NO. A07-0210

State of Minnesota

In Court of Appeals DEUTSCIIE BANK NATIONAL TRUST COMP ANY,

AS TRUSTEE OF AMERIQUEST MORTGAGE SECURITIES, INC., ASSET BACKED PASS-THROUGH

CERTIFICATES SERIES 2002-13, A UNITED ST.ATES CORPORATION,

Appellant, vs.

DEBORAH K. PETERSEN AND GUYL. PETERSEN, HUSB}.i..l'TD AND WIFE,

MERCHANTS BONDING COMP ANY, Respondents.

BRIEF AND APPENDIX OF RESPONDENT MERCHANTS BONDING COMPANY

GARY B. BODELSON, ESQ .Gary B. Bodelson (#120923) 247 Third Avenue South Minneapolis, Minnesota 55415 (612) 332-4853

Attorney for Plaintiff/ Appellant Deutsche Bank National T rustCompany, as T rustee of Ameriquest Mortgage Securities, Inc. Asset Backed Pass-Through Certificates, Series 2003-13

DEBORAH K . PETERSEN GUY L. PETERSEN

Defendants/Respondents Pro Se

GURSTEL, STALOCH & CHARGO, P.A. Mitchel C. Chargo (#237565) Heather A. Spindler (#322945) 401 North Third Street, Suite 590 Minneapolis, Minnesota 55401 (612) 664-8200

Attorneys far Defendant/Respondent Merchants Bonding Company

2007 LEGAL PHONE 339-9518

The appendix to this brief is not available for online viewing as specified in the Minnesota Rules of Public Access to the Records of the Judicial Branch, Rule 8, Subd. 2(e)(2).

TABLE OF CONTENTS

PAGE

TABLE OF AUTHORITIES ............................................................................................. iii

STATEMENT OF LEGAL ISSUES .................................................................................. 1

STATEMENT OF THE CASE ........................................................................................... 2

STATEMENT OF THE FACTS ......................................................................................... 4

STANDARD OF REVIEW ................................................................................................ 6

ARGUMENT ...................................................................................................................... 8

I. THE DISTRICT COURT PROPERLY CONCLUDED THAT RESPONDENT HAS A VALID JUDGMENT LIEN WHICH HAS PRIORITY OVER APPELLANT'S MORTGAGE BECAUSE RESPONDENT'S LIEN WAS DOCKETED IN ANOKA COUNTY TWELVE DAYS PRIOR TO APPELLANT RECORDING THE MORTGAGE ................................................................................................ 8

IL THE DISTRICT COURT PROPERLY CONCLUDED THAT APPELLANT DOES NOT HAVE STANDING TO ASSERT THE HOMESTEAD EXEMPTION, AND, EVEN IF IT DID, IT IS IRRELEVANT AS THE PETERSENS HAVE WANED THEIR HOMESTEAD EXEMPTION RIGHTS .................................................... 14

CONCLUSION ................................................................................................................. 18

APPENDIX AND INDEX ................................................................................................ 20

1

APPENDIX AND ITS INDEX

PAGE

Notice of Pendency .......................................................................................................... R.1

Republic Leasing Corp. v. Fames, 2000 Minn. App. LEXIS 390 (Minn. Ct. App., April 25, 2000) .......................................................................... R.2

Indemnity Agreement. ...................................................................................................... R.4

11

TABLE OF AUTHORITIES

PAGE

CASES

Am. Family Ins. Group v. Schroedl, 616 N.W.2d 273 (Minn. 2000) ........................................................................................ 6

Amaral v. St. Cloud Hosp., 598 N.W.2d 379 (Minn. 1999) .................................................................................... 6, 7

Argonaut Insurance Co. v. Cooper, 261 N.W.2d 743 (Minn. 1978) ...................................................................................... 16

Bank of Kansas v. Davison, 253 Kan. 780, 861 Pac.2d 806 (1993) ........................................................................... 15

Baumann v. Chaska Building Center, Inc., 621 N.W.2d 795 (Minn. Ct. App. 2001) ................................................................. 12, 14

DLH, Inc. v. Russ, 566 N.W.2d 60 (Minn. 1997) .......................................................................................... 6

Fabio v. Bellomo, 504 N.W.2d 758 (Minn. 1993) ........................................................................................ 6

