United States District Court, D. Minnesota
Forest Lake Facilities, LLC, Forest Lake, MN, Limited Partnership, Plaintiffs,
Wells Fargo Bank, N.A., Defendant.
M. Koneck, Esq., and Kyle W. Ubl, Esq., Fredrikson &
Byron, PA, counsel for Plaintiffs.
R. Shedlock, Esq., Christopher P. Parrington, Esq., and
Jeremy D. Peck, Esq., Kutak Rock LLP, counsel for Defendant.
MEMORANDUM OPINION AND ORDER
DONOVAN W. FRANK UNITED STATES DISTRICT JUDGE
plaintiffs in this case are commercial borrowers who filed
suit after the defendant refused to consent to a lease
modification as needed under the mortgage agreement. The
defendant contends that it had the sole discretion to deny
the modification, but the plaintiffs allege that the
defendant acted in bad faith. The defendant has moved to
dismiss the complaint. For the reasons discussed below, the
Court denies the defendant's motion.
2006, Plaintiffs Forest Lake Facilities, LLC and Forest Lake,
MN, Limited Partnership (collectively, “Forest
Lake”) executed a mortgage with CIBC, Inc. for real
property at 1943 West Broadway Avenue, Forest Lake, Minnesota
(the “Mortgaged Property”) in exchange for a
$5.75 million promissory note (the “Note”). The
Note contained a balloon payment due on July 1, 2016.
Subsequently, Defendant Wells Fargo Bank, N.A. became the
registered trustee of the mortgage.
the balloon payment, Forest Lake needed to sell the Mortgaged
Property. Forest Lake had leased the Mortgaged Property to
Home Depot, and the lease was set to expire on April 30,
2018. In late 2015, Forest Lake began negotiating a lease
extension, which would boost the Mortgaged Property's
modify the lease, Forest Lake needed Wells Fargo's
consent. The Mortgage contains two relevant provisions in
(a) Entering Into Leases. Borrower will not enter
into, modify, amend, consent to cancellation of or terminate
any Lease, whether now existing or hereafter entered into,
without the prior written consent of Lender, which consent
may be granted or withheld at Lender's sole discretion. .
(c) Amendments to Leases. Borrower shall not,
without the prior written consent of Lender, amend, modify or
waive the provisions of any Lease or terminate, reduce rents
under, accept a surrender of space under, or shorten the
terms of, any Lease (including any guaranty, letter of credit
or other credit support with respect thereto) (the foregoing,
collectively, a “Lease Modification”).
(Doc. No. 1-3.) Forest Lake requested a modification, but the
request was ultimately denied. Without the modification,
Forest Lake was unable to sell the Mortgaged Property to make
the balloon payment. Wells Fargo foreclosed on the Mortgaged
Property. Forest Lake contends that Wells Fargo denied the
modification in bad faith because Wells Fargo wanted to seize
the Mortgaged Property to sell in foreclosure.
Lake has brought five claims: (1) breach of the mortgage; (2)
breach of the implied covenant of good faith and fair
dealing; (3) declaratory judgment; (4) tortious interference
with a prospective ...