First and Third Properties, LLC, 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This opinion is nonprecedential except as provided by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
A24-1326

First and Third Properties, LLC, et al.,
Respondents,

vs.

Platinum Six, LLC, et al.,
Appellants,

Tricia Beckering, et al.,
Defendants.

Filed April 21, 2025
Affirmed
Larkin, Judge

Hennepin County District Court
File No. 27-CV-21-6958

Jack E. Pierce, Bernick Lifson, P.A., Minneapolis, Minnesota (for respondents)

Kathleen M. Brennan, Stephen A. Ling, Maureen A. Foster, Johanna R. Hyman, Spencer
Fane LLP, Minneapolis, Minnesota (for appellants)

Considered and decided by Johnson, Presiding Judge; Larkin, Judge; and Schmidt,
Judge.
NONPRECEDENTIAL OPINION
LARKIN, Judge
Appellant lender challenges the district court’s award of relief to respondent
borrower, which was based on appellant’s violation of a statutory requirement when
making residential mortgage loans to borrower. Appellant lender also challenges the
2
district court’s determination that it breached the covenant of good faith and fair dealing
implicit in its contract with respondent guarantors. We affirm.
FACTS
This appeal stems from transactions between a ppellant Platinum Six , LLC,
(“Platinum”) and respondent First and Third Properties, LLC, (“F&T”).1 Tricia Beckering
is Platinum’s sole member,2 and appellant Darin Beckering is Tricia Beckering’s spouse.
Respondent Daniel Coleman manages F&T, and r espondent Hanna Coleman is Daniel
Coleman’s spouse.
In 2018 and 2019, Platinum made multiple loans to F&T , which were secured by
mortgages against five F&T-owned properties. F&T signed loan agreements, promissory
notes, and mortgages related to the loans, and Daniel and Hanna Coleman each signed a
personal guaranty for F&T’s obligations. At issue are two loans made in 2019 . Each of
the 2019 mortgages provided that F&T could “not sell, assign, lease, convey, mortgage or
otherwise encumber or dispose of either the legal or equitable title or both to all or any
portion” of the five F&T properties or interests in the properties without Platinum’s prior
written consent.
Before making the loans to F&T, Platinum did not request, review, or verify F&T’s
tax returns , bank records , payroll receipts , income, net worth , or current financial
obligations. F&T’s equity in the mortgaged properties was the sole financial resource that

1 Our summary of the relevant facts is based on the district court’s extensive posttrial
findings of fact and conclusions of law.
2 Tricia Beckering is not a party to this appeal.
3
Platinum considered in making the loans to F&T. Platinum understood that F&T intended
to improve the individual properties for potential sale and that F&T would require access
to the equity in the individual mortgaged properties through resale of the properties to pay
the amounts due under the loan agreements on May 31, 2020.3
When Platinum made the residential mortgage loans to F&T, and throughout the
term of the loan s and thereafter, Platinum was not licensed in Minnesota as a residential
loan originator. Additionally, Platinum did not hold a license from the Commissioner of
Commerce as a residential mortgage servicer.
In March 2020, F&T attempted to refinance its debt to Platinum. Platinum provided
final payoff amounts two days before the scheduled closing that were significantly higher
than amounts it had previously provided . The conflicting payoff information was a
material factor that prevented F&T from refinancing. After the dispute over payoff
calculations, Platinum informed F&T that Platinum would consider and provide payoff
information for further refinancing efforts only if the proposed transaction would fully pay
Platinum all of the amounts due under the loan agreement s. Because F&T would need to
sell more than one property to fully satisfy the amounts due under the loan s, Platinum

