This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (2014).
STATE OF MINNESOTA
IN COURT OF APPEALS
A14-1529
The Janice Kaunas Samsing Revocable Trust, et al.,
Respondents,
vs.
Arthur D. Walsh,
Appellant.
Filed June 29, 2015
Affirmed
Rodenberg, Judge
Washington County District Court
File No. 82-CV-13-1444
Barton C. Gernander, Burns & Hansen, P.A., Minneapolis, Minnesota (for respondents)
John G. Westrick, Westrick & McDowall-Nix, P.L.L.P., St. Paul, Minnesota (for
appellant)
Considered and decided by Stauber, Presiding Judge; Bjorkman, Judge; and
Rodenberg, Judge.
UNPUBLISHED OPINION
RODENBERG, Judge
We affirm the district court in this foreclosure-by-action dispute because, of the
issues properly preserved for review, the district court made no errors of law and acted
within its discretion. We decline to address the issues on appeal that were not timely
raised to the district court.
FACTS
This dispute arises out of a loan to appellant Arthur D. Walsh, a licensed attorney,
made by respondents Mildred Kaunas and Janice Samsing as co-trustees of the Janice
Kaunas Samsing Revocable Trust.1 The appeal follows multiple motions and a court
trial.
Appellant borrowed $150,000 from respondents to finance the construction of a
new home located at 4936 210th Street North, Forest Lake, Minnesota. Appellant
acknowledged both his receipt of the funds and the terms for repayment in several letters
addressed to respondents. In these letters, appellant agreed to repay the loan in monthly
installments over a thirty-year period at six percent annual interest. Appellant also stated
in the letters that he would repay the loan according to the terms of a promissory note
secured by a first mortgage, both to be drafted by appellant, and the letters were to be
enforceable until appellant finalized the promissory note and mortgage.
No promissory note was drafted, but appellant did draft and execute a mortgage in
favor of the trust on January 5, 2004. Appellant made 29 sporadic payments after signing
the mortgage, with the last payment made on December 24, 2011.
On January 17, 2012, respondents sent a letter to appellant demanding that he
bring the payments current or deed the property to respondents in lieu of foreclosure.
Appellant failed to do either. Respondents commenced an action to foreclose the
mortgage, and requested judgment for the full amount loaned, plus interest and attorney
fees.
1
Mildred Kaunas, Janice Samsing, and the Janice Kaunas Samsing Revocable Trust are
referred to collectively as “respondents.”
2
Respondents moved for partial summary judgment, arguing that as a matter of law,
appellant’s letters constituted an enforceable contract between the parties, that the
mortgage was valid and enforceable, and that appellant was in default under his
agreement with respondents. Appellant also moved for summary judgment. Although he
failed to properly serve the motion, the district court allowed appellant to make
arguments in support of his untimely motion at the summary judgment hearing. The
district court granted respondents partial summary judgment, determining that the letters
from appellant created a valid contract between the parties, that the mortgage was a valid
and enforceable document, and that appellant was in default under the mortgage and in
breach of the contract between the parties regarding repayment of the loan. Because the
amount owed by appellant was in dispute, the issue of respondents’ money damages was
reserved for further decision. Appellant’s summary judgment motion was denied.
A court trial was held on the remaining issues: the amount of respondents’
damages, the amount of attorney fees incurred by respondents, and the effect of any
failure by respondents to provide a foreclosure notice under Minn. Stat. § 580.021, subd.
2 (2014). After trial, the district court ordered a money judgment against appellant for
$244,676.83 and concluded that respondents were entitled to a decree of foreclosure. The
district court further determined that Minn. Stat. § 580.021, subd. 2 provided no penalty
for failure to give the required notice, ruled that appellant suffered no prejudice by any
such violation, and excused any failure by respondents to provide the required notice
under the statute. Respondents docketed the judgment on May 27, 2014.
3
On June 9, 2014, appellant moved for amended findings and a new trial, and for
judgment as a matter of law on various grounds. The district court denied appellant’s
motions. This appeal followed.
DECISION
I. Issues Not Properly Before the Court
Appellant raises numerous issues on appeal. Several of these issues were not
properly presented to or considered by the district court.
