                         This opinion will be unpublished and
                         may not be cited except as provided by
                         Minn. Stat. § 480A.08, subd. 3 (2012).

                              STATE OF MINNESOTA
                              IN COURT OF APPEALS
                                    A14-0190

                                  Sterling State Bank,
                                      Respondent,

                                           vs.

                       Maas Commercial Properties, LLC, et al.,
                                  Appellants.

                               Filed September 2, 2014
                                      Affirmed
                                   Schellhas, Judge

                             Dakota County District Court
                             File No. 19HA-CV-10-3035

Tracy J. Morton, Apple Valley, Minnesota (for respondent)

John M. Koneck, Peter J. Diessner, Fredrikson & Byron, P.A., Minneapolis, Minnesota
(for appellants)

      Considered and decided by Peterson, Presiding Judge; Schellhas, Judge; and

Huspeni, Judge.*


                        UNPUBLISHED OPINION

SCHELLHAS, Judge

      Appellants argue that a genuine issue of material fact precluded the district court’s

grant of summary judgment to respondent. We affirm.

*
 Retired judge of the Minnesota Court of Appeals, serving by appointment pursuant to
Minn. Const. art. VI, § 10.
                                          FACTS

         This appeal involves disputes arising out of a construction loan, mortgages that

secured the debt, and personal guaranties to pay the debt. Under the terms of a

March 2005 construction-loan and promissory note, respondent Sterling State Bank

agreed to loan appellant Maas Commercial Properties LLC (MCP) up to $1,875,000, to

be repaid with monthly interest-only payments the first year; monthly principal-and-

interest payments the following four years; and a final payment on April 8, 2010. To

secure the debt, MCP gave Sterling first and second mortgages on Dakota County real

property and agreed to pay all property taxes, and appellants Alan Maas and Lynette

Maas (Maases) provided Sterling with their individual guaranties.1 Maases also gave

Sterling first and second mortgages on Scott County real property to secure two

promissory notes and agreed that they would be in default on the notes if they breached

any agreement with Sterling.

         During the first year of the 2005 promissory note, MCP began paying Sterling

interest only at the rate of 6.75%; from May 2005 through March 2006, MCP paid

interest only at the rate of 7%. From April 2006 through February 2010, MCP made

monthly principal-and-interest payments of $13,377.11. In March 2008, Sterling adjusted

the interest rate downward to 6.25%; in April 2008, to 6%; in October 2008, to 5.5% and

then to 5%; and in December 2008, to 4.25%. MCP failed to pay property taxes on the

Dakota County property during 2009 and failed to make the final loan payment due on

April 8, 2010. Sterling declared MCP in default, informed Maas parties that the unpaid

1
    We refer to MCP and Maases, collectively, as Maas parties.

                                             2
loan balance exceeded $1,600,000, and demanded immediate payment from Maases

under their guaranties. Sterling also notified Maases that they were in default on their

individual promissory notes for failing to pay property taxes in 2009 and breaching

“Other Agreements,” demanded immediate payment under the promissory notes, and

then foreclosed its first mortgage against the Scott County property and purchased the

sheriff’s certificate in December 2010.

       Sterling commenced an action to foreclose its mortgage against the Dakota County

property and sought a determination that its mortgagee’s interest was prior to any interest

of Maas parties and enforcement of Maases’ guaranties. Maas parties answered and

counterclaimed, alleging, among other things, that Sterling breached the 2005 promissory

note by failing to adjust the amounts due each month and asserting that Sterling’s breach

“suspended” their obligations to perform under any agreement with Sterling. The parties

brought cross motions for partial summary judgment. The district court denied summary

judgment to Maas parties, granted partial summary judgment to Sterling, and ordered

entry of judgment. The district court administrator certified the order as “THE PARTIAL

JUDGMENT OF THE COURT.” Maas parties appealed, and this court dismissed the

appeal, concluding that the partial judgment was not immediately appealable. Sterling

State Bank v. Maas Commercial Props., LLC, 837 N.W.2d 733, 734 (Minn. App. 2013),

review denied (Minn. Nov. 12, 2013).

       In December 2013, after this court’s dismissal, the district court dismissed

Sterling’s unresolved claims based on the parties’ stipulation, and the district court

administrator certified the resulting judgment.