Ferguson v. Kurnler, 27 Minn. 156, 6 N.W. 618 (1880) ................................................................................. 15

Gould v. City of St. Paul, 120 Minn. 172, 139 N.W. 293 (1913) ....................................................................... 1, 10

Home Lumber Co. v. Kopfinann Homes, 535N.W.2d302(Minn.1995) ...................................................................................... 10

Host v. Host, 497 N.W.2d 617 (Minn. Ct. App. 1993) ..................................................................... 1, 9

In re Jolmson, 207 B.R. 878 (D.Minn. 1997) ....................................................................................... 15

In re Kasden, 84 F.3d 1104 (D.Minn. 1995) ....................................................................................... 15

ll1

In re: Certain Pharmaceuticals and Proceedings of Northland Providers, Inc., 78 F.Supp.2d 954 (D.Minn. 1999) .............................................................................. 1, 9

Kipp v. Sweno, 2003 Minn. App. LEXIS 936 (Minn. Ct. App., Aug. 5, 2003) ..................................... 12

Kipp v. Sweno, 629 N.W.2d 468 (Minn. Ct. App. 2001) ............................................................. 9, 12, 13

Lefto v. Hoggsbreath Enters., Inc., 581 N.W.2d 855 (Minn. 1998) ........................................................................................ 6

Lowe v. Reierson, 201 Minn. 280,276 N.W. 224 (1937) ..................................................................... 10, 12

Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 106 S.Ct. 1348 (1986) .............................................................................. 6

Mulroy v. Sioux, 165 Minn. 295, 206N.W. 461 (1985) ........................................................................... 15

Oldewurtel v. Redding, 421 N.W.2d 722 (Minn. 1988) .................................................................................... 1, 9

Republic Leasing Corp. v. Fames, 2000 Minn. App. LEXIS 390 (Minn. Ct. App., April 25, 2000) .................................. 16

Ripley v. Piehl, 700 N.W.2d 540 (Minn. Ct. App. 2005) ....................................................................... 10

State by Cooper v. French, 460 N. W.2d 2 (Minn. 1990) ............................................................................................ 6

Stewart v. Smith, 36 Minn. 82, 30 N.W. 430 (1886) ................................................................................. 11

Wallin v. Letourneau, 534 N.W.2d 712 (Minn. 1995) ........................................................................................ 6

STATUTES

Minn. Stat.§ 507.34 (2006) ........................................................................................ 10, 11

Minn. Stat.§ 510.01 .......................................................................................... 3, 14, 15, 17

Minn. Stat.§ 510.02 (2006) ........................................................................................ 11, 12

lV

Minn. Stat.§ 548.09 ...................................................................................................... 1, 10

Minn. Stat. § 548.09, subd. 1 .................................................................................. 9, 12, 13

OTHER AUTHORITIES

Dunnell Minn. Digest 2d Liens§ 2.19 (4th ed. 2006) ....................................................... 16

Dunnell Minn. Digest 2d Liens§ 4.00 (4th ed. 2006) ....................................................... 10

V

STATEMENT OF LEGAL ISSUES

I. DID THE DISTRICT COURT PROPERLY CONCLUDE THAT THE LIEN OF RESPONDENT'S JUDGMENT, WHICH WAS DOCKETED IN ANOKA COUNTY ON NOVEMBER 26, 2003, HAS PRIORITY OVER APPELLANT'S MORTGAGE, WHICH WAS RECORDED IN ANOKA COUNTY ON DECEMBER 8, 2003?

The District Court held that based upon the plain language contained in Minn. Stat. § 548.09, Respondent's judgment against the Petersens attached to their real property in Anoka County at the time the judgment was docketed in Anoka County. The District Court held that under applicable Minnesota law, the rule applied to determine the priority ofliens is "first in time is first in right."

Apposite authority: • Gould v. City of St. Paul, 120 Minn. 172, 176, 139 N.W. 293,

294 (1913) • Host v. Host, 497 N.W.2d 617 (Minn. Ct. App. 1993) • Oldewurtel v. Redding, 421 N.W.2d 722, 726 (Minn. 1988) • In re: Certain Pharmaceuticals and Proceedings of Northland

Providers, Inc., 78 F.Supp.2d 954, 962 (D.Minn. 1999) • Minn. Stat.§ 548.09

IL SHOULD THE DISTRICT COURT'S ENTRY OF JUDGMENT IN FAVOR OF RESPONDENT BASED UPON THE DETERMINATION THAT RESPONDENT'S JUDGMENT LIEN HAS PRIORITY OVER APPELLANT'S MORTGAGE BE UPHELD?

