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NO. A07-0210
State of Minnesota
In Court of Appeals DEUTSCIIE BANK NATIONAL TRUST COMP ANY,
AS TRUSTEE OF AMERIQUEST MORTGAGE SECURITIES, INC., ASSET BACKED PASS-THROUGH
CERTIFICATES SERIES 2002-13, A UNITED ST.ATES CORPORATION,
Appellant, vs.
DEBORAH K. PETERSEN AND GUYL. PETERSEN, HUSB}.i..l'TD AND WIFE,
MERCHANTS BONDING COMP ANY, Respondents.
BRIEF AND APPENDIX OF RESPONDENT MERCHANTS BONDING COMPANY
GARY B. BODELSON, ESQ .Gary B. Bodelson (#120923) 247 Third Avenue South Minneapolis, Minnesota 55415 (612) 332-4853
Attorney for Plaintiff/ Appellant Deutsche Bank National T rustCompany, as T rustee of Ameriquest Mortgage Securities, Inc. Asset Backed Pass-Through Certificates, Series 2003-13
DEBORAH K . PETERSEN GUY L. PETERSEN
Defendants/Respondents Pro Se
GURSTEL, STALOCH & CHARGO, P.A. Mitchel C. Chargo (#237565) Heather A. Spindler (#322945) 401 North Third Street, Suite 590 Minneapolis, Minnesota 55401 (612) 664-8200
Attorneys far Defendant/Respondent Merchants Bonding Company
2007 LEGAL PHONE 339-9518
The appendix to this brief is not available for online viewing as specified in the Minnesota Rules of Public Access to the Records of the Judicial Branch, Rule 8, Subd. 2(e)(2).
TABLE OF CONTENTS
PAGE
TABLE OF AUTHORITIES ............................................................................................. iii
STATEMENT OF LEGAL ISSUES .................................................................................. 1
STATEMENT OF THE CASE ........................................................................................... 2
STATEMENT OF THE FACTS ......................................................................................... 4
STANDARD OF REVIEW ................................................................................................ 6
ARGUMENT ...................................................................................................................... 8
I. THE DISTRICT COURT PROPERLY CONCLUDED THAT RESPONDENT HAS A VALID JUDGMENT LIEN WHICH HAS PRIORITY OVER APPELLANT'S MORTGAGE BECAUSE RESPONDENT'S LIEN WAS DOCKETED IN ANOKA COUNTY TWELVE DAYS PRIOR TO APPELLANT RECORDING THE MORTGAGE ................................................................................................ 8
IL THE DISTRICT COURT PROPERLY CONCLUDED THAT APPELLANT DOES NOT HAVE STANDING TO ASSERT THE HOMESTEAD EXEMPTION, AND, EVEN IF IT DID, IT IS IRRELEVANT AS THE PETERSENS HAVE WANED THEIR HOMESTEAD EXEMPTION RIGHTS .................................................... 14
CONCLUSION ................................................................................................................. 18
APPENDIX AND INDEX ................................................................................................ 20
1
APPENDIX AND ITS INDEX
PAGE
Notice of Pendency .......................................................................................................... R.1
Republic Leasing Corp. v. Fames, 2000 Minn. App. LEXIS 390 (Minn. Ct. App., April 25, 2000) .......................................................................... R.2
Indemnity Agreement. ...................................................................................................... R.4
11
TABLE OF AUTHORITIES
PAGE
CASES
Am. Family Ins. Group v. Schroedl, 616 N.W.2d 273 (Minn. 2000) ........................................................................................ 6
Amaral v. St. Cloud Hosp., 598 N.W.2d 379 (Minn. 1999) .................................................................................... 6, 7
Argonaut Insurance Co. v. Cooper, 261 N.W.2d 743 (Minn. 1978) ...................................................................................... 16
Bank of Kansas v. Davison, 253 Kan. 780, 861 Pac.2d 806 (1993) ........................................................................... 15
Baumann v. Chaska Building Center, Inc., 621 N.W.2d 795 (Minn. Ct. App. 2001) ................................................................. 12, 14
DLH, Inc. v. Russ, 566 N.W.2d 60 (Minn. 1997) .......................................................................................... 6
