United States District Court, D. Minnesota
WALTER G. KRAWZA, Plaintiff,
FEDERAL HOME LOAN MORTGAGE CORPORATION, Defendant.
REPORT AND RECOMMENDATION
JANIE S. MAYERON, Magistrate Judge.
This matter came before the undersigned on defendant's 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), Local Rule 72.1, and the Amended Administrative Order issued by Chief Judge Michael Davis on November 6, 2013 [Docket No. 4]. Pursuant to this Court's Order of January 7, 2014 [Docket No. 14], this matter was decided on the parties' written submissions.
Plaintiff seeks to invalidate the foreclosure of the mortgage on his home. Plaintiff asserts five claims against defendant Federal Home Loan Mortgage Corporation ("Freddie Mac"): (1) quiet title to determine adverse claims under Minn. Stat. §599.01;
(2) declaratory judgment; (3) slander of title; (4) damages for loss of possession of his property; and (5) damages for conversion of his personal property.
For the reasons below, the Court recommends that Freddie Mac's Motion to Dismiss be granted and plaintiff's claims be dismissed with prejudice.
The facts bearing on defendant's Motion to Dismiss are as follows. On August 6, 2007, plaintiff executed a note ("Note") and mortgage ("Mortgage") to Homeservices Lending, LLC Series A, d/b/a Edina Realty Mortgage ("Homeservices Lending, LLC") for property located in Dakota County, Minnesota ("Property). Complaint, ¶4 [Docket No. 1], Ex. 1 (Mortgage).
Plaintiff alleged that Freddie Mac acquired an interest in the Mortgage on September 13, 2007, before commencement of the foreclosure by advertisement, but the assignment was not recorded. Id., ¶¶6, 27. In support of this claim, plaintiff attached a screen shot from Freddie Mac's public website stating that Freddie Mac was the owner of his Mortgage and acquired it on September 13, 2007. Id., ¶6, Ex. 2 (screen shot dated March 13, 2013).
Plaintiff pled that Freddie Mac invests in mortgage loans originated by sellers and servicers such as Wells Fargo, Freddie Mac's Seller/Servicer Guides and Custodial Agreement govern the investment relationship, and the Custodial Agreement requires that the Seller/Servicer deliver to the Custodian a duly prepared and executed assignment of the security instrument from the Seller/Servicer to Freddie Mac in recordable form, but not recorded. Id., ¶¶7, 8, Ex. 4 (blank form Custodial Agreement). According to plaintiff, Freddie Mac is in possession of an unrecorded assignment of the mortgage. Id., ¶9.
On August 3, 2007, Homeservices Lending, LLC assigned the Mortgage to Wells Fargo through an assignment signed by Robin Dreyer and Michael Sinclair as Vice Presidents of Loan Documentation. Id., ¶19, Ex. 5 (Assignment of Mortgage). The Assignment was recorded in the Dakota County Recorder's office on September 17, 2007. Id.
On June 1, 2010, China Brown, as Vice President of Loan Documentation for Wells Fargo, executed a Notice of Pendency and Power of Attorney to Foreclose, authorizing the Reiter & Schiller law firm to foreclose on the Property by advertisement. Id., ¶20, Ex. 6 (Notice of Pendency and Power of Attorney to Foreclose). The Notice of Pendency and Power of Attorney was recorded in the Dakota County Recorder's office on June 8, 2010. Id . Plaintiff contended that Brown has been identified as an unauthorized "robo-signer" by McDonnell Property Analytics, which was hired by the Southern Essex District Registry of Deeds, Salem, Massachusetts to audit its files. Id., ¶29; Ex. 11 ("Forensic Examination of Assignments of Mortgage Recorded During 2010 in the Essex Southern District Registry of Deeds" showing the name "China Brown" on a list of robo-signers). Plaintiff asserted that Brown had no factual knowledge of the contents of the Notice of Pendency and Power of Attorney she signed, and therefore the Notice of Pendency and Power of Attorney is void. Id., ¶33.
A sheriff's sale of the Property was conducted on January 5, 2011. Id., ¶21. Reiter & Schiller appeared at the sale and bid the amount allegedly due on the Note, $155, 068.29. Id., ¶21, Ex. 7 (Sheriff's Certificate of Sale and Foreclosure Record).
On February 23, 2011, Wells Fargo assigned its interest in the Property to Freddie Mac through a quit claim deed. Id., ¶22. Thomas Reiter, a named partner at Reiter & Schiller, signed the quit claim deed as attorney-in-fact for Wells Fargo. Id., Ex. 8 (quit claim deed).
Plaintiff alleged the foreclosure was void because Freddie Mac, not Wells Fargo, was the mortgagee of record at the time of the foreclosure. Id., ¶27. Plaintiff further alleged that the foreclosure was void because: (1) Freddie Mac failed to record assignments of the Mortgage before commencing the foreclosure; (2) the published Notice of Foreclosure did not list Freddie Mac as an assignee in violation of Minn. Stat. §580.04; (3) there is no "of record" power of attorney from Freddie Mac, the "actual mortgagee" to Reiter authorizing Reiter to conduct the foreclosure; (4) the Notice of Pendency and Power of Attorney was signed by an individual (Brown) lacking in factual knowledge of its content. Id., ¶¶30-33.
On or about October 17, 2011, Freddie Mac began an eviction action to remove plaintiff from the Property. Id., ¶34, Ex. 12 (eviction complaint). The complaint alleged that the Property had been sold at a sheriff's sale, which plaintiff denied on the ground that the sale was improper. Id., ¶36. On December 7, 2011, the state district court issued a Writ of Recovery and Order to Vacate, requiring plaintiff to vacate the Property. Id., ¶37, Ex. 13 (Writ of Recovery and Order to Vacate). Freddie Mac, through its counsel, notified plaintiff in writing that he had until December 12, 2011, at 1:00 p.m. to remove his possessions from the Property, and failing to do so, the items would be placed in storage and he would be charged for the storage costs. Id., 38, Ex. 14 (letter dated December 9, 2011 to plaintiff from Wilford, Geske & Cook). Plaintiff received a letter dated January 12, 2012, from Wilford, Geske & Cook stating that the statutory 28day storage period for plaintiff's personal possessions was expiring and that if plaintiff wanted his personal possessions he had to contact Barry Cavalancia, a broker, no later than January 19, 2012. Id., ¶39, Ex. 15 (letter from Wilford, Geske & Cook to plaintiff). Plaintiff claimed that he made arrangements to retrieve his possessions, but the broker cancelled the appointment and told plaintiff that he would be given access over a 24hour period before disposing of the property. Id . Plaintiff contended that Freddie Mac and its agents refused his demands for the return of his possessions, beginning on December 12, 2011 and continuing to the date of the Complaint, November 6, 2013. Id., ¶40.
Plaintiff pled the following causes of action:
Count I sought a determination of adverse claims under Minn. Stat. §599.01, et. seq. This Count alleged that in a quiet title action, defendant has the burden of proof, and consequently, defendant must prove its interest in the Property by a preponderance of evidence. Id., ¶¶43-52.
Count II sought a declaratory judgment pursuant to Minn. Stat. §551.01 et. seq. that "Freddie Mac's interest in the Property and/or Mortgage is void and that the foreclosure is void" and that "[p]laintiff remains the fee owner of the [P]roperty." Id., ¶¶54, 55.
Count III alleged slander of title based on defendant's drafting and recording of documents that plaintiff claimed were false and not executed by legally authorized persons, which evidenced a reckless disregard for the truth and that created ...