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Denelsbeck v. Wells Fargo & Co.

July 31, 2003



When previously provided documents stated that the terms of the respondent's retirement certificate of deposit included automatic renewal at the then-current market rate of return, notice from bank to respondent stating that the certificate would automatically renew based on the terms of the certificate and that a listed telephone number should be called to obtain the new interest rate because the rate could not be currently determined was adequate notice, under both the federal regulations and the contract, that the certificate would renew at the then-current market rate of return.


The opinion of the court was delivered by: Anderson, Paul H., Justice

Heard, considered and decided by the court en banc.


Respondent Violet Denelsbeck brought this breach of contract action against appellant Wells Fargo Bank, N.A., alleging that Wells Fargo breached the terms of her retirement certificate of deposit. Denelsbeck contends that Wells Fargo failed to give her adequate notice that it was changing the 12.25% interest rate paid on her certificate to 4.6%. Concluding that Wells Fargo had provided adequate notice, the district court granted summary judgment to Wells Fargo. The court of appeals reversed the grant of summary judgment, concluding that "genuine issues of material fact [existed] regarding whether a substitute contract was formed and whether Wells Fargo provided notice as required by the contract." Denelsbeck v. Wells Fargo & Co., No. C8-02-594, 2002 WL 31057013, at *1 (Minn. App. Sept. 17, 2002). We reverse.

On July 11, 1984, Violet Denelsbeck purchased a savings certificate for her Individual Retirement Account from Waseca Savings & Loan. The certificate was for 84 months, matured on July 11, 1991, and had an initial 12.25% interest rate. The certificate's renewal section provided for automatic renewal every seven years at the market rate in effect for market rate certificates with the same term on the date of renewal. The renewal section read as follows:

Renewal Section: The accountholder agrees that this account shall be automatically renewed at the close of business on the initial maturity date shown above or on the maturity date of any renewal term at a rate of interest equal to the rate in effect on Market Rate Certificates with the same term. The accountholder agrees that automatic renewal shall take place unless (1) the accountholder withdraws the account balance within the seven day grace period referred to in Section 6 below or, (2) the accountholder receives written notice from the Association at least 15 days prior to any renewal date that this account shall not be renewed for this type of account. If the latter occurs, the account will be converted to a regular savings account at the Association's then current interest rate on regular savings accounts or the account may be renewed at a new interest rate for this type of account at the accountholders' option.

(Emphasis added.)

In her deposition, Denelsbeck testified that an employee of Waseca Savings & Loan Association named Mary told her when she bought the certificate that the interest rate would be "permanent" and that it would not change as long as Denelsbeck retained the certificate. It was not clear from Denelsbeck's testimony, however, whether Mary meant that the interest rate would be permanent only for the seven-year term of the certificate or for each successive renewal. Denelsbeck further testified that although she read the certificate and understood that Waseca Savings & Loan could change the interest rate if it gave her 15 days written notice, she "was given to understand it wasn't likely."

Through a series of transactions in the 1980s, Waseca Savings & Loan was merged into First Minnesota Savings Bank, F.S.B. Despite this change in ownership, Denelsbeck asserts that she did not have another conversation with a bank or savings association representative about her certificate until on or around December 4, 1990. Denelsbeck stated that at about that time she received a call from someone in the IRA Savings Department at First Minnesota who told her, "we can't pay 12 and a quarter." Denelsbeck testified she responded by saying "oh yes, you can, that's a fixed rate." Denelsbeck stated that the person then told her that he would check into it further.

That same month, December 1990, First Minnesota was acquired by Norwest Bank Minnesota, N.A. (Norwest). On December 18, 1990, the Retirement Services Department of Norwest sent a letter to Denelsbeck stating in relevant part:

We are writing to confirm that the Retirement certificate that you opened at our former First Minnesota Waseca office has been transferred to our Edina branch office.

The terms, conditions, and interest rate of your original certificate remains in effect until maturity, as is reflected on the enclosed replacement certificate.

To avoid any confusion with your certificate, we ask that you please destroy your former certificate document.

The replacement document that accompanied Norwest's December 18 letter was on a First Minnesota form and was entitled "Rate Change or Internal Transfer Request/ Fixed Rate Retirement Savings Certificate Disclosure." At the top of the front page of the document, there was a notation that said, "Transferred from Waseca to Edina to have all accounts in same entity." Reading down the document, it first provided identifying information on Denelsbeck and then provided certain options from which to choose. Account numbers had been typed in one of the options that read:

I request that First Minnesota Saving Bank, F.S.B. transfer my existing Retirement Account Number(s) (A) [account number], * * * to a * * * Retirement Account Number [account number] with the rate and term as shown below in the New Account Summary.

There was a box next to the foregoing option and a line for the "Participant's Signature." On her copy of the replacement document, Denelsbeck had not signed on the signature line. Denelsbeck testified that she did not recall returning the replacement document to the bank, but instead she destroyed the original 1984 certificate as directed and kept the replacement document for her files. At the bottom of the replacement document under a section termed New Account Summary, the original terms of the document were restated as follows: original date of issuance 7/11/84, initial maturity date 7/11/91, initial term 84 months, and rate of earnings 12.25%.

The replacement document also had a number of information sections on the back and a statement at the top that read, "This Retirement Savings Certificate is Non-Transferable and Non-Negotiable." The renewal section on the back of the document provided:

This account will be automatically renewed at the close of business on the Initial Maturity Date or on the maturity date or any Renewal Term unless (1) it is withdrawn within the 7 day period referred to in the Penalty Clause Section hereof, or (2) at least 15 days prior to a maturity date, the Bank gives written notice to the participant that this account will not be renewed at the earnings rate set forth in the Earnings Section and/or for any other term(s) set forth in this certificate. In such latter event, upon maturity the account will be renewed at such Rate of Earnings and/or such different terms as set forth in said written notice.

(Emphasis added.) Denelsbeck testified at her deposition that it was her understanding the replacement document only changed the account number and did not change the terms of her original certificate purchased in 1984.

On or about July 3, 1991, shortly before Denelsbeck's certificate matured, Norwest sent a letter to all savings certificate customers acquired from First Minnesota. ...

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