Fabio v. Bellomo, 504 N.W.2d 758 (Minn. 1993) ........................................................................................ 6
Ferguson v. Kurnler, 27 Minn. 156, 6 N.W. 618 (1880) ................................................................................. 15
Gould v. City of St. Paul, 120 Minn. 172, 139 N.W. 293 (1913) ....................................................................... 1, 10
Home Lumber Co. v. Kopfinann Homes, 535N.W.2d302(Minn.1995) ...................................................................................... 10
Host v. Host, 497 N.W.2d 617 (Minn. Ct. App. 1993) ..................................................................... 1, 9
In re Jolmson, 207 B.R. 878 (D.Minn. 1997) ....................................................................................... 15
In re Kasden, 84 F.3d 1104 (D.Minn. 1995) ....................................................................................... 15
ll1
In re: Certain Pharmaceuticals and Proceedings of Northland Providers, Inc., 78 F.Supp.2d 954 (D.Minn. 1999) .............................................................................. 1, 9
Kipp v. Sweno, 2003 Minn. App. LEXIS 936 (Minn. Ct. App., Aug. 5, 2003) ..................................... 12
Kipp v. Sweno, 629 N.W.2d 468 (Minn. Ct. App. 2001) ............................................................. 9, 12, 13
Lefto v. Hoggsbreath Enters., Inc., 581 N.W.2d 855 (Minn. 1998) ........................................................................................ 6
Lowe v. Reierson, 201 Minn. 280,276 N.W. 224 (1937) ..................................................................... 10, 12
Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 106 S.Ct. 1348 (1986) .............................................................................. 6
Mulroy v. Sioux, 165 Minn. 295, 206N.W. 461 (1985) ........................................................................... 15
Oldewurtel v. Redding, 421 N.W.2d 722 (Minn. 1988) .................................................................................... 1, 9
Republic Leasing Corp. v. Fames, 2000 Minn. App. LEXIS 390 (Minn. Ct. App., April 25, 2000) .................................. 16
Ripley v. Piehl, 700 N.W.2d 540 (Minn. Ct. App. 2005) ....................................................................... 10
State by Cooper v. French, 460 N. W.2d 2 (Minn. 1990) ............................................................................................ 6
Stewart v. Smith, 36 Minn. 82, 30 N.W. 430 (1886) ................................................................................. 11
Wallin v. Letourneau, 534 N.W.2d 712 (Minn. 1995) ........................................................................................ 6
STATUTES
Minn. Stat.§ 507.34 (2006) ........................................................................................ 10, 11
Minn. Stat.§ 510.01 .......................................................................................... 3, 14, 15, 17
Minn. Stat.§ 510.02 (2006) ........................................................................................ 11, 12
lV
Minn. Stat.§ 548.09 ...................................................................................................... 1, 10
Minn. Stat. § 548.09, subd. 1 .................................................................................. 9, 12, 13
OTHER AUTHORITIES
Dunnell Minn. Digest 2d Liens§ 2.19 (4th ed. 2006) ....................................................... 16
Dunnell Minn. Digest 2d Liens§ 4.00 (4th ed. 2006) ....................................................... 10
V
STATEMENT OF LEGAL ISSUES
I. DID THE DISTRICT COURT PROPERLY CONCLUDE THAT THE LIEN OF RESPONDENT'S JUDGMENT, WHICH WAS DOCKETED IN ANOKA COUNTY ON NOVEMBER 26, 2003, HAS PRIORITY OVER APPELLANT'S MORTGAGE, WHICH WAS RECORDED IN ANOKA COUNTY ON DECEMBER 8, 2003?
The District Court held that based upon the plain language contained in Minn. Stat. § 548.09, Respondent's judgment against the Petersens attached to their real property in Anoka County at the time the judgment was docketed in Anoka County. The District Court held that under applicable Minnesota law, the rule applied to determine the priority ofliens is "first in time is first in right."
