STATE OF MINNESOTA
DISTRICT COURT
COUNTY OF CLAY
SEVENTH JUDICIAL DISTRICT
Case Type: Other Civil
(Consumer Protection)
State of Minnesota by its Attorney General,
Mike Hatch,
Plaintiff,
vs.
Jack Hoffner, individually and d/b/a
Greenwood Communities,
Defendant.
Court File No. __________________
Minnesota Attorney General Charges Owner of Greenwood Mobile Home
Park with Abusive Practices
The State of Minnesota, by its Attorney General, Mike Hatch, alleges as
follows:
INTRODUCTION AND PARTIES
Defendant Jack Hoffner’s business practices are predatory, abusive and
unlawful. Hoffner has falsely and deceptively advertised mobile homes
for sale in Greenwood Communities as the “owner” or “broker” of the
homes, when in fact he is neither the titled owner nor that person’s
broker. He has used unwritten criteria to deny prospective purchasers
residency in the park. He has required that all consumers execute a
lease with a host of unlawful terms. He is unlicensed as either a
manufactured home dealer or lender, and yet he has sold and financed
the purchase of dozens of homes in the park each year using installment
contracts with unlawful terms. He has repeatedly failed to promptly
deliver the homes’ certificates of title to resident-buyers after the
sale, pocketing the titles instead to more easily enable his eviction
of residents in default without proper repossession of their homes. He
has then resold homes for an identical or an inflated price, stripping
the former resident’s equity in the home.
Mike Hatch, the Attorney General of the State of Minnesota, is
authorized under Minn. Stat. ch. 8, including Minn. Stat. §§
8.01, 8.31, 8.32 and under Minn. Stat. §§ 325F.67, 325F.70,
327B.12, 327C.15 and has common law authority, including parens patriae
authority, to bring this action on behalf of the State of Minnesota and
its citizens, to enforce Minnesota law.
Jack Hoffner (“Hoffner”) resides at 2808 38th Avenue, Fargo ND 58104.
Hoffner owns and operates Greenwood Communities, a manufactured home
park located on two parcels known as the Greenwood Main Court, 1700 3rd
Avenue South, Moorhead, MN 56560 (parcel number 587210690) and
Greenwood East, 1903 1st Avenue South, Moorhead, MN 56560 (parcel
number 587210640). Hoffner conducts business at the park under the
assumed name “Greenwood Communities” (“ Greenwood”), which is
registered with the Minnesota Secretary of State. Hoffner has directly
participated in, knowingly acquiesced in and/or should have known about
the conduct alleged in this Complaint.
JURISDICTION
This Court has personal jurisdiction over the defendant and, pursuant
to Minn. Stat. §§ 8.31, 8.32, subd. 2(a), 325D.45, 325F.67
and 325F.70 (2004), jurisdiction over the subject matter of this action.
VENUE
Venue in Clay County is proper under Minn. Stat. § 542.09 (2004)
because the cause of action arose, in part, in Clay County.
FACTS
Greenwood is a 97-lot manufactured home park in Moorhead, Minnesota,
which is home to low-income Minnesotans, many of whom qualify for
financial assistance from governmental agencies or non-profit
organizations committed to helping those in need.
Since 1998, Hoffner has rented the lots in Greenwood to
resident-tenants, and repeatedly sold to and financed the purchase by
resident-buyers of the manufactured homes (“mobile homes”) located on
more than half of those lots.
Hoffner’s business practices in the rental of lots, the sale and
financing of mobile homes, and the recovery of homes upon “abandonment”
or eviction are unlawful as follows:
Evaluation and Denial of Prospective Residents Without Written Criteria
Hoffner and his staff interview prospective park residents who respond
to print advertisements or otherwise inquire about living in Greenwood.
Hoffner and his staff provide to prospective residents a Greenwood form
entitled “Proposed Application Process We Will Use in Determining Your
Eligibility,” a copy of which is attached hereto as Exhibit A.
Hoffner’s “proposed application process” form generally provides that
“financing with some bad credit is allowed” and that “we reserve the
right to run a credit check,” but it fails to specify in writing the
criteria Hoffner uses to evaluate consumer creditworthiness. For
instance, Hoffner fails to specify in writing that he employs “income
guidelines” to evaluate whether prospective residents’ payments to
Greenwood will constitute 25% or less of their total income. Hoffner
also fails to specify in writing what debts he considers in evaluating
consumers’ applications: He considers a prospective resident’s debts to
a former landlord, a home mortgage company, or for child support, but
gives less credence to debts for medical care, vehicles, or those
incurred by a divorcing spouse.
Using these unwritten procedures and criteria, Hoffner has evaluated
and denied prospective buyers approval as park residents in violation
of Minn. Stat. § 327C.07, subd. 2 and § 327C.02, subd. 5
(2004).
Unlawful Lot Rentals
Hoffner requires all consumers approved for residency to rent a lot
from him, doing business as Greenwood Communities, by executing a
contract entitled “Lot Rental/Leasing Agreement” (“Lot Lease”), the
form of which has remained substantially the same during his ownership
of the park. A copy of the Lot Lease is attached hereto as Exhibit B.
Hoffner also typically provides tenants with a form document entitled
“Rules and Regulations” (“Park Rules”), a copy of which is attached
hereto as Exhibit C.
