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Lubbers v. Deutsche Bank National Trust Co.

United States District Court, Eighth Circuit

December 3, 2013

STEPHAN LUBBERS and MARGARET LUBBERS, Plaintiffs,
v.
DEUTSCHE BANK NATIONAL TRUST COMPANY, et al. Defendants.

REPORT AND RECOMMENDATION

JANIE S. MAYERON, Magistrate Judge.

This matter came before the undersigned on defendant's Motion to Dismiss [Docket No. 3]. This matter has been referred to the undersigned Magistrate Judge for a Report and Recommendation by the District Court pursuant to 28 U.S.C. § 636(b)(1)(A), (B) and Local Rule 72.1(c). Pursuant to this Court's Order dated September 6, 2013 [Docket No. 12] this Report and Recommendation is being issued based on the parties' written submissions.

Plaintiffs seek to invalidate the foreclosure of the mortgage on their home. Plaintiffs assert three claims against defendant: (1) quiet-title, to determine adverse claims under Minn. Stat. § 559.01; (2) declaratory judgment; and (3) slander of title. For the reasons below, the Court recommends that defendant's Motion to Dismiss be granted and plaintiffs' claims be dismissed with prejudice.[1]

I. BACKGROUND

A. Plaintiff's Complaint On May 19, 2013, plaintiffs, sued defendant Deutsche Bank National Trust

Company, as Indenture Trustee for Argent Securities Inc., Asset-Backed Pass-Through Certificates, Series 2003-W3 ("Deutsche Bank")[2] in state court. Notice of Removal, Ex. Attach. 1 (Complaint) [Docket No. 1-1]. Deutsche Bank removed the suit to Federal District Court on April 22, 2013, pursuant to 28 U.S.C. §1332(a). Notice of Removal [Docket No. 1].

The facts as alleged in plaintiffs' Complaint are as follows. Plaintiffs entered into a residential mortgage and note with Argent Mortgage Company, LLC ("Argent Mortgage") on July 8, 2003, for property located in Anoka County, Minnesota ("Property"). Complaint, ¶ 4. The Complaint contains no express allegation that plaintiffs have defaulted on the promissory note, but the allegations in the Complaint and documents attached to the Complaint regarding foreclosure proceedings indicate that plaintiffs defaulted on the note by 2009. See Complaint, ¶¶ 13-15, 20, Exs. 5-7, 9. The mortgage was recorded with the Anoka County Recorder on July 30, 2003. Id., Ex. 1 (Mortgage). On March 26, 2009, the law firm of Wilford and Gesje, P.A. ("Wilford") drafted an Assignment of Mortgage from Argent Mortgage to Deutsche Bank, as trustee for asset-backed pass-through certificates, series 2003-W3. Id., ¶ 6. The Assignment of Mortgage dated March 26, 2009, was executed by Patricia Olvera, as Vice-President of Argent Mortgage, and was recorded in the Anoka County Office of the Recorder on April 7, 2009. Id., ¶ 6, Ex. 2 (Assignment of Mortgage).

Plaintiffs alleged that Deutsche Bank securitized their loan into a mortgagebacked certificate entitled "Argent Securities Inc., asset-backed pass-through certificates, series 2003-W3", the trust was registered with the SEC on September 5, 2003, and the securitization process was governed by a Pooling and Service Agreement ("PSA") dated September 1, 2003, between and among Argent Securities, as depositor, Ameriquest Mortgage Company as master servicer, and Deutsche Bank, as trustee. Id., ¶ 7, Ex. 3 (portions of PSA). As a condition to issuing mortgagedbacked securities, the PSA required that the parties to the securitization documents create and deliver documents creating a complete chain of title from the loan originator, Argent Mortgage, to the legal owner of plaintiffs' loan, Deutsche Bank, and required Argent Mortgage to deliver to Deutsche Bank the original note endorsed in blank, a certified copy of the mortgage, and an original assignment of the mortgage by the closing date of the trust on September 5, 2003. Id., ¶¶ 8, 9, Ex. 3. The securitization documents required that assignments of the mortgage be prepared and delivered to and from: (1) Argent Mortgage, as the originator of the loan, to Ameriquest Mortgage Company ("Ameriquest"), as the seller; (2) from Ameriquest to Argent Securities, as depositor; and (3) from Argent Securities to Deutsche Bank, as trustee. Id., ¶ 10. Neither the Assignments of Mortgage, nor the PSA or any power of attorney from Argent Mortgage or Ameriquest to Deutsche Bank appear of record on the Property in violation of Minn. Stat. § 580.05. Id., ¶¶ 10, 11.

On April 3, 2009, Wilford drafted a Notice of Pendency, empowering it to foreclose on the Property and to bid on for the Property at the foreclosure sale. Id., ¶ 13. Denise Bailey executed the Notice of Pendency dated April 3, 2009, as the Assistant Secretary of Deutsche Bank. Id . This Notice of Pendency was recorded with the Anoka County Office of the Recorder on April 7, 2009. Id., Ex. 5 (Notice of Pendency of Proceeding and Power of Attorney to Foreclose Mortgage).

