Beeks v. CitiMortgage, Inc., et al.

Filing 10

MEMORANDUM OF LAW & ORDER. IT IS HEREBY ORDERED: Plaintiff's Motion for Preliminary Injunction 3 is DENIED. (Written Opinion). Signed by Chief Judge Michael J. Davis on 11/5/14. (GRR)

UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
Jason Beeks,
Plaintiff,
vs.
CitiMortgage, Inc., Federal Home Loan
Mortgage Corporation, Sharepoint
Credit Union, all other persons or
entities claiming any right title, estate,
lien, or interest in the real estate
described in the Summons and
Complaint herein, and Bill Guenther,
solely in his capacity as the Sheriff of
Isanti County, Minnesota,

MEMORANDUM OF
LAW & ORDER
Civil File No. 14-cv-4603 (MJD/HB)

Defendants.
Evan Weiner and John R. Neve, Neve Webb, PLLC, Counsel for Plaintiff Jason
Beeks.
Thomas J. Lallier and Cameron A. Lallier, Foley & Mansfield, PLLP, Counsel for
Defendants CitiMortgage, Inc. and Federal Home Loan Mortgage Corporation.
________________________________________________________________________
I.

INTRODUCTION
This matter is before the Court on Plaintiff’s Motion for Preliminary

Injunction [Docket No. 3] pursuant to Rule 65(b) of the Federal Rules of Civil
Procedure. Plaintiff seeks a preliminary injunction to stop the lockout of
Plaintiff Jason Beeks’ residence scheduled for 1:00 p.m. on November 5, 2014.

An emergency hearing on Plaintiff’s Motion took place at 10:00 a.m. on
November 5, 2014. Because the Plaintiff has failed to establish a likelihood of
success on the merits as set forth below, the Motion is denied.
II.

BACKGROUND
a.

The Mortgage

This action involves a parcel of real property (the “Property”) located in
Isanti County, Minnesota, legally described as Lot 4, Block 2, Woodhaven Acres
1st Addition, and located at 1470 33rd Court, Cambridge, MN 55008. (Verified
Compl. ¶ 7 [Docket No. 1-1].) Beeks alleges that the Property is his primary
residence. (Id. ¶ 8.)
On or about August 22, 2003, Beeks executed a mortgage on the Property
in the amount of $132,000.00 (the “Mortgage”) in favor of Mortgage Electronic
Registration Systems, Inc. (“MERS”) that was later recorded with the Isanti
County Recorder and memorialized as Document No. 322439. (Id. ¶ 9.)
Beeks alleges, on information and belief, that MERS subsequently assigned
the Mortgage to Defendant CitiMortgage, Inc. (“CitiMortgage”). (Id. ¶ 10.)
Beeks further alleges that CitiMortgage serves as the residential mortgage
servicer on the debt secured by the Mortgage and that Defendant Sharepoint

2

Credit Union (“Sharepoint”) holds a junior mortgage on the Property in the
principal amount of $23,052.40. (Id. ¶ 11.)
b.

Beeks’ Bankruptcy Proceeding

On or about May 24, 2011, Beeks filed for Chapter 7 bankruptcy. (Id. ¶ 12.)
He avers that despite the bankruptcy, he remained willing and able to continue
making payments on the Mortgage, rather than lose his home. (Id. ¶ 13.) Beeks
alleges that when he tried to reaffirm the debt secured by the Mortgage,
CitiMortgage refused and sought relief from the automatic stay to initiate
foreclosure proceedings. (Id. ¶ 14.) On or about September 13, 2011, Beeks’
debts were discharged by the United States Bankruptcy Court for the District of
Minnesota. (Id. ¶ 15.)
c.

The Postponed 2012 Sale

In October 2011, CitiMortgage commenced foreclosure proceedings and
scheduled a Sheriff’s Sale for the Property for January 10, 2012, at 10:00 a.m. (Id.
¶ 16.) CitiMortgage issued a Notice of Mortgage Foreclosure Sale informing
Beeks of the sale. (Id. ¶ 16 and Ex. A.)
By letter dated January 6, 2012, and postmarked January 9, 2012, the law
firm of Usset, Weingarden & Liebo, PLLP notified the Property’s occupant that

3

the sheriff’s foreclosure sale was postponed until February 14, 2012. (Id. Ex. B.)
At the November 5, 2014, hearing, the Defendants produced a Notice of
Mortgage Foreclosure Sale dated January 6, 2012, published in the Isanti County
News. Beeks alleges that he did not receive this letter, or any other notice, until
on or about January 12, 2012, two days after the initial date scheduled for the
foreclosure sale. (Id. ¶ 22.)
On January 10, 2012, Beeks attended a sale at the Isanti County Sheriff’s
Office. (Id. ¶ 17.) He alleges that the Sheriff’s Office confirmed that the sale
would begin at 10:00 a.m. and end at 11:00 a.m. on that date. (Id.) CitiMortgage
did not appear at the sale. (Id.) Beeks made the only bid on the Property in the
amount of $8.00. (Id. ¶18.)
Beeks alleges that at approximately 11:00 a.m. the same day, the clerk
contacted the law firm representing CitiMortgage and told Beeks that the sale
was cancelled. (Id. ¶ 19.) Subsequently, the Sheriff’s Office refused to accept
Beeks’ money or acknowledge the sale. (Id.)
When Beeks’ attorney later discussed the matter with the clerk, Beeks
claims that the clerk “acknowledged that the sale was not postponed or cancelled
by notice to the sheriff’s office prior to the 10:00 am [sic] scheduled sale time.”

