Estate of Steven Lane, The v. CMG Mortgage, Inc et al

Filing 32

MEMORANDUM OPINION AND ORDER granting defendant Flagstar Bank's 12 Motion to Dismiss; granting defendant CMG Mortgage's 15 Motion to Dismiss (Written Opinion). Signed by Judge John R. Tunheim on May 11, 2015. (DML)

UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
THE ESTATE OF STEVEN LANE,

Civil No. 14-3277 (JRT/LIB)

Plaintiff,
v.
CMG MORTGAGE, INC., d/b/a CMG
Financial, FLAGSTAR BANK, and ALL
OTHER PERSONS OR ENTITIES
UNKNOWN, CLAIMING ANY RIGHT,
TITLE, ESTATE, INTEREST OR LIEN
IN THE REAL ESTATE DESCRIBED
IN THE COMPLAINT HEREIN,

MEMORANDUM OPINION AND
ORDER GRANTING
DEFENDANTS’ MOTIONS TO
DISMISS

Defendants.
Andrew B. Kalis, RYAN & BRUCKER, LTD., 201 Minnesota Avenue
North, P.O. Box 388, Aitkin, MN 56431; and Carl G. Peterson and Erik F.
Hansen, BURNS & HANSEN, 8401 Wayzata Boulevard, Suite 300,
Minneapolis, MN 55426, for plaintiff.
Donald Chance Mark, Jr. and Tyler P. Brimmer, FAFINSKI MARK &
JOHNSON, PA, 775 Prairie Center Drive, Suite 400, Eden Prairie, MN
55344; and Jason E. Goldstein, BUCHALTER NEMER, 18400
Von Karman Avenue, Suite 800, Irvine, CA 92612, for defendant CMG
Mortgage, Inc.
David A. Snieg and Michael A. Ponto, FAEGRE BAKER DANIELS
LLP, 90 South Seventh Street, Suite 2200, Minneapolis, MN 55402, for
defendant Flagstar Bank.

This is an action brought by the Estate of Steven Lane (“the Estate”) against
Defendants CMG Mortgage, Inc. (“CMG”) and Flagstar Bank (“Flagstar”). Flagstar
possesses a mortgage against Lane’s home in Aitken, Minnesota (“the Property”). In

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2013, Steven Lane (“Lane”) attempted to refinance that mortgage with CMG but became
ill and was unable to complete the transaction himself. Lane had filled out a general
power of attorney form in 2009, naming his daughter, Kathleen M. Christy (“Christy”),
as his attorney-in-fact. She attempted to close the refinancing using the general power of
attorney, but CMG refused, demanding a specific power of attorney. Lane passed away
before a specific power of attorney was drafted, leaving the refinancing transaction
unfinished and the Estate unable to make the mortgage payments on the Property. In
November 2014, Flagstar sold the Property at a foreclosure sale. The Estate now seeks
monetary damages and injunctive relief, arguing that CMG violated an agreement to
refinance the mortgage.
This matter is now before the Court on both defendants’ motions to dismiss
pursuant to Federal Rule of Civil Procedure 12(b)(6). Because the Court finds that the
complaint does not allege any actual wrongdoing against Flagstar, the Court will grant
Flagstar’s motion and dismiss the complaint as to Flagstar. Accepting as true all facts
alleged in the complaint, the Court finds that the Estate’s claims against CMG are either
barred by statute or do not allege sufficient facts to state a claim on which relief may be
granted. Therefore, the Court will also grant CMG’s motion to dismiss.

BACKGROUND
I.

POWER OF ATTORNEY
On July 8, 2009, Steven Lane filled out a form to execute a statutory power of

attorney naming his children, Corey D. Lane and Kathleen M. Christy, as his attorneys-

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in-fact. (Notice of Removal, Ex. A (“Compl.”) ¶ 8, Aug. 27, 2014, Docket No. 1.) This
form, entitled “Statutory Short Form Power of Attorney Minnesota Statutes, Section
523.23,” is included as an exhibit to the Estate’s complaint. (Id., Ex. A.) The form
includes a field labeled “Specimen Signature of Attorney-in-Fact,” but the field is blank
and does not contain any signatures. (Id. at 18.) The field for an optional expiration date
is also blank. (Id. at 16.)
The form lists several powers that a Principal may grant to an attorney-in-fact.
The first of those powers is “real property transactions.” (Id. at 17.) Lane placed an “X”
next to this power. (Id.) He did not limit the power in any way or specify any particular
real property transactions on the form. Among other powers, Lane also placed an “X”
next to “banking transactions.” (Id.)

