Michaels v. First USA Title, LLC

844 N.W.2d 528, 2014 WL 996519
CourtCourt of Appeals of Minnesota
DecidedMarch 17, 2014
DocketNo. A13-0757
StatusPublished
Cited by6 cases

This text of 844 N.W.2d 528 (Michaels v. First USA Title, LLC) is published on Counsel Stack Legal Research, covering Court of Appeals of Minnesota primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Michaels v. First USA Title, LLC, 844 N.W.2d 528, 2014 WL 996519 (Mich. Ct. App. 2014).

Opinion

OPINION

WORKE, Judge.

Appellant title insurance company challenges the district court’s finding that a notary public who negligently notarized signatures on fraudulent home mortgages was appellant’s agent. We affirm.

FACTS

Larry Maxwell and Jerome KingRussell stole respondent John Foster’s identity and used it to obtain four fraudulent mortgages. At each closing, Maxwell acted as the real-estate agent, and KingRussell impersonated Foster. Janie Coates, a notary public who had no knowledge of the fraud, acted as the closing agent. The incidents were part of a larger mortgage-fraud ring led by Maxwell that fraudulently obtained more than $2 million in the mid-2000s. State v. Maxwell, 802 N.W.2d 849, 851 (Minn.App.2011). It is undisputed that the fraud caused enormous financial damage— amounting to nearly $850,000 — to Foster and his wife, respondent Melony Michaels. They lost their access to credit, were declared in default, and had their credit-card balances accelerated. They subsequently lost dividends and interest on retirement accounts, suffered tax and insurance penalties, were forced to miss work, spent thousands of hours trying to remedy their finances, and incurred medical expenses treating significant mental-health consequences of the fraud.

[531]*531Respondents Foster and Michaels brought this suit against Maxwell, Kin-gRussell, Coates, and appellant First USA Title, LLC (“First USA”), among others.1 Respondents argued that First USA was liable because Coates, acting as its agent, was negligent in failing to verify KingRus-sell’s identity. First USA maintained that Coates was not its agent.

Respondents moved for summary judgment. Coates did not oppose the motion. First USA opposed the motion and submitted the affidavit of Sheryl Aarnio, a founder of First USA, who testified that Coates “was never an employee of [First USA], nor was she an agent of [First USA].” The district court granted summary judgment on the question of Coates’s negligence in favor of respondents, but ruled that there was a genuine issue of material fact as to whether she was an agent of First USA, and scheduled a bench trial. First USA chose not to participate in that trial.

After the trial, the district court found that First USA “used the services of [Coates] as a notary,” and that Coates “testified without contradiction ... that at all pertinent times she acted as agent of First USA Title.” The district court thus found that “[t]he evidence reflects that First USA Title, through Coates, notarized Foster’s signature without proper proof of his identity.” The district court entered judgment of $849,181.54 against First USA and others. First USA did not make any posttrial motions. This appeal followed.

ISSUES

I.When a party fails to appear at trial and does not move for a new trial, what legal issues are properly preserved for appellate review?

II. When a party fails to appear at trial, can an appellate court consider evidence introduced in support of a motion for summary judgment?

III. Does the evidence sustain the findings of fact, and do the findings of fact sustain the district court’s conclusions of law and judgment?

ANALYSIS

I.

The district court granted a default judgment against First USA. A default judgment is a “judgment entered against a defendant who has failed to plead or otherwise defend against the plaintiffs claim, often by failing to appear at trial.” Cole v. Metro. Council HRA, 686 N.W.2d 334, 337 (Minn.App.2004) (quotation omitted). A default judgment may be entered against a non-appearing party when the plaintiff introduces sufficient evidence at trial to receive a judgment. See, e.g., Pedersen v. Daly, 307 Minn. 163, 164-65, 238 N.W.2d 620, 621-22 (1976) (affirming a district court’s imposition of a default judgment in that context); see also 2 David F. Herr & Roger S. Haydock, Minnesota Practice § 55.4 (5th ed.2011) (stating that a party that “serves a responsive pleading but fails to appear at trial to litigate the matter or to contest the evidence” is not necessarily subject to entry of default judgment against it, because the participating party must still “present evidence to prove the allegations of the complaint”). Respondents presented un-contradicted evidence at the bench trial supporting their claim that Coates acted as First USA’s agent.

In this appeal, First USA challenges the district court’s conclusion that Coates act[532]*532ed as its agent, but First USA made no posttrial motions. See Thorp Loan & Thrift Co. v. Morse, 451 N.W.2d 361, 363 (Minn.App.1990) (stating that, to preserve issues for appeal, a defaulting party should move the district court to vacate the judgment), review denied (Minn. Apr. 13,1990). We favor posttrial motions to vacate default judgments because of their ability to “focus the district court’s attention on the specifics of an objection,” allow the district court to consider the context and possible effect of alleged errors on the outcome of the trial and to correct those errors, sharpen “critical aspects of the record” for appellate review, and occasionally eliminate the need for review altogether. Alpha Real Estate Co. of Rochester v. Delta Dental Plan of Minn., 664 N.W.2d 303, 309 (Minn.2003) (quotations omitted).

As a consequence of failing to make a posttrial motion to vacate a default judgment, a party appealing directly from a default judgment may bring only limited challenges. Thorp Loan, 451 N.W.2d at 363. The defaulting party cannot deny facts or assert facts not put into issue before the district court, or raise procedural arguments not raised below, “if adequate relief was available by motion to the district court.” Scroggins v. Solchaga, 552 N.W.2d 248, 253 (Minn.App.1996), review denied (Minn. Oct. 29, 1996). Caselaw identifies only three appropriate issues for review on an appeal taken directly from a default judgment. First, we may consider whether the evidence supports the district court’s findings of fact. Nazar v. Nazar, 505 N.W.2d 628, 633 (Minn.App.1993), review denied (Minn. Oct. 28, 1993). Second, we may consider whether those findings of fact support the conclusions of law and the judgment. Id. Third, we may review “substantive questions of law that were properly raised during trial.” Alpha Real Estate, 664 N.W.2d 303, 310 (Minn. 2003); Thorp Loan, 451 N.W.2d at 363 (observing that “a defendant in default may argue for the first time on appeal” certain legal questions, including “that the plaintiffs complaint did not state a cause of action or that the relief granted was not justified by the complaint”).

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844 N.W.2d 528, 2014 WL 996519, Counsel Stack Legal Research, https://law.counselstack.com/opinion/michaels-v-first-usa-title-llc-minnctapp-2014.