Federal National Mortgage Association v. Von Grewe et al

Filing 32

ORDER overruling 30 Defendants' Objection and adopting 28 the Magistrate Judge's December 16, 2013, Report and Recommendation; remanding this action to Hennepin County District Court; and denying as moot 7 Plaintiff's combined motion for summary judgment and motion to dismiss Defendants Von Grewes' counterclaim. Signed by Judge Susan Richard Nelson on 2/18/2014. (ACY)

UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA

Federal National Mortgage Association,

Case No. 13-cv-2720 (SRN/JJK)

Plaintiff,
MEMORANDUM OPINION
AND ORDER

v.
Gerald Von Grewe, Gretchen R.L. Harvey,
Sheila M. Smith-Von Grewe, John Doe,
and Mary Roe,
Defendants.

Kalli L. Ostlie and Wendy Oien Sanchez, Shapiro & Zielke, LLP, 12550 West Frontage
Road, Suite 200, Burnsville, Minnesota 55337, for Plaintiff.
William B. Butler, Butler Liberty Law, LLC, 33 South Sixth Street, Suite 4100,
Minneapolis, Minnesota 55402, for Defendants Gerald Von Grewe, Sheila M. Smith-Von
Grewe, John Doe, and Mary Roe.
Gretchen R.L. Harvey, pro se Defendant.

SUSAN RICHARD NELSON, United States District Judge
I.

INTRODUCTION
This matter is before the Court on Defendants’ Objection [Doc. No. 30] to United

States Magistrate Judge Jeffrey J. Keyes’ December 16, 2013, Report and Recommendation
(“R&R”) [Doc. No. 28]. On sua sponte consideration of remand, the Magistrate Judge
recommended that this action be remanded to Minnesota state district court. For the reasons
set forth below, the Court overrules Defendants’ Objection and adopts the R&R.
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II.

BACKGROUND
The Magistrate Judge’s Report and Recommendation thoroughly documents the

factual and procedural background of this case, and the Court incorporates it here by
reference. Briefly stated, Plaintiff Federal National Mortgage Association brought this
eviction action against Defendants on September 19, 2013, in Hennepin County District
Court. The litigation concerns Defendants’ former property in Maple Plain, Minnesota,
which was subject to a mortgage foreclosure sale on July 3, 2012.
On October 2, 2013, Defendants Gerald Von Grewe and Sheila M. Smith-Von
Grewe removed this case to federal district court, asserting that this Court has original
jurisdiction under 28 U.S.C. § 1345 because Plaintiff is a federal agency under 12 U.S.C. §
1452(f). (Notice of Removal [Doc. No. 1].) On October 29, 2013, Plaintiff moved both for
summary judgment and to dismiss Defendants Gerald Von Grewe and Sheila M. Smith-Von
Grewe’s counterclaim. (Pl.’s Combined Mot. for Summ. J. and Mot. to Dismiss Defs.Von
Grewes’ Countercl. [Doc. No. 7].) Defendants opposed Plaintiff’s summary judgment
motion. (Mem. in Opp’n to Summ. J. Mot. [Doc. No. 23].)
On December 16, 2013, the Magistrate Judge sua sponte considered remand and
recommended that this action be remanded to Minnesota state district court. (Dec. 16, 2013,
Report and Recommendation at 1 [Doc. No. 28].) Without deciding whether this case was
properly removed under 28 U.S.C. § 1441 and 28 U.S.C. § 1345, the Magistrate Judge
concluded that abstaining from exercising jurisdiction is appropriate. (Id. at 3.)
Considering principles of comity, federalism, and judicial economy, the Magistrate Judge
found abstention appropriate because this eviction action is “fundamentally a matter of state
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law,” and there was neither a federal interest in retaining the proceedings or a federal right
at stake, nor any apparent prejudice with the case going forward in state court. (Id. at 6.)
Because the Magistrate Judge determined that abstention from exercising jurisdiction is
appropriate, he did not address the merits of Plaintiff’s pending motion. (Id. at 6-7.)
Defendants filed objections [Doc. No. 30] to the Magistrate Judge’s R&R on
December 19, 2013, and Plaintiff responded [Doc. No. 31] on December 20, 2013.
III.