II.

MORTGAGE REFINANCING NEGOTIATIONS
Lane purchased the Property – located in Aitkin, Minnesota – in 1992. (Compl.

¶ 7.) Flagstar possesses a mortgage against the Property. (Id.) In 2013, Lane, a veteran
of the United States Army, began working to refinance his mortgage loan through the
United States Department of Veterans’ Affairs (“the VA”). (Id. ¶¶ 9-10.) CMG was to
be the lender in the refinancing transaction.

(Id. ¶ 11.) If the refinancing had been

completed, the monthly mortgage payments for the Property would have been reduced
from $1,228.31 to $846.45. (Id. ¶ 12.)
Lane was never able to close the refinancing. In May 2013, he was diagnosed
with esophageal cancer. (Id. ¶ 13.) He planned to undergo surgery in September 2013

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and asked Christy, his daughter and attorney-in-fact, to close the refinancing transaction
if he was not able to do so himself. (Id. ¶ 14.) Lane underwent surgery on September 23,
2013, suffered various complications, and was sedated for approximately six weeks. (Id.
¶ 15.)
During the period that Lane was sedated following his surgery, a loan officer
named Justus Koelliker1 contacted Christy about the refinancing transaction. (Id. ¶ 16.)
Koelliker is described in the complaint as “the loan officer who was helping Lane with
his home refinance transaction.” (Id. ¶ 16.) In his correspondence with Christy, he is
identified as a Mortgage Loan Officer for Flagship Financial Group, LLC, which is a
company that serves as “a broker for mortgage loans.” (Id., Ex. B at 20.) As such,
Koelliker was not an agent of CMG or Flagstar.
On October 6, 2013, Christy initiated email correspondence with Koelliker and
updated him on Lane’s health condition.

(Id., Ex. B at 27-28.)

Christy informed

Koelliker that she had power of attorney, and inquired whether she could close the
refinancing for Lane.

(Id., Ex. B at 26-27.)

In response, Koelliker requested on

October 9 that Christy send him a copy of the power of attorney so that he could forward
it on to the lender for approval. (Id. ¶ 18; id., Ex. B at 26.) On October 10, 2013,
Koelliker informed Christy that he “received a full approval on the loan from the lender
last night” but still needed the power of attorney and repeated his request from the
previous day that she send it to him. (Id., Ex. B at 24.) Christy subsequently provided
1

The complaint refers to the loan officer as “Koeliker.” Because email correspondence
between the loan officer and Christy indicates that the officer spells his own name “Koelliker,”
the Court will use the “Koelliker” spelling. (Compl., Ex. B.)

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Koelliker with the Statutory Short Form Power of Attorney document that Lane executed
in 2009. (Id. ¶ 18.)
Later the same day, Koelliker informed Christy that the lender was requesting an
updated power of attorney specific to the transaction. (Id., Ex. B at 23-24.) Koelliker
quoted the lender as saying the following: “The power of attorney provided was issued
back in 2009. We require current power of attorney, specific to our transaction, with
address, CMG as lender, and loan # required. Also, the borrower is retired, why is he
using power of attorney, and who are the people that are listed?” (Id.) In light of CMG’s
request for a power of attorney specific to the refinancing transaction, Koelliker
suggested that Christy have Lane execute a new power of attorney. (Id.) Christy
expressed that she was unwilling to acquire one because she would “look a little shady in
the ICU with a notary having [Lane] sign documents” shortly after his surgery. (Id.,
Ex. B at 22-23.) She did not challenge CMG’s refusal to accept the power of attorney
she provided at that time. (See id.) Instead, she told Koelliker that “[a]s of now, I would
say the loan will have to go back to underwriting,” and she would contact him when
Lane’s health improved enough that he was ready and able to close the loan. (Id., Ex. B
at 22-23.) Lane passed away one month later, on November 11, 2013. (Id. ¶ 22.) He did
not execute a different power of attorney form prior to his death. (Id.)
On January 9, 2014, two months after her father’s death, Christy sent Koelliker an
email insisting that the refusal to accept the power of attorney she provided was in
violation of Minnesota Statute § 523.23. (Id., Ex. B at 21.) The Estate became unable to
afford the monthly payments for the Property. (Id. ¶ 23.) In August 2014, Flagstar
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initiated a foreclosure proceeding for the Property and subsequently sold the property at a
foreclosure sale on November 6, 2014. (Pl.’s Req. for Judicial Notice, Ex. A (Notice of
Mortgage Foreclosure Sale), Sept. 26, 2014, Docket No. 22.)

III.