The District Court held that because Respondent's judgment was docketed prior to Appellant's Mortgage being recorded, that there can be no conclusion other than that Respondent's lien has priority over Appellant's mortgage. Accordingly, Respondent was entitled to judgment as a matter of !aw.

Apposite Authority: • Host v. Host, 497 N.W.2d 617 (Minn. Ct. App. 1993) • Oldewurtel v. Redding, 421 N.W.2d 722, 726 (Minn. 1988) • In re: Certain Pharmaceuticals and Proceedings of Northland

Providers, Inc., 78 F.Supp.2d 954,962 (D.Minn. 1999) • Minn. Stat. § 548.09

I

STATEMENT OF THE CASE

This action arises out of a judgment obtained by Respondent Merchants Bonding

Company (hereinafter referred to as "Respondent") on August 11, 2003, against

Respondents Deborah K. and Guy L. Petersen (hereinafter collectively referred to as "the

Petersens") in the amount of $98,744.24, which judgment was subsequently docketed on

November 26, 2003 in Anoka County. (A.54) On November 21, 2003, the Petersens

executed and delivered a mortgage in the amount of $382,500.00 (hereinafter referred to

as "the Mortgage") to Ameriquest Mortgage Company (hereinafter referred to as

"Ameriquest") securing the Subject Property. The Mortgage was not recorded until

December 8, 2003. (A.30-A.50)

On or about February 2, 2005, Ameriquest assigned the Mortgage to Appellant

Deutsche Bank National Trust Company (hereinafter referred to as "Appellant"). (A.51-

A.53) The assignment was subsequently recorded with Anoka County on February 16,

2005. Id. On February 16, 2005, Counsel for Appellant executed and recorded a Notice of

Pendency of Proceeding to Foreclose Mortgage in connection with Appellant's desire to

initiate a foreclosure of the Mortgage by advertisement. (R.1)

Appellant commenced suit on or about October 12, 2005, against the Petersens

and Respondent seeking a determination as to whether Appellant's interest in the Subject

Property had priority over Respondent's judgment lien. (A. 1.-A.2) Appellant moved for

summary judgment on October 9, 2006. (A.7-A.8) The District Court1 denied Appellant's

motion. (A.66-A.70 and A.71-A.76) However, the District Court granted judgment to

1 The Honorable Jenny Walker Jasper, Anoka County District Court

2

Respondent on the grounds that (i) Appellant is not within the protections of Minn. Stat.

§ 510.01 as the protection afforded by the homestead exemption contained therein covers

the judgment debtor/homeowner and not the mortgagee; (ii) that Respondent's judgment

against the Petersens attached to the Petersens' real property in Anoka County at the time

the judgment was docketed in Anoka County; and, (iii) that Respondent's lien against the

Petersens' homestead takes priority over the Mortgage because Respondent's judgment

was recorded first. (A.71-A.76)

Appellant filed its Notice of Appeal from the judgment on January 26, 2007.

(A.77-A.78)

3

STATEMENT OF THE FACTS

On June 8, 2001, Michael L. Hadtrath and Patti M. Hadtrath executed and

delivered to Respondent Deborah K Petersen a Warranty Deed conveying title to real

property located in Anoka County legally described as follows:

Lot 17, Block 6, River's Bend

(hereinafter referred to as "Subject Property"). (A.15)

On August 11, 2003, Respondent obtained a judgment against the Petersens in the

amount of Ninety-Eight Thousand, Seven Hundred Forty-Four and 24/100 Dollars

($98,744.24), which judgment was subsequently docketed on November 26, 2003 m

Anoka County as Judgment Docket No. 02-C8-03-l 1679. (A.54)

On November 21, 2003, the Petersens executed and delivered the Mortgage to

Ameriquest securing the Subject Property. (A.30-A.50) The Mortgage was not recorded

until December 8, 2003, and was recorded as Document No. 1880603. Id

On or about February 2, 2005, Ameriquest assigned the Mortgage to Appellant.

