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River City Mortgage Corp. v. Baldus

April 19, 2005

RIVER CITY MORTGAGE CORPORATION, D/B/A RIVER CITY MORTGAGE & FINANCIAL, APPELLANT,
v.
GARY J. BALDUS, RESPONDENT, DARRELL THOMPSON, RESPONDENT, STATEWIDE LENDING CORPORATION, RESPONDENT.



Dakota County District Court File No. C6-03-8258.

Considered and decided by Kalitowski, Presiding Judge; Klaphake, Judge; and Peterson, Judge.

SYLLABUS BY THE COURT

Because it does not contain a definitive expiration date or term of the agreement, the rate-lock agreement entered into between appellant and respondent-Baldus violates the unambiguous requirements of Minn. Stat. § 47.206 (2004), and the agreement is, therefore, unenforceable as a matter of law.

The opinion of the court was delivered by: Kalitowski, Judge

Affirmed

OPINION

On appeal in this real-estate financing contract dispute, appellant-lender argues that (a) the district court erred in finding that the rate-lock agreement it entered into with respondent-Baldus had no definite expiration date and was unenforceable under Minn. Stat. § 47.206 (2004); (b) even if Minn. Stat. § 47.206 was violated, the violation renders the contract voidable rather than void; (c) as a matter of law, respondent-Baldus anticipatorily breached the contract and appellant's right to sue accrued at the time of breach, rather than the closing date; and (d) appellant established that respondents Thompson and Statewide Lending Corporation tortiously interfered with appellant's contractual relations with respondent-Baldus; thus, even if the contract was invalid as to respondent-Baldus, the defense that the contract is voidable is not available to third-party tortfeasors Thompson and Statewide Lending Corporation.

FACTS

On July 24, 2002, respondent-Baldus (Baldus) applied for a mortgage loan with appellant River City Mortgage (appellant) to finance the purchase of a new home. And on August 29, 2002, Baldus entered into a Mortgage Loan Lock Agreement (rate-lock agreement) with appellant, where appellant agreed to provide a guaranteed interest rate of 6.25% if Baldus closed on his new home before November 25, 2002.

The record indicates that on October 4, 2002, Baldus submitted a separate non-binding loan application to respondent-Statewide Lending (Statewide). Baldus's closing was subsequently postponed because of delays on the part of Baldus's builder. Baldus eventually closed a mortgage loan with Statewide on January 6, 2003. Appellant filed suit against Baldus, Statewide, and Statewide's agent--respondent-Thompson (Thompson)--on April 14, 2003, alleging breach of contract, fraud, and bad faith against Baldus; and tortious interference with contract against Statewide and Thompson individually.

On May 12, 2004, the case proceeded to trial before the Dakota County District Court. The district court entered its order on June 16, 2004, finding that the rate-lock agreement was unenforceable under Minn. Stat. § 47.206 (2004). The court based this finding on the language of the rate-lock agreement, which states:

The Interest Rate, Points and Program will be Locked-in under the following terms:

1. 11/25/02 Expiration Date (LOAN MUST CLOSE AND DISBURSE ON OR ...


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