PROCEDURAL HISTORY
The Estate filed a complaint against CMG and Flagstar on July 15, 2014.2

(Compl.) The complaint alleges that CMG was not within its rights when it refused the
power of attorney Christy provided. (See id.) There are eight counts: breach of contract,
unjust enrichment, promissory estoppel, specific performance, injunction/injunctive
relief, equitable estoppel/declaratory judgment, breach of fiduciary duty, and violation of
Minnesota Statute § 523.20, which establishes a cause of action for refusing the authority
of an attorney-in-fact to act on a principal’s behalf. (Id. ¶¶ 25-107.) The Estate seeks
monetary damages, specific performance as to the closing of the refinancing, and an
injunction against foreclosure on the mortgage and Property. (See id.) On August 27,
2014, CMG removed the action to federal court. (Notice of Removal.)
Flagstar filed a motion to dismiss on September 2, 2014. (Def. Flagstar’s Mot. to
Dismiss, Sept. 2, 2014, Docket No. 12.) Three days later, CMG also moved to dismiss.
(Def. CMG’s Mot. to Dismiss, Sept. 5, 2014, Docket No. 15; Def. CMG’s Req. for
Judicial Notice in Supp. of Notice of Mot. & Mot. to Dismiss the Compl. Pursuant to

2

The complaint is also addressed to “all other persons or entities unknown, claiming any
right, title, estate, interest or lien in the real estate described in the Complaint herein,” but no
claims are asserted against any other persons or entities. (Compl. at 3.)

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Federal Rule of Civil Procedure 12(b)(6) (“CMG’s Req. for Judicial Notice”), Sep. 5,
2014, Docket No. 17.) This matter is now before the Court on both motions to dismiss.

ANALYSIS
I.

STANDARD OF REVIEW
In reviewing a motion to dismiss brought under Federal Rule of Civil Procedure

12(b)(6), 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.’” Gomez v. Wells Fargo
Bank, N.A., 676 F.3d 655, 660 (8th Cir. 2012) (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.’”
Ashcroft, 556 U.S. at 678 (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)).
“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.

“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. (internal quotation marks omitted). Finally, Rule

12(b)(6) “authorizes a court to dismiss a claim on the basis of a dispositive issue of law.”
Neitzke v. Williams, 490 U.S. 319, 326 (1989).

II.

CMG’S MOTION TO DISMISS
CMG moves to dismiss all eight counts brought against them. The Court will

grant CMG’s motion to dismiss Counts I, III, VII, and VIII, because they are barred by
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the Minnesota Credit Agreement Statute. The Court will also dismiss Counts IV and V
for failure to state an independent cause of action, and Counts II and VI for failure to
state a plausible claim on which relief may be granted.3

A.

Minnesota Credit Agreement Statute
1.

Writing Requirement in Section 513.33

Under the Minnesota Credit Agreement Statute, “[a] debtor may not maintain an
action on a credit agreement unless the agreement is in writing, expresses consideration,
sets forth the relevant terms and conditions, and is signed by the creditor and the debtor.”
Minn. Stat. § 513.33, subd. 2. “A credit agreement within the meaning of § 513.33 is ‘an
agreement to lend or forbear repayment of money, goods, or things in action, to otherwise
extend credit, or to make any other financial accommodation.’” St. Jude Med. S.C., Inc.
v. Tormey, 779 F.3d 894, 900 (8th Cir. 2015) (quoting Minn. Stat. § 513.33, subd. 1).
Therefore, a “mortgage agreement constitutes a credit agreement as defined by Minn.

3

CMG argues that the Estate’s entire complaint is preempted by a pamphlet (“VA
Pamphlet 26-7”) produced by the VA. VA Pamphlet 26-7 requires that a loan transaction
conducted through the VA must include a specific power of attorney discussing the details of the
transaction, if the veteran is not personally able to complete the transaction. (CMG’s Req. for
Judicial Notice, Ex. 4 (VA Pamphlet 26-7) at 30-32.) CMG maintains that VA regulations trump
state law where the two conflict. United States v. Shimer, 367 U.S. 374, 377 (1961) (“The
Regulations promulgated by the Veterans’ Administration make clear that they were intended to
create a uniform system for determining the Administration’s obligation as guarantor, which in
its operation would displace state law.”); Connelly v. Derwinski, 961 F.2d 129, 130 (9th Cir.
1992). CMG is correct that a federal statute or regulation would trump contrary state law, but
VA Pamphlet 26-7, which is part of the VA’s current Lenders Handbook, is not a regulation
contained within the Code of Federal Regulations. It is merely a VA policy. CMG cites no
support for the position that a VA policy handbook has the same supremacy effect as a federal
statute or regulation. Therefore, the Court will not find that VA Pamphlet 26-7 preempts the
relevant Minnesota statutes.

