Torborg v. Federal National Mortgage Association et al
Filing
32
MEMORANDUM OPINION AND ORDER ADOPTING REPORT AND RECOMMENDATIONS: The Court OVERRULES Plaintiff's objections and adopts 28 the Report and Recommendation to the extent stated in the Order, Defendants' 9 Mot ion to Dismiss/General filed by Mortgage Electronic Registration System, Inc., MERSCORP, Inc., Federal National Mortgage Association is DENIED as moot, Defendants' 21 Motion to Dismiss/General filed by Mortgage Electronic Registration System, Inc., MERSCORP, Inc., Federal National Mortgage Association is GRANTED, Plaintiff's Amended Complaint 16 is DISMISSED with prejudice (Written Opinion). Signed by Judge John R. Tunheim on March 31, 2014. (HAZ) CC: Torborg. (kt)
UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
Civil No. 13-1211 (JRT/JSM)
PHILIP TORBORG,
Plaintiff,
v.
FEDERAL NATIONAL MORTGAGE
ASSOCIATION, MORTGAGE
ELECTRONIC REGISTRATION
SYSTEMS, INC., MERSCORP, INC.,
and also all other persons, unknown
claiming any right, title, estate, interest,
or lien in the real estate described in the
complaint herein,
Defendants.
MEMORANDUM OPINION AND
ORDER ADOPTING REPORT AND
RECOMMENDATION OF
MAGISTRATE JUDGE
Philip Torborg, plaintiff.1
Rebecca F. Schiller and Curt N. Trisko, SCHILLER & ADAM, P.A., 25
Dale Street North, St. Paul, MN 55102, for defendants.
This case is one in a long series of cases filed by William B. Butler 2 and arises out
of Plaintiff Philip Torborg’s challenge to the foreclosure on a mortgaged property.
1
Plaintiff Philip Torborg was formerly represented by William B. Butler, who was
suspended from the practice of law before the Eighth Circuit and the Court effective December
26, 2013. (Order, Miscellaneous Case No. 13-49, Jan. 14, 2014, Docket No. 10.) As a result, the
Court ordered Plaintiff Philip Torborg to either have new counsel enter an appearance on his
behalf or file a statement with the Court indicating an intent to proceed pro se by February 19,
2014. (Order, Jan. 29, 2014, Docket No. 31.) Torborg has not filed a response. However,
because the instant objections were filed before Butler was suspended, out of an abundance of
caution, the Court will proceed to rule on the objections.
2
See, e.g., Dunbar v. Wells Fargo Bank, N.A., 709 F.3d 1254 (8th Cir. 2013); Jerde v.
JPMorgan Chase Bank, N.A., 502 F. A’ppx 616 (8th Cir. 2013) (per curiam); Murphy v. Aurora
Loan Servs., LLC, 699 F.3d 1027 (8th Cir. 2012), cert. denied, 133 S. Ct. 2358 (2013); Sigford v.
(Footnote continued on next page.)
28&AS
Torborg’s claims center on the validity of both the mortgage assignment and the Powers
of Attorney that authorized the foreclosure on the property.
Before the Court are
Plaintiff’s objections to the Report and Recommendation (“R&R”) of United States
Magistrate Judge Janie S. Mayeron. The Magistrate Judge recommended that the Court
grant the motion to dismiss filed by Defendants Federal National Mortgage Association,
Mortgage Electronic Registration Systems, Inc. (“MERS”), and Merscorp, Inc.
(collectively “Defendants”).
The Court will adopt the R&R and dismiss Torborg’s
claims with prejudice, concluding that Torborg fails to state a quiet title claim and has
failed to object to the Magistrate Judge’s conclusion that his claims for slander of title
and declaratory judgment should be dismissed.