                                             3
       This appeal follows.

                                      DECISION

Jurisdiction

       Sterling argues that this court lacks “jurisdiction to review” issues involving the

foreclosure judgment because Maas parties did not appeal the judgment within 60 days of

its entry. Whether this court has jurisdiction to address an issue is a legal question

reviewed de novo. In re Welfare of J.R., Jr., 655 N.W.2d 1, 2 (Minn. 2003). We may

review final judgments or final partial judgments properly ordered under Minn. R. Civ. P.

54.02 when appeal was taken from them within 60 days. Minn. R. Civ. App. P. 104.01,

subd. 1; see T.A. Schifsky & Sons, Inc. v. Bahr Constr., LLC, 773 N.W.2d 783, 787–88

(Minn. 2009) (stating that “[r]ule 104.01 refers only to a Final judgment” and referring to

“a final partial judgment pursuant to Minn. R. Civ. P. 54.02”). Maas parties timely

appealed from the February 2013 partial judgment, but we dismissed that appeal because

the partial judgment was not immediately appealable, noting that Maas parties could

obtain review of the partial judgment by timely appealing after a final judgment. Maas

parties timely appealed following the December 2013 final judgment. We conclude that

Maas parties timely appealed the February 2013 partial judgment and that the partial

judgment is within our scope of review. See Minn. R. Civ. App. P. 103.04 (permitting

appellate court to “review any order involving the merits or affecting the judgment” and

“any other matter as the interest of justice may require”).2


2
 Also within the scope of our review is the district court’s order denying Maas parties’
partial summary-judgment motion. Although orders denying summary judgment are

                                              4
Summary Judgment

       In granting summary judgment to Sterling, the district court concluded that the

2005 promissory note did not require Sterling to decrease MPC’s monthly payments

when the interest rate decreased and that Sterling therefore did not breach the note. Maas

parties admit that MPC failed to pay the 2010 final payment required by the promissory

note and failed to pay the 2009 Dakota County property’s taxes required by the 2005

mortgage. But they argue that the court erred by granting Sterling summary judgment

because a genuine issue of material fact exists as to whether Sterling was the first party to

breach the promissory note by not decreasing their monthly payments when the interest

rate decreased, thereby suspending Maas parties’ obligations to perform. Maas parties

argue that, had the bank not first breached the promissory note, they would have been

able to pay the 2009 property taxes. Maas parties’ arguments are not persuasive.

       Appellate courts “review a decision to grant or deny summary judgment de novo.”

Premier Bank v. Becker Dev., LLC, 785 N.W.2d 753, 758 (Minn. 2010). In doing so, we

“determine whether any genuine issues of material fact exist and whether the district

court erred in its application of the law,” “constru[ing] the facts in the light most


generally “not immediately appealable,” Kastner v. Star Trails Ass’n, 646 N.W.2d 235,
238 (Minn. 2002), they are within the scope of our review of an appealable final
judgment when they “involv[e] the merits” of the judgment, Minn. R. Civ. App. P.
103.04. But cf. Bahr v. Boise Cascade Corp., 766 N.W.2d 910, 918 (Minn. 2009) (stating
that, after a jury trial, “a denial of a motion for summary judgment . . . cannot be viewed
as ‘affecting the judgment’” when the denial turns on the existence of a genuine dispute
of fact because “a genuine dispute of fact becomes moot once the jury reaches a verdict
on that issue”). The order denying Maas parties’ motion is within our scope of review
because their motion asked for dismissal of the bank’s same claims for which the bank
received summary judgment and therefore involved the judgment’s merits.

                                             5
favorable to the party against whom summary judgment was granted.” Minn. Laborers

Health & Welfare Fund v. Granite Re, Inc., 844 N.W.2d 509, 513 (Minn. 2014). “No

genuine issue for trial exists when the record taken as a whole could not lead a rational

trier of fact to find for the nonmoving party.” McKee v. Laurion, 825 N.W.2d 725, 729

(Minn. 2013). Whether a contract is ambiguous is a legal question. Caldas v. Affordable

Granite & Stone, Inc., 820 N.W.2d 826, 832 (Minn. 2012).

