author: SANDSTROM, Justice. MARING, Justice,

text:
    2006 ND 87
    CHOICE FINANCIAL GROUP, Plaintiff and Appellee v. Donald A. SCHELLPFEFFER, Defendant and Appellant and The R & D Group, LLC, Defendant.
    No. 20050273.
    Supreme Court of North Dakota.
    April 25, 2006.
    Rehearing Denied June 7, 2006.

      Stephen W. Plambeck (argued) of Nilles, Ilvedson, Stroup, Plambeck & Seibo, Ltd., Fargo, N.D., and Michael S. Degan of Blackwell, Sanders, Pepper, Martin, Omaha, NE, for defendant and appellant.
    Lowell P. Bottrell (argued) and Kyle L. Carlson of Anderson & Bottrell, Fargo, N.D., for plaintiff and appellee.
   SANDSTROM, Justice.

[¶ 1] Donald Schellpfeffer appeals the district court’s amended judgment ordering him to pay Choice Financial Group (“Choice”) $2,036,725.35 on a note he guaranteed for The R & D Group, LLC (“R & D”). Schellpfeffer also appeals the court’s order allowing Choice to dismiss $275,000 of its claim, which he contends was an attempt to block further discovery. Finally, he appeals the district court’s denial of his motion to amend his complaint to counterclaim that Choice fraudulently induced him into guaranteeing the loan. Holding summary judgment was improperly granted before Schellpfeffer had any opportunity for discovery, we reverse and remand.

I

[¶ 2] The facts of this case were outlined in Choice Financial Group v. Schellpfeffer, 2005 ND 90, 696 N.W.2d 504. We highlight those facts necessary for this opinion. In January 2003, R & D gave a promissory note for $2.2 million to Choice. Schellpfeffer and Michael Volk, both members of R & D, guaranteed the note. Schellpfeffer agreed only to guaranty the debt of R & D and no other entity associated with Volk. R & D defaulted on the note. Volk filed for bankruptcy and was protected by bankruptcy’s automatic stay.

[¶ 3] On March 3, 2004, Choice sued R & D and Schellpfeffer to recover on the defaulted note. Choice requested a judgment against R & D for $2.2 million plus interest and late charges. Choice requested Schellpfeffer be found jointly and severally liable on the note as a guarantor. R & D and Schellpfeffer served a joint answer on May 7, 2004. In the joint answer, Schellpfeffer individually admitted he executed the guaranty but affirmatively alleged Choice fraudulently induced him to sign the guaranty. According to Schellp-feffer, some of the debt allegedly owed by R & D was actually owed by another company, Plains Technology Ventures, LLC (“Plains Technology”), and he had refused to guaranty any loans made to Plains Technology; therefore, his guaranty did not cover any money advanced to Plains Technology.

[¶ 4] On May 13, 2004, approximately ten weeks after the lawsuit began and six days after the answer was. served, Choice moved for summary judgment. At the summary judgment hearing, Schellpfef-fer’s counsel argued more discovery was needed before summary judgment could be granted. The district court disagreed. It held no genuine issue of material fact existed as to a large part of the note and partially granted summary judgment, awarding Choice $2,036,725.35. The court denied summary judgment for $275,000 of the note because it concluded there were issues of fact as to that amount. Schellp-feffer secured new counsel and moved to alter, amend, or vacate the judgment. Counsel argued in the brief supporting the motion that more discovery was needed before summary judgment could be granted. He argued Schellpfeffer had requested documents from Choice detailing the loan transaction, but the discovery request was not answered before the summary judgment hearing. Schellpfeffer’s motion was denied.

[f 5] The district court certified the partial summary judgment as a final order as provided in N.D.R.Civ.P. 54(b), and Sehellpfeffer appealed the partial summary judgment. We dismissed the appeal, concluding the partial summary judgment was not a final order. Choice Fin. Group, 2005 ND 90, ¶ 1, 696 N.W.2d 504.

[¶ 6] On remand, Choice moved to voluntarily dismiss the remaining $275,000 of its claim to secure a final judgment. Sehellpfeffer moved to amend his answer to include a counterclaim against Choice and a cross-claim against R & D. In his reply to Choice’s voluntary dismissal motion and in support of his motion to amend, counsel argued additional discovery was needed. The district court denied Schellp-feffer’s motion to amend the answer, granted Choice’s motion to voluntarily dismiss part of its claim, and ordered final judgment be entered in favor of Choice.

[¶ 7] On appeal, Sehellpfeffer argues the district court erred when it granted summary judgment for Choice, granted voluntary dismissal of part of Choice’s claim, and denied his motion to amend the answer. Choice argues the district court properly resolved the motions before it.

[¶ 8] The district court had jurisdiction under N.D. Const. art. VI, § 8, and N.D.C.C. § 27-05-06. The appeal was timely under N.D.R.App.P. 4(a). This Court has jurisdiction under N.D. Const. art. VI, §§ 2, 6, and N.D.C.C. § 27-02-04 and §§ 28-27-01 through 28-27-02.

II

[¶ 9] The dispositive issue on appeal is whether summary judgment was properly granted. Summary judgment is appropriate only after the non-moving party has had a reasonable opportunity for discovery to develop his position. Aho v. Maragos, 1998 ND 107, ¶4, 579 N.W.2d 165 (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250 n. 5, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986)). Rule 56(f), N.D.R.Civ.P., allows for additional discovery before summary judgment is granted:

Should it appear from the affidavits of a party opposing the motion that the party cannot for reasons stated present by affidavit facts essential to justify the party’s opposition, the court may refuse the application for judgment or may order a continuance to permit affidavits to be obtained or depositions to be taken or discovery to be had or may make such other order as is just.

Rule 56(f) is within the discretion of the district court, and the court will not be reversed unless it has abused its discretion. Aho, at ¶ 4. “A court abuses its discretion if it acts in an arbitrary, unreasonable, or unconscionable manner, or if it misinterprets or misapplies the law.” Sec. Nat’l Bank v. Wald, 536 N.W.2d 924, 928 (N.D.1995).

[¶ 10] In Johnson Farms v. McEnroe, this Court held that N.D.R.Civ.P. 56(f) should be applied liberally. 1997 ND 179, ¶ 27, 568 N.W.2d 920. Discussing Rule 56(f), this Court noted:

“[T]he purpose of subdivision (f) is to provide an additional safeguard against an improvident or premature grant of summary judgment and the rule generally has been applied to achieve that objective. Consistent with this purpose, courts have stated that technical rulings have no place under the subdivision and that it should be applied with a spirit of liberality.”

Id. at ¶27 (quoting 10A Charles Alan Wright, Arthur R. Miller & Mary Kay Kane, Federal Practice and Procedure: Civil § 2740 (2d ed.1984)). In Johnson Farms, approximately four months elapsed between the beginning of the lawsuit and the defendant’s motion for summary judgment. Id. at ¶¶ 11-12. The plaintiff had specifically invoked Rule 56(f) in its brief opposing summary judgment. Id. at ¶ 28. This Court held that if the reason the district court denied the plaintiffs request for additional discovery was because it was not made in affidavit form, the court’s decision “would be a technical application of a rule that should be applied with a spirit of liberality.” Id. at ¶ 29.

[¶ 11] In Aho v. Moragos, this Court reversed the district court’s grant of summary judgment because the court abused its discretion when it denied the defendant’s request for additional discovery. 1998 ND 107, ¶ 1, 579 N.W.2d 165. Twelve weeks had elapsed between the beginning of the lawsuit and the summary judgment motion. Id. at ¶ 3. Only six weeks had passed between the service of the defendant’s answer and the summary judgment motion. Id. Becausei this Court’s primary concern was that a party be afforded the opportunity to conduct discovery necessary to its position, the Court concluded the defendant’s oral request for additional discovery, made at the summary judgment hearing, was sufficient to invoke Rule 56(f). Id. at ¶¶ 6-8. This Court again emphasized that Rule 56(f) needed to be applied with “ ‘a spirit of liberality.’ ” Id. at ¶ 6 (quoting Johnson Farms, 1997 ND 179, ¶ 29, 568 N.W.2d 920).

[¶ 12] “Although not binding, federal court interpretations of a corresponding federal rale of civil procedure are highly persuasive in construing our rule.” Thompson v. Peterson, 546 N.W.2d 856, 860 (N.D.1996). Although failure to comply with the affidavit requirement of Rule 56(f) is not fatal to a request for additional discovery, a proponent of the request must still “identify with specificity ‘what particular information is sought; how, if uncovered, it would preclude summary judgment; and why it has not previously been obtained.’ ” Lunderstadt v. Colafella, 885 F.2d 66, 71 (3d Cir.1989) (quoting Dowling v. City of Phila., 855 F.2d 136, 140 (3d Cir.1988)).

