Beverly Clark, et al., Appellants, vs. Nations Trust Mortgage, LLC, et al., Respondents, AND In re the Matter of the Petition of Nations Trust Mortgage, LLC, for Certain Relief in Connection with Certificate of Title No. 235058.0 and for a New Certificate after Mortgage Foreclosure Sale.

Beverly Clark, et al., Appellants, vs. Nations Trust Mortgage, LLC, et al., Respondents, AND In re the Matter of the Petition of Nations Trust Mortgage, LLC, for Certain Relief in Connection with Certificate of Title No. 235058.0 and for a New Certificate after Mortgage Foreclosure Sale. A06-1477, Court of Appeals Unpublished, August 21, 2007.

This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480 A. 08, subd. 3 (2006).

 

STATE OF MINNESOTA

IN COURT OF APPEALS

A06-1477

 

Beverly Clark, et al.,

Appellants,

 

vs.

 

Nations Trust Mortgage, LLC, et al.,

Respondents,

 

AND

 

In re the Matter of the Petition of Nations Trust Mortgage, LLC,

for Certain Relief in Connection with Certificate of Title

No. 235058.0 and for a New Certificate after

Mortgage Foreclosure Sale

 

Filed August 21, 2007

Affirmed

Randall, Judge

 

St. Louis County District Court

File No. 69DU-CV-05-1421,

69DU-CV-06-575

 

Gregory M. Miller, Stephen H. Parsons, Mansfield, Tanick & Cohen, P.A., 1700 U.S. Bank Plaza South, 220 South Sixth Street, Minneapolis, MN  55402-4511 (for appellants)

 

Joseph V. Ferguson, III, Paul W. Wojciak, Johnson, Killen & Seiler, P.A., 800 Wells Fargo Center, 230 West Superior Street, Duluth, MN  55802 (for respondents)

 

                        Considered and decided by Willis, Presiding Judge; Randall, Judge; and Ross, Judge.

U N P U B L I S H E D   O P I N I O N

RANDALL, Judge

            On appeal from summary judgment in this breach-of-fiduciary-duty dispute, appellants argue (a) the district court should not have addressed the merits of respondent-defendant's motion for summary judgment because respondent's motion was not adequately supported until five days before the hearing; (b) the grant of summary judgment was improper because appellants' affidavits raised factual questions and because respondents' affidavits did not set forth admissible evidence and did not adequately address the elements of appellants' claims; and (c) the district court should not have ruled on respondent's title claims in a proceeding subsequent without giving adequate notice of the hearing.  We affirm. 

FACTS

            Appellants William and Beverly Clark[1] were the owners of a parcel of real estate located on Trinity Road in Duluth (hereinafter "Trinity Road Property").  They are also the owners of a triplex located in Carlton County, and Mrs. Clark is the owner of a cabin located on Grand Lake, north of Duluth.  The Trinity Road Property was encumbered by a mortgage held by Ocwen Federal Bank (Ocwen).  When appellants defaulted on the mortgage payments, Ocwen commenced foreclosure proceedings, and a sheriff's sale was scheduled for December 23, 2004. 

            A few weeks before the date of the scheduled sheriff's sale, Mrs. Clark contacted respondent Nations Trust Mortgage L.L.C.[2] attempting to identify an alterative lender for the mortgage loan obligation due and payable to Ocwen.  According to Mrs. Clark, her reason for seeking respondent's services was to benefit from a lower interest rate and to accomplish the financing without a down payment, fees, or other up-front expenses.  Respondent, a mortgage broker and not a mortgage lender, agreed to assist Mrs. Clark in identifying a substitute lender. 

            On December 9, 2004, respondent mailed a preliminary mortgage loan package to Eastern Savings Bank (Eastern), one of the mortgage lenders identified by respondent as a potential mortgage lender.  By December 16, 2004, however, it became clear that Eastern would not be able to process a loan application prior to the sheriff's sale.  In an effort to provide Mrs. Clark with the opportunity to repurchase the Trinity Road Property, respondent attended the sheriff's sale and bid $1 more than the Ocwen obligation.  As a result of being the successful bidder at the sheriff's sale, respondent provided Mrs. Clark with six months to complete mortgage loan applications and identify a mortgage
lender whose underwriting requirements matched her ability to support the mortgage payments. 

