Bruce Westman, Appellant,

This opinion is nonprecedential except as provided by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
A23-1634

Bruce Westman,
Appellant,

vs.

Specialized Loan Servicing, LLC, et al.,
Respondents.

Filed August 5, 2024
Reversed and remanded
Smith, Tracy M., Judge

Isanti County District Court
File No. 30-CV-22-580

Jonathan L. R. Drewes, Drewes Law, PLLC, Minneapolis, Minnesota (for appellant)

Benjamin J. Court, Sarah R. Almquist, Stinson LLP, Minneapolis, Minnesota (for
respondents)

Considered and decided by Smith, Tracy M., Presiding Judge; Frisch, Judge; and
Ede, Judge.
NONPRECEDENTIAL OPINION
SMITH, TRACY M., Judge
Appellant brought this action against respondents, the holder of the second
mortgage on appellant’s residential real property and the current servicer of appellant’s
mortgage loan, seeking (1) to quiet title under Minnesota Statutes section 559.01 (2022)
and (2) relief under the Minnesota Residential Mortgage Originator and Servicer Licensing
2
Act (MOSLA), Minnesota Statutes sections 58.01 to 58.23 (2022 & Supp. 2023). 1
Appellant’s claims are based on his allegation that respondents violated state statutes
prohibiting usurious interest rates on loans. The district court granted summary judgment
for respondents, determining that (1) the quiet-title claim is time-barred and (2) the
MOSLA claim fails because appellant cannot establish that he was injured by the allegedly
usurious interest rate. On appeal, appellant challenges both decisions. Because we conclude
that appellant’s quiet-title claim is not time-barred and that appellant has alleged an injury
sufficient to support a claim under MOSLA, we reverse and remand for further
proceedings.
FACTS
The following facts are undisputed. On May 12, 2006, appellant Bruce Westman
signed a promissory note secured by a second mortgage on his residential property,
pursuant to which General Mortgage Home Equity Corp. (General Mortgage) lent
Westman $96,000 at a n annual interest rate of 12.45%. Under the note, Westman agreed
to make monthly payments of $1,020.84 beginning on July 1, 2006, through June 1, 2021,
with a balloon payment for the remaining balance due on June 1, 2021. Westman further
agreed to the following provision in the note:
If a law, which applies to this loan and which sets
maximum loan charges, is finally interpreted so that the
interest or other loan charges collected or to be collected in
connection with this loan exceed the permitted limits, then:

1 We cite the most recent version of MOSLA because it has not been amended in relevant
part. See 2023 Minn. Laws ch. 57, art. 3, §§ 63-66, at 47-50; see also Interstate Power Co.
v. Nobles Cnty. Bd. of Comm’rs, 617 N.W.2d 566, 575 (Minn. 2000) (stating that,
generally, “appellate courts apply the law as it exists at the time they rule on a case”).
3
(a) any such loan charge shall be reduced by the amount
necessary to reduce the charge to the permitted limit; and
(b) any sums already collected from me which exceeded
permitted limits will be refunded to me. The Note Holder may
choose to make this refund by reducing the principal I owe
under this Note or by making a direct payment to me. If a
refund reduces principal, the reduction will be treated as a
partial prepayment.