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Stat. § 513.33, subd. 1.” Myrlie v. Countrywide Bank, 775 F. Supp. 2d 1100, 1108-09 (D.
Minn. 2011).
The complaint makes repeated reference to an agreement between the parties to
refinance Lane’s mortgage. The complaint does not, however, allege the existence of a
signed writing. CMG argues that there is no agreement in writing, signed by the parties,
and therefore the Estate may not maintain an action as to the alleged mortgage
refinancing agreement.
In opposition to CMG’s motion, the Estate argues that CMG approved Lane’s loan
application in writing, but there is no such allegation in the complaint, nor does the Estate
explain in its briefing what that writing might be. The only potentially relevant writings
the Court is able to ascertain from the complaint and related materials are Lane’s
application to refinance the mortgage and the emails between Christy and Koelliker. The
emails between Christy and Koelliker cannot satisfy the Minnesota Credit Agreement
Statute, as CMG is not a party to the communications. Although Lane’s application for
refinancing was in writing, there is no indication that it was signed by CMG or that it
obligated CMG to accept Lane’s general power of attorney to finalize the transaction.
Thus, the Court will not construe the application as a signed writing sufficient to satisfy
§ 513.33. Because the complaint does not allege the existence of a signed writing, the
Court will dismiss the Estate’s actions based on the alleged agreement. The Court must
next determine which actions are barred by the statute.

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2.

Barred Claims Under Section 513.33

Some of the Estate’s claims do not require the existence of a signed writing and
thus would not be barred by Minnesota Statute § 513.33. Specifically, the claims the
Court finds are barred by § 513.33 because they are based on the parties’ alleged
agreement are: Count I (breach of contract), Count III (promissory estoppel), and Count
VII (breach of fiduciary duty).4 Each of these actions is grounded in the allegation that
CMG violated an agreement or contract between the parties.
First, a breach of contract action is squarely “an action on a credit agreement,” as
the claim alleges a violation of the underlying credit agreement. See Rogers v. Bank of
Am., N.A., No. 13-1698, 2014 WL 2968900, *7 (D. Minn. July 1, 2014) (internal
quotation marks omitted).

In this case, the complaint alleges that “Mr. Lane and

Defendant CMG entered into a contract to refinance Mr. Lane’s loan against the
Property,” and that “[b]ecause Defendant CMG breached the contract between itself and
Mr. Lane, the Estate cannot afford the monthly payments for the Property and will lose
ownership of the Property.” (Compl. ¶¶ 26, 33.) Because Count I is an action on a credit
agreement and the Estate “has produced no writing [memorializing the agreement], either
signed or unsigned,” the Court finds that “[t]he credit statute of frauds thus bars [the

4

CMG argues that the Estate’s equitable estoppel claim is also barred by the Minnesota
Credit Agreement Statute. The Court finds that the statute does not bar an equitable estoppel
claim, however, as “[e]quitable estoppel is a type of equitable doctrine applicable not only to the
statute of frauds but also to any of a number of different claims and defenses.” See Del Hayes &
Sons, Inc. v. Mitchell, 230 N.W.2d 588, 594 (Minn. 1975). As such, it is not barred by a lack of
agreement in writing under Minnesota Statute § 513.33.

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Estate]’s breach-of-contract claim.” Benson v. Wells Fargo Bank, N.A., No. 12-1213,
2013 WL 4521173, at *2 (D. Minn. Aug. 27, 2013).
The Court will also dismiss Count III, the promissory estoppel claim, on the
grounds that it is barred by Minnesota Statute § 513.33. “Under Minnesota law, oral
promises which constitute a credit agreement within the ambit of § 513.33 cannot be
enforced under a theory of promissory estoppel; the promises must be in writing.”
Tormey, 779 F.3d at 901; see also Bracewell v. U.S. Bank Nat’l Ass’n, 748 F.3d 793, 796
(8th Cir. 2014) (“[T]he complaint in substance alleges a claim of promissory estoppel,”
which “is barred by the Minnesota Credit Agreement Statute.”). “Minnesota courts have
held that plaintiffs are barred from asserting a promissory estoppel claim where they lack
a sufficient writing under Minn. Stat. § 513.33, subd. 2.