(A.51-A.53) The assignment was subsequently recorded with Anoka County on

February 16, 2005 and recorded as Document No. 1972999.002. Id.

On February 16, 2005, the exact same day Appellant recorded its assignment with

Anoka County, Counsel for Appellant executed and recorded a Notice of Pendency of

Proceeding to Foreclose Mortgage in connection with Appellant's desire to initiate a

foreclosure by advertisement of the Mortgage. (R.l)

Appellant commenced suit in Anoka County District Court on or about

October 12, 2005, against the Petersens and Respondent seeking a determination as to

4

whether Appellant's interest in the Subject Property has priority over Respondent's

judgment lien. (A.1-A.2) Appellant claimed that the Mortgage had priority over

Respondent's judgment arguing that the Subject Property owned and occupied by the

Petersens is their homestead property and therefore exempt from sale or seizure based on

a personal judgment. Respondent denied Appellant's allegations and reasoning and

asserted that Respondent's judgment lien had priority over the Mortgage because

Respondent's judgment lien was recorded first. (A.3-A.6) The District Court held in

favor of Respondent. (A.66-A.70 and A.71-A.76)

Based upon the facts of this case and pertinent filings and recordings,

Respondent's judgment has priority over Appellant's Mortgage.

5

STANDARD OF REVIEW

It is well-settled that a "motion for summary judgment shall be granted when the

pleadings, depositions, answers to interrogatories, and admissions on file, together with

the affidavits, if any, show that there is no genuine issue of material fact and that either

party is entitled to a judgment as a matter of law." Fabio v. Bellomo, 504 N.W.2d 758,

761 (Minn. 1993) (citation omitted). No genuine issue of material fact exists "[w]here the

record taken as a whole could not lead a rational trier of fact to find for the nonmoving

party." DLR, Inc. v. Russ, 566 N.W.2d 60, 69 (Minn. 1997) (quoting Matsushita Elec.

Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 1356 (1986)). "On

an appeal from summary judgment, the Court of Appeals asks two questions: (1) whether

there are any genuine issues of material fact and (2) whether the [ district] court[] erred in

[its] application of the law." State by Cooper v. French, 460 N.W.2d 2, 4 (Minn. 1990)

( citation omitted).

When the district court grants summary judgment based on the application of a

statute to undisputed facts, the result is a legal conclusion, reviewed de novo by the

Appellate Court. Lefto v. Hoggsbreath Enters., Inc., 581 N.W.2d 855, 856 (Minn. 1998)

( citing Wallin v. Letourneau, 534 N.W.2d 712, 715 (Minn. 1995)). Whenever possible, a

statute should be interpreted to give effect to all of its provisions; "no word, phrase, or

sentence should be deemed superfluous, void, or insignificant." Am. Family Ins. Group v.

Schroedl, 616 N.W.2d 273, 277 (Minn. 2000) (quoting Amaral v. St. Cloud Hosp., 598

N.W.2d 379, 384 (Minn. 1999)). Moreover, the Court of Appeals is "to read and construe

6

a statute as a whole and must interpret each section in light of the surrounding sections to

avoid conflicting interpretations." Id.

7

ARGUMENT

This Court should deny Appellant's Appeal because there are no genuine issues of

material fact and because the District Court did not err in its application of the law. In

the case at hand, it is undisputed that Respondent docketed and recorded its judgment lien

on November 26, 2003 - twelve (12) days prior to Appellant recording its Mortgage.

Minnesota law is well-settled that with respect to priority of liens, "first in time is first in

right". Based upon the pertinent filings and recordings, it is clear that Respondent's

judgment lien has priority over Appellant's Mortgage. There are no genuine issues of

material fact in this case and it is clear that the District Court did not err in its application

of the law.

I. THE DISTRICT COURT PROPERLY CONCLUDED THAT RESPONDENT HAS A VALID JUDGMENT LIEN WHICH HAS PRIORITY OVER APPELLANT'S MORTGAGE BECAUSE RESPONDENT'S LIEN WAS DOCKETED IN ANOKA COUNTY TWELVE DAYS PRIOR TO APPELLANT RECORDING THE MORTGAGE.

