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Montero v. Bank of America, N.A.

United States District Court, D. Minnesota

February 13, 2014

Manuel Montero, Plaintiff,
v.
Bank of America, N.A., Mortgage Electronic Registration Systems, Inc., MERSCORP Holdings, Inc., and also other persons, unknown claiming any right, title, estate, interest, or lien in the real estate described in the complaint herein, Defendants.

William B. Butler, Butler Liberty Law, LLC, for Plaintiff.

Mark G. Schroeder, Briggs & Morgan, PA, for Defendants.

MEMORANDUM OPINION AND ORDER

SUSAN RICHARD NELSON, District Judge.

I. INTRODUCTION

This matter is before the Court on Plaintiff's Objection [Doc. No. 19] to United States Magistrate Judge Janie S. Mayeron's December 3, 2013, Report and Recommendation ("R&R") [Doc. No. 18]. The Magistrate Judge recommended that: (1) Defendants' Motion to Dismiss [Doc. No. 4] be granted, and (2) this matter be dismissed with prejudice. For the reasons set forth below, the Court overrules Plaintiff's Objection and adopts the R&R in its entirety.

II. BACKGROUND

The Magistrate Judge's R&R thoroughly documents the factual and procedural background of Plaintiff's case, which is incorporated here by reference. Briefly stated, Plaintiff is challenging the foreclosure of the mortgage on his home. Plaintiff sued Bank of America, N.A. ("BANA"), Mortgage Electronic Registration System, Inc. ("MERS"), MERSCORP Holdings, Inc., and other unnamed persons in state district court on March 19, 2013. On April 11, 2013, Defendants removed the matter to federal district court. (Notice of Removal [Doc. No. 1].)

As alleged in the Complaint, Plaintiff resides and is in possession of real property located in Minneapolis, Minnesota ("Property"). (Compl. ¶ 1 [Doc. No. 1-1].) On May 9, 2008, Plaintiff executed a promissory note to Countrywide Bank, FSB, and a mortgage in favor of MERS, as nominee for Countrywide Bank. (Id. ¶ 5.) On October 31, 2011, BANA drafted an Assignment of Mortgage from MERS to BANA. (Id. ¶ 7.) Talisha Wallace, an employee of BANA, executed the assignment as Assistant Secretary of MERS, and she recorded the assignment in the Hennepin County Office of the Recorder on November 9, 2011. (Id.) Plaintiff alleges "upon information and belief" that Wallace lacked the legal authority to execute the assignment, because she was an employee of BANA on October 31, 2011. (Id. ¶ 8.)

Plaintiff does not allege that he defaulted on the promissory note, but documents attached to the Complaint regarding foreclosure proceedings show that Plaintiff defaulted on the note by 2012. (Exs. 4 and 5 to Compl. [Doc. No. 1-1].)

On March 12, 2012, the Peterson, Fram & Bergman, P.A. law firm ("PFB") drafted a Notice of Pendency that empowered PFB to foreclose on the Property and to bid on the property at the foreclosure sale. (Compl. ¶ 9.) Clinton Duncan, Assistant Vice President of BANA, executed the Notice of Pendency. (Id.) On March 28, 2012, PFB recorded the Notice of Pendency with the Recorder of Hennepin County. (Id.) Plaintiff alleges "upon information and belief" that Duncan lacked the legal authority to execute the Notice of Pendency. (Id. ¶ 10.)

On March 30, 2012, BANA, through PFB, noticed a Sheriff's sale of the Property, and it conducted the sale on August 28, 2012. (Id. ¶ 12.) PFB, on BANA's behalf, bid $171, 873.78 in debt allegedly due to BANA. (Id.) A Sheriff's Certificate of Sale and foreclosure record was recorded in the Hennepin County Office of the Recorder. (Ex. 5 to Compl. [Doc. No. 1-1].) Plaintiff alleges that BANA had no legal authority to bid at the Sheriff's sale because the assignment from MERS to BANA was invalid. (Compl. ¶ 12.) Plaintiff also alleges that BANA engaged in "unsafe and unsound" banking practices by conducting the foreclosure and knew or had reason to know that the Assignment of Mortgage and Notice of Pendency were void, and the foreclosure was illegal. (Id. ¶¶ 13, 15.)

Plaintiff brings three causes of action. First, Count 1 seeks a determination of adverse claims under Minnesota's quiet title statute, Minn. Stat. § 559.01. (Id. ¶¶ 19-25.) Plaintiff alleges that Defendants' claim to an interest in the Property is void because: (1) there are unrecorded mortgage assignments conveying the mortgagee's power of sale to third parties; (2) BANA lacked the power of sale on the date of the Sheriff's sale; and (3) the foreclosure was void because (a) individuals executing the foreclosure documents lacked the legal authority to execute the documents when signed, and (b) Defendants did not record the necessary powers of attorney authorizing the foreclosure. (Id. ¶ 24.) Count 1 further alleges that in a quiet title action, Defendants have the burden of proof, and BANA must prove its interest in the Property by a preponderance of the evidence. (Id. ¶¶ 22, 23.) Second, Count 2 seeks a declaratory judgment that the Assignment of Mortgage from MERS to BANA and the Notice of Pendency were void, and that Plaintiff remains the fee owner of the Property. (Id. ¶¶ 27, 28.) Third, Count 3 alleges slander of title based on the recording of allegedly false documents. (Id. ¶¶ 30-32.)

Instead of answering, Defendants moved to dismiss the Complaint under Federal Rule of Civil Procedure 12(b)(6) [Doc. No. 4]. Plaintiff opposed Defendants' motion [Doc. No. 11], and Defendants filed a reply [Doc. No. 12]. This matter was decided on the parties' written submissions by the Magistrate Judge, who then issued her Report and Recommendation [Doc. No. 18].

On December 3, 2013, the Magistrate Judge recommended that Defendants' Motion to Dismiss be granted, and that this matter be dismissed with prejudice. (Dec. 3, 2013, Report and Recommendation at 22 [Doc. No. 18].) First, the Magistrate Judge found that Plaintiff's quiet title claim fails because: (1) Plaintiff made wholly unsupported statements about "adverse interests" in the Property, unrecorded assignments, and the alleged lack of legal authority by the individuals signing the foreclosure documents-and simply pleading some of these statements "upon information and belief" failed to satisfy federal pleading standards; (2) the record in fact ...


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