Nuvola, LLC v. Morgan Wright

This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (2014).

STATE OF MINNESOTA
IN COURT OF APPEALS
A15-1778

Nuvola, LLC,
Respondent,

vs.

Morgan Wright,
Appellant.

Filed June 13, 2016
Affirmed
Cleary, Chief Judge

Hennepin County District Court
File No. 27-CV-HC-15-3802

John E. Braun, Thomas Law Group, PLLC, Minneapolis, Minnesota (for respondent)

Erik F. Hansen, Trevor Oliver, Burns & Hansen, P.A., Minneapolis, Minnesota (for
appellant)

Considered and decided by Connolly, Presiding Judge; Cleary, Chief Judge; and

Ross, Judge.

UNPUBLISHED OPINION

CLEARY, Chief Judge

In this eviction action, appellant Morgan Wright challenges the district court’s

finding that the parties’ purchase agreement was cancelled, its failure to consider whether
respondent Nuvola, LLC was responsible for the failure to close on the sale of the subject

property, and the court’s denial of appellant’s request for a stay pending resolution of

related civil litigation. Because we hold that the district court did not err in deciding that

the purchase agreement was cancelled by its own terms, and that appellant’s request for a

stay was untimely and did not provide the district court with a case-specific reason to grant

the stay, we affirm.

FACTS

On December 9, 2014, respondent and appellant entered into a condominium

purchase agreement under which appellant agreed to purchase a part of unit #200 from

respondent. Respondent planned to combine the rest of unit #200 with unit #100, which

was directly below unit #200. The parties were to evenly split the cost of physically

dividing unit #200, but they agreed that each party would be solely responsible for covering

the cost of connecting utilities and providing mechanical equipment to their respective

units.

Respondent and appellant aimed for a March 1, 2015 closing. An addendum to the

purchase agreement provided that, if the closing could not be accomplished by March 1,

appellant would take immediate temporary possession of the property, begin contributing

to respondent’s running costs, and pay utilities and insurance for unit #200. The addendum

further provided: “In the event [appellant] is unable or unwilling to complete purchase by

July 31, 2015, this purchase agreement shall be deemed cancelled and all monies paid

thereunder shall be forfeited to [respondent].”

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 Appellant and Francesco Parisi, the sole owner of Nuvola, LLC, were in a romantic

relationship at the time they entered into the purchase agreement. By January 2015 their

relationship had deteriorated and respondent began managing construction on unit #200 on

its own. In the process, respondent incurred approximately $74,000 in construction

expenses which it expected to charge to appellant, but appellant continues to dispute

whether she was responsible for paying these costs.

Appellant took possession of unit #200 after March 1, 2015, per the purchase

agreement. On March 24, 2015, respondent served appellant with a notice of declaratory

cancellation of the purchase agreement, apparently pursuant to Minn. Stat. § 559.217,

subd. 4 (2014). Respondent stated that the cancellation was based on appellant’s failure to

contribute to running costs starting on March 1, as agreed to in the addendum; appellant’s

failure to acquire insurance for the property starting on March 1; appellant’s failure to

install mechanical equipment and services that would make the unit habitable; and

appellant’s withdrawal of earnest money from a joint account where it was supposed to be

available at any time prior to closing for disbursement to pay costs associated with dividing

the property.

In response, appellant sought a district court order suspending the declaratory

cancellation. That action is the basis of a separate civil suit between the parties. On

April 8, 2015, the district court in the separate civil suit found that the defects or unfulfilled

conditions did not, by the terms of the purchase agreement, cancel the agreement and,

therefore, the notice of cancellation was subject to Minn. Stat. § 559.217, subd. 3 (2014),

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not subdivision 4. Because subdivision 3 allows 15 days to cure, and appellant had cured

or could cure all the defects that respondent had alleged, the district court granted

appellant’s motion for a temporary restraining order, and suspended respondent’s

declaratory cancellation, enjoining respondent from initiating further proceedings to

terminate the purchase agreement. The district court also ordered appellant to make

monthly payments to respondent for running costs, insurance, and utilities.

