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Amresco Residential Mortgage Corp. v. Stange, 631 N.W.2d 444 (Minn. Ct. App. 2001), the trial court ruled that it could not consider mortgage defects in the eviction action. On appeal, the court held that rather than order the trial court to hear the issues or convert the action to an ejectment action, the appellants could seek to enjoin prosecution of the eviction action in the separate proceeding in which they sought to set aside respondent's foreclosure which they commenced after dismissal of their counterclaims in the eviction action. While the court affirmed dismissal of the counterclaims, it ordered that the court's stay of the writ of restitution during the appeal be continued for a reasonable period of time in which appellants can assert, and the district court can determine in their pending proceeding, whether their right of possession should be protected by enjoining the writ until the court rules on their title claims. See AHR Construction, Inc. v. Dixon, Nos. A06-1554, A06-0248, 2007 WL 2417083 (Minn. Ct. App. Aug. 28, 2007), review denied (Minn. Nov. 21, 2007) (unpublished) (challenges to foreclosure cannot be raised in an unlawful detainer action and must be asserted in a separate proceeding, citing AMERSCO). But see Comerica Mortgage Corp. v. Gaddy, No. UD-1950223514 (Minn. Dist. Ct. 4th Dist. Mar. 24, 1995) (Appendix 195) (Mortgager did not prove that service of the notice of foreclosure sale was insufficient).
In Fraser v. Fraser, 642 N.W.2d 34 (Minn. Ct. App., 2002), the husband's father, who sold house to husband and wife under contract for deed, gave notice of cancellation of contract after husband brought dissolution action. The wife sought to enjoin cancellation as part of dissolution proceedings, which was granted and later vacated. The father then brought an eviction action against wife, and the district court ruled in father's favor. The wife appealed in both cases and they were consolidated. The court held that there was no jurisdiction in the dissolution action jurisdiction to enjoin cancellation of contract for deed. In the eviction action, the court held that the trial court was not bound by findings on the contract for deed service from the dissolution action, given the lack of jurisdiction in the latter. As to whether the wife could litigate equitable real estate issues in the eviction case, relying on Amresco Residential Mortgage Corp. v. Stange, 631 N.W.2d 444 (Minn. Ct. App. 2001), the court held that if she has the ability to litigate her equitable mortgage and other claims and defenses in alternate civil proceedings where she could enjoin the eviction action, it would be inappropriate for her to seek to do so in the eviction action. However, since the court could not determine whether the eviction action was wife's only opportunity to address her claims and defenses, it remanded the case for the district court to address wife's service claims, address the propriety of entertaining wife's equitable defenses in the eviction action or in an alternate proceeding; and, if appropriate, decide the equitable defenses.
In most eviction (unlawful detainer) actions based on contract for deed cancellation or mortgage foreclosure the plaintiff will assert compliance with statutory procedures in the complaint. The defendant's denial of these claims is not an equitable defense, but rather a denial that plaintiff has satisfied the procedural preconditions for commencing the action.
The defendant was precluded from raising ultimate legal or equitable defenses in an eviction (unlawful detainer) action. See Dahlberg; William Weisman Holding Co. But see Lilyerd. In Dahlberg, the Court made the distinction between the claim that an instrument is voidable is an equitable issue, while the claim that an instrument is void is not an equitable issue, concluding that the claim of fraud involved whether the instrument was voidable, thus an equitable issue that could not be raised in an unlawful detainer action. The defendant could assert that challenging compliance with procedural requirements is not an equitable issue, since it involves a determination of whether the contract for deed cancellation or mortgage foreclosure was void, rather than voidable.
b. 2006: Real Estate Equity Strategies, LLC v. Jones
The issue of litigation of mortgage foreclosure issues in eviction cases took another turn in Real Estate Equity Strategies, LLC v. Jones, 720 N.W.2d 352 (Minn. Ct. App. 2006). When the defendants’ home went into foreclosure, they entered in an agreement with the plaintiff under which the defendants sold their home to one of plaintiff’s entities, which leased it back to the defendants with an option for purchase. When the defendants defaulted on the lease, the plaintiff filed an eviction action against them. The defendants filed a separate equity stripping action against the plaintiff and its entities under Minn. Stat. §§ 325N.01-08, and filed an answer in the eviction case asking for dismissal or a stay pending resolution of the equity stripping action. The trial denied the motion and entered judgment for the plaintiff.
The Court of Appeals affirmed the decision, first concluding that a defendant’s assertion of claim of title under Minn. Stat. § 504B.121 does not deprive subject matter jurisdiction to the eviction court. Id. The Court concluded that the trial court has discretion to decide whether to stay the eviction pending resolution of the equity stripping action, and does not abuse its discretion by declining to stay the eviction. Id.