Appellant argues that 1) respondents failed to provide a foreclosure-related notice
under Minn. Stat. § 580.041 (2014); 2) respondents failed to provide notice that late
payments would no longer be accepted before commencing the foreclosure action against
appellant as articulated in Cobb v. Midwest Recovery Bureau Co., 295 N.W.2d 232
(Minn. 1980); 3) the district court erred in applying attorney fees to appellant’s personal
judgment obligation; 4) respondents elected to pursue their remedies on the personal
judgment and to forego the foreclosure remedy by docketing the judgment against
appellant; and 5) pursuant to Minn. Stat. § 541.05, subd. 1(1) (2014), respondents are
barred by the six-year statute of limitations from recovering any payments from appellant
before June 28, 2013. All of these issues were first raised by appellant in a post-trial
motion to the district court.2
Appellant also argues that any personal judgment against him must be limited to
installments claimed due and owing at the time of trial, because the letter promising
repayment terms contained no acceleration clause. This issue was first raised by
2
Appellant asserted the statute of limitations as a defense in his answer but no argument
was presented on the issue until appellant’s post-trial motion.
4
appellant in a post-summary-judgment-hearing memorandum and was not addressed by
the district court in its order regarding summary judgment.3 Appellant again raised the
issue in his post-trial motion.
Because none of these issues were properly and timely raised in the district court,
we decline to consider appellant’s arguments concerning these issues on appeal. See
Thiele v. Stich, 425 N.W.2d 580, 582 (Minn. 1988) (“A reviewing court must generally
consider only those issues that the record shows were presented and considered by the
[district] court in deciding the matter before it.” (quotations omitted)); see also Grigsby v.
Grigsby, 648 N.W.2d 716, 726 (Minn. App. 2002) (stating that “an issue first raised in a
post-trial motion is not raised in a timely fashion”); State v. Brunes, 373 N.W.2d 381, 386
(Minn. App. 1985) (providing that when issues are first raised in a post-hearing
memorandum, they are considered waived). Appellant had ample opportunity to raise
these issues at or before trial and, whether by inadvertence or some design, failed to do
so. No good reason appears for us to depart from our general practice of declining to
address issues not timely presented to the district court.
II. Real Party In Interest
Appellant argues that the district court’s foreclosure judgment must be vacated
because respondents failed to include the real party in interest. Appellant asserts that if
the mortgage was part of the trust res, then respondents Kaunas and Samsing should have
brought suit in their capacity as trustees, rather than as individuals. Minnesota Rule of
3
While the district court did allow parties to submit a “[v]ery brief closing argument”
after the summary judgment hearing, it did not allow the parties to submit post-hearing
memoranda raising issues that were not previously raised at the hearing.
5
Civil Procedure 17.01 requires that every action be brought by the real party in interest,
which is determined by “whether the party has the legal right to bring the claim under the
applicable substantive law.” Austin v. Austin, 481 N.W.2d 884, 886 (Minn. App. 1992).
The rule’s purpose is to “prevent other claimants from making further demands against a
defendant for the same relief.” Id. “Determining the real party in interest is ordinarily a
question of fact for the [district] court, whose factual findings must be upheld unless
clearly erroneous.” Minn. Educ. Ass’n v. Indep. Sch. Dist. No. 404, 287 N.W.2d 666, 668
(Minn. 1980) (citation omitted).
Here, the named plaintiffs include Mildred Kaunas, Janice Samsing, and the Janice
Kaunas Samsing Revocable Trust. Kaunas and Samsing are co-trustees of the trust.
Appellant received the loan from Kaunas and Samsing, and a mortgage was executed in
favor of the trust. The payments that appellant made were paid to the order of either 1)
Mildred Kaunas and Janice Samsing, collectively; 2) the Janice Kaunas Samsing
Revocable Trust; or 3) Janice Samsing, individually.
Together, the named plaintiffs comprise all of the potential plaintiffs that could
pursue the claims against appellant. Under rule 17.01, Samsing and Kaunas, as trustees
of the trust, could have sued in their own names without joining the trust itself. Minn. R.
Civ. P. 17.01 (A “trustee of an express trust, . . . may sue in that person’s own name
without joining the party for whose benefit the action is brought”). The district court did
not err in allowing suit to proceed in these circumstances.
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III. “Notice” Issues Properly Raised on Appeal
Appellant argues that respondents failed to comply with various notice
prerequisites for the foreclosure by action, and that such failures require that the
foreclosure be vacated. See Minn. Stat. §§ 580.021, subd. 2; 582.041 (2014). Appellant
timely raised and preserved statutory-notice issues. Minn. Stat. § 580.021, subd. 2 and
Minn. Stat. § 582.041 (2014). We address each in turn.