The sale of the property did not close by July 31, 2015. On August 4, 2015,

respondent filed an eviction action to remove appellant, who remained in possession of

unit #200. At trial in housing court on August 25, 2015, appellant argued that she had not

been “unable or unwilling” to close by July 31. She argued that it was respondent’s actions

that led to her failure to close by the deadline. Appellant maintained that she did not close

because respondent failed to pay condominium dues; demanded payment from appellant

immediately before closing for construction costs respondent had incurred; did not provide

appellant’s lender with invoices for those construction costs; and, as late as the scheduled

closing date on July 31, alleged that appellant was engaging in mortgage fraud. Appellant

also asserted that the stress of the situation caused her to have multiple seizures on July 31,

which rendered her unable to help resolve issues that arose with the closing.

Respondent argued that appellant’s failure to close on the purchase of unit #200 was

a result of her failure to close on the sale of her other residence on July 31, 2015. A

mortgage company representative testified that the closing on appellant’s other

condominium was delayed due to a legal issue that her homeowner’s association raised late

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in the process. The mortgage company’s underwriters then had to review the loan before

they could approve it, which, according to the representative, could take anywhere from a

day to several weeks. The underwriters could not get the necessary documents to approve

the buyer’s loan by July 31, so appellant did not close on the sale of her other condominium

by that date. Respondent also elicited testimony from the mortgage closer that appellant

had to sell her other home before she could close on the purchase of unit #200. The closer

testified that because appellant did not provide proof that she had closed on the other sale

by July 31, the closing on unit #200 could not be completed.

Appellant’s mortgage loan officer testified that respondent’s allegation of mortgage

fraud and its demand for payment of $74,000 on the morning of July 31—the scheduled

closing date for unit #200—were not resolved by the closing time. The loan officer testified

that she would not have closed without resolving these issues. She also testified, however,

that while she initially thought that respondent would not close without its demands being

met, she later understood that respondent had agreed to close about an hour before the

scheduled closing. The loan officer further testified that the only condition of closing was

the sale of appellant’s residence, and because that did not happen, appellant could not close

on unit #200.

At the end of trial, the housing court invited appellant to submit a letter brief about

respondent’s citation to an unpublished court of appeals decision. Appellant included in

the letter brief a request for a stay of the eviction proceeding pending the resolution of her

related civil suit involving respondent’s earlier attempt to cancel the purchase agreement.

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She argued that the civil suit was still pending and involved the validity of the purchase

agreement at issue in the eviction proceeding. Appellant had not previously requested a

stay of the eviction proceeding in housing court. The housing court considered the request

and declined to grant it because the request was untimely. The housing court found that,

even if appellant’s motion was timely, appellant had failed to provide a case-specific reason

why a stay was necessary to protect her interests.

The housing court found that respondent had proved by a preponderance of the

evidence that appellant was unable or unwilling to complete the purchase by July 31, 2015,

and that this caused the purchase agreement to expire by its own terms on that date. The

housing court recommended that a writ of recovery of the premises and order to vacate be

issued in favor of respondent, and the district court confirmed this decision. Appellant

sought review of the housing court decision. The district court reviewed and affirmed the

housing court’s decision in its entirety after a hearing. This appeal followed.

DECISION

I.

Appellant argues that her request to stay was timely because the end of a housing

court proceeding does not mark the end of the eviction proceeding as a whole. Respondent

argues that appellant’s informal request to stay does not qualify as a timely motion because

appellant submitted it after completion of the eviction proceeding. The eviction proceeding

took place on August 25, 2015, and appellant requested a stay on August 28, 2015. The

housing court made recommendations on September 4, 2015, and the district court

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confirmed the housing court’s findings and order on the same day. Appellant argues that

because the housing court’s findings and conclusions are “mere recommendations” that

only become the findings and order of the district court after the district court confirms

them, a motion is timely if it is made any time after housing court proceedings but before

the district court’s review and confirmation.

