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Perez v. Bank of America, N.A.

United States District Court, D. Minnesota

May 20, 2014

RENE PEREZ and MARIA LOPEZ, Plaintiffs,
v.
BANK OF AMERICA, N.A. MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC., and MERSCORP, INC., Defendants.

REPORT AND RECOMMENDATION

JANIE S. MAYERON, Magistrate Judge.

This matter came before the undersigned on defendants' Motion to Dismiss [Docket No. 6]. This matter has been referred to the undersigned Magistrate Judge for a Report and Recommendation by the District Court pursuant to 28 U.S.C. § 636(b)(1)(A), (B) and Local Rule 72.1(c). Pursuant to this Court's Order dated September 13, 2013 [Docket No. 12], this Report and Recommendation is being issued based on the parties' written submissions.

Plaintiffs seek to invalidate the foreclosure of the mortgage on their home. Plaintiffs assert three claims against defendants: (1) quiet-title, to determine adverse claims under Minn. Stat. § 559.01; (2) declaratory judgment; and (3) slander of title. For the reasons stated forth below, the Court recommends that defendants' Motion to Dismiss be granted and plaintiffs' claims be dismissed with prejudice.

I. BACKGROUND

On August 16, 2013, plaintiffs, sued defendants Bank of America, N.A., Mortgage Electronic Registration System, Inc., and MERSCORP, Inc. (collectively "defendants") in state court. Notice of Removal, Attach. 1 (Complaint) [Docket No. 1-1]. Defendants removed the suit to federal district court on September 5, 2013. Notice of Removal [Docket No. 1].

The facts bearing on defendants' motion to dismiss are as follows: On August 4, 2003, [1] plaintiffs executed and delivered a note to Home Town Mortgage, Inc. ("Home Town"). See Complaint [Docket No. 1-1], ¶ 6; Affidavit of Mark G. Schroeder [Docket No. 9] ("Schroeder Aff."), Ex. A (Note). On the same day, plaintiffs executed and delivered a Mortgage in favor of Mortgage Electronic Registration System, Inc. ("MERS") as nominee for Home Town. Complaint, ¶ 6, Ex. 1 (Mortgage); Schroeder Aff., Ex. B (same). The Mortgage was recorded with the Scott County Recorder on September 8, 2008. Id . Plaintiffs claimed that Home Town securitized the Mortgage loan and then assigned the securitization rights to Countrywide Home Loans, Inc. ("Countrywide"). See Complaint, ¶ 11.

On February 9, 2006, Home Town drafted an Assignment of Mortgage from MERS, as nominee of Home Town, to Countrywide. Complaint, ¶ 12, Ex. 2 (Assignment of Mortgage); Schroeder Aff., Ex. C (same). Attorney Lawrence Wilford, an attorney with the law firm of Wilford & Geske, P.A., executed the Assignment of Mortgage as the Vice President of the MERS. Id . The assignment was recorded with the Scott County Recorder on February 15, 2006. Id.

On February 10 and 21, 2006, James Geske, an attorney with Wilford & Geske, executed Notices of Pendency and Powers of Attorney empowering Wilford & Geske to foreclose on behalf of Countrywide, which Geske signed as the attorney-in-fact for Countrywide as to the February 21, 2006 Notice of Pendency and Power of Attorney. Complaint, ¶¶ 13, 14, Exs. 3 (2/10/06 NOP/POA), 4 (2/21/06 NOP/POA); Declaration of William Butler [Docket No. 14] ("Butler Decl.") Exs. 3-4 (same).

Plaintiffs alleged that there is no "of-record power" of attorney from Countrywide to Wilford & Geske in violation of Minn. Stat. § 580.05. Complaint, ¶ 15.

On May 21, 2012, the Law firm of Shapiro & Zielke, LLP ("Shapiro") prepared and recorded an Assignment of Mortgage from Countrywide to Bank of America, NA ("BOA"). Id., ¶ 15, Ex. 5 (May 21, 2012 Assignment of Mortgage); Schroeder Aff., Ex. E (same). Lewis Wilson, III, executed the Assignment of Mortgage, as the Assistant Vice President of Countrywide. Id . The assignment was recorded with the Scott County Recorder on May 30, 2012. Id.

On October 22, 2012, BOA recorded a June 5, 2012 Notice of Pendency of Proceeding and Power of Attorney to Foreclose Mortgage with the Scott County Recorder, in which Phiachita Price, Assistant Vice-President of BOA, authorized Shapiro to foreclose the Mortgage by advertisement. See Complaint, Ex. 6 (June 5, 2012 NOP/POA); Schroeder Aff., Ex. F (same).