On August 19, 2010, Wilford drafted another Notice of Pendency, empowering it to foreclose on the Property and to bid in on the Property at the foreclosure sale. Id., ¶ 14. James Geske executed the Notice of Pendency dated August 19, 2010, as an attorney for Wilford. Id . This Notice of Pendency was recorded with the Anoka County Office of the Recorder on August 20, 2010. Id., ¶ 14, Ex. 6 (Notice of Pendency to Foreclose Mortgage).

On April 6, 2012, Ocwen Loan Servicing, LLC ("Ocwen") drafted a Notice of Pendency and Power of Attorney, empowering Wilford to foreclose on the Property and to bid in on the Property at the foreclosure sale, which was executed by Richard Work, as Contract Management Coordinator of Ocwen, and recorded with the Anoka County Office of the Recorder on April 27, 2012. Id., ¶ 15, Ex. 7 (Notice of Pendency of Proceeding and Power of Attorney to Foreclose Mortgage recorded on April 27, 2012).[3] "Upon information and belief, Richard Work did not have the legal authority to execute the 08/19/10 NOP at the time he executed it as Ocwen Loan Servicing did not have any recorded interest in the Property nor had they been empowered as the attorney-in-fact for Deutsche." Id., ¶ 16.

On April 20, 2012, Ocwen drafted an Assignment of Mortgage from Deutsche Bank National Trust Company, as trustee for asset-backed pass-through certificates, series 2003-W3 to Deutsche Bank National Trust Company, as indenture trustee for Argent Securities Inc., asset-backed pass-through certificates, series 2003-W3.[4] Id., ¶ 17, Ex. 8 (Assignment of Mortgage). Leticia Arias, Ocwen Contract Manager, executed the Assignment of Mortgage dated April 20, 2012. Id., ¶ 17. This Assignment of Mortgage was recorded with the Anoka County Office of the Recorder on April 27, 2012. Id., ¶ 17, Ex. 8. Plaintiffs claimed there was no of-record evidence that Arias had the power to execute Assignment of Mortgage dated April 20, 2012, or that Ocwen was granted the legal authority to draft and execute documents on behalf of Deutsche Bank. Id., ¶¶ 17, 18.

Deutsche Bank, through Wilford, noticed a sheriff's sale for the Property, and conducted the sale on August 13, 2012. Id., ¶ 20, Ex. 9 (Sheriff's Certificate of Foreclosure Sale). The Sheriff's Certificate indicated that Wilford had the legal authority to make a credit bid at the sale. Id.[5] Wilford, on behalf of Deutsche Bank, appeared at the sheriff's sale and exercised the power of sale clause in the mortgage by bidding $166, 549.98 in on the debt due to Deutsche Bank. Id . The Sheriff's Certificate of Sale and foreclosure record is recorded in the Anoka County Office of the Recorder. Id.. "Upon information and belief, prior to the Sheriff's Sale, Deutsche Bank National Trust Company had transferred the power of sale through an unrecorded assignment of mortgage." Id., ¶ 21. Plaintiffs were required to vacate the Property prior to February 13, 2013, after the redemption period had expired. Id., Ex. 9 (Foreclosure Record).

Plaintiffs asserted that Deutsche Bank at all times knew or had reason to know that the March 26, 2009 Assignment of Mortgage, the April 3, 2009 Notice of Pendency, the August 19, 2010 Notice of Pendency, the April 6, 2012 Notice of Pendency and Power of Attorney, and the April 20, 2012 Assignment of Mortgage, were void. Id., ¶ 22. Plaintiffs also maintain that they are the owner of the fee title, the Sheriff's Certificate of Sale is void, and that the foreclosure was void. Id., ¶¶ 23, 24.

Plaintiffs alleged the following causes of action:

In Count I, plaintiffs assert a quiet title action pursuant to Minn. Stat. § 559.01, and seek a determination regarding Deutsche Bank's adverse interest in the Property. Id., ¶¶ 26-31. According to plaintiffs, in a quiet title action, the burden of proof is on the mortgagee asserting an adverse interest in the property to show that both record title and legal title concur and co-exist at the same time and in the same entity to foreclose by advertisement. Id., ¶ 29.

In Count II, plaintiffs seek a declaratory judgment under Minn. Stat. § 555.02 that the various assignments of mortgage, notices of pendency, and powers of attorney are all void, and that plaintiffs remain the owner of the Property in fee title. Id., ¶¶ 33, 34.

In Count III, alleging slander of title, plaintiffs asserted that Wilford, acting at direction of Deutsche Bank, drafted and recorded documents that were false and not executed by legally authorized persons, and that Deutsche Bank knew that the documents were false because unauthorized persons executed the power of attorneys and the assignments of mortgage. Id., ¶¶ 35-40.

As relief, plaintiffs sought: (1) a determination of adverse interest in the Property; (2) a declaration that the Sheriff's Certificate of Sale, the various assignments of mortgage, notices of pendency, and powers of attorney are all void; (3) a declaration that plaintiffs remain the owner ...


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