Koenen v. Homecomings Financial LLC et al

Filing 10

ORDER granting 2 Defendants' Motion to Dismiss(Written Opinion). Signed by Senior Judge David S. Doty on 9/6/2011. (PJM)

UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
Civil No. 11-945(DSD/SER)
Deborah L. Koenen,
Plaintiff,
ORDER

v.
Homecomings Financial LLC,
formerly known as Homecomings
Financial Network, Inc., GMAC
Mortgage, LLC, Federal National
Mortgage Association and John and
Jane Does 1-10,
Defendants.

Amoun Van Sayaovong, Esq., Legal Solutions LLC, 150
Eaton, Street, Suite 105, St. Paul, MN 55107, counsel for
plaintiff.
Donald G. Heeman, Esq., Randi J. Winter, Esq. and
Felhaber, Larson, Fenlon & Vogt, PA, 220 South Sixth
Street, Suite 2200, Minneapolis, MN 55402, counsel for
defendants.

This matter is before the court upon the motion to dismiss by
defendants Homecomings Financial LLC f/k/a Homecomings Financial
Network, Inc. (Homecomings); GMAC Mortgage, LLC (GMAC) and Federal
National Mortgage Association (Fanny Mae).1

The court heard oral

argument on August 26, 2011. Based on a review of the file, record
and proceedings herein, the court grants the motion.

1

Koenen also named “John and Jane Does 1–10" but never
identified or served those defendants.

BACKGROUND
This mortgage dispute arises out of a mortgage loan from
Homecomings to Koenen for a home located at 1236 12th Avenue West
in Shakopee, Minnesota.

On April 29, 2008, Koenen and Homecomings

executed a promissory note in exchange for a mortgage to Mortgage
Electronic Registration Systems (MERS) as the nominal mortagee.
Compl. ¶¶ 12-13.

According to Koenen, the transaction occurred at

her

¶

home.

Id.

12.

According

to

the

Settlement

Statement

submitted by Koenen, the place of settlement was 1850 121st Street
East, Suite 107 in Burnsville, Minnesota.
at 35.

Id. Ex. 1, ECF No. 1-1,

That same day, nonparty Chad Roberts2 notarized the

documents.

According to Koenen, Roberts was not present when

Koenen and Homecomings executed the documents.
6, ECF No. 1-1, at 65.
Id. ¶ 16.

Id. ¶ 15; id. Ex.

Koenen paid $100 for Roberts’s services.

According to Koenen, she received one unsigned copy of

the Notice of Right to Cancel and did not receive an Itemization of
Amount Financed.
According to GMAC, Koenen did not meet her payment obligation
and was delinquent $6,128.34 as of May 8, 2010.
1-1, at 60.
28, 2010.

Id. Ex. 5, ECF No.

MERS assigned interest in the mortgage to GMAC on May

Id. ¶ 30.

GMAC began foreclosure by advertisement, and

2

Koenen’s exhibits suggest that a notary public named Chad
Robert Alan Michaels notarized the documents. See Compl. Ex. 1,
ECF No. 1-1, at 34.
The court refers to the notary public as
“Roberts.”
2

filed notices with the Scott County Registrar.

Id. ¶ 31.

27, 2010, GMAC purchased the home at a sheriff’s sale.

On July

Id. ¶ 32.

On October, 25, 2010,3 Koenen sent a rescission notice and
qualified written request (QWR) to GMAC.

Id. ¶ 25.

According to

Koenen, GMAC did not provide an answer to the rescission request.
GMAC responded to the QWR.
On March 17, 2011,
state-court

action

in

See id. Ex. 2.

Koenen filed an amended complaint in her
which

she

sought

a

declaration

that

Homecomings failed to provide certain disclosures required by the
Real Estate Settlement Procedures Act (RESPA) and the Truth in
Lending Act (TILA); claimed that Homecomings committed fraud; and
sought declaratory and injunctive relief against all defendants
under

the

Minnesota

Deceptive

Trade

Practices

Act

(MDTPA).

Defendants timely removed and move to dismiss for failure to state
a claim.

DISCUSSION
I.

Standard
To survive a motion to dismiss for failure to state a claim,

“‘a complaint must contain sufficient factual matter, accepted as
true, to state a claim to relief that is plausible on its face.’”
Braden v. Wal-Mart Stores, Inc., 588 F.3d 585, 594 (8th Cir. 2009)

3

2010.

Other sources in the record show the date to be December 9,
See Compl. Ex. 2; Pl.’s Mem. Opp’n 4.
3

(quoting Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009)).

“A

claim has facial plausibility when the plaintiff [has pleaded]
factual content that allows the court to draw the reasonable
inference that the defendant is liable for the misconduct alleged.”
Iqbal, 129 S. Ct. at 1949 (citing Bell Atl. Corp. v. Twombly, 550
U.S. 544, 556 (2007)).

Although a complaint need not contain

detailed factual allegations, it must raise a right to relief above
the speculative level.

See Twombly, 550 U.S. at 555.

“[L]abels

and conclusions or a formulaic recitation of the elements of a
cause of action are not sufficient to state a claim.”

Iqbal, 129

S. Ct. at 1949 (citation and internal quotation marks omitted).
The court does not consider matters outside the pleadings in
deciding a motion to dismiss under Rule 12(b)(6). See Fed. R. Civ.
P. 12(d).

The court may consider, however, materials “that are

part of the public record,”

Porous Media Corp. v. Pall Corp., 186

F.3d 1077, 1079 (8th Cir. 1999), and matters “necessarily embraced
by the pleadings and exhibits attached to the complaint,” Mattes v.
ABC Plastics, Inc., 323 F.3d 695, 698 n.4 (8th Cir. 2003).
II.