[¶ 13] As in Aho, Schellpfeffer’s counsel argued at the summary judgment hearing that the discovery to that point had been insufficient to conclude whether money supposedly advanced to R & D under its note was actually advanced to Volk’s other entities. Specifically, Schellpfeffer’s counsel argued:

What I know is Mr. Volk has testified to some amount of money. Hey, this amount of money Choice says is due is not correct. Some of this money was advanced to Plains Technology Ventures and was then later characterized as R & D Group that once Dr. Schellpfeffer wouldn’t sign those loan documents.
I don’t believe this issue is ripe for summary judgment at this point. I think we need to find out what — what the facts were with regard to making of these documents and loan advances.
That either Choice Financial Group would advance money without a promissory note makes me — makes me question the transaction. I’d like the ability to go back and do some more discovery and find out exactly what happened here.
I don’t understand — I don’t understand how — what Mr. Volk tells me and what his business partner told me was the facts about how this transaction came to be.
But what I’m saying, Your Honor, is it appears that there’s some — it appears that all the facts aren’t on the table. There’s some amount of money here, and we don’t know what, that Dr. Schellpfeffer — that may have been more properly attributed to Plains Tech that Dr. Sehellpfeffer wasn’t informed about. So I don’t know what the amount of his guaranty should be. I don’t even know if that second guaranty is enforceable as a result of Choice’s failure to tell him.
That’s why I think summary judgment at this time is inappropriate. I think that further discovery is probably appropriate, Your Honor.

[¶ 14] Counsel’s argument was supported by Volk’s affidavit testimony that at least $275,000 had been advanced to Plains Technology. We conclude counsel’s argument was sufficient to invoke Rule 56(f). It identified what information was sought, specifically whether more than the $275,000 Volk specifically knew of was advanced to entities other than R & D. The argument outlined how those facts would preclude summary judgment by raising genuine issues of material fact concerning what amount of money Sehellpfeffer was responsible for because of his guaranty. Finally, the reason discovery had not been previously obtained was obvious: only six days had passed between the service of R <& D and Schellpfeffer’s joint answer and Choice’s motion for summary judgment. R & D and Sehellpfeffer were not given time to complete discovery. Counsel for Sehellpfeffer specifically stated, “I do not believe this issue is ripe for summary judgment at this point,” and “I think summary judgment at this time is inappropriate.”

[¶ 15] As in Aho and Johnson Farms, the district court ignored Schellp-feffer’s request for additional discovery on the note, other than the $275,000 still in dispute. Since the summary judgment hearing, Sehellpfeffer has consistently argued more discovery was needed before summary judgment could be properly granted. The accelerated time in the present case was shorter than the times in Aho and Johnson Farms. Choice moved for summary judgment a mere ten weeks after it first sued Sehellpfeffer and only six days after R & D and Sehellpfeffer served their joint answer. Furthermore, the facts Sehellpfeffer wished to discover were in possession of businesses and people other than himself, including Choice. “[W]here the facts are in possession of the moving party a continuance of a motion for summary judgment for purposes of discovery should be granted almost as a matter of course.” Costlow v. United States, 552 F.2d 560, 564 (3d Cir.1977). Sehellpfeffer is entitled to the spirit of liberality applied in Aho and Johnson Farms. We hold that in light of the short time between the beginning of the lawsuit and the summary judgment motion, additional discovery is needed before summary judgment can be appropriate. The district court abused its discretion when it granted summary judgment in favor of Choice.

[¶ 16] We note, however, that this Court has a strong preference for compliance with the affidavit requirement of N.D.R.Civ.P. 56(f). As we said in Hummel v. Mid Dakota Clinic, P.C.:

The possibility that discovery will yield evidence favorable to a party opposing summary judgment is not a ground to deny summary judgment where the party opposing the motion has failed to specifically invoke Rule 56(f) procedures. Because counsel did not comply with Rule 56(f), the alleged incomplete state of [the plaintiffs] discovery provides no basis to reverse the • summary judgment.

526 N.W.2d 704, 708 (N.D.1995) (citations omitted). In Hummel, only nine weeks had passed between the beginning of the lawsuit and the defendant’s summary judgment motion. Brief of Plaintiff and Appellant at 1, Hummel v. Mid Dakota Clinic, P.C., 526 N.W.2d 704 (N.D.1995) (No. 940218). Only six weeks had passed from the time the defendant’s answer was served until the summary judgment motion. Id. Hummel is distinguishable, however, because the plaintiffs request for additional discovery was unspecific. 526 N.W.2d at 707. Counsel for the plaintiff had submitted two affidavits. Id. The first affidavit discussed events the decedent had told counsel about and vague information an unnamed informant had told counsel. Id. In the second affidavit, counsel tried to relay the distress the decedent had endured and stated that other people would be ready to testify at a trial. Id. The plaintiff argued these affidavits, along with a reference in her trial court brief claiming discovery would support the plaintiffs position, were sufficient to invoke Rule 56(f). Id. at 708. We held they were insufficient because the vague references to discovery did not state why the plaintiff could not present facts needed to oppose the motion and because the plaintiff failed to specifically invoke Rule 56(f). Id. In the present case, although Schellpfeffer’s counsel did not specifically cite Rule 56(f), he repeatedly requested more discovery, stating it was needed to learn what specific amounts of money were advanced to entities other than R & D and arguing the information would have raised an issue of fact concerning how much Schellpfeffer was actually liable for under his guaranty.

[¶ 17] As federal courts have noted, following the affidavit procedures of Rule 56(f) is beneficial to both the parties and the court. Affidavits give the parties’ arguments strength and supply the district court with the information needed to make a decision on the motion. See Lunderstadt, 885 F.2d at 70-71 (“Compliance with that provision by a party opposing summary judgment on Rule 56(f)[, Fed.R.Civ. P.,] grounds will also facilitate supplying the district court with the information needed to rule on the Rule 56(f)[, Fed. R.Civ.P.,] motion.”). From the court’s perspective, affidavits deter the parties from engaging in dilatory tactics or other bad faith strategies. See United States v. Five Parcels, 765 F.Supp. 1283, 1286 n. 2 (E.D.Mich.1991) (“Therefore, because Rule 56(f)[, Fed.R.Civ.P.,] presents an opportunity for parties to engage in dilatory tactics, the request for additional discovery time must be made in an affidavit, thereby subjecting the affiant to the penalties prescribed by Rule 56(g)[, Fed.R.Civ.P.].”). Although R & D and Schellpfeffer were tardy in filing an answer, interrogatory answers, and a response to Choice Financial’s motion for summary judgment, summary judgment was not granted as a sanction, nor do we suggest that it would have been appropriate.

[¶ 18] Therefore, following the affidavit procedure of Rule 56(f) rather than merely requesting additional discovery at a summary judgment hearing is the better practice. Simply requesting additional discovery at a summary judgment hearing will not guarantee the discovery continuance will be granted. The party requesting additional discovery must still explain to the district court what information is sought, how the information would preclude summary judgment, and why it has not been previously obtained. Affidavits will help meet that burden.

[¶ 19] Given the short time presented in this case, the district court abused its discretion by not allowing Schellpfeffer additional time for discovery. We reverse the district court’s grant of summary judgment and remand the case to the district court.

Ill

[¶20] Because we conclude summary judgment was improperly granted, Choice’s motion to dismiss part of its claim and Schellpfeffer’s motion to amend his answer remain subject to revision. See Smith v. Vestal, 456 N.W.2d 502, 506 (N.D. 1990) (“Because we have concluded that Rule 54(b) certification was improvidently granted, the summary judgments at issue remain subject to revision.”). The parties may move for reconsideration in light of this opinion and the discovery to be conducted. Id

IV

[¶ 21] The district court abused its discretion when it did not allow additional discovery. We reverse the amended judgment and remand to the district court.

[¶ 22] GERALD W. VANDE WALLE, C.J., BRUCE E. BOHLMAN, S.J., and CAROL RONNING KAPSNER, JJ.

[¶ 23] The Honorable BRUCE E. BOHLMAN, Surrogate Judge, sitting in place of CROTHERS, J., disqualified.

MARING, Justice,

dissenting.

[¶ 24] I respectfully dissent. Although Rule 56(f), N.D.R.Civ.P., should be interpreted liberally, the majority interprets it in such a way that it is only the time that has passed between service of the answer and the motion for summary judgment that provides the test for a court’s abuse of discretion. In doing so, the majority ignores that Sehellpfeffer did not establish one of the elements required by Rule 56(f), and rewards his lack of diligence during the course of this litigation. I do not interpret our prior decisions on Rule 56(f) as creating such a time test and, therefore, I do not believe the trial court abused its discretion in denying further time for discovery.

[¶ 25] Rule 56(f) is intended to “provide an additional safeguard against the improvident or premature grant of summary judgment, and the rule generally has been applied to achieve that objective.” Luallin v. Koehler, 2002 ND 80, ¶ 29, 644 N.W.2d 591. In Aho v. Maragos, this Court rejected a strict interpretation of the rule posited by Justice Sandstrom. See generally, Aho v. Maragos, 1998 ND 107, 579 N.W.2d 165. We said:

Our primary concern under Rule 56(f) is to ensure that parties are given a full and fair opportunity to conduct necessary discovery before being required to meet a motion for summary judgment. Rule 56(f) is intended to safeguard against judges swinging the summary judgment axe too hastily. We will apply the rule to prevent a “rush to summary judgment” when a party has been denied a fair opportunity to conduct discovery.

