, et al.)
Arthur G. Boylan, Philip J. Kaplan, Anthony Ostlund Baer & Louwagie P.A., Minneapolis, Minnesota (for respondents First Financial Bank in Winnebago, et al.)
Considered and decided by Gaïtas, Presiding Judge; Connolly, Judge; and Reyes, Judge.
NONPRECEDENTIAL OPINION
In the first of these consolidated appeals (A20-0066), appellants challenge the district court's order granting a motion to discharge certain notices of lis pendens and enjoining appellants from recording additional notices of lis pendens (the lis pendens order). In the second appeal (A20-0639), the same appellants challenge a contempt order by the district court, which was premised on failure to comply with the lis pendens order. Because the district court properly enjoined appellants from recording additional notices of lis pendens, and because the contempt order is well supported by the record, we affirm.
These consolidated appeals are the latest in the lengthy litigation arising from a farmer-lender relationship. The facts underlying this dispute appear in several opinions of this court, most recently in Rabbe v. Farmers State Bank of Trimont, No. A19-1353, 2020 WL 2312931 (Minn. App. May 11, 2020), review denied (Minn. July 23, 2020). See also Farmers State Bank of Trimont v. Rabbe, No. A19-0707, 2019 WL 7287075 (Minn. App. Dec. 30, 2019); Rabbe v. Farmers State Bank of Trimont, No. A18-1845, 2019 WL 2416036 (Minn. App. June 10, 2019), review denied (Minn. Aug. 20, 2019). We provide an abbreviated factual and procedural history here to frame the issues on appeal.
The appellants in this case include individual Rabbe family members Joel Rabbe, Kirsten Rabbe, Jon Rabbe, Debra Rabbe, and Joyce Rabbe in her personal capacity and as a trustee (Rabbe individuals), along with two farming companies owned by certain Rabbefamily members—Rabbe Farms LLP and Rabbe Ag Enterprises (together, the "Rabbe Entities," and collectively with the Rabbe individuals, "the Rabbes"). For many years, the Rabbes had a farmer-lender relationship with respondent Farmers State Bank of Trimont (FSB).1
In 2013 and 2014, FSB loaned Rabbe Farms over $17 million. The loans were personally guaranteed by Rabbe individuals and secured in part by mortgages on grain elevators (the Elevator Properties) and five parcels of farmland covering 503 acres (the Rabbe Farms Farmland). In May 2014, FSB declared default on the loans. The parties then negotiated and entered into a forbearance agreement. Pursuant to the forbearance agreement, the Rabbes executed a new mortgage in the amount of $15 million on about 1,200 acres of additional land owned by Rabbe individuals (the Rabbe Individual Farmland) to secure the loans. The Rabbes also agreed to release and forever discharge all claims against FSB if the circumstances giving rise to such claims occurred prior to the date of the agreement.
Subsequently, the Rabbes defaulted on the forbearance agreement. The parties executed an amended forbearance agreement, but the Rabbes later defaulted on that agreement as well. The parties participated in farmer-lender mediation, which yielded noresolution. In September 2015, the Rabbe Entities filed for Chapter 11 bankruptcy protection.
While the Rabbe Entities' bankruptcy proceedings were pending, FSB initiated foreclosure litigation regarding the Rabbe Individual Farmland. In May 2016, the district court entered summary judgment in favor of FSB on all claims and issued a foreclosure decree as to the Rabbe Individual Farmland. The Rabbes appealed.
Following the foreclosure decree, FSB purchased the entirety of the Rabbe Individual Farmland at two sheriff's sales. The district court confirmed the validity of the sheriff's sales in a July 2016 order. The sheriffs executed and delivered certificates of sale to FSB shortly thereafter, confirming FSB's ownership of the property subject only to the Rabbe individuals' statutory right of redemption and right of first refusal under Minnesota Statutes section 500.245 (2020). See Minn. Stat. § 580.12 (2020). The Rabbe individuals did not redeem from any of the foreclosure sales.2
Meanwhile, in the Rabbe Entities' bankruptcy proceedings, the parties reached a settlement that was eventually enforced by the bankruptcy court. Under the settlement, Rabbe Farms agreed to deed over the Rabbe Farms Farmland and Elevator Properties to FSB, and the Rabbes agreed to dismiss their appeal of the district court's summary judgment in the foreclosure litigation. Rabbe Farms executed and delivered quit claim deeds conveying Rabbe Farms Farmland and Elevator Properties to FSB in May 2017.This court dismissed the appeal in the foreclosure litigation with prejudice upon the stipulation of the parties. Farmers State Bank of Trimont vs. Rabbe, No. A16-0609, A16-0891 (Minn. App. July 3, 2017) (order).
