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Federal Home Loan Mortgage Corp. v. Cardenas

United States District Court, D. Minnesota

September 16, 2014

FEDERAL HOME LOAN MORTGAGE CORPORATION, Plaintiff,
v.
JESUS J. NAVARRO CARDENAS, ALFREDO HERNANDEZ, JOHN DOE, and MARY ROE, Defendants.

Kalli L. Ostlie and Wendy Oien Sanchez, SHAPIRO & ZIELKE, LLP, 12550 West Frontage Road, Suite 200, Burnsville, MN 55337, for plaintiff.

Jesus J. Navarro Cardenas, Alfredo Hernandez, John Doe, and Mary Roe, Defendants.[1]

MEMORANDUM OPINION AND ORDER ADOPTING REPORT AND RECOMMENDATION OF MAGISTRATE JUDGE

JOHN R. TUNHEIM, District Judge.

This case is one of a series of cases involving William B. Butler[2] and arises from an action brought by Plaintiff, Federal Home Loan Mortgage Corporation ("Freddie Mac") against Defendants Jesus J. Navarro Cardenas, Alfredo Hernandez, and John and Mary Roe (collectively, "Defendants"), seeking to evict Defendants from a property that Defendants had mortgaged but which Freddie Mac claims it now owns as a result of foreclosure. Defendants bring counterclaims challenging the eviction on the grounds that the underlying foreclosure on the mortgaged property was invalid. Before the Court are Defendants' objections to the Report and Recommendation ("R&R") of United States Magistrate Judge Jeffrey J. Keyes, in which the Magistrate Judge recommended that the Court abstain from exercising jurisdiction and remand the case to Minnesota state district court. Because the issues involved can be fairly adjudicated at the state court level, the Court will overrule Defendants' objections, adopt the R&R, abstain from exercising jurisdiction, and remand the case to state court.

BACKGROUND

Defendants Jesus J. Navarro Cardenas and Alfredo Hernandez acquired an interest in the real property in question ("the Property") via Warranty Deed dated April 11, 2005. (Answer ¶ 15, Sept. 4, 2013, Docket No. 5.) That same day Defendants executed and delivered a note ("Note") and mortgage to JPMorgan Chase Bank, N.A. ("Chase"). ( Id . ¶ 16.) Though not stated explicitly in the complaint, the circumstances described in the complaint indicate that Defendants defaulted on the mortgage at some point before January 2013. ( See Notice of Removal, Ex. 1 ("Compl.") ¶ 2, Aug. 28, 2013, Docket No. 1 (alleging that the mortgage was foreclosed).) The mortgage was foreclosed upon and the premises were sold by the Sheriff of Ramsey County at public auction on January 22, 2013. ( Id. )

Following the foreclosure and sale of the Property, (Compl., Ex. A at 7)[3] Plaintiff filed an eviction action on August 21, 2013 in Minnesota state district court. (Compl. at 1). Defendants removed to federal court on the basis that the Court has original jurisdiction over the matter under 28 U.S.C. § 1345 because Plaintiff is a federal agency under 12 U.S.C. §1452(f). (Notice of Removal at 2.) Once removed, Defendants filed an answer and counterclaim, seeking to void Plaintiff's claim to possession, void the foreclosure, and void the assignment of the mortgage. ( See Answer ¶¶ 36-49.)

Defendants' counterclaims to the eviction and foreclosure center around the validity of the assignment of the mortgage from Chase to Freddie Mac and Freddie Mac's subsequent foreclosure proceedings. Defendants allege that the assignment of the mortgage from Chase to Freddie Mac was invalid because Chase did not have the legal authority to assign the mortgage. (Answer ¶ 33.) Moreover, they allege that the foreclosure is void because the assignment of the mortgage from Chase to Freddie Mac was not recorded. ( Id. ¶ 35.) In response to the counterclaims, Plaintiff filed a Combined Motion to Dismiss Defendants' Counterclaim and Motion for Summary Judgment. (Mot. to Dismiss Countercl. and Mot. for Summ. J., Sept. 20, 2013, Docket No. 6.)

The Magistrate Judge issued an R&R recommending that the Court abstain from exercising jurisdiction and remand the action to Minnesota state district court. (R&R, Dec. 12, 2013, Docket No. 23.) The Magistrate Judge observed that an eviction action is fundamentally a matter of state law, and the exercise of federal review "would be disruptive of state efforts to establish a coherent policy with respect to a matter of substantial public concern.'" ( Id. at 4, 6 (quoting Colo. River Water Conservation Dist. v. United States, 424 U.S. 800, 814 (1976).) The Magistrate Judge also observed that there is no substantial federal interest or right in the proceedings and that federal courts are not as equipped as state courts to adjudicate dispossessory actions. ( Id. at 6.)

Defendants object to the R&R's recommendation that the Court abstain from exercising jurisdiction over the action. They argue that, because the Court has original jurisdiction over all civil actions in which Freddie Mac is a party under 12 U.S.C § 1452(f), the Court cannot abstain from "[c]ongressionally-mandated federal question jurisdiction." (Objection at 1-3, Dec. 15, 2013, Docket No. 24.) The Court, however, concludes that abstention is appropriate in this situation, and will remand to Minnesota state court over Defendants' objection.

ANALYSIS

I. STANDARD OF REVIEW

Upon the filing of a report and recommendation by a magistrate judge, a party may "serve and file specific written objections to the proposed findings and recommendations." Fed.R.Civ.P. 72(b)(2); accord D. Minn. LR 72.2(b). "The district judge must determine de novo any part of the magistrate ...


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