Sterling State Bank v. Maas Commercial Props., LLC

• Decision Date: 26 August 2013
• Parties: Sterling State Bank, Respondent, v. Maas Commercial Properties, LLC, et al., Appellants.
• Court: Minnesota Court of Appeals

Sterling State Bank, Respondent, v. Maas Commercial Properties, LLC, et al., Appellants.

A13-0643

STATE OF MINNESOTA IN COURT OF APPEALS

Filed August 26, 2013

Appeal dismissed

Johnson, Chief Judge

Dakota County District Court

File No. 19HA-CV-10-3035

Tracy J. Morton, Apple Valley, Minnesota (for respondent)

John Koneck, Peter J. Diessner, Fredrikson & Byron, P.A., Minneapolis, Minnesota (for appellants)

Considered and decided by Johnson, Chief Judge; Stoneburner, Judge; and Connolly, Judge.

SYLLABUS

The district court erred by directing entry of final partial judgment pursuant to rule 54.02 of the Minnesota Rules of Civil Procedure because the benefits of interlocutory appellate review do not outweigh the general policy against piecemeal appellate review and because neither party will be prejudiced by the absence of interlocutory appellate review.

SPECIAL TERM OPINION

JOHNSON, Chief Judge

This appeal is taken from a partial judgment that determined some but not all of respondent's claims and all of appellants' counterclaims. The district court stated that there is no just reason for delay and directed entry of final partial judgment pursuant to rule 54.02 of the Minnesota Rules of Civil Procedure. We questioned our jurisdiction over the appeal and asked the parties to submit memoranda on the question whether the district court properly directed entry of a final partial judgment. We conclude that the benefits of interlocutory appellate review in this case do not outweigh the general policy against piecemeal appellate review and that neither party would be prejudiced without interlocutory appellate review. Therefore, we dismiss the appeal.

Respondent Sterling State Bank lent money to appellant Maas Commercial Properties, LLC (hereinafter MCP), to finance real estate developments in Dakota County and Scott County. MCP executed a promissory note and gave respondent a mortgage and an assignment of rents on the properties. Appellants Alan Maas and Lynette Maas executed personal guaranties. After appellants defaulted, respondent commenced this action with a multi-count complaint. Appellants answered the complaint and alleged multiple counterclaims.

The district court granted respondent's motion for partial summary judgment. The district court ordered summary judgment in favor of respondent on its breach-of-contract claims, permitted respondent to foreclose the mortgage recorded against the Dakota County property, confirmed the foreclosure sale of the Scott County property, anddischarged the notices of lis pendens against the properties. The district court also granted summary judgment to respondent on all of appellants' counterclaims. Respondent did not move for summary judgment on its claims of slander of title, unjust enrichment, fraudulent misrepresentation, and promissory estoppel. Accordingly, those claims remained pending after partial judgment was entered on the district court's summary judgment order.

Although not requested by either party, the district court's order states that there is no just reason for delay and directs entry of final partial judgment. The district court's order does not contain any reasons for directing entry of a final partial judgment pursuant to rule 54.02. The district court administrator entered judgment on the same day that the order was issued.

After the entry of final partial judgment, appellants' counsel submitted a letter to the district court requesting reconsideration, both on the merits and on the district court's directive for entry of final partial judgment pursuant to rule 54.02. Respondent's counsel submitted a letter opposing reconsideration. The district court denied appellants' request for reconsideration without addressing the propriety of the directive for entry of final partial judgment.

Appellants timely filed a notice of appeal from the final partial judgment. This court issued an order questioning whether the district court properly directed entry of final partial judgment.¹ Both appellants and respondent filed memoranda.

DECISION

This court recently summarized the caselaw interpreting rule 54.02:

As a general rule, an appeal in a civil case should be brought after the entry of final judgment. See Minn. R. Civ. App. P. 103.03(a). A partial judgment ordinarily is not an appealable judgment and, thus, "should be included within a single appeal from a final judgment that fully disposes of the litigation." Brookfield Trade Ctr. v. County of Ramsey, 609 N.W.2d 868, 873 n.6 (Minn. 2000); see also Erickson v. General United Life Ins. Co., 256 N.W.2d 255, 259 (Minn. 1977). The basic "thrust" of the rules of civil appellate procedure "is that appeals should not be brought or considered piecemeal." Emme v. C.O.M.B., Inc., 418 N.W.2d 176, 179 (Minn. 1988). This general policy conserves judicial resources and promotes the prompt completion of trial proceedings. Id. The general policy also avoids the disruption, delay, and expense of pre-trial appeals; avoids placing unnecessary burdens on appellate courts; and allows district court judges to supervise pre-trial and trial proceedings without interference by appellate courts. Id.

