Wells Fargo Bank vs. True Gravity Ventures, Astra Genstar Partnership affirmed

This opinion is nonprecedential except as provided by Minn. R. Civ. App. P. 136.01, subd. 1(c). STATE OF MINNESOTA IN COURT OF APPEALS A24-0787 Wells Fargo Bank, National Association, Respondent, vs. True Gravity Ventures, LLC, et al., Defendants, Astra Genstar Partnership, LLP, Appellant. Filed March 16, 2026 Affirmed Johnson, Judge Dakota County District Court File No. 19HA-CV-23-308 Charles E. Nelson, Ballard Spahr, L.L.P., Minneapolis, Minnesota (for respondent) Howard A. Roston, Jessica R. Sharpe, Fredrikson & Byron, P.A., Minneapolis, Minnesota (for appellant) Considered and decided by Johnson, Presiding Judge; Larson, Judge; and Cochran, Judge. NONPRECEDENTIAL OPINION JOHNSON, Judge This appeal requires the court to decide who has the right to be the developer of certain parcels of real property in the city of Farmington that are the subject of a planned-unit-development (PUD) agreement: Astra Genstar Partnership LLP, which was selected

to be the developer by the then-owner of the property when the PUD agreement was entered into in 2011—or Wells Fargo Bank, which was granted a mortgage by the then-owner of the property in 1995, foreclosed on the mortgage in 2021, and purchased the property at a foreclosure sale. The district court concluded that Wells Fargo is entitled to develop the property or select a developer. We conclude that Astra Genstar’s rights in the property, which were transferred to Astra Genstar by the former owner of the property, were terminated by the foreclosure sale. Therefore, we affirm. FACTS This appeal is from an order on a motion for judgment on the pleadings filed pursuant to rule 12.03 of the rules of civil procedure. Ordinarily, in reviewing an order on such a motion, we would “consider only the facts alleged in the complaint, accepting those facts as true and drawing all reasonable inferences in favor of the nonmoving party.” Harkins v. Grant Park Ass’n, 972 N.W.2d 381, 385 (Minn. 2022) (quotation omitted). In this case, the plaintiff, Wells Fargo, attached seven exhibits to the complaint. We may consider the facts contained in those exhibits as part of Wells Fargo’s statement of its claim. See Minn. R. Civ. P. 10.03; Hardin Cnty. Savs. Bank v. Housing & Redevelopment Auth. of Brainerd, 821 N.W.2d 184, 192 (Minn. 2012). In addition, defendants Astra Genstar and True Gravity Ventures LLC submitted two documents as exhibits to an attorney’s affidavit. The district court stated that Wells Fargo’s motion “could also be analyzed as a motion for summary judgment,” presumably because of the exhibits submitted by the defendants. The district court’s statement corresponds to the second sentence of rule 12.03, which provides, “If . . . matters outside the pleadings are presented to and not excluded by

the court, the motion shall be treated as one for summary judgment and disposed of as provided for in Rule 56.” Minn. R. Civ. P. 12.03. Because the district court did not exclude the exhibits submitted by the parties, the district court relied on some of those documents in its order, and no party challenges the district court’s decision to treat Wells Fargo’s motion as one for summary judgment, we too will treat the motion as one for summary judgment. See Expose v. Thad Wilderson & Assocs., PA, 863 N.W.2d 95, 101-02 (Minn. App. 2015), aff’d, 889 N.W.2d 279 (Minn. 2016). Accordingly, the facts stated below are the relevant undisputed facts in the parties’ pleadings and exhibits. In 1995, the trustees of a trust established in 1976 by Fred Seed for the benefit of James Michael Seed (hereinafter the Seed Trust) granted to Wells Fargo a mortgage encumbering certain parcels of real property in Farmington. Wells Fargo recorded the mortgage with the Hennepin County and Dakota County recorders’ offices in January 1995. In 2011, the Seed Trust (and two other persons, the Finnegans, who owned other parcels of real property in Farmington) entered into a PUD agreement with Astra Genstar and the City of Farmington. The PUD agreement identifies the various parties to the agreement as the “owners,” the “developer,” and “the City.” The trustees of the Seed Trust signed the agreement on behalf of the trust. James M. Seed signed on behalf of Astra Genstar, the developer, in his capacity as president of a corporation that was a partner in the Astra Genstar partnership. The mayor and city administrator signed on behalf of the City of Farmington. The PUD agreement was recorded with the Dakota County Recorder’s office in July 2011.

