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Stephens v. Federal National Mortgage Association

United States District Court, Eighth Circuit

December 30, 2013

GEORGINA STEPHENS and LARRY ALEXANDER (a married couple), Plaintiffs,
FEDERAL NATIONAL MORTGAGE ASSOCIATION, a federally chartered corporation, all unknown successors, and all other persons Unknown claiming any right, title, interest, or lien in the real estate described in the complaint Herein and John Doe and Jane Doe, Defendant.

Georgina Stephens and Larry Alexander, pro se.

Kendall L. Bader, BARNES & THORNBURG LLP, for defendant.


JOHN R. TUNHEIM, District Judge.

Plaintiffs Georgina Stephens and Larry Alexander challenge the foreclosure of the property located at 224 North Avon Street, St. Paul, MN (the "Property"). The matter is before the Court on Defendant Federal National Mortgage Association's ("Fannie Mae") motion to dismiss. On June 21, 2013, United States Magistrate Judge Steven E. Rau issued a Report and Recommendation ("R&R") recommending that the Court grant Defendant's motion to dismiss and dismiss Plaintiffs' claims with prejudice. (Docket No. 33.) Plaintiffs made timely objections to the R&R. Having conducted a de novo review of those portions of the R&R to which Plaintiffs object, see 28 U.S.C. § 636(b)(1)(C); D. Minn. LR 72.2(b), and having carefully reviewed the submitted materials, the Court overrules Plaintiffs' objections and adopts the R&R because it finds that the foreclosure on the Property was valid.


Plaintiffs owned the Property prior to foreclosure on it. ( See Notice of Removal, Ex. B ("Compl.") ¶¶ 4-6, Sep. 24, 2012, Docket No. 1.) The parties dispute whether Plaintiffs occupied the Property at the time of the foreclosure in late 2011 and early 2012. In their Complaint, Plaintiffs allege that the Property "is [their] principal place of residence." (Compl. ¶ 4.) Fannie Mae, however, submits public records that demonstrate the Property was "res[idential], non-hstd [non-homestead]" land (Decl. of Kendall Bader, Ex. 3, Mar. 6, 2013, Docket No. 16)[2] at the time of the foreclosure and was unoccupied as a result of being condemned ( see, e.g., Bader Decl., Ex. 12).

Public Records

On April 29, 2011, the City of St. Paul (the "City") declared the Property unfit for human habitation and condemned it. ( See Notice of Condemnation as Unfit for Human Habitation & Order to Vacate ("Condemnation Order"), City of St. Paul, Apr. 29, 2011.)[3] The Condemnation Order demanded vacation of the property by May 2, 2011. ( Id. )

Alexander appealed the City's decision and appeared at a City Legislative Hearing on May 3, 2011. (Minutes - Final, Legislative Hearings, at 8-10, City of St. Paul, May 3, 2011.)[4] At that hearing, the Legislative Hearing Officer stated that she did "not trust that [the Property was] an owner-occupied unit, " and ordered the property vacated no later than May 4, 2011. ( Id. at 10.) The case was referred to the St. Paul City Council. ( Id. )

Alexander appealed to the St. Paul City Council and on May 18, 2011, appeared at the City Council's public hearing. ( See Minutes - Final, City Council at 18-19, May 18, 2011.)[5] The City Council adopted the Legislative Hearing Officer's recommendation and ordered immediate vacation of the Property. ( Id. at 19.) Alexander informed the City Council that the property was "currently vacant." ( Id. ) City records show that the property has been vacant since May 6, 2011. (Bader Decl., Ex. 5 (Vacant Building List).)

Alexander filed suit in Ramsey County seeking damages against the City and attempting to overturn the Condemnation Order. ( See Second Decl. of Kendall Bader, Ex. A (Findings of Fact, Conclusions of Law, Order Dismissing the Action at 10, Alexander v. City of St. Paul, No. 62-CV-11-5136 (Minn. Dist. Ct. Nov. 3, 2011)), Docket No. 27.) That court found that Alexander had vacated the Property by May 2, 2011, and that the Property had remained legally unoccupied since that time. ( Id. at 5, 7.) Alexander did not appeal this decision.

Beginning in May 2011, an inspector for the City, Matt Dornfeld, visited the Property to check for occupancy and repairs and documented his visits.[6] ( See Bader Decl., Ex. 12.) Dornfeld noted that the house appeared illegally occupied at times during the summer of 2011 but that no one would answer the door despite his repeated knocks on multiple visits. ( Id. at 3-4.). Dornfeld also observed repairs conducted to the roof without a permit during August 2011 ( id. at 4) and recent painting of the house in the Fall of 2011 ( id. at 5). On November 7, 2011, Dornfeld visited the Property and found that the house "appeared vacant." (Bader Decl., Ex. 12 at 5.) The same day, Dornfeld noted that Alexander left him "a VM [voicemail] stating house is vacant.'" ( Id. ) On his next visit to the Property on November 29, 2011, Dornfeld once again noted that the "[h]ouse appeared vacant." ( Id. )

Foreclosure Process

On October 27, 2011, after Plaintiffs defaulted on their mortgage, the current assignee of the mortgage, CitiMortgage, Inc. ("CitiMortgage"), recorded its intent to foreclose on the Property. (Compl. ¶¶ 8-9; Bader Decl., Ex. 7 (Notice of Pendency).) Then, on November 12, 2011, CitiMortgage attempted to serve Plaintiffs with notice of the foreclosure sale, but the process server found the Property "vacant ...

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