       Maas parties ask us to conclude that they were relieved of their obligations to

perform under the promissory notes, mortgages, and guaranties because Sterling breached

the 2005 promissory note. “Generally, contract performance is excused when it is

hindered or rendered impossible by the other party,” Zobel & Dahl Constr. v. Crotty, 356

N.W.2d 42, 45 (Minn. 1984), such as by a “previous ‘uncured material failure’ by the

other party,” Schwickert, Inc. v. Winnebago Seniors, Ltd., 680 N.W.2d 79, 84 (Minn.

2004) (quoting Restatement (Second) of Contracts § 237 (1981)), or “a repudiating

party[’s] . . . prior total breach,” Space Ctr., Inc. v. 451 Corp., 298 N.W.2d 443, 451

(Minn. 1980); accord Associated Cinemas of Am. v. World Amusement Co., 201 Minn.

94, 99, 276 N.W. 7, 10 (1937). We have stated that “a party who first breaches a contract

is usually precluded from successfully claiming against the other party.” Carlson Real

Estate Co. v. Soltan, 549 N.W.2d 376, 379 (Minn. App. 1996), review denied (Minn.

Aug. 20, 1996). But “the better expression of that rule is that a breach must be material in

order to excuse performance.” TC/Am. Monorail, Inc. v. Custom Conveyor Corp., 822

N.W.2d 812, 817 (Minn. App. 2012) (emphasis added), rev’d on other grounds, 840

N.W.2d 414 (Minn. 2013).


                                             6
       To consider whether Sterling breached the 2005 promissory note, as alleged by

Maas parties, we construe the various instruments as one contract. See Marso v. Mankato

Clinic, Ltd., 278 Minn. 104, 114, 153 N.W.2d 281, 289 (1967) (“Where several

instruments are made part of one transaction, they will be read together and each will be

construed with reference to the others, although the instruments do not in terms refer to

each other.”); Wm. Lindeke Land Co. v. Kalman, 190 Minn. 601, 607, 252 N.W. 650, 653

(1934) (“[I]t is evident that exhibit B, which consists of the lease proper and the guaranty,

is one contract and not two.”). The 2005 promissory note and mortgage incorporate each

other by reference, as do the note and guaranties. Although the mortgage does not

incorporate the guaranties by reference, we construe them as one contract because the

guaranties state that “[t]he Lender has refused to make the Loan unless this Guaranty is

executed by the Guarantor and delivered to the Lender.”

       Appellate courts give effect to contract language that is “clear and unambiguous,

meaning it has only one reasonable interpretation.” Halla Nursery, Inc. v. City of

Chanhassen, 781 N.W.2d 880, 884 (Minn. 2010). “The determination of whether a

contract is unambiguous depends on the meaning assigned to the words and phrases in

accordance with the apparent purpose of the contract as a whole.” Id. We “assign

unambiguous contract language its plain meaning,” Savela v. City of Duluth, 806 N.W.2d

793, 796–97 (Minn. 2011), which we may ascertain by consulting dictionaries, see, e.g.,

In re Pamela Andreas Stisser Grantor Trust, 818 N.W.2d 495, 502 (Minn. 2012)

(consulting dictionary to ascertain ordinary meaning of phrase in trust agreement).




                                             7
      The parties do not dispute that an interest rate is needed to calculate monthly

payments through amortization.3 Cf. Thomas E. Plank, The True Sale of Loans and the

Role of Recourse, 14 Geo. Mason L. Rev. 287, 299 n.35 (1991) (stating that an

amortization calculation can calculate the periodic-payment amount if “the interest rate,

the number of payment periods, [and] the present value [of the debt] . . . is known or

assumed”). Maas parties argue that, because the interest rate under the 2005 promissory

note varied and the note does not expressly require fixed monthly payments, at least one

reasonable interpretation of the following provision is that the note required the bank to

decrease monthly payments when the interest rate decreased: “Monthly payments of

principal and interest shall be calculated on an assumed amortization of twenty-five (25)

years effective March 8, 2006.” We disagree.

      The subject provision falls within the following relevant context:

             MAAS COMMERCIAL PROPERTIES, LLC . . . hereby
             agrees and promises to pay to the order of STERLING
             STATE BANK . . . the principal sum of up to
             . . . $1,875,000.00 . . . and to pay interest on the unpaid
             principal balance, from [March 8, 2005] until this Note is
             fully paid, at the rate of interest described below. . . .