The Court reviewed the history of litigation of title issues in eviction actions, dating back to the time when evictions were heard in county and municipality courts of limited jurisdiction. The Court concluded that unification of the trial courts removed any limitations based on the nature of the court, leaving only limitations based on the summary nature of the eviction action, which does not preclude litigation of title. Id.
Since this decision, the Legislature amended Minn. Stat. § 325N.18 to include a new subdivision 6, which requires the court to issue an automatic stay without imposition of a bond if a defendant makes a prima facie showing that the defendant has commenced an illegal foreclosure reconveyance action, raises the defense under Minn. Stat. § 504B.121 of an illegal foreclosure reconveyance, or asserts a claim of fraud, false pretense, false promise, misrepresentation, misleading statement, or deceptive practice in conveyance with a foreclosure reconveyance. The defendant also must show that the defendant owned foreclosed residence, the foreclosure reconveyance, and continued occupancy of the property. The automatic stay expires if the foreclosed homeowner fails to commence a foreclosure reconveyance action within 90 days of issuance of the stay.
Just months before the Real Estate Equities Strategies decision and afterwards, the Court of Appeals has following the earlier line of cases, holding that the eviction court could not adjudicate legal and equitable rights of ownership. RedStar Capital, LLC v. Rex, No. A07-1873, 2008 WL 5136002 (Minn. Ct. App. Dec. 9, 2008) (unpublished); Ketterling v. Hamilton, Nos. A05-1872, A05-2119, 2006 WL 2258053 (Minn. Ct. App. Aug. 8, 2006) (unpublished); Sundberg v. Sundberg, No. A05-1845, 2006 WL 1806394 (Minn. Ct. App. July 3, 2006) (unpublished) (eviction defendant could not litigate the legal cancellation of contract for deed).
Counterclaims or set offs are not allowed if the basis of the counterclaim or setoff is independent of the tenant's obligation to pay rent. Keller v. Henvit, 219 Minn. 580, 585, 18 N.W.2d 544, (1945); William Weisman Holding Co. v. Miller, 152 Minn. 330, 332, 188 N.W. 732, (1922); Warren v. Hodges, 137 Minn. 389, 390, 163 N.W. 739, (1917) (in nonpayment of rent case, no defense for landlord's violation of repair covenant); Peterson v. Kreuger, 67 Minn. 449, 450, 70 N.W. 567, (1897). Warren was reversed in Fritz v. Warthen, 298 Minn. 48, 54, 213 N.W.2d 339, 341-42 (1973), where the court held that § 504.18 (now § 504B.161) created an exception to the rule, holding that the covenants of habitability and the covenant to pay rent are mutual and dependant, and all or part of the rent is not due when the landlord has breached the covenants.
"The summons shall be served . . . in the manner provided for service of a summons in a civil action in the district court." Minn. Stat. § 504B.331 (formerly § 566.06). See Minn. R. Civ. P. 4. The summons and complaint shall be served not less than seven (7) nor more than fourteen (14) days before the initial court appearance. Minn. Stat. §§ 504B.321 (formerly § 566.05), 504B.331 (formerly § 566.06). The time period excludes the date of service but includes the date of the initial hearing. Minn. Stat. § 645.15. See Township Bd. v. Lewis, 305 Minn. 488, 490-92, 234 N.W.2d 815, 817-18 (1975).
Minn. Stat. § 504B.331 (formerly § 566.06) provides for the methods of service:
a. By delivery to the defendants.
b. If the defendants cannot be found in the county, substituted service.
(1) By delivery at the defendant's residence, to a family member or other person of suitable age and discretion residing at the defendant's residence, or
(2) By mail and posting, if
(A) service has been attempted at least twice on different days, with at least one of the attempts between 6:00 p.m. and 10:00 p.m., and
(B) The plaintiff or counsel files an affidavit (1) stating that the defendant cannot be found, or the affiant believes that the defendant is not in the state, and (2) that a copy of the summons has been mailed to the defendant at the defendant's last address known to the plaintiff.
The summons may be served by any person not named a party to the action. See also Minn. R. Civ. P. 4.02. If the defendant is confined to a state institution, by serving also the chief executive officer at the institution. Minn. R. Civ. P. 4.03(a).
Strict compliance with service requirements is a precondition to personal jurisdiction. See Bloom v. American Express Co., 222 Minn. 249, 253, 23 N.W.2d 570, (1946). B&J Property Management v. Gates, No. UD-01970602519 (Minn. Dist. Ct. 4th Dist. June 12, 1997) (Appendix 247) (Dismissal for improper service, failure to register trade name, and failure to attach notice to quit and lease to complaint).