            After the sheriff's sale, respondent continued to work with Eastern and Mrs. Clark in an effort to obtain refinancing for the Trinity Road Property.  Despite respondent's efforts, however, a suitable agreement was unable to be reached.  During this time frame, respondent discovered that Mrs. Clark had purportedly misrepresented her financial status, including the value of appellants' triplex and Mrs. Clark's cabin on Grand Lake.  Respondent claimed that it discovered that Mrs. Clark's credit report was substandard, her income was sporadic, she had overstated the value of her real properties, and she was unwilling to liquidate assets or cross-collateralize properties to provide funding or security to repurchase the Trinity Road Property.  Consequently, respondent claimed that it was unable to identify to a suitable lender for Mrs. Clark.

            On June 16, 2005, one week prior to the expiration of the redemption period, Mrs. Clark filed a complaint with the Minnesota Attorney General's Office.  Shortly after being contacted by the Attorney General's Office, respondent agreed to extend the redemption period for 30 days beyond the June 23, 2005 deadline.  The 30 days passed without Mrs. Clark identifying a mortgage lender and no further action was taken by the Attorney General's Office.  A similar complaint filed by Mrs. Clark with the Minnesota Department of Commerce was opened and closed without a finding of wrongdoing by respondent. 

             In July 2005, appellants commenced this action against respondent under the Minnesota consumer-protection statutes for injunctive relief and damages.  Appellants claimed that respondent had a fiduciary duty to act in appellants' best interests in obtaining a mortgage loan to save appellants' home from foreclosure, and respondent breached that duty by purchasing the home at the sheriff's foreclosure sale, while continuing to represent to appellants that respondent was going to obtain financing on the terms listed by appellants.  Appellants asserted that respondent's breach of fiduciary duty and misrepresentations to appellants resulted in appellants' failing to obtain the financing necessary to redeem the home and the loss of the home to respondent.

            After appellants filed their complaint, they were evicted from the Trinity Road Property, and, shortly thereafter, respondent disposed of the Trinity Road Property.  Approximately five months later, on May 1, 2006, respondent filed a notice of motion and motion, entitling the motion as one for summary judgment.  A hearing date on the motion was set for June 5, 2006.  Although respondent's memorandum in support of the motion for summary judgment set forth what respondent claimed were "undisputed facts," respondent neglected to submit any affidavits, answers to interrogatories, deposition transcripts, or sworn statements of any kind in support of the summary judgment motion. 

            Because appellants' counsel of record withdrew in December 2005, Mrs. Clark, acting pro se, filed a memorandum of law in opposition to respondent's summary judgment motion.  The memorandum asserted that because respondent failed to submit any affidavits or other sworn testimony in support of their motion, the motion should be treated as a motion for judgment on the pleadings under rule 12.03.  Mrs. Clark also submitted an affidavit along with the memorandum in opposition to respondent's summary judgment motion stating that "[t]he contents of [the] Complaint are true and correct to the best of my knowledge, information and belief except as those things that are stated on information and belief, and as to those, I believe them to be true."  Mrs. Clark argued that because the pleadings create issues of fact and the only sworn "facts" before the district court were those in the complaint as incorporated by reference in Mrs. Clark's affidavit in opposition to the motion for summary judgment, respondent's motion should be denied.

            After receiving Mrs. Clark's memorandum of law and affidavit, respondent submitted the affidavits of Befera and Malmstrom.  The affidavits were submitted on May 31, 2006, before a hearing on the matter, and simply confirmed that the facts set forth in respondent's memorandum of law were true and correct.  The affidavits did not add any new facts to the record.