Apposite authority: • Gould v. City of St. Paul, 120 Minn. 172, 176, 139 N.W. 293,
294 (1913) • Host v. Host, 497 N.W.2d 617 (Minn. Ct. App. 1993) • Oldewurtel v. Redding, 421 N.W.2d 722, 726 (Minn. 1988) • In re: Certain Pharmaceuticals and Proceedings of Northland
Providers, Inc., 78 F.Supp.2d 954, 962 (D.Minn. 1999) • Minn. Stat.§ 548.09
IL SHOULD THE DISTRICT COURT'S ENTRY OF JUDGMENT IN FAVOR OF RESPONDENT BASED UPON THE DETERMINATION THAT RESPONDENT'S JUDGMENT LIEN HAS PRIORITY OVER APPELLANT'S MORTGAGE BE UPHELD?
The District Court held that because Respondent's judgment was docketed prior to Appellant's Mortgage being recorded, that there can be no conclusion other than that Respondent's lien has priority over Appellant's mortgage. Accordingly, Respondent was entitled to judgment as a matter of !aw.
Apposite Authority: • Host v. Host, 497 N.W.2d 617 (Minn. Ct. App. 1993) • Oldewurtel v. Redding, 421 N.W.2d 722, 726 (Minn. 1988) • In re: Certain Pharmaceuticals and Proceedings of Northland
Providers, Inc., 78 F.Supp.2d 954,962 (D.Minn. 1999) • Minn. Stat. § 548.09
I
STATEMENT OF THE CASE
This action arises out of a judgment obtained by Respondent Merchants Bonding
Company (hereinafter referred to as "Respondent") on August 11, 2003, against
Respondents Deborah K. and Guy L. Petersen (hereinafter collectively referred to as "the
Petersens") in the amount of $98,744.24, which judgment was subsequently docketed on
November 26, 2003 in Anoka County. (A.54) On November 21, 2003, the Petersens
executed and delivered a mortgage in the amount of $382,500.00 (hereinafter referred to
as "the Mortgage") to Ameriquest Mortgage Company (hereinafter referred to as
"Ameriquest") securing the Subject Property. The Mortgage was not recorded until
December 8, 2003. (A.30-A.50)
On or about February 2, 2005, Ameriquest assigned the Mortgage to Appellant
Deutsche Bank National Trust Company (hereinafter referred to as "Appellant"). (A.51-
A.53) The assignment was subsequently recorded with Anoka County on February 16,
2005. Id. On February 16, 2005, Counsel for Appellant executed and recorded a Notice of
Pendency of Proceeding to Foreclose Mortgage in connection with Appellant's desire to
initiate a foreclosure of the Mortgage by advertisement. (R.1)
Appellant commenced suit on or about October 12, 2005, against the Petersens
and Respondent seeking a determination as to whether Appellant's interest in the Subject
Property had priority over Respondent's judgment lien. (A. 1.-A.2) Appellant moved for
summary judgment on October 9, 2006. (A.7-A.8) The District Court1 denied Appellant's
motion. (A.66-A.70 and A.71-A.76) However, the District Court granted judgment to
1 The Honorable Jenny Walker Jasper, Anoka County District Court
2
Respondent on the grounds that (i) Appellant is not within the protections of Minn. Stat.
§ 510.01 as the protection afforded by the homestead exemption contained therein covers
the judgment debtor/homeowner and not the mortgagee; (ii) that Respondent's judgment
against the Petersens attached to the Petersens' real property in Anoka County at the time
the judgment was docketed in Anoka County; and, (iii) that Respondent's lien against the
Petersens' homestead takes priority over the Mortgage because Respondent's judgment
was recorded first. (A.71-A.76)
Appellant filed its Notice of Appeal from the judgment on January 26, 2007.
(A.77-A.78)
3
STATEMENT OF THE FACTS
On June 8, 2001, Michael L. Hadtrath and Patti M. Hadtrath executed and
delivered to Respondent Deborah K Petersen a Warranty Deed conveying title to real
property located in Anoka County legally described as follows:
Lot 17, Block 6, River's Bend
(hereinafter referred to as "Subject Property"). (A.15)
On August 11, 2003, Respondent obtained a judgment against the Petersens in the
amount of Ninety-Eight Thousand, Seven Hundred Forty-Four and 24/100 Dollars
($98,744.24), which judgment was subsequently docketed on November 26, 2003 m
Anoka County as Judgment Docket No. 02-C8-03-l 1679. (A.54)
On November 21, 2003, the Petersens executed and delivered the Mortgage to
Ameriquest securing the Subject Property. (A.30-A.50) The Mortgage was not recorded
until December 8, 2003, and was recorded as Document No. 1880603. Id
On or about February 2, 2005, Ameriquest assigned the Mortgage to Appellant.