If plaintiffs could assert

promissory estoppel claims in such situations, they could make an easy end-run around
the Minnesota Credit Agreement Statute.” Labrant v. Mortg. Elec. Registration Sys.,
Inc., 870 F. Supp. 2d 671, 677 (D. Minn. 2012) (internal quotation marks omitted).
Accordingly, the Court finds that the Estate’s promissory estoppel claim is barred by
Minnesota Statute § 513.33.
Finally, the Court concludes that § 513.33 bars the Estate’s breach of fiduciary
duty claim. As with the Estate’s breach of contract claim, the fiduciary duty claim asserts
that “Mr. Lane and Defendant CMG entered into a contract to refinance Mr. Lane’s loan
against the Property.” (Compl. ¶ 87.) The Estate alleges that this contract imposed upon
CMG a fiduciary duty to “act in a manner that would best protect and further the Estate’s
interest in the Property and to close the transaction that Mr. Lane attempted to complete
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during his life.” (Id. ¶ 95.) Because the Estate asserts no source for CMG’s fiduciary
duties other than its alleged agreement with Lane to refinance the loan, the Court finds
that the breach of fiduciary duty claim is barred by § 513.33.

3.

Refusal to Recognize Power of Attorney Under Minnesota
Statute Section 523.20

Section 523.20 of the Minnesota Credit Agreement Statute provides a cause of
action for refusal to acknowledge an attorney-in-fact’s authority to act on a principal’s
behalf. The Estate alleges in Count VIII that CMG violated § 523.20 by refusing to
acknowledge Christy’s authority to act on Lane’s behalf as his attorney-in-fact. CMG
moves to dismiss Count VIII, arguing that Lane’s power of attorney did not comply with
the threshold requirements for an action pursuant to § 523.20.
Section 523.20 has six criteria that must be met before a party will be “liable to the
principal and to the principal’s heirs, assigns, and representatives of the estate of the
principal in the same manner as the party would be liable had the party refused to accept
the authority of the principal to act on the principal’s own behalf.” Minn. Stat. § 523.20.
Only the first two criteria are pertinent here: an action may be brought against “[a]ny
party refusing to accept the authority of an attorney-in-fact to exercise a power granted by
a power of attorney which (1) is executed in conformity with section 523.23 or a form
prepared under section 523.231; [and] (2) contains a specimen signature of the attorneyin-fact authorized to act . . . .” Id.
Lane clearly complied with the first criterion, because he filled out the Statutory
Short Form Power of Attorney contained within § 523.23. (Compl., Ex. A.) Instead, the
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more relevant requirement for the purposes of Count VII is the second criterion, requiring
that the power of attorney must “contain[] a specimen signature of the attorney-in-fact
authorized to act.” Minn. Stat. § 523.20. The Estate attached a copy of Lane’s power of
attorney form as Exhibit A to the complaint, so the Court may consider the form on a
motion to dismiss. Mattes v. ABC Plastics, Inc., 323 F.3d 695, 697 n.4 (8th Cir. 2003)
(“[I]n considering a motion to dismiss, the district court may sometimes consider
materials outside the pleadings, such as materials that are necessarily embraced by the
pleadings and exhibits attached to the complaint.”); Potocnik v. Carlson, 9 F. Supp. 3d
981, 987 (D. Minn. 2014). The power of attorney form has a field for a “Specimen
Signature of Attorney-in-Fact,” but there is no signature in that space on the form – or
anywhere else on the form – belonging to either Christy or Corey D. Lane, Lane’s other
named attorney-in-fact. (Compl., Ex. A at 18.)
Although the specimen signature requirement appears to be something of a
technicality, it is clearly listed as an enumerated prerequisite for recovery under
Minnesota Statute § 523.20.

Lane satisfied the first criterion by “execut[ing] in

conformity with section 523.23” a power of attorney, but without the specimen signature
on the form, the Estate is unable to maintain an action under § 523.20 against CMG for
refusal to acknowledge Christy’s authority to act on Lane’s behalf. CitiMortgage, Inc. v.
Akers, 858 N.W.2d 788, 794-95 n.1 (Minn. Ct. App. 2014). Therefore, the Court will
dismiss Count VIII.

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B.