3 In one finding of fact, the district court stated that the amounts were due on May 31, 2019,
but in other findings of fact, the district court stated that they were due on May 31, 2020.
It appears that reference to a due date of May 31, 2019 is a clerical mistake, which may be
corrected at any time. See Minn. R. Civ. P. 60.01 (“Clerical mistakes in judgments, orders,
or other parts of the record and errors therein arising from oversight or omission may be
corrected by the court at any time upon its own initiative or on the motion of any party and
after such notice, if any, as the court orders.”).
4
effectively prevented F&T from accessing the equity in any one property to pay down the
loans.
On May 31, 2020, F&T defaulted on the loans. Under the loan terms, the interest
rate increased to 20% per year on the unpaid principal, and Platinum imposed monthly late
fees.
Litigation ensued. The parties’ claims and counterclaims were tried to the district
court over five days. In resolving those claims, the district court found that F&T defaulted
on the loan agreements. However, the district court also found that Platinum violated a
statutory provision that requires a residential mortgage originator to verify a borrower’s
reasonable ability to pay before making a residential mortgage loan and that Platinum’s
violation injured F&T. Nonetheless, the district court determined that F&T should remain
liable for the outstanding principal and granted Platinum a decree of foreclosure based on
F&T’s default. But the district court eliminated the increased interest rate and penalties
stemming from F&T’s default , awarded F&T i ts reasonable attorney fees , and denied
Platinum’s contractual attorney fees based on Platinum’s statutory violation and the
resulting injury to F&T.
The district court also granted relief to the Colemans based on its determination that
Platinum breached the covenant of good faith and fair dealing implied in the guaranty
between Platinum and the Colemans. The district court ruled that the Colemans ’ liability
on the guaranty would be co -extensive with F&T’s reduced liability under the court’s
order.
Platinum appeals.
5
DECISION
This appeal stems from a violation of the Minnesota Residential Mortgage
Originator and Servicer Licensing Act, Minn. Stat. §§ 58.01-.23 (2024) (“the Act”). The
relevant portions of the Act follow.
Minn. Stat. § 58.18, subd. 1, provides:
A borrower injured by a violation of the standards,
duties, prohibitions, or requirements of sections 58.13, 58.136,
58.137, 58.16, and 58.161 shall have a private right of action
and the court shall award:
(1) actual, incidental, and consequential
damages;
(2) statutory damages equal to the amount of all
lender fees included in the amount of the principal of the
residential mortgage loan as defined in section 58.137;
(3) punitive damages if appropriate, and as
provided in sections 549.191 and 549.20; and
(4) court costs and reasonable attorney fees.

(Emphasis added.)
Minn. Stat. § 58.13, subd. 1(a)(24) provides, in relevant part:
No person acting as a residential mortgage
originator . . . shall:

. . . .

(24) make, provide, or arrange for a residential
mortgage loan without verifying the borrower’s reasonable
ability to pay the scheduled payments of the following, as
applicable: principal; interest; real estate taxes; homeowner ’s
insurance, assessments, and mortgage insurance premiums. . . .
For all residential mortgage loans, the borrower ’s income and
financial resources must be verified by tax returns, payroll
receipts, bank records, or other similarly reliable documents.

(Emphasis added.)
6
On appeal, Platinum does not dispute that it violated the Act by making the
underlying loans without verifying F&T’s reasonable ability to pay the financial
obligations resulting from the amounts due under the loan agreements . Instead, Platinum
contends that the district court erred as follows: (1) by determining that F&T was a
“borrower injured” under section 58.18, (2) by determining that Platinum breached the
implied covenant of good faith and fair dealing, and (3) by awarding F&T equitable relief,
by awarding F&T’s reasonable attorney fees, and by denying Platinum’s contractual
attorney fees. We address each contention in turn.
I.
Platinum contends that the district court erred by determining that F&T was an
injured borrowe r—as required under section 58.18, subd ivision 1 of the Act —because
there was no evidence that F&T was harmed by Platinum’s violation of the Act. Platinum
argues that “[s]imply pointing to a violation of the statute, without more, is insufficient” to
establish an injury. Platinum further argues that section 58.18, by its terms, requires some
concrete injury or damage that has a nexus to the violative conduct.
The district court found—and Platinum does not dispute on appeal that—it violated
Minn. Stat. § 58.13, subd. 1(a)(24), which prohibits a residential mortgage originator from
making a residential mortgage loan without first verifying the borrower’s reasonable ability
to pay. The district court also determined that F&T sustained an injury as a result of
Platinum’s violation. The district court explained the injury, and the nexus between the
violation and the injury, as follows:
7
F&T’s equity in the five mortgaged properties was the
sole actual financial resource Platinum considered in making
the loans to F&T and entering the Loan Documents with F&T
and the Colemans.

. . . .

Platinum’s issuance of the residential mortgage loans
evidenced by the Loan Documents without verification of
resources other than the equity in the cross -mortgaged
properties and F&T’s actual lack of other income and resources
to repay the amounts due was a significant factor in F&T’s
ultimate default on May 31, 2020.

. . . .