4

(Id. ¶ 20.) Further, Beeks alleges that the clerk agreed that the Sheriff’s Office
duty was to conduct the sale as scheduled. (Id.) When Beeks’ attorney informed
Chief Deputy Isanti County Attorney Tom Wedes, Wedes allegedly indicated
that Beeks may have received a “windfall” and would get back to Beeks’
attorney. (Id. ¶ 21.) Nonetheless, the Sheriff’s Office refused to issue a
Certificate of Sale. (Id. ¶¶ 20, 21.)
d.

The Prior Federal Action

According to CitiMortgage, on or about December 27, 2011, Beeks, through
his then-counsel William Butler, filed and served a complaint on CitiMortgage
and Federal Home Loan Mortgage Corporation (“Freddie Mac”) challenging the
mortgage foreclosure (the “Prior Federal Action”). See Anderson et al. v.
CitiMortgage, Inc. et al., Civ. No. 12-0230 (ADM/AJB) [Docket No. 1-1]. An
Amended Complaint in that action was filed on January 30, 2013. Id., [Docket
No. 3].
On July 24, 2012, the Court dismissed the Amended Complaint in its
entirety and judgment was entered accordingly in the Prior Federal Action. Id.,
[Docket Nos. 42 and 43]. The dismissal was later affirmed by the Eighth Circuit.
See Anderson et al. v. CitiMortgage, Inc. et al., 515 F. App’x 644 (8th Cir. 2013).

5

As a result of the pendency of the Prior Federal Action, CitiMortgage
claims it elected to postpone the January 10, 2012 foreclosure sale. (See Verified
Compl., Ex. A.) CitiMortgage has produced ten additional notices of
postponement mailed to the occupant of the Property during the pendency of the
Prior Federal Action. (See Exhibit 1 to CitiMortgage and Freddie Mac’s Joint
Mem. Opp. of Pl.’s Mot. for Prelim. Inj. [Docket No. 8].)
e.

The 2014 Sale

On January 14, 2014, CitiMortgage proceeded with the sale of the Property.
(Id. ¶ 23.) CitiMortgage was the highest bidder. (Id.) Beeks alleges, on
information and belief, that CitiMortgage then assigned its interest to Defendant
Federal Home Loan Mortgage Corporation (“Freddie Mac”). (Id. ¶ 24.)
f.

The Eviction Judgment

On or about August 14, 2014, Freddie Mac commenced an eviction
proceeding in Isanti County District Court. (Id. ¶ 25.) An eviction judgment
against Beeks was entered on or about September 8, 2014. (Id.)
g.

The State Court Action and Removal

Beeks commenced this action on or about October 13, 2014, in Isanti
County District Court, under case number 30-CV-14-757. On October 31, 2014,

6

Freddie Mac gave notice of removal of the state court proceedings to the United
States District Court for the District of Minnesota pursuant to 28 U.S.C. §§ 1331
and 1442 and 12 U.S.C. § 1425(f).
h.

The Lockout

On Monday, November 3, 2014, at approximately 5:15 p.m., Freddie Mac
informed the parties that it had scheduled a lockout of the Property for
Wednesday, November 5, 2014, at 1:00 p.m. (Declaration of John R. Neve (“Neve
Decl.”), Ex. A [Docket No. 5].) At approximately 11:15 a.m. on Tuesday
November 4, 2014, Beeks informed Defendants that he would be seeking
preliminary injunctive relief from the Court if Freddie Mac would not agree to a
postponement of the lockout. (Neve Decl. Ex. B.)
Shortly thereafter, Beeks filed a motion pursuant to Rule 65(b) of the
Federal Rules of Civil Procedure for a preliminary injunction to stop the lockout
of the Property scheduled for 1:00 p.m. on Wednesday, November 5, 2014, and
seeking expedited handling pursuant to L.R. 7.1(d)(4). [Docket No. 3]
Defendants CitiMortgage and Freddie Mac (collectively “Defendants”) filed a
memorandum in opposition later that day. [Docket No. 8]

7

III.

ANALYSIS
This matter is before the Court on Plaintiff’s motion for a preliminary

injunction pursuant to Rule 65 of the Federal Rules of Civil Procedure. The
Eighth Circuit has established the following analysis to be used in considering a
request for preliminary injunctive relief:
[w]hether a preliminary injunction should issue involves
consideration of (1) the threat of irreparable harm to the movant; (2)
the state of the balance between this harm and the injury that
granting the injunction will inflict on other parties litigant; (3) the
probability that movant will succeed on the merits; and (4) the
public interest.
Dataphase Sys., Inc. v. C. L. Sys., Inc., 640 F.2d 109, 113 (8th Cir. 1981). Because
Plaintiff has not established a likelihood of success on the merits, a preliminary
injunction is not warranted.
a.