The PUD agreement envisioned a development known as the Fairhill project, consisting of approximately 965 acres of land, which was designed to include approximately 678 acres of residential property and 29 acres of mixed-use commercial and residential property. The City agreed not to change its ordinances with respect to the project for 20 years without Astra Genstar’s consent. The PUD agreement prohibits Astra Genstar from assigning its rights under the agreement “without the written permission of” the City. In late 2019, the Seed Trust defaulted on a loan from Wells Fargo that was secured by the mortgage granted to Wells Fargo in 1995. The property owned by the Seed Trust that was encumbered by the 1995 mortgage was part of the property subject to the 2011 PUD agreement. In May 2020, Wells Fargo commenced a foreclosure action in the Dakota County District Court by serving a summons and complaint on the Seed Trust, Astra Genstar, and True Gravity, among other defendants. In October 2020, the district court filed an order stating that Wells Fargo was entitled to foreclose on the mortgage granted by the Seed Trust and to conduct a sheriff’s sale. In June 2021, Wells Fargo purchased nine parcels of foreclosed property at a sheriff’s sale for approximately $8,500,000. In July 2022, True Gravity redeemed one of the foreclosed parcels previously owned by the Seed Trust by paying approximately $535,000. Meanwhile, True Gravity’s president, Robert Wachholz, acquired operating control of Astra Genstar. In July 2022, immediately after True Gravity completed the redemption of one parcel of foreclosed property, Wachholz sent an e-mail message to Wells Fargo, saying, among other things, that Astra Genstar “holds the exclusive development rights for

the Fairhill PUD lands.” Wachholz proposed a negotiation for the purchase of Wells Fargo’s property in the Fairhill project. Wachholz provided Wells Fargo with a copy of a letter from the Farmington mayor to Astra Genstar, dated June 5, 2022, which “affirm[s] the development rights of Astra Genstar” with respect to the Fairhill project and states that, “at least from the City’s perspective, the only parties entitled to develop the Fairhill parcels before the expiration of the amended PUD contract would be Astra Genstar or a person or entity to whom Astra Genstar has assigned its development rights.” In January 2023, Wells Fargo commenced this action against True Gravity, Astra Genstar, and Wachholz. In August 2023, Wells Fargo served and filed an amended complaint to add the City as a defendant. Wells Fargo sought a declaratory judgment that, with respect to the eight parcels it owns as a result of the foreclosure sale, Astra Genstar’s and True Gravity’s interests in those parcels under the 2011 PUD agreement have been “terminated such that Astra Genstar is not the exclusive developer under the PUD.” Astra Genstar, True Gravity, and Wachholz filed a joint answer, and the City filed a separate answer. In November 2023, Wells Fargo moved for judgment on the pleadings. See Minn. R. Civ. P. 12.03. Wells Fargo argued that True Gravity’s and Astra Genstar’s interests in the property are junior to the interests of Wells Fargo and, thus, were terminated by Wells Fargo’s foreclosure of the mortgage granted by the Seed Trust. In response, True Gravity, Astra Genstar, and Wachholz argued that Astra Genstar “still has exclusive development rights under the PUD contract” because Astra Genstar has not assigned its right to be the project’s developer. The City filed a memorandum stating that it wishes “to ensure the

proper development of” the property at issue “subject to its zoning regulations” and asking the district court to “confirm that PUD zoning is not extinguished and require that any future development be pursuant to PUD agreement or development agreement with the City.” In December 2023, the district court filed an order granting Wells Fargo’s motion. The district court determined that “the right to develop under the PUD ‘runs with the land’” but also determined that “the right of Astra Genstar to develop the land has been extinguished through the foreclosure and expiration of the redemption period.” Ultimately, the district court ordered declaratory relief as follows: Wells Fargo is entitled to declaratory judgment that any interest of Astra Genstar in the real property, including the right to develop it under the PUD, has been terminated by the foreclosure sale and the running of the redemption period. Astra Genstar has no right or interest in the real property. Astra Genstar does not have the right to be the exclusive developer of the real property pursuant to the PUD. The district court administrator entered judgment on the same day that the order was filed. Astra Genstar appeals. For unknown reasons, the parties did not receive notice of the entry of judgment until March 2024. Astra Genstar filed a notice of appeal in May 2024. This court dismissed the appeal as untimely. The supreme court granted Astra Genstar’s petition for review and, in July 2025, reversed this court’s dismissal and reinstated the appeal. Wells Fargo Bank, N.A. v. True Gravity Ventures, LLC, 23 N.W.3d 837 (Minn. 2025).