Remedies Stated As Causes of Action

In addition to arguing that several claims are barred by the Minnesota Credit
Agreement Statute, CMG also moves to dismiss both Count IV and Count V on the
grounds that they do not state a valid cause of action. Because the Court finds that
neither “specific performance” nor “injunction/injunctive relief” is an independent cause
of action, the Court will dismiss Counts IV and V of the complaint. Int’l Fid. Ins. Co. v.
Mahogany, Inc., No. 11-1708, 2011 WL 3055251, at *2 (D. Md. June 25, 2011)
(“Although the complaint contains additional counts for injunctive relief and specific
performance, these are remedies and not independent causes of action.”).
First, “specific performance is not a cause of action.” Datatel Solutions, Inc. v.
Keane Telecom Consulting, LLC, No. 12-1306, 2015 WL 411238, *4 (E.D. Cal. Jan. 30,
2015); Artistic Framing, Inc. v. Hospitality Res., Inc., No. 12-6997, 2013 WL 2285797,
at *2 (N.D. Ill. May 23, 2013). Rather, “[s]pecific performance is an equitable remedy
which compels performance of a contract.” In re Landmark Holding Co., Ltd., 286 B.R.
377, 385 (D. Minn. 2002). “Under the 12(b)(6) standard, a request for a specific remedy
is not sufficient to state a claim upon which relief can be granted.” Mielke v. Standard
Metals Processing, Inc., No. 14-1763, 2015 WL 1886709, at *6 (D. Nev. Apr. 24, 2015)
(internal quotation marks omitted).
“As specific performance is not itself a claim, but rather an equitable remedy
available to a party who was damaged by another’s breach of contract and has no
adequate remedy at law, Plaintiff’s claim for specific performance must be dismissed
. . . .” Invensys Inc. v. Am. Mfg. Corp., No. 04-3744, 2005 WL 600297, at *9 (E.D. Pa.
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Mar. 15, 2005). The Court would entertain the Estate’s specific performance request as a
requested remedy for the independent breach of contract action, but as previously
explained, the Estate’s breach of contract action is barred by Minnesota Statute § 513.33.
Further, the Court finds that even if “specific performance” were to be a standalone cause
of action, it too would be barred by § 513.33, as it would be based on the underlying
agreement between the parties, which was not reduced to a signed writing. Thus, the
Court will dismiss Count IV of the complaint.
For the same reasons, the Court will also dismiss Count V of the complaint, styled
as a claim for “injunctive relief.” “‘Injunctive relief is a remedy and not, in itself, a cause
of action, and a cause of action must exist before injunctive relief may be granted.’”
Scott v. Wells Fargo Bank, N.A., No. 10-3368, 2011 WL 3837077, at *11 (D. Minn.
Aug. 29, 2011) (quoting Ryan v. Hennepin Cnty., 29 N.W.2d 385, 387 (Minn. 1947));
Labrant, 870 F. Supp. 2d at 684 (“[A]n injunction is a remedy, not a cause of action.”).
Although plaintiffs may “seek such equitable remedies in connection with the other
claims in the Complaint,” injunctive relief claims are not, standing alone, viable causes of
action. Motley v. Homecomings Fin., LLC, 557 F. Supp. 2d 1005, 1014 (D. Minn. 2008).
Accordingly, the Court will dismiss Count V.

C.

Claims Lacking Sufficient Allegations
1.

Unjust Enrichment (Count II)

Count II of the complaint alleges unjust enrichment by CMG. “To prevail on a
claim for unjust enrichment, Plaintiffs will have to prove that Defendants received

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something of value, which they were not entitled to, under circumstances that would
make it unjust to permit its retention.” Tharaldson v. Ocwen Loan Servicing, LLC,
840 F. Supp. 2d 1156, 1165 (D. Minn. 2011). In other words, “a plaintiff must show that
another party knowingly received something of value to which he was not entitled, and
that the circumstances are such that it would be unjust for that person to retain the
benefit.” Bohnhoff v. Wells Fargo Bank, N.A., 853 F. Supp. 2d 849, 857 (D. Minn. 2012)
(internal quotation marks omitted).
In this case, the complaint’s allegations as to the unjust enrichment claim are that
CMG breached an agreement to refinance Lane’s mortgage and that, “[a]s a direct and
proximate result of Defendant CMG’s conduct, Defendant [Flagstar] and Defendant
CMG have been unjustly enriched and the Estate has been damaged in an amount that
exceeds $50,000.00.” (Compl. ¶ 44.) The complaint does not specify in what way CMG
was unjustly enriched or what benefit it obtained by allegedly breaching the agreement
CMG had with Lane, “aside from the cursory allegation that Defendants have received”
an unspecified benefit by refusing to accept Lane’s power of attorney. See Labrant,
870 F. Supp. 2d at 682. Thus, the Court will dismiss the Estate’s unjust enrichment claim
because it does not allege any benefit CMG unjustly obtained and therefore lacks facial
plausibility.

2.