(A.51-A.53) The assignment was subsequently recorded with Anoka County on
February 16, 2005 and recorded as Document No. 1972999.002. Id.
On February 16, 2005, the exact same day Appellant recorded its assignment with
Anoka County, Counsel for Appellant executed and recorded a Notice of Pendency of
Proceeding to Foreclose Mortgage in connection with Appellant's desire to initiate a
foreclosure by advertisement of the Mortgage. (R.l)
Appellant commenced suit in Anoka County District Court on or about
October 12, 2005, against the Petersens and Respondent seeking a determination as to
4
whether Appellant's interest in the Subject Property has priority over Respondent's
judgment lien. (A.1-A.2) Appellant claimed that the Mortgage had priority over
Respondent's judgment arguing that the Subject Property owned and occupied by the
Petersens is their homestead property and therefore exempt from sale or seizure based on
a personal judgment. Respondent denied Appellant's allegations and reasoning and
asserted that Respondent's judgment lien had priority over the Mortgage because
Respondent's judgment lien was recorded first. (A.3-A.6) The District Court held in
favor of Respondent. (A.66-A.70 and A.71-A.76)
Based upon the facts of this case and pertinent filings and recordings,
Respondent's judgment has priority over Appellant's Mortgage.
5
STANDARD OF REVIEW
It is well-settled that 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 v. Bellomo, 504 N.W.2d 758,
761 (Minn. 1993) (citation omitted). No genuine issue of material fact exists "[w]here the
record taken as a whole could not lead a rational trier of fact to find for the nonmoving
party." DLR, Inc. v. Russ, 566 N.W.2d 60, 69 (Minn. 1997) (quoting Matsushita Elec.
Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 1356 (1986)). "On
an appeal from summary judgment, the Court of Appeals asks two questions: (1) whether
there are any 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)
( citation omitted).
When the district court grants summary judgment based on the application of a
statute to undisputed facts, the result is a legal conclusion, reviewed de novo by the
Appellate Court. Lefto v. Hoggsbreath Enters., Inc., 581 N.W.2d 855, 856 (Minn. 1998)
( citing Wallin v. Letourneau, 534 N.W.2d 712, 715 (Minn. 1995)). Whenever possible, a
statute should be interpreted to give effect to all of its provisions; "no word, phrase, or
sentence should be deemed superfluous, void, or insignificant." Am. Family Ins. Group v.
Schroedl, 616 N.W.2d 273, 277 (Minn. 2000) (quoting Amaral v. St. Cloud Hosp., 598
N.W.2d 379, 384 (Minn. 1999)). Moreover, the Court of Appeals is "to read and construe
6
a statute as a whole and must interpret each section in light of the surrounding sections to
avoid conflicting interpretations." Id.
7
ARGUMENT
This Court should deny Appellant's Appeal because there are no genuine issues of
material fact and because the District Court did not err in its application of the law. In
the case at hand, it is undisputed that Respondent docketed and recorded its judgment lien
on November 26, 2003 - twelve (12) days prior to Appellant recording its Mortgage.
Minnesota law is well-settled that with respect to priority of liens, "first in time is first in
right". Based upon the pertinent filings and recordings, it is clear that Respondent's
judgment lien has priority over Appellant's Mortgage. There are no genuine issues of
material fact in this case and it is clear that the District Court did not err in its application
of the law.
I. THE DISTRICT COURT PROPERLY CONCLUDED THAT RESPONDENT HAS A VALID JUDGMENT LIEN WHICH HAS PRIORITY OVER APPELLANT'S MORTGAGE BECAUSE RESPONDENT'S LIEN WAS DOCKETED IN ANOKA COUNTY TWELVE DAYS PRIOR TO APPELLANT RECORDING THE MORTGAGE.
The District Court properly concluded that Respondent has a judgment lien that
has priority over the lien of Appellant's Mortgage. The real issue in this case is plain and
simple - whose lien has priority. The answer is clear - Respondent's judgment lien does.
There are no genuine issues of material fact and the District Court did not err in its
application of the law.