A. Minn. Stat. § 580.021, subd. 2
At trial, respondents stipulated that they did not provide appellant with notice
under Minn. Stat. § 580.021, subd. 2. The parties dispute the effect of the absence of the
notice on this proceeding. Appellant argues that respondents’ failure to provide the
statutory notice requires vacation of the foreclosure judgment because the statute
mandates that notice of foreclosure prevention counseling services be given. Appellant’s
claim involves a determination of the effect the statute has if the statutory notice is not
given in the foreclosure-by-action context. Whether respondents’ failure to comply with
the statutory notice requirements of section 580.021, subd. 2, requires vacation of the
foreclosure judgment presents a question of statutory interpretation. We therefore review
de novo. See S.M. Hentges & Sons, Inc. v. Mensing, 777 N.W.2d 228, 231 (Minn. 2010).
Minn. Stat. § 580.021, subd. 2 provides:
Before the notice of pendency under section 580.032,
subdivision 3, or the lis pendens for a foreclosure under
chapter 581 is recorded, a party foreclosing a mortgage must
provide to the mortgagor information contained in a form
prescribed in section 580.022, subdivision 1, that:
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(1) foreclosure prevention counseling services provided by an
authorized foreclosure prevention counseling agency are
available.
The statute does not specify a remedy for failure to comply with the required
foreclosure-prevention-counseling-services notice in the foreclosure-by-action context.
Appellant suggests that vacation of the foreclosure judgment, and requiring respondents
to begin the foreclosure action anew, is the only way to give effect to the statute’s notice
requirements. To support his argument, appellant cites to a footnote in Jackson v. Mortg.
Elec. Registration Sys., Inc., 770 N.W.2d 487, 492 n.3 (Minn. 2009). The footnote
provides:
In 2008, the legislature added an additional prerequisite to
foreclosure by advertisement, requiring that “before the
notice of pendency as required under section 580.032 is
recorded, the party has complied with section 580.021.” Act
of May 18, 2008, ch. 341, art. 5, § 7, 2008 Minn. Laws 1390,
1422 (codified at Minn. Stat. 580.02 (2008)). Section
580.021 requires the foreclosing party to give notice of the
availability of counseling, and to provide the homeowner
various contact information for counseling services. Minn.
Stat. §§ [sic] 580.021 (2008).
Id. The supreme court in Jackson then went on to note:
[T]he Minnesota Legislature has amended chapter 580 to help
mortgagors facing foreclosure by advertisement . . . . Under
the new sections, it is a prerequisite to foreclosure by
advertisement that the mortgagees provide mortgagors with
information on the availability of counseling. Minn. Stat.
§§ 580.02-.22 (2008). The Minnesota Legislature has
attempted to provide homeowners facing possible foreclosure
by advertisement with greater information and access to help.
Id. at 502. “If the foreclosing party fails to strictly comply with the statutory
requirements, the foreclosure proceeding is void.” Id. at 494.
8
Appellant’s reliance on Jackson is misplaced. Jackson discusses application of the
statute in the foreclosure-by-advertisement context. This case involves a foreclosure by
action. “An alternative to foreclosure by action, foreclosure by advertisement was
devised to avoid the delay and expense of judicial proceedings.” Ruiz v. 1st Fidelity
Loan Servicing, LLC, 829 N.W.2d 53, 59 (Minn. 2013) (voiding a foreclosure by
advertisement for failure to strictly comply with Minn. Stat. § 580.02(3)). Unlike a
foreclosure by advertisement, a foreclosure by action involves judicial review and
subsequent approval of the foreclosure process.
Appellant is correct that a strict-compliance standard is applied in foreclosure by
advertisement. But no authority requires strict compliance in instances of foreclosure by
action. Accordingly, violation of the Minn. Stat. § 580.021 notice requirement does not
mandate automatic vacation of the foreclosure judgment.
Because we conclude that strict compliance with the section 580.021, subd. 2,
notice is not required in the case of a foreclosure by action, we next consider whether
appellant was prejudiced by respondents’ failure to provide the foreclosure-prevention-
counseling-services notice. See Minn. R. Civ. P. 61 (stating that “no error or defect in
any ruling or order . . . is ground for granting a new trial . . . unless refusal to take such
action appears to the court inconsistent with substantial justice”); see also Waters v.