The issuance of the Loan Documents cross mortgaging
the properties with terms precluding any transactions without
Platinum’s approval, without verification that F&T had
sufficient resources other than the equity in the mortgaged
properties harmed F&T. F&T suffered an immediate injury in
the impairment of its property rights in each of cross -
mortgaged properties, specifically the right to sell the
properties without interference or approval of Platinum.
Ultimately, when F&T lacked other resources to repay t he
principal amounts due on May 31, 2020, F&T sustained
additional harms in the form of the increased interest rate on
the unpaid principal, late fees, and obligations to pay
additional expenses including [attorney] fees. Indeed,
Platinum now asserts it is entitled to more than $1,234,303.48
in unpaid principal, interest and late fees (not inclusive of
[attorney] fees and expenses) which represents a more than
75% increase to the amount due on May 31, 2020.

(Emphasis added and omitted.)
Platinum argues that the district court erred in reasoning that the impairment of
F&T’s property rights constitutes an injury because under that reasoning “every residential
mortgage or loan arrangement in the State could be considered injurious to the borrower
under the Act.” But, as the district court explained, the injury in this case was not mere ly
8
the encumbrance of F&T’s equity in the properties . T he injury was F&T’s default as a
result of its inability to access its equity in the mortgaged properties and the ensuing
“imposition of substantial financial penalties under the terms of the unlawfully issued Loan
Documents.” And, as the district court reasoned, F&T’s inability to pay Platinum without
accessing its equity in the mortgaged properties —and the resulting financial harm to
F&T—stemmed from Platinum’s failure to verify that F&T had a reasonable ability to pay
its loan obligations from sources other than its equity in the mortgaged properties.
Platinum also argues that the district court erred in reasoning that F&T was entitled
to rely on Platinum to verify F&T’s ability to repay the loans. Platinum argues that “it was
not reasonable for F&T, a sophisticated real estate investor with full knowledge of its
financial condition and the 2019 Loan terms, to rely on Platinum for verification of its
ability to repay the 2019 Loans.” This argument is at odds with the verification requirement
of Minn. Stat. § 58.13, subd. 1(a)(24), which makes no except ion for sophisticated
borrowers.
Platinum further argues that it had no reason to doubt F&T’s ability to repay the
loans because F&T fully repaid a previous loan from Platinum. This argument is also at
odds with Minn. Stat. § 58.13, subd. 1(a)(24). Although the statute authorizes reliance on
“criteria other than the borrower ’s income and financial resources to establish the
borrower’s reasonable ability to repay the residential mortgage loan ,” reliance “on any
single item . . . is not sufficient to establish the existence of the income or resources when
verifying the reasonable ability to pay.” Minn. Stat. § 58.13, subd. 1(a)(24).
9
In sum, the district court did not award relief to F&T based only on Platinum’s
violation of the Act. The district court awarded relief because Platinum’s statutory
violation resulted in financial harm to F&T . And Platinum’s arguments suggesting it
should not be liable for that violation are inconsistent with the Act.
II.
Platinum contends that the district court erred in determining that it breached the
implied covenant of good faith and fair dealing.
“Under Minnesota law, every contract includes an implied covenant of good faith
and fair dealing . . . .” In re Hennepin Cnty. 1986 Recycling Bond Litig., 540 N.W.2d 494,
502 (Minn. 1995). The covenant requires that “one party not unjustifiably hinder the other
party’s performance of the contract.” Id. (quotation omitted). “To establish a violation of
this covenant, a party must establish bad faith by demonstrating that the adverse party has
an ulterior motive for its refusal to perform a contractual du ty.” Minnwest Bank Cent. v.
Flagship Props. LLC, 689 N.W.2d 295, 303 (Minn. App. 2004).
As an initial matter, Platinum notes that F&T did not include a claim alleging breach
of the implied covenant of good faith and fair dealing in its complaint. F&T responds that
even though it did not expressly allege a breach of the implied covenant in its complaint,
the issue was litigated by consent of the parties.
Minn. R. Civ. P. 15.02 provides:
When issues not raised by the pleadings are tried by
express or implied consent of the parties, they shall be treated
in all respects as if they had been raised in the pleadings. Such
amendment of the pleadings as may be necessary to cause them
to conform to the evidence and to raise these issues may be
10
made upon motion of any party at any time, even after
judgment; but failure to amend does not affect the result of a
trial of these issues.