Equitable Estoppel / Declaratory Judgment (Count VI)

In Count VI, the Estate seeks a declaratory judgment that CMG is estopped from
refusing to honor the refinance agreement allegedly entered into by the parties. “Parties

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seeking to invoke the doctrine of equitable estoppel must prove (1) that promises or
inducements were made; (2) that they reasonably relied upon the promises; and (3) that
they will be harmed if estoppel is not applied.” Pollard v. Southdale Gardens of Edina
Condo. Ass’n, Inc., 698 N.W.2d 449, 454 (Minn. Ct. App. 2005). Under Minnesota law,
the promises by the party against whom equitable estoppel is sought must “amount[] to a
representation or a concealment of material facts” to defeat the statute of frauds. Del
Hayes & Sons, Inc. v. Mitchell, 230 N.W.2d 588, 594 (Minn. 1975); Meshbesher &
Spence, Ltd. v. Sprint Spectrum, L.P., No. 03-3434, 2004 WL 2801590, at *4 (D. Minn.
Nov. 19, 2004).
The Estate’s equitable estoppel claim is based on the argument that the parties
entered into a contract to refinance Lane’s mortgage loan, CMG refused to accept
Christy’s power of attorney to finalize the transaction, and the Estate has been harmed as
a result because it cannot afford the monthly payments and will likely lose the property.
(Compl. ¶¶ 77-85.)
Although the Estate’s claim does not specify what promises CMG allegedly made
to Lane or Christy on which they reasonably relied to their detriment, the Court will
construe Count VI as alleging that CMG approved the transaction, which CMG then
violated by refusing to finalize the refinancing transaction.5 Critically absent from the
complaint is any allegation of reliance by Christy or Lane on Koelliker’s or CMG’s
5

The Court notes, however, that the email exchange between Koelliker and Christy
during the refinancing negotiations shows that CMG consistently maintained that it would not
accept Christy’s general power of attorney and that the transaction would not be finalized
without Lane’s action or a new, specific power of attorney. It was, instead, Koelliker who led
Christy to believe the loan was approved. (Compl., Ex. B at 23-26.)

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alleged promises. In fact, Christy appeared to accept that the loan could not be closed
when she emailed Koelliker on October 10, stating, “If [the lack of a specific power of
attorney] is a problem, you can wait to close the loan when Dad is able. He may not be
able for weeks depending on how his recovery progresses.” (Compl., Ex. B at 23.)
When Koelliker advised Christy she should obtain a specific power of attorney from
Lane, Christy expressly elected not to do so and responded, “We will contact you after
Dad can close the loan.” (Id.) At that point, it appears that she was aware CMG would
not finalize the transaction without a specific power of attorney, and she chose to wait
rather than take steps to procure it.
The Court finds that there is no indication Christy or Lane relied on a promise that
CMG would refinance the loan without further action by Lane. Further, there are no
allegations in the complaint that CMG acted in a way that concealed material facts or was
fraudulent. Therefore, the Court will dismiss Count VI for failure to state a plausible
claim upon which relief may be granted.

III.

FLAGSTAR’S MOTION TO DISMISS
Flagstar moves to dismiss on the grounds that the complaint does not allege any

wrongdoing by Flagstar.

Flagstar is named in three of the Estate’s claims: unjust

enrichment (Count II), injunctive relief (Count V), and breach of fiduciary duty
(Count VII). Because the Court finds that the complaint does not allege any wrongful
actions on Flagstar’s part, the Court will grant Flagstar’s motion to dismiss in its entirety.

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A.

Unjust Enrichment

The paragraphs describing the basis for the Estate’s unjust enrichment claim refer
to actions taken by CMG, (Compl. ¶¶ 35-43), and then the final paragraph of the claim
alleges that “[a]s a direct and proximate result of Defendant CMG’s conduct, [Flagstar]
and Defendant CMG have been unjustly enriched and the Estate has been damaged in an
amount that exceeds $50,000.00,” (id. ¶ 44). There are no allegations as to any promises
Flagstar made to Lane or Christy, nor are there any allegations as to what benefit Flagstar
might have received from any promises CMG made to Christy or Lane.
Under Minnesota law, “to prevail on a claim of unjust enrichment, a claimant must
establish an implied-in-law or quasi-contract in which the defendant received a benefit of
value that unjustly enriched the defendant in a manner that is illegal or unlawful.”
Caldas v. Affordable Granite & Stone, Inc., 820 N.W.2d 826, 838 (Minn. 2012); Issaenko
v. Univ. of Minn., --- F. Supp. 3d ---, 2014 WL 4954646, at *29 (D. Minn. 2014). The
Estate does not allege an implied-in-law or quasi-contract between the Estate and Flagstar
or specify what benefit Flagstar allegedly received.