Aho, 1998 ND 107, ¶7, 579 N.W.2d 165 (citations omitted). I believe the correct interpretation of Rule 56(f) requires the party opposing a motion for summary judgment to clearly state in his brief or affidavits that further discovery is necessary, what and why further discovery is necessary, and that a continuance is requested. The rule plainly states:

Should it appear from the affidavits of a party opposing the motion that the party cannot for reasons stated present by affidavit facts essential to justify the party’s opposition, the court may refuse the application for judgment or may order a continuance to permit affidavits to be obtained or depositions to be taken or discovery to be had or may make such other order as is just.

N.D.R.Civ.P. 56(f). I believe the plain meaning of Rule 56(f) allows the trial court, once requested, to review the brief and affidavits of the non-moving party to decide if more time for discovery should be afforded. If it appears from this review that (1) the non-moving party cannot present essential facts that would justify his opposition to the motion for summary judgment; and, (2) the non-moving party states in his brief or affidavit reasons why he is not able to timely present such facts, a continuance generally should be given before summary judgment is granted. Although both prongs are preferably supported by affidavits, I would not penalize a party that establishes both prongs in either briefing or oral argument. See Johnson Farms v. McEnroe, 1997 ND 179, ¶ 29, 568 N.W.2d 920 (stating “[i]f the trial court’s reason for denying the request is because it was not made in affidavit form, that reason is not apparent from the decision and, in any event, would be a technical application of a rule that should be applied with a spirit of liberality”); see also Aho, 1998 ND 107, ¶ 6, 579 N.W.2d 165.

[¶ 26] However, a trial court’s failure to conduct this review will not be error if arguments invoking the rule, either specifically by name or by raising arguments that embody the spirit captured in the rule, are never raised. That is what I believe this Court meant when it said in BTA that “[t]he possibility that further discovery will yield evidence favorable to a party opposing summary judgment is not a ground to deny the motion when the party has failed to invoke N.D.R.Civ.P. 56(f).” BTA Oil Producers v. MDU Resources Group, 2002 ND 55, ¶ 52, 642 N.W.2d 873 (citing Opp v. Source One Mgmt., Inc., 1999 ND 52, ¶ 11, 591 N.W.2d 101; American State Bank and Trust Co. v. Sorenson, 539 N.W.2d 59, 62 (N.D.1995); Hummel v. Mid Dakota Clinic, P.C., 526 N.W.2d 704, 708 (N.D.1995)).

[¶ 27] In Johnson Farms, the rule was explicitly raised in the non-moving party’s brief. 1997 ND 179, ¶ 28, 568 N.W.2d 920. In Aho, the spirit of the rule was invoked by the non-movant during a telephonic hearing on the summary judgment motion. 1998 ND 107, ¶ 3, 579 N.W.2d 165. In BTA, we held that the rule was not invoked and therefore the possibility that further discovery would yield favorable evidence was not a ground to reverse the trial court’s denial of the motion on appeal. 2002 ND 55, ¶ 52, 642 N.W.2d 873.

[¶ 28] I agree with the majority insofar as it rejects the requirement that Rule 56(f)’s invocation requires magic words be spoken. In this case, the words “Rule 56(f)” were never uttered in either the affidavits, briefs, or oral argument. See majority, at ¶ 16. Nevertheless, by making arguments that embodied Rule 56(f), at least in spirit if not in name, I believe Schellpfeffer sufficiently “invoked” the rule.

[¶ 29] However, I would affirm because I do not believe Schellpfeffer met the second prong of the Rule 56(f) test. I do not read the original 2004 affidavits or the arguments of counsel opposing the motion for summary judgment as providing reasons Schellpfeffer could not present the essential facts that would allow him to oppose the motion for summary judgment. Schellpfeffer’s arguments for continuance are presented in the majority opinion at ¶ 13. Nowhere does Schellpfeffer state a reason he has not been able to conduct discovery. In Hummel v. Mid Dakota Clinic, P.C., the Court was faced with whether the following comments sufficiently invoked Rule 56(f):

Duane Hummel has died, and cannot personally testify, but the affidavit demonstrates a basis to reasonably expect discovery to substantiate the plaintiffs position. His widow has the right to pursue discovery in the case, to verify from other admissible sources, what her husband was told on December 16, 1993.

526 N.W.2d 704, 708 (N.D.1995). In affirming the trial court’s granting of summary judgment, we held both that Rule 56(f) had not been properly invoked, and that the second prong of Rule 56(f), requiring a reason, had not been met:

We do not view these comments in the brief, considered along with the affidavits, as sufficient to invoke Rule 56(f). Rule 56(f) is not mentioned in either the brief or the affidavits, and nowhere are reasons stated why Mary Ann cannot present by affidavit any facts essential to justify her opposition to the motion. The trial court did not view these vague, isolated references to discovery as a Rule 56(f) request, and neither do we.

Id. As in Hummel, Schellpfeffer here fails to state why he could not present the essential facts. He only makes conclusory statements that more discovery is needed.

[¶ 30] In the absence of a reason, the majority implies a reason: there has not been enough time. See majority, at ¶ 15 (stating “in light of the short time between the beginning of the lawsuit and the summary judgment motion, additional discovery is needed before summary judgment can be appropriate”). It is true we have held that an insufficient amount of time is, in appropriate cases, a sufficient reason to grant a continuance under Rule 56(f). E.g., Aho, 1998 ND 107, ¶8, 579 N.W.2d 165. We have also held that lack of time for discovery is not a sufficient reason for a continuance. E.g., Luallin v. Koehler, 2002 ND 80, ¶ 30, 644 N.W.2d 591. Because the circumstances in each case are different, we review the trial court’s determination of whether a continuance shoúld be granted with a deferential standard, abuse of discretion. Id. at ¶ 29. Here, this Court both provides the reason and substitutes its own discretion for that of the trial court.

[¶ 31] It is necessary to review facts omitted in the majority opinion in order to establish that Schellpfeffer had enough time to conduct discovery. On March 5, 2004, the summons and complaint were served upon The R & D Group and received by Volk. On March 8, 2004, the summons and complaint were served upon Schellpfeffer at his home. Because no answer was timely served, Choice Financial was forced to file a motion for default judgment with the trial court on April 19, 2004. An answer was filed with the trial court on May 10. The affidavit of service for the answer does not state the date the answer was transmitted by facsimile transmission, but it was notarized May 7, 2004. On May 13, 2004, a motion for summary judgment was served on Schellpfeffer by Choice Financial. Schellpfeffer’s response was served on June 15, 2004, again late. Discovery, including interrogatories and requests for admission, was served on Schellpfeffer on March 24, 2004. Again Schellpfeffer did not timely respond, finally serving responses on May 7, 2004. On remand from this Court, the trial court noted in its June 30, 2005, memorandum opinion and order that Schellpfeffer still had not come forward “with any personal affidavit or other evidence suggesting he had a real defense” to the personal guaranty and, despite a year having passed, “there is nothing but counsel’s arguments and allegations in the proposed Second Amended Answer to suggest any possible reason why the '2004 summary judgment was not correct.” The trial court clearly believed Schellpfeffer’s late attempt to present new allegations in his answer was a dilatory pattern of conduct.

[¶ 32] I do not believe the trial court abused its discretion in deciding a fair opportunity for discovery was afforded Schellpfeffer, who had not been diligent at any point in this litigation.

[¶ 33] The majority, at ¶ 16, states, correctly, that we prefer affidavits accompany a Rule • 56(f) request for continuance. However, the majority, at ¶ 17, then ignores its own reasoning why we have such a preference: “From the court’s perspective, affidavits deter the parties from engaging in dilatory tactics or other bad faith strategies.”

The district courts have a duty under Rule 56(f) to ensure that the parties have been given a reasonable opportunity to make their record complete before ruling on a motion for summary judgment. To this end, it has been said that Rule 56(f) should be liberally construed. On the other hand, a party seeking a Rule 56(f) continuance is generally required to demonstrate due diligence both in pursuing discovery before the summary judgment motion is made and in pursuing the extension of time after the motion is made.

11 James Wm. Moore, Moore’s Federal Practice ¶ 56.10(8)(a) (1997) (emphasis added).

[¶ 34] The majority ignores that there is no evidence in the record that Schellp-feffer conducted any discovery prior to the hearing on the motion for summary judgment, a hearing held fourteen weeks after the lawsuit was commenced. The majority does not discuss that it took eight weeks for Schellpfeffer to file an answer and, even then, the answer was not served until three weeks after a motion for default judgment had been made by Choice Financial. The majority neglects that Schellp-feffer’s response to the motion for summary judgment was late. The majority ignores that Schellpfeffer did not answer discovery requests made upon him in a timely manner. The majority ignores that, on remand, Schellpfeffer still failed to present any affidavits setting forth the representations he claimed were fraudulent and the discovery he felt necessary. There is a complete void of due diligence on Sehellpfeffer’s part. Yet, the majority gives Schellpfeffer extraordinary leniency. In holding as it does, it is difficult to not come to the conclusion this Court will now reward dilatory tactics when a request is made for further discovery invoking Rule 56(f).