BACKGROUND
Torborg’s challenge to the foreclosure centers on the validity of two exchanges in
the life of his mortgage: its assignment from MERS to Fannie Mae and Fannie Mae’s
subsequent foreclosure proceeding. Torborg alleges that the assignment was not valid
because it was authorized and executed by individuals who did not have the authority to
execute the assignment. Similarly, he alleges that the foreclosure proceeding was invalid
because parties to the proceeding lacked the necessary powers of attorney and because
the Power of Attorney was not recorded prior to the publication of the Notice of Sale.
____________________________________
(Footnote continued.)
U.S. Bank, N.A., Civ. No. 13-2225, 2014 WL 468300 (D. Minn. Feb. 6, 2014); Sonsalla v.
Mortg. Elec. Registration Sys., Inc., Civ. No. 13-659, 2013 WL 4052825 (D. Minn. Aug. 9,
2013).
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Torborg acquired an interest in the real property in question on March 31, 2006.
(Am. Compl. ¶ 2, July 1, 2013, Docket No. 16.) 3 That same day, Torborg executed a
mortgage with MERS. (Id. ¶ 6.) MERS subsequently assigned the mortgage to Fannie
Mae. (Id. ¶ 10; id., Ex. 2.) The assignment of the mortgage was executed on November
10, 2011 and recorded by the Sherburne County Office of the Recorder on May 15, 2012.
(Id. ¶ 10 (citing id., Ex. 2).) Torborg alleges that this assignment was invalid because the
employees who supposedly executed the assignment on behalf of MERS were in Idaho
and that an employee of a different company that happens to be located in Idaho (another
employee of which had notarized the instant assignment) testified in a different matter
that she previously “robo-signed” assignments of mortgage. (Id. ¶¶ 11-13; id., Ex. 7.)
He alleges that, based on these facts, there is a plausible inference that the employees
who supposedly executed the assignment on behalf of MERS actually worked for the
notarizing company, not MERS, and therefore the assignment was not valid. (Id. ¶¶ 1213.)
Although Torborg does not state this directly in his pleadings, the other pleadings
and related documents indicate that Torborg defaulted on his mortgage by 2012. (See id.
¶ 9 (noting that Torborg attempted to modify his payment plan for the mortgage, but
ultimately sought and declared bankruptcy in June 2012); Decl. of Rebecca F. Schiller,
Exs. 4-5 (foreclosure documents filed with Sherburne County), June 10, 2013, Docket
No. 11; Compl., Ex. 4 (notice of foreclosure), May 20, 2013, Docket No. 1.) A Notice of
3
As discussed below, the operative complaint in this case is the Amended Complaint, so
the recitations to Torborg’s allegations will reference the Amended Complaint.
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Pendency of Proceeding to Foreclose was recorded at the Sherburne County Recorder’s
office on September 10, 2012. (Am. Compl. ¶¶ 16-17, Ex. 8.) On September 13, 2012,
Fannie Mae noticed the Sheriff’s Sale for the property. (Id. ¶ 20.) Defendants executed a
Power of Attorney to Foreclose on September 21, 2012, and recorded it with the
Recorder of Sherburne County on October 4, 2012. (Id. ¶ 18.) The execution and
recording of the Power of Attorney took place prior to the sale on November 8, 2012.
(See id. ¶ 20.) 4 Torborg alleges that the foreclosure was invalid because the person who
signed the Notice of Pendency of Proceeding to Foreclose lacked the legal authority to do
so. (Id. ¶ 17.)
Following the foreclosure and sale of the property, Torborg filed a complaint in
this action, seeking to quiet title to the property (Count I), declaratory judgment stating
that the assignment and foreclosure were void (Count II), and alleging slander of title
(Count III). Defendants moved to dismiss all claims against them. (Mot. to Dismiss,
June 10, 2013, Docket No. 9.) In response, Torborg simultaneously filed an opposition
memorandum and the Amended Complaint. (Am. Compl.; Mem. in Opp. to Mot. to
Dismiss, July 1, 2013, Docket No. 17.) The Amended Complaint includes two additional
paragraphs further detailing the allegations of unauthorized assignment of the mortgage,
4
At the sheriff’s sale on November 8, 2012, the Power of Attorney bid on behalf of
Fannie Mae. (Am. Compl. ¶ 20.) On November 13, 2012, a Sheriff’s Certificate of Sale was
recorded at the Sherburne County Recorder’s Office. (Id. ¶ 20, Ex. 10 (Sheriff’s Certificate of
Sale and Foreclosure Record).)
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but is otherwise nearly identical to the original complaint. (See Am. Compl. ¶¶ 12-13.)5
Defendants again moved to dismiss all counts against them. (Mot. to Dismiss Am.
Compl., July 19, 2013, Docket No. 21.) 6
The Magistrate Judge issued an R&R recommending that the Court grant
Defendants’ Motion to Dismiss the Amended Complaint. (R&R, Dec. 19, 2013, Docket
No. 28.) With regard to the quiet title claim, the R&R concluded that Torborg failed to
adequately allege that certain Defendants lacked the requisite signing authority; that
Minn. Stat. § 582.25(1)(v) does not provide for a cause of action for failure to record a
power of attorney prior to the publication of the Notice of Sale; that Torborg lacked
standing because allegations that the subsequent assignment of a mortgage was invalid do
not amount to injury-in-fact; and that Torborg is not eligible for any equitable relief
because of the doctrine of unclean hands. (Id. at 10-18.) Concerning the slander of title
claim, the R&R observed that Torborg failed to address Defendants’ arguments on that
5
The Court treats the Amended Complaint as an amendment as a matter of course under
Federal Rule of Civil Procedure 15, because it was filed within 21 days of Defendants’ Motion to
Dismiss the original complaint (the motion was filed June 10, 2013 and the amended complaint
was filed July 1, 2013). See Fed. R. Civ. P. 15(a)(1)(B) (permitting one amendment of a
pleading as a matter of course “if the pleading is one to which a responsive pleading is required,
21 days after service of a responsive pleading or 21 days after service of a motion under
Rule 12(b), (e), or (f), whichever is earlier”). Thus, the Amended Complaint is the operative
complaint. See In re Atlas Van Lines, Inc., 209 F.3d 1064, 1067 (8th Cir. 2000) (“[A]n amended
complaint super[s]edes an original complaint and renders the original complaint without legal
effect.”).
6
Inexplicably, the Motion to Dismiss the original complaint was not terminated, nor was
it withdrawn by Defendants, so both motions are currently pending before the Court. Because
the Amended Complaint supersedes the original complaint, the Court will deny the Motion to
Dismiss the original complaint as moot.
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claim in his Memorandum in Opposition to Defendants’ Motion to Dismiss and therefore
waived the issue. (Id. at 19 (“Plaintiff did not address defendants’ arguments regarding
dismissal of his slander of title claim in his opposition brief. Therefore, the Court treats
plaintiff’s lack of opposition as a concession that the claim cannot succeed and should be
dismissed.”).) Concerning the declaratory judgment claim (which Torborg also failed to
address in his opposition memorandum), the Magistrate Judge concluded that he failed to
state a claim for declaratory judgment because declaratory judgment is a remedy, not a
cause of action, and his underlying claims failed. (Id. at 20-21.)
Torborg raises three objections to the R&R, all of which involve his quiet title
claim. His first objection is essentially identical to his Memorandum in Opposition to
Defendants’ Motion to Dismiss. The subsequent objections are new and challenge the
Magistrate Judge’s conclusion that he lacks standing for his quiet title claim and that the
doctrine of unclean hands bars him from any equitable relief. Torborg again makes no
argument regarding the slander of title and declaratory judgment claims.
The Court concludes that Torborg’s quiet title action fails to state a claim upon
which relief can be granted because he makes no plausible allegations that the assignment
and foreclosure were invalid.
Because Torborg has failed to object or make any
argument regarding the remaining claims, the Court will therefore dismiss all claims
against Defendants.
