On March 10, 2025, a Minnesota state court judge granted in part and denied in part a credit union’s motion for summary judgment—and granted the defendants’ motion for leave to assert counterclaims against the credit union—in a case stemming from the defendants’ alleged default of a promissory note.
On June 27, 2022, Liberty 8200 Normandale LLC entered into a 99-year ground lease to acquire the leasehold interest of 8200 Normandale LLC, an office building in Bloomington, Minnesota. To finance the ground lease, Liberty obtained a $41 million loan from Wings Credit Union. Due to the COVID-19 pandemic, Liberty experienced cash flow issues and did not make the real estate tax payments for the property. Liberty later ceased making monthly loan payments to Wings.
Due to the default, Wings initiated foreclosure proceedings against Liberty, alleging claims for breach of the note and loan agreement, breach of the guarantees, and declaratory relief. Wings also sought appointment of a receiver to maintain the status quo. The court appointed a receiver, which collected rents from the building’s tenants. Wings then cancelled the ground lease, paid the past due real estate taxes, and created a new entity to which it transferred the title in the leasehold interest.
After terminating the ground lease, Wings abandoned its foreclosure action and moved for summary judgment on its remaining claims. Upon discovering Wings’ conduct, Liberty moved for leave to assert counterclaims against Wings, including for unjust enrichment, fraud, and tortious interference with contract.
The court granted in part Wings’ motion for summary judgment. The court held that Wings sufficiently demonstrated the existence of a contract and that Liberty defaulted under the promissory note. However, the court held that issues of material fact precluded summary judgment on the issue of damages. Wings argued that it was entitled to the full amount of the outstanding loan balance without any consideration of the value of the leasehold interest it acquired after terminating the ground lease. The court rejected this argument, holding that the value of the leasehold interest must also be considered in establishing Wings’ damages.
The court also granted Liberty’s motion for leave to amend the complaint to assert counterclaims against Wings and raise additional affirmative defenses. Liberty’s counterclaims all arise out of Wings’ alleged bad-faith conduct in terminating the ground lease—despite the appointment of a receiver—and seeking to recover the full outstanding balance of the loan after acquiring the leasehold interest. The court held that all Liberty’s counterclaims—including claims for fraud and tortious interference—were timely filed and were not futile.
The case is Wings Fin. Credit Union v. Liberty 8200 Normandale LLC et al., No. 27-CV-24-4562 (Minn. Dist Ct. Mar. 10, 2025). Wings is represented by GDO Law. The defendants are represented by King & Spalding LLP and Fredrikson & Byron, P.A. The order is available here.
