Pine County District Court File No. 58-CV-10-85.
Marc G. Kurzman, Carol Grant, Kurzman Grant Law Office, Minneapolis, Minnesota (for appellants).
Justin P. Weinberg, Matthew C. Berger, Keith P. Duffy, Gislason & Hunter LLP, New Ulm, Minnesota (for respondent MidCountry Bank).
Frederick J. Ojile, Messenger & Ojile, PLLP, Minneapolis, Minnesota (for respondent David Larson).
Considered and decided by Kalitowski, Presiding Judge; Johnson, Chief Judge; and Toussaint, Judge. [*]
In this appeal from a district court's order and judgment adopting a jury verdict, appellants Todd Enterprises, LLC and Todd and Carolyn Bork argue that the district court erred by excluding expert testimony at trial, by denying their request for rescission of certain loan documents, and by ordering a receiver to sell their property without going through mortgage foreclosure proceedings. By notice of related appeal, respondents MidCountry Bank and David Larson argue that appellants failed to file a proper notice of appeal and that the district court erred by finding a fiduciary relationship and by awarding attorney fees. We affirm in part, reverse in part, and remand.
This case arises out of certain loan transactions between Todd Enterprises and MidCountry and the Borks and MidCountry. The Borks own Todd Enterprises, through which they own and operate a tree farm. David Larson is the loan officer who represented MidCountry in the loan transactions.
In October 2005, the Borks signed one promissory note on behalf of Todd Enterprises in the amount of $2, 429, 000 (the Todd Enterprises note) and one promissory note on their own behalf in the amount of $636, 000 (the Bork note). Both notes were signed in order to refinance existing loans from MidCountry. To secure these notes, they also executed mortgages on three properties. The parties dispute which mortgages were intended to secure which promissory notes. The Borks contend that (1) the Todd Enterprises note was secured by a mortgage on Minnesota property owned by Todd Enterprises and (2) the Bork note was secured by one mortgage on Minnesota property owned by the Borks and one mortgage on Wisconsin property owned by the Borks. But the recorded loan documents show that (1) the Todd Enterprises note was secured by the mortgage on the Minnesota property owned by Todd Enterprises and the mortgage on the Minnesota property owned by the Borks and (2) the Bork note was secured by only the mortgage on the Wisconsin property owned by the Borks.
After the loan documents were signed, Todd Enterprises and the Borks defaulted on their payments. They sued MidCountry and Larson, alleging four counts: breach of fiduciary duties, fraud, rescission, and promissory estoppel. MidCountry counterclaimed with various allegations of breach of contract in relation to Todd Enterprises's and the Borks' payment defaults. The district court appointed a receiver for the mortgaged property and subsequently authorized the receiver to sell certain property and assets of the tree farm.
A jury found that a fiduciary relationship had been established between the Borks and Larson, that Larson had breached his fiduciary duties in regard to certain loan transactions, and that the Borks were entitled to $636, 000 in damages. The jury also found that no fraud was committed in connection with the loan transactions. Following the trial, the district court denied the Borks' motion to rescind the loan documents based on the theory of constructive fraud. The district court issued findings of fact and an order adopting the jury's findings. The district court ...