Likelihood of Success on the Merits
i. Whether the January 2012 Sale Was Properly Postponed

Beeks asserts that he is likely to succeed on the merits because he was the
highest bidder at the January 10, 2012 foreclosure sale. To support his position,
Beeks cites to Minnesota Statutes chapter 580, which governs foreclosure by
advertisement. Section 580.06 states that the foreclosure sale “shall be made by
the sheriff or the sheriff's deputy at public venue to the highest bidder.” Section

8

580.12 further provides that when a sale is made, the sheriff “shall make and
deliver to the purchaser a certificate” of the sale. Beeks argues that these statutes
are unambiguous, and the term “shall” means that the sale and delivery of a
certificate of sale to the highest bidder is mandatory. Because Beeks was the
highest (and only) bidder at the January 10, 2012 sale, he argues that the sale is
final and bars the subsequent 2014 sale. Therefore, he asserts, the eviction and
lockout are invalid.
Defendants, however, have demonstrated that the January 2012 sale was
properly postponed. At the emergency hearing, Defendants directed the Court
to Minnesota Statutes section 580.07, which addresses postponement of sheriff
sales. Under that section, a sheriff’s sale may be postponed by the party
conducting the foreclosure. The party requesting the postponement must:
(1)
publish, only once, a notice of the postponement and the
rescheduled date of the sale, if known, as soon as practicable, in the
newspaper in which the notice under section 580.03 was published;
and
(2)
send by first class mail to the occupant, postmarked within
three business days of the postponed sale, notice:
(i)
(ii)

of the postponement; and
if known, of the rescheduled date of the sale and the date on
or before which the mortgagor must vacate the property if the
sheriff's sale is not further postponed, the mortgage is not

9

reinstated under section 580.30, the property is not redeemed
under section 580.23, or the redemption period is not reduced
under section 582.032. The notice must state that the time to
vacate the property is 11:59 p.m. on the specified date.
Minn. Stat. § 580.07, subd. 1(a).
A review of the exhibits attached to the Verified Complaint demonstrates
that Defendants sent notice of the postponement by first class mail, postmarked
on January 9, within three business days of the postponed January 10, 2012, sale.
(Verified Compl. Ex. A.) Beeks does not dispute that the notice was postmarked
on January 9. (Id. ¶ 22.) At the hearing, Defendants provided a copy of the
Notice of Mortgage Foreclosure Sale indicating that the required notice was
published on January 6, 2012. Pursuant to Rule 201 of the Federal Rules of
Evidence, the Court takes judicial notice of the Notice of Mortgage Foreclosure
Sale.
Because it appears, at this stage, that Defendants complied with the
statutory requirements to postpone the January 10, 2012, foreclosure sale, Beeks
has not demonstrated a sufficient likelihood of success on the merits and a denial
of his motion for preliminary injunction is warranted.

10

(ii)

Whether Beeks’ Claims Are Barred by Res Judicata

Defendants also argue that Beeks’ claims are barred by the doctrine of res
judicata because prior federal litigation involved the same set of factual
circumstances (the foreclosure of the Property), the same parties (Beeks, on one
side, and CitiMortgage and Freddie Mac on the other), a final judgment on the
merits (dismissal and the Eighth Circuit affirmance of that dismissal), and Beeks
had a full and fair opportunity to litigate the matter.
Under the doctrine of res judicata, a subsequent claim is barred when: "(1)
the first suit resulted in a final judgment on the merits; (2) the first suit was based
on proper jurisdiction; (3) both suits involve the same parties (or those in privity
with them); and (4) both suits are based upon the same claims or cause of action."
Yankton Sioux Tribe v. U.S. Dep't of Health & Human Servs., 533 F.3d 634, 639
(8th Cir. 2008) (quoting Costner v. URS Consultants, Inc., 153 F.3d 667, 673 (8th
Cir. 1998)). Under this doctrine, "a final judgment on the merits of an action
precludes the parties or their privies from relitigating issues that were or could
have been raised in that action." Id. (quoting Allen v. McCurry, 449 U.S. 90, 94
(1980)).

11

Beeks does not appear to dispute that the prior federal action resulted in a
final judgment on the merits, was based on proper jurisdiction, involved the
same parties (or those in privity) and is based on the same Mortgage at issue in
this case. Beeks’ sole argument to prevent the application of res judicata is that
the January 10, 2012, sale occurred after the initial complaint was filed.
However, an Amended Complaint was filed on January 31, 2012, after the
purported sale. At that time, Beeks could have raised his present arguments.
His failure to do so acts as a waiver and bars Beeks’ claims in the present action.
Therefore, Beeks has not demonstrated a likelihood of success on the merits and
the motion for preliminary injunction is denied.
Accordingly, based upon the files, records, and proceedings herein, IT IS
HEREBY ORDERED:
Plaintiff’s Motion for Preliminary Injunction [Docket No. 3] is DENIED.

Dated: November 5, 2014

s/ Michael J. Davis
Michael J. Davis
Chief Judge
United States District Court

12