BOA, through Shapiro, noticed a sheriff's sale for the Property, which was first published on October 25, 2012. Complaint, Ex. 7 (Sheriff's Certificate of Sale and Foreclosure Record); Schroeder Aff., Ex. G (same). Several Notices of Postponement of Mortgage Foreclosure were also published-the last Notice of Postponement was published on March 6, 2013, which noticed the sale for May 9, 2013. Id . The sheriff's sale for the Property occurred on May 9, 2013. Id . Shapiro appeared on behalf of BOA at the sheriff's sale, and exercised the power of the sale clause in the Mortgage by bidding the amount owed to BOA. Id . A Sheriff's Certificate of Sale and the foreclosure record was recorded in the Scott County Office of the Recorder. Id.

Plaintiffs alleged that they did not owe anything at the date of the Sheriff's Sale, as BOA was not the note holder, or servicer acting at the express direction of the note owner on the date of the sheriff's sale. See Complaint, ¶ 17. According to plaintiffs, neither the February 9, 2006 nor the May 21, 2012 Assignments of Mortgage transferred an interest in the Note. Id.

Plaintiffs claimed that on or about April 13, 2011, BOA entered into a Consent Order with the Officer of Comptroller of the Currency in which BOA did not contest that it had engaged in a variety of "unsafe and unsound" banking practices in conducting foreclosures. Id., ¶¶ 22-23.

Plaintiffs contended that the foreclosure in this case was improper because (1) there is no of-record evidence of Wilford's authority to execute the February 9, 2006 Assignment of Mortgage in violation of Minn. §§ 580.05 and 507.413; (2) there is no "ofrecord" evidence that Wilford & Geske was the attorney-in-fact for Countrywide on February 10, 2006, when Wilford & Geske recorded the February 10 and 21, 2006 Notices of Pendency and Powers of Attorney; (3) Lewis Wilson, III did not have the legal authority to execute the May 21, 2012 Assignment of Mortgage at the time it was executed; (4) Phiachita Price, Assistant Vice-President of BOA, did not have the legal authority to empower Shapiro & Zielke to prosecute the foreclose at the time she executed the June 5, 2012 Notice of Pendency and Power of Attorney; and (5) the loan is securitized and there are unrecorded assignments of the Mortgage to and from the parties to the securitization. Id., ¶¶ 26, 27.

Plaintiffs alleged the following causes of action:

In Count I, Determination of Adverse Claims, Minn. Stat. § 559.01, plaintiffs asserted a quiet title action seeking a determination regarding defendants' adverse interest in the Property. Id., ¶¶ 28-38. According to plaintiffs, in a quiet title action, the burden of proof is on the mortgagee asserting an adverse interest in the Property and defendants must prove their title to the Mortgage by preponderance of the evidence. Id., ¶¶ 30-33, 37.

In Count II, plaintiffs sought a declaratory judgment under Minn. Stat. § 555.02 that BOA's interest in the Property and Mortgage is void; the foreclosure is void; and that plaintiffs remain the owners of the Property. Id., ¶¶ 39-41.

In Count III, alleging slander of title, plaintiffs asserted that defendants drafted and recorded documents that were false and not executed by legally authorized persons, and that defendants knew or should have known that the documents were false. Id., ¶¶ 42-46.

As relief, plaintiffs sought: (1) a determination of adverse interest in the Property;

(2) a declaration that the Sheriff's Certificate of Sale, the various assignments of mortgage, notices of pendency, and powers of attorney were all void; (3) a declaration that plaintiffs remained the owner of the Property in fee title; and (4) money damages. Id., Prayer for Relief.

Defendants moved to dismiss the Complaint pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure, contending that plaintiffs' quiet title and slander of title claims failed because their allegations that every relevant mortgage-related document was executed without authority and there are missing mortgage assignments, were conclusory and without support of facts and the law. Id., pp. 10-13, 19. Additionally, defendants submitted that plaintiffs lacked standing to challenge the foreclosure because they were not parties to the assignments, and that plaintiffs' quiet title claim is barred by the doctrine of unclean hands. Id., pp. 12-15. As for the declaratory judgment count, because plaintiffs' substantive claims failed, defendants argued this claim must also be dismissed. Id., pp. 16-17. II. STANDARD OF REVIEW

In considering a motion to dismiss under Rule 12(b)(6), the pleadings are construed in the light most favorable to the non-moving party, and the facts alleged in the complaints must be taken as true. Ashley County, Ark. V. Pfizer, Inc., 552 F.3d 659, 665 (8th Cir. 2009). In addition, a court must afford the plaintiff all reasonable inferences from those allegations. Blanjkenship v. USA Truck, Inc. , 601 F.3d 852, 853 (8th Cir. 2010). At the same time, to withstand a motion to dismiss under Rule 12(b)(6), litigants must properly plead their claims under Rule 8 of the Federal Rules of Civil Procedure and meet the ...


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