Hoffner represents in the Lot Lease that he is leasing to consumers not
only a lot, but also the mobile home situated on the lot. Coupled with
other practices described below, including Hoffner’s failure to deliver
titles to homes he has sold on installment contracts, this misleading
representation has the tendency and capacity to deceive consumers that
they are renting or leasing a mobile home from Greenwood when, in fact,
they are not, in violation of Minn. Stat. § 325F.69, subd. 1 and
325D.44, subd. 1 (2004).
Hoffner further regularly violates the Manufactured Home Park Lot
Rentals Act as follows:
A. Failure to Identify Secured Party. The Lot Lease fails to name the
person, if any, who holds a security interest in the resident’s home,
in violation of Minn. Stat. § 27C.02, subd. 1(e) (2004). For
instance, as of January 15, 1997, Hoffner has been identified as the
secured party on the title to a 1978 Detroiter mobile home on Lot 121,
and yet he has failed to identify his security interest in the Lot
Leases signed by at least five successive tenants on that lot (to whom
he likewise failed to transfer ownership of the home).
B. Failure to Include All Rules in Lease. The Lot Lease fails to
include all rules applicable to the resident, in violation of Minn.
Stat. § 327C.02, subd. 1(c) (2004). The Park Rules are not
incorporated in the Lot Lease, are not uniformly signed by residents to
acknowledge receipt, and are sometimes not even provided to residents.
C. Failure to Include All Financial Obligations in Lease. The Lot Lease
fails to include all financial obligations imposed on residents by the
park, in violation of Minn. Stat. §§ 327C.02, subd. 1(d) and
327C.03, subd. 1 (2004). The Lot Lease does not include special fees
charged or chargeable by Greenwood for the clean up of lots, excess
water usage, labor and materials to fix sewer problems, towing of
unregistered vehicles, and removal of pet droppings. For instance,
Hoffner fined residents $150 and $50 respectively for “garbage outside
your home” in the February 13 and June 27, 2003 notices attached hereto
as Exhibit D.
D. Invalid Rent Increase. Hoffner has increased rent without 60 days’
notice, in violation of Minn. Stat. § 327C.06, subd. 1 (2004). For
instance, on June 27, 2003, Hoffner notified one resident that his lot
rent would be immediately increased to $250 (from $200) until the
resident cleaned up “garbage” outside his mobile home. See Exhibit D.
E. Failure to Provide Notice of Legal Rights. Hoffner wholly fails to
provide to prospective residents the statutorily-required “Important
Notice” setting forth their legal rights, in violation of Minn. Stat.
§ 327C.02, subd. 5 (2004).
Unlawful Sales of Mobile Homes
In addition to lot rentals, Hoffner has sold to dozens of his tenants
the mobile homes located on more than 50 of the rented lots in
Greenwood Communities. Hoffner sells mobile homes using a motor vehicle
retail installment contract entitled “Deposit Receipt and Agreement of
Sale” (“Sales Agreement”), the form of which has remained the same or
substantially similar since 1998. An exemplar copy of the Deposit
Receipt and Agreement of Sale (“Sales Agreement”) is attached hereto as
Exhibit E.
Hoffner represents to prospective buyers orally and in the Sales
Agreement that he is the “seller” and that he “agrees…to sell to the
buyer” the mobile home described in the contract. By such conduct,
Hoffner engages in the business of selling, offering to sell,
soliciting and advertising the sale of used manufactured homes, and
thereby acts as a “dealer” of manufactured homes as defined in Minn.
Stat. § 327B.01, subd. 7 (2004).
Hoffner has failed, however, to obtain a dealer’s license or limited
dealer’s license and a surety bond in violation of Minn. Stat.
§§ 327B.04, subd. 1 and 327B.09 (2004), and in violation of a
Letter of Settlement and Assurance of Discontinuance he entered with
the Minnesota Department of Administration on March 16, 1998 (“DOA
Assurance”). A copy of the DOA Assurance is attached hereto as Exhibit
F (see ¶1).
Although unlicensed, Hoffner is nonetheless subject to the duties,
prohibitions and penalties imposed by the Manufactured Home Sales Act
(“MHSA”) pursuant to Minn. Stat. § 327B.09, subd. 1 (2004).
Hoffner regularly violates MHSA as follows:
A. Unlicensed Advertising as “Broker.” Hoffner advertises in local
print publications as a “broker” for the sale of manufactured homes
without being licensed as a dealer, in violation of Minn. Stat.
§§ 327B.09, subd. 2 and 327B.05, subd. 1(b) (2004). Exemplar
copies of such advertisements are attached as Exhibit G.
B. False, Deceptive and Misleading Advertising as “Owner” and “Broker.”
Hoffner’s representation in print advertisements that he is the
“broker” or the “owner” of homes for sale is likewise false, deceptive
and misleading in violation of Minn. Stat. § 327B.05, subd. 1(d)
(2004) as well as Minnesota’s consumer protection statutes--Minn. Stat.
§§ 325F.69, subd. 1; 325F.67; and 325D.44, subd. 1
(2004)--referenced therein. Hoffner is almost never the titled owner of
the homes he sells (which title typically remains in the name of a
prior resident), nor does he broker the sale of the home for a prior
resident pursuant to a listing agreement under which he takes a
commission for his service.
