• April 13, 2011

The recent unpublished Minnesota Court of Appeals decision in Chamnic et al. v. Colonial Pacific Leasing is the latest installment in Tales of County Recording Office Errors (and their unfortunate (costly) ramifications) (an earlier episode is here).

Kevin J. Dunlevy of Beisel & Dunlevy successfully flipped a jury verdict from Wabasha County District Court (Judge Terrence M. Walters) before an appellate panel of Judges Shumaker, Halbrooks, and Schelhas.  The jury had found that Citicorp. Leasing, Inc. had “slandered title” because it had recorded an attorney’s affidavit seeking to explain the timing of the mortgage “for informational purposes.”

Appellant Citicorp Leasing, Inc. had tried to record a mortgage but the Wabasha County Recorder’s office rejected the mortgage because, they said, the mortgagor was not the record owner of the mortgaged property.

The Citicorp mortgage met therequirements for recording, and it was not within the authority of the Wabasha County Recorder’s Office to reject the mortgage simply because Hershey Oil was not yet the record owner of the property. This rejection caused appellant to lose its priority dispute with ICG because the district court found that ICG did not have notice of the Citicorp mortgage in Wabasha County.  Because of this lack of notice, the district court refused to reform the mortgage to reflect the parties’ intent in Wabasha County…. But the fact that appellant lost its priority dispute with ICG does not mean that appellant slandered respondents’ title when it attempted to record its mortgage.
The “slander of title” claim went to a jury along with an instruction that began, “Did Citicorp know that its mortgage was invalid when it recorded the [Lawyer’s] affidavit against the Wabasha Property?”  The jury answered yes, which the Court of Appeals found problematic (“not legally supportable,” to be precise) in light of its conclusion that the mortgage was not, in fact, “invalid” at the time.

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