[¶ 35] I agree with the majority that Rule 56(f), N.D.R.Civ.P., should be applied to uphold its purpose of providing “an additional safeguard against an improvident or premature grant of summary judgment,” that “technical rulings have no place under the subdivision and that it should be applied with a spirit of liberality.” See Johnson Farms v. McEnroe, 1997 ND 179, ¶27, 568 N.W.2d 920. I agree that the invoking of Rule 56(f) does not require the recitation of magic words. I cannot agree, however, that the trial court, in this case, abused its discretion by denying Schellpfeffer additional time for discovery.

[¶ 36] I would affirm.

[¶ 37] Mary Muehlen Maring


source: Caselaw Access Project

author: PER CURIAM.

license: Public Domain

text:
    2006 SD 32
    Patricia Marie JUDSTRA, Plaintiff and Appellee, v. Michael Robert DONELAN, Defendant and Appellant.
    No. 23551.
    Supreme Court of South Dakota.
    Considered on Briefs Jan. 9, 2006.
    Decided March 29, 2006.
    Patricia Marie Judstra, Humboldt, SD, Pro se plaintiff and appellee.
    Chad Swenson of Swenson Law Firm, Sioux Falls, SD, for defendant and appellant.
   PER CURIAM.

[¶ 1.] Michael Donelan appeals from the entry of a stalking protection order restraining him from contact with Patricia Judstra. We reverse and remand for the entry of findings of fact and conclusions of law.

FACTS

[¶2.] Donelan lives near the City of Montrose and Judstra resides in the nearby City of Humboldt. Donelan is a self-employed contractor, and was hired by Judstra to do some work on her residence. According to Donelan, a dispute arose between the two over payment for the work performed, and Donelan continued to make contact with Judstra about paying the balance owed. In October 2004, Juds-tra filed a petition for a stalking protection order against Donelan. A hearing on the petition was held on November 23, 2004, and the trial court denied issuance of a protection order. However, during her departure from the courthouse after the hearing, Judstra had an encounter with Donelan that caused her to file a new petition. A hearing on the second petition was held on December 15, 2004. At the close of the hearing, the trial court entered an order finding that stalking had taken place. The court restrained Donelan from following or harassing Judstra for a period of three years. The order further restrained Donelan from coming within 1000 feet of Judstra, her residence, or her place of work. The order finally restrained Do-nelan from contact of any kind with Juds-tra including phone calls, e-mails, or third party contact.

ISSUE

[¶ 3.] Did the trial court err in granting a protection order?

[¶ 4.] The standards applicable in reviewing protection orders were recently set forth in Goeden v. Dawn, 2003 SD 91, ¶ 5, 668 N.W.2d 108,110:

The grant or denial of a protection order is reviewed under the same standard used to review the grant or denial of an injunction. We must first determine if the trial court’s findings of fact were clearly erroneous.
In applying the clearly erroneous standard, our function is not to decide factual issues de novo. The question is not whether this court would have made the same findings that the trial court did, but whether on the entire evidence we are left with a definite and firm conviction that a mistake has been committed. This court is not free to disturb the lower court’s findings unless it is satisfied that they are contrary to a clear preponderance of the evidence. Doubts about whether the evidence supports the court’s findings of fact are to be resolved in favor of the successful party’s ‘version of the evidence and of all inferences fairly deducible therefrom which are favorable to the court’s action.’
If the findings of fact are not clearly erroneous, this Court must then determine whether the trial court abused its discretion in granting or denying the protection order, (citations omitted).

[¶ 5.] South Dakota law allows issuance of a protection order on a finding that “stalking” has taken place. See SDCL 22-19A-11. Donelan argues that the trial court abused its discretion in granting a protection order because the evidence did not support a finding that stalking occurred. The evidence supporting stalking is found in Judstra’s affidavit. Judstra alleged that after the first protection order hearing she and her boyfriend waited in the courtroom for a few minutes for Done-lan to leave and that they then took the elevator to the courthouse lobby. Judstra further alleged that at that point Donelan approached her in the lobby, “sneered” at her and then left through one set of doors as she and her boyfriend went out through another. Judstra asserted that Donelan then turned around and followed her as she made her way outside and that she turned around and went back into the courthouse to find the judge. Unable to find the judge, Judstra made contact with courthouse security who escorted her to her vehicle in the parking lot where, she alleged, Donelan was still parked.

[¶ 6.] Judstra did not testify during the second protection order hearing. Instead, she relied on the foregoing allegations in her affidavit and the testimony of her boyfriend. Donelan countered with his own testimony, testimony from two friends, and testimony from his girlfriend. All of Do-nelan’s witnesses essentially testified that Donelan had no contact with Judstra after the first protection order hearing. All four witnesses testified that after the first hearing they departed the courtroom and went down to the courthouse lobby where they visited for a few minutes. During that time, they saw Judstra but denied any contact with her as she left the building. Donelan only admitted going out the wrong set of doors to reach his vehicle and that he then had to turn around and follow Judstra out of the building to get to his parking place. However, Donelan and his witnesses repeatedly denied any contact with Judstra.

[¶ 7.] The trial court entered no formal findings of fact on these divergent stories. Moreover, it is obvious from the record of the second protection order hearing that part of the court’s basis for issuing its order was evidence presented during the first hearing. The court began the second hearing with the following statement:

THE COURT: You can have a seat. Okay. Now, I just heard this case not too long ago, and I dismissed the Protection Order, and I told Mr. Donelan, you stay away from her, don’t go near her, don’t go near her, don’t go near her. Then I heard from my clerk that Mr. Donelan or I guess Ms. Judstra had to [be] escorted out of the courthouse by security because you wouldn’t leave her alone. Now, tell me where I’m wrong here. Tell me where I’m wrong.

Ultimately, the trial court issued the order at the close of the second hearing explaining:

THE COURT: All right. Thank you. Well, I spent, I would guess, at least an hour if not two hours hearing the evidence in this case before, and Mr. Done-lan was very persuasive that it was just about a money deal, and that there was nothing' going on, and he would just stay away from her, and oh, his business was going to be hurt and this whole big song and dance that I got from Mr. Donelan, and so I dismissed it, and I’m making a finding that first of all, I warned him. I said you stay away from her, you do not go near her, you leave her alone, and I bet I said it ten times if I said it once, and she waited in the courtroom to give him a chance to leave the building, then she goes down and he specifically walks up to her and sneers at her and makes a face. That violated the Order that I gave him to get out of the courthouse, before he was even out of the courthouse, and I am granting a protection order for Ms. Judstra for three years against Mr. Donelan for stalking and for not even obeying my Order long enough to get out of the courthouse, and so there’s no contact whatsoever, and if it wrecks his business, you know what, I don’t care because I gave him a break. He couldn’t even get out of this courthouse without offending her to the point where she needed security, and it was up to him to make sure that she didn’t feel scared and didn’t need security. All he had to do was leave the courthouse. Not hang around inside the courthouse because she was waiting for him to clear the place, and I find that offensive, so she gets the protection order, he stays away from her, and this time if he walks up and sneers to her, he goes to jail, and that’s how protection orders work. I gave him a break. I listened to him. I bought in to what he was saying, and I don’t buy it any more.

Other than also reciting the statutory language defining stalking in the protection order, the foregoing statement contains the only findings that we have in the record to review this dispute.

[¶ 8.] Given the absence of the record from the first protection order proceeding, the scant record of the second proceeding, and the absence of adequate findings of fact and conclusions of law, much guesswork would be involved in any attempt to review the sufficiency of the evidence in this case: particularly evidence of stalking, which requires a showing of a series of acts that constitute willful, malicious and repeated harassment that serves no legitimate purpose. See SDCL 22—19A.—1(1); 22-19A-K3); 22-19A-4; 22-19A-5. Thus, much of what this Court stated in Goeden, regarding adequate findings, is also applicable here:

We cannot meaningfully review the trial court decision without the trial court’s reasons for ruling the way it did. The standard of review requires that we first determine whether the findings of fact are clearly erroneous. Without findings of fact, there is no way to determine the basis for the trial court’s conclusions that stalking had occurred or whether those findings were clearly erroneous.
Secondly, we are to determine whether the trial court abused its discretion in light of those findings in granting the protection order. “An abuse of discretion can simply be an error of law or it might denote a discretion exercised to an unjustified purpose, against reason and evidence.”
The trial court’s only pronouncement, at the conclusion of the testimony, was a general statement that he found stalking had occurred under SDCL 22-19A. He did not indicate which version of the evidence he believed. Nor did he indicate hoiv the evidence met the statutory elements of stalking. ...
In making a decision, the trial court must set forth the basis for its conclusions with sufficient specificity to permit a meaningful review.... The rules of civil procedure ... should not be relaxed to the point of skipping a crucial element of a court trial involving contested facts. Unless waived, the judge must insure that findings of fact and conclusions of law are clearly entered. This may be done orally on the record following the hearing, or with a written memorandum, or by filing formal findings of fact and conclusions of law, or by incorporating them into the protection order itself.... We reverse and remand to allow the trial court to enter findings of fact and conclusions of law.