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ANALYSIS
I.
STANDARD OF REVIEW
Upon the filing of a report and recommendation by a magistrate judge, a party
may “serve and file specific written objections to the proposed findings and
recommendations.” Fed. R. Civ. P. 72(b)(2); accord D. Minn. LR 72.2(b). “The district
judge must determine de novo any part of the magistrate judge’s disposition that has been
properly objected to.” Fed. R. Civ. P. 72(b)(3). However, objections which are not
specific but merely summarize or repeat arguments presented to and considered by a
magistrate judge are not entitled to de novo review, but rather are reviewed for clear
error. See, e.g., Martinez v. Astrue, Civ. No. 10-5863, 2011 WL 4974445, at *3 (E.D. Pa.
Oct. 19, 2011) (citing cases from numerous other jurisdictions); Fed. R. Civ. P. 72
advisory committee’s note, subd. (b) (“When no timely objection is filed, the court need
only satisfy itself that there is no clear error on the face of the record in order to accept
the recommendation.”).
Here, Torborg’s objections to the R&R’s conclusions regarding his failure to state
a quiet title claim were merely a recitation of much of Plaintiff’s Memorandum in
Opposition of Motion to Dismiss Amended Complaint. (Compare Objection, at 4–8,
with Mem. to Opp. to Mot. to Dismiss Am. Compl. at 5-11, August 9, 2013, Docket No.
24.) Torborg’s objections to the Magistrate Judge’s determinations that the quiet title
claim must also fail because of lack of standing and unclean hands, however, are new and
specific.
Out of an abundance of caution, the Court will review all of Torborg’s
objections de novo. See Fed. R. Civ. P. 72(b)(3); accord D. Minn. LR 72.2(b)(3).
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II.
FAILURE TO STATE A CLAIM FOR QUIET TITLE
A.
Standard of Review
Reviewing a complaint under a Rule 12(b)(6) motion to dismiss, the Court
considers all facts alleged in the complaint as true to determine if the complaint states 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, 556 U.S. 662, 678 (2009)). To
survive a motion to dismiss, a complaint must provide more than “‘labels and
conclusions’ or ‘a formulaic recitation of the elements of a cause of action.’” Iqbal, 556
U.S. at 678 (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)); see also
Karnatcheva v. JPMorgan Chase Bank, N.A., 704 F.3d 545, 548 (8th Cir.) cert. denied,
134 S. Ct. 72 (2013) (concluding that conclusory allegations are insufficient to satisfy
pleading standards). The allegations in the complaint must “nudge[]” the claims against
the defendant “across the line from conceivable to plausible.” See Iqbal, 556 U.S. at 680
(internal quotation marks omitted). “Where a complaint pleads facts that are merely
consistent with a defendant’s liability, it stops short of the line between possibility and
plausibility,” and therefore must be dismissed. Id. at 678. (internal quotation marks
omitted).
B.
Torborg’s Quiet Title Claim
Upon reviewing the record, the Court concludes that the Amended Complaint fails
to state a claim for quiet title under Minn. Stat. § 559.01. Section 559.01 states:
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Any person in possession of real property personally or through the
person’s tenant, or any other person having or claiming title to vacant or
unoccupied real property, may bring an action against another who claims
an estate or interest therein, or a lien thereon, adverse to the person bringing
the action, for the purpose of determining such adverse claim and the rights
of the parties, respectively.
Minn. Stat. § 559.01. Torborg argues that he has adequately pleaded facts which, if true,
would afford him relief under this section, because any adverse claim by the Defendants
is invalid because the assignment was invalid under Minn. Stat. § 507.413 and the
Powers of Attorney for the foreclosure sale did not comply with Minn. Stat. § 580.05.
Courts have repeatedly rejected claims under § 559.01 on the basis of conclusory
allegations challenging a defendant’s adverse claim on the basis of invalid assignment.