A claim that Platinum breached the implied covenant of good faith and fair dealing
was raised and addressed on the merits in several district court filings. For example, F&T
raised the claim in its memorandum opposing Platinum’s motion for summary judgment ,
and Platinum acknowledged the claim in its summary-judgment reply memorandum. F&T
also raised the claim in its trial memorandum. And the claim was raised in a joint statement
of the case that the parties filed in district court. Finally, Platinum acknowledged the claim
in its proposed findings of fact , noting that an issue for trial was whether or not Platinum
had breached the implied covenant of good faith and fair dealing . On this record, we are
satisfied that F&T’s claim for breach of the implied covenant of good faith and fair dealing
was litigated by consent of the parties.
As to the merits of the claim, the district court noted that F&T and the Colemans
each asserted that Platinum violated the implied covenant of good faith and fair dealing as
a defense to Platinum’s breach -of-contract claims against F&T and the Colemans. The
district court declined to address F&T’s argument that Platinum breached the implied
covenant because “any remedy would be consistent with the equitable relief” that the court
granted F&T based on Platinum’s violation of the Act . Thus, the district court addressed
the issue only in the context of whether Platinum breached the implied covenant “in
relation to the [Colemans’] Guaranty.”
The Guaranty contains a “Waiver of Defenses” that provides:
11
OTHER THAN CLAIMS BASED [UP]ON THE
FAILURE OF THE LENDER TO ACT IN A
COMMERCIALLY REASONABLE MANNER,
GUARANTOR WAIVES EVERY PRESENT AND FUTURE
DEFENSE (OTHER THAN THE DEFENSE OF PAYMENT
IN FULL), CAUSE OF ACTION, COUNTERCLAIM OR
SETOFF [WHICH] GUARANTOR OR THE BORROWER
MAY NOW HAVE OR HEREAFTER MAY HAVE TO ANY
ACTION BY LENDER IN ENFORCING THIS GUARANTY
OR ANY OF THE LOAN [DOCUMENTS]. THIS
PROVISION IS A MATERIAL INDUCEMENT FOR THE
LENDER GRANT [ING] ANY FINANCIAL
ACCOMMODATION TO THE BORROWER.

The district court found that:
The Guaranty includes an implied covenant of GFFD
[(good faith and fair dealing)] that the underlying Loans, Notes
and Mortgages Platinum entered with F&T upon which the
Guaranty is based were not issued unlawfully under Minnesota
law governing the transactions. The Guaranty also includes an
implied covenant of GFFD that Platinum would not act in bad
faith to impair F&T’s ability to pay the amounts due, which
under the circumstances of the Loan Documents included that
it would not act unreasonably to preclude F&T from being able
to access the equity in the mortgaged properties individually in
relation to payment obligations.

. . . .

. . . As a result of Platinum’s breach of the implied covenant of
GFFD and commercially unreasonable conduct, the “waivers”
of defenses and set offs under the Guaranty do not apply. The
Colemans are entitled to assert this defense and claims for set-
off of the obligations under the Guaranty in relation to the
equitable relief awarded to F&T.

Under the Guaranty, the Colemans remain jointly and
severally liable for the amounts owed by F&T under this Order
and any deficiency judgment following the foreclosure sales of
the properties.

(Emphasis added.)
12
In sum, the district court identified two breaches of the implied covenant of good
faith and fair dealing by Platinum: (1) Platinum issued the underlying loans in violation of
the Act and (2) Platinum acted in bad faith to impair F&T’s ability to pay the amounts due.
Although the district court found that Platinum breached the implied covenant in
two distinct ways , Platinum assigns error only to the district court’s determination
regarding the second breach. We need not consider Platinum’s assignment of error to the
district court’s determination that Platinum acted in bad faith to impair F&T’s ability to
pay the amounts due because, for the reasons that follow, we conclude that the district
court’s alternative , unchallenged determination that Platinum breached the implied
covenant by unlawfully issuing the loans is an independent and sufficient basis to sustain
the district court’s grant of relief to the Colemans. See Hunter v. Anchor Bank, N.A., 842
N.W.2d 10, 17 (Minn. App. 2013) (affirming grant of summary judgment where district
court provided two independent and sufficient grounds for the grant, and appellant did not
challenge one of the grounds), rev. denied (Minn. Mar. 18, 2024).
The district court noted:
Platinum argues that any relief under [the Act] is limited to
F&T and that it is entitled under the terms of the Guaranty to
separately enforce against the Colemans personally all of the
contractual amounts it claims against F&T under the Loan
Documents regardless of the Court’s issuance of equitable
relief to F&T in relation to . . . those obligations.