Appellant's argument 1s an obvious attempt to circumvent well-established
Minnesota law on priority by arguing at length that Respondent does not have a lien as to
the Subject Property unless evidence is presented that establishes that the value of the
8
homestead was sufficient to exceed the exemption limit of $200,000.00. See Appellant's
Brief at pp 10-16. This argument is without merit. The District Court properly concluded
that Respondent's judgment is a lien against the Subject Property. (A.66-A.70 and A.71-
A.76) The District Court came to this conclusion based upon the plain language
contained in Minn. Stat. § 548.09, subd. 1 which provides in pertinent part that:
... every judgment requiring the payment of money shall be entered by the court administrator when ordered by the court and will be docketed by the court administrator upon the filing of an affidavit . . . from the time of docketing the judgment is a lien, in the amount unpaid, upon all real property in the county then or thereafter owned by the judgment debtor. ..
Id. The District Court also based its conclusion on the decision of Kipp v. Sweno, 629
N.W.2d 468 (Minn. Ct. App. 2001) wherein this Court of Appeals rejected the argument
that a personal judgment does not attach as a lien against the homestead based upon
Minn. Stat. § 548.09, subd. 1. (A.66-A.70 and A.71-A.76) Clearly, the District Court did
not err in its application of the law.
The basic rule of lien priority law in Minnesota is simple and well-settled. It
provides that in disputes between creditors concerning a lien or mortgage on the debtor's
property, seniority of interests ordinarily is determined by the chronological order in
which liens or mortgages are recorded. In other words, the first creditor to record the lien
or mortgage shall prevail. Oldewurtel v. Redding. 421 N.W.2d 722, 726 (Minn. 1988); In
re: Certain Pharmaceuticals and Proceedings of Northland Providers, Inc., 78 F.Supp.2d
954, 962 (D.Minn. 1999); Host v. Host, 497 N.W.2d 617, 619 (Minn. Ct. App. 1993)
(holding that the rule applied to determine lien priority is "first in time is first in right");
9
Gould v. City of St. Paul, 120 Minn. 172, 176, 139 N.W. 293, 294 (1913); see also
Dunnell Minn. Digest 2d Liens § 4.00 ( 4th ed. 2006). The Minnesota Recording Act
(Minn. Stat. § 507.34 (2006)) establishes priority from the date of recording with the
county recorder or the registrar of titles. Ripley v. Piehl, 700 N.W.2d 540, 544-45 (Minn.
Ct. App. 2005); Home Lumber Co. v. Kopfinann Homes, 535 N.W.2d 302, 304 (Minn.
1995); see also Minn. Stat. § 507.34 (2006) ( every conveyance of real estate not recorded
shall be void against any subsequent purchaser in good faith) ( emphasis added). Further,
under Minnesota law, the factor determining priority is docketing date not the moment in
time when the lien attaches. Lowe v. Reierson, 201 Minn. 280, 286-89, 276 N.W. 224,
227-28 (1937). Here, Respondent's judgment lien was docketed on November 26, 2003 -
twelve (12) days prior to Appellant's Mortgage lien being recorded. Hence, Respondent's
judgment lien is prior to Appellant's Mortgage lien as a matter of law. Clearly, the
District Court's decision should be affirmed and upheld.
It is undisputed that the lien of Respondent's judgment arose prior to Appellant's
Mortgage. (A.54 and A.30-A.50) Respondent obtained a judgment against the Petersens
on August 11, 2003, in the amount of $98,744.24, which was subsequently docketed and
thus recorded in Anoka County on November 26, 2003 pursuant to Minn. Stat.§ 548.09.
(A.54) On November 21, 2003, the Petersens executed and delivered the Mortgage in the
amount of$382,500.00 to Ameriquest. (A.30-A.50) On December 8, 2003, the Mortgage
was recorded in the office of the Recorder of the County of Anoka. Id. As this court is
aware, the Minnesota Recording Act establishes priority from the date of recording with
the county recorder or registrar of titles. Riply v. Piehl, 700 N.W.2d 540, 544-45 (Minn.
10
Ct. App. 2005); Minn. Stat. § 507.34. Thus, Respondent's judgment lien is prior to
Appellant's Mortgage lien as a matter oflaw.