Notwithstanding this general policy, the rules of civil appellate procedure permit interlocutory appeals in certain circumstances. One such circumstance is the entry of final partial judgment pursuant to rule 54.02 of the Minnesota Rules of Civil Procedure. See Minn. R. Civ. App. P. 103.03(a). A party may appeal from a partial judgment entered pursuant to rule 54.02 if an action involves "multiple claims for relief or multiple parties" and if the district court makes an express determination that there is no just reason for delay and expressly directs the entry of a final judgment. Minn. R. Civ. P. 54.02; Minn. R. Civ. App. P. 104.01, subd. 1. Rule 54.02 is both a means of "reduc[ing] piecemeal appeals by limiting appeals from judgments that resolve onlypart of the litigation" and of "liberaliz[ing] the appellate process for parties who might be prejudiced by waiting to appeal a decision where other claims or liabilities are yet to be decided." T.A. Schifsky & Sons, Inc. v. Bahr Constr., LLC, 773 N.W.2d 783, 787 (Minn. 2009).

T & R Flooring, LLC v. O'Byrne, 826 N.W.2d 833, 835 (Minn. App. 2013) (footnote omitted).

"A district court's decision to direct entry of final partial judgment pursuant to rule 54.02 is a two-step process." Id. at 835-36. First, a district court may enter final partial judgment "only if a case involves multiple parties or 'multiple claims for relief.'" Id. at 836 (quoting Minn. R. Civ. P. 54.02). "Second, if the first requirement is satisfied, a district court then may consider whether 'substantial benefits to the parties in a particular case outweigh the general policy considerations against piecemeal review,' which includes the question whether the absence of an immediate appeal would cause prejudice to either party." Id. (quoting First Nat'l Bank of Windom v. Rosenkranz, 430 N.W.2d 267, 268 (Minn. App. 1988)). With respect to the second step, the supreme court has made clear that district courts should not "automatically" direct entry of final partial judgment by merely reciting the operative language of rule 54.02, that there is no just reason for delay. Schifsky, 773 N.W.2d at 787 n.2.

This court applies a de novo standard of review to the first issue, whether a case involves multiple parties or multiple claims. Schifsky, 773 N.W.2d at 786; T & R Flooring, 826 N.W.2d at 836. We ordinarily apply an abuse-of-discretion standard of review to the second issue, "whether substantial benefits to the parties outweigh the general policy considerations against piecemeal review." T & R Flooring, 826 N.W.2d at836; see also Schifsky, 773 N.W.2d at 786-87. The abuse-of-discretion standard of review applies if a district court articulates its discretionary decision by explaining the reasons for directing entry of final partial judgment. Id. at 836. In that event, appellate courts "give 'substantial deference' to a district court's decision to direct entry of final partial judgment pursuant to rule 54(b) because the district court is 'most likely to be familiar with the case and with any justifiable reasons for delay.'" Id. (quoting Huggins v. FedEx Ground Package Sys., Inc., 566 F.3d 771, 774 (8th Cir. 2009)).² "But if a district court has not provided any explanation of its reasons for directing entry of final partial judgment, there is nothing to which this court can defer." Id. In that situation, it is appropriate to scrutinize the district court's decision carefully to determine whether "the parties urged valid reasons for directing final partial judgment or whether a compelling reason is obvious." Id. at 837.

In this case, the parties agree that there was no error at the first step of the two-step process because the case "involves . . . 'multiple claims for relief.'" Id. at 836 (quoting Minn. R. Civ. P. 54.02). But the parties disagree concerning the second step, whether the district court properly balanced the considerations of the second requirement, whether "there are 'substantial benefits to the parties [that] outweigh the general policy considerations against piecemeal review'" and "'whether the absence of an immediate appeal would cause prejudice to either party.'" Id. at 836 (quoting Rosenkranz, 430 N.W.2d at 268).

It is notable that appellants argue that this court "does not have jurisdiction to take this appeal because . . . the district court erred in concluding that there is no just reason for delay and directing the entry of final partial judgment." Appellants note that "[n]either party made any arguments about whether a Rule 54.02 determination was appropriate in this case, and the [district court] conducted no written analysis on this issue." Appellants state that the district court "simply inserted a Rule 54.02 determination at the end of the Order," which appellants characterize as "exactly what the Minnesota Supreme...