Margaret Liao, et al., Respondents,

This opinion is nonprecedential except as provided by
Minn. R. Civ. App. P. 136.01, subd. 1(c).

STATE OF MINNESOTA
IN COURT OF APPEALS
A21-0271

Margaret Liao, et al.,
Respondents,

vs.

Mohammad Sabri,
Appellant.

Filed November 1, 2021
Affirmed
Ross, Judge

Hennepin County District Court
File No. 27-CV-19-18999

Gregory N. Arenson, Christopher M. Daniels, Parker Daniels Kibort LLC, Minneapolis,
Minnesota (for respondents)

Mohammad Sabri, Minneapolis, Minnesota (pro se appellant)

Considered and decided by Ross, Presiding Judge; Jesson, Judge; Gaïtas, Judge.
NONPRECEDENTIAL OPINION
ROSS, Judge
Mohammad Sabri issued a $150,000 promissory note to Margaret and Benjamin
Liao as consideration for a $150,000 certificate of deposit that the Liaos provided as
collateral for a loan to a company the parties partly owned or allegedly controlled. Five
months later, adjusting to a changed circumstance, Sabri issued a substitute promissory
note with roughly identical material terms, and the Liaos issued a corresponding
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satisfaction of the first note. The Liaos sued for breach of contract when Sabri failed to pay
them on the substitute note as scheduled. The district court granted summary judgment
favoring the Liaos and sanctioned Sabri for failing to respond to discovery requests.
Because the undisputed facts establish that the parties formed a contract requiring Sabri to
pay the Liaos under the terms of the substitute promissory note, and because Sabri fails to
explain how the district court acted beyond its discretion by sanctioning him for his various
discovery failures, we affirm.
FACTS
This case concerns Mohammad Sabri’s failure to pay Margaret and Benjamin Liao
$150,000 as required under a 2016 promissory note that Sabri issued to the Liaos. The
circumstances leading to the 2016 note began in 2013. The Liaos partly owned, and alleged
that Sabri controlled, M&S Properties LLC, which sought a business loan. Venture Bank
lent M&S Properties $2,350,000 in 2013, and the Liaos provided the bank a $150,000
certificate of deposit as collateral. Two years later the Liaos agreed to authorize the bank
to liquidate the certificate of deposit to apply it to the loan if Sabri (and another man who
is not party to this dispute) agreed to repay the Liaos the $150,000 by December 2016.
Sabri issued a promissory note to the Liaos in October 2015 memorializing that agreement
and also including as additional consideration the assignment of 20% interest “in and to
M&S Properties, LLC to Liang, LLC.” Consistent with the terms of the agreement, the
Liaos authorized the bank to liquidate the certificate of deposit to apply to the 2013 loan.
By March 2016 Sabri had made no payment on the promissory note and issued a
second promissory note with essentially the same terms, except he changed the additional
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consideration to the assignment of 20% interest “in and to M&S Properties, LLC to Chows,
LLC.” The same day Sabri executed the 2016 note, Benjamin Liao executed a satisfaction
of the 2015 note.
Sabri did not pay the Liaos by December 2016 as required by the promissory note.
The Liaos sued Sabri for breach of contract in 2019. Citing Sabri’s incomplete responses
and failure to provide documents and information requested in discovery, the Liaos
successfully moved the district court to compel him to amend and supplement his discovery
responses and participate in his deposition. Sabri failed to attend his scheduled deposition.
The district court sanctioned Sabri $11,942.35 in attorney fees and costs under Minnesota
Rule of Civil Procedure 37.02(b).
The parties filed competing summary-judgment motions. The Liaos contended that
Sabri’s failure to pay breached the 2016 promissory note. Sabri contended that the parties
never formed an agreement under the 2016 promissory note, maintaining that the Liaos
made no offer and provided no consideration. The district court rejected Sabri’s argument,
granted the Liaos’ motion, and entered judgment. Sabri appeals.
DECISION
Sabri challenges the district court’s summary -judgment decision and its order for
sanctions. His challenges fail.
We first address Sabri’s summary-judgment challenge. We review the district
court’s summary-judgment decision de novo, assessing whether a genuine issue of material
fact exists and whether the district court properly applied the law. Minn. R. Civ. P. 56.01;
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Peterka v. Dennis, 764 N.W.2d 829, 832 (Minn. 2009). For the following reasons, we are
satisfied that summary judgment is fitting based on undisputed material facts.
We see no merit to Sabri’s contention that a contract never formed. A contract is
formed when a party extends an offer, another party accepts the offer, and the agreement
is supported by consideration. Com. Assocs. Inc. v. Work Connection, Inc., 712 N.W.2d
772, 782 (Minn. App. 2006). Sabri maintains that no viable offer occurred and that no
consideration supports the 2016 promissory note.
Although Sabri frames his challenge as contesting both offer and consideration, he
inflates one argument into two. He asserts that no “offer existed as of March 16, 2016, to