Fiebelkorn, 216 Minn. 489, 495, 13 N.W.2d 461, 465 (Minn. 1944) (“[E]rror without
prejudice is not ground for reversal.”). The district court determined that appellant was
not prejudiced by respondents’ failure to provide notice under section 580.021, subd. 2,
taking judicial notice that appellant is a licensed attorney and determining that his status
9
as an attorney was relevant to the question of whether appellant was aware of options to
avoid foreclosure.
Appellant’s status as an attorney supports the district court’s determination that he
was not prejudiced by respondents’ failure to provide notice of foreclosure prevention
counseling services. He should have been aware of options to avoid foreclosure without
being advised under section 580.021, subd. 2. And neither at the district court nor on
appeal does appellant identify any prejudice suffered by him as a result of the lack of
notice. The record does not reveal any prejudice. The district court did not err in ruling
that failure to provide notice to appellant under Minn. Stat. § 580.021, subd. 2 did not
require dismissal of this foreclosure by action.
B. Minn. Stat. § 582.041
Appellant also argues that respondents failed to provide notice under Minn. Stat.
§ 582.041. He asserts that this failure requires vacation of the foreclosure judgment.
Again, this is a question of statutory interpretation, and we review de novo. S.M.
Hentges, 777 N.W.2d at 231.
Minn. Stat. § 582.041, subd. 1 provides:
If a mortgage on real property is foreclosed and the property
contains a portion of a homestead, the person in possession of
the real property must be notified by the foreclosing
mortgagee that the homestead may be sold and redeemed
separately from the remaining property.
Section 582.041 notice provides a procedure for a debtor to allocate a portion of a
foreclosed property to be designated as a homestead if it contains a home, and sold
separately. Id., subd. 2. The allocated parcels must conform to local zoning ordinances
10
and be compact so as to not unreasonably reduce the value of the remaining property.
Id., subd. 3. The homestead portion is to be sold separately. Id., subd.
We have already determined that no authority requires strict statutory compliance
in foreclosure-by-action cases. The failure to give the section 582.041 notice requirement
does not mandate vacating the foreclosure judgment, as appellant contends.
Appellant has suffered no prejudice by not receiving the homestead-exemption
notice because appellant could not possibly “allocate[] a portion of homestead property to
be sold first” under the statute. Appellant’s house is located on a residential lot that is
platted as a single-family residence. Further division of the property is not possible
without violating local zoning ordinances. Moreover, the entire assessed value of
appellant’s land is significantly lower than the total amount of respondents’ claims. Even
if appellant were able to have a separate portion of his property homesteaded, he would
only benefit under the statute if that separate parcel could be sold to satisfy the judgment
against appellant. That is impossible on these facts. Because it would be impossible for
appellant to designate a portion of his property to be sold separately from the house itself,
he has suffered no prejudice by the failure to provide the homestead-exemption notice.
The district court did not err in excusing respondents’ failure to provide such notice.
IV. Attorney Fees
Appellant challenges the district court’s award of attorney fees. We review a
district court’s grant of attorney fees for an abuse of discretion. Becker v. Alloy
Hardfacing & Eng’g Co., 401 N.W.2d 655, 661 (Minn. 1987). “The reasonable value of
attorney fees is a question of fact, and we must uphold the district court’s findings on that
11
issue unless they are clearly erroneous.” Andrew L. Youngquist, Inc. v. Cincinnati Ins.
Co., 625 N.W.2d 178, 188 (Minn. App. 2001).
A. Sufficiency of Findings
In challenging the district court’s award, appellant first argues that the district
court erred by failing to make sufficient findings of fact to support its award of attorney
fees to respondents. A judgment based on insufficient findings will not be sustained on
appeal. See Becker, 401 N.W.2d at 661 (providing that, on remand, the district court
should provide its rationale for denying request for attorney fees so the award could be
reviewed by appellate court).
Here, the district court awarded respondents attorney fees in the amount of
$28,785.89. The district court made several findings of fact regarding its award of the
fees, indicating the analysis it applied and providing its reasoning for the amount awarded
to respondents. The district court’s findings are more than adequate, and the record
before us supports those findings. Accordingly, the district court made sufficient findings
to support its award of attorney fees to respondents.