The District Court properly concluded that Respondent has a judgment lien that

has priority over the lien of Appellant's Mortgage. The real issue in this case is plain and

simple - whose lien has priority. The answer is clear - Respondent's judgment lien does.

There are no genuine issues of material fact and the District Court did not err in its

application of the law.

Appellant's argument 1s an obvious attempt to circumvent well-established

Minnesota law on priority by arguing at length that Respondent does not have a lien as to

the Subject Property unless evidence is presented that establishes that the value of the

8

homestead was sufficient to exceed the exemption limit of $200,000.00. See Appellant's

Brief at pp 10-16. This argument is without merit. The District Court properly concluded

that Respondent's judgment is a lien against the Subject Property. (A.66-A.70 and A.71-

A.76) The District Court came to this conclusion based upon the plain language

contained in Minn. Stat. § 548.09, subd. 1 which provides in pertinent part that:

... every judgment requiring the payment of money shall be entered by the court administrator when ordered by the court and will be docketed by the court administrator upon the filing of an affidavit . . . from the time of docketing the judgment is a lien, in the amount unpaid, upon all real property in the county then or thereafter owned by the judgment debtor. ..

Id. The District Court also based its conclusion on the decision of Kipp v. Sweno, 629

N.W.2d 468 (Minn. Ct. App. 2001) wherein this Court of Appeals rejected the argument

that a personal judgment does not attach as a lien against the homestead based upon

Minn. Stat. § 548.09, subd. 1. (A.66-A.70 and A.71-A.76) Clearly, the District Court did

not err in its application of the law.

The basic rule of lien priority law in Minnesota is simple and well-settled. It

provides that in disputes between creditors concerning a lien or mortgage on the debtor's

property, seniority of interests ordinarily is determined by the chronological order in

which liens or mortgages are recorded. In other words, the first creditor to record the lien

or mortgage shall prevail. Oldewurtel v. Redding. 421 N.W.2d 722, 726 (Minn. 1988); In

re: Certain Pharmaceuticals and Proceedings of Northland Providers, Inc., 78 F.Supp.2d

954, 962 (D.Minn. 1999); Host v. Host, 497 N.W.2d 617, 619 (Minn. Ct. App. 1993)

(holding that the rule applied to determine lien priority is "first in time is first in right");

9

Gould v. City of St. Paul, 120 Minn. 172, 176, 139 N.W. 293, 294 (1913); see also

Dunnell Minn. Digest 2d Liens § 4.00 ( 4th ed. 2006). The Minnesota Recording Act

(Minn. Stat. § 507.34 (2006)) establishes priority from the date of recording with the

county recorder or the registrar of titles. Ripley v. Piehl, 700 N.W.2d 540, 544-45 (Minn.

Ct. App. 2005); Home Lumber Co. v. Kopfinann Homes, 535 N.W.2d 302, 304 (Minn.

1995); see also Minn. Stat. § 507.34 (2006) ( every conveyance of real estate not recorded

shall be void against any subsequent purchaser in good faith) ( emphasis added). Further,

under Minnesota law, the factor determining priority is docketing date not the moment in

time when the lien attaches. Lowe v. Reierson, 201 Minn. 280, 286-89, 276 N.W. 224,

227-28 (1937). Here, Respondent's judgment lien was docketed on November 26, 2003 -

twelve (12) days prior to Appellant's Mortgage lien being recorded. Hence, Respondent's

judgment lien is prior to Appellant's Mortgage lien as a matter of law. Clearly, the

District Court's decision should be affirmed and upheld.

It is undisputed that the lien of Respondent's judgment arose prior to Appellant's

Mortgage. (A.54 and A.30-A.50) Respondent obtained a judgment against the Petersens

on August 11, 2003, in the amount of $98,744.24, which was subsequently docketed and

thus recorded in Anoka County on November 26, 2003 pursuant to Minn. Stat.§ 548.09.

(A.54) On November 21, 2003, the Petersens executed and delivered the Mortgage in the

amount of$382,500.00 to Ameriquest. (A.30-A.50) On December 8, 2003, the Mortgage

was recorded in the office of the Recorder of the County of Anoka. Id. As this court is

aware, the Minnesota Recording Act establishes priority from the date of recording with

the county recorder or registrar of titles. Riply v. Piehl, 700 N.W.2d 540, 544-45 (Minn.