The only way that Appellant's Mortgage lien could attain priority status over
Respondent's judgment lien is if Appellant's Mortgage was in fact a purchase money
mortgage in which case the effect of "super-priority" would take place and the purchase
money mortgage lien would essentially "leap frog" over Respondent's judgment lien and
have priority. See Stewart v. Smith, 36 Minn. 82, 30 N.W. 430 (1886). However, it is
undisputed that Appellant's Mortgage is not a purchase money mortgage. Therefore,
since Respondent's judgment was docketed before Appellant's Mortgage and since
Appellant's Mortgage is not a purchase money mortgage, the lien of Respondent's
judgment has priority over the lien of Appellant's Mortgage as a matter oflaw.
Despite there being no material fact issues in this case, and in spite of the well
established law in Minnesota on lien priority, Appellant makes one last-ditch effort to
improve its junior lien position - Appellant seeks to destroy Respondent's lien altogether.
Appellant erroneously employs the Minnesota homestead exemption as the means to its
end. Appellant devotes much time in its brief wrongfully arguing that the docketing of a
judgment is irrelevant in this case because the Subject Property is "homestead" and,
therefore, completely exempt from attachment by a judgment lien. Respondent disagrees
as did the District Court. (A.66-A.70 and A.71-A.76) A determination of homestead
exemption is immaterial and irrelevant to the determination of priority in this case.
It is well known that Minnesota law currently provides for a homestead exemption
in the amount of $200,000.00 in equity. See Minn. Stat. § 510.02 (2006). This was not
11
always the case. Up until 1993, there was an unlimited homestead exemption in
Minnesota, and Appellant cites to four older cases in its brief which discuss the unlimited
homestead exemption. Prior to the 1993 amendment to Minn. Stat. § 510.02, Minnesota
law provided for an unlimited exemption amount which resulted in the inability of
judgments to attach to real property that was properly designated as "homestead." In
fact, Appellant fails to cite one Minnesota case from after the 1993 amendment to Minn.
Stat.§ 510.02 which supports its contention that judgment creditors, such as Respondent,
have no "right, title or interest" in homestead property without sufficient equity. Why
not? Because that is not what Minn. Stat. § 510.02 says.
Under Minn. Stat. § 548.09, subd. 1 (2006), every judgment becomes a lien
against the judgment debtor's real property at the time of docketing. There is no
distinction made between homestead and non-homestead property. In fact, the factor
determining priority is the time of docketing, not the moment in time when the lien
attaches. Lowe v. Reierson, 201 Minn. 280, 286-89, 276 N.W. 224, 225 (1937). The
homestead exemption is, therefore, completely unrelated to a determination of priority in
this case, and priority is the basis for Appellant's quiet title action. As a matter of law,
Respondent's judgment lien is prior to Appellant's Mortgage lien.
Appellant attempts to support its erroneous assertion that judgment liens do not
attach to homestead property by citing to two cases: Kipp v. Sweno, 629 N.W.2d 468
(Minn. Ct. App. 2001) (Appeal after remand Kipp v. Sweno, 2003 Minn. App. Lexis 936
(Minn. Ct. App., Aug. 5, 2003) and Baumann v. Chaska Building Center, Inc., 621
N.W.2d 795 (Minn. Ct. App. 2001). Appellant's reliance on both cases is flawed.
12
Appellant asserts that the court in Kipp v. Sweno held that a mortgage has a superior
position to an alleged judgment lien in regard to homestead property. See Appellant's
Brief, at p. 13. This is simply untrue. Nowhere in the Court's opinion is this stated - not
in dicta and not even by inference. At the trial court level, the Kipp case dealt with the
severance of a joint tenancy interest in homestead property. There was no priority issue in
Kipp. See generally Kipp v. Sweno, 629 N.W.2d 468 (Minn. Ct. App. 2001). The Kipp
court certainly did not invalidate judgment liens that attached to homestead property. See
Kipp, 629 N.W.2d at 474. In fact the Kipp court held just the opposite by citing to Minn.
Stat. § 548.09, subd. 1, and stating that "every judgment becomes a lien against the
judgment debtor's real property" at the time of docketing. Id. In this case, Respondent's
judgment became a lien prior to Appellant's Mortgage. The law supports Respondent's
contention and the District Court agreed.