This court reviews the housing court decision, as it is effectively the district court’s

decision. “The findings of a referee, to the extent adopted by the court, shall be considered

as the findings of the court.” Minn. R. Civ. P. 52.01. “[O]nce the district court reviews

and confirms the housing court referee’s decision, the findings and order become the

district court’s findings and order.” Bass v. Equity Residential Holdings, LLC, 849 N.W.2d

87, 92 (Minn. App. 2014).

“We review the interpretation of procedural rules de novo.” State v. Martinez-

Mendoza, 804 N.W.2d 1, 6 (Minn. 2011). In Hennepin County Housing Court, “[a]ny

motion otherwise allowed by Minnesota Rules of Civil Procedure may be made by any

party orally or in writing at any time including the day of trial.” Minn. Gen. R. Pract. 610.

The housing court interpreted this rule to mean that appellant could have requested a stay

before the trial began on August 25, 2015, but her letter brief of August 28 was too late

because it arrived after the trial on the merits. Appellant appears to interpret the language

more broadly to mean that a party can move the court at any time—even after trial.

The housing court has the better interpretation. The language and context of the

rule informs us that a party is permitted to make a motion at any time leading up to, and

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including, the day of trial, but not after completion of trial. The phrase “at any time” does

not lend itself to mean that parties may make motions up until the last moment before the

referee makes her recommendation, given the context of housing court rules. Rule 610

provides that the court may grant a party time to respond to any motion. If, however,

parties were allowed to move the court at the last moment, it would not leave any time for

response, given that eviction actions are also intended to be summary proceedings. Minn.

Stat. § 504B.001, subd. 4 (2014).

Appellant also argues that any motion made during the period leading up to a district

court’s review of a referee’s confirmed decision is timely. This argument is inconsistent

with Rule 611(a), which provides that “[a] judge’s review of a decision recommended by

the referee shall be based upon the record established before the referee.” Minn. Gen. R.

Pract. Rule 611(a). If a party were permitted to submit motions to the reviewing court after

a district court had confirmed the housing court’s recommendations, the reviewing court

would find itself considering items that were not in the record before the housing court.

Appellant’s request for a stay was not timely.

II.

The district court also found that appellant had failed to present a case-specific

reason to grant a stay. The court found no risk that its decision in the eviction action would

cause problems of issue or claim preclusion in the civil action involving the same purchase

agreement. Appellant argues on appeal that it was reversible error to decline to stay or

abrogate the eviction proceeding.

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 A district court has discretion to decide whether to grant a stay in an eviction

proceeding, and we review its decision only for abuse of that discretion. Deutsche Bank

Nat. Trust Co. v. Hanson, 841 N.W.2d 161, 164 (Minn. App. 2014). We review the

decision based on the record that was before the housing court. Minn. R. Civ. App. P.

110.01 (“The documents filed in the trial court, the exhibits, and the transcript of the

proceedings, if any, shall constitute the record on appeal in all cases.”); Minn. Gen. R.

Pract. 611(a) (“A judge’s review of a decision recommended by the referee shall be based

upon the record established before the referee.”).

A defendant may request a stay if there is another pending action related to the same

property, but that fact alone does not require a stay. Fed. Home Loan Mortg. v.

Nedashkovskiy, 801 N.W.2d 190, 192-93 (Minn. App. 2011). The party requesting the stay

must provide a case-specific reason for granting it and, even then, the decision remains

discretionary with the district court. Id. at 193. This court has held that when a parallel

civil action is pending which involves counterclaims and defenses that are “necessary to a

fair determination of the eviction action, it is an abuse of discretion not to grant a stay of

the eviction proceedings.” Bjorklund v. Bjorklund Trucking, Inc., 753 N.W.2d 312, 318-

19 (Minn. App. 2008), review denied (Minn. Sept. 23, 2008).