C. Failure to Provide Notice of Rights. Before buyers execute his Sales
Agreement, Hoffner also fails to disclose in writing to the buyer the
state law concerning in-park sales of manufactured homes, in violation
of Minn. Stat. §§ 327B.08, subd. 1 and 327B.05, subd. 1(b)
(2004)
D. Failure to Deliver Titles. Whether the “owner,” “dealer,” or
“secured party,” Hoffner wrongfully fails to deliver certificates of
title and/or other documents to buyers and/or the registrar of motor
vehicles (“DMV”), in violation of Minn. Stat. § 327B.05, subd.
1(n) (2004) as follows:
1. As “Owner.” As the putative “owner” of the home, Hoffner fails to
immediately deliver title to the resident-buyer and, within ten days of
the sale, provide notice of the sale to DMV, in violation of Minn.
Stat. § 168A.10, subd. 1 (2004).
2. As “Dealer.” If a “dealer,” Hoffner fails to promptly deliver to the
DMV, on the resident-buyer’s behalf, an application for a new
certificate of title within ten days of the sale, in violation of Minn.
Stat. § 168.11, subd. 1 (2004).
3. As “Secured Party.” If a “secured party” under his Sales
Agreement--a contract silent with regard to creation of such a security
interest--Hoffner fails to promptly deliver to DMV after the sale the
existing title, an application for a new title naming him a secured
party and, if the sale was an involuntary transfer, an affidavit that
the owner’s interest was lawfully terminated or that the home was sold
pursuant to the terms of a security agreement, in violation of Minn.
Stat. § 168A.17, subd. 2; 168A.18(b); and § 168A.12 (2004).
E. Failure to Supervise Staff. Hoffner fails to reasonably supervise
his employees and/or agents in the operation of the park, resulting in
injury or harm to the residents therein, in violation of Minn. Stat.
§ 327B.05, subd. 1(t) (2004). For instance, Hoffner has failed to
reasonably supervise members of his staff who have raised lot rent
without 60 days’ notice, imposed fees and fines without contractual
authority, collected interest on existing Sales Agreements after he
lost his sales financing license, and unlawfully threatened or
prosecuted eviction proceedings against residents allegedly in default
under their Sales Agreements, resulting in financial loss, housing
displacement, or other injury or harm to numerous park residents.
Unlawful Financing of Mobile Homes
In conjunction with his home sales, Hoffner also finances the purchase
of those homes using the same Sales Agreement. Hoffner’s form Sales
Agreement requires that consumers make a “down payment” toward the
purchase price of the home, and thereafter make both monthly payments
for “taxes and insurance escrow” and monthly installment or “contract”
payments on the balance financed by Hoffner at double-digit interest
rates. Hoffner allegedly applies the consumer’s monthly installment
payments to principal and interest according to an amortization
schedule attached to the Sales Agreement.
The Sales Agreements created and held by Hoffner are retail installment
contracts under which he charges and collects from retail buyers a
finance charge--interest payments--as a condition of his extension of
credit to them. Hoffner is thereby engaged in the business of a sales
finance company as defined in Min. Stat. § 168.66, subd. 23 (2004).
Since July 1, 2000, Hoffner has failed to maintain a motor vehicle
sales finance license to finance the purchase of mobile homes, in
violation of Minn. Stat. § 168.67(a) and 168.75(a) (2004) and of
the DOA Assurance (see ¶ 6).
Moreover, Hoffner’s financing practices violate the Motor Vehicle
Retail Sales Installment Act (“MVRISA”) as follows:
A. Failure to Specify Types of Insurance and Taxes. Hoffner requires
resident-buyers to make monthly payments toward an “escrow” account for
“taxes and insurance,” but he fails to specify in the Sales Agreement
the types of insurance coverage and taxes that he purchases and pays on
their behalf, in violation of Minn. Stat. § 168.71, subd. 2(4)
(2004).
B. Failure to Disclose Proper Principal Balance. Hoffner fails to
include in the “remaining balance” or the “balance financed” identified
in the Sales Agreement the escrow charges for taxes and insurance, and
thus he fails in the Sales Agreement to properly calculate and disclose
the “principal balance” owed by the resident-buyer, in violation of
Minn. Stat. § 168.71, subd. 2(5) (2004).
C. Failure to Disclose Total of Payments. Hoffner fails to identify in
the Sales Agreement the total of all payments payable by the
resident-buyer (the sum of the principal balance and finance charges),
in violation of Minn. Stat. § 168.71, subd. 2(7) (2004).
D. Foreclosure of Buyer’s Right to Pick Insurance Broker. Hoffner
includes in some Sales Agreements a contractual provision that requires
buyers to carry insurance and name Hoffner as an additional lienholder,
after which he identifies his daughter-in-law, Keli Hoffner, as the
insurance agent to contact. An illustrative Sales Agreement is attached
hereto as Exhibit H. By inclusion of this provision, Hoffner
deceptively represents and/or implies that resident-buyers must
purchase insurance from Ms. Hoffner, thereby circumscribing his buyers’
statutory privilege of purchasing insurance from an agent or broker of
his or her own selection, in violation of Minn. Stat. § 168.71,
subd. 3 (2004).
E. Failure to Timely Provide Insurance Policy. Hoffner also fails to
send or cause to be sent to the consumer, within thirty days of
execution of the Sales Agreement, a policy or certificate of insurance
for which he charges them in that contract, in violation of Minn. Stat.
§ 168.71, subd. 3 (2004).
