Eighth Circuit Affirms Minnesota Credit Agreement Statute

Eighth Circuit Affirms Minnesota Credit Agreement Statute and Dismisses Borrower Claims Based on Lender’s Oral Promise

On April 4, 2014, the Eighth Circuit in Bracewell v. U.S. Bank National Association affirmed the validity of the Minnesota Credit Agreement Statute (“Statute”) which provides “A debtor may not maintain an action on a credit agreement unless the agreement is in writing, expresses consideration, sets forth the terms and conditions, and is signed by the creditor and the debtor.” Under the Statute, a “credit agreement” is any agreement by the lender to forbear repayment of money, to otherwise extend credit or to make any other financial accommodation. Minn. Stat. § 513.33. In Bracewell, the Borrower sued the Lender based on alleged oral promise to cancel or postpone a sheriff’s sale. Despite this “promise”, the Bank proceeded with the sale. The Borrowers filed suit alleging negligent misrepresentation and equitable estoppel.

The Borrowers argued that the Statute did not apply to claims for negligent misrepresentation because the Court has previously refused to address the issue. The Eighth Circuit summarily dismissed the argument holding that the Statute barred the claim because “any party asserting the existence of a ‘credit agreement’ must comply with the writing and signature requirements of [the Statute] regardless of the type of claim the agreement is alleged to support.” Similarly, the Court rejected the Borrowers’ claim for Equitable Estoppel because the alleged promise by the Bank was no different than previously rejected claims for promissory estoppel. The Court held that where a Borrower alleges a promise based on statements of future intent rather than a past or present fact, the claim is properly rejected under the Statute.

The Bracewell case is a welcome affirmation of Minnesota’s Credit Agreement Statute which stands as an important safeguard for Lenders to frivolous claims by Borrowers.


If you are confronted with a lender liability claim, please contact Nick Vivian by email or call at 651-379-3080 or Amanda Prutzman by email or call at 651-351-2116.

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