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Heartland State Bank v. Larson

Supreme Court of North Dakota

May 16, 2019

Heartland State Bank, Plaintiff and Appellee
v.
Jared A. Larson, Defendant and Appellant and U.S. Express, Inc., Dale Redinger, and State of North Dakota acting by and through the Department of Human Services' Child Support Division, and all other parties in possession, Defendants

          Appeal from the District Court of LaMoure County, Southeast Judicial District, the Honorable Daniel D. Narum, Judge.

          Kasey D. McNary, Fargo, ND, for plaintiff and appellee.

          James F. Lester, Fargo, ND, for defendant and appellant.

          OPINION

          VANDEWALLE, CHIEF JUSTICE.

         [¶1] Jared Larson appealed a district court judgment foreclosing a mortgage in favor of Heartland State Bank. Larson argues the judgment should be reversed because Heartland's notice before foreclosure was legally insufficient. We affirm.

         I

         [¶2] In July 2015, Larson granted a mortgage to Heartland for property in LaMoure County. The mortgage secured three promissory notes: 1) note 77392, executed in May 2014 for the principal amount of $200, 000; 2) note 77444, executed in June 2014 for the principal amount of $70, 000; and 3) note 77886, executed in July 2015 for the principal amount of $575, 393.70. In March 2017, Heartland sued Larson seeking foreclosure of the mortgage, alleging he defaulted under the mortgage by failing to make payments on the notes.

         [¶3] Before suing Larson, Heartland served him with a notice before foreclosure under N.D.C.C. §§ 32-19-20 and 32-19-21. The notice stated he had thirty days to reinstate the mortgage by paying the following: 1) $212, 845.39 on note 77392; 2) $25, 949.28 on note 77444; and 3) $96, 083.20 on note 77886, for a total of $334, 877.87. Larson did not pay or offer to pay that amount within thirty days.

         [¶4] In September 2017, Heartland moved to amend its complaint after its attorney learned of a July 2016 default judgment in Stutsman County against Larson relating to the notes. A judgment of $782, 273.17 was entered against Larson for failing to pay the amounts due under the notes. Heartland alleged in its motion to amend that in addition to not making payments on the notes, Larson defaulted under the mortgage by failing to satisfy the judgment. Larson objected, arguing the amended complaint would be futile because the amendment would make the notice before foreclosure legally insufficient. The district court granted Heartland's motion to amend its complaint.

         [¶5] Heartland moved for summary judgment, arguing it was appropriate because Larson failed to satisfy the Stutsman County judgment. In response, Larson claimed that Heartland's amended complaint rendered the notice before foreclosure defective and fatal to Heartland's case. Larson argued Heartland failed to strictly comply with the notice before foreclosure requirements because the amount that Heartland alleged was due on the notes in the notice differed from the amount due under the default judgment. The district court granted Heartland's motion, concluding the notice before foreclosure was legally sufficient:

The Notice Before Foreclosure served by Heartland State Bank did comply with the requirements of N.D.C.C. Ch. 32-19 under the circumstances. At the time Heartland State Bank served the Notice Before Foreclosure upon Larson there were no installments of principal and interest due and owing by Larson because the debt obligations had already been reduced to a judgment entered in Stutsman County District Court, Case No. 47-2016-cv-00361, in the amount of $782, 273.17, plus interest at the daily rate of $126.23 from and after July 13, 2016 to the date of the entry of the Judgment.

         The court entered judgment foreclosing Heartland's mortgage.

         II

         [¶6] Under N.D.R.Civ.P. 15(a), after a responsive pleading has been served, a complaint may only be amended by leave of court or by written consent of the opposing party. Johnson v. Hovland, 2011 ND 64, ¶ 8, 795 N.W.2d 294. "A district court has wide discretion in deciding whether to permit amended pleadings after the time for an amendment has passed." Id. A court abuses its discretion when it acts arbitrarily, unconscionably, or unreasonably, or when its decision is not the ...


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