Goeden, 2003 SD 91 at ¶¶7-10, 668 N.W.2d at 110-111 (citations omitted)(emphasis added).

[¶ 9.] In this case, the record reflects that the trial court’s decision was based on conflicting evidence from both hearings. However, we have no findings from the first hearing, and the findings from the second hearing are inadequate to determine which version of the evidence was believed and how it met the statutory definition. Therefore, as in Goeden, we reverse and remand for the entry of findings of fact and conclusions of law. They should include background findings, based upon evidence presented in both hearings, that allegedly justify the issuance of a stalking protection order.

[¶ 10.] Reversed and remanded.

[¶ 11.] GILBERTSON, Chief Justice, and SABERS, KONENKAMP, ZINTER and MEIERHENRY, Justices, participating.


author: ZINTER, Justice.

text:
    2006 SD 30
    STATE of South Dakota, Plaintiff and Appellee, v. Roberta Lee SCHWALLER, Defendant and Appellant.
    No. 23710.
    Supreme Court of South Dakota.
    Considered on Briefs Feb. 13, 2006.
    Decided March 29, 2006.

      Lawrence E. Long, Attorney General, Frank Geaghan, Assistant Attorney General, Pierre, South Dakota, Attorneys for plaintiff and appellee.
    John J. Simpson, Hamill, South Dakota, Attorney for defendant and appellant.
   ZINTER, Justice.

[¶ 1.] Roberta Schwaller appeals her misdemeanor conviction for making threatening or harassing telephone calls in violation of SDCL 49-31-31. Because we do not have jurisdiction to consider a direct appeal from a misdemeanor conviction in magistrate court, we dismiss.

PROCEDURAL HISTORY

[¶ 2.] On January 27, 2005, a criminal complaint was filed against Schwaller for making threatening or harassing telephone calls in violation of SDCL 49-31-31, a class 1 misdemeanor. The Honorable Kathleen F. Trandahl was assigned to preside in this matter. On February 1, 2005, Judge Trandahl recused herself. On February 10, 2005, the Honorable Max A. Gors, presiding judge of the Sixth Judicial Circuit, appointed Magistrate Judge Mark Smith to replace Judge Trandahl. The order provided that Judge Smith would “act in the stead of the said Judge Kathleen F. Trandahl, with full power, authority and jurisdiction to proceed in the matter.”

[¶ 3.] Judge Smith presided over the jury trial. The jury returned a guilty verdict against Schwaller. Judge Smith sentenced her to: 360 days in the county jail with 330 days suspended; a $500.00 fine with $500.00 suspended; unsupervised probation for one year; and she was prohibited from using the telephone except to call immediate family members and 911 for emergency purposes.

[¶ 4.] On July 15, 2005, Schwaller filed a notice of appeal directly with this Court challenging the conviction and sentence. As stated in her brief: “Schwaller appealed from the Judgment of Conviction and Sentence executed by the Honorable Mark Smith, Law Trained Magistrate for the Sixth Judicial Circuit, Gregory County South Dakota dated June 24, 2005.” Brief for Schwaller at 1, State v. Schwaller, 2006 SD 30, 712 N.W.2d 869. However, neither Schwaller nor the State cited any authority giving this Court jurisdiction to review a direct appeal from magistrate court. Instead, both parties cited general appellate statutes providing jurisdiction to review appeals from judgments of conviction entered in circuit court. Because this is a direct appeal from a judgment of conviction entered by a magistrate judge, and because this Court is required to take notice of jurisdictional defects, we examine our jurisdiction to entertain this appeal.

ANALYSIS

[¶ 5.] “This Court has only ‘such appellate jurisdiction as may be provided by the legislature. The right to appeal is statutory and therefore does not exist in the absence of a statute permitting it.’ ” Dale v. City of Sioux Falls, 2003 SD 124, ¶ 6, 670 N.W.2d 892, 894 (citing State v. Hoxeng, 315 N.W.2d 308, 308 (S.D. 1982)). “The appellate jurisdiction of this Court will not be presumed but must affirmatively appear from the record.” Double Diamond Constr. v. Farmers Coop., 2003 SD 9, ¶ 6, 656 N.W.2d 744, 746 (citing State v. Hare, 260 N.W.2d 224, 226 (S.D. 1977)). “The question of jurisdiction to hear an appeal may be raised sua sponte.” Id. In fact, we are “required to take notice of jurisdictional questions, whether presented by the parties or not.” Dale, 2003 SD 124, ¶ 6, 670 N.W.2d at 894.

[¶ 6.] Judge Smith assumed jurisdiction over this ease because Judge Trandahl recused herself. Pursuant to SDCL 15-12-32, in the event of the disqualification of a circuit court judge, the presiding judge of the circuit “shall assign some other circuit judge or magistrate of that circuit as is appropriate to preside in such action.” “A magistrate court with a magistrate judge presiding has concurrent jurisdiction with the circuit courts to try and determine all cases of misdemeanor.” SDCL 16-12B-11. Therefore, Judge Smith had jurisdiction over the action.

[¶ 7.] Following the jury trial and entry of the judgment by Judge Smith, Schwaller had the right to appeal her conviction. However, the appeal was to circuit court. “[T]here is a right to appeal to the circuit court from any final order or judgment of the magistrate court with a magistrate judge presiding, and such appeal shall be taken in the manner prescribed by law or rule for appeals to the circuit court.” SDCL 16-12B-16; 16-12A-27.1. “This Court has also adopted rules governing the manner in which such appeals are taken from magistrate court to the circuit court.” Dale, 2003 SD 124, ¶ 8, 670 N.W.2d at 895 (citing SDCL ch 15-38 (appeal from magistrate court to the circuit court)).

[¶ 8.] Consequently, we have previously held that “ ‘with the one exception provided by SDCL 23A-32-5 (appeals by the State from certain pre-trial orders of a magistrate), there is no right of direct appeal from magistrate court to the Supreme Court.’ ” Id. (citing Hoxeng, 315 N.W.2d at 309). And, when a party fails to pursue the only appeal authorized by law (to circuit court), this Court has no jurisdiction to entertain a direct appeal. See e.g., Dale, 2003 SD 124, ¶ 9, 670 N.W.2d at 895 (dismissing appeal in a civil action brought directly to this Court from magistrate court); Hoxeng, 315 N.W.2d at 309 (dismissing direct appeal from a law trained magistrate’s judgments of conviction entered after a jury trial). Although SDCL 23A-32-2 generally provides for an appeal to this Court “from [a] 'final judgment of conviction,” we have specifically held that this appellate statute does not abrogate the appellate statutes requiring an appeal from magistrate court to circuit court after a criminal conviction. Hoxeng, 315 N.W.2d at 309. Therefore, under this directly controlling authority, we have no jurisdiction to review this appeal.

[¶ 9.] Appeal dismissed.

[¶ 10.] GILBERTSON, Chief Justice, and SABERS, KONENKAMP and MEIERHENRY, Justices, concur,

      . SDCL 16-6-10 vests the circuit court with appellate jurisdiction for courts of limited jurisdiction. "Magistrate courts are, of course, courts of limited jurisdiction.” Hoxeng, 315 N.W.2d at 308 (citing SDCL ch 16-12A).


author: LARSON, Justice.

text:
    Mark STURM and Lori J. Sturm, Appellants, v. PEOPLES TRUST & SAVINGS BANK, Appellee.
    No. 04-1139.
    Supreme Court of Iowa.
    April 14, 2006.

      Benjamin T. Doran of Doran Anderson & Baltimore, P.L.C., Boone, for appellants.
    Bernard L. Spaeth, Jr. of Whitfield & Eddy, P.L.C., Des Moines, for appellee.
   LARSON, Justice.

The plaintiffs, Mark and Lori J. Sturm, defaulted on loans they had obtained from Peoples Trust <& Savings Bank (Peoples), and Peoples foreclosed. After the foreclosure, Sturms filed this suit, claiming the loan papers had failed to comply with a federal statute, that Peoples negligently misrepresented the rights and duties under the loan agreements, and that they had suffered damages as a result. The district court sustained Peoples’ motion for summary judgment, and Sturms appealed. We affirm.

I. Facts and Prior Proceedings.

Sturms and Peoples had a long banking relationship, but only two transactions are involved on this appeal. The first was a loan in July 1999 for $100,000 to build a cabin on Sturms’ acreage. Peoples, in order to loan the money, required a first lien on the Sturms’ real estate, which was at that time mortgaged to Farmers Savings Bank of Halbur (Farmers). Peoples paid the balance due to Farmers of $54,237.28 to obtain a first-lien position. In addition, $12,118.35 was deducted from the loan proceeds to pay off a previous loan Sturms had with Peoples. As a result of the payments to Farmers and to Peoples on its existing loan, Sturms did not get the full $100,000 for the construction of their cabin, as they had planned.

The second transaction relates to what was actually a new loan taken out by the Sturms in 2001 in the amount of $143,292.71. The loan required an initial payment of $4500 and monthly payments of $1359.39. The Sturms claim that they were not aware that a new loan was being created and that they believed three of the previous loans with Peoples were merely being renewed.

