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Guzman v. Great Southern Bank

United States District Court, D. Minnesota

April 15, 2014

Gustavo Aguilar Guzman and Gabriela Tatiana Castro Serna, Plaintiffs,
v.
Great Southern Bank, [1] Defendant.

Gustavo Aguilar Guzman and Gabriela Tatiana Castro Serna, pro se Plaintiffs. [2]

Jared M. Goerlitz, Esq., counsel for Defendant Great Southern Bank.

REPORT AND RECOMMENDATION

JEFFREY J. KEYES, Magistrate Judge.

INTRODUCTION

In this action, Plaintiffs Gustavo Aguilar Guzman and Gabriela Tatiana Castro Serna seek to invalidate the foreclosure of the mortgage on their home. Plaintiffs' Complaint asserts three counts: (1) a quiet-title claim-i.e., a claim to determine adverse claims under Minn. Stat. § 559.01; (2) a claim for a declaratory judgment; and (3) a claim of slander of title. This matter is before the Court for a Report and Recommendation under 28 U.S.C. § 636 and D. Minn. Local Rule 72.1, on Defendant Great Southern Bank's ("Great Southern") Motion to Dismiss (Doc. No. 9). This Court took the matter under advisement on the papers submitted by docket entry Notice issued on January 13, 2014. (Doc. No. 18.) For the reasons below, this Court recommends that Great Southern's Motion to Dismiss be granted and Plaintiffs' claims be dismissed with prejudice.

FACTS

Plaintiffs reside in and are in possession of real property located at 1489 Woodview Street East, Eagan, MN 55122. (Doc. No. 1, Compl. ¶ 1.) They acquired their interest in the property via warranty deed dated December 12, 2006. ( Id. ¶ 2.) On October 31, 2006, Plaintiffs executed and delivered a $179, 500.00 promissory note, as well as a mortgage securing the note, to First Residential Mortgage Corporation ("FRMC"). ( Id. ¶ 6; Ex. 1.) The mortgage identifies Mortgage Electronic Registration Systems, Inc. ("MERS") as nominee for the lender, FRMC. ( Id. )

MERS, as nominee, assigned the mortgage to Inter Savings Bank, FSB ("Inter Savings") on May 10, 2011. The Assignment of Mortgage ("AOM") was executed by Tori Mock on behalf of MERS and was recorded in Dakota County on May 17, 2011. ( Id. ¶ 13; Ex. 2.) A Notice of Pendency of Proceeding and Power of Attorney to Foreclose Mortgage was executed on May 12, 2011 ("May 12, 2011 NOP/POA"). The NOP/POA was executed by Michael Oberle as attorney in fact for Inter Savings. ( Id. ¶ 14; Ex. 3.) It authorized the law firm of Peterson, Fram & Bergman, PA ("PFB") to conduct proceedings for foreclosure by advertisement on the Plaintiffs' mortgage on behalf of Inter Savings and was recorded with the Dakota County Recorder on May 17, 2011. ( Id. )

A subsequent NOP/POA was executed on April 17, 2012, by Jennifer Dobron in her capacity as Vice President and Assistant Secretary at Inter Savings Bank, FSB. ( Id. ¶ 15; Ex. 4.) The April 17, 2017 NOP/POA was recorded in Dakota County on April 27, 2012, and it likewise authorized PFB to conduct foreclosure by advertisement proceedings on the Plaintiffs' mortgage on behalf of Inter Savings. ( Id. )

On April 27, 2012, Inter Savings was closed by the Office of the Comptroller of the Currency, and the FDIC was named as the Receiver for the bank. ( Id. Ex. 5.) On January 15, 2013, the FDIC assigned Inter Savings' interest in the Plaintiffs' note and mortgage to Great Southern by Receiver's Assignment of Deed of Trust/Mortgage executed by Ginger Tompkins as attorney-in-fact for the FDIC. ( Id. ¶ 16; Ex. 5.) The assignment was recorded in Dakota County on February 11, 2013. ( Id. ) Thereafter, on February 20, 2013, a NOP/POA was executed by Jana House on behalf of Great Southern, now authorizing PFB to conduct proceedings for foreclosure on the Plaintiffs' mortgage for Great Southern ( Id. ¶ 18; Ex. 6.) The February 20, 2013, NOP/POA was recorded in Dakota County on February 26, 2013. ( Id. )

A Notice of Mortgage Foreclosure Sale was prepared by PFB on behalf of Great Southern and the Notice was provided by publication in March and April 2013. ( Id. Ex. 7.) A Sheriff's sale was conducted on April 30, 2013, and the subject property was sold to Great Southern for $106, 250. ( Id. ¶ 19; Ex. 7.) The Sheriff's Certificate of Sale and Foreclosure Record was recorded in Dakota County on April 30, 2013. ( Id. ) Plaintiffs commenced this action to invalidate the foreclosure by service of the Summons and Complaint on or about November 19, 2013. (Doc. No. 1, Not. of Removal.)

Plaintiffs alleged in their Complaint that the foreclosure on their property was invalid because Great Southern was not a real party in interest having legal authority to enforce rights relating to the note and foreclosure. ( Id. ¶ 22.) Plaintiffs also challenged the validity and/or enforceability of certain documents, i.e. the Assignment of Mortgage from MERS to Inter Savings Bank; the April 17, 2012 Notice of Pendency and Power of Attorney; and the January 15, 2013 Assignment of Mortgage from the FDIC to Great Southern. ( Id. ¶ 23.)

In their written opposition to Great Southern's motion to dismiss the Plaintiffs contend that Great Southern did not have the rights of a holder in due course because the note had gone through insolvency proceedings and the assignment of mortgage to Great Southern was executed by a person who had not obtained authority through a power of attorney to act on behalf of the FDIC. Plaintiffs seek relief by way of a quiet title claim under ...


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