F. Unlawful Imposition of Late Fees. Hoffner imposes late fees on
delinquent resident-buyers, in violation of Minn. Stat. § 168.71,
subd.s 1(a) and (c) (2004), which provide that the Sales Agreement must
contain all agreements of the parties, including any agreement to pay
delinquency charges not exceeding the greater of $5 or 5% of each
installment.
Hoffner’s failures to comply with MVRISA are intentional, in violation
of Minn. Stat. §168.75(b) (2004), given his flagrant disregard for
compliance issues identified years ago by the Minnesota Department of
Commerce (“Commerce Department”) as follows:
A. Licensure Process. In May 1998, the Commerce Department issued
Hoffner a motor vehicle sales finance license for which he was required
to apply by the DOA Assurance. During the licensing process, the
Commerce Department advised Hoffner that various provisions of his
self-made sample retail installment contract violated MVRISA, in
response to which Hoffner submitted a revised sample contract. Copies
of the Commerce Department’s letter of May 12, 1998 and Hoffner’s
response of May 18, 1998 are attached hereto as Exhibit I. After the
Commerce Department continued to express concerns about his revised
sample contract, Hoffner agreed and represented to the Commerce
Department that he would purchase pre-printed form contracts published
by Bankers Acceptance for use with prospective resident-buyers. In
fact, Hoffner not only did not use Bankers Acceptance contracts with
resident-buyers, he did not even use his own revised self-made contract
submitted to the Commerce Department.
B. Non-Renewal of License. On April 14, 1999, the Commerce Department
conducted an examination of Hoffner’s mobile home sales and financing
practices, finding numerous violations of laws governing such
practices. The Commerce Department repeatedly requested that Hoffner
respond to the violations. Hoffner failed entirely to do so, and thus
the Commerce Department non-renewed his motor vehicle sales finance
license effective July 1, 2000. A copy of the Commerce Department’s
letter of December 3, 1999 summarizing this activity is attached hereto
as Exhibit J.
In his financing business, Hoffner further employs deceptive, confusing
and otherwise unlawful terms and conduct as follows:
A. Unlawful Contractual Requirement to “Sign Home Back” Upon Default.
The Sales Agreement requires consumer-buyers who “fail to make payments
in a timely manner” to “sign this mobile home back to Jack Hoffner.”
Such a provision forces park residents to waive or circumscribe
privileges and rights guaranteed to them by law, including among others
the right to receive notice setting forth the circumstances
constituting the default (Minn. Stat. § 327.64, subd. 2), the
right to cure the default within 30 days (Minn. Stat. § 327.66)
and the right to sell their homes through an in-park sale (Minn. Stat.
§ 327C.07, subd. 1). Hoffner’s contractual attempt to waive and
circumscribe such rights is void pursuant to Minn. Stat. §
327C.02, subd. 4 (2004).
B. Misrepresentation Concerning Closing and Title Transfer. The Sales
Agreement falsely, fraudulently, and deceptively misrepresents and
promises that the “closing and title transfer” on the home will occur
on a specified date months before the consumer’s last installment
payment, in violation of Minn. Stat. §§ 325F.69, subd. 1 and
325D.44, subd. 1 (2004). In fact, Hoffner neither “closes” the
transaction with the resident-buyer, nor transfers title to him or her
on the date specified in the Sales Agreement; rather, he retains the
title in his office until (and sometimes even after) the resident-buyer
has made all installment payments according to the Sales Agreement. See
Exhibits E and H.
C. Confusing Insurance Provisions. The Sales Agreement sometimes
falsely, deceptively and confusingly provides both that “buyers agree
to take out insurance” and that they agree to pay money into “escrow”
for Hoffner to do so for them, in violation of Minn. Stat. §§
325F.69, subd. 1 and 325D.44, subd. 1 (2004).
D. Confusing Lot Rent Provisions. The Sales Agreement includes “lot
rent” in a box identifying the consumer’s total “monthly costs,” even
though lot rent is governed by the Lot Lease, an entirely separate
contract. The amount of lot rent identified in the Sales Agreement is
also sometimes different than the amount of lot rent identified in the
Lot Lease. This conflation and misrepresentation of contractual
requirements has the tendency to deceive and confuse consumers, in
violation of Minn. Stat. § 325F.69, subd. 1 and 325D.44, subd. 1
(2004).
Unlawful Eviction of Residents
In response to Hoffner’s unlawful contracts and conduct, park residents
or third parties on their behalf, such as social service agencies or
non-profit organizations, have paid thousands of dollars to Hoffner for
such items as security deposits, lot rent, down payments, installment
contract payments, tax-and-insurance escrow payments, and special fees.
Residents and their benefactors often make monthly lump-sum payments
for these diverse obligations arising from separate contracts.
Until recently, Hoffner and his staff deposited residents’ lump-sum
payments into a single bank account and then--rather than maintaining
separate payment histories for lot rent, installment contracts, and the
escrow--unilaterally, arbitrarily and without any contractual authority
allocated residents’ payments in a single accounts receivable ledger
first to past-due obligations, then to items currently owed. Hoffner
failed entirely to disclose in his contracts, and routinely failed to
disclose elsewhere, this or any other material fact concerning his
allocation of residents’ payments, in violation of Minn. Stat.
§§ 325D.44, subd. 1 and 325F.69, subd. 1 (2004).