The last payment that Westman made was on April 1, 2008.
In 2019, General Mortgage assigned the mortgage to respondent Gulf Harbour
Investments Corporation (Gulf Harbour). As of May 3, 2022, the balance due on the note
was $263,712.08. On May 10, 2022, Gulf Harbour’s mortgage servicer, respondent
Specialized Loan Servicing, LLC (SLS), sent Westman a “Notice of Default and Notice of
Intent to Foreclose,” demanding payment of $172,521.96 by June 12, 2022.
In September 2022, Westman sued SLS and Gulf Harbour to quiet title and
additionally brought a claim against SLS under MOSLA. In his quiet-title claim, Westman
sought a declaration, under Minnesota Statutes section 559.01, that the note and mortgage
are void under Minnesota Statutes section 334.03 (2022), with reference to Minnesota
Statutes section 47.20 (2022), because the interest rate on the note is usurious. In his
MOSLA claim, Westman sought the same declaratory relief as well as damages, costs, and
attorney fees from SLS.
After Westman brought suit, a March 16, 2023 payoff statement showed that the
amount of principal, interest, and fees due under the note was $234,767.83. This statement
calculated the payoff at a reduced interest rate of 10.371%. In his complaint, Westman had
alleged that the maximum interest rate allowed was 10.371%.
4
Westman moved for summary judgment, and respondents cross-moved for
judgment on the pleadings or for summary judgment. The district court denied Westman’s
motion for summary judgment and granted summary judgment to respondents, dismissing
Westman’s claims with prejudice. As to the quiet-title claim, the district court determined
that Westman’s claim is barred by the two-year statutes of limitations in Minnesota Statutes
sections 334.02 and 541.07(2) (2022) because Westman made no payments on the note
within two years of commencing this action. The district court alternatively determined
that, even if the two-year statutes of limitations did not apply, the claim is barred by the
six-year statute of limitations in Minnesota Statutes section 541.05, subdivision 1(2)
(2022). As to the MOSLA claim, the district court determined that Westman could not
prove that he was injured by the allegedly usurious interest rate as necessary to recover
under MOSLA.
Westman appeals.
DECISION
Appellate courts “review the grant of summary judgment de novo to determine
whether there are genuine issues of material fact and whether the district court erred in its
application of the law.” Montemayor v. Sebright Prods., Inc., 898 N.W.2d 623, 628 (Minn.
2017) (quotation omitted). The parties do not argue that there are genuine issues of material
fact. The question that they present is whether the district court erred in applying the law.
Westman asserts that the district court erred because (1) no statute of limitations
bars his claim for relief under section 559.01 seeking a declaration that the note and
5
mortgage are void and (2) he was injured by SLS’s notice of default and notice of intent to
foreclose on the mortgage. We address each argument in turn.
I. The district court erred by granting summary judgment to respondents on
Westman’s claim for relief under section 559.01 on the ground that the claim
is time-barred.

Westman’s quiet-title claim seeking a declaration that the note and mortgage are
void is founded on his assertion that the interest rate in the note is usurious. S ection 47.20
establishes the criteria for determining the maximum interest rate that a lender is legally
allowed to charge for a conventional residential loan. Minn. Stat. § 47.20, subd. 4a(a).
Section 47.20 further provides that “[a]ny conventional loan having an interest rate or loan
yield in excess of the maximum lawful interest rate provided for in subdivision 4a shall be
usurious and subject to the same penalties as a loan made in violation of section 334.01.”
Id., subd. 13.
The remedies for violations of Minnesota Statutes section 334.01 (2022) are
provided by sections 334.02 and 334.03. Barton v. Moore, 558 N.W.2d 746, 750 (Minn.
1997). Section 334.02, which provides a cause of action to recover any interest paid on a
usurious loan, states:
Every person who for any such loan or forbearance shall
have paid or delivered any greater sum or value than in section
334.01 allowed to be received may, personally or through
personal representatives, recover in an action against the
person who shall have received the same, or the receiver’s
personal representatives, the full amount of interest or
premium so paid, with costs, if action is brought within two
years after such payment or delivery.

6
Section 334.03 provides that all usurious “notes, mortgages, and all other contracts and
securities . . . shall be void except as to a holder in due course.” In other words, “a usurious
transaction is void,” absent the holder-in-due-course exception. Phalen Park State Bank v.
Reeves, 251 N.W.2d 135, 139 (Minn. 1977). “If the mortgage is usurious, it is void, and
the [lender] has no right to either the interest accrued or the principal.” Id. But see Rathbun
v. W. T. Grant Co., 219 N.W.2d 641, 653 (Minn. 1974) (stating that “the recovery of both
interest and principal provides a remedy too harsh under the circumstances”); Katz &
Lange, Ltd. v. Beugen, 356 N.W.2d 733, 735 (Minn. App. 1984) (citing this aspect of
Rathbun).
Westman argues that his quiet-title claim is not time-barred because “[a] claim
brought pursuant to Minn. Stat. § 559.01 to determine current rights of parties claiming
current adverse interests in real estate cannot be barred by a statute of limitations.”
Section 559.01 provides:
Any person in possession of real property personally or
through the person’s tenant, or any other person having or
claiming title to vacant or unoccupied real property, may bring
an action against another who claims an estate or interest
therein, or a lien thereon, adverse to the person bringing the
action, for the purpose of determining such adverse claim and
the rights of the parties, respectively.

