McGlory et al v. CitiMortgage Inc. et al

Filing 16

ORDER granting 5 Motion to Dismiss (Written Opinion). Signed by Senior Judge David S. Doty on 6/14/2013. (PJM)

UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
Civil No. 12-3145(DSD/JJG)
Andrew and Carmita McGlory,
Plaintiffs,
ORDER

v.
CitiMortgage, Inc., Peterson,
Fram & Bergman, P.A., Usset,
Weingarden & Liebo, PLLP, and
Christopher Kalla,
Defendants.

William B. Butler, Esq. and Butler Liberty Law, LLC, 33
South Sixth Street, Suite 4100, Minneapolis, MN 55402,
counsel for plaintiffs.
Cameron A. Lallier, Esq. and Foley & Mansfield, PLLP, 250
Marquette Avenue, Suite 1200, Minneapolis, MN 55401;
Gerald G. Workinger, Jr., Esq. and Usset, Weingarden &
Liebo PLLP, 4500 Park Glen Road, Suite 300, Minneapolis,
MN 55416; Jared M. Goerlitz, Esq. and Peterson, Fram &
Bergman, PA, 55 East Fifth Street, Suite 800, St. Paul,
MN 55101, counsel for defendants.

This matter is before the court upon the motion to dismiss by
defendants CitiMortgage Inc. (CitiMortgage); Usset, Weingarden &
Liebo, PLLP (UWL); Peterson, Fram, & Bergman (PFB) and Christopher
Kalla.1

Based on a review of the file, record and proceedings

herein, and for the following reasons, the court grants the motion.

1

UWL, PFB and Kalla represented CitiMortgage throughout the
foreclosure proceedings and sheriff’s sale. The court collectively
refers to these entities as the “law firm defendants.”

BACKGROUND
This

mortgage

dispute

arises

out

of

the

foreclosure

property owned by plaintiffs Andrew and Carmita McGlory.
November

4,

2002,

the

McGlorys

and

American

Summit

on
On

Lending

Corporation executed a note and mortgage for property located at
1117 Sheridan Avenue North, Minneapolis, Minnesota.
9.

Compl. ¶¶ 1,

The mortgage was recorded by the Hennepin County Registrar of

Titles (Hennepin County) on February 10, 2003. Workinger Decl. Ex.
A,

at

1.

CitiFinancial
County.2

On

May

15,

Mortgage

2003,

the

Company,

mortgage

Inc

and

was

recorded

assigned
in

to

Hennepin

Id. Ex. D.

The McGlorys defaulted on their mortgage, and CitiMortgage
initiated non-judicial foreclosure proceedings.

Compl. ¶¶ 34, 37.

Thereafter, CitiMortgage purchased the property at the foreclosure
sale.

Id. ¶ 41.

The McGlorys did not redeem the property during

the redemption period, and CitiMortgage initiated a lawful detainer
action on February 7, 2012.

Id. ¶ 46.

On November 19, 2012, the McGlorys filed this action in
Minnesota court, alleging claims for quiet title, negligence per

2

Defendant CitiMortgage is the successor by merger to
CitiFinancial Mortgage Company.
The succession and merger was
recorded by Hennepin County on August 23, 2006.
See Workinger
Decl. Ex. E.
2

se, wrongful ouster and slander of title.

The McGlorys also seek

a declaratory judgment regarding the parties’ property interests.
Defendants timely removed,3 and move to dismiss.

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
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

3

Federal courts are courts of limited jurisdiction. Thomas
v. Basham, 931 F.2d 521, 522 (8th Cir. 1991). As such, the court
“has a special obligation to consider its own jurisdiction.” Id.
at 523 (citation omitted).
Defendants claim that original jurisdiction exists pursuant to
28 U.S.C. § 1332(a).
See Notice Removal ¶ 4.
In the present
action, however, the parties are not completely diverse. See id.
¶ 4(a).
Nevertheless, for the reasons that follow, the court
concludes that no reasonable claims exist against the non-diverse
law firm defendants and that they were fraudulently joined. See
Karnatcheva v. JPMorgan Chase Bank, N.A., 704 F.3d 545, 546 (8th
Cir. 2013) (“[W]e recently concluded that nearly identical claims
against a resident law firm had no reasonable basis in law and fact
under Minnesota law and constituted fraudulent joinder.” (citation
omitted)). As a result, diversity jurisdiction exists, and removal
of the matter was proper.
3

(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
under Rule 12(b)(6).

See Fed. R. Civ. P. 12(d).

The court,

however, may consider matters of public record and materials that
are “necessarily embraced by the pleadings.”

See Porous Media

Corp. v. Pall Corp., 186 F.3d 1077, 1079 (8th Cir. 1999) (citation
and internal quotation marks omitted).

In this case, the note and

mortgage documents are matters of public record and are properly
considered.
II.

Quiet Title and Declaratory Judgment
The McGlorys first raise a quiet-title claim and seek a

declaratory

judgment

that

the

sheriff’s

sale

was

invalid.

Specifically, the McGlorys argue “upon information and belief” that
(1) employees of the mortgage servicing companies did not have
authority

to assign

the

mortgages

or

sign

power

of

attorney

documents and (2) unrecorded mortgages and powers of attorney
exist.

Based on these beliefs, the McGlorys argue that the

foreclosure and the assignments of the mortgage were invalid.

4

These claims fail, however, as they are not adequately pleaded
under Iqbal and Twombly and are insufficient to state a claim.
“[T]he plaintiff’s pleadings, on their face, have not provided
anything to support their claim that the defendants’ adverse claims
are

invalid,

other

than

labels

and

conclusions,

based

on

speculation that transfers affecting payees and assignments of the
notes were invalid.” Karnatcheva v. JPMorgan Chase Bank, N.A., 704
F.3d 545, 548 (8th Cir. 2013) (citations omitted).