See Karnatcheva, 704 F.3d at 548 (“labels and conclusions, based on speculation that
transfers affecting payees and assignments of the notes were invalid” were insufficient to
state a claim for quiet title under Minn. Stat. § 559.01); see also Vollmer v. Fed. Home
Loan Mortg. Corp., No. 13-2617, 2014 WL 642423, at *1 (8th Cir. Feb. 20, 2014)
(affirming dismissal of claim under § 559.01 based on invalid assignment theory, noting,
“we have squarely rejected this theory, and we agree with the district court that the
conclusory allegations of the amended complaint as to an unrecorded mortgage are
insufficient under Rule 8”).
Torborg’s allegations that the assignment was invalid are similarly conclusory and
therefore insufficient. His allegations essentially amount to a claim that: (1) although the
MERS representatives who signed the assignment claim to be and have titles as
employees of MERS, there is no evidence that they actually are, and (2) because an
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employee of a different company, in the same town as where the signing MERS
representatives allegedly reside, admitted in a different matter that she has “robo-signed”
documents before, it can be assumed that robo-signing is a regular practice for the
company. (Am. Comp. ¶¶ 10-13.) These allegations do not plausibly state that the
assignment was invalid: Torborg provides no basis for his assertion that the signers were
not employees of MERS and any allegations about the practices of a different company in
a different matter have no bearing on the assignment here.
Torborg’s challenges to the foreclosure’s validity are similarly insufficient. He
alleges that an attorney who executed a Power of Attorney on behalf of Fannie Mae “did
not have the legal authority to execute” the document because “[t]here is no [] record
evidence of [his] authority,” (Am. Compl. ¶ 17) and that the person who executed the
Power of Attorney on behalf of Fannie Mae did not have the authority to do so because
his title was “not a fact, it is a disputed hearsay statement,” and “[t]here is no evidence of
[his] authority” to execute foreclosure documents on behalf of Fannie Mae, although the
Power of Attorney listed him as “attorney-in-fact for FNMA,” (id. ¶¶ 18-19). Torborg
provides no factual support for these speculative and conclusory allegations, and thus
they do not suffice to state a claim for quiet title on the basis that the Powers of Attorney
were invalid. Cf. Wolff v. Bank of New York Mellon, Civ. No. 13-2175, 2014 WL
641510, at *10 & n.5 (D. Minn. Feb. 19, 2014) (adopting R&R which found complaint
stated no “plausible inference” relevant party did not have the legal authority to execute
power of attorney).
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Similarly, Torborg’s allegations regarding the recording of the Power of Attorney
and the notice of publication of the Notice of Sale fail to state a claim. According to
Torborg’s allegations, Defendants executed the Power of Attorney to Foreclose on
September 21, 2012, and recorded it with Sherburne County on October 4, 2012. (Am.
Compl. ¶ 18.) Both of these actions took place prior to the sale on November 8, 2012.
(See id. ¶ 20.) Thus, the requirement of Minn. Stat. § 580.05 that a power of attorney be
recorded prior to the sale was satisfied here. See Minn. Stat. § 580.05 (“[T]he authority
of the attorney at law shall appear by power of attorney executed and acknowledged by
the mortgagee or assignee of the mortgage in the same manner as a conveyance, and
recorded prior to the sale in the county where the foreclosure proceedings are had.”); see
also Otremba v. CitiMortgage, Inc., Civ. No. 13-871, 2013 WL 6388461, at *3 (D. Minn.
Dec. 6, 2013).
Torborg’s complaint provides nothing to support his claim that “[D]efendants’
adverse claims are invalid, other than labels and conclusions, based on speculation that
transfers affecting payees and assignments of the notes were invalid.” Karnatcheva, 704
F.3d at 548. Accordingly, the Court concludes that Torborg’s allegations supporting his
quiet title claim are insufficient and the Court will dismiss Count I for failure to state a
claim.
