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Estate of Lane v. Cmg Mortgage, Inc.

United States District Court, D. Minnesota

May 11, 2015


Andrew B. Kalis, RYAN & BRUCKER, LTD., 201 Minnesota Avenue North, P.O. Box 388, Aitkin, MN 56431; and Carl G. Peterson and Erik F. Hansen, BURNS & HANSEN, 8401 Wayzata Boulevard, Suite 300, Minneapolis, MN 55426, for plaintiff.

Donald Chance Mark, Jr. and Tyler P. Brimmer, FAFINSKI MARK & JOHNSON, PA, 775 Prairie Center Drive, Suite 400, Eden Prairie, MN 55344; and Jason E. Goldstein, BUCHALTER NEMER, 18400 Von Karman Avenue, Suite 800, Irvine, CA 92612, for defendant CMG Mortgage, Inc.

David A. Snieg and Michael A. Ponto, FAEGRE BAKER DANIELS LLP, 90 South Seventh Street, Suite 2200, Minneapolis, MN 55402, for defendant Flagstar Bank.


JOHN R. TUNHEIM, District Judge.

This is an action brought by the Estate of Steven Lane ("the Estate") against Defendants CMG Mortgage, Inc. ("CMG") and Flagstar Bank ("Flagstar"). Flagstar possesses a mortgage against Lane's home in Aitken, Minnesota ("the Property"). In 2013, Steven Lane ("Lane") attempted to refinance that mortgage with CMG but became ill and was unable to complete the transaction himself. Lane had filled out a general power of attorney form in 2009, naming his daughter, Kathleen M. Christy ("Christy"), as his attorney-in-fact. She attempted to close the refinancing using the general power of attorney, but CMG refused, demanding a specific power of attorney. Lane passed away before a specific power of attorney was drafted, leaving the refinancing transaction unfinished and the Estate unable to make the mortgage payments on the Property. In November 2014, Flagstar sold the Property at a foreclosