Frillman et al v. Deutsche Bank National Trust Company
MEMORANDUM OPINION AND ORDER: 1. Defendant's Motion to Dismiss [Doc. No. 25] is GRANTED; 2. The Amended Complaint [Doc. No. 22] is DISMISSED WITH PREJUDICE (Written Opinion). Signed by Judge Susan Richard Nelson on 9/25/13. (LPH)
UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
Louis W. Frillman and Carol A.
Civil No. 12-2976 (SRN/FLN)
Deutsche Bank National Trust Company,
as Trustee of the Home Equity Mortgage
Loan Asset-Back Trust Series SPMD
2004-A, Home Equity Mortgage Loan
Asset-Backed Certificates, Series SPMD
2004-A under the Pooling and Servicing
Agreement dated June 1, 2004,
Daniel M. Eaton, Christensen Law Office PLLC, 800 Washington Ave. N., Suite 704,
Minneapolis, Minnesota 55401; for Plaintiffs.
Adam C. Ballinger, Kristin D. Kanski, and Bryan A. Welp, Linquist & Vennum PLLP, 80
South Eighth St., Suite 4200, Minneapolis, MN 55402, for Defendant.
SUSAN RICHARD NELSON, United States District Judge
This matter is before the Court on a Motion to Dismiss filed by Defendant
Deutsche Bank National Trust Company [Doc. No. 25]. For the reasons stated below, the
Court grants the Motion to Dismiss and dismisses the Amended Complaint [Docket No.
22] with prejudice.
FACTUAL AND PROCEDURAL BACKGROUND
Plaintiffs Louis and Carol Frillman owned rental property on Holly Avenue in St.
Paul. (Am. Compl. ¶ 3.) In 2004, the Frillmans entered into a $332,500 mortgage on the
property in favor of IndyMac Bank. (Id. Ex. B at 27.) The mortgage was assigned to
Defendant Deutsche Bank National Trust Company in 2005, and that assignment was
recorded shortly thereafter. (Id.) In 2009, the mortgage was assigned to Deutsche Bank
as trustee for certain asset-backed certificates. This assignment was recorded on
November 9, 2009. (Id.)
Although the Amended Complaint contains little detail about the Frillmans’
payment history on this mortgage, it appears that the Frillmans went into default on the
mortgage in late 2010 or early 2011. In early July 2011, the Frillmans received notice
that Deutsche Bank intended to sell the property at a foreclosure sale scheduled for
August 19, 2011. (Id. at 26, 28.) The Frillmans thereafter attempted to bring the
mortgage current, and pursuant to a “Forbearance Plan” outlined in Exhibit C to the
Amended Complaint, agreed to make substantial monthly payments starting in August
2011. (Id. Ex. C at 34.) The Amended Complaint avers that the Frillmans made the first
of these, a $15,783.94 payment on August 17, 2011. (Id. ¶ 17.) There is no allegation
that the Frillmans made any further payments under the Forbearance Plan.
Pursuant to the Forbearance Agreement, which modified the payment plan
originally due and owing under the Note, OneWest, on behalf of Deutsche Bank, agreed
to temporarily suspend collections and the foreclosure process and the Frillmans
expressly agreed as follows:
Upon default under any of the terms or conditions in this
agreement, [the servicer] retains the right to terminate this
agreement, to demand immediate payment of all remaining
installments and to resume collections and/or foreclosure at
the point the servicing was previously suspended without
further notice. If your loan is in foreclosure and you default
under any terms or conditions of this agreement, [the servicer]
reserves the right to re-commence the foreclosure actions
immediately with no further notice to you, your representatives
(Am. Compl. Ex. C.) (emphasis added)
A week after Deutsche Bank sent the initial foreclosure sale letter to the Frillmans,
Deutsche Bank attempted to serve the Frillmans’ tenant, Kelly Canter, with notice of the
upcoming foreclosure sale. According to the Amended Complaint, the attempted service
was unsuccessful because the process server served a person named Sara Arne who
resided in a different unit in the building. (Id. ¶ 11.) Minnesota law requires that a notice
of mortgage foreclosure sale be served on a person in possession of the mortgaged
premises. Minn. Stat. § 580.03. The exhibits attached to the Amended Complaint include
the process server’s affidavit of service, which lists Sara Arne as a Occupant/Roommate”
of the tenant. (Am. Compl. Ex. A at 7.)
After the Frillmans entered into the Forbearance Plan, the sheriff’s sale was
postponed, but it was ultimately rescheduled after the Frillmans apparently defaulted on
their payment obligations under that Plan. As a result, Deustche Bank recommenced the
foreclosure by advertisement process in accordance with the express terms of the
Forbearance Agreement. (Am. Compl. Ex. C.) As required by statute, OneWest, on
behalf of Deutsche Bank, caused to be published and served notices of postponement of
the sale first to September 19, 2011, and then to October 19, 2011. (Am. Compl. Ex. A.)
Despite evidence to the contrary, the Amended Complaint contends that Deutsche Bank
failed to send notice of the postponed sale or rescheduled date to the tenant, in violation
of the statutory requirement that it do so. (Id. ¶¶ 26-28 (citing Minn. Stat. § 580.07).)
The property was sold at sheriff’s sale on October 19, 2011. (Id. ¶ 18.)
The Amended Complaint contains three counts. Count 1 seeks a declaration that
the sheriff’s sale of the Frillmans’ property is “null and void” because of Deutsche Bank’s
alleged failure to serve the initial notice of the foreclosure sale on the Frillmans’ tenant.
(Id. ¶ 24.) Count 2 asks for a declaratory judgment that the sheriff’s sale is void for
Deutsche Bank’s alleged failure to notify the property’s occupant of the postponement of
the sheriff’s sale and the rescheduled date for the sale. (Id. ¶ 30.) Finally, Count 3
contends that Deutsche Bank’s alleged failure to comply with Minnesota’s foreclosureby-advertisement statute created a cloud on the title of the Frillmans’ property and seeks
to quiet title to that property under Minn. Stat. § 559.01. (Id. ¶¶ 32-36.) As a remedy, the
Frillmans ask for a declaration that the sheriff’s sale is null and void and an order
returning the property to the Frillmans, “subject to any liens or encumbrances existing at
the time of the sheriff’s sale.” (Id. ¶ 36.)
Motion to Dismiss
When evaluating a motion to dismiss under Rule 12(b)(6), the Court assumes the
facts in the Complaint to be true and construes all reasonable inferences from those facts
in the light most favorable to Plaintiff. Morton v. Becker, 793 F.2d 185, 187 (8th Cir.
1986). However, the Court need not accept as true wholly conclusory allegations, Hanten
v. Sch. Dist. of Riverview Gardens, 183 F.3d 799, 805 (8th Cir. 1999), or legal
conclusions Plaintiffs draw from the facts pled. Westcott v. City of Omaha, 901 F.2d
1486, 1488 (8th Cir. 1990).
When considering a motion to dismiss, the Court ordinarily does not consider
matters outside the pleadings. See Fed. R. Civ. P. 12(d). The Court may, however,
consider exhibits attached to the complaint and documents that are necessarily embraced
by the pleadings, Mattes v. ABC Plastics, Inc., 323 F.3d 695, 697 n.4 (8th Cir. 2003), and
may also consider public records. Levy v. Ohl, 477 F.3d 988, 991 (8th Cir. 2007).
To survive a motion to dismiss, a complaint must contain “enough facts to state a
claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544,
545 (2007). Although a complaint need not contain “detailed factual allegations,” it must
contain facts with enough specificity “to raise a right to relief above the speculative
level.” Id. at 555. “Threadbare recitals of the elements of a cause of action, supported by
mere conclusory statements,” will not pass muster under Twombly. Ashcroft v. Iqbal,
556 U.S. 662, 678 (2009) (citing Twombly, 550 U.S. at 555). In sum, this standard “calls
for enough fact[s] to raise a reasonable expectation that discovery will reveal evidence of
[the claim].” Twombly, 550 U.S. at 556.
The Frillmans do not dispute that they had notice of the foreclosure and
subsequent sheriff’s sale of their property.1 The claims in the Amended Complaint
In their opposition papers, the Frillmans appear to make a claim that they were
instead arise out of Deutsche Bank’s alleged failure to notify the Frillmans’ tenant of the
pending and rescheduled sheriff’s sale. Although state law requires such notice, the
Frillmans do not have standing to challenge the alleged lack of notice to their tenant, as
they suffered no harm as a result. Slater v. Alliance Bank, No. A11-369, 2011 WL
5829157, at *2 (Minn. Ct. App. Nov. 21, 2011).
Standing requires that the party bringing suit “must have suffered an ‘injury in
fact’—an invasion of a legally protected interest.” Lujan v. Defenders of Wildlife, 504
U.S. 555, 560 (1992). Further, that injury must be caused by the complained-of conduct.
Id. Here, the only injury caused by Deutsche Bank’s alleged failure to give notice is
injury to the Frillmans’ tenant, not to the Frillmans. As in the Slater case, the Frillmans
“lack standing to assert any occupant’s rights because it is undisputed that [they] did not
live on the property.” Slater, 2011 WL 5829157, at *1. The Frillmans had notice of the
sheriff’s sale, and thus it is not clear that they suffered any injury at all, or at least any
injury caused by actions other than their own failure to pay the mortgage on the property.
Even if they had standing, however, the Frillmans’ claims fail on the merits. They
have failed to plausibly allege that Deutsche Bank did not comply with the notice
requirements of Minnesota’s foreclosure-by-advertisement statute. The statute requires
not notified of the rescheduled foreclosure sale. But the Forbearance Plan to which the
Frillmans agreed makes clear that the Frillmans waived any notice of a rescheduled
foreclosure sale if they failed to comply with the terms of the Forbearance Plan. (Am.
Compl. Ex. C. at 34.) They cannot now complain that they did not receive notice to
which they were not entitled.
that a copy of the notice of foreclosure be “served in like manner as a summons in a civil
action in the district court upon the person in possession of the mortgaged premises, if the
same are actually occupied.” Minn. Stat. § 580.03. As discussed above, the Frillmans
contend that the process server did not serve the occupant of the premises but rather
served a person who occupied another unit in the building, and thus that the requirements
of § 580.03 were not satisfied.
The question of whether service is proper is a question of law. Amdahl v.
Stonewall Ins. Co., 484 N.W.2d 811, 814 (Minn. Ct. App. 1992). Minnesota law requires
that service be accomplished by “delivering a copy to the individual personally or by
leaving a copy at the individual’s usual place of abode with some person of suitable age
and discretion then residing therein.” Minn. R. Civ. P. 4.03. The documents in the public
record and attached to the Amended Complaint show that the process server served the
foreclosure notice on someone who identified herself as the “Occupant/Roommate” of the
Frillmans’ tenant. Such a person would qualify as person “then residing therein” under
An affidavit of service is “strong evidence of proper service” that may be
overcome only “by the production of clear and convincing evidence.” Peterson v. Eishen,
495 N.W.2d 223, 226 (Minn. Ct. App. 1993). The Frillmans’ statement that, “upon
information and belief,” the person accepting service was not an occupant of their
property is not clear and convincing evidence that the service was improper. See Slater,
2011 WL 5829157, at *2 (affirming dismissal of complaint when property owner’s claims
regarding service were refuted by the process server’s affidavit). There is no plausible
allegation here that Deutsche Bank did not comply with its service obligations, and the
Frillmans’ claims therefore fail.
Moreover, as the Minnesota Supreme Court and this Court have reasoned, “lack of
service” challenges asserted by a mortgagor cannot be tenable when the mortgagor has
actual notice of the sale because the mortgagors are not “prejudiced in the slightest,” as is
precisely the case with the Frillmans here. Skartum v. Koch, 218 N.W. 446, 446-47
(1928); U.S. v. House, 100 F. Supp. 2d 967, 976-78 (D. Minn. 2000). The Frillmans were
not only on notice of the foreclosure by advertisement, they expressly negotiated a
Forbearance Agreement to postpone the proceedings and further their own interests prior
to the original sheriff’s sale—under which they immediately defaulted, which triggered
Deutsche Bank’s right to recommence the proceedings. They expressly waived any right
to any notice thereafter.
Based on the foregoing, and all the files, records and proceedings herein, IT IS
HEREBY ORDERED that:
Defendant’s Motion to Dismiss [Doc. No. 25] is GRANTED;
The Amended Complaint [Doc. No. 22] is DISMISSED WITH
LET JUDGMENT BE ENTERED ACCORDINGLY.
Dated: September 25, 2013
s/Susan Richard Nelson
SUSAN RICHARD NELSON
United States District Judge
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