The district court rejected that argument, reasoning:
[I]interpreting borrowers to exclude those who have
obligations under a personal guaranty would substantially
undermine the intent of the legislature and public policy
interests in relation to protections for transactions involving
13
residential mortgages. If remedies including damages or
equitable relief for a borrow[er] do not apply to a guarantor for
injuries for the unlawful making of a residential mortgage loan
(whether the borrow[er] or guarantor are the same [or] different
people or entities) [the Act’s] remedies, as broad as they are,
could be considered illusory.

Based on the district court’s statements regarding the purpose of the Act, we are
confident that the district court would have granted Colemans the same relief (i.e., reducing
the Colemans’ liability under the loans so it is co-extensive with F&T’s liability ) based
solely on its determination that Platinum breached the implied covenant by issuing the
loans in violation of the Act. Because there is an unchallenged independent and sufficient
ground for the district court’s grant of relief to the Colemans, any error stemming from the
district court’s second determination that Platinum acted in bad faith to impair F&T’s
ability to pay the amounts due is harmless and must be ignored. See Minn. R. Civ. P. 61
(indicating that harmless error must be ignored).
III.
Platinum contends that the district court abused its discretion by awarding F&T
equitable relief in the form a reduction in the interest rates and penalties on the loans, by
awarding F&T’s reasonable attorney fees, and by denying Platinum’s contractual right to
attorney fees.
The district court awarded equitable relief in part as follows:
As equitable relief, the Court precludes Platinum from
benefiting from enforcing its strict legal rights under the Loan
Documents following F&T [’s] default from its inability to
repay the amounts due on May 31, 2020. Specifically,
Platinum is precluded from obtaining after May 31, 2019 more
than reasonable interest on the principal loaned amounts
14
($600,000 and $100,000). Reasonable interest is determined
by the Court to be the default rate on contractual debt
obligation under Minn. Stat. § 334.01 of 6% per annum.
Platinum is precluded from recovering monthly or other late
fees after May 31, 2020[,] and from recovering under the Loan
Documents any additional contractual costs, expenses and
[attorney] fees in relation to the residential mortgage loans.

Because Platinum remains entitled under the Loan
Documents to recover the loaned amounts and reasonable
interest from F&T, and against the mortgaged properties, the
Court will grant Platinum’s claim for foreclosure by action on
the properties. As further equitable relief, the parties will bear
their own [attorney] fees and expenses in relation to the
foreclosure sale.

In challenging the district court’s approach, Platinum first argues that equitable
relief was not available to F&T as a matter of law. In the alternative, Platinum argues that
the district court abused its discretion in fashioning equitable relief. We address each issue
in turn.
Availability of Equitable Relief
Platinum argues that equitable relief was not available to F&T as a matter of law
because there was no evidence showing that F&T was harmed or injured by Platinum’s
violation of the Act. Platinum repeats its argument that, because F&T was not a “borrower
injured,” F&T was not entitled to relief under Minn. Stat. § 58.18, subd 2. We have already
rejected that argument and do not discuss it further in this context.
Platinum also argues that equitable relief was not available to F&T as a matter of
law because F&T did not plead a claim under Minn. Stat. § 8.31 (2024), Minnesota’s
private attorney general statute . Platinum relies on a provision in the Act that states: “A
borrower injured by a violation of ” certain sections of the Act “also may bring an action
15
under section 8.31. A private right of action by a borrower under this chapter is in the
public interest.” Minn. Stat. § 58.18, subd. 2 (emphasis added). The district court cited
section 8.31 as the basis for its award of equitable relief—including its award of F&T’s
reasonable attorney fees—even though F&T did not plead a claim for relief under section
8.31.
Although F&T did not explicitly plead a claim for relief under section 8.31 in its
complaint, it requested “any and all further relief available, such as any relief [the district
court] may consider equitable or appropriate.” In addition, F&T’s request for equitable
relief was contained in the joint statement of the case that the parties filed with the district
court. In fact, at trial, Platinum raised the unclean-hands doctrine as a defense to F&T’s
request for equitable relief .4 This record shows that F&T’s general request for equitable
relief, including relief under section 8.31, was litigated with Platinum’s consent. See Minn.
R. Civ. P. 15.02.
Abuse of Discretion
“[B]ecause the district court in this case weighed the equities and made its decision
based on disputed factual findings after a court trial, we review the district court’s equitable
determinations for abuse of discretion.” Herlache v. Rucks, 990 N.W.2d 443, 450 n.4
(Minn. 2023). A district court abuses its discretion if its ruling is “based on an erroneous