10

Ct. App. 2005); Minn. Stat. § 507.34. Thus, Respondent's judgment lien is prior to

Appellant's Mortgage lien as a matter oflaw.

The only way that Appellant's Mortgage lien could attain priority status over

Respondent's judgment lien is if Appellant's Mortgage was in fact a purchase money

mortgage in which case the effect of "super-priority" would take place and the purchase

money mortgage lien would essentially "leap frog" over Respondent's judgment lien and

have priority. See Stewart v. Smith, 36 Minn. 82, 30 N.W. 430 (1886). However, it is

undisputed that Appellant's Mortgage is not a purchase money mortgage. Therefore,

since Respondent's judgment was docketed before Appellant's Mortgage and since

Appellant's Mortgage is not a purchase money mortgage, the lien of Respondent's

judgment has priority over the lien of Appellant's Mortgage as a matter oflaw.

Despite there being no material fact issues in this case, and in spite of the well­

established law in Minnesota on lien priority, Appellant makes one last-ditch effort to

improve its junior lien position - Appellant seeks to destroy Respondent's lien altogether.

Appellant erroneously employs the Minnesota homestead exemption as the means to its

end. Appellant devotes much time in its brief wrongfully arguing that the docketing of a

judgment is irrelevant in this case because the Subject Property is "homestead" and,

therefore, completely exempt from attachment by a judgment lien. Respondent disagrees

as did the District Court. (A.66-A.70 and A.71-A.76) A determination of homestead

exemption is immaterial and irrelevant to the determination of priority in this case.

It is well known that Minnesota law currently provides for a homestead exemption

in the amount of $200,000.00 in equity. See Minn. Stat. § 510.02 (2006). This was not

11

always the case. Up until 1993, there was an unlimited homestead exemption in

Minnesota, and Appellant cites to four older cases in its brief which discuss the unlimited

homestead exemption. Prior to the 1993 amendment to Minn. Stat. § 510.02, Minnesota

law provided for an unlimited exemption amount which resulted in the inability of

judgments to attach to real property that was properly designated as "homestead." In

fact, Appellant fails to cite one Minnesota case from after the 1993 amendment to Minn.

Stat.§ 510.02 which supports its contention that judgment creditors, such as Respondent,

have no "right, title or interest" in homestead property without sufficient equity. Why

not? Because that is not what Minn. Stat. § 510.02 says.

Under Minn. Stat. § 548.09, subd. 1 (2006), every judgment becomes a lien

against the judgment debtor's real property at the time of docketing. There is no

distinction made between homestead and non-homestead property. In fact, the factor

determining priority is the time of docketing, not the moment in time when the lien

attaches. Lowe v. Reierson, 201 Minn. 280, 286-89, 276 N.W. 224, 225 (1937). The

homestead exemption is, therefore, completely unrelated to a determination of priority in

this case, and priority is the basis for Appellant's quiet title action. As a matter of law,

Respondent's judgment lien is prior to Appellant's Mortgage lien.

Appellant attempts to support its erroneous assertion that judgment liens do not

attach to homestead property by citing to two cases: Kipp v. Sweno, 629 N.W.2d 468

(Minn. Ct. App. 2001) (Appeal after remand Kipp v. Sweno, 2003 Minn. App. Lexis 936

(Minn. Ct. App., Aug. 5, 2003) and Baumann v. Chaska Building Center, Inc., 621

N.W.2d 795 (Minn. Ct. App. 2001). Appellant's reliance on both cases is flawed.

12

Appellant asserts that the court in Kipp v. Sweno held that a mortgage has a superior

position to an alleged judgment lien in regard to homestead property. See Appellant's

Brief, at p. 13. This is simply untrue. Nowhere in the Court's opinion is this stated - not

in dicta and not even by inference. At the trial court level, the Kipp case dealt with the

severance of a joint tenancy interest in homestead property. There was no priority issue in

Kipp. See generally Kipp v. Sweno, 629 N.W.2d 468 (Minn. Ct. App. 2001). The Kipp

court certainly did not invalidate judgment liens that attached to homestead property. See

Kipp, 629 N.W.2d at 474. In fact the Kipp court held just the opposite by citing to Minn.