DECISION Astra Genstar argues that the district court erred by granting Wells Fargo’s motion and declaring that Astra Genstar’s right to develop Wells Fargo’s property in the Fairhill project was terminated by the foreclosure sale. A district court must grant a motion for summary judgment “if the movant shows that there is no genuine issue as to any material fact and the movant is entitled to judgment as a matter of law.” Minn. R. Civ. P. 56.01. The evidence must be viewed in the light most favorable to the nonmoving party. Henry v. Independent Sch. Dist. No. 625, 988 N.W.2d 868, 880 (Minn. 2023). A genuine issue of material fact exists if a rational trier of fact, considering the record as a whole, could find for the nonmoving party. Frieler v. Carlson Mktg. Grp., Inc., 751 N.W.2d 558, 564 (Minn. 2008). This court applies a de novo standard of review to a district court’s grant of a motion for summary judgment. Henry, 988 N.W.2d at 880. The central issue on appeal is governed by a statute providing that, after a foreclosure sale and the expiration of the redemption period, a certificate of sale “shall operate as a conveyance to the purchaser . . . of all the right, title, and interest of the mortgagor in and to the premises named therein at the date of such mortgage, without any other conveyance.” Minn. Stat. § 580.12 (2024). Because of this statute, a person who purchases foreclosed property at a foreclosure sale receives “a title identical to that of the mortgagor as of the time the mortgage was executed.” Farmers & Merchants Bank of Preston v. Junge, 458 N.W.2d 698, 700 (Minn. App. 1990) (citing Gerdin v. Princeton State Bank, 384 N.W.2d 868, 871 (Minn. 1986)). The purchaser of foreclosed property

becomes “the owner” and is “entitled to all the rights of ownership,” including “every right or interest held by the mortgagor in and to the mortgaged property.” Tomasko v. Cotton, 273 N.W. 628, 630 (Minn. 1937). Furthermore, “a valid foreclosure of a mortgage terminates all interests in the foreclosed real estate that are junior to the mortgage . . . and whose holders are properly joined or notified.” In re Crablex, Inc., 762 N.W.2d 247, 253 (Minn. App. 2009) (quotation omitted), rev. denied (Minn. Apr. 29, 2009). Astra Genstar’s arguments on appeal do not directly confront the legal authorities summarized above, which Wells Fargo cited in the district court. In its opening brief, Astra Genstar argues that the PUD agreement identifies and determines the developer of the project, that the rights and obligations created by the PUD agreement run with the land, and that development rights recognized by the PUD agreement may not be assigned without the consent of both Astra Genstar and the City. In response, Wells Fargo argues that, notwithstanding the PUD agreement, the foreclosure sale terminated Astra Genstar’s rights to develop the property. In its reply brief, Astra Genstar reiterates the arguments made in its principal brief. In addition, Astra Genstar states that it “does not dispute that its property rights in the foreclosed property are terminated” but further states that “its development rights are contractual under the PUD contract and remain in effect.” (Emphasis added.) Astra Genstar’s distinction between property rights and contract rights is inconsequential in this context because it is elementary that property rights may be, and routinely are, conveyed by contracts. Although the PUD agreement is a contract, Astra Genstar’s rights to develop property in the Fairhill project are, nonetheless, property rights.

As a matter of property law, Astra Genstar may possess no greater rights to develop property formerly owned by the Seed Trust than the trust possessed at the time of the PUD agreement. See Tomasko, 273 N.W. at 630; Junge, 458 N.W.2d at 700. Before entering into the PUD agreement, however, the Seed Trust had granted a mortgage to Wells Fargo that encumbered property subject to the PUD agreement. Wells Fargo’s interest in the foreclosed property, which was acquired by the grant of a mortgage in 1995, is senior to Astra Genstar’s interest, which was acquired in 2011. As a consequence, Wells Fargo’s foreclosure of the property terminated Astra Genstar’s junior interest in the property. See Crablex, 762 N.W.2d at 253. Thus, the district court did not err by concluding that Astra Genstar’s interest in the property formerly owned by the Seed Trust, including the right to develop Wells Fargo’s property in the Fairhill project, was terminated by the foreclosure and Wells Fargo’s purchase at the foreclosure sale of eight parcels formerly owned by the Seed Trust. Before concluding, we will address Astra Genstar’s alternative argument that, even if this court affrims, the district court’s declaratory relief is overbroad. Astra Genstar notes that the district court declared that “any interest of Astra Genstar in the real property, including the right to develop it under the PUD, has been terminated by the foreclosure sale and the running of the redemption period.” Astra Genstar asserts that this statement is overbroad because the foreclosure “did not address all of the property subject to the PUD agreement.” Astra Genstar explains that True Gravity redeemed one parcel of property that had been owned by the Seed Trust, is subject to the PUD agreement, was foreclosed upon, and was purchased by Wells Fargo at the foreclosure sale. Astra Genstar explains

further that the Finnegans own property that is subject to the PUD agreement but was not foreclosed upon. At oral argument, Wells Fargo did not dispute that True Gravity and the Finnegans may work with Astra Genstar to develop the parcels of property owned by them. Thus, we clarify that the district court’s declaration applies only to property that was owned by the Seed Trust, encumbered by the 1995 mortgage that the Seed Trust granted to Wells Fargo, foreclosed upon, purchased by Wells Fargo at the foreclosure sale, and not redeemed by True Gravity. Affirmed.