4 The district court rejected that defense stating, “When the Court considers and weighs all
of the wrongful conduct by all of the parties and considers the equities between all of those
parties arising from the wrongful conduct, the equities weigh against imposing the doctrine
of unclean hands against F&T . . . .”
16
view of the law” or is “against the facts in the record.” City of North Oaks v. Sarpal, 797
N.W.2d 18, 24 (Minn. 2011).
Platinum challenges the district court ’s reliance on the doctrine of unjust
enrichment, arguing that it was based on an erroneous view of the law and contrary to the
facts.5
The supreme court recently summarized the doctrine of unjust enrichment:
Unjust enrichment is an equitable doctrine that allows a
plaintiff to recover a benefit conferred upon a defendant when
retention of the benefit is not legally justifiable . Claims for
unjust enrichment do not lie simply because one party benefits
from the efforts or obligations of others. Rather, the plaintiff
must show that the defendant was enriched illegally or
unlawfully, or in a manner that is morally wrong. The measure
of relief for an unjust enrichment claim is based on what the
person allegedly enriched has received, not on what the
opposing party has lost.

5 Although the district court relied on the doctrine of unjust enrichment, it noted:

The Court believes equitable relief under alternative
equitable theories would also be appropriate including: (1)
injunctive relief enjoining Platinum from enforcement of its
strict contractual rights in relation to interest, late fees and
additional costs, expenses and attorneys’ fees; (2) declaring the
unlawfully issued Loan Document voidable by F&T and
providing for Platinum to recover just payment through equity
for the amounts loaned (this approach could leave Platinum
without recourse against the mortgaged properties); and/or (3)
the doctrine of equitable restitution. Because the Court
believes the doctrine of unjust enrichment is established and
sufficiently flexible to provide sufficient and adequate
equitable relief, the Court does not analyze other alternative
equitable relief.

(Citation omitted.)
17
Herlache, 990 N.W.2d at 450 (quotations and citations omitted).
Platinum argues that the district court “overlooked established Minnesota law ”
providing that “a party to a contract cannot be unjustly enriched by asserting or enforcing
its contractual rights.” Platinum asserts that it was simply enforcing its contractual rights.
Platinum is correct that equitable relief based on the doctrine of unjust enrichment
generally “cannot be granted where the rights of the parties are governed by a valid
contract.” U.S. Fire Ins. Co. v. Minn . State Zoological Bd., 307 N.W.2d 490, 497 (Minn.
1981). But in this case, we are confronted with a contract that, although valid, is voidable.
Given that context, several principles inform our analysis.
Although “[i]llegal contracts are commonly spoken of as void,” that proposition “is
not generally accurate and, if true under all circumstances, it would lead to unfortunate
consequences, for it might protect a guilty defendant from paying damages to an innocent
plaintiff.” Vercellini v. U.S.I. Realty Co. , 196 N.W. 672, 672 ( Minn. 1924). Thus, a
distinction is made between “void” and “voidable” contracts. See Logan v. Panuska, 293
N.W.2d 359, 363 (Minn. 1980).
Transactions that do not comply with an applicable statute are generally considered
voidable and not void. See Greer v. Kooiker , 253 N.W.2d 133, 138 & n.2 (Minn. 1977)
(explaining that statute of frauds, which states that certain contracts “shall be void,”
actually renders them voidable (quotation omitted)); In re Sprain ’s Est., 272 N.W. 779,
781 (Minn. 1937) (holding that sale of property in probate proceeding in violation of statute
stating any sale “made contrary to the provisions of this section shall be void,” was voidable
rather than void (quotation omitted)). But the supreme court has stated, “We do not believe
18
the void -voidable rule should prevent a court from acting fairly by applying equitable
principles . . . .” Logan, 293 N.W.2d at 363.
Here, the loan agreements are voidable, meaning they are valid unless they are
voided. See Spartz v. Rimnac, 208 N.W.2d 764, 767 ( Minn. 1973) (“A voidable contract
is valid and binding until it is avoided by the party entitled to avoid it.” (quotation omitted)).
On the one hand, b ecause the loan agreements are valid, equitable relief generally would
not be available under the unjust-enrichment doctrine as a remedy for the injury caused by
Platinum’s violation of the Act. On the other hand, a remedy for that injury could have
included voiding the loan agreements. We do not believe that the distinction between void
and voidable contracts should prevent the application of a more measured equitable
response in this situation. See Logan, 293 N.W.2d at 360-61 n.1, 364 (holding that
“equitable estoppel is a valid defense in an action for rescission” under a “Blue Sky Law”
that generally prohibited the sale of securities that were not registered in compliance with
certain statutory requirements).
The district court ’s reasoning reflects the distinction between void and voidable
contracts and the idea that the distinction should not foreclose equitable relief in an
appropriate case. The district court explained:
[A]lthough violation of [the Act] occurs when an Originator
makes a residential mortgage loan without verifying the
borrower’s reasonable income and financial resources (other
than equity in the property), a determination that this
automatically renders the contracts related to the transa ctions
void as against public policy is not warranted. . . . [T]he broad
remedies available under [the Act] t hat allow the Court to
fashion appropriate equitable relief on a case by case basis [are]
sufficient to protect the public policy interests of [the Act].
19