In her letter brief, appellant argued that the validity of the purchase agreement is at

issue in the eviction action and in the related civil action and that, as a result, the civil action

determines the eviction action. Appellant stated that both of the proceedings are

“dependent on the effectiveness and validity of the purchase agreement.” Appellant did

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not explain how her claims regarding the purchase agreement in the civil action would

affect her interests in the eviction proceeding, beyond stating that the related proceeding

would determine her possessory rights. The letter brief asserted that appellant’s defenses

and counterclaims in the eviction proceeding are also at issue in the related civil action, but

it did not identify specific defenses or counterclaims or explain how they are necessary to

a fair determination of the eviction action.

The housing court also examined appellant’s complaint in the related civil action.

The complaint only addressed respondent’s purported declaratory cancellation of the

purchase agreement on March 24, 2015, and appellant’s request for injunctive relief. The

complaint did not set forth any of the additional contract claims that appellant now raises.1

The housing court observed that while the two actions involved the same property, the

actions are independent of each other in the sense that, regardless of the outcome of the

related civil action, respondent could bring the eviction action based on appellant’s failure

to close on July 31, 2015.

The district court did not abuse its discretion when it declined to grant appellant a

stay. The issues raised in the related civil action revolved around appellant’s alleged failure

1
Appellant states that she amended her complaint to include additional claims such as
breach of the purchase agreement, fraud, and tortious interference with contract, but it does
not appear that her amended complaint had been filed at the time the district court reviewed
the housing court’s decision. The amended complaint was certainly not before the housing
court, as appellant states that she served the amended complaint since perfecting her appeal
of the eviction matter. When reviewing a housing court decision, the district court is to
review only the record that was created in front of the housing court. Minn. Gen. R. Pract.
611(a). The impact of the claims arising out of this amended complaint is not properly
before this court. Thiele v. Stich, 425 N.W.2d 580, 582 (Minn. 1988).

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to meet conditions set forth in the purchase agreement, such as payment of per-diem monies

starting on March 1, 2015, and unauthorized withdrawal of earnest money. The later

eviction action raised the issue of whether appellant was unwilling or unable to close by

July 31, 2015. Appellant’s defenses and counterclaims in the eviction action focus on what

she characterizes as respondent’s obstructionist demands at closing and her excusable

inability to close due to her medical condition. It remains unclear how a determination of

appellant’s claims in the related civil action is essential to her defense in the eviction action.

Appellant states that this court has held it is an abuse of discretion not to grant a stay

of an eviction proceeding when “the merits of an eviction action depend[] entirely on

whether the current possessor of the property was in breach of an agreement allowing them

to possess it.” Fed. Home Mortg. Corp. v. Mitchell, 862 N.W.2d 67, 74 (Minn. App. 2015),

review denied (Minn. June 30, 2015). But this case does not support the argument that the

district court abused its discretion when it declined to grant a stay. Mitchell indicates that

when the outcome of an eviction action depends on whether the terms of an agreement

granting possession had been violated, that issue may be addressed in the eviction action

or by staying the eviction action pending resolution of the related civil action. Id.

Additionally, there is no evidence that appellant requested an injunction from the

court where the related civil action is pending. “Settled law holds that a stay is not

necessary in an eviction action when adequate alternatives are available, such

as . . . seeking an injunction from the court where other claims are pending.” Hanson, 841

N.W.2d at 166. For all of the foregoing reasons, even if appellant’s request for a stay had

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been timely, the district court did not abuse its discretion in declining to stay the eviction

proceeding.

III.

Appellant argues that the district court exceeded the scope of an eviction proceeding

by deciding whether the parties’ purchase agreement was cancelled by its own terms.

“Eviction actions are summary proceedings that are intended to adjudicate only the limited

question of present possessory rights to the property.” Hanson, 841 N.W.2d at 164; see

also Minn. Stat. § 504B.001, subd. 4 (2014) (defining “eviction” as “a summary court

proceeding to remove a tenant or occupant from or otherwise recover possession of real

property by the process of law set out in this chapter”). A person who is entitled to a

disputed property may recover possession of it through an eviction proceeding when “any

person holds over real property . . . after termination of contract to convey the property.”