Appellant also wrongly states that in the context of the Kipp case, the court held
that all mortgages are to be paid prior to judgment liens. The Kipp court never stated that
nor was it ever implied. Instead, the Kipp court stated that in that particular case, the
judgment creditor was entitled to an independent appraisal, and if the fair market value of
the three existing mortgages exceeded the $200,000.00 equity exemption and the value of
the three existing mortgage liens, which the judgment creditor acknowledged were
superior to its judgment lien, then the judgment creditor can levy on what is left. Kipp v.
Sweno, 629 N.W.2d at 473. The Kipp court never decided that all mortgages are to be
paid first or that they are automatically superior to judgment liens.
13
Appellant's reliance on Baumann v. Chaska Building Center, Inc., 621 N.W.2d
795 (Minn. Ct. App. 2001), is similarly flawed. The Baumann case stands solely for its
holding that the homestead exemption covers $200,000.00 of the debtor's equity in the
property not in market value of the property. Contrary to Appellant's assertions, the
Baumann case does not award junior mortgagees super-priority over judgment creditors.
In fact, Baumann has no bearing on this case whatsoever.
As stated repeatedly by Respondent, the only issue before this Court of Appeals
and the District Court is that of priority. Based upon the filings and recordings provided
and argued herein, it is undisputed that Respondent's judgment lien is clearly of record
first. Because Minnesota is a "race-notice" state, Respondent's judgment has priority
over Appellant's Mortgage. Accordingly, the District Court properly concluded that there
are no genuine issues as to any material fact, thus Respondent is entitled to judgment as a
matter of law. The District Court properly entered judgment in favor of Respondent
concluding that Respondent's judgment lien has priority over Appellant's mortgage and
did not err in its application of the law.
II. THE DISTRICT COURT PROPERLY CONCLUDED THAT APPELLANT DOES NOT HA VE STANDING TO ASSERT THE HOMESTEAD EXEMPTION, AND, EVEN IF IT DID, IT IS IRRELEVANT AS THE PETERSENS HA VE WAIVED THEIR HOMESTEAD EXEMPTION RIGHTS.
The District Court properly concluded that the protections offered a judgment
debtor under the homestead exemption contained in Minn. Stat. § 510.01 cannot be
asserted by Appellant. (A. 66-A.70 and A.71-A.76) Section 510.01 of the Minnesota
Statutes states, in pertinent part, that
14
The house owned and occupied by a debtor as the debtor's dwelling place, together with the land upon which it is situated to the amount of area and value hereinafter limited and defined, shall constitute the homestead of such debtor and the debtor's family, and be exempt from seizure or sale under legal process on account of any debt not lawfully charged thereon in writing ...
The District Court properly concluded that "the safe harbor from sale or seizure of a
debtor's homestead based on personal judgments is a protection provided to the
homeowner; not another creditor such as [Appellant]". Id. (citing In re Kasden, 84 F.3d
1104 (D.Minn. 1995); Mulroy v. Sioux, 165 Minn. 295, 206 N.W. 461, 462 (1985);
Ferguson v. Kumler, 27 Minn. 156, 6 N.W. 618 (1880) and In re Johnson, 207 B.R. 878
(D.Minn. 1997)).
Appellant alleges that a mortgagee can raise the homestead exemption issue on its
own behalf even though the homestead exemption can also apply to the homeowner. See
Appellant's Brief, at p. 5. However, Appellant sets forth no binding legal authority to
support such proposition. Instead, Appellant relies solely upon the case of Bank of
Kansas v. Davison, 253 Kan. 780, 861 Pac.2d 806, 808 (1993). However, this case
simply demonstrates a rule oflaw that has been settled and applied in the state of Kansas.
