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Torborg v. Federal National Mortgage Association, Mortgage Electronic Registration Systems, Inc.

United States District Court, D. Minnesota

March 31, 2014

PHILIP TORBORG, Plaintiff,
v.
FEDERAL NATIONAL MORTGAGE ASSOCIATION, MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC., MERSCORP, INC., and also all other persons, unknown claiming any right, title, estate, interest, or lien in the real estate described in the complaint herein, Defendants.

Philip Torborg, plaintiff.[1]

Rebecca F. Schiller and Curt N. Trisko, SCHILLER & ADAM, P.A., for defendants.

MEMORANDUM OPINION AND ORDER ADOPTING REPORT AND RECOMMENDATION OF MAGISTRATE JUDGE

JOHN R. TUNHEIM, District Judge.

This case is one in a long series of cases filed by William B. Butler[2] and arises out of Plaintiff Philip Torborg's challenge to the foreclosure on a mortgaged property. Torborg's claims center on the validity of both the mortgage assignment and the Powers of Attorney that authorized the foreclosure on the property. Before the Court are Plaintiff's objections to the Report and Recommendation ("R&R") of United States Magistrate Judge Janie S. Mayeron. The Magistrate Judge recommended that the Court grant the motion to dismiss filed by Defendants Federal National Mortgage Association, Mortgage Electronic Registration Systems, Inc. ("MERS"), and Merscorp, Inc. (collectively "Defendants"). The Court will adopt the R&R and dismiss Torborg's claims with prejudice, concluding that Torborg fails to state a quiet title claim and has failed to object to the Magistrate Judge's conclusion that his claims for slander of title and declaratory judgment should be dismissed.

BACKGROUND

Torborg's challenge to the foreclosure centers on the validity of two exchanges in the life of his mortgage: its assignment from MERS to Fannie Mae and Fannie Mae's subsequent foreclosure proceeding. Torborg alleges that the assignment was not valid because it was authorized and executed by individuals who did not have the authority to execute the assignment. Similarly, he alleges that the foreclosure proceeding was invalid because parties to the proceeding lacked the necessary powers of attorney and because the Power of Attorney was not recorded prior to the publication of the Notice of Sale.

Torborg acquired an interest in the real property in question on March 31, 2006. (Am. Compl. ¶ 2, July 1, 2013, Docket No. 16.)[3] That same day, Torborg executed a mortgage with MERS. ( Id. ¶ 6.) MERS subsequently assigned the mortgage to Fannie Mae. ( Id. ¶ 10; id., Ex. 2.) The assignment of the mortgage was executed on November 10, 2011 and recorded by the Sherburne County Office of the Recorder on May 15, 2012. ( Id. ¶ 10 (citing id., Ex. 2).) Torborg alleges that this assignment was invalid because the employees who supposedly executed the assignment on behalf of MERS were in Idaho and that an employee of a different company that happens to be located in Idaho (another employee of which had notarized the instant assignment) testified in a different matter that she previously "robo-signed" assignments of mortgage. ( Id. ¶¶ 11-13; id., Ex. 7.) He alleges that, based on these facts, there is a plausible inference that the employees who supposedly executed the assignment on behalf of MERS actually worked for the notarizing company, not MERS, and therefore the assignment was not valid. ( Id. ¶¶ 12-13.)

Although Torborg does not state this directly in his pleadings, the other pleadings and related documents indicate that Torborg defaulted on his mortgage by 2012. ( See id. ¶ 9 (noting that Torborg attempted to modify his payment plan for the mortgage, but ultimately sought and declared bankruptcy in June 2012); Decl. of Rebecca F. Schiller, Exs. 4-5 (foreclosure documents filed with Sherburne County), June 10, 2013, Docket No. 11; Compl., Ex. 4 (notice of foreclosure), May 20, 2013, Docket No. 1.) A Notice of Pendency of Proceeding to Foreclose was recorded at the Sherburne County Recorder's office on September 10, 2012. (Am. Compl. ¶¶ 16-17, Ex. 8.) On September 13, 2012, Fannie Mae noticed the Sheriff's Sale for the property. ( Id. ¶ 20.) Defendants executed a Power of Attorney to Foreclose on September 21, 2012, and recorded it with the Recorder of Sherburne County on October 4, 2012. ( Id. ¶ 18.) The execution and recording of the Power of Attorney took place prior to the sale on November 8, 2012. ( See id. ¶ 20.)[4] Torborg alleges that the foreclosure was invalid because the person who signed the Notice of Pendency of Proceeding to Foreclose lacked the legal authority to do so. ( Id. ¶ 17.)

Following the foreclosure and sale of the property, Torborg filed a complaint in this action, seeking to quiet title to the property (Count I), declaratory judgment stating that the assignment and foreclosure were void (Count II), and alleging slander of title (Count III). Defendants moved to dismiss all claims against them. (Mot. to Dismiss, June 10, 2013, Docket No. 9.) In response, Torborg simultaneously filed an opposition memorandum and the Amended Complaint. (Am. Compl.; Mem. in Opp. to Mot. to Dismiss, July 1, 2013, Docket No. 17.) The Amended Complaint includes two additional paragraphs further detailing the allegations of unauthorized assignment of the mortgage, but is otherwise nearly identical to the original complaint. ( See Am. Compl. ¶¶ 12-13.)[5] Defendants again moved to dismiss all counts against them. (Mot. to Dismiss Am. Compl., July 19, 2013, Docket No. 21.)[6]

The Magistrate Judge issued an R&R recommending that the Court grant Defendants' Motion to Dismiss the Amended Complaint. (R&R, Dec. 19, 2013, Docket No. 28.) With regard to the quiet title claim, the R&R concluded that Torborg failed to adequately allege that certain Defendants lacked the requisite signing authority; that Minn. Stat. § 582.25(1)(v) does not provide for a cause of action for failure to record a power of attorney prior to the publication of the Notice of Sale; that Torborg lacked standing because allegations that the subsequent assignment of a mortgage was invalid do not amount to injury-in-fact; and that Torborg is not eligible for any equitable relief because of the doctrine of unclean hands. ( Id. at 10-18.) Concerning the slander of title claim, the R&R observed that Torborg failed to address Defendants' arguments on that claim in his Memorandum in Opposition to Defendants' Motion to Dismiss and therefore waived the issue. ( Id. at 19 ("Plaintiff did not address defendants' arguments regarding dismissal of his slander of title claim in his opposition brief. Therefore, the Court treats plaintiff's lack of opposition as a concession that the claim cannot succeed and should be dismissed.").) Concerning the declaratory judgment claim (which Torborg also failed to address in his opposition memorandum), the Magistrate Judge concluded that he failed to state a claim for declaratory judgment because declaratory judgment is a remedy, not a cause of action, and his underlying claims failed. ( Id. at 20-21.)

Torborg raises three objections to the R&R, all of which involve his quiet title claim. His first objection is essentially identical to his Memorandum in Opposition to Defendants' Motion to Dismiss. The subsequent objections are new and challenge the Magistrate Judge's conclusion that he lacks standing for his quiet title claim and that the doctrine of unclean hands bars him from any equitable relief. Torborg again makes no argument regarding the slander of title and declaratory judgment claims.

The Court concludes that Torborg's quiet title action fails to state a claim upon which relief can be granted because he makes no plausible allegations that the assignment and foreclosure were invalid. Because Torborg has failed to object or make any argument regarding the remaining claims, the Court will therefore dismiss all claims against Defendants.

ANALYSIS

I. STANDARD OF ...


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