The gist of the Sturms’ suit against Peoples is that the loan papers were deficient under federal statutes and common law. They argue that the first of the bank’s “HUD-1” forms (which we explain later) was deficient because it failed to state on its face that the net amount of the loan would be reduced by the payment to Farmers and to Peoples on its earlier loan. They believe the second HUD-1 form was deficient because it indicated that the three previous loans were merely being renewed.

The factual support for'Sturms’ claims are not at issue on appeal. The sole issues are legal ones: (1) Do borrowers have a private cause of action against a lending institution for violation of the federal lending statute involved here, and (2) if statutory liability does not exist, may Peoples be held liable under a theory of negligent misrepresentation?

II. The Statutory Claim.

The Sturms claim that Peoples failed to comply with 12 U.S.C. § 2603, which provides for the development and use of a standard form called “HUD-1.” The statute requires that the form

conspicuously and clearly itemize all charges imposed upon the borrower and all charges imposed upon the seller in connection with the settlement and shall indicate whether any title insurance premium included in such charges covers or insures the lender’s interest in the property, the borrower’s interest, or both.

This section is part of the “Real Estate Settlement Procedures Act” or RESPA. The bank does not concede that it violated § 2603, but argues that, even if it had violated it, the Sturms have no cause of action.

The Sturms acknowledge that § 2603 does not expressly create a private cause of action for a violation. However, they argue that it is “inconsistent to impose requirements on a lender, yet protect it [from] liability to a borrower for violations of those requirements.” While they acknowledge that the weight of authority suggests that a private cause of action cannot be implied from 12 U.S.C. § 2603, they believe this court should reach a different result.

Only one case cited by Sturms found an implied cause of action under RE SPA. That case is Vega v. First Federal Savings & Loan Association, 622 F.2d 918 (6th Cir.1980). However, the “holding” in that case is relegated to a footnote:

As a threshold matter, we must determine whether [RESPA] creates a private cause of action for violations of 12 U.S.C. s 2609 and 12 U.S.C. s 2610. While the Act does not expressly provide for such causes of action, we believe, based on the legislative history, that Congress intended to create a private remedy for violations of the Act.

Vega, 622 F.2d at 925 n. 8. Apparently, all other reported federal cases have found no implied cause of action. See Collins v. FMHA-USDA, 105 F.3d 1366, 1368 (11th Cir.1997) (finding no private cause of action under 12 U.S.C. § 2604 (requiring that information booklets and good-faith estimate of charges for specific settlement services be provided)); Louisiana v. Litton Mortgage Co., 50 F.3d 1298, 1301-02 (5th Cir.1995) (finding no private right of action under 12 U.S.C. § 2609) (limitation on advance deposit requirements); Allison v. Liberty Sav., 695 F.2d 1086, 1089 (7th Cir.1982) (finding no private right of action under 12 U.S.C. § 2609); Bloom v. Martin, 865 F.Supp. 1377, 1385 (N.D.Cal.1994)) (finding no private cause of action under 12 U.S.C. § 2603), aff'd on other 'grounds, 77 F.3d 318, 320-21 (9th Cir.1996); Campbell v. Machias Sav. Bank, 865 F.Supp. 26, 31 (D.Me.1994) (finding no implied cause of action under 12 U.S.C. § 2609); Bergkamp v. N.Y. Guardian Mortgagee Corp., 667 F.Supp. 719, 723 (D.Mont.1987) (finding no private cause of action under 12 U.S.C. § 2609).

Apparently, the only eighth circuit decision discussing the issue is DeBoer v. Mellon Mortgage Co., 64 F.3d 1171, 1177 (8th Cir.1995). DeBoer recognized the split in authorities, but it expressed doubt as to whether an implied cause of action exists under RESPA. In assessing the merits of a class-action settlement in that case, the court said:

Counseling strongly in favor of the settlement is the fact that the plaintiffs did not have a very strong case — they may not have even had a legitimate federal cause of action.

DeBoer, 64 F.3d at 1177. Based on the state of the law in other jurisdictions, the court concluded “there was a strong unlikelihood of success” by the plaintiffs. Id.

In determining whether a private cause of action was created by implication, many courts have relied on the four-part test of Cort v. Ash, 422 U.S. 66, 78, 95 S.Ct. 2080, 2088, 45 L.Ed.2d 26, 36-37 (1975). Under that ease, a court should inquire whether (1)the statute was created for the plaintiffs special benefit, (2) there is any indication of legislative intent to create a private remedy, (3) a private remedy would be consistent with the legislative purpose, and (4) the area is so traditionally relegated to the states that it would be inappropriate to infer a cause of action based solely upon federal law.

In further refining the test, the Supreme Court has held that, because the ultimate question is one of legislative intent, the determinative factor is whether there is any indication of congressional intent to create a private remedy. Transamerica Mortgage Advisors, Inc. v. Lewis, 444 U.S. 11, 15-16, 100 S.Ct. 242, 245, 62 L.Ed.2d 146, 152 (1979). Further, the Court stated in Alexander v. Sandoval, 532 U.S. 275, 286-87, 121 S.Ct. 1511, 1519-20,149 L.Ed.2d 517, 528 (2001),

[l]ike substantive federal law itself, private rights of action to enforce federal law must be created by Congress. The judicial task is to interpret the statute Congress has passed to determine whether it displays an intent to create not just a private right but also a private remedy. Statutory intent on this latter point is determinative. Without it, a cause of action does not exist and courts may not create one, no matter how desirable that might be as a policy matter, or how compatible with the statute.

(Citations omitted.)

The legislative history of this statute does not support an interpretation under which a private remedy is created. See S.Rep. No. 93-866 (1974), 93rd Cong., 2nd Sess., U.S.Code Cong. & Adm.News 1974 p. 6546; H.R.Rep. No. 93-1526(1974), 93rd Cong., 2nd Sess., U.S.Code Cong. & Adm.News, 1974, p. 6569; H.R.Rep. No. 94-667 (1975); H.R.Rep. No. 94r-769 (1975), 94th Cong., 1st Sess., U.S.Code Cong. & Admin.News 1975, p. 2463. Rather, its limited purpose is as stated by Congress:

that consumers throughout the Nation [be] provided with greater and more timely information on the nature and the costs of the settlement process and [be] protected from unnecessarily high settlement charges caused by certain abusive practices....

12 U.S.C. § 2601(a).

According to the Supreme Court, the fact that a federal statute has been violated and some person harmed does not automatically give rise to a private cause of action in favor of that person.

Cannon v. Univ. of Chicago, 441 U.S. 677, 688, 99 S.Ct. 1946, 1953, 60 L.Ed.2d 560, 570 (1979).

In Sturms’ case, it is not likely that Congress merely overlooked providing a private remedy under § 2603 because other provisions in RESPA specifically state that a private remedy exists. For example, § 2605 provides for liability of a lender for violations of the loan and escrow servicing provisions and § 2607 provides for penalties and private remedies for violation of a kickback in unearned fee provisions.

We reject Sturms’ claim that § 2603 provides a private cause of action for its violation.

III. The Negligent Misrepresentation Claim.

The Sturms pled a common-law claim for negligent misrepresentation that, they contend, provided a basis for recovery independent of their statutory claim under 12 U.S.C. § 2603. The district court dismissed that claim as well as the statutory claim.

We recognize claims for negligent misrepresentation as defined in Restatement (Second) of Torts section 552. See Freeman v. Ernst & Young, 516 N.W.2d 835, 837 (Iowa 1994). Section 552 provides:

One who, in the course of his business, profession, or employment, or in any other transaction in which he has a pecuniary interest, supplies false information for the guidance of others in their business transactions, is subject to liability for pecuniary loss caused to them by their justifiable reliance upon the information, if he fails to exercise reasonable care or competence in obtaining or communicating the information.

Sturms, however, have a major obstacle to overcome in applying the tort of negligent misrepresentation in this case because

the tort does not apply when a defendant directly provides information to a plaintiff in the course of a transaction between the two parties, which information harms the plaintiff in the transaction with the defendant.

Sain v. Cedar Rapids Cmty. Sch. Dist., 626 N.W.2d 115, 126 (Iowa 2001). Thus, the tort “predominately applies to situations where the Information supplied harmed the plaintiff in its relations with third parties.” Id. at 126.

In Haupt v. Miller, 514 N.W.2d 905, 910 (Iowa 1994), we refused to recognize a negligent misrepresentation claim against a bank officer in connection with the negotiation of a loan guarantee. We noted the distinction between defendants in the business of supplying information, as to which the tort principle may apply, and parties to an arms-length or adversary transaction, as to which the claim does not apply. Here, the loan transactions fall within the latter category, and the negligent misrepresentation principles of section 552 do not apply.

AFFIRMED.

