PLS Services v. Clear Creek Retirement Plan, 960 N.W.2d 780

PLS was assigned two mortgages that were executed in 2012 and recorded July 10, 2012; both recorded instruments contained an incorrect legal description (an errant tract index) that did not match the actual property description.
Clear Creek granted a $225,000 mortgage to Valueplus in July 2012 that used the same errant description (satisfied March 2013); Clear Creek later granted a correctly-described mortgage to Valueplus in March 2013 (satisfied November 2013).
Fidelity assigned a mortgage to Valueplus recorded in August 2013 with the correct legal description; Valueplus sued to foreclose that mortgage in 2017 and ultimately purchased the property in June 2019.
PLS sued in July 2019 claiming its earlier-assigned mortgages had priority and seeking reformation and foreclosure; Valueplus moved for summary judgment asserting it was a good-faith purchaser without notice of PLS’s mortgages.
The district court granted summary judgment for Valueplus, ordered PLS to release its lis pendens and pay costs and fees, and certified the judgment against PLS as final under N.D.R.Civ.P. 54(b).
On appeal the Supreme Court of North Dakota affirmed the Rule 54(b) certification but reversed the summary judgment and the attorney-fees award, remanding for further proceedings because the district court abused its discretion by not addressing PLS’s request for additional discovery under Rule 56(f).

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether Rule 54(b) certification was proper	Certification should not be allowed because appeal would be piecemeal and remaining claims might affect relief	Certification was appropriate because the priority dispute between PLS and Valueplus was fully decided and separate from remaining claims	Court did not abuse discretion; certification affirmed
Whether Valueplus was a good-faith purchaser (notice/priority)	PLS: Valueplus had or should have had notice because Valueplus once held a mortgage using the same errant description, so Valueplus should have inquired further	Valueplus: had no actual or constructive notice of PLS’s errant-recorded mortgages and purchased in good faith	Court agreed Valueplus lacked constructive notice under Hanson, but overall summary judgment was improper because factual issues about actual knowledge remained
Whether summary judgment should have been granted without further discovery (N.D.R.Civ.P. 56(f))	PLS: needed discovery to test Valueplus manager’s affidavit and whether Valueplus actually knew of PLS’s mortgages	Valueplus: affidavit showed no knowledge and summary judgment should be entered promptly	Court abused its discretion by not addressing PLS’s Rule 56(f) continuance request; summary judgment and fee award reversed and remanded

Tharaldson Ethanol Plant I, LLC v. Vei Glob., Inc., 845 N.W.2d 900 (N.D. 2014) (abuse-of-discretion standard and factors for Rule 54(b) certification)
Hanson v. Zoller, 187 N.W.2d 47 (N.D. 1971) (instruments not indexed in the tract index do not give constructive notice)
Farmers Union Oil Co. of Garrison v. Smetana, 764 N.W.2d 665 (N.D. 2009) (definition and notice rules for good-faith purchaser disputes)
Aho v. Maragos, 579 N.W.2d 165 (N.D. 1998) (summary judgment inappropriate if nonmoving party lacks full opportunity for discovery)
Choice Fin. Grp. v. Schellpfeffer, 712 N.W.2d 855 (N.D. 2006) (district court discretion to grant continuance for discovery under Rule 56(f))
First Nat’l Bank v. Big Bend Land Co., 164 N.W. 322 (N.D. 1917) (record of an instrument provides constructive notice of its contents)