The quiet-title statute contains no statute of limitations, and respondents have not directed
us to, and we are not aware of, any caselaw that determines that a statute of limitations
specifically applies to claims under section 559.01.
Respondents argue, though, that Westman’s quiet-title claim is barred either by the
two-year statutes of limitations in sections 334.02 and 541.07(2) or by the six-year statute
7
of limitations in section 541.05, subdivision 1(2). Respondents’ argument for application
of one of these statutes of limitations relies on the Minnesota Supreme Court’s decision in
Weavewood, Inc. v. S & P Home Investments, LLC, 821 N.W.2d 576 (Minn. 2012).
In Weavewood, after foreclosure proceedings were commenced by advertisement,
the mortgagor brought common-law and statutory claims seeking, in part, declaratory
relief. 821 N.W.2d at 577-78. In reviewing the district court’s grant of summary judgment
against the mortgagor, the supreme court addressed whether statutes of limitations apply
to claims for declaratory relief. Id. at 579. The supreme court held that “statutes of
limitations apply to a declaratory judgment action to the same extent as a nondeclaratory
proceeding based on the same cause of action.” Id. at 580. It explained that this conclusion
follows from the rule that “a complaint requesting declaratory relief must present a
substantive cause of action that would be cognizable in a nondeclaratory suit.” Id. at 579
(quotation omitted). The supreme court instructed that, to determine whether a declaratory-
judgment action is timely, courts must “examine the essence or gravamen of the action to
determine which, if any, statutes of limitations apply.” Id. at 581 (quotation omitted). By
implication, the supreme court recognized that there may be claims with no governing
statute of limitations. See id.
The supreme court in Weavewood also recognized that, even when there are
applicable statutes of limitations , they do not bar relief if the complaint asserts “pure
defenses” rather than “affirmative claims for relief.” Id. The Weavewood court cited
Reynolds v. Reynolds, 458 N.W.2d 103 (Minn. 1990). Id. In Reynolds, the supreme court
concluded that a husband was not barred from claiming nonpaternity as a defense in a
8
dissolution and support action even though the time for bringing an affirmative claim for a
declaration of nonparentage had lapsed. 458 N.W.2d at 105. The Reynolds court explained
that “the statute of limitations does not bar a party from raising a pure defense” because
“[t]he general rule is that the statute of limitations may be used as a shield, not as a sword.”
Id.
While the supreme court in Weavewood ruled that statutes of limitations apply to
claims for declaratory relief, it declined to determine whether the specific claims in that
case were in fact time-barred and remanded the matter to this court. 821 N.W.2d at 581.
On remand, we first rejected the mortgagee’s argument that the mortgagor’s complaint did
not assert a pure defense because the mortgagor was not defending itself against a suit.
Weavewood, Inc. v. S & P Home Invs., LLC, No. A10-1762, 2013 WL 599125, at *2 (Minn.
App. Feb. 19, 2013). We concluded that, “in the context of a foreclosure by advertisement,
a mortgagor’s challenge to the validity of the mortgage or foreclosure sale presents a pure
defense so long as it is asserted to prevent a pending foreclosure.” Id. at *1. Next, we
reviewed each of the mortgagor’s claims to determine whether they were asserted to
prevent a pending foreclosure. Id. at *4-6. We concluded that five of the mortgagor’s
claims sought to set aside the mortgage and prevent foreclosure. Id. Those claims, we
concluded, presented pure defenses and were therefore not time-barred. Id.
Westman contends that the supreme court’s holding in Weavewood—that claims for
declaratory judgment are subject to the statutes of limitations that apply to the underlying
substantive claims—does not apply to a quiet-title action under section 559.0 1. He also
asserts that the statutes of limitations advanced by respondents—the two-year statutes of
9
limitations in sections 334.02 and 541.07(2) or, alternatively, the six-year statute of
limitations in section 541.05, subdivision 1(2)—do not apply to the claim here. Finally,
Westman asserts that, even if a statute of limitations applies, it does not bar his quiet-title
claim because the complaint asserts a pure defense.
We need not decide whether an action for declaratory relief under section 559.01 is
subject to any statute of limitations, including those advanced by respondents here,
because, we conclude, Westman’s quiet-title claim presents a “pure defense.” Westman’s
quiet-title claim is based on alleged violations of state usury statutes. Based on those
statutes, he is asking the district court to declare that the note and mortgage are void to
prevent a foreclosure. He does not seek monetary recovery for this claim. Westman’s quiet-
title claim, like the five claims in Weavewood, constitutes a pure defense to a foreclosure
action. As such, the claim is not time-barred.
We recognize that in Weavewood a foreclosure by advertisement was already
pending whereas, here , Westman brought his claim before any foreclosure action was
initiated. But whether Westman asserted his claim for declaratory relief in a complaint after
initiation of a foreclosure by advertisement or as a claim in a judicial foreclosure
proceeding, his claim would still be defensive in nature. We see no compelling reason why
Westman’s claim may not be determined at this earlier stage—when the mortgage servicer
has sent a notice of default and notice of intent to foreclose.
Because we conclude that the district court erred by granting summary judgment to
respondents on Westman’s quiet-title claim, we reverse the district court’s grant of
10
summary judgment in favor of respondents on that basis and remand to the district court
for further proceedings. We do not address the merits of Westman’s claim.2
II. The district court erred by granting summary judgment to SLS on Westman’s
MOSLA claim on the ground that Westman could not prove that he was
injured by the allegedly usurious interest rate.