Stat. § 548.09, subd. 1, and stating that "every judgment becomes a lien against the

judgment debtor's real property" at the time of docketing. Id. In this case, Respondent's

judgment became a lien prior to Appellant's Mortgage. The law supports Respondent's

contention and the District Court agreed.

Appellant also wrongly states that in the context of the Kipp case, the court held

that all mortgages are to be paid prior to judgment liens. The Kipp court never stated that

nor was it ever implied. Instead, the Kipp court stated that in that particular case, the

judgment creditor was entitled to an independent appraisal, and if the fair market value of

the three existing mortgages exceeded the $200,000.00 equity exemption and the value of

the three existing mortgage liens, which the judgment creditor acknowledged were

superior to its judgment lien, then the judgment creditor can levy on what is left. Kipp v.

Sweno, 629 N.W.2d at 473. The Kipp court never decided that all mortgages are to be

paid first or that they are automatically superior to judgment liens.

13

Appellant's reliance on Baumann v. Chaska Building Center, Inc., 621 N.W.2d

795 (Minn. Ct. App. 2001), is similarly flawed. The Baumann case stands solely for its

holding that the homestead exemption covers $200,000.00 of the debtor's equity in the

property not in market value of the property. Contrary to Appellant's assertions, the

Baumann case does not award junior mortgagees super-priority over judgment creditors.

In fact, Baumann has no bearing on this case whatsoever.

As stated repeatedly by Respondent, the only issue before this Court of Appeals

and the District Court is that of priority. Based upon the filings and recordings provided

and argued herein, it is undisputed that Respondent's judgment lien is clearly of record

first. Because Minnesota is a "race-notice" state, Respondent's judgment has priority

over Appellant's Mortgage. Accordingly, the District Court properly concluded that there

are no genuine issues as to any material fact, thus Respondent is entitled to judgment as a

matter of law. The District Court properly entered judgment in favor of Respondent

concluding that Respondent's judgment lien has priority over Appellant's mortgage and

did not err in its application of the law.

II. THE DISTRICT COURT PROPERLY CONCLUDED THAT APPELLANT DOES NOT HA VE STANDING TO ASSERT THE HOMESTEAD EXEMPTION, AND, EVEN IF IT DID, IT IS IRRELEVANT AS THE PETERSENS HA VE WAIVED THEIR HOMESTEAD EXEMPTION RIGHTS.

The District Court properly concluded that the protections offered a judgment

debtor under the homestead exemption contained in Minn. Stat. § 510.01 cannot be

asserted by Appellant. (A. 66-A.70 and A.71-A.76) Section 510.01 of the Minnesota

Statutes states, in pertinent part, that

14

The house owned and occupied by a debtor as the debtor's dwelling place, together with the land upon which it is situated to the amount of area and value hereinafter limited and defined, shall constitute the homestead of such debtor and the debtor's family, and be exempt from seizure or sale under legal process on account of any debt not lawfully charged thereon in writing ...

The District Court properly concluded that "the safe harbor from sale or seizure of a

debtor's homestead based on personal judgments is a protection provided to the

homeowner; not another creditor such as [Appellant]". Id. (citing In re Kasden, 84 F.3d

1104 (D.Minn. 1995); Mulroy v. Sioux, 165 Minn. 295, 206 N.W. 461, 462 (1985);

Ferguson v. Kumler, 27 Minn. 156, 6 N.W. 618 (1880) and In re Johnson, 207 B.R. 878

(D.Minn. 1997)).

Appellant alleges that a mortgagee can raise the homestead exemption issue on its

own behalf even though the homestead exemption can also apply to the homeowner. See

Appellant's Brief, at p. 5. However, Appellant sets forth no binding legal authority to

support such proposition. Instead, Appellant relies solely upon the case of Bank of

Kansas v. Davison, 253 Kan. 780, 861 Pac.2d 806, 808 (1993). However, this case

simply demonstrates a rule oflaw that has been settled and applied in the state of Kansas.