TILA
The TILA “assure[s] a meaningful disclosure of credit terms so

that the consumer will be able to compare more readily the various
credit terms available.”

15 U.S.C. § 1601(a).

construes the TILA in favor of consumers.
F.3d 842, 847-48 (8th Cir. 2009).

4

The court broadly

Rand Corp. v. Moua, 559

In transactions secured by a

principal dwelling, the TILA gives borrowers an unconditional
three-day right to rescind. Id. §§ 1635(a), 1641(c). The required
disclosures include two copies of a notice of the three-day right
to rescind.

12 C.F.R. § 226.23(b)(1).

If “the required notice or

material disclosures are not delivered, the right to rescind shall
expire 3 years after consummation, upon transfer of all of the
consumer’s interest in the property, or upon sale of the property,
whichever occurs first.”

Id. § 226.23(a)(3) (emphasis added); see

15 U.S.C. § 1635(f).
Defendants argue that Koenen’s claim for rescission fails
because the home was sold at a sheriff’s sale in July 2010.

Koenen

responds that the limitations of § 1635(f) do not apply because she
seeks recoupment under 15 U.S.C. § 1640(e).

Koenen’s argument

fails because the sale of the property extinguished her right to
rescind.

See Hintz v. JP Morgan Chase Bank, 2010 WL 4220486, at *4

(D. Minn. Oct. 20, 2010); see also 15 U.S.C. § 1635(f).

Moreover,

the TILA is “uncompromising” in extinguishing a consumer’s right to
rescission, and the Supreme Court has rejected the application of
recoupment to § 1635(f).

Beach v. Ocwen Fed. Bank, 523 U.S. 410,

418–19 (1998). Despite Koenen’s characterization of her lawsuit as
“defensive,” her claims seek affirmative relief.

5

In short, her

right to rescission expired on July 27, 2010, and recoupment does
not apply to Koenen’s claims. Koenen did not seek rescission until
Therefore, dismissal is warranted.4

December (or October) 2010.
III.

MDTPA
Koenen did not respond to the motion to dismiss her MDTPA

claim, and dismissal is warranted on that basis alone.

Moreover,

the Minnesota private attorney-general statute “applies only to
those claimants who demonstrate that their cause of action benefits
the public.”

Ly v. Nystrom, 615 N.W.2d 302, 314 (Minn. 2000).

As

a result, a “single one-on-one transaction” where the alleged
misrepresentation was made only to the plaintiff “is not a claim
that

could

be

responsibilities
enjoin.”

Id.

considered
of

the

to

attorney

be

within

general

to

the

duties

investigate

and
and

Here, Koenen seeks relief on her own behalf, not for

the benefit of the public.

Therefore, the MDTPA claim fails, and

dismissal is warranted.5
IV.

RESPA
Koenen also failed to respond to the motion to dismiss her

RESPA claim, and dismissal is warranted on that basis alone.

The

4

For these same reasons, Koenen’s claim that defendants
failed to respond to her rescission request also fails. Defendants
had no obligation to respond to a moot request for rescission.
5

The claim also fails because Koenen provides no facts from
which the court could infer that defendants’ practices or her
receipt of only one copy of the TILA right to rescind constitutes
a likelihood of confusion or misunderstanding within the meaning of
the MDTPA.
6

claim also fails on the merits because there is no dispute that
defendants timely responded to her QWR.

See Compl. Ex. 2.

Moreover, Koenen’s itemized HUD-1 statement contradicts her claim
that the form was deficient.

See id. Ex. 1.

Therefore, Koenen

fails to state a RESPA claim, and dismissal is warranted.
V.

Fraud
A plaintiff must plead fraud with particularity.

See Fed. R.

Civ. P. 9(b). To satisfy the heightened pleading requirement, a
plaintiff must plead “the time, place and contents” of the false
representations, the identity of the individual who made the
representations and what was obtained thereby.

BJC Health Sys. v.

Columbia Cas. Co., 478 F.3d 908, 917 (8th Cir. 2007). Under
Minnesota law, a plaintiff establishes a claim for fraudulent
misrepresentation by establishing that: (1) there was a false
representation by a party of a past or existing material fact
susceptible of knowledge; (2) made with knowledge of the falsity of
the representation or made as of the party’s own knowledge without
knowing whether it was true or false; (3) with the intention to
induce

another

to

act

in

reliance

thereon;

(4)

that

the

representation caused the other party to act in reliance thereon;
and (5) that the party suffered pecuniary damage as a result of the
reliance. Hoyt Props., Inc. v. Prod. Res. Grp., L.L.C., 736 N.W.2d
313, 318 (Minn. 2007).

7

Defendants argue that Koenen fails to plead her fraud claim
with

particularity.

Koenen

responds

that

she

stated

that

Homecomings committed fraud by telling her that a notary would be
available and by charging her $100 for the notary’s services.
There is no dispute that Roberts notarized the documents.

Even

assuming that the notary public was not present when Koenen signed
the documents, she was aware of his absence and executed the
documents

anyway.

As

a

result,

there

can

be

no

false

representation of an existing fact: the notary public was not there
and Koenen knew so.

For this same reason, Koenen also fails to

plead facts from which the court could infer that a belief that a
notary would be present induced her to sign the documents.
Further, Koenen

also

fails

to

present

facts

showing

how

her

reliance that a notary would be present caused her pecuniary
damage.

Therefore, Koenen fails to state a claim of fraud, and

dismissal is warranted.

CONCLUSION
Accordingly, based on the above, IT IS HEREBY ORDERED that the
motion to dismiss [Doc. No. 2] is granted.
LET JUDGMENT BE ENTERED ACCORDINGLY.
Dated:

September 6, 2011
s/David S. Doty
David S. Doty, Judge
United States District Court
8