The McGlorys

respond that state law pleading standards - rather than the federal
pleading standards set forth by Iqbal and Twombly - should apply.
Such an argument, however, is plainly contrary to established law.
See id.

As a result, the McGlorys fail to state a claim and

dismissal of their quiet title and declaratory judgment claims is
warranted.
III.

Wrongful Ouster
The

McGlorys

next

allege

that

the

eviction

proceedings

resulted in wrongful ouster under Minnesota Statutes § 504B.231.
Specifically, the McGlorys argue that CitiMortgage “cannot prove
their claim of title” and that the law firms “knew that the
unrecorded assignment of mortgage renders the foreclosure void.”
Compl.

¶¶

86-87.

As

already

explained,

these

speculative

conclusions and labels do not adequately state a claim under
Twombly and Iqbal.

See Karnatcheva, 704 F.3d at 548.

Moreover,

§ 504B.231(a) is inapplicable, as defendants were not the McGlorys’

5

landlord.

See Minn. Stat. § 504B.231(a) (“If a landlord ...

unlawfully and in bad faith removes, excludes, or forcibly keeps
out a tenant from residential premises, the tenant may recover from
the landlord treble damages or $500, whichever is greater.”); id.
§ 504B.001, subdiv. 7 (defining landlord as one “directly or
indirectly in control of rental property (emphasis added)).

As a

result, the claim for wrongful ouster fails.
IV.

Negligence Per Se
The McGlorys next argue that the law firm defendants are

negligent per se.
the law

firm

assignments,

The McGlorys assert negligence per se based on

defendants
in

allegedly

violation

of

(1)

failing

Minnesota

to

Statutes

record
§

all

580.02;

(2) failing to record powers of attorney, in violation of Minnesota
Statutes § 580.05 and (3) representing to the eviction court that
the foreclosure was valid, in violation of Minnesota Rule of
Professional Conduct 3.3.
“The essential elements of a negligence claim are: (1) the
existence of a duty of care; (2) a breach of that duty; (3) an
injury was sustained; and (4) breach of the duty was the proximate
cause of the injury.”
(Minn. 1995)

(citation

Lubbers v. Anderson, 539 N.W.2d 398, 401
omitted).

“A

per

se

negligence

rule

substitutes a statutory standard of care for the ordinary prudent

6

person standard of care, such that a violation of a statute ... is
conclusive evidence of duty and breach.”

Gradjelick v. Hance, 646

N.W.2d 225, 231 n.3 (Minn. 2002) (citations omitted).
Under Minnesota law, however, “an attorney acting within the
scope of his employment as attorney is generally immune from
liability

to

third

persons

professional relationship.”

for

actions

arising

out

of

that

McDonald v. Stewart, 182 N.W.2d 437,

440 (Minn. 1970) (citations omitted).

“Further, attorneys are

generally not liable to the client’s adversary, absent evidence of
an affirmative misrepresentation.”

Karnatcheva v. JPMorgan Chase

Bank, N.A., 871 F. Supp. 2d 834, 839 (D. Minn. 2012) (citation
omitted), aff’d 704 F.3d 545 (8th Cir. 2013). Moreover, violations
of § 580.02, § 580.05 and Rule 3.3 cannot establish negligence per
se.

See Forseth v. Bank of Am., N.A., No. 13-38, 2013 WL 2297036,

at *7 (D. Minn. May 24, 2013); Stilp v. HSBC Bank USA, N.A., No.
12-3098, 2013 WL 1175025, at *2 (D. Minn. March 20, 2013).

As a

result, dismissal of this claim is warranted.
V.

Slander of Title
Finally, the McGlorys claim slander of title.

To state a

claim for slander of title, a plaintiff must allege facts that
show:
(1)
That
there
was
a
false
statement
concerning the real property owned by the
plaintiff; (2) That the false statement was
published to others; (3) That the false
statement was published maliciously; and (4)
That the publication of the false statement
7

concerning title to the property caused the
plaintiff pecuniary loss in the form of
special damages.
Paidar v. Hughes, 615 N.W.2d 276, 279-80 (Minn. 2000) (citation
omitted).

The filing of an instrument known to be inoperative is

a false statement that, if done maliciously, constitutes slander of
title.

Kelly v. First State Bank of Rothsay, 177 N.W. 347, 347

(Minn. 1920).

“References to amounts due on mortgages are not

properly characterized as false or misleading statements.” Mine v.
Fed. Home Loan Mortg. Corp., No. 13-220, 2013 WL 443852, at *5 (D.
Minn. June 5, 2013) (citation omitted).
In the present case, the McGlorys have alleged no facts from
which the court could infer that defendants made a false statement,
that defendants acted with malice or that the McGlorys suffered any
pecuniary damages from a publication concerning their title to the
property.

See Dunbar v. Wells Fargo Bank, N.A., 709 F.3d 1254,

1257-58 (8th Cir. 2013) (dismissing similarly-pleaded slander-oftitle claim).

Therefore, the McGlorys fail to state a claim for

slander of title, and dismissal is warranted.

8

CONCLUSION
Accordingly, based on the above, IT IS HEREBY ORDERED that the
motion to dismiss [ECF No. 5] is granted.
LET JUDGMENT BE ENTERED ACCORDINGLY.
Dated:

June 14, 2013
s/David S. Doty
David S. Doty, Judge
United States District Court

9