Commercial Banking, Collections, and Bankruptcy

Dist. Ct. did not err in granting defendant-railroad's motion for summary judgment in plaintiff-railroad's action, seeking indemnification for environmental cleanup expenses associated with property that plaintiff had purchased from defendant, where both parties had entered into settlement agreement with third-party and EPA that called for both parties to share in payment of said costs. Language in purchase agreement called for plaintiff to pay all environmental costs associated with property if no claim to said costs had been lodged within 10 years of date of purchase, and record showed that neither third-party, EPA or state agency asserted "claim" (as that term is understood under Minnesota law) by filing lawsuit or initiating agency action within applicable 10-year period. Moreover, indemnification clause in purchase agreement covered all claims for environmental matters relating to defendant's ownership of property, and claims which instant parties settled with EPA and third-party all arose out of dumping waste on subject property or from other actions taken by defendant's predecessors in support of operation of defendant's railroad lines on said property. As such, plaintiff was responsible for all environmental costs contained in settlement agreement.

Dist. Ct. did not err in entering judgment in favor of plaintiff-insurance company in action seeking declaration that it had no duty to defend defendant-insured debt collector in underlying claim filed by debtor, who alleged that defendant violated Fair Debt Collection Practices Act (FDCPA), Telephone Consumer Protection Act (TCPA), and related common-law actions by attempting to collect on mortgage loan that had been discharged in bankruptcy by making 58 calls to debtor's cell-phone. Debtor's action was not covered by policy that contained exclusions for actions under TCPA, as well as for underlying conduct that formed basis of violation of enumerated laws, including debtor's FDCPA claim. In this regard, underlying  allegations that defendant caused debtor's phone to ring repeatedly with intent to annoy debtor violated FDCPA, which was excluded conduct under instant policy. Also, debtor's underlying complaint that "some or all" of calls made to debtor's cell-phone were accomplished by using one of four ATDS phone systems reinforced notion that debtor was alleging that defendant had violated TCPA.

Dist. Ct. did not err in dismissing as moot debtor’s appeal of Bankruptcy Ct. order that directed debtor to amend his Chapter 13 reorganization plan by requiring that debtor make $15,000 additional payment to unsecured creditors to reflect fact that debtor had failed to include his pending workers’ compensation lawsuit in his Schedule B asset list. Debtor ultimately received $92,000 workers compensation award, and while his appeal before Dist. Ct was still pending, debtor voluntarily amended his reorganization plan by adding $15,000 payment requirement. Moreover, debtor’s Chapter 13 plan was subsequently dismissed where debtor had failed to make $15,000 payment as required by amended plan. Ct. of Appeals rejected debtor’s argument that his appeal was not moot because he had no choice but to file amended reorganization plan, since debtor could have pursued other avenues to preserve his challenge to underlying order that required amendment of reorganization plan. Also, where debtor’s bankruptcy petition had been dismissed, there was no remaining reorganization plan to enforce, and thus Dist. Ct. was free to rely on general rule that bankruptcy petition dismissal results in dismissal of other related proceedings.

Dist. Ct. did not err in dismissing for lack of Article III standing plaintiff’s Fair Debt Collection Practices Act (FDCPA) claim, alleging that defendant violated 15 USC section 1692g(a)(3) by sendig debt-collection letter that told plaintiff that if she not dispute debt in writing within 30 days, defendant would assume that debt was valid. While plaintiff asserted that she was confused by letter, she failed to allege any concrete injury such as contending that letter’s alleged lack of clarity led her to take any additional step such as paying money she did not owe. Moreover, plaintiff’s contention that debt collector violated FDCPA by telling her to communicate in writing was insufficient to establish any actual injury, where plaintiff failed to explain how writing requirement deterred her from disputing debt, or how disputing her debt would have done her any good. As such, plaintiff was no worse off than if instant letter had told her that she could dispute debt orally.

Dist. Ct. did not err in dismissing for failure to state cause of action, cross-plaintiffs' RICO action, alleging that cross-defendants-two law firms, which performed real-estate-related services on behalf of bank, committed financial institution fraud under 18 USC section 1962(c) and collected on unlawful debt. To state cause of action under section 1962(c), cross-plaintiffs were required to allege that instant law firms engaged in conduct of an enterprise through pattern of racketeering activity or collection of unlawful debt, and instant action failed to state viable action under section 1962(c) where allegations regarding law firms’ mere provision of legal services to alleged racketeering enterprise did not meet operation or management element of said offense. In this regard, cross-complaint alleged that seller of hotel properties colluded with bank and others to inflate appraised values of hotels that caused purchaser of hotels to eventually default on loans generated by said bank. However, cross-complaint failed to adequately plead that law firms either played role in operating or managing bank, or conspired to commit RICO violation or invested income from pattern of racketeering. Furthermore, even if law firms knew or should have known that instant appraisals were inflated, alleging such knowledge, by itself, was insufficient to state RICO claim against law firms.

Dist. Ct. erred in granting defendants’ motion for summary judgment in action by plaintiff-buyer of business owned by defendants seeking $2 million held in escrow fund created by instant sale of business to resolve disputes relating to purchase of business. Record showed that plaintiff spent over $1 million to compensate each of its current customers of business for alleged improper billing practices of defendants, as well as several hundred thousand dollars spent in investigating said practices. Dist. Ct. held that plaintiffs had failed to meet strict 10-day deadline for claiming indemnification from escrow account. However, Ct. of Appeals, in reversing Dist. Ct., found that issue of whether plaintiff’s demand for indemnification came within 10-day limitations period could not be resolved via summary judgment motion. Moreover, record otherwise demonstrated that, even if plaintiff was late in making instant demand, defendants could not use said fact to defeat instant indemnification claim, since undisputed facts showed that defendants did not irrevocably forfeit any rights or defenses to underlying disputes at issue in indemnification claim by reason of timing of plaintiff’s demand, as required by language in purchase agreement.