We turn to Westman’s second claim, which alleges that SLS violated MOSLA.
MOSLA prohibits a residential mortgage servicer from “violat[ing] any provision of any
other applicable state or federal law regulating residential mortgage loans including,
without limitation, section[] 47.20.” Minn. Stat. § 58.13, subd. 1(8). Section 47.20, as
noted above, imposes a limit on interest rates for conventional residential loans. Minn. Stat.
§ 47.20, subd. 4a(a). “A borrower injured by a violation of the standards, duties,
prohibitions, or requirements of section[] 58.13 . . . shall have a private right of action and
the court shall award” various remedies, including damages and attorney fees. Minn. Stat.
§ 58.18, subd. 1.

2 Respondents argue that they are entitled to summary judgment for several reasons that,
while presented as part of their statute-of-limitations arguments, actually go to the merits
of the quiet-title claim. Respondents assert that, because Gulf Harbo ur is a “holder in due
course,” section 334.03 does not apply to them. They also assert that Westman is entitled
to no remedy even if the note contains a usurious rate because the note provides that any
rate determined to be unlawful will be reduced to “the permitted limit” and any
overpayments will be applied to the principal. Finally, respondents argue that, even if the
note is usurious, Westman is not entitled to have the entire debt declared void because he
was not making payments on the loan and, under the note, any usurious sums would go
toward reducing the principal. The district court did not rule on these issues. While an
appellate court “may affirm a grant of summary judgment if it can be sustained on any
grounds,” Doe v. Archdiocese of St. Paul, 817 N.W.2d 150, 163 (Minn. 2012), it is not
clear to us, on this record, that the issues were properly presented in the district court or
may be resolved based on the record developed there. We therefore do not evaluate whether
summary judgment for respondents may be appropriate based on any of these alternative
arguments.
11
The district court concluded that Westman’s MOSLA claim fails as a matter of law.
It reasoned that, because Westman did not make payments after the two- or six-year statutes
of limitations expired, he cannot show that he was “injured” by SLS’s alleged violation of
section 47.20.
In section I above, we concluded that no statute of limitations bars Westman’s quiet-
title action based on an alleged violation of section 47.20. But, in any event, Westman does
not contend that he was injured by making payments to SLS. Rather, he argues that he “was
injured by [SLS’s] notice of intent to foreclose and demands for usurious interest” because
they forced him “to retain counsel to defend his real estate.” He asserts that his “attorney
fees are the natural consequence of SLS’s actions.”
To support his argument, Westman relies on Engstrom v. Whitebirch, Inc., 931
N.W.2d 786 (Minn. 2019). In that case, the plaintiff asserted consumer-fraud claims under
the Minnesota private attorney general statute, Minnesota Statutes section 8.31,
subdivision 3a (2022).3 Engstrom, 931 N.W.2d at 789. The private attorney general statute
provides that “any person injured by a violation of” certain laws, including the consumer
fraud act, “may bring a civil action and recover damages, together with costs and
disbursements, including costs of investigation and reasonable attorney’s fees.” Minn. Stat.
§ 8.31, subds. 1, 3a (2022). The district court dismissed the plaintiff’s complaint,
concluding that the plaintiff had not alleged an “injury” because he had not paid any money
to the defendants. Engstrom, 931 N.W.2d at 789. The supreme court reversed. Id. at 791.