Minn. Stat. § 504B.285, subd. 1(a)(ii) (2014).

“Parties generally may not litigate related claims in an eviction proceeding,” but

defendants may “raise defenses and counterclaims that fit within the limited scope of an

eviction proceeding.” Hanson, 841 N.W.2d at 164. Where defenses and counterclaims

exceed the scope of a summary proceeding, an appellant may commence a separate

proceeding and “raise their counterclaims and equitable defenses directly in that separate,

district court proceeding, where they can also seek to enjoin prosecution of the eviction

action.” AMRESCO Residential Mortg. Corp. v. Stange, 631 N.W.2d 444, 445-46 (Minn.

App. 2001).

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 Appellant argues that her possessory right under the purchase agreement could not

be determined without considering equitable claims and defenses that are beyond the scope

of an eviction proceeding, and that she was therefore limited in her presentation of the

evidence and issues.

The district court did not err in limiting the issues and evidence. Respondent’s

eviction action asserted that appellant remained in possession of the property after

cancellation of the purchase agreement. Respondent alleged that a condition of the

purchase agreement—closing by July 31—had not been met, so by operation of that

contractual term, the purchase agreement was cancelled. To determine appellant’s present

possessory right to the property, the district court had to determine whether the contract to

convey the property had terminated and whether appellant remained in possession after

termination. See Minn. Stat. § 504B.285, subd. 1(a)(ii) (listing this as one of the situations

in which a person may recover possession of a disputed property through an eviction

proceeding).

Appellant had the opportunity to raise defenses and counterclaims that related to the

cancellation of the purchase agreement. She testified that her seizures affected her ability

to close on July 31, 2015. Appellant testified to respondent’s demand for payment of

construction costs and its allegation of mortgage fraud just before the scheduled closing.

She argued that respondent’s actions caused the failure of the closing on July 31 and that,

as a result, she was not unable or unwilling to close on July 31, the purchase agreement did

not terminate on that date, and her possessory right remains intact.

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 The district court determined that appellant was unable or unwilling to close and

that, as a result, the purchase agreement cancelled by its own terms. The district court

determined that because the purchase agreement created appellant’s possessory interest,

her possessory interest terminated when the agreement terminated. The court only decided

issues that were determinative of present possessory rights to the property.2

If appellant had equitable defenses and counterclaims that exceeded the scope of the

eviction proceeding, she could have raised them in a separate district court proceeding,

where she could also have sought a stay of the eviction proceeding. We have recognized

that the availability of alternate process preserves the summary nature of eviction

proceedings. AMRESCO, 631 N.W.2d at 445-46. At the time of the eviction proceeding

on August 25, 2015, there was no other pending action in which the effect of the failure to

close on July 31 was at issue. Appellant had apparently not yet amended her complaint in

the related civil action in any way that would have raised the same issues, and there is no

evidence that she requested a stay of the eviction proceeding in a separate district court

proceeding.

IV.

Appellant argues that the district court also erred in determining that the purchase

agreement was cancelled by its own terms. Appellant contends that respondent’s

2
In a case where we held that the district court exceeded the scope of an eviction
proceeding, the district court determined the prospective rent that could be charged and
denied attorney fees under a lease provision. Eagan E. Ltd. P’ship v. Powers
Investigations, Inc., 554 N.W.2d 621, 622 (Minn. App. 1996). These issues were not
determinative of the present right to possession. Id.

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anticipatory breach of the purchase agreement excused her performance; that his actions

made the July 31, 2015 closing impossible; that her seizures incapacitated her and excused

her failure to close on July 31; and that, as a result, she is not in default of the purchase

agreement.

We review the district court’s findings of fact in an eviction action for clear error.