The present litigation
In November 2017, the Rabbes commenced this litigation by serving a summons and complaint for lender liability on respondents. The next month, the Rabbes served respondents with an amended complaint, which asserts ten counts arising out of FSB's origination, administration, and collection of the loans owed by the Rabbes, and out of the sale process for real property acquired by FSB.3 The first amended complaint requests monetary damages, a civil penalty, treble damages, and an injunction.
Respondents moved to dismiss the first amended complaint. In September 2018, the district court granted the motion to dismiss except as to an antitrust claim. The Rabbes filed a second amended complaint in response, containing only allegations relating to the antitrust claim. They later requested leave to file a third amended complaint, but the district court denied their request because the proposed amendments essentially reasserted causes of action already dismissed.
FSB moved for summary judgment as to the remaining antitrust claim, the district court granted the motion—dismissing the Rabbes' complaint in its entirety—and entered judgment in favor of FSB. The Rabbes appealed, challenging, among other things, thedistrict court's October 2018 order dismissing all of their claims, except the antitrust claim, and the order denying their motion for a third amended complaint (the summary-judgment appeal). We affirmed the district court's order on May 11, 2020. Rabbe, 2020 WL 2312931, review denied (Minn. July 21, 2020).
Lis pendens order
While the summary-judgment appeal was still pending, and before this court had issued its decision, other events transpired that led to the present consolidated appeals.
Around the same time that the Rabbes commenced the lawsuit underlying this case (in other words, the lawsuit that led to the summary-judgment appeal), they commenced another lawsuit against FSB in Martin County District Court (the right-of-first-refusal litigation). In that lawsuit, the Rabbes alleged that FSB violated their statutory right of first refusal under Minnesota Statutes section 500.245 in regards to marketing and selling the Rabbe Farms Farmland, Rabbe Individual Farmland, and Elevator Properties after acquiring them as a result of the bankruptcy and foreclosure proceedings. See Rabbe, 2019 WL 2416036 at *2. The Rabbes recorded notices of lis pendens in connection with the right-of-first-refusal litigation against all of the real estate subject to the purchase agreements entered into between FSB and third parties, thereby clouding title and hindering FSB's ability to sell the property. The district court dismissed the Rabbes' right-of-first-refusal claims in May 2018 and entered partial final judgment. The Rabbes appealed, this court affirmed, and the supreme court denied further review. See Rabbe, 2019 WL 2416036 at *1, review denied (Minn. Aug. 20, 2019).
Three days after the supreme court denied review in the right-of-first-refusal litigation, the Rabbes recorded notices of lis pendens in this lawsuit on all of the Rabbe Farms Farmland, Rabbe Individual Farmland, and Elevator Properties.4 The notices of lis pendens state that the "object of the action is . . . Claims for declaratory relief and judgment and cancellation of deeds and mortgages as a result of the execution of such documents pursuant to contracts which were fraudulently induced without consideration and not performed by the Defendants." Again, at the point when the Rabbes filed these notices, the district court had dismissed the Rabbes' claims in this case and the Rabbes had appealed. See Rabbe, 2020 WL 2312931. FSB promptly moved the district court for an order discharging the notices of lis pendens.
In a November 2019 order, the district court granted FSB's motion and discharged the notices of lis pendens. The district court reasoned that none of the versions of the complaint filed by the Rabbes in this litigation would support the filing of a notice of lis pendens, as the allegations do not raise a question about the validity of FSB's title to real property. The district court found that the Rabbes' decision to file the lis pendens "after the resolution of numerous counts in multiple court actions was for the purpose of delay and to increase FSB's costs," and that the filing was not reasonable under the circumstances. The district court accordingly sanctioned the Rabbes with attorney fees and expenses and enjoined them from filing additional notices of lis pendens on the real...
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