Torborg objects to other grounds upon which the Magistrate Judge recommended
dismissing his quiet title claim: that he lacks standing to pursue a claim for invalid
assignment of a mortgage and that the doctrine of unclean hands bars him from seeking
equitable relief because he defaulted on the mortgage. (See Objection at 7-10.) Because
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the Court concludes that Torborg’s quiet title claim must be dismissed for failure to state
a claim, the Court need not reach these issues. Cf. Novak v. JPMorgan Chase Bank, N.A.,
518 F. App’x 498, 500-01 (8th Cir. 2013). (where district court found several alternative
bases for dismissing quiet title claim, including unclean hands, affirming dismissal on
the basis of failure to state a claim). 7 Therefore, the Court will dismiss Torborg’s quiet
title claim as to all Defendants with prejudice. The Court will also dismiss Torborg’s
claims for slander of title and declaratory judgment as he has not raised any objections to
the Magistrate Judge’s recommendation that those claims be dismissed.
ORDER
Based on the foregoing, and all the files, records, and proceedings herein, the
Court OVERRULES Plaintiff’s objections [Docket No. 29] and ADOPTS the
7
Even if the Court were to review these arguments, courts have repeatedly rejected these
arguments and concluded that plaintiffs in Torborg’s position lack standing and are barred from
seeking equitable relief by the doctrine of unclean hands. See Wolff, 2014 WL 641510 *10
(“[P]laintiffs suffered no injury in fact as a result [of alleged lack of signing authority for power
of attorney] and, therefore lack standing to pursue a quiet title claim on this basis.”); Sorem v.
Bank of New York Mellon, Civ. No. 13-290, 2013 WL 4611115, *3 (D. Minn. Aug. 29, 2013)
(“Plaintiffs base their claims on the primary argument that the foreclosure is void because
unrecorded assignments exist, and in support Plaintiffs argue that BNYM’s Pooling and
Servicing Agreement requires that an assignment be executed in favor of BNYM. Plaintiffs lack
standing to make this challenge.”); Novak v. JP Morgan Chase Bank, N.A., Civ. No. 12-589,
2012 WL 3638513, *4 (D. Minn. Aug. 23, 2012) (concluding plaintiffs could not state a quiet
title action because they “c[a]me to court with unclean hands” on account of having “defaulted
on their mortgage loans by failing to make promised payments”), aff’d 518 F. App’x 498 (8th Cir.
2013); Stilp v. HSBC Bank USA, N.A., Civ. No. 12-3098, 2013 WL 1175025, *4 (D. Minn.
Mar. 20, 2013) (rejecting quiet title claim where plaintiffs sought to “declare their mortgage
invalid after defaulting; as such, they come to the present case with unclean hands”), aff’d, 539
F. App’x 694 (8th Cir. 2013) Because the Court does not rely on these objected to portions of
the R&R to dismiss Torborg’s claims, the Court declines to adopt the portions of the Report
addressing standing and unclean hands.
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Recommendation and ADOPTS the Report of the Magistrate to the extent stated in the
Order [Docket No. 28]. Accordingly, IT IS HEREBY ORDERED that:
1.
Defendants’ Motion to Dismiss the Amended Complaint [Docket No. 21] is
GRANTED.
2.
Defendants’ Motion to Dismiss [Docket No. 9] is DENIED as moot.
3.
Plaintiff’s Amended Complaint [Docket No. 16] is DISMISSED with
prejudice.
4.
The Clerk of Court is DIRECTED to mail a copy of this order to Plaintiff
at 18950 238th Avenue Northwest, Big Lake, MN 55309. 8
LET JUDGMENT BE ENTERED ACCORDINGLY.
DATED: March 31, 2014
at Minneapolis, Minnesota.
___________
_________
JOHN R. TUNHEIM
United States District Judge
8
There is no address listed for Plaintiff on the docket, but the Amended Complaint states
that Torborg resides at this address. (Am. Compl. ¶ 1.)
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