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Le v. Wells Fargo Bank, N.A.

United States District Court, D. Minnesota

April 28, 2014

Nhut Le and Chai M. Le, Plaintiffs,
v.
Wells Fargo Bank, N.A., Schiller & Adam, P.A., James J. Pauley, Divine N. Difongwa, Rebecca Schiller, Sarah J.B. Adam, Jeffrey D. Klobucar, and Sidney Jintara Yang, Defendants.

Nhut Le and Chai M. Le, Maplewood, Minnesota 55117, pro se Plaintiffs.

Jeffrey D. Klobucar, Schiller & Adam, P.A., 25 Dale Street North, Saint Paul, Minnesota 55102, and Ellen B. Silverman, Hinshaw & Culbertson LLP, 333 South Seventh Street, Suite 2000, Minneapolis, Minnesota 55402, for Defendants.

ORDER

SUSAN RICHARD NELSON, District Judge.

I. INTRODUCTION

This matter is before the Court on Plaintiffs' Corrected Objections [Doc. No. 167] to United States Magistrate Judge Jeffrey J. Keyes's March 17, 2014, Amended Report and Recommendation ("R&R") on Defendants' Motions to Dismiss and Motions on Bankruptcy References [Doc. No. 162]. For the reasons that follow, the Court overrules the Objections and adopts the R&R in its entirety.

Also before the Court is Plaintiffs' Motion for Mandatory Withdrawal of Reference [Doc. No. 164]. For the reasons that follow, the Court grants in part and denies in part this motion, consistent with the Magistrate Judge's R&R.

II. BACKGROUND

The Magistrate Judge's R&R thoroughly documents the factual and procedural background of the case, which is incorporated here by reference. The claims in this case arise from the foreclosure and sheriff's sale of Plaintiffs' residence, located in Maplewood, Minnesota. In October of 2011, a mortgage on the property was granted to Wells Fargo, as security for a promissory note in favor of Wells Fargo as the lender. Foreclosure proceedings began in June of 2012, and the property was sold to Wells Fargo on October 2, 2012. Plaintiffs received notice that unless the mortgage was reinstated or the redemption period was altered, they were required to vacate the residence by April 2, 2012. The mortgage was not reinstated, and the redemption period was not altered.

Plaintiffs continued to occupy the residence beyond the redemption period, leading Defendant Schiller & Adam to begin an eviction proceeding in Ramsey County in April of 2013 (Case No. 62-HG-CV-13-1016). On May 7, 2013, Plaintiffs filed for bankruptcy (Bankr. Case No. 13-32274). On May 17, 2013, Plaintiffs began an adversary proceeding in the bankruptcy action (Adv. Case No. 13-03108) ("3108"). In June of 2013, Defendants moved to dismiss the 3108 action. On July 3, 2013, Plaintiffs "removed" the eviction matter from Ramsey County to Bankruptcy Court as a second adversary proceeding (Adv. Case No. 13-03135) ("3135").

Plaintiffs filed the instant case on July 17, 2013. (Compl. [Doc. No. 1].) On July 31, 2013, Plaintiffs filed a "Notice of Removal" in their bankruptcy case, essentially attempting to transfer the entire bankruptcy case to this Court as case number 13-2064. That same day, Wells Fargo moved in Bankruptcy Court to remand the eviction matter to Ramsey County. On August 14, 2013, Plaintiffs filed a Notice of Removal of the eviction matter within the 3135 adversary proceeding, which became case number 13-2199 in this Court.

On October 17, 2013, the undersigned judge consolidated the federal court cases and the removed bankruptcy adversary proceedings for all purposes in case number 13-1920 in this Court. (Order for Consolidation [Doc. No. 68].) Plaintiffs filed an Amended Complaint [Doc. No. 95], alleging violations of civil rights under 42 U.S.C. ยงยง 1981, 1982, 1983, 1985, and 1986 (Counts 1-5); bankruptcy fraud (Count 6); violation of the Fair Housing Act (Count 7); violations of the Fair Debt Collection Practices Act (Count 8); RICO violations (Count 9); violation of the Consumer Credit Protection Act (Count 10); violation of the Real Estate Settlement Procedures Act (Count 11); violation of the Home Owner Equity Procedures Act (Count 12); violations of the Federal False Claims Act (Counts 13-17); securities fraud (Count 18); violation of the Minnesota False Claims Act (Count 19); quiet title (Count 20); violations of the United States Constitution (Count 21); adverse possession (Count 22); cancellation of false liens and false interest on real property (Count 23); aiding and abetting (Count 24); civil conspiracy (Count 25); breach of contract (Count 26); tortious interference with business contract (Count 27); unjust enrichment (Count 28); malicious prosecution (Count 29); breach of duty of good faith and fair dealing (Count 30); intentional infliction of emotional distress (Count 31); deceptive trade and unfair business practices (Count 32); and declaratory judgment (Count 33).

On March 17, 2014, the Magistrate Judge recommended that: (1) Defendants' Motion to Withdraw the Reference as to the 2050 Case (the "3108" adversary case) [Doc. No. 121] should be granted; (2) Defendants' Motion to Sever the Bankruptcy Case from the Consolidated Case [Doc. No. 128] should be granted; (3) Defendants' Motion to Withdraw the Reference as to the Eviction Matter, Sever the Eviction Matter from the Consolidated Case, and Remand the Eviction Matter to State Court [Doc. No. 114] should be granted; (4) Defendant Wells Fargo's Motion to Dismiss Plaintiffs' Amended Complaint [Doc. No. 100] should be granted; (5) the Schiller Defendants' Motion to Dismiss Plaintiffs' Amended Complaint should be granted; and (6) Plaintiffs' Motion to Strike under Rule 12(f) and/or Local Rules [Doc. No. 140] should be denied. (Mar. 17, 2014, R&R at 28-29 [Doc. No. 162].)

On April 1, 2014, Plaintiffs filed a Motion for Mandatory Withdrawal of Reference [Doc. No. 164]. Plaintiffs also filed Objections [Doc. No. 163] to the R&R on April 1, 2014, and a corrected set of objections [Doc. No. 167] on April 2, 2014. On April 15, 2014, Defendant Wells Fargo responded to ...


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