By such conduct, Hoffner and his staff deprived residents of any right
to direct where their payments should be applied. When residents failed
to pay an amount sufficient to cover all of their purported
obligations, Hoffner and his staff applied residents’ partial payments
to items other than lot rent, declaring them in default under the Lot
Lease. For instance, Hoffner sent the “statement of account” attached
hereto as Exhibit K to a resident whom he threatened with eviction in
which he affirmatively represented “you cannot apply payments to lot
rent if the monthly [installment contract] payments are past due.”
Hoffner then evicts or attempts to evict such residents for failure to
pay lot rent when, in fact, the resident’s partial payment would have
been sufficient to cover lot rent if it had been so applied. An
exemplar copy of an order in one such unlawful detainer proceeding,
Greenwood Communities v. Estrada et. al., Court File No. C1-03-2257 is
attached hereto as Exhibit L.
Hoffner has also regularly attempted to evict, or evicted, residents
for a failure to make not only lot rent payments, but also installment
contract and late fee payments pursuant to their Sales Agreements with
Hoffner. For instance, Hoffner represented to one resident in the “Ten
Day Notice to Vacate” attached hereto as Exhibit M that he would
initiate an unlawful detainer action to recover possession of his lot
unless the resident made two past-due installment payments of $215 and
paid two $9 late fees that had nothing at all to do with his lot rental
obligations.
Greenwood’s attempts in this regard to recover possession of the land
upon which a resident’s manufactured home is situated for reasons other
than actual nonpayment of rent violates Minn. Stat. § 327C.09,
subd. 1 (2004).
Unlawful Repossession of Mobile Homes
When they invoke the legal process, Greenwood and Hoffner rely
exclusively on eviction proceedings as described above to force
residents in default from the park. While Greenwood’s unlawful detainer
actions--if legal--would return to him possession of residents’ lots
(which are premises rented under the Lot Lease), Greenwood’s eviction
actions cannot, in themselves, lawfully return to Hoffner possession of
residents’ mobile homes on those lots (which are personal property
purchased from him under the Sales Agreement). To obtain possession of
such homes when a default occurs under the terms of the Sales
Agreement, Hoffner must repossess the mobile home as provided in the
Manufactured Home Repossession Security Act (“MHRSA”).
Hoffner violates MHRSA as follows:
A. Failure to Repossess as Required by Statute. Hoffner has failed
entirely to commence repossession in the manner authorized by MHRSA
upon default by his resident-buyers under the terms of Sales Agreements
which ostensibly cover their manufactured homes as collateral, in
violation of Minn. Stat. § 327.64, subd. 1 (2004). Instead,
Hoffner has relied on “repossession” by threats or prosecution of
unlawful eviction actions and by void contractual attempts to force
delinquent residents to vacate their homes on ten days’ notice (see,
e.g., Exhibit H) or to “sign [their] home back” to him upon default
(see, e.g., Exhibit E).
B. Failure to Provide Notice of Default/Repossession. Hoffner has
failed to properly serve notices on his resident-debtors that state the
circumstances constituting default and that, 30 days after receipt of
the notice, he would seek a court order removing the resident unless he
or she cured the default, in violation of Minn. Stat. § 327.64,
subd. 2 (2004).
C. Failure to Provide 30-Day Right to Cure. Hoffner failed to uniformly
provide resident-debtors 30 days to cure the default by paying the
amount in arrears or otherwise remedying the default, in violation of
Minn. Stat. § 327.66 (2004). Had Hoffner properly afforded
resident debtors this statutory right--rather than forcing them to cure
within 10 days in the eviction context--residents could have suspended
Hoffner’s right to repossess their homes by curing the default
according to Minn. Stat. § 327.66 (2004).
Unlawful Resale of Abandoned Mobile Homes
Since he fails entirely to properly repossess mobile homes as the
secured party under the Sales Agreement, Hoffner typically re-acquires
possession of homes subject to his Sales Agreements by claiming that
the resident “abandoned” the mobile home when vacating the lot, whether
involuntarily in response to a formal eviction order or voluntarily in
response to Hoffner’s notices concerning delinquent payments.
In either case, he simply takes possession of the home, then promptly
resells it to a new resident-buyer in a private sale without notice to
the prior owner as if he, in fact, lawfully owned it. Using his form
Sales Agreement, Hoffner resells the home to the new resident-buyer--
often at the same or a higher price--without paying any portion of the
proceeds from the sale to the prior resident-owner who had made a down
payment and/or installment payments on the home.
Hoffner’s conduct in this regard is illustrated by his regular re-sale
of mobile homes on Lot 5: On August 12, 1999, Hoffner paid a resident
$960 for a 1973 Aircraft on the lot; the resident executed the
assignment and warranty of the title as the seller, but Hoffner simply
kept it unsigned. Instead, he sold the same trailer about six weeks
later, on September 27, 1999, to L.W. for $5,800, more than a 600% mark
up and without delivering title to L.W. or filing any notice of sale or
application for a lien card with DMV. Hoffner claimed L.W. abandoned
the trailer on January 3, 2000, ten days after which Hoffner re-sold it
for $6,000 to E.W. The 1973 Aircraft burned in 2000, so Hoffner
replaced it with a 1975 Adrian Colt. Over two and a half years, Hoffner
sold and resold the 1975 Adrian Colt to a string of resident-buyers,
including on December 12, 2000 for $9,000; on June 7, 2001 for $8,750;
on July 6, 2001 for $8,750; on September 6, 2001 for $8,750; on March
13, 2002 for $8,900; on July 11, 2003 for $8,900; and finally on
September 10, 2003 for $7,700. Hoffner resold the 1975 Adrian Colt to
each buyer without a title, without adjusting the sale price downward
(except the last sale), and without paying any portion of the sale
proceeds to the prior owner.