      . The court in Vega did not elaborate on the "legislative history” it found to support a private cause of action. In fact, as the court observed in Allison v. Liberty Savings, 695 F.2d 1086, 1089 (7th Cir.1982), "[t]he parties’ briefs, the district court’s opinion and our own research disclose no legislative history on the issue of private remedies under § 10.”


author: /s/Paul H. Anderson Associate Justice

text:
    Donald A. MEYERS, Relator, v. K BYTE-HIBBING MANUFACTURING, and TIG Insurance Company, Respondents.
    No. A06-154.
    Supreme Court of Minnesota.
    May 1, 2006.
    Thomas R. Longfellow, Stacie R. McBride-Cox, Longfellow Law Office, St. Paul, MN, for Appellant.
    Thomas L. Cummings, Jardine, Logan & O’Brien, P.L.L.P., Lake Elmo, MN, for Respondent.
    Mike Hatch, Attorney General, Rory H. Foley, Assistant Attorney General, St. Paul, MN, for Amicus Curiae.
   ORDER

Based upon all the files, records and proceedings herein,

IT IS HEREBY ORDERED that the decision of the Workers’ Compensation Court of Appeals filed December 22, 2005, be, and the same is, affirmed without opinion. See Hoff v. Kempton, 317 N.W.2d 361, 366 (Minn.1982) (summary dispositions have no precedential value because they do not commit the court to any particular point of view, doing no more than establishing the law of the case).

BY THE COURT:

/s/Paul H. Anderson Associate Justice


author: WILLIS, Judge.

text:
    BCBSM, INC. d/b/a Blue Cross Blue Shield of Minnesota, Appellant, v. MINNESOTA COMPREHENSIVE HEALTH ASSOCIATION, Respondent.
    No. A05-942.
    Court of Appeals of Minnesota.
    April 12, 2006.

      Diane B. Bratvold, Karen B. Andrews, Rider Bennett, L.L.P., Minneapolis, MN, for appellant.
    Ryan J. Burt, Halleland Lewis Nilan & Johnson, P.A., Minneapolis, MN, for respondent.
    Considered and decided by KALITOWSKI, Presiding Judge; WILLIS, Judge; and STONEBURNER, Judge.
   OPINION

WILLIS, Judge.

In this appeal from summary judgment, appellant argues that the district court erred by ruling that respondent properly assessed appellant for premiums from its sale of stop-loss insurance, based on the determination that stop-loss insurance is health-and-accident insurance. We affirm.

FACTS

Appellant BCBSM, Inc. (BCBSM), an insurance company that does business in Minnesota as Blue Cross Blue Shield of Minnesota, is a member of respondent Minnesota Comprehensive Health Association (MCHA). From 1996 through 2002, BCBSM paid assessments to MCHA based on the amount of accident-and-health-insurance premiums collected by BCBSM, as required by statute, to help fund insurance that MCHA offers to individuals with high-risk health conditions who cannot otherwise obtain coverage. Included in this category of premiums used to calculate the assessment were premiums on stop-loss insurance purchased by employers who otherwise self-insure for their employees’ health-care costs. Such inclusion was not questioned until BCBSM brought this challenge. Stop-loss insurance may be purchased by employers that self-insure their employees’ health-care costs rather than purchasing health insurance but that want to protect themselves against employee health-care expenses above a stated dollar amount.

In 2003, BCBSM claimed for the first time that stop-loss insurance is not accident-and-health insurance and consequently that premiums received for stop-loss insurance should not be included in calculating its assessment. It appealed to the MCHA, seeking a reduction of its 2002 assessment. Before the MCHA reached a decision, BCBSM initiated this action in district court and withdrew its appeal to the MCHA. After a hearing, the district court granted summary judgment to MCHA. This appeal follows.

ISSUE

Is stop-loss insurance for employee health-care expenses within the statutory definition of “accident-and-health insurance” so that stop-loss premiums are included in the calculation of the Minnesota Comprehensive Health Association’s annual assessments of its members under Minn.Stat. § 62E.11, subd. 5 (2004)?

ANALYSIS

In reviewing an appeal from summary judgment, the appellate court will deter-, mine whether there are any genuine issues of material fact and whether the district court erred as a matter of law. State by Cooper v. French, 460 N.W.2d 2, 4 (Minn.1990). The construction of a statute is a question of law. Hibbing Educ. Ass’n v. Pub. Employment Relations Bd., 369 N.W.2d 527, 529 (Minn.1985).

When interpreting a statute, courts will first determine whether the language of the statute, on its face, is clear or ambiguous. Molloy v. Meier, 679 N.W.2d 711, 723 (Minn.2004). “If the words of the statute are ‘clear and free from all ambiguity,’ further construction is neither necessary nor permitted.” Owens v. Water Gremlin Co., 605 N.W.2d 733, 736 (Minn.2000) (quotation omitted); see Minn.Stat. § 645.16 (2004). “A statute is only ambiguous when the language therein is subject to more than one reasonable interpretation.” Am. Family Ins. Group v. Schroedl, 616 N.W.2d 273, 277 (Minn.2000) (quotation omitted). In that event, the court must ascertain the intent of the legislature. See Minn.Stat. § 645.16. Legislative intent may be determined by considering factors such as the need for the law, the circumstances under which it was enacted, its purpose, legislative history, and administrative interpretations. Id. When a statute was not particularly clear and the parties provided reasonable but opposing interpretations, the court of appeals has concluded that the statute was ambiguous. In re Will of Kipke, 645 N.W.2d 727, 731 (Minn.App.2002), review denied (Minn. Aug. 20, 2002). We conclude that Minn. Stat. § 62E.11, subd. 5 (2004), is ambiguous and that statutory construction is necessary, therefore, to determine its meaning.

The legislature established the Minnesota Comprehensive Health Association (MCHA) “to promote the public health and welfare of the state.” Minn.Stat. § 62E.10, subd. 1 (2004). All insurers, self-insurers, and other specified insurance plans, programs, and organizations are members of the MCHA. Id. Membership in MCHA is a mandatory condition of doing business as an accident-and-health insurer, a self-insurer, a health-maintenance organization, or a community-integrated service-network in the state. Id., subd. 3 (2004). The MCHA- is statutorily mandated to offer health-insurance coverage to eligible persons who are otherwise unable to obtain insurance. MinmStat. § 62E.12(a) (2004) (mandating MCHA to offer such policies); Minn.Stat. § 62E.14, subd. 1 (2004) (providing for enrollment by eligible persons). Generally, this allows Minnesota residents who have been rejected for standard insurance coverage because of high-risk health conditions to obtain health insurance. See Minn.Stat. § 62E.14, subd. 1.

Those insured under these provisions pay premiums for their coverage. Minn. Stat. § 62E.08, subd. 1 (2004). But to the extent that the premiums are not sufficient to cover claims and expenses, the legislature also provided that MCHA’s expenses for losses resulting from claims and for operating and administrative expenses are to be funded by annual assessments levied on MCHA’s members. MinmStat. § 62E.11, subd. 5. The amount of the assessment is “equal to the ratio of the contributing member’s total accident and health insurance premium, received from or on behalf of Minnesota residents as divided by the total accident and health insurance premium, received by all contributing members from or on behalf of Minnesota residents.” Id.

MCHA’s assessment of each of its contributing member is based on the amount of the accident-and-health insurance premiums collected by that member. Id. The term “accident and health insurance policy” is defined as “insurance or nonprofit health service plan contracts providing benefits for hospital, surgical and medical care.” MinmStat. § 62E.02, subd. 11 (2004). The statute then provides that accident-and-health insurance does not include eight specified types of other coverage, including disability insurance; automobile medical coverage; supplemental liability insurance; certain coverage that makes fixed payments; credit accident-and-health insurance; dental- or vision-care insurance; blanket accident- and-sickness insurance under section 62A.11; and accident-only coverage based on the cost of the covered services. Id.

Stop-loss coverage is

[ijnsurance that protects a self-insured employer from catastrophic losses or unusually large health costs of covered employees. Stop-loss insurance essentially provides excess coverage for a self-insured employer. The employer and the insurance carrier agree to the amount the employer will cover, and the stop-loss insurance will cover claims exceeding that amount.

Black’s Law Dictionary 807 (7th ed.1999); see MinmStat. § 60A.235 (2004) (discussing standards for determining whether insurance policy is one for accident-and-sickness insurance or a stop-loss policy for purposes of regulation of the business of insurance).

