Schumacher v. Federal Home Loan Mortgage Corporation et al

Filing 21

ORDER granting 5 & 9 Motions to Dismiss.(Written Opinion). Signed by Senior Judge David S. Doty on 6/17/2013. (PJM)

UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
Civil No. 13-29(DSD/FLN)
Peter J. Schumacher,
Plaintiff,
ORDER

v.
Federal Home Loan Mortgage
Corporation; Bank of America,
N.A.; Reiter & Schiller, P.A.,
and Peterson, Fram & Bergman, P.A.,
Defendants.

William B. Butler, Esq. and Butler Liberty Law, LLC, 33
South Sixth Street, Suite 4100, Minneapolis, MN 55402,
counsel for plaintiff.
Brent R. Lindahl, Esq. and Fulbright & Jaworski, LLP, 80
South Eighth Street, Minneapolis, MN 55402; Jared M.
Goerlitz, Esq. and Peterson, Fram & Bergman PA, 55 East
Fifth Street, St. Paul, MN 55101; Curt N. Trisko, Esq.
and Schiller & Adam, PA, The Academy Building, 25 North
Dale Street, St. Paul, MN 55102, counsel for defendants.

This matter is before the court upon the motions to dismiss by
defendants Federal Home Loan Mortgage Corporation (Freddie Mac);
Bank of America, N.A. (BANA); Peterson, Fram & Bergman, P.A. (PFB)
and Reiter & Schiller, P.A. (R&S).1

Based on a review of the file,

record and proceedings herein, and for the following reasons, the
court grants the motions.

1

PFB and R&S represented BANA and Freddie Mac throughout the
foreclosure proceedings, sheriff’s sale and eviction process. The
court refers to these entities collectively as the “law firm
defendants.”

BACKGROUND
This

mortgage

dispute

arises

out

of

the

foreclosure

property owned by plaintiff Peter J. Schumacher.

on

On April 24,

2007, Schumacher and BANA executed a note and mortgage for property
located at 89 Oxford Street, St. Paul, Minnesota.

Compl. ¶¶ 2, 9.

Schumacher defaulted, and on August 26, 2010, PFB drafted and
recorded a Notice of Pendency and Power of Attorney.

Id. ¶ 14.

Thereafter, PFB noticed a sheriff’s sale on September 20, 2011.
Id. ¶ 16.

BANA, through PFB, purchased the property at the

sheriff’s sale, and recorded the purchase with the Ramsey County
Office of Recorder (Ramsey County).
executed

a

quitclaim

deed

to

transaction with Ramsey County.

Id.

Freddie
Id. ¶ 18.

On April 26, 2012, BANA
Mac

and

recorded

the

On September 10, 2012,

R&S, as counsel for Freddie Mac, commenced an eviction proceeding
against Schumacher.
On

November

Id. ¶ 25.

29,

2012,

Schumacher

filed

this

action

in

Minnesota court, alleging claims for quiet title, deceit and
collusion under Minnesota Statutes § 481.07, slander of title and
negligence per se.

Schumacher also seeks a declaratory judgment

stating that the sheriff’s sale and quitclaim deed are void.
Defendants timely removed,2 and move to dismiss.

2

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).
(continued...)
2

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 (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).

2

(...continued)
Defendants claim that original jurisdiction exists pursuant to
28 U.S.C. § 1332(a). See Notice Removal ¶ 12. In the present
action, however, the parties are not completely diverse. See id.
¶ 14.
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

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.

Res Judicata
Defendants argue that this action is barred by res judicata.

Specifically, defendants argue that Schumacher - and his counsel,
William Butler - have already challenged the validity of the
instant foreclosure, see Mustafa v. Bank of America, N.A., No. 12590, 2012 WL 3612083 (D. Minn. Aug. 21, 2012), and that this
lawsuit is

nothing

Schumacher’s claim.

more

than

a

brazen

attempt

to relitigate

The court need not reach the res judicata

determination, however, as the underlying claims, just as in
Mustafa, fail on the merits.
III.

Quiet Title and Declaratory Judgment
Schumacher

brings

a

claim

for

quiet

title

and

seeks

a

declaratory judgment that the foreclosure, sheriff’s sale and
quitclaim deed were invalid. Specifically, Schumacher argues “upon
information and belief” that (1) there was an unrecorded assignment
from BANA to Freddie Mac prior to the foreclosure and (2) employees

4

of the defendants did not have authority to sign power of attorney
and notice of pendency documents or execute the quitclaim deed.
Based on these beliefs, Schumacher argues that the foreclosure,
sheriff’s sale and quitclaim deed were invalid.
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).

Schumacher

responds that state law pleading standards - rather than the
federal pleading standards set forth by Iqbal and Twombly - should
apply.

Such

an

established law.

argument,
See id.

however,

is

plainly

contrary

to

As a result, Schumacher fails to state

a claim, and dismissal of the quiet title and declaratory judgment
claims is warranted.
IV.

Slander of Title
Schumacher next claims 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
5

statement 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, Schumacher has alleged no facts from
which the court could infer that defendants made a false statement,
that defendants acted with malice or that Schumacher 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, Schumacher fails to state a claim for

slander of title, and dismissal is warranted.
V.

Negligence Per se
Schumacher next argues that the law firm defendants are

negligent per se.
the law

firm

assignments,

Schumacher asserts 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

6

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
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.

7

12-3098, 2013 WL 1175025, at *2 (D. Minn. March 20, 2013).

As a

result, dismissal of this claim is warranted.
VI.

Deceit and Collusion
Finally, Schumacher argues a claim for deceit and collusion

under Minnesota Statutes § 481.07.

Section 481.07 provides that

“[a]n attorney who, with intent to deceive a court or a party to an
action or judicial proceeding, is guilty of or consents to any
deceit or collusion ... shall be liable to the party injured in
treble damages.”
cause of action.”

That statute, however, “does not create a new
Love v. Anderson, 61 N.W.2d 419, 422 (Minn.

1953). Rather, a plaintiff seeking the damages allowed by § 481.07
must “specifically allege a claim of fraud as the underlying cause
of action, in compliance with Fed. R. Civ. P. 9(b).”

Beardmore v.

Am. Summit Fin. Holdings, LLC, No. 01-948, 2001 WL 1586785, at *8
(D. Minn. Dec. 10, 2001) (citation omitted).
Here, Schumacher has neither alleged a claim for fraud nor
conformed his allegations to the heightened pleading standard of
Rule 9(b). As a result, Schumacher cannot state a claim for deceit
and collusion under § 481.07, and dismissal is warranted.

8

CONCLUSION
Accordingly, based on the above, IT IS HEREBY ORDERED that the
motions to dismiss [ECF Nos. 5, 9] are granted.
LET JUDGMENT BE ENTERED ACCORDINGLY.
Dated:

June 17, 2013
s/David S. Doty
David S. Doty, Judge
United States District Court

9