Court Opinion

ID: 9523016
Source: CourtListenerOpinion
Date Created: 2023-08-07 02:35:07.914487+00
Date Added: 2024-06-11T13:04:28.321846
License: Public Domain

MINGE, Judge
(dissenting).
I respectfully dissent. Minn.Stat. § 514.11 (2004), which governs commencement of a mechanic’s lien foreclosure action, defines the defendants in the action in terms of lienholders that have “filed a lien statement for record.” When Maveo began this action and filed its notice of lis pendens, Wells Fargo had not yet recorded its mortgage. As of that date, Wells Fargo lacked an interest of public record. Maveo had no knowledge of Wells Fargo’s interest until several weeks later.
Because Wells Fargo was not an interested party of record when this action was *845commenced or when notice of lis pendens was filed, I would hold that Wells Fargo is not protected by Minn.Stat. § 514.12, subd. 3 (2004). This approach respects the notice function of the recording system. See Minn.Stat. § 507.32 (2004) (stating that the “record ... of any instrument properly recorded shall be taken and deemed notice to parties”)', Minn.Stat. § 557.02 (2004) (stating that “[f]rom the time of the filing of [notice of lis pendens], and from such time only, the pendency of the action shall be notice to purchasers and encumbrancers of the rights and equities of the party filing the same to the premises”). In other contexts, the supreme court has held that a party holding an interest in property that is not recorded until after a notice of lis pendens is recorded takes the property subject to the action for which notice of lis pendens was recorded. See Marr v. Bradley, 239 Minn. 503, 510, 59 N.W.2d 331, 335 (1953) (specific performance action); Bredeson v. Nickolay, 156 Minn. 506, 194 N.W. 460, 461 (1923) (same).
Neither the language of Minn.Stat. § 514.11 nor case law compel the result reached by the majority. Minn.Stat. § 514.12, subd. 3, is silent as to when a party must acquire and record a property interest to be protected by the one-year limitations period. The cases relied on by the majority are distinguishable. In all of them, the party objecting to the mechanic’s lien foreclosure either otherwise had a position of priority over the mechanic’s lien or was in privity with a recorded interest in the property at the time the lien foreclosure action was commenced. In Duelos, the mortgage was recorded before the mechanic’s lien statement was filed and thus before the mechanic’s lien foreclosure started. Morrison County Lumber Co. v. Duclos, 138 Minn. 20, 21, 163 N.W. 734, 735 (1917). Similarly, in Hokanson the mortgage predated the mechanic’s lien and the claiming party, as the purchaser of the property at the mortgage foreclosure sale, was in privity with that earlier recorded interest. Hokanson v. Gunderson, 54 Minn. 499, 502, 56 N.W. 172, 173 (1893).
The rule stated in this case would allow a person who recorded an interest 364 days into the one-year deadline for foreclosure to obtain priority over the holder of the mechanic’s lien unless the lienholder amended his complaint and served the newcomer in the brief one-day period before the one-year deadline expired. This is not a reasonable result. Although last-minute checking of real estate records is possible, serving an amended complaint may be physically impossible. In fact, a party (like Wells Fargo in this case) who is loaning money and acquiring a mortgage after the mechanic’s lien has been filed has been put on notice of an adverse claim and can protect itself by inquiry. To give that party priority over the mechanic’s lien claimant who timely forecloses the lien is not consistent with general rules of real estate priority or logical development of the law.