Even more importantly, the

complaint does not identify how Flagstar obtained that benefit in an unlawful manner.
Even if the Court accepts as true the conclusory allegation that Flagstar was enriched
through CMG’s refusal to refinance the loan, “unjust enrichment claims do not lie simply
because one party benefits from the efforts or obligations of others, but instead it must be
shown that a party was unjustly enriched in the sense that the term ‘unjustly’ could mean
illegally or unlawfully.” First Nat’l Bank of St. Paul v. Ramier, 311 N.W.2d 502, 504
(Minn. 1981).
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Accepting as true all facts stated in the complaint, the Court finds that there are
insufficient allegations to support a finding that Flagstar was unjustly enriched through
wrongdoing. Thus, the Court will dismiss Count II as to Flagstar.

B.

Injunctive Relief

The Estate’s claim for injunctive relief makes several allegations targeting CMG’s
conduct, (id. ¶¶ 66-74), and then the final paragraph of Count V requests “an Order from
this Court enjoining any of the Defendants from commencing any foreclosure action and
from taking any other action to deprive the estate of any rights to the Property to prevent
the Estate from suffering irreparable harm while this action is pending,” (id. ¶ 75
(emphasis added)). As previously explained, “injunctive relief is a remedy and not, in
itself, a cause of action, and a cause of action must exist before injunctive relief may be
granted.” Scott, 2011 WL 3837077, at *11.
Even if “injunctive relief” were an independent cause of action, the Estate’s claim
for injunctive relief does not allege any wrongful action by Flagstar justifying such relief.
Indeed, the Estate appears to concede that Flagstar has done nothing warranting
injunctive relief but rather was included as a defendant because “the Estate will
eventually assert claims against Flagstar if Flagstar proceeds with the impending sheriff’s
sale. Dismissing Flagstar as a defendant will force the Estate to file a motion to amend
the complaint in the future to bring Flagstar back [into] this case.” (Pl.’s Mem. in Opp’n
to Defs.’ Mots. to Dismiss at 12, Sept. 26, 2014, Docket No. 23.) Because “injunctive
relief” is not an independent cause of action, and the complaint alleges no wrongdoing by

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Flagstar for which an injunction could be granted, the Court will dismiss Count V as to
Flagstar.

C.

Breach of Fiduciary Duty

As with Counts II and V, the Estate’s breach of fiduciary claim in Count VII
alleges wrongdoing only by CMG. Specifically, the claim alleges that CMG owed and
breached fiduciary duties to Lane and the Estate. The final paragraph of the claim then
alleges that “[a]s a direct and proximate result of Defendants’ actions, Plaintiff has been
damaged in an amount that exceeds $50,000.00.” (Id. ¶ 97 (emphasis added).)
“The general rule in Minnesota is that lenders bear no fiduciary duty to
borrowers.” Roers v. Countrywide Home Loans, Inc., 728 F.3d 832, 838 (8th Cir. 2013)
(internal quotation marks omitted); Burgmeier v. Farm Credit Bank of St. Paul, 499
N.W.2d 43, 51 (Minn. Ct. App. 1993) (finding that a fiduciary “relationship does not
exist as a matter of law” between a lender and a borrower). Where there are special
circumstances involved, the existence of a fiduciary relationship becomes a question of
fact, focused on whether “confidence is reposed on one side and there is resulting
superiority and influence on the other; and the relation and duties involved in it need not
be legal, but may be moral, social, domestic, or merely personal.” Toombs v. Daniels,
361 N.W.2d 801, 809 (Minn. 1985) (internal quotation marks omitted).
Here, the Estate makes no allegations that there was a fiduciary relationship
between Lane or Christy and Flagstar, nor does the Estate allege any facts suggesting that
there was influence or superiority on the part of Flagstar leading to a breach of a fiduciary

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relationship between Christy or Lane and CMG. Therefore, the Court will also dismiss
Count VII as to Flagstar.

ORDER
Based on the foregoing, and all the files, records, and proceedings herein, IT IS
HEREBY ORDERED that:
1.

Defendant CMG Mortgage, Inc.’s Motion to Dismiss [Docket No. 15] is

GRANTED.
2.

Defendant Flagstar Bank’s Motion to Dismiss [Docket No. 12] is

GRANTED.

LET JUDGMENT BE ENTERED ACCORDINGLY.
DATED: May 11, 2015
at Minneapolis, Minnesota.

____s/
____
JOHN R. TUNHEIM
United States District Judge

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