Connoy v. U.S. Bank N.A.
Filing
24
ORDER granting 2 Motion to Dismiss(Written Opinion). Signed by Senior Judge David S. Doty on 12/1/2011. (PJM)
UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
Civil No. 11-2352(DSD/JSM)
Michael Connoy,
Plaintiff,
ORDER
v.
U.S. Bank N.A.,
Defendant.
Marcus A. Jarvis, Esq. and Jarvis & Associates, PC, 13630
Oakwood Curve, Burnsville, MN 55337, counsel for
plaintiff.
Jared M. Goerlitz, Esq., Steven H. Bruns, Esq. and
Peterson, Fram & Bergman, P.A., 55 East Fifth Street,
Suite 800, St. Paul, MN 55101, counsel for defendant.
This matter is before the court upon the motion to dismiss by
U.S. Bank N.A. (U.S. Bank).
Based on a review of the file, record
and proceedings herein, and for the following reasons, the court
grants the motion.
BACKGROUND
This mortgage dispute arises out of a mortgage loan from
nonparty Bank of America, N.A. (Bank of America) to plaintiff
Michael Connoy.
On April 10, 2007, Connoy and Bank of America
executed a promissory note (Note) for the amount of $865,000 in
exchange for a mortgage of real property located at 7650 South Bay
Drive, Bloomington, Minnesota (the Property).1
7.
See Compl. ¶¶ 4, 6-
On April 23, 2007, the mortgage was recorded with Hennepin
County.
Id. ¶ 17; Goerlitz Aff. Ex. 2.
On April 6, 2010, Bank of America assigned the mortgage to
U.S. Bank.
Compl. ¶ 18; Goerlitz Aff. Ex. 2.
U.S. Bank recorded
the mortgage, and after an event of default, it began non-judicial
foreclosure proceedings.
See Goerlitz Aff. Exs. 2-3.
The default
was not cured, and the Property was sold at a Sheriff’s Sale on
January 28, 2011.
Compl. ¶ 20.
Connoy filed this claim in Minnesota state court on July 27,
2011, requesting an order to set aside the foreclosure sale, a
declaratory judgment voiding the Defendants’ security interest in
plaintiff’s home and money damages. U.S. Bank timely removed. The
court now considers the motion.
DISCUSSION
I.
Standard of Review
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)
(quoting Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009)). “A claim
1
The legal description for the property is Lot 10, Block 2,
South Bay 8th Addition, Hennepin County, Minnesota.
2
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 on
a motion to dismiss under Rule 12(b)(6).
12(d).
See Fed. R. Civ. P.
The court may consider 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).2
II.
Jurisdiction
Connoy first argues that this court lacks subject-matter
jurisdiction.3
U.S. Bank removed this case from state court
2
Exhibits 1-3 of the affidavit of Jared M. Goerlitz are
public records and necessarily embraced by the complaint.
3
Connoy did not file a motion to remand. Instead, he argued
that it would be improper to grant a motion to dismiss, because the
court lacks subject-matter jurisdiction.
3
pursuant to 28 U.S.C. § 1332.
controversy
must
exceed
For jurisdiction, the amount in
$75,000
and
there
must
diversity of citizenship between the parties.
be
complete
See 28 U.S.C.
§ 1332.
Connoy concedes that the amount in controversy exceeds
$75,000.
See Pl.’s Mem. Opp’n 5.
In the Eighth Circuit, a national bank is a citizen in the
state “designated ... as its main office.”
Wachovia Bank, N.A. v.
Schmidt, 546 U.S. 303, 318 (2006); see Wells Fargo Bank, N.A. v.
WMR e-PIN, LLC, 653 F.3d 702, 709 (8th Cir. 2011).
The Federal
Deposit Insurance Corporation lists the location of U.S. Bank’s
main office as Cincinnati, Ohio.
Cf. U.S. Bank Nat’l Ass’n v.