Since mobile homes are personal property under Minnesota law (Minn.
Stat. §§ 273.125, subd. 7; 168.012, subd.9 and 168A.05, subd.
1a (2004)), Hoffner, as landlord, is responsible for complying with
Minnesota law concerning the storage, care and sale of the mobile homes
abandoned by residents who purchased them from Hoffner under a Sales
Agreement, whether his tenants vacate their lots before or after an
eviction order.
Unlawful Pre-Eviction Resale Conduct. Hoffners’ re-sale of the homes of
tenants who vacated their lots before eviction violates Minn. Stat.
§ 504B.271, subd. 1 (2004) as follows:
A. Failure to Hold Home for 60 Days. Hoffner fails to wait until the
later of 60 days after he receives actual notice of abandonment or
after it reasonably appears to him that the lot has been abandoned in
order to sell the resident’s mobile home thereon.
B. Failure to Notify Former Tenant Prior to Resale. Hoffner fails to
make a reasonable effort to notify his tenant of the sale of his or her
mobile home at least 14 days prior to the sale, both in writing (by
personal service or certified mail) and by posting notice of the sale
in a conspicuous place.
C. Failure to Pay Proceeds or Account to Resident After the Sale. After
the sale, Hoffner fails to pay to the resident the proceeds of the sale
or provide a written statement showing the specific reason for
withholding any portions thereof.
Unlawful Post-Eviction Resale Conduct. Hoffners’ re-sale of the homes
of defendant-tenants who vacated their lots after eviction (e.g., in
response to a writ of restitution) violates Minn. Stat. § 504B.365
(2004) as follows:
A. Failure to Hold Home for 60 Days. Hoffner fails to detain the
defendant-tenant’s mobile home at least 60 days after execution of the
order to vacate before selling it, in violation of Minn. Stat. §
504B.365, subd. 3(c) (2004).
B. Failure to Inventory Home. Hoffner fails to prepare, sign, date and
mail to the defendant-tenant’s last known address an inventory of his
or her personal property (e.g., the mobile home and its contents), a
description of its condition, a person authorized to release such
property, and the name and badge number of the officer in whose
presence the inventory was prepared, in violation of Minn. Stat. §
504B.365, subd. 3(d) (2004).
C. Failure to Sell Home in Public Sale with Notice. Hoffner fails to
sell the mobile home in a public sheriff’s sale as required by Minn.
Stat. § 504B.365, subd. 3(c) (2004). In this regard, Hoffner fails
to provide 45-days’ written notice to any secured party identified on
the title, and fails to personally serve or mail to the owner and to
publish for three successive weeks notice of the public sale, in
violation of Minn. Stat. §§ 514.20 and 514.21 (2004).
D. Failure to Purchase Home in Good Faith. Hoffner then not only fails
to fairly and in good faith purchase the mobile home at the public
sheriff’s sale in violation of Minn. Stat. § 514.22 (2004), he
never purchases the home from the defendant-resident at all. In fact,
Hoffner simply takes possession of it, then privately resells the home
as if he were its lawful owner.
E. Sale of More Property Than Necessary to Satisfy Amount Due. Hoffner
sells the entire home stored on the premises--generating an amount
vastly in excess of the amount owed to him by the tenant--in violation
of Minn. Stat. § 514.22 (2004), and thereafter fails to pay the
difference back to the prior resident in violation of Minn. Stat.
§ 504B.365, subd. 3(d) and (f) (2004).
Hoffner’s resale of homes to new residents for an identical or inflated
sale price without paying any portion of the proceeds to the owner (his
former resident) effectively strips any equity the former resident had
obtained through his or her down payment and/or installment payments on
the home under the Sales Agreement.
For instance, in the Lot 5 illustration above, one owner of the 1975
Adrian Colt, D.F., purchased the home for $8,900 on March 13, 2002.
Pursuant to the Sales Agreement, Hoffner collected more than $2,000 in
the form of a down payment and numerous installment payments by D.F.
until she moved out in July 2003. Hoffner immediately re-sold the
trailer to a new resident for the same price--$8,900--and yet failed to
pay D.F. any portion of her equity in the home.
By engaging in the conduct described above, Hoffner thus combines
“top-drawer” financing, disregard or misuse of the legal process, and
vehicular equity stripping in order to unlawfully profit from his
low-income residents: Rather than properly transfer ownership of the
homes to his residents and perfect his security interest, Hoffner
retains in his office drawer titles to the homes he sells (if he even
has them) such that he can disregard statutory repossession procedures
when residents default in making installment payments. Instead, under
such circumstances, Hoffner threatens or prosecutes an eviction action
in order to effectively “repossess” a resident’s home by prompting
abandonment, after which he swiftly resells the home to a new resident
as if he were its lawful owner without notice to the government and
without providing any accounting or repayment of the equity the former
resident-owner had accumulated in the home.
COUNT I
MANUFACTURED HOMEPARKLOT RENTALS ACT
Plaintiff re-alleges all prior paragraphs of this Complaint.
Minn. Stat. § 327C.01 et seq. (2004) governs Hoffner’s business
practices in the rental of lots in Greenwood Communities.