Minn. Stat. § 504B.331 (formerly § 566.06); Karnis v. Rayford, No. UD-1940714513 (Minn. Dist. Ct. 4th Dist. Aug. 15, 1994) (personal service proven by a preponderance of the evidence) (Appendix 37); Koop v. _____, No. 27-CV-HC-09-1163 (Minn. Dist. Ct. 4th Dist. Feb. 17, 2009) (Appendix 606) (eviction dismissed for improper service, where action listed four named defendants and affidavit of service claimed service on “John Doe”). If the process server and the defendant are within speaking distance of each other and the process server takes such action as to convince a reasonable person that personal service is being attempted, the defendant cannot avoid service simply by refusing to accept the summons. Nielsen v. Braland, 264 Minn. 481,484, 119 N.W.2d 737, 739 (1963).
The summons must be served seven days before the hearing, but not to the exact hour. Central Internal Medicine Assoc. P.A. v. Chilgren, No. C2-00-36, 2000 WL 987858 (Minn. Ct. App. July 18, 2000) (unpublished). Minn. Stat. § 504B.331 (formerly § 566.06).
In Peart v. Peloquin, No. C3-90-430 (Minn. Dist. Ct. 8th Dist. May 25, 1990), the court dismissed the action when the tenant received the summons and complaint only five days before the hearing. (Appendix 2.A). See Judge v. Rio Hot Properties, Inc., No. UD-1981202903 (Minn. Dist. Ct. 4th Dist. July 7, 1999) (Appendix 401) (unlawful detainer action dismissed for service less than seven days before the hearing); Bratton v. Cobb, No. 8C-000222514 (Minn. Dist. Ct. 4th Dist. Apr. 12, 2000) (Appendix 380) (parties agreed there was short service but executed move out agreement; case expunged due to short service).
Minn. Stat. §645.44, subd. 5 prohibits services on legal holidays. Service on Sunday had been prohibited by § 624.04, but it was repealed in 2005.
Service by the plaintiff is improper. Minn. R. Civ. P. 4.02. Williams v. McCrimmon, No. UD-1991207535 (Minn. Dist. Ct. 4th Dist. Dec. 17, 1999) (Appendix 428) (Improper service by delivery to a person of suitable age and discretion, who lives in Iowa and was only a temporary guest of the tenant; service on the tenant was made by the plaintiff; action dismissed). See Landgren v. Pipestone County Board of Commissioners, 633 N.W.2d 875 (Minn. Ct. App. 2001) (sheriff may not serve his own action).
In Lewis v. Contracting Northwest, Inc., 413 N.W.2d 154 (Minn. Ct. App. 1987), the court explained the reason for precluding parties from serving process:
The law has wisely entrusted the decision of disputes between citizens to persons wholly disinterested and free from bias and the acrimony of feeling so frequently, if not uniformly, engendered by litigation; and the same is equally true of the persons selected to execute the process necessary to the adjustment of such disputes.
Id. at 155 (emphasis added). A court should carefully scrutinize service by persons related to or employed by the plaintiff who are not "wholly disinterested and free from bias" related to the action.
A number of courts have held that partners, managers, caretakers, and other employees of the plaintiff are not authorized to serve defendants because they are not wholly disinterested in the case. In Hedlund v. Potter, No. C3-91-1542 (Minn. Dist. Ct. 10th Dist. Dec. 31, 1991), the caretaker for the landlord served the tenant with the summons and complaint. The caretaker had signed the lease, and was authorized to sign leases, collect rent, maintain the premises, and receive service of process on behalf of the landlord under Minn. R. Civ. P. 4.03. Id. at 2. The court held that service was improper under Minn. Stat. § 566.06 (now § 504B.331) and Minn. R. Civ. P. 4.02, which states that the summons must be served by any person not named a party in the action. Id. at 4. (Appendix 4.C.2). See Meldahl and SJM Prop. v. _____, No. 1050923509, Order on Referee Review at 12-14 (Minn. Dist. Ct. 4th Dist. Feb. 23, 2006) (Appendix 609) (judge reversed referee and ordered dismissal for improper service by maintenance person who was agent for landlord); MJD Enterprises, Inc. v. _____, No. HC-1040406523 (Minn. Dist. Ct. 4th Dist. May 18, 2004) (Appendix 612) (eviction dismissed and expunged and costs awarded where property manager served defendant and filed false affidavit stating that another person served defendant; it was irrelevant that manager called herself an “independent contractor” when she handled all matters related to rental);
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