                    The interest rate . . . shall be a variable rate equal to
             one percent (1%) plus the prime rate . . . and shall be adjusted
             immediately as the Prime Rate changes from time to time
             during the term of this Note . . . .

                    Commencing April 8, 2005, monthly payments of
             interest only shall be made on the eighth day of each month
             and continue through and include March 8, 2006.

3
 “[A]mortization” is “[t]he act or result of gradually extinguishing a debt, such as a
mortgage, usu. by contributing payments of principal each time a periodic interest
payment is due.” Black’s Law Dictionary 99 (9th ed. 2009).

                                            8
                     Commencing April 8, 2006, monthly payments of
              principal and interest shall be due on the eighth day of each
              month through and including March 8, 2010. Monthly
              payments of principal and interest shall be calculated on an
              assumed amortization of twenty-five (25) years effective
              March 8, 2006.

                     Notwithstanding anything contained herein to the
              contrary, on April 8, 2010, the entire outstanding principal
              balance, together with accrued interest and any other amounts
              due hereunder, shall be due and payable in full.

(Emphasis added.) We conclude that nothing in the note required Sterling to adjust

monthly payments when the interest rate changed. Rather, the note provided that monthly

payments “shall be calculated on an assumed amortization of twenty-five (25) years

effective March 8, 2006.” (Emphasis added.) Absent specific language in the note that

required the adjustment of monthly payments, the only reasonable interpretation of the

note is that, effective March 8, 2006, fixed monthly payments would be allocated in

varying amounts to principal and interest, depending on the applicable interest rate.

       Maas parties argue that the district court erred by effectively granting summary

judgment sua sponte when it interpreted “assumed amortization” to mean that monthly

payments would be fixed without either party suggesting that interpretation. See Hebrink

v. Farm Bureau Life Ins. Co., 664 N.W.2d 414, 416 (Minn. App. 2003) (“A party

opposing a district court’s sua sponte order for summary judgment must be given a

‘meaningful opportunity’ to acquire evidence to oppose the motion.”). Maas parties are

correct that the district court concluded that their interpretation of the subject provision

“would be contradictory to the parties’ use of the word ‘assumed’ to modify



                                             9
‘amortization,’” but they cite no authority for the proposition that granting summary

judgment based in part on a contract interpretation not suggested by the parties is the

equivalent of granting summary judgment sua sponte. And Maas parties do not argue that

they lacked a meaningful opportunity to oppose that interpretation on appeal. We agree

with the district court. The use of “assumed” in the promissory note acknowledged that,

although the payment period would be 4 years, monthly payments would be calculated as

if the period were 25 years. Cf. The American Heritage Dictionary 110 (4th ed. 2006)

(defining “assumed” as “[t]aken up or used so as to deceive; pretended” and “supposed”).

       Without providing persuasive authority, Maas parties argue that interpreting the

promissory note as providing for fixed monthly payments ignores “[t]he general rule with

adjustable rate financing . . . that when the interest rate adjusts, the payment amount also

adjusts.” Although we are not persuaded, even if such a general rule exists, it is not

contained in the note and therefore is immaterial to whether the relevant language in the

note is ambiguous. Cf. Sayer v. Minn. Dep’t of Transp., 790 N.W.2d 151, 157 (Minn.

2010) (“A contract is ambiguous if, based upon its language alone, it is reasonably

susceptible of more than one interpretation.” (emphasis added) (quotation omitted));

Grant S. Nelson & Dale A. Whitman, Real Estate Finance Law § 11.4, 963 (5th ed. 2007)

(noting that two options when adjustable-rate-mortgage interest rates rise are (1) raising

monthly payments and (2) holding payments constant and adding unpaid interest to

principal).

       Read in context, we conclude that the subject provision unambiguously required

Sterling to calculate monthly payments only once, effective March 8, 2006, based on a


                                            10
25-year assumed amortization. We also conclude that the district court did not err by

rejecting Maas parties’ argument that Sterling first breached the 2005 promissory note

thereby suspending Maas parties’ obligations to perform under the various instruments at

issue. The district court did not err by granting Sterling summary judgment and denying

Maas parties summary judgment.

      Affirmed.




                                          11