Such authority is not binding law or precedence and should not be recognized or followed

by this Court. Appellant is unable to provide any binding authority in Minnesota

supporting its theory. The District Court, on the other hand, was able to recite several

local authorities including a statute and pertinent case law, which clearly dispels

Appellant's argument. (A.66-A.70 and A.71-A.76)

15

Even if Appellant's assertion was correct, it is irrelevant as the Petersens waived

their homestead exemption in 2000. In Minnesota, it has been determined that "the owner

of a homestead may waive his homestead rights, even though they be constitutional

rights, by an act which evidences an unequivocal intention to do so." Argonaut Insurance

Co. v. Cooper, 261 N.W.2d 743, 744 (Minn. 1978); Republic Leasing Corp. v. Farnes,

2000 Minn. App. LEXIS 390, at *3 (Minn. Ct. App., April 25, 2000) (such unequivocal

intention may be found when the parties enter into a general indemnity agreement that

includes a specific waiver of the homestead exemption) (R.2-R.3); Dunnell Minn. Digest

2dLiens § 2.19 (4th ed. 2006).

In Argonaut, the parties entered into a general indemnity agreement that included

a specific waiver of a homestead exemption. Argonaut Insurance Co. v. Cooper, 261

N.W.2d at 743. The debtor defaulted on various obligations and a judgment was

subsequently obtained against the debtor. Id. at 744. Thereafter, the debtor claimed the

homestead exemption. Id. The Minnesota Supreme Court concluded that the surrounding

facts, including the general indemnity agreement and submitted financial statements,

make clear that the debtor unequivocally intended to waive his homestead rights. Id.

Here, the Petersens have unequivocally waived any and all homestead rights they

had in the Subject Property. In September of 2000, the Petersens executed and delivered a

General Application and Agreement of Indemnity (hereinafter referred to as the

"Indemnity Agreement") to Respondent. (R.4-R.10) Within the Indemnity Agreement

there contains a clause which states:

16

[The Petersens] hereby waive all right to claim any property, including homestead, as exempt from levy, execution, sale or other legal process secured or requested by the Company under the law of the United States or of any state or province or of any other government.

The Indemnity Agreement is relevant to the homestead issue raised by Appellant

and shows that the fee owners, the Petersens, have waived their homestead exemption.

That is an important point because Appellant seemingly ignores the priority argument and

relies solely on the inability of Respondent's judgment lien to attach because of the

alleged homestead exemption.

Here, it is apparent that the Petersens unequivocally intended to waive their

homestead rights. They do not deny executing such document nor do they dispute that

their exemption rights regarding the homestead have been waived. As a result, the

Petersens cannot claim such an exemption. Likewise, no other party can claim such an

exemption either.

The District Court properly concluded that the protections offered a judgment

debtor under the homestead exemption contained in Minn. Stat. § 510.01 cannot be

asserted by Appellant. (A.66-A.70 and A.71-A.76) Despite Appellant's complaint that

the District Court failed to address any case law cited by Appellant in support of its

proposition that it had standing to raise the homestead exemption, the District Court is

under no obligation to do so. See Appellant's Brief, at p. 7. Instead, the District Court

independently researched the issue and provided statutory and case law authority which

supported its decision to the contrary. (A.66-A.70 and A.71-A.76) The District Court did

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not err in its application of the law and properly concluded that Appellant does not have

standing to assert the homestead exemption.

CONCLUSION

Based upon the foregoing, Respondent respectfully requests the Court uphold and

affirm the Anoka County District Court's ruling that Respondent's judgment lien, as a

matter of law, has priority over Appellant's mortgage. There are no genuine issues as to

any issues of material fact and the District Court did not err in its application of the law.

DATED: May 2007

GURSTEL, STALOCH & CHARGO, P.A.

Mitchel C. Char o ( 237565) Heather A. Spindler (#322945)

Attorneys for Plaintiff 401 North Third Street, Suite 590 Minneapolis, Minnesota 55401 (612) 664-8200

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CERTIFICATE OF COMPLIANCE

This brief complies with the type-volume limitations under Minn. R. Civ. App.

P. 132.01, subd. 3(a). This brief contains 4,187 words, inclusive of the Statement of

Issues designated at p. 1, and excluding the part of the brief allowed under appellate

rules. This brief is written in Microsoft Word 2003 in Time Roman type font and 13

point size.

DATED: May 2007

GURSTEL, STALOCH & CHARGO, P.A.

Mitchel C. Chargo 2 7565) Heather A. Spindler (#322945)

Attorneys for Plaintiff 401 North Third Street, Suite 590 Minneapolis, Minnesota 55401 (612) 664-8200

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