Anderson v. Zimbelman
2014 ND 34
| N.D. | 2014Background
- Marvin and Melanie Zimbelman executed three mortgages to First Western Bank (recorded 2006, 2007, 2008); by 2013 the loan balances exceeded principal amounts.
- Northern Livestock obtained a judgment lien against Melanie Zimbelman (2008), executed on it (2009), and the Bank was the high bidder at a sheriff’s sale for $495,000 but did not pay the purchase price; the execution was returned wholly unsatisfied, though the Bank paid sheriff fees and received a certificate of sale.
- In Dec. 2010/Jan. 2011, the Bank and Northern Livestock (Sundsbak and Bitz) signed an agreement subordinating Northern Livestock’s judgment to the Bank’s mortgages and assigning any certificate-of-sale interest to the Bank in exchange for the Bank releasing any claim for reimbursement of sheriff fees/commissions.
- The Bank (assignee Anderson) foreclosed the mortgages after Zimbelman defaulted; Anderson moved for summary judgment and argued Northern Livestock waived any claim to sale surplus by the 2010 agreement.
- Northern Livestock asserted actual and constructive fraud, lack of consideration, entitlement to surplus from the 2009 sheriff sale, and sought specific performance; the district court granted Anderson summary judgment and denied Northern Livestock’s amendment/cross-relief.
- The North Dakota Supreme Court affirmed: the 2010 agreement was enforceable, there was valid consideration (forbearance on reimbursement claims), no genuine issue of material fact on fraud/constructive fraud, and Northern Livestock’s specific-performance claim was improperly raised in this foreclosure proceeding.
Issues
| Issue | Plaintiff's Argument (Anderson/Bank) | Defendant's Argument (Northern Livestock) | Held |
|---|---|---|---|
| Validity/enforceability of 2010 agreement | Agreement valid; subordinated judgment and waived surplus claim | Agreement was fraudulently induced and thus unenforceable | Agreement enforceable; Sundsbak affidavit insufficient to raise genuine fraud issue (no clear/convincing evidence of actual fraud; no fiduciary duty for constructive fraud) |
| Consideration for agreement | Forbearance from seeking reimbursement of sheriff fees constituted valid consideration | Payment of sheriff fees was required by statute, so Bank’s promise was past performance and invalid consideration | Consideration valid: compromise of bona fide controversy and forbearance to sue sufficient; not past consideration |
| Entitlement to sheriff-sale surplus | 2010 agreement assigned/subordinated any certificate interest to Bank; Northern Livestock waived surplus claim | Bank’s bid created an irrevocable surplus to Northern Livestock prior to agreement | No genuine fact issue; Northern Livestock’s later inaction and the clear agreement extinguished their lien and surplus claim |
| Specific performance and procedural posture | Foreclosure proceeding resolves mortgage interests per agreement | Northern Livestock sought specific performance to recover sheriff-sale surplus in this case | Specific-performance claim directed at the execution sale was improperly raised in this foreclosure action and not addressed here by the court |
Key Cases Cited
- Arndt v. Maki, 813 N.W.2d 564 (N.D. 2012) (summary judgment standard and de novo review)
- Saltsman v. Sharp, 803 N.W.2d 553 (N.D. 2011) (summary judgment standard principles)
- First Union Nat’l Bank v. RPB 2, LLC, 674 N.W.2d 1 (N.D. 2004) (fraud must be proved by clear and convincing evidence)
- Perius v. Nodak Mut. Ins. Co., 782 N.W.2d 355 (N.D. 2010) (affidavits with conclusory allegations insufficient to create genuine fact issue)
- American Bank Center v. Wiest, 793 N.W.2d 172 (N.D. 2010) (bank-customer relationship is ordinarily debtor-creditor; no fiduciary duty)
- Maragos v. Norwest Bank Minnesota, N.A., 507 N.W.2d 562 (N.D. 1993) (existence of consideration is a question of law)
- Keen v. Larson, 132 N.W.2d 350 (N.D. 1965) (forbearance from suit and compromise of bona fide controversy constitute valid consideration)