## Facts

- Richard Tretsven agreed to purchase a 160-acre parcel near Moose Lake, Minnesota, and obtained a $148,000 purchase-money loan from Lake State Federal Credit Union secured by a mortgage.
- The closing agent received the loan proceeds, closed the sale, and was to record the deed and Lake State mortgage, but failed to record them.
- After closing, the deed was altered to add Amanda Mahn as an additional grantee.
- Before Lake State’s mortgage was recorded, Mahn granted a $57,000 mortgage on the property to Hunter Financial, LLC.
- Hunter’s sole member was Kenneth D. Woodard, but the Mahn-to-Hunter mortgage did not name Woodard individually.
- At the time Hunter took the mortgage, Hunter was not registered as an LLC with the Minnesota Secretary of State; it registered months later.
- After Tretsven defaulted, Lake State sued to foreclose, joined Hunter, and challenged Hunter’s mortgage.
- The district court declared the Mahn-to-Hunter mortgage void for fraud, ordered foreclosure, and directed sale proceeds to Lake State (with any excess paid into court).
- Woodard, not Hunter, appealed in his individual capacity, asserting he was deprived of rights in the property.

## Issues

1. Whether an LLC’s sole member, who was not a party in the district court and was not named in the mortgage instrument, has standing in an individual capacity to appeal a judgment affecting the LLC’s purported mortgage interest.
2. Whether any asserted property rights derived from the Hunter mortgage could succeed where the named mortgagee was an unregistered LLC at the time of the transaction.

## Decision

- The court affirmed the district court’s judgment.
- Woodard lacked standing to appeal because the relevant party was Hunter, and Woodard was not personally a party or a named interest-holder under the mortgage.
- Even if standing existed, the claim to rights in the property failed because the alleged mortgagee (Hunter) was an unregistered LLC when the mortgage was executed.

## Legal Principles

- Appellate standing generally requires that the appellant be a party aggrieved by the judgment; an individual cannot appeal to vindicate an entity’s rights merely because of ownership or membership.
- An LLC is a separate legal person; claims and property interests belonging to the LLC are not the individual rights of its members.
- A mortgage interest purportedly granted to an entity acting as an LLC before it is properly registered may be treated as legally ineffective, defeating derivative claims based on that interest.

## Conclusion

The court upheld foreclosure relief for the purchase-money lender, holding that the LLC’s sole member could not appeal in his personal capacity and that the competing mortgage could not support enforceable property rights where the named mortgagee was an unregistered LLC at the time of the transaction.


Lake State Fed. Credit Union v. Tretsven, No. A07-1542, 2008 WL 2732111 (Minn. Ct. App. July 15, 2008)