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AgCountry Farm Credit Servicers v. Oelke8/16/2005
Appellants guarantors challenge the summary judgment granted to respondent creditor. We affirm.
FACTS
During 1998 and 1999, in two promissory note/loan agreements, respondent Farm Credit Services (FCS) lent River Ridge Dairy (RRD) almost $3 million. RRD's assets secured the loans, which were made on condition that RRD obtain "Personal Guarantees totaling $932,000."
Appellants Robert and Beth Oelke were among those from whom RRD obtained personal guarantees. They guaranteed payment of amounts due up to $52,000 and any costs and attorney fees incurred by FCS in enforcing the guarantee. The guarantee could be "enforced by without first resorting to or exhausting any other security or collateral and without first having recourse to the Obligations or any of the remedies provided by the Obligations through foreclosure proceedings or otherwise."
In 2002, RRD defaulted on payments on the notes. In 2003, FCS and RRD executed a forbearance agreement providing that, inter alia, RRD would quitclaim to FCS the real property that guaranteed the loan; in exchange, FCS agreed not to foreclose. RRD subsequently quitclaimed its property to FCS.
FCS brought this action against the Oelkes to enforce their guarantee, seeking $52,000 plus costs and attorney fees. FCS was granted summary judgment. The Oelkes now challenge that judgment, arguing (1) that genuine issues of material fact preclude summary judgment on their claimed defenses of payment, accord and satisfaction, fraudulent conveyance, breach of fiduciary duty, and negligent misrepresentation; (2) that the increase in appellants' risk has caused the guarantee to be discharged as a matter of law; and (3) that the district court abused its discretion in not granting the Oelkes' motion to compel discovery.
DECISION
1. Genuine Issues of Material Fact
A genuine issue for trial must be established by substantial evidence. DLH, Inc. v. Russ, 566 N.W.2d 60, 69-70 (Minn. 1997).
here is no genuine issue of material fact for trial when the nonmoving party presents evidence which merely creates a metaphysical doubt as to a factual issue and which is not sufficiently probative with respect to an essential element of the nonmoving party's case to permit reasonable persons to draw different conclusions.
Id. at 71. " he party resisting summary judgment must do more than rest on mere averments." Id. The Oelkes allege that genuine issues of material fact preclude summary judgment on five claimed defenses.
a. Payment
The Oelkes argue that the delivery to FCS of a quitclaim deed to RRD's property was payment of RRD's debt, so that nothing is now owed to FCS, or, in the alternative, that the deed is ambiguous and there is a genuine issue of material fact as to whether anything is owed to FCS.
The relevant passages of the forbearance agreement provide that:
3. shall execute a nonmerger quit claim deed . . . conveying the Mortgaged Property to . . . . Notwithstanding delivery and recordation of the Deed and/or sale of the Mortgaged Property by , shall retain all rights as to the Personal Property Collateral and to seek recovery from and/or any guarantors of the Indebtedness (however, Guarantors are not providing any warranty as to [FCS's] rights as against other guarantors of the Indebtedness). Even if acquires the Mortgaged Property by recordation of the Deed and/or foreclosure of the Mortgages, this shall not satisfy the Indebtedness other than with respect to the proceeds realized by upon sale of the Mortgaged Property, which proceeds will be applied to the Indebtedness. [It is un
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