            On June 7, 2006, the district court issued an order granting respondent's motion for summary judgment.  The district court held that respondent's late filing of the accompanying affidavits was "inadvertent[]" and that the late filing did not prejudice appellants.  The district court then decided respondent's motion as a rule 56 motion and held that appellants did not raise a genuine issue of material fact because all that was relied on in opposition to the motion were the general allegations set forth in the complaint.  The district court also addressed respondent's petition for proceeding subsequent that had been filed on February 9, 2006, requesting that a new certificate of title be issued reflecting respondent as the owner of the Trinity Road Property.  The district court noted that Mrs. Clark filed a reply in May 2006, which asserted as a defense that "title to the property is, and has been in dispute by commencement of an affiliated action by [r]espondent against [appellant]."  The court held that because it granted respondent's motion for summary judgment, Mrs. Clark's defense to the petition was rendered moot.  This appeal followed.    

D E C I S I O N

            On an appeal from summary judgment, this court asks two questions:  (1) whether there are genuine issues of material fact and (2) whether the district court erred in its application of the law.  State by Cooper v. French, 460 N.W.2d 2, 4 (Minn. 1990).  This court views the evidence in the light most favorable to the party against whom summary judgment was granted.  Fabio v. Bellomo, 504 N.W.2d 758, 761 (Minn. 1993).  But if that party fails to raise a genuine issue of material fact on any element essential to establishing its case, summary judgment is appropriate.  Lubbers v. Anderson, 539 N.W.2d 398, 401 (Minn. 1995).  "[T]here is no genuine issue of material fact for trial when the nonmoving party presents evidence which merely creates a metaphysical doubt as to a factual issue and which is not sufficiently probative with respect to an essential element of the nonmoving party's case to permit reasonable persons to draw different conclusions."  DLH, Inc. v. Russ, 566 N.W.2d 60, 71 (Minn. 1997).

I.

            The timing of summary judgment motions is governed by Minn. R. Civ. P. 56.03 and Minn. R. Gen. Pract. 115.03(a).  Minn R. Civ. P. 56.03 provides:

            Service and filing of the motion shall comply with the requirements of Rule 115.03 of the General Rules of Practice for the District Courts, provided that in no event shall the motion be served less than 10 days before the time fixed for the hearing.  Judgment shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that either party is entitled to judgment as a matter of law. 

 

Minn. R. Gen. Pract. 115.03(a) states that no dispositive motion shall be heard unless properly noticed and served at least 28 days prior to the scheduled hearing.  "[T]he stated time for the notice in Rule 56.03 is mandatory, absent a clear waiver by the adversary."  Wikert v. N. Sands & Gravel, Inc., 402 N.W.2d 178, 182 (Minn. App. 1987), review denied (Minn. May 18, 1987).  "A Rule 56 motion which is decided solely on the basis of pleadings will be considered a motion for judgment on the pleadings under Rule 12.03 on appeal."  2 David F. Herr & Roger S. Haydock, Minnesota Practice § 56.6 (4th ed. 2002) (citing Abresch v. Nw. Bell Tel. Co., 246 Minn. 408, 412, 75 N.W.2d 206, 209 (1956)).

            It is undisputed that respondent did not serve and file its affidavits in support of its motion for summary judgment until approximately five days before the hearing on the motion.  Appellants argue that because the affidavits were not filed within the mandates of Minn. R. Civ. P. 56.03 and Minn. R. Gen. Pract. 115.03(a), the affidavits were untimely and should not be considered.  Appellants contend that without the supporting affidavits, respondent's motion converts to a motion for judgment on the pleadings under rule 12.03 and, therefore, the district court erred by treating respondent's motion as one for summary judgment.   

            An untimely summary judgment motion may be heard and granted when the opposing party does not suffer prejudice.  See Benigni v. County of St. Louis, 585 N.W.2d 51, 53 (Minn. 1998).  In determining whether the objecting party was prejudiced, courts will consider whether new arguments or issues are raised in the summary judgment motion, whether the non-moving party is caught off guard, and whether the non-moving party is denied a meaningful opportunity to prepare.  Id. 