Hoffner’s conduct as described above constitutes multiple, separate
violations of Minn. Stat. § 327C.01 et. seq. (2004).
COUNT II
MANUFACTURED HOME SALES ACT
Plaintiff re-alleges all prior paragraphs of this Complaint.
Minn. Stat. § 327B.01 et. seq. (2004) governs Hoffner’s business
practices in the sale of manufactured homes in Greenwood Communities.
Hoffner’s conduct described above constitutes multiple, separate
violations of Minn. Stat. § 327B.01 et. seq. (2004).
COUNT III
FALSE ADVERTISING ACT
Plaintiff re-alleges all prior paragraphs of this Complaint.
Minn. Stat. § 325F.67 provides, in part, that:
Any person, firm, corporation, or association who, with intent to sell
or in anywise dispose of merchandise, securities, services, or anything
offered by such person, firm, corporation, or association, directly or
indirectly, to the public, for sale or distribution, or with intent to
increase the consumption thereof, or to induce the public in any manner
to enter into any obligation relating thereto, or to acquire title
thereto, or any interest therein, makes, publishes, disseminates,
circulates, or places before the public, or causes, directly or
indirectly, to be made, published, disseminated, circulated, or placed
before the public, in this state, in a newspaper or other publication,
or in the form of a book, notice, handbill, poster, bill, label, price
tag, circular, pamphlet, program, or letter, or over any radio or
television station, or in any other way, an advertisement of any sort
regarding merchandise, securities, service, or anything so offered to
the public for use, consumption, purchase, or sale, which advertisement
contains any material assertion, representation, or statement of fact
which is untrue, deceptive, or misleading, shall, whether or not
pecuniary or other specific damage to any person occurs as a direct
result thereof, be guilty of a misdemeanor, and any such act is
declared to be a public nuisance and may be enjoined as such.
Hoffner’s conduct described above constitutes multiple, separate
violations of Minn. Stat. § 325F.67 (2004), including but not
limited to employing untrue, deceptive or misleading print
advertisements.
COUNT IV
UNIFORM DECEPTIVE TRADE PRACTICES ACT
Plaintiff re-alleges all prior paragraphs of this Complaint.
Minn. Stat. § 325D.44, subdivision 1 provides, in part, that:
Subdivision 1. A person engages in a deceptive trade practice when, in
the course of business, vocation, or occupation, the person:
(3) causes likelihood of confusion or of misunderstanding as to
affiliation, connection, or association with, or certification by,
another;
(5) represents…that a person has a sponsorship, approval, status,
affiliation, or connection that the person does not have;
(9) advertises goods or services with intent not to sell them as
advertised;
(13) engages in any other conduct which similarly creates a likelihood
of confusion or misunderstanding.
Hoffner’s conduct described above constitutes multiple, separate
violations of Minn. Stat. § 325D.44, subdivision 1(3), (5), (9)
and (13) (2004), including but not limited to by engaging in
advertising and contracting conduct which creates a likelihood of
confusion or misunderstanding on the part of park residents.
COUNT V
PREVENTION OF CONSUMER FRAUD ACT
Plaintiff re-alleges all prior paragraphs of this Complaint.
Minn. Stat. § 325F.69, subdivision 1 provides that:
The act, use, or employment by any person of any fraud, false pretense,
false promise, misrepresentation, misleading statement or deceptive
practice, with the intent that others rely thereon in connection with
the sale of any merchandise, whether or not any person has in fact been
misled, deceived, or damaged thereby, is enjoinable as provided herein.
15. Hoffner’s conduct described above constitutes multiple, separate
violations of Minn. Stat. § 325F.69, subdivision 1 (2004),
including but not limited to by the use of oral and written false
promises, misrepresentations, misleading statements and deceptive
practices in connection with the sale of mobile homes.
COUNT VI
MOTOR VEHICLE RETAIL INSTALLMENT SALES ACT
Plaintiff re-alleges all prior paragraphs of this Complaint.
Minn. Stat. § 168.66 et. seq. (2004) governs defendant Hoffner’s
conduct in financing the purchase of manufactured homes by residents in
Greenwood Communities.
Hoffner’s conduct described above constitutes multiple, separate
violations of Minn. Stat. § 168.66 et. seq. (2004).
COUNT VII
MANUFACTURED HOME REPOSSESSION SECURITY ACT
Plaintiff re-alleges all prior paragraphs of this Complaint.
Minn. Stat. § 337.61 et. seq. (2004) governs the conduct of
Hoffner, to the extent he is a secured party under the Sales Agreement,
in the repossession of manufactured homes owned by residents in
Greenwood Communities.
Hoffner’s conduct described above constitutes multiple, separate
violations of Minn. Stat. § § 337.61 et. seq. (2004).
COUNT VIII
LANDLORD TENANT ACT
Plaintiff re-alleges all prior paragraphs of this Complaint.
Minn. Stat. §§ 504B.271 and 504B.365 (2004) govern the
conduct of Hoffner, as a landlord under the Lot Lease, in the treatment
of personal property, including manufactured homes, abandoned by
residential tenants of Greenwood Communities.
Hoffner’s conduct described above constitutes multiple, separate
violations of Minn. Stat. §§ 504B.271 and 504B.365 (2004).
COUNT IX
BREACH OF ASSURANCE OF DISCONTINUANCE
Plaintiff re-alleges all prior paragraphs of this Complaint.