Essentially, the district court reasoned that it could provide a remedy for Platinum’s
violation of the Act in one of two ways: (1) void the loan agreements or (2) leave the loan
agreements in effect with certain equitable modifications intended to prevent Platinum
from being unjustly enriched by its unlawful loan s to F&T. Under the circumstances, the
district court did not abuse its discretion by granting equitable relief to prevent Platinum’s
unjust enrichment, even though the parties’ rights are generally governed by a contract.
Finally, Platinum argues that the district court’s award of equitable relief was
“contrary to the facts in the record .” Specifically, Platinum argues that the district court
“failed to account for the substantial financial benefits that F&T received during this
litigation,” including rent s from the mortgaged properties and insurance proceeds for
damage to one of the mortgaged properties. But the district court’s findings do not indicate
that the amount of any rents received by F&T or the amount of any insurance proceeds
retained by F&T netted an amount that rendered the district court’s equitable award a
windfall for F&T.6 We therefore discern no abuse of discretion.
Platinum further argues that the district court’s award of attorney fees to F&T
“effectively offset all of the reduced interest and a significant amount of the principal ,”
resulting in an interest-free loan for F&T and for giving a portion of the principal —all to
Platinum’s detriment. Platinum asserts that F&T received a “windfall” as a result of the
attorney-fee award. Platinum’s argument is unavailing for the following two reasons.

6 Platinum did not move for amended findings of fact. See Minn. R. Civ. P. 52.02 (stating
that on proper motion, a district court may “amend its findings or make additional
findings”).
20
First, the attorney-fee award was mandated by the Act: “the court shall
award . . . court costs and reasonable attorney fees” to a borrower injured by a violation of
the Act . Minn. Stat. § 58.18, subd. 1(4). Second, the attorney -fee award was not a
“windfall” for F&T. It compensated F&T for the reasonable attorney fees it incurred as a
result of its injury from Platinum’s issuance of a loan in violation of the Act.7 We therefore
do not consider the amount of F&T’s attorney-fee award when reviewing the relief that
was awarded on equitable grounds, that is, the reduction of interest rate s, elimination of
default penalties, and denial of Platinum’s contractual attorney fees.
As to the district court’s reduction of interest rates and elimination of default
penalties, we discern no abuse of discretion. Again, t he district court could have voided
the loan agreements. Instead, after considering the equities to both sides, the district court
left the loan agreements in effect and eliminated the higher interest rate and financial
penalties that were triggered by F&T’s default.
As to the district court’s denial of Platinum’s contractual attorney fees, the district
court reasoned that Platinum should not benefit from enforcement of “its strict legal rights”
under the loan agreements following F&T’s default, including “[attorney] fees in relation
to the residential mortgage loans .” Platinum does not show that the district court abused
its discretion by refusing to allow Platinum to benefit from its strict legal rights under the
loan agreements when Platinum made the loans in violation of the Act and F&T was injured
as a result.

7 Platinum does not contest the district court’s determination of the amount of fees awarded
to F&T.
21
In sum, Platinum has not established prejudicial error justifying relief.
Affirmed.