Appellant also argues that the district court shifted to him the burden of proof on
the attorney-fees issue. Appellant misapprehends the district court’s observation in its
finding of fact that appellant presented no argument rebutting the amount of claimed
attorney fees. The district court found that respondents met their burden of proof through
Samsing’s testimony. The court’s observation that respondents’ request for fees was
unopposed by appellant did not amount to a reallocation of the burden of proof.
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B. Exhibit 14
Appellant argues that the district court abused its discretion in allowing Exhibit
14, a copy of the billing statements of respondents’ attorneys through the day before trial,
to be used to refresh Samsing’s recollection when she testified at trial. Appellant asserts
that the document could not be used to refresh Samsing’s memory because Samsing was
not the author of the document.
“The admission of evidence rests within the broad discretion of the [district] court
and its ruling will not be disturbed unless it is based on an erroneous view of the law or
constitutes an abuse of discretion.” Kroning v. State Farm Auto. Ins. Co., 567 N.W.2d
42, 45-46 (Minn. 1997) (quotation omitted). Under Minn. R. Evid. 612, if a witness has
first-hand knowledge about that which he or she is testifying, that witness may
legitimately rely on a writing to refresh his or her memory. See also Minn. R. Evid. 602.
The district court “has wide discretion in permitting use of memoranda [to refresh a
witness’s memory] and in the references that may be made thereto.” Ostrowski v.
Mockridge, 242 Minn. 265, 274, 65 N.W.2d 185, 191 (1954).
Rule 612 does not require that the individual whose memory is being refreshed be
the same individual who authored the document. The rule only requires that the witness
have “first-hand knowledge” about the topic to which he or she is testifying. See Minn.
R. Evid. 602. Here, Samsing testified that she had personal knowledge of the attorney
fees that she had incurred, but also indicated that she could not remember the specific
amount of the fees. Exhibit 14 was used to refresh her recollection of the exact amount.
13
The district court did not abuse its discretion in allowing Exhibit 14 to be used to refresh
Samsing’s recollection.
V. Amount of Judgment
Appellant argues that the district court erred in entering judgment against him in
the full amount owed on the loan through the date of trial. Appellant asserts that the
district court’s error stems, in part, from admitting inadmissible evidence.
Appellant argues that the district court abused its discretion when it received into
evidence Exhibit 13, an amortization schedule reflecting the payments made by appellant,
the principal amount that remained owing, and the accrual of interest through the date of
trial. Appellant asserts that Exhibit 13 prejudiced him because it was the only evidence
offered by respondents regarding the amount due and owing by appellant.
As previously discussed, the district court has broad discretion in making
evidence-admissibility determinations, and these rulings will only be overturned if they
are based on “an erroneous view of the law or constitute[] an abuse of discretion.”
Kroning, 567 N.W.2d at 45-46. Over appellant’s objection, the district court allowed
Exhibit 13 into evidence under Minn. R. Evid. 803(6). Rule 803(6) allows for the
admission of hearsay statements under the business-records exception, provided that a
qualified witness testifies that it was the regular practice of the business to create and
maintain that record. See also Nat’l Tea Co. v. Tyler Refrigeration Co., 339 N.W.2d 59,
62 (Minn. 1983) (providing that the business-records exception requires foundation for
the document’s admissibility to be laid by a qualified witness). A “qualified witness”
need not be an employee of the business. See Nat’l Tea, 339 N.W.2d at 61-62. “The
14
phrase ‘other qualified witness’ should be given the broadest interpretation; he need not
be an employee of the entity so long as he understands the system.” Id. at 61.
Appellant argues that Samsing is not a “qualified witness” within the meaning of
Rule 803(6) because she did not know exactly how Exhibit 13 was produced or the basis
for the calculations contained in the document. Despite this, the record supports the
district court’s admission of the exhibit. At trial, Exhibit 13 was identified by Samsing as
a record regularly kept concerning this loan to appellant and reflecting the amounts owed
through the date of trial. She testified that the document was prepared, at her direction,
by her accountant of fifteen years. Samsing further testified that the accountant first
prepared the document at the time the loan was made, that the document was prepared
with information Samsing provided to the accountant, that the document accurately
reflected the payments appellant made, and she had no reason to believe that there was
any error or inaccuracy in the document. Based on this record, we see no abuse of the
district court’s discretion in finding that proper foundation was provided for Exhibit 13.
The district court acted within its discretion in admitting the amortization schedule as a
business record.
Affirmed.
15