Polyphase Elec. Co., No. 10-4881, 2011 WL 3625102, *1-3 (D. Minn.
Aug. 17, 2011) (holding that U.S. Bank is a citizen of Ohio only).
Connoy is a citizen of Minnesota.
Therefore, the parties are
diverse, and the court has subject-matter jurisdiction.
III. Foreclosure by Advertisement
Under
Minnesota
law,
for
a
party
to
foreclose
advertisement, it is requisite:
(1) that some default in a condition of such
mortgage has occurred, by which the power to
sell has become operative;
(2) that no action or proceeding has been
instituted at law to recover the debt then
remaining secured by such mortgage ...
(3) that the mortgage has been recorded and,
if it has been assigned, that all assignments
thereof have been recorded ....
4
by
Minn. Stat. § 580.02; see Jackson v. Mortg. Elec. Registration
Sys.,
Inc.,
770
N.W.2d
487,
492
(Minn.
2009).
“The
foreclosure-by-advertisement statute is strictly construed because
it is a purely statutory creation.”
Ofor v. Ocwen Loan Servicing,
LLC, 649 F.3d 808, 813 (8th Cir. 2011) (citation and internal
quotations marks omitted).
Exact compliance with the terms of the
foreclosure-by-advertisement statute is required. See Jackson, 770
N.W.2d at 494.
“If the foreclosing party fails to strictly comply
with the statutory requirements, the foreclosure proceeding is
void.”
A.
Id. (citation and internal quotation marks omitted).
Separation of Mortgage and Note
Connoy argues that the foreclosure is invalid, because the
mortgage and Note were separated. Jackson precludes this argument.
See id. at 500.
Ownership of the note (equitable title) can be
separated from ownership of the mortgage (legal title).
Id.
In
such cases, “the power of sale must be exercised in the name of the
party who has the legal title to the instrument.”
Id. (quoting
Burke v. Backus, 52 N.W. 458, 459 (Minn. 1892)).
Connoy acknowledges that legal title to the property was
transferred from Bank of America to U.S. Bank on April 6, 2010.
See Compl. ¶ 18; see also Goerlitz Aff. Ex. 2.
dismissal is warranted.
5
Therefore,
B.
Standing
Connoy also argues that U.S. Bank lacks standing to foreclose.
In support, Connoy argues that the Note presented at foreclosure
did not have his signature, or, in the alternative, that U.S. Bank
could not foreclose because it did not own the Note.
The court
disagrees.
The Sheriff’s Certificate of Sale and Foreclosure Record is
“prima facie evidence that all the requirements of law ... have
been complied with ....”
Minn. Stat. § 580.19.
Further, the
original note need not be produced prior to foreclosure. See Stein
v. Chase Home Finance, LLC, No. 11-1292, slip op. at 6 (8th Cir.
Dec. 1, 2011); Butler v. Bank of Am., N.A., No. 11-461, 2011 WL
2728321, at *5 (D. Minn. July 13, 2011).
Where, as here, legal and
equitable title have been separated, only legal title is material
under Jackson.
or
whether
Whether Connoy’s signature was present on the Note
U.S.
Bank
owned
the
Note
has
no
significance.
Therefore, this argument fails, and dismissal is warranted.4
C.
Minnesota Statutes § 580
Connoy also argues that the foreclosure was improper based on
the failure of U.S. Bank to comply with the statutory requirements
4
In conjunction with his standing claim, Connoy also alleges
violations of the Federal Fair Debt Collection Practices Act and
common law fraud. See Compl. ¶¶ 67-69. Not only do these claims
fail to state a claim, see Braden v. Wal-Mart Stores, Inc., 588
F.3d 585, 594 (8th Cir. 2009), but since U.S. Bank had standing to
foreclose, they also fail as a matter of law.
6
of the Minnesota non-judicial foreclosure statute.5
The court
disagrees.
Connoy first argues that U.S. Bank failed to record all
assignments of the mortgage.