DISCUSSION
A. Standard of Review
A party “may file and serve specific written objections to a magistrate judge’s

proposed findings and recommendations.” D.Minn. LR 72.2(b)(1). The district court will
review de novo those portions of the R&R to which an objection is made, and it “may
accept, reject, or modify, in whole or in part, the findings or recommendations made by the
magistrate judge.” 28 U.S.C. § 636(b)(1)(C); FED. R. CIV. P. 72(b)(3); D.Minn. LR
72.2(b)(3). Ordinarily, the district judge relies on the record of proceedings before the
magistrate judge. D.Minn. LR 72.2(b)(3).
B. Objections
Defendants cite Colorado River Water Conservation District v. United States, 424
U.S. 800 (1976), arguing that a federal court cannot abstain from exercising jurisdiction
over a case when it falls within the court’s federal-question jurisdiction. (Objection [Doc.
No. 30].) The Court recently rejected this very argument by Defendants’ counsel. Fed.
Nat’l Mortg. Ass’n v. Guse, No. 13-cv-801 (PJS/JSM), 2014 WL 127033 (D. Minn. Jan. 14,
2014); Fed. Nat’l Mortg. Ass’n v. Mondragon, No. 13-cv-1473 (PJS/JSM), 2014 WL
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127113 (D. Minn. Jan. 14, 2014). These cases identify the following problems with
Defendants’ argument.
First, this case does not involve federal-question jurisdiction. The Court agrees with
the Magistrate Judge’s observation that this post-foreclosure eviction action is
“fundamentally a matter of state law.” (Dec. 16, 2013, Report and Recommendation at 6
[Doc. No. 28].) Moreover, Defendants removed this case under 28 U.S.C. § 1345 (“United
States as plaintiff”) and not 28 U.S.C. § 1331(“Federal question”). (Notice of Removal
[Doc. No. 1].) By asserting that this Court has jurisdiction “because Plaintiff is a federal
agency within the meaning of 28 U.S.C. § 1345,” Defendants posit that every case to which
the United States is a party involves federal-question jurisdiction. (Id. ¶ 3 [Doc. No. 1];
Objection at 2 [Doc. No. 25].) The Court, however, previously noted:
If defendants were correct that a federal court has jurisdiction over every case
to which the United States is a party under § 1331, then § 1345 would have
no reason for existing. In support of their argument, defendants cite nothing
except Article III, § 2 of the Constitution. But Article III, § 2 explicitly
distinguishes between federal-question jurisdiction [sic] and U.S.-party
jurisdiction [sic]. Moreover, Article III, § 2 creates all federal jurisdiction—
including not only the federal-question jurisdiction implemented in § 1331,
and the U.S.-party jurisdiction implemented in § 1345, but, for example, the
diversity jurisdiction implemented in 28 U.S.C. § 1332. Just as diversity
jurisdiction is plainly not federal-question jurisdiction, so, too, U.S.-party
jurisdiction is plainly not federal-question jurisdiction.
Guse, 2014 WL 127033, at *1; see Mondragon, 2014 WL 127113, at *1. This reasoning
applies to the very same argument ventured by Defendants’ counsel here. The Court finds
that there is no federal-question jurisdiction.
Second, Colorado River does not apply to this case as Defendants urge. In Colorado
River, the United States filed a federal lawsuit with state and federal claims. 424 U.S. at
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805, 815-16. The district court dismissed the federal lawsuit, a decision with which the
Supreme Court agreed. Id. at 821. Although the Supreme Court noted that the district court
would have had jurisdiction under 28 U.S.C. § 1331, dismissal was nonetheless appropriate
in light of many factors that counseled against concurrent federal proceedings. Id. at 819.
As such, even if the United States is a party, and even if there were federal-question
jurisdiction, abstention may still be appropriate.
The Magistrate Judge properly considered principles of comity, federalism, and
judicial economy in reaching his conclusion that abstention is appropriate. The Court finds
this case to be an ordinary eviction proceeding that falls squarely within the realm of state
law. There is no federal interest in retaining the proceedings or federal right at stake, and
there is no apparent prejudice to the defendants by resuming this case in state court.
Accordingly, the Court remands this matter to Hennepin County District Court.
IV.

ORDER
The Court OVERRULES Defendants’ Objection [Doc. No. 30] and ADOPTS the

Magistrate Judge’s December 16, 2013, Report and Recommendation [Doc. No. 28].
Accordingly, IT IS HEREBY ORDERED that:
1. This action is remanded to Hennepin County District Court; and
2. Plaintiff’s combined motion for summary judgment and motion to dismiss
Defendants Von Grewes’ counterclaim [Doc. No. 7] is DENIED AS MOOT.
LET JUDGMENT BE ENTERED ACCORDINGLY.
Dated:

February 18, 2014

s/ Susan Richard Nelson
SUSAN RICHARD NELSON
United States District Court Judge
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