Such authority is not binding law or precedence and should not be recognized or followed
by this Court. Appellant is unable to provide any binding authority in Minnesota
supporting its theory. The District Court, on the other hand, was able to recite several
local authorities including a statute and pertinent case law, which clearly dispels
Appellant's argument. (A.66-A.70 and A.71-A.76)
15
Even if Appellant's assertion was correct, it is irrelevant as the Petersens waived
their homestead exemption in 2000. In Minnesota, it has been determined that "the owner
of a homestead may waive his homestead rights, even though they be constitutional
rights, by an act which evidences an unequivocal intention to do so." Argonaut Insurance
Co. v. Cooper, 261 N.W.2d 743, 744 (Minn. 1978); Republic Leasing Corp. v. Farnes,
2000 Minn. App. LEXIS 390, at *3 (Minn. Ct. App., April 25, 2000) (such unequivocal
intention may be found when the parties enter into a general indemnity agreement that
includes a specific waiver of the homestead exemption) (R.2-R.3); Dunnell Minn. Digest
2dLiens § 2.19 (4th ed. 2006).
In Argonaut, the parties entered into a general indemnity agreement that included
a specific waiver of a homestead exemption. Argonaut Insurance Co. v. Cooper, 261
N.W.2d at 743. The debtor defaulted on various obligations and a judgment was
subsequently obtained against the debtor. Id. at 744. Thereafter, the debtor claimed the
homestead exemption. Id. The Minnesota Supreme Court concluded that the surrounding
facts, including the general indemnity agreement and submitted financial statements,
make clear that the debtor unequivocally intended to waive his homestead rights. Id.
Here, the Petersens have unequivocally waived any and all homestead rights they
had in the Subject Property. In September of 2000, the Petersens executed and delivered a
General Application and Agreement of Indemnity (hereinafter referred to as the
"Indemnity Agreement") to Respondent. (R.4-R.10) Within the Indemnity Agreement
there contains a clause which states:
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[The Petersens] hereby waive all right to claim any property, including homestead, as exempt from levy, execution, sale or other legal process secured or requested by the Company under the law of the United States or of any state or province or of any other government.
The Indemnity Agreement is relevant to the homestead issue raised by Appellant
and shows that the fee owners, the Petersens, have waived their homestead exemption.
That is an important point because Appellant seemingly ignores the priority argument and
relies solely on the inability of Respondent's judgment lien to attach because of the
alleged homestead exemption.
Here, it is apparent that the Petersens unequivocally intended to waive their
homestead rights. They do not deny executing such document nor do they dispute that
their exemption rights regarding the homestead have been waived. As a result, the
Petersens cannot claim such an exemption. Likewise, no other party can claim such an
exemption either.
The District Court properly concluded that the protections offered a judgment
debtor under the homestead exemption contained in Minn. Stat. § 510.01 cannot be
asserted by Appellant. (A.66-A.70 and A.71-A.76) Despite Appellant's complaint that
the District Court failed to address any case law cited by Appellant in support of its
proposition that it had standing to raise the homestead exemption, the District Court is
under no obligation to do so. See Appellant's Brief, at p. 7. Instead, the District Court
independently researched the issue and provided statutory and case law authority which
supported its decision to the contrary. (A.66-A.70 and A.71-A.76) The District Court did
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not err in its application of the law and properly concluded that Appellant does not have
standing to assert the homestead exemption.
CONCLUSION
Based upon the foregoing, Respondent respectfully requests the Court uphold and
affirm the Anoka County District Court's ruling that Respondent's judgment lien, as a
matter of law, has priority over Appellant's mortgage. There are no genuine issues as to
any issues of material fact and the District Court did not err in its application of the law.
DATED: May 2007
GURSTEL, STALOCH & CHARGO, P.A.
Mitchel C. Char o ( 237565) Heather A. Spindler (#322945)
Attorneys for Plaintiff 401 North Third Street, Suite 590 Minneapolis, Minnesota 55401 (612) 664-8200
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CERTIFICATE OF COMPLIANCE
This brief complies with the type-volume limitations under Minn. R. Civ. App.
P. 132.01, subd. 3(a). This brief contains 4,187 words, inclusive of the Statement of
Issues designated at p. 1, and excluding the part of the brief allowed under appellate
rules. This brief is written in Microsoft Word 2003 in Time Roman type font and 13
point size.
DATED: May 2007
GURSTEL, STALOCH & CHARGO, P.A.
Mitchel C. Chargo 2 7565) Heather A. Spindler (#322945)
Attorneys for Plaintiff 401 North Third Street, Suite 590 Minneapolis, Minnesota 55401 (612) 664-8200
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