3 Although the Engstrom decision discussed the 2018 version of the statute, we cite the
current 2022 version because the language of the statute has not been changed.
12
Applying a dictionary definition of the word “injury” as “hurt, damage, or loss sustained,”
the court concluded that “a person who is targeted by a fraudulent demand and
consequently pays an attorney to investigate his liability in response to that demand has
been ‘injured’ within the meaning of the private attorney general statute.” Id. at 787, 791
(quotation omitted).
We agree with Westman that Engstrom is analogous. Like the private attorney
general statute, MOSLA does not define “injured,” so the dictionary definition of “injury”
may be applied. And, under that definition, the pecuniary loss from hiring a lawyer to
investigate and respond to a demand that is allegedly made in violation of law can
constitute “injury.” Here, Westman submitted evidence that he spent money on legal fees
responding to SLS’s demand for payment and notice of intent to foreclose, which were
allegedly made in violation of state usury laws. Westman therefore provided sufficient
evidence of “injury” to defeat summary judgment on this basis.
4

4 Respondents also argue that we should affirm summary judgment on the alternative
ground that “damages” are an element of a MOSLA claim and Westman failed to present
proof of damages. They cite two federal cases and one nonprecedential decision from this
court in support of their argument: Winkler v. GMAC Mortgage, LLC, No. 12-cv-46, 2012
WL 1883916 (D. Minn. May 22, 2012), Wirtz v. Specialized Loan Servicing, LLC, 987
F.3d 1156 (8th Cir. 2021), and LeMaster v. Green Tree Servicing, LLC, No. A15-0552,
2015 WL 9437640 (Minn. App. Dec. 28, 2015). We are not persuaded. First, we are not
bound by a federal court’s interpretation of Minnesota law, TCI Bus. Cap., Inc. v. Five Star
Am. Die Casting, LLC, 890 N.W.2d 423, 431 (Minn. App. 2017), or by our nonprecedential
decisions, Minn. R. Civ. App. P. 136.01, subd. 1(c). Second, we are not convinced that the
cases are persuasive here. Winkler involved an alleged MOSLA violation based on claims
of fraud and misrepresentation, which require proof of detrimental reliance, and the district
court concluded that, because such proof was absent, the MOSLA claim failed. 2012 WL
1883916, at *4. LeMaster, too, rejected the plaintiff’s MOSLA claim because she took no
action based on the defendant’s allegedly deceptive or misleading offers of loan
modification. 2015 WL 9437640, at *5. Neither Winkler nor LeMaster concludes that a
13
Accordingly, SLS is not entitled to summary judgment on the ground that Westman
was not “injured” by an alleged violation of section 47.20. We therefore reverse the district
court’s grant of summary judgment in favor of SLS on that basis and remand to the district
court for further proceedings. We do not address the merits of Westman’s MOSLA claim.
Reversed and remanded.

MOSLA claim based on an alleged violation of section 47.20 requires proof of monetary
damages— separate from “injury”—to sustain the claim. And , although Wirtz addresses the
meaning of “injured” in MOSLA, it does not address “damages” as a separate requirement.
987 F.3d at 1159-60.