Hoffner executed an Assurance of Discontinuance on March 16, 1998,
attached hereto as Exhibit F, in which he agreed as follows:
I understand that my Unlicensed Manufactured Home Sales, and failing to
Transfer Title of Manufactured Homes to consumers within ten days of
manufactured home sale, and failing to provide true and accurate copies
of all documentation involved in the manufactured home sale to the
consumer, and selling or leasing a non-complying manufactured home
after July 1, 1972, to consumers, and financing manufactured home sales
without a Mobile Home Finance License are violations of State Laws and
Rules. I agree to comply with all the Laws and Rules regulating the
sale of manufactured homes and I understand that any further will lead
to procedures or penalty fees, and possible restitution to any
consumers involved, and actions as deemed necessary by the Minnesota
Building Codes and Standards Division and the Office of the Minnesota
Attorney General.
Hoffner’s conduct described above constitutes multiple, separate
violations of the Assurance of Discontinuance, including but not
limited to by acting as a dealer in the sale of manufactured homes
without a dealers’ license in violation of Minn. Stat. § 327B.09
(2004); financing the sale of manufactured homes without a motor
vehicle sales finance license since July 1, 2000 in violation of Minn.
Stat. § 168.66 et seq. (2004); and failing to transfer or deliver
title to manufactured homes to consumer-buyers within ten days of the
sale of the manufactured home in violation of Minn. Stat. §
327B.05, subd. 1(n) (2004) and Chapter 168A.
RELIEF
WHEREFORE, Plaintiff, the State of Minnesota, by its Attorney General,
Mike Hatch, respectfully asks this Court to award judgment against
defendant Jack Hoffner, individually and doing business as Greenwood
Communities:
* Declaring that acts of Hoffner described in this
Complaint constitute multiple, separate violations of Minn. Stat.
§§ 327C.01 et seq.; 327B.01 et. seq.; 325F.67; 325D.44, subd.
1; 325F.69, subd. 1; 168.66 et. seq.; 327.61 et. seq.; 504B.271;
504B.365 (2004) and the DOA Assurance, including but not limited to
voiding all attempts by Hoffner to waive or circumscribe any privilege
or right guaranteed by law to Greenwood residents pursuant to Minn.
Stat. § 327C.02, subd. 4 (2004);
* Enjoining Hoffner, and his employees, officers,
directors, agents, independent contractors, successors, assignees,
affiliates, merged or acquired predecessors, parent or controlling
entities, subsidiaries, and all other persons acting in concert of
participation with him, from engaging in the acts and practices
described in this Complaint, or in any other way violating Minn. Stat.
§§ 327C.01 et seq.; 327B.01 et. seq.; 325F.67; 325D.44, subd.
1; 325F.69, subd. 1; 168.66 et. seq.; 327.61 et. seq.; 504B.271;
504B.365 (2004) and the DOA Assurance;
* Awarding judgment against Hoffner, individually
and doing business as Greenwood Communities, for a $25,000 civil
penalty pursuant to Minn. Stat. § 8.31, subd. 3 (2004) for each
separate violation of Minn. Stat. §§ 327C.01 et seq.; 327B.01
et. seq.; 325F.67; 325D.44, subd. 1; 325F.69, subd. 1; 168.66 et. seq.;
327.61 et. seq.; 504B.271; and 504B.365 (2004);
* Awarding judgment against Hoffner, individually
and doing business as Greenwood Communities, for restitution under the
parens patriae doctrine, Minn. Stat. § 8.31 (2004), the general
equitable powers of this Court, the DOA Assurance of Discontinuance,
and any other authority for all persons injured by Hoffner’s acts
described in this Complaint, including but not limited to restitution
of the whole amount due and payable under any Sales Agreement for
Hoffner’s intentional failure to comply with MVRISA pursuant to Minn.
Stat. § 168.75(b) (2004);
* Awarding judgment against Hoffner, individually
and doing business as Greenwood Communities, for disgorgement of all
profits derived as a result of each separate violation of Minn. Stat.
§§ 327C.01 et seq.; 327B.01 et. seq.; 325F.67; 325D.44, subd.
1; 325F.69, subd. 1; 168.66 et. seq.; 327.61 et. seq.; 504B.271; and
504B.365 (2004);
* Awarding judgment against Hoffner for contempt for
his failure to comply with the DOA Assurance, and for the liquidated
monetary relief set forth therein, including restitution to consumers
and a $2,500.00 stayed civil penalty;
* Awarding plaintiff its costs, including costs of
investigation and attorney’s fees, as authorized by Minn. Stat. §
8.31, subd. 3a (2004); and
* Granting such further relief as the Court deems
appropriate and just.
Dated: ________________________ Respectfully submitted,
MIKE HATCH
Attorney General
State of Minnesota
MINN. STAT. § 549.211 ACKNOWLEDGMENT
The party on whose behalf the attached motion is served acknowledges
through its undersigned counsel that sanctions, including reasonable
attorney fees and other expenses, may be awarded to the opposite party
or parties pursuant to Minn. Stat. § 549.211 (2002).
Dated:
Office of Minnesota Attorney General Mike Hatch
1400 Bremer Tower
445 Minnesota Street
St. Paul, MN 55101
(651) 296-3353
1-800-657-3787
TTY: (651) 297-7206
TTY: 1-800-366-4812