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Bremer Bank, National Association v. Matejcek

Court of Appeals of Minnesota

July 2, 2018

Bremer Bank, National Association, a national banking association, Respondent,
Kathryn Matejcek, Defendant, Jeffrey Matejcek, Appellant.

          Washington County District Court File No. 82-CV-17-1514

          Garth G. Gavenda, Lindsay W. Cremona, Anastasi Jellum, P.A., Stillwater, Minnesota (for respondent)

          Thomas R. Braun, Bruce K. Piotrowski, Restovich Braun & Associates, Rochester, Minnesota (for appellant)

          Considered and decided by Connolly, Presiding Judge; Smith, Tracy M., Judge; and Bratvold, Judge.


         For purposes of Minn. Stat. § 336.9-610(a) (2016), a secured party on a defaulted loan does not dispose of collateral by consenting to a joint debtor's sale of collateral and, therefore, is not subject to statutory notice or other disposition requirements.



         Appellant Jeffrey Matejcek (Jeffrey) challenges the district court's decision to grant summary judgment in favor of respondent Bremer Bank, National Association (Bremer Bank or bank) and to direct the entry of a money judgment against Jeffrey and his ex-wife, Kathryn Matejcek (Kathryn), jointly and severally, for amounts due on a defaulted loan that was secured by a motorhome. Jeffrey and Kathryn were joint debtors on the loan and jointly held title to the motorhome. In the Matejceks' dissolution action, the district court awarded Kathryn the motorhome, directed her to sell the motorhome, and required her to deposit the sale proceeds with Bremer Bank. To facilitate Kathryn's sale, Bremer Bank agreed to release its lien on the motorhome upon receipt of the sale proceeds; it also applied the sale proceeds to reduce the amount due on the loan.

         Bremer Bank then pursued this breach-of-contract action for the remaining loan balance. While Jeffrey did not dispute either that he is a joint borrower on the defaulted loan or the amount owed on the loan, he objected to the motorhome's sale, contending the price was short of its market value. On appeal, Jeffrey contends that the district court erred in granting summary judgment because Bremer Bank failed to give notice and dispose of the motorhome in a commercially reasonable manner, as a secured party is required to do under Minnesota's version of the Uniform Commercial Code (UCC)-Secured Transactions. Bremer Bank contends that the UCC provisions were not triggered because it did not sell the motorhome.

          Because the undisputed facts establish that Bremer Bank did not sell the motorhome, we conclude that the district court correctly determined that Bremer Bank did not dispose of the motorhome, as defined in relevant UCC provisions, when it consented to Kathryn's sale of the motorhome to offset the amount owed on the loan. We also conclude that the district court did not abuse its discretion in denying Jeffrey's request for a continuance to pursue additional discovery. Thus, we affirm the district court's decision.


         In January 2013, Jeffrey and Kathryn executed, as joint borrowers, a promissory note to Bremer Bank for a loan in the amount of $340, 459.04. Jeffrey and Kathryn also executed a separate agreement providing Bremer Bank with a security interest in a 2013 Winnebago Tour motorhome that they jointly purchased with the borrowed money.

         In 2016, Jeffrey commenced a marital dissolution action in Rice County. Jeffrey and Kathryn failed to make several monthly loan payments to Bremer Bank. In September 2016, Kathryn informed Jeffrey and Bremer Bank that she wished to sell the motorhome, and had received an offer of approximately $170, 000. Jeffrey objected to a sale at $170, 000, stating that he believed the motorhome's value was $225, 000. In October 2016, Kathryn informed Bremer Bank that she had found a potential buyer for the motorhome at $175, 000, and offered to pay the net proceeds to Bremer Bank in exchange for the bank releasing its lien against the motorhome. Jeffrey again objected to selling the motorhome at the proposed price.

         At about the same time, Bremer Bank conducted its own valuation analysis of the motorhome, "through information from the National Automobile Dealers Association, which indicated a potential value of $168, 700.00-$234, 400.00." Bremer Bank concluded that it would incur "at least $25, 305.00" in expenses should it repossess, hold, and sell the motorhome, resulting in a net value to Bremer Bank of "$143, 395.00-$199, 240.00." Bremer Bank deemed $175, 000 to be "a very good recovery," and informed Kathryn that it would agree to this sale price.

         Kathryn brought a motion in the dissolution action to authorize transfer of the motorhome title to her name alone and to obtain approval of the proposed sale. At the hearing on Kathryn's motion, Jeffrey's attorney stated that Jeffrey did not oppose the transfer. On November 1, 2016, the district court issued an emergency order transferring title of the motorhome from Jeffrey and Kathryn jointly to Kathryn individually. The order directed that Kathryn "shall attempt to sell and shall sell the motorhome in a prompt and prudent manner, acceptable to the secured party (Bremer Bank), and shall pay the net sale proceeds to Bremer Bank, not to exceed the amount actually owing by the parties to Bremer Bank." Finally, the order reserved for future determination which party had liability for any deficiency on ...

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