Minneapolis Cmty. Dev. Agency v. Smallwood, 379 N.W.2d 554, 555 (Minn. App. 1985),

review denied (Minn. Feb. 19, 1986). Findings of fact are clearly erroneous when, upon

review of the record, this court is unable to find “reasonable evidence” to support the

district court’s findings. Rasmussen v. Two Harbors Fish Co., 832 N.W.2d 790, 797

(Minn. 2013) (quotation omitted). We give due regard to the district court’s opportunity

to judge the credibility of witnesses, and we consider the adopted findings of the housing

court to be the findings of the district court. Minn. R. Civ. P. 52.01. We review the district

court’s conclusions of law de novo. In re Estate of Barg, 752 N.W.2d 52, 63 (Minn. 2008).

Contract construction is “a question of law unless the contract is ambiguous.”

Denelsbeck v. Wells Fargo & Co., 666 N.W.2d 339, 346 (Minn. 2003). “The plain and

ordinary meaning of the contract language controls, unless the language is ambiguous.”

Bus. Bank v. Hanson, 769 N.W.2d 285, 288 (Minn. 2009). “Whether a contract is

ambiguous is a question of law that we review de novo. The language of a contract is

ambiguous if it is susceptible to two or more reasonable interpretations.” Dykes v. Sukup

Mfg. Co., 781 N.W.2d 578, 582 (Minn. 2010) (citation omitted).

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 The district court focused on the meaning and operation of this condition in the

addendum to the purchase agreement: “In the event [appellant] is unable or unwilling to

complete purchase by July 31, 2015, this purchase agreement shall be deemed cancelled

and all monies paid thereunder shall be forfeited to [respondent].” During trial, appellant

argued that the term “unable” is ambiguous. The purchase agreement does not define the

term, so we apply the plain and ordinary meaning. “Able” means “having sufficient ability

or resources.” The American Heritage College Dictionary 3 (3d ed. 1997). The prefix

“un” indicates the opposite of the stem to which it is attached. Id. at 1465. And “ability”

is defined as “the quality of being able to do something; the physical, mental, financial, or

legal power to perform.” Id. at 3. The combination of “unable” with “unwilling” further

suggests that “unable” refers to a lack of capacity, because “unwilling” refers to a

disinclination or lack of desire to do something. The use of both words indicates that the

parties intended each word to communicate something different. See Chergosky v.

Crosstown Bell, Inc., 463 N.W.2d 522, 526 (Minn. 1990) (stating that because courts

presume that parties intend contract language to have effect, courts “will attempt to avoid

an interpretation of the contract that would render a provision meaningless”). Applying

the plain meaning of the word “unable” to the condition in question, it is clear that if

appellant does not have the capacity to perform by July 31, 2015, the purchase agreement

terminates.

Appellant argues that the district court erred by failing to consider whether

respondent was to blame for the failure to close on July 31, 2015. She contends that the

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court ignored respondent’s actions leading up to the scheduled closing and disregarded

testimony that favored appellant.

The district court’s findings of fact on this issue are supported by the record and are

not clearly erroneous. During the eviction proceeding, appellant elicited testimony from

witnesses that respondent made last-minute demands for payment and alleged that she was

engaging in mortgage fraud. Appellant testified about her seizures and argued that her

medical condition made it impossible to complete the closing by the deadline.

However, trial testimony supports the conclusion that respondent’s actions and

appellant’s health had no bearing on appellant’s failure to perform by July 31, 2015.

Testimony of the mortgage closer and the loan officer indicates that appellant’s failure to

close on her other residence made her unable to close on the purchase of unit #200 on July

31. The record also supports the conclusion that appellant’s medical condition did not

cause her failure to close on the sale of her other residence. A witness who was involved

with that sale testified that resolution of the underwriting problem—which was the source

of the delay on that closing—required an exchange of paperwork between a homeowner’s

association, the mortgage originator, and the underwriter. No evidence indicates that

appellant’s involvement was necessary at that stage. The district court did not err in

determining that appellant failed to perform and the purchase agreement was therefore

cancelled by its own terms.

Affirmed.

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