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AgCountry Farm Credit Servicers v. Oelke8/16/2005
is not "property to the extent it is encumbered by a valid lien." Minn. Stat. § 513.41(2)(i) (2004). RRD's property was encumbered because of the loans from FCS; therefore, it is not a transferred asset within the meaning of the statute.
Moreover, even if the quitclaim were declared fraudulent and void, it would not affect the Oelkes. RRD would retain property, encumbered by a lien to FCS, on which FCS would have the right to foreclose; RRD would also be a defaulting debtor with a debt guaranteed in part by the Oelkes. The Oelkes have not provided evidence of a defense, or of a genuine issue of material fact as to a defense, under Minn. Stat. § 513.44.
d. Breach of Fiduciary Duty
The Oelkes claim that a genuine issue of material fact exists as to whether FCS had a fiduciary relationship to them that precluded it from acquiring RRD's property. As guarantors of RRD's obligation to FCS, the Oelkes themselves acquired a debtor-creditor or borrower-lender relationship with FCS. This relationship is not fiduciary. See, e.g., Klein v. First Edina Nat'l Bank, 293 Minn. 418, 422, 196 N.W.2d 619, 623 (1972) (observing that bank has no special duty to counsel customer unless special circumstances exist and bank knows customer relies on bank for counsel and information).
The only evidence the Oelkes provide of the alleged fiduciary relationship is their own affidavits stating that they relied on FCS for financial information about RRD and that FCS provided some accounting services for RRD. But a genuine issue for trial must be established by "substantial evidence." DLH, Inc., 566 N.W.2d at 69-70. " he party resisting summary judgment must do more than rest on mere averments." Id. at 71. The Oelkes do no more than aver the existence of a fiduciary relationship.
e. Negligent Misrepresentation
Negligent misrepresentation requires that false information be supplied in a business transaction, that the information be supplied by one who failed to use reasonable care in obtaining or communicating it, that the claimant justifiably rely on the information, and that the claimant be financially harmed. Bonhiver v. Graff, 311 Minn. 111, 122, 248 N.W.2d 291, 298-99 (1976). The provider of the information must owe a duty of care to the claimant. Smith v. Woodwind Homes, Inc., 605 N.W.2d 418, 424 (Minn. App. 2000). If the parties are dealing at arm's length in a commercial transaction, no duty is owed. Safeco Ins. Co. of Am. v. Dain Bosworth Inc., 531 N.W.2d 867, 871 (Minn. App. 1995), review denied (Minn. July 20, 1995).
The transaction that led to the Oelkes' financial harm was their execution of the guarantee. They allege no misrepresentation prior to signing. They claim that, after they signed the guarantee, FCS omitted to tell them that RRD had quitclaimed its property to FCS, but they do not explain if or how they relied on this omission or what financial loss they suffered because of it. Again, to resist summary judgment, the Oelkes must do more than rest on averments. See DLH, Inc., 566 N.W.2d at 71. The Oelkes do not show a genuine issue of material fact in regard to their defense of negligent misrepresentation.
2. Increased Risk
The Oelkes claim that the district court erred by not finding that, because their risk had increased, their guarantee was discharged as a matter of law. This is a mixed question of law and fact. When reviewing mixed questions of law and fact, an appellate court will correct erroneous applications of law but accord the district court discretion in its ultimate conclusions and review such conclusions under the abuse-of-discretion standard. Rehn v. Fischley, 557 N.W.2d 328, 333 (Minn. 1997).<
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