Fleming et al v. HSBC Finance Corporation et al

Filing 24

ORDER: Select and U.S. Bank's Motion to Dismiss 3 and HSBC and Decision One's Motion to Dismiss 14 are GRANTED. The Plaintiff's Complaint is DISMISSED against all Defendants. (Written Opinion) Signed by Judge Joan N. Ericksen on August 5, 2013. (CBC)

UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
Jay S. Fleming, Debra K.
Fleming,
Plaintiffs,
v.

Civil No. 13-1039 (JNE/JJK)
ORDER

HSBC Finance Corporation, a
Delaware corporation, as successorin-interest to Decision One Mortgage
Company, LLC, a North Carolina
limited liability company dba Decision
One Mortgage Company, Inc., a
Minnesota corporation; Select Portfolio
Servicing, Inc., a Utah corporation; U.S.
Bank National Association, as Trustee of
the Home Equity Asset Trust 2007-3;
ABC Corporation; also all other persons
unknown claiming any right, title, estate,
interest, or lien in the real estate described in
the complaint herein,
Defendants.
Plaintiffs Jay and Debra Fleming (“the Flemings”) sued Defendants HSBC Finance
Corporation (“HSBC”), as successor-in-interest to Decision One Mortgage Company (“Decision
One”); Select Portfolio Servicing, Inc. (“Select”); U.S. Bank National Association (“U.S.
Bank”); and ABC Corporation (“ABC”). This case is before the Court on motions to dismiss
filed by U.S. Bank, Select, HSBC, and Decision One. The Flemings have not opposed these
motions.
When ruling on a motion to dismiss for failure to state a claim pursuant to Rule 12(b)(6),
a court must accept the facts alleged in the complaint as true and grant all reasonable inferences
in favor of the plaintiff. Mulvenon v. Greenwood, 643 F.3d 653, 656 (8th Cir. 2011). Although a
complaint is not required to contain detailed factual allegations, “[a] pleading that offers ‘labels
1

and conclusions’ or ‘a formulaic recitation of the elements of a cause of action will not do.’”
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544,
555 (2007)). “To survive a motion to dismiss, a complaint must contain sufficient factual matter,
accepted as true, to ‘state a claim to relief that is plausible on its face.’” Id. (quoting Twombly,
550 U.S. at 570). “A claim has facial plausibility when the plaintiff pleads factual content that
allows the court to draw the reasonable inference that the defendant is liable for the misconduct
alleged.” Id.
Counts I and II allege that HSBC and Decision One violated Minn. Stat. §§ 58.13, .161
when the Flemings entered into two loans with Decision One on December 14, 2006. 1 The
Flemings did not commence their action until April 2013; consequently, the Flemings’ claims are
barred by the six-year statute of limitations for “liabilit[ies] created by statute.” Minn. Stat. §
541.05, subd. 1(2); see Joyce v. Armstrong Teasdale, LLP, 635 F.3d 364, 367 (8th Cir. 2011)
(“As a general rule, the possible existence of a statute of limitations defense is not ordinarily a
ground for Rule 12(b)(6) dismissal unless the complaint itself establishes the
defense.” (quotation omitted)); Sykora v. Chase Home Fin., Civ. No. 12-775 (RHK/JSM), 2012
WL 2979142, at *2 ( D. Minn. July 20, 2012) (dismissing plaintiffs’ claims under Minn. Stat. §
58.13 because the six-year statute of limitations began to run when the plaintiffs executed the
mortgage but plaintiffs did not commence a lawsuit until eight years later).

1

The Flemings executed two mortgages and promissory notes on December 14, 2006.
They allege in their Complaint that they were given the one of the loans on December 14, 2006
and that the second loan was closed concurrently with the first. (Compl. ¶¶ 10, 15.) Moreover,
U.S. Bank and Select provided the Court with a partial copy of the first mortgage, and it is dated
December 14, 2006. See Noble Sys. Corp. v. Alorica Cent., LLC, 543 F.3d 978, 982 (8th Cir.
2008) (noting that on a motion to dismiss the court can consider documents necessarily embraced
by the complaint).
2

Counts III, IV, and VII allege various statutory and common-law violations based on the
alleged failure of some of the Defendants to record assignments. The Flemings assert “upon
information and belief” that their “Mortgages and/or Mortgage Loans were sold and/or assigned
numerous times to several different entities” and those assignments were not recorded. (Compl.
¶¶ 68, 70, 80–81, 99.) 2 But the Flemings have failed to plead any factual content that allows the
Court to draw a reasonable inference that unrecorded assignments exist. See Segura v. Fed. Nat’l
Mortg. Ass’n, Civ. No. 13-531 (SRN/JJK), 2013 WL 3034096, at *3 (D. Minn. June 17, 2013)
(noting that the allegation upon information and belief of the existence of an unrecorded
assignment is “the sort of implausible statement that Twombly and Iqbal prohibit”); Mine v. Fed.
Home Loan Mortg. Corp., Civ. No. 13-220 (ADM/JSM), 2013 WL 2443852, at *4 (D. Minn.
June 5, 2013) (“To the extent that Mine argues ‘upon information and belief’ that Freddie Mac
acquired an unrecorded [assignment of mortgage] before the start of foreclosure proceedings,
Mine is rehashing another implausible allegation without proof. Mine essentially asks the Court
to assume that an assignment occurred because he alleges it occurred.” (citation omitted)).
In Count V, the Flemings allege a violation of Minn. Stat. §§ 331A, 580.03 because the
notice of foreclosure sale “was not published in a qualified newspaper that was likely to give
notice in the affected area or to whom it was directed because it was not published where the
Property was located.” (Compl. ¶ 89.) Minn. Stat. § 580.03 requires six weeks’ published notice
of a foreclosure sale. The public notice must be published in a “qualified newspaper . . . that is
likely to give notice in the affected area or to whom it is directed.” Minn. Stat. § 331A.03,
2

Throughout these counts, the Flemings assert that the “Mortgages and/or Mortgage
Loans” were assigned but not recorded. It is unclear whether the Flemings are referring to the
mortgages or to the promissory notes. If the Flemings are referring to the promissory notes, the
Court rejects their claims because under Minnesota law, an assignment of a promissory note
need not be recorded. See Stein v. Chase Home Fin., LLC, 662 F.3d 976, 979 (8th Cir. 2011);
Jackson v. Mortg. Elec. Registration Sys., Inc. 770 N.W.2d 487, 501 (Minn. 2009).
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subdiv. 1. A “qualified newspaper” is one which is “circulated in the political subdivision which
it purports to serve.” Minn. Stat. § 331A.02, subdiv. 1(d). “Political subdivision” means “a
county, municipality, school district, or any other local political subdivision or local or area
district, commission, board, or authority.” Id. § 331A.01, subdiv. 3. The Minnesota Secretary of
State publishes a list of qualified legal newspapers. See
http://www.sos.state.mn.us/index.aspx?page=98. The Anoka County Union, the newspaper in
which the notice was published, is one of the listed qualified legal newspapers in Anoka County.
Fridley, where the mortgaged property is located, is also in Anoka County. The Flemings
misplace their reliance on two exhibits attached to the Complaint to assert that the Anoka County
Union is not a qualified newspaper. The Flemings allege that Exhibit A is the Union’s rate card,
and they assert upon information and belief that the shaded areas on a map indicate where the
Union is distributed. But the map has no caption and no explanation, and nothing on Exhibit A
indicates what the shaded areas mean. Exhibit B is a question-and-answer page that states that
the Union is the official newspaper for several cities, not including Fridley; but it does not
state—as the Flemings allege—that the Union is not distributed in Fridley. The Complaint
contains no other facts to support its allegation that the Anoka County Union was not an
appropriate legal publication for the notice of foreclosure. See Schulz v. Wells Fargo Bank, N.A.,
Civ. No. 12-2147 (JNE/JSM), 2012 WL 6591457, at *2 (D. Minn. Dec. 18, 2012) (rejecting
claim that a notice was not published in a qualified newspaper when the newspaper was listed on
the secretary of state’s website as a qualified newspaper that was circulated in the county where
the property was located).

4

Count VI alleges negligent misrepresentation against HSBC and Decision One. Under
Minnesota law, an allegation of negligent misrepresentation is an allegation of fraud. Trooien v.
Mansour, 608 F.3d 1020, 1028 (8th Cir. 2010). Fraud claims must be brought within six years
from “the discovery by the aggrieved party of the facts constituting the fraud.” Minn. Stat. §
541.05, subd. 1(6). The Flemings’ negligent misrepresentation allegations all stem from the
terms of the loans they entered into in December 2006, and the Flemings would have been aware
of the facts underlying their negligent misrepresentation claim at the time they entered into their
loans. See Simonson v. Ameriquest Mortg. Co., Civ. No. 06-2943 (ADM/AJB), 2006 WL
3463000, at *4 (D. Minn. Nov. 30, 2006) (“No statute or case requires that the aggrieved party
know all the legal consequences that flow from those facts.”). Because the Flemings commenced
their action more than six years after they entered into their loans, their negligent
misrepresentation claim is time-barred.
Finally, Count VIII raises a qui-tam action against Defendants, asserting that because
Defendants did not “record the assignments of the Mortgages and/or Mortgage Loans, the state
of Minnesota, Minnesota counties, and Minnesota citizens, were deprived of thousands of dollars
of recording fees due under the Minnesota Statutes § 357.18, 508.82, 508A.82.” (Compl. ¶ 112.)
The Flemings seek to enforce these statutes through Minnesota’s private attorney general
statute—Minn. Stat. § 8.31, subd. 3a—but the private attorney general statute does not apply to
any of the statutory provisions that the Flemings seek to enforce. See Minn. Stat. § 8.31, subd. 3a
(allowing a private individual to bring suit who is injured by a violation of laws referred to in
subdivision 1), subd. 1 (listing multiple statutes, but not including Minn. Stat. § 357.18, 508.82,
508A.82); see also Pope v. Wells Fargo Bank, N.A., Civ. No. 11-2496 (SRN/FLN), 2012 WL
1886493, at *4 (D. Minn. May 23, 2012) (rejecting similar qui-tam claim).

5

Because the Complaint fails to state any claim upon which relief can be granted, the
Court grants Defendants’ motions to dismiss the Complaint. 3
Based on the files, records, and proceedings herein, and for the reasons stated above, IT
IS ORDERED THAT:
1. Select and U.S. Bank’s Motion to Dismiss [Docket No. 3] and HSBC and Decision
One’s Motion to Dismiss [Docket No. 14] are GRANTED.
2. The Plaintiff’s Complaint is DISMISSED against all Defendants.
LET JUDGMENT BE ENTERED ACCORDINGLY.
Dated: August 5, 2013
s/Joan N. Ericksen

JOAN N. ERICKSEN
United States District Judge

3

The Complaint identifies ABC as a “fictitious designation, the identity of which is not
known at this time.” (Compl. ¶ 6.) “[A]n action may proceed against a party whose name is
unknown if the complaint makes allegations specific enough to permit the identity of the party to
be ascertained after reasonable discovery.” Estate of Rosenberg v. Crandell, 56 F.3d 35, 37 (8th
Cir. 1995). Counts III, IV, V, VII, and VII are alleged against ABC and other Defendants. Not
only has the Court determined that these counts are meritless, but there are no specific
allegations in the Complaint that would allow the identity of ABC to be ascertained after
reasonable discovery. Therefore, the Court dismisses the Complaint against ABC.
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