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Frillman v. Deutsche Bank National Trust Co.

United States District Court, Eighth Circuit

September 25, 2013

Louis W. Frillman and Carol A. Frillman, Plaintiffs,
v.
Deutsche Bank National Trust Company, as Trustee of the Home Equity Mortgage Loan Asset-Back Trust Series SPMD 2004-A, Home Equity Mortgage Loan Asset-Backed Certificates, Series SPMD 2004-A under the Pooling and Servicing Agreement dated June 1, 2004, Defendant.

Daniel M. Eaton, Christensen Law Office PLLC, 800 Washington Ave. N., Suite 704, Minneapolis, Minnesota 55401; for Plaintiffs.

Adam C. Ballinger, Kristin D. Kanski, and Bryan A. Welp, Linquist & Vennum PLLP, 80 South Eighth St., Suite 4200, Minneapolis, MN 55402, for Defendant.

MEMORANDUM OPINION AND ORDER

SUSAN RICHARD NELSON, District Judge.

This matter is before the Court on a Motion to Dismiss filed by Defendant Deutsche Bank National Trust Company [Doc. No. 25]. For the reasons stated below, the Court grants the Motion to Dismiss and dismisses the Amended Complaint [Docket No. 22] with prejudice.

I. FACTUAL AND PROCEDURAL BACKGROUND

Plaintiffs Louis and Carol Frillman owned rental property on Holly Avenue in St. Paul. (Am. Compl. ¶ 3.) In 2004, the Frillmans entered into a $332, 500 mortgage on the property in favor of IndyMac Bank. (Id. Ex. B at 27.) The mortgage was assigned to Defendant Deutsche Bank National Trust Company in 2005, and that assignment was recorded shortly thereafter. (Id.) In 2009, the mortgage was assigned to Deutsche Bank as trustee for certain asset-backed certificates. This assignment was recorded on November 9, 2009. (Id.)

Although the Amended Complaint contains little detail about the Frillmans' payment history on this mortgage, it appears that the Frillmans went into default on the mortgage in late 2010 or early 2011. In early July 2011, the Frillmans received notice that Deutsche Bank intended to sell the property at a foreclosure sale scheduled for August 19, 2011. (Id. at 26, 28.) The Frillmans thereafter attempted to bring the mortgage current, and pursuant to a "Forbearance Plan" outlined in Exhibit C to the Amended Complaint, agreed to make substantial monthly payments starting in August 2011. (Id. Ex. C at 34.) The Amended Complaint avers that the Frillmans made the first of these, a $15, 783.94 payment on August 17, 2011. (Id. ¶ 17.) There is no allegation that the Frillmans made any further payments under the Forbearance Plan.

Pursuant to the Forbearance Agreement, which modified the payment plan originally due and owing under the Note, OneWest, on behalf of Deutsche Bank, agreed to temporarily suspend collections and the foreclosure process and the Frillmans expressly agreed as follows:

Upon default under any of the terms or conditions in this agreement, [the servicer] retains the right to terminate this agreement, to demand immediate payment of all remaining installments and to resume collections and/or foreclosure at the point the servicing was previously suspended without further notice. If your loan is in foreclosure and you default under any terms or conditions of this agreement, [the servicer] reserves the right to re-commence the foreclosure actions immediately with no further notice to you, your representatives or agents.

(Am. Compl. Ex. C.) (emphasis added)

A week after Deutsche Bank sent the initial foreclosure sale letter to the Frillmans, Deutsche Bank attempted to serve the Frillmans' tenant, Kelly Canter, with notice of the upcoming foreclosure sale. According to the Amended Complaint, the attempted service was unsuccessful because the process server served a person named Sara Arne who resided in a different unit in the building. (Id. ¶ 11.) Minnesota law requires that a notice of mortgage foreclosure sale be served on a person in possession of the mortgaged premises. Minn. Stat. § 580.03. The exhibits attached to the Amended Complaint include the process server's affidavit of service, which lists Sara Arne as a Occupant/Roommate" of the tenant. (Am. Compl. Ex. A at 7.)

After the Frillmans entered into the Forbearance Plan, the sheriff's sale was postponed, but it was ultimately rescheduled after the Frillmans apparently defaulted on their payment obligations under that Plan. As a result, Deustche Bank recommenced the foreclosure by advertisement process in accordance with the express terms of the Forbearance Agreement. (Am. Compl. Ex. C.) As required by statute, OneWest, on behalf of Deutsche Bank, caused to be published and served notices of postponement of the sale first to September 19, 2011, and then to October 19, 2011. (Am. Compl. Ex. A.) Despite evidence to the contrary, the Amended Complaint contends that Deutsche Bank failed to send notice of the postponed sale or rescheduled date to the tenant, in violation of the statutory requirement that it do so. (Id. ¶¶ 26-28 (citing Minn. Stat. § 580.07).) The property was sold at sheriff's sale on October 19, 2011. (Id. ¶ 18.)

The Amended Complaint contains three counts. Count 1 seeks a declaration that the sheriff's sale of the Frillmans' property is "null and void" because of Deutsche Bank's alleged failure to serve the initial notice of the foreclosure sale on the Frillmans' tenant. (Id. ¶ 24.) Count 2 asks for a declaratory judgment that the sheriff's sale is void for Deutsche Bank's alleged failure to notify the property's occupant of the postponement of the sheriff's sale and the rescheduled date for the sale. (Id. ¶ 30.) Finally, Count 3 contends that Deutsche Bank's alleged failure to comply with Minnesota's foreclosureby-advertisement statute created a cloud on the title of the Frillmans' property and seeks to quiet title to that property under Minn. Stat. § 559.01. (Id. ¶¶ 32-36.) As a remedy, the Frillmans ask ...


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