form a valid, binding, and enforceable contract” specifically “because the $150,000
Certificate of Deposit held as collateral for the 2015 Note was liquidated on November 3,
2015” and because “no evidence of separate consideration or any benefit that could be
bestowed upon [Sabri] was presented beyond the availability of the Certificate of Deposit.”
And he similarly asserts that no consideration existed because “there is no evidence of what
consideration [Sabri] received [on March 16, 2016] for entering into this bargain.” We
address his appeal as essentially challenging only one component: consideration in the
form of the Liaos’ agreement to allow the bank to liquidate the certificate of deposit and
apply it to the business loan.
Sabri conceded in the district court that the 2015 promissory note memorialized a
binding contract. But he argued in the district court and on appeal that, because the bank
had already liquidated the certificate of deposit when Sabri issued the 2016 promissory
note, the Liaos’ agreement to authorize the liquidation cannot constitute consideration for
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the 2016 promise to pay the $150,000. Sophistry. The 2016 note is an extension of the
promise in the 2015 note and rests on the same consideration. Consideration exists when a
contractual promise is the product of a bargained-for exchange, such as “an obligation by
one party upon condition of an act or forbearance of an act by the other.” Baehr v.
Penn-O-Tex Oil Corp., 104 N.W.2d 661, 665 (Minn. 1960). It is evident that Sabri received
consideration for the 2016 agreement. Contemporaneous with the 2016 promissory note,
the Liaos executed a satisfaction of the 2015 note, on which Sabri had made no payments.
But for his issuing the 2016 note (the obligation), the Liaos had no reason to release him
from his duty to pay under the 2015 note (the forbearance). Even if this were not so, Sabri
executed the 2016 note “FOR VALUE RECEIVED,” and the note identified part of that
value received as “payment of $150,000 Certificate of Deposit.” See Liberty State Bank v.
Metro. Church Ass’n, 191 N.W. 414, 415 (Minn. 1923) (explaining that “for value
received” in a promissory note relieves the plaintiff of the burden to prove consideration).
Under either theory, Sabri received valuable consideration for his 2016 promise to pay.
We likewise find no merit in Sabri’s contention that the district court abused its
discretion by imposing discovery sanctions. We consider Sabri’s challenge on the merits
notwithstanding the Liaos’ assertion that the sanctions order is not properly before us. The
Liaos contend that the appeal from the order is untimely because the district court issued it
two months before granting summary judgment and seven months before Sabri filed his
notice of appeal, long after the 60-day appeal period in Minnesota Rule of Appellate
Procedure 104.01. The Liaos correctly highlight that the district court entered judgment on
the sanctions order and that they served notice of the filing of the judgment. But an appeal
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from a judgment that is not final, meaning it does not adjudicate “all the claims and rights
and liabilities” of all the parties, is not immediately appealable unless “the trial court makes
an express determination that there is no just reason for delay and expressly directs the
entry of a final judgment.” Minn. R. App. P. 104.01, subd. 1. The district court did not
make that express determination here. The judgment on the order imposing discovery
sanctions was therefore subject to the district court’s authority to revise and was not
immediately appealable. Minn. R. Civ. P. 54.02. We turn to the merits of Sabri’s appeal
from the sanctions order.
Sabri incorrectly argues that the district court imposed sanctions under Minnesota
Rule of Civil Procedure 11.03, which authorizes the district court to penalize a party for
representations to the court. He challenges the sanctions award on his contention that “the
record does not demonstrate sufficient evidence to support a determination that [Sabri ]
acted in bad faith, asserted a frivolous claim or unfounded position, or committed a fraud
upon the court.” But the district court did not order sanctions for any of these reasons under
rule 11.03. It instead sanctioned Sabri and ordered him to pay attorney fees and costs under
Minnesota Rule of Civil Procedure 37.02(b), which authorizes the court to sanction a party
who fails to obey a discovery order. The district court rested its rule 37 order on Sabri’s
multiple discovery offenses. The record reflects that Sabri failed to respond to the Liaos’
discovery requests and that, after the district court reminded him to participate in discovery,
he offered responses that were vague, incomplete, and unaccompanied by requested
documents. He then failed to attend his scheduled deposition. Because Sabri fails to dispute
the various bases for the district court’s sanction or offer any argument explaining how the
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order is inappropriate under rule 37, he gives us no reason to consider how the order reflects
an abuse of discretion.
Affirmed.