In support, Connoy notes that “WELLS
(BAFC 2007-D MASTER SERV)” is the “creditor whom the debt is owed,”
and that this entity is not listed on the Notice of Foreclosure.
See Pl.’s Mem. Opp’n 5.
“Standing
to
foreclose
under
Minnesota’s
non-judicial
foreclosure law requires ... that the mortgage has been recorded
and, if it has been assigned, that all assignments thereof have
been recorded ....”
Minn. Stat. § 580.02.
A party, however, “can
hold legal title to the ... [mortgage] without holding an interest
in
the
promissory
“[A]ssignment
of
note.”
the
Jackson,
promissory
note
770
N.W.2d
with
no
at
500.
accompanying
assignment of the security instrument constitutes a mere equitable
assignment of the mortgage, it does not by operation of law need to
be recorded to meet the requirements necessary to commence a
5
Connoy raises several new claims under Minnesota Statutes
§ 580 in his motion in opposition. This alone is sufficient to
warrant dismissal. See Morgan Distrib. Co. v. Unidynamic Corp.,
969 F.2d 992, 995 (8th Cir. 1989) (“[I]t is axiomatic that the
complaint may not be amended by the briefs in opposition to a
motion to dismiss.” (quoting Car Carriers, Inc. v. Ford Motor Co.,
745 F.2d 1101, 1107 (7th Cir. 1984))). Nevertheless, the court
addresses these arguments, because they do not change the outcome
of the case.
7
foreclosure by advertisement.”
Id. at 501.
As Jackson makes
clear, the current creditor possesses no legal title and need not
be recorded.
Connoy does not state a claim under § 580.02.
Connoy next argues that the foreclosure notice did not include
the proper “lender name” and “loss mitigation phone number” as
required by Minnesota Statutes § 580.041, subdivision 2.
The
foreclosure notice lists Bank of America as the lender and provides
a phone number to contact the lender.
See Pl.’s Mem. Opp’n 6.
Connoy appears to take the position that U.S. Bank, as opposed to
Bank of America, should have been listed on the foreclosure notice.
Section 580.041, however, does not require that the mortgage holder
be listed.
As a result, including only Bank of America and a phone
number to their mortgage office does not violate § 580.041.
Connoy also argues that the sheriff’s sale violated Minnesota
Statutes § 580.04,6 because the Notice of Foreclosure failed to
state or incorrectly stated the name of the mortgagee or assignee
of the mortgage.
Section 580.04 requires that, in order to
foreclose by advertisement, “[e]ach notice shall specify or contain
... the name of the mortgagor, the mortgagee, each assignee of the
mortgage, if any, and the original or maximum principal amount
6
Connoy
alleges:
“[T]he
Notice
of
Foreclosure
by
Advertisement did not meet the requirements of Minn. Stat.
§ 582.25. Specifically, plaintiffs claim that the notice failed to
state the names of one or more of the assignees ....” Def.’s Mem.
Opp’n 6.
Section 582.25 does not proscribe requirements for a
Notice of Foreclosure by Advertisement. The court construes this
as a claim under § 580.04.
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secured by the mortgage.”
Minn. Stat. § 580.04(a)(1).
Connoy
pleaded no facts that suggest that the mortgage was owned by any
entity other than Bank of America or U.S. Bank.
Both Bank of
America and U.S. Bank were listed on the Notice of Foreclosure.
Therefore, Connoy does not state a claim under § 580.04, and
dismissal is warranted.
CONCLUSION
Accordingly, based on the above, IT IS HEREBY ORDERED that:
1.
The motion to dismiss [ECF No. 2] is granted; and
2.
Because this action is dismissed, the Notice of Lis
Pendens filed on July 27, 2011, in Hennepin County, is discharged.
LET JUDGMENT BE ENTERED ACCORDINGLY
Dated:
December 1, 2011
s/David S. Doty
David S. Doty, Judge
United States District Court
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