The district court invoked the doctrine of “expressio unius est exclusio al-teráis” or “the expression of one thing indicates the exclusion of another.” See Harris v. County of Hennepin, 679 N.W.2d 728, 731 (Minn.2004); see also Minn.Stat. § 645.19 (2004) (“Exceptions expressed in a law shall be construed to exclude all others.”). The doctrine is a rule of construction and an aid to determining legislative intent. Northern Pac. Ry. Co. v. City of Duluth, 243 Minn. 84, 89, 67 N.W.2d 635, 638 (1954). The district court found “that stop-loss coverage, although providing coverage only after the specified attachment point is reached, provides benefits for hospital, áurgical and medical care.” The district court reasoned that, had the legislature intended to exclude stop-loss premiums from the calculation of MCHA’s assessment, it\would have done so explicitly, as it did with certain other categories of insurance. Í

BCBSM raises a number of Arguments in support of his claim that ston-loss premiums should not be included in calculating its assessment. We first exanAine its contention that because stop-loss coverage is not mentioned in chapter 62E\or specifically defined as accident-and-heauth insurance, the legislature did not inte nd that premiums for such insurance si oiiild be included in calculating the assessment. Courts may not add words to a statute ('to “supply that which the legislature purposely omits or inadvertently overlook's.” (Goplen v. Olmsted County Support & Recovery Unit, 610 N.W.2d 686, 689 (Minn.App.2000) (quotation omitted): /

We agree with the district court that the legislature’s decision not to specifically exclude stop-loss insurance from the [definition of accident-and-health insurance in Minn.Stat. § 62E.02, subd. 11, is compelling support for the assertion that it is accident-and-health-insurance subject to inclusion in the calculation of the assessment. The Indiana Court'of Appeals considered a similar cirefestance in addressing the issue of whether a stop-loss carrier was a member of the state’s comprehensive-health-insurapce association and subject to mandatory. .assessments. Avemco Ins. Co. v. State ex rel. McCarty, 812 N.E.2d 108,121 (Ind.Ct.App.2004) (upholding preliminary injuiiption ordering stop-loss insurer to comply with, orders of the Commissioner of Insurance). There, the court found it significant that while the issuers of certain categories of insurance were excluded from membership in the association, stop-loss carriers were not. Id. at 123. As evidenced by the enactment of Minn.Stat. §§ 60A.235-.236 (2004), which describes standards for determining whether an insurance policy is accident- and-sickness insurance or stop-loss insurance for the. purpose of regulating the business of insurance, the legislature was aware of the existence of such insurance and could have specifically excluded it from assessment. Applying the same analysis used in Avemco, we likewise find that the Minnesota legislature’s failure to exclude stop-loss insurance from the definition is a strong indication that it intended that stop-loss insurance is accident-and-health insurance.

Further, Minnesota law specifically lists some 15 lines of insurance that can be sold in the state, but that' list does not include stop-loss insurance." Minn.Stat. § 60A.06, subd. 1 (2004). This supports MCHA’s claim that stop-loss insurance is not a separate and distinct line' of insurance but rather is a form of one of the enumerated lines, namely accident-and-health insurance. If this were not so, BCBSM would ' have no authority to sell stop-loss insurance in Minnesota.

In support" of its argument that stop-loss insurance is not accident-and-health insurance, BCBSM contends that an important distinction between the two is that accident-and-health-care policies provide employees with benefits for hospital, surgical, and medical care, while stop-loss insurance provides no medical-care benefits for an employee. Instead, it covers the'employer’s risk for health-care expenses in excess of a stated amount, or attachment point. Further, BCBSM contends that stop-loss insurance, premiums are paid from the employer’s assets, and the employer receives the benefits of the policy. BCBSM contends, therefore, that “if stop-loss insur-anee provides benefits to self-insured employers, it cannot also provide benefits to employees for hospital, surgical and medical care.”

We are not persuaded by BCBSM’s argument. Stop-loss insurance plainly provides benefits for the expenses of medical care, and we conclude that the fact that it is paid to the employer to cover expenses rather than directly to employees or providers is a difference without a distinction. The underlying expenses being covered in either case are for hospital, surgical, or medical care. In Avemco, the court held, in relevant part, that “the medical stop loss insurers insure for medical expenses incurred by individuals within the scope of their policies.” 812 N.E.2d at 122. It rejected the insurer’s argument that they were not members of the state’s comprehensive-health-insurance association because, as stop-loss insurers, they did not provide health insurance and stop-loss insurance benefits were received by the employer rather than the employees. Id. at 124.

BCBSM next cites Minn.Stat. § 60A.235, subd. 1, which specifically addresses whether a policy is considered to be a health-plan contract or a stop-loss contract, for the proposition that because the legislature expressly distinguished between stop-loss policies and aceident-and-sickness policies, MCHA’s position that stop-loss insurance and accident-and-health insurance are indistinguishable must fail.

Section 60A.235 sets out standards for determining whether a policy is a health-plan contract or a stop-loss contract for purposes of regulating the business of insurance. Minn.Stat. § 60A.235,. subd. 1. The statute provides that if a policy issued to an employer for the health-care expenses of its employees has an attachment point of less than $10,000 per individual, it is considered a health plan. Id., subd. 3(a) (also providing an alternative method of calculating attachment*' point). In stop-loss insurance, an “attachment point” means “the claims amount beyond which the insurance corn-pan pay 2(aj. y or health carrier incurs a liability for ment.” Minn.Stat. § 60A.235, subd. Section 60A.235 appears to be directed at the issue of whether stop-loss policies issued in Minnesota are governed by] state law or by the federal ERISA law. Thle latter has been described as “a comprehensive federal statute regulating private employee benefit plans, including plains maintained for the purpose of providing medical or other health benefits for employees.” Am. Med. Sec., Inc. v. Bartlleti, 111 F.3d 358, 361 (4th Cir.1997). ERISA broadly preempts states from regulating fully self-funded plans. Id. Nonetheless, under a “savings clause,” state laws that regulate insurance are saved from ERISA preemption. Id. But a state law that merely “deems” an employee-benefit plan to be an “insurance company” in order to regulate it is preempted. Id.

A number of cases, including some that BCBSM cites, have addressed the issue of whether stop-loss insurance is health insurance for purposes of determining whether ERISA or state law governs. See, e.g., Ramsey County Med. Ctr., Inc. v. Breault, 189 Wis.2d 269, 525 N.W.2d 321, 325 (1994) (holding that stop-loss insurance is not health insurance under ERIS'A and that ERISA preempts application of state law). As the court in Avemco noted', how-* ever, issues raised in ERISA preemption cases generally involve “1) whether the purchase of stop loss insurance by employee benefit plans alters the preemption analysis under ERISA, or 2) the extent to which states may indirectly regulate ERISA plans.” 812 N.E.2d at 122 n. 6 (citations omitted). Thus, Avemco found these cases irrelevant to a determination of whether stop-loss carriers were' members of the Indiana comprehensive-health-insurance association because such cases primarily ■ addressed ERISA preemption issues. Id. Likewise, we do not find determinative the cases addressing the .issue of ÉRISA preemption cited by BCBSM.

BCBSM also cites a tax case, in which the Minnesota Supreme Court held that “premiums received by an insurer on ^top-loss insurance policies issued to employers who self-fund health care coverage for their employees” are not subjefet to a premium tax. BCBSM, Inc. v. Comm’r of Revenue, 663 N.W.2d 581, 531, *534 (Minn.2003). BCBSM asserts that the supreme court made two relevant observations regarding stop-loss policies. First, under a self-funded plan, “the employees’ health care costs are paid directly •out of the employer’s assets and it is the employer who assumes the risks for the employees’ health care coverage.” Id. at 532: Second, because a stop-loss policy covers “the employer’s risk above a speci•fied amount known as the attachment point,” the stop-loss insurer consequently .“has no direct [insuring] relationship with the employee[s].” Id. Consequently, ■BCBSM contends, stop-loss policies should be considered excess insurance for employers rather than accident-and-health insurance for employees.

We do not find BCBSM helpful. First, it interprets tax provisions that are not at issue here. Further, as already noted, we find unpersuasive BCBSM’s argument that because stop-loss benefits are paid to the employer, they cannot constitute accident- and-health benefits.

Next, we address the purpose of the statute. Minn.Stat. § 645.16. MCHA was created to provide health-insurance benefits to Minnesota residents who would otherwise be unable to obtain insurance because of their, high-risk health conditions. See Minn.Stat. §§ 62E.12(a), 62E.14; subd. 1(c). The legislature determined that unfunded expenses and claims should be paid for by assessments based on the. premiums collected by accident- and-health insurers. Minn.Stat. § 62E.11, subd. 5.

BCBSM asserts that the amount realized from the assessments would remain the same regardless of whether stop-loss premiums are included and that the only effect is that the assessment would be reallocated. But we determine that the legislature intended that insurers who offer stop-loss insurance should be among those assessed. Consequently, we conclude that premiums for stop-loss insurance were properly included as accident- and-health-insurance premiums in calculating MCHA’s annual assessment of its members.

DECISION

We affirm the decision of the district court that stop-loss premiums are included in the definition of accident-and-health insurance for purposes of calculating MCHA’s annual assessment of its members.

Affirmed.

      . “Health plan” is defined in Minn.Stat. § 62A.011. Minn.Stat. § 60A.235, subd. 2(e). Minn.Stat. § 62A.011, subd. 3 (2004), defines “health plan” as a policy of accidenl-and-sickness insurance as defined in Minn.Stat. § 62A.01.

      . Minn.Stat. § 60A.235 uses the term "accident-and-sickness insurance,” while Minn. Stat. § 62E.02, subd. 11, uses the term "accident-and-health insurance.”

      . The parties note that Minn.Stat. § 2971.05, addressing the premium tax at issue, was amended so that "direct business" is defined , as including stop-loss insurance. Minn.Stat. § 2971.01, subd. 6a (Supp.2005) (containing amended language). They dispute the effect of this amendment on the holding in BCBSM, 663 N.W.2d at 534, but we do not find it necessary to address this dispute.