            Here, the district court recognized that respondent "inadvertently" failed to file the affidavits when the motion for summary judgment was filed, but concluded that appellants were unable to establish that the late receipt of the affidavits was in any way prejudicial.  We agree with this reasoning.  All of the facts respondent relied on in support of its summary judgment motion were presented in its memorandum of law.  The affidavits did not raise any new arguments or issues, but simply confirmed that the facts set forth in respondent's memorandum of law were true and correct.  Appellants cannot claim they were "caught off guard" by respondent's motion because the motion was entitled as a motion for summary judgment.  Moreover, appellants had time to prepare for the motion.  The motion itself was timely filed, and appellants replied to the motion in a timely fashion.  Although the affidavits were filed only five days before hearing, five days seems sufficient to rebut respondent's argument when the affidavits do nothing more than confirm the facts set forth in respondent's memorandum of law.  If appellants needed more than five days, they could have requested a continuance, which appellants declined to do. 

            Finally, appellants' argument that they would have responded differently to respondent's motion for summary judgment if the affidavits were timely filed is diluted by the fact that the affidavits were filed five days before the hearing and the five days provided appellants with sufficient time to rebut the summary judgment motion rather than simply relying on the argument that the motion should be treated solely as a motion for judgment on the pleadings.  See Benigni, 585 N.W.2d at 53 (holding that taxpayer was not prejudiced by county's serving its summary judgment motion one day late when taxpayer had adequate advance notice of county's position and taxpayer had sufficient time to prepare an adequate record).  Again, if appellants believed the five days were insufficient to rebut the argument, a continuance could have been requested.  Appellants fail to explain how they would have responded differently had the affidavits been timely filed.  At no time have appellants supplied any evidence rebutting the facts set forth in respondent's motion for summary judgment.  Accordingly, the district court properly found that appellants were not prejudiced by respondent's untimely motion for summary judgment, and the district court did not err in treating respondent's motion as one for summary judgment.   

II.

            Appellant also contends that if the district court properly considered respondent's motion as one for summary judgment, the district court erred in granting respondent's motion.  "A motion for summary judgment shall be granted when the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue of material fact and that either party is entitled to a judgment as a matter of law."  Fabio, 504 N.W.2d at 761.  For purposes of summary judgment, "[s]upporting and opposing affidavits shall be made on personal knowledge, shall set forth such facts as would be admissible in evidence, and shall show affirmatively that the affiant is competent to testify to the matters stated therein."  Minn. R. Civ. P. 56.05.  Affidavits based on "information and belief" and containing only unverified opinions and allegations are "insufficient as a matter of law" under rule 56.05.  See Urbaniak Implement Co. v. Monsrud, 336 N.W.2d 286, 287 (Minn. 1983) (stating that an affidavit opposing summary judgment is not adequate if it only recites argumentative and conclusory allegations).  When a motion for summary judgment is made and supported as provided in rule 56, an adverse party may not rest on the mere averments or denials of the adverse party's pleading but must present specific facts showing that there is a genuine issue for trial.  Minn. R. Civ. P. 56.05. 

            Appellants contend that respondent's affidavits were insufficient to support summary judgment because the affidavits failed to set forth facts that would be admissible in evidence and failed to affirmatively show that the affiants were competent to testify.[3]  We understand appellants' argument.  The subsequent affidavits were "bare bones" and are not "a recommended tactic for future litigation."  But their sparseness did not lead to substantial prejudice to appellants and does not dictate reversal.  The affidavits submitted by Befera and Malmstrom did state that they are members of respondent company and that they carefully reviewed the memorandum in support of the summary judgment motion.  The facts set forth in the memorandum, adopted by reference in the affidavits of Befera and Malmstrom, were "succinct," "particularized," and "specific."  As members of respondent company, Befera and Malmstrom had personal knowledge of the case and were competent to testify as to the matters of the case.  Moreover, the district court is not necessarily precluded from considering technically deficient evidence on a motion for summary judgment.  For example, in Lundgren v. Eustermann, 370 N.W.2d 877, 881 (Minn. 1985), the supreme court held that an unsworn and untimely
psychologist's letter should still be considered part of the summary judgment record.  It has further been noted that:

Overly strict adherence to the demands of [Minn. R. Civ. P.] 56.05 could lead to an undue amount of energy being devoted to determine the quality of the admissible evidence contained in the affidavits. . . .  Courts may be reluctant to strictly apply the rules of evidence to summary judgment proceedings.  To do so might render . . . supportive affidavits ineffective, precluding otherwise appropriate summary judgments . . . .

 

2A David F. Herr & Roger S. Haydock, Minnesota Practice § 56.27 (1985).  We acknowledge that this issue is close and that more detailed affidavits would have been appropriate.  But we conclude that respondent's affidavits were sufficient to establish judgment in their favor.

            Appellants further argue that summary judgment was inappropriate because Mrs. Clark's affidavit established genuinely disputed issues of material fact.  We disagree.  Mrs. Clark's affidavit merely states that:  "The contents of said Complaint are true and correct to the best of my knowledge, information and belief except as to those things that are stated on information and belief, and as to those, I believe them to be true."  A review of the complaint reflects that the complaint is vague and fails to set forth specific facts to counter the allegations set forth in respondent's memorandum.  For example, the complaint alleges that respondent "assured" Mrs. Clark that it could obtain refinancing for the Trinity Road Property.  But there is no evidence identifying what, if any, were the agreed on refinancing terms, whether the alleged terms were available, what entity made the terms available, whether respondent knew or should have known the terms were available, and whether respondent offered those terms to appellants.  Although appellants alleged that a written agreement was entered into between Mrs. Clark and respondent, the agreement was never submitted to the district court.  Moreover, appellants claim that respondent never intended on finding a lender, but instead, planned on purchasing the Trinity Road Property from the start.  Appellants failed to present any evidence supporting this allegation.  Instead, respondent presented evidence that it attempted to obtain refinancing for appellants through Eastern, a fact not disputed by appellants.  Finally, appellants claim that respondent made numerous misrepresentations during its representation of appellants.  But again, appellants fail to identify and support this allegation.  Because the averments in the complaint are general and unsupported, the district court properly granted respondent's motion for summary judgment.  See Minn. R. Civ. P. 56.05 (stating that when a motion for summary judgment is made and supported as provided in rule 56, an adverse party may not rest on the mere averments or denials of the adverse party's pleading but must present specific facts showing that there is a genuine issue for trial).

III.

            Appellants argue that the district court improperly ruled on respondent's proceeding subsequent.  A district court may, sua sponte, grant summary judgment if, under the same circumstances, it would grant summary judgment on motion of a party.  Del Hayes & Sons, Inc. v. Mitchell, 304 Minn. 275, 280, 230 N.W.2d 588, 591-92 (1975).  A reviewing court will not disturb the district court's "inherent power to grant summary judgment" unless the objecting party can show prejudice from lack of notice, from procedural irregularities, or from the lack of a meaningful opportunity to oppose summary judgment.  Fed. Land Bank of St. Paul v. Obermoller, 429 N.W.2d 251, 255 (Minn. App. 1988), review denied (Minn. Oct. 26, 1988).

            Here, when the district court granted summary judgment in favor of respondent, the court also ruled that appellants' defense to the proceeding subsequent was rendered moot.  Appellants argue that it was improper for the district court to make a substantive ruling on the proceeding subsequent without giving adequate notice of the hearing because it denied appellants a meaningful opportunity to oppose the ruling.  But appellants fail to establish how they were prejudiced by the ruling.  See Id.  The record reflects that the district court's grant of summary judgment rendered appellants' defense to the proceeding subsequent moot, and appellants do not dispute this fact.  Accordingly, the district court properly ruled on respondent's proceeding subsequent.

            Affirmed.    

[1] Throughout all periods of time relevant to this case, Mr. and Mrs. Clark were estranged and lived separately.  Mrs. Clark was the party who primarily interacted with respondents. 

[2] Respondents Frank Befera and Jason Malmstrom are the sole members and managers of respondent Nations Trust Mortgage, LLC.

 

[3] Respondent contends that appellants' argument regarding the sufficiency of respondent's affidavits and the admissibility of respondent's stated facts was not raised below and, therefore, may not be considered on appeal.  Generally, issues not raised below will not be considered on appeal.  Thiele v. Stich, 425 N.W.2d 580, 582 (Minn. 1988).  But this court may review any matter as the interests of justice may require.  Minn. R. Civ. App. P. 103.04.  Although the record reflects that appellants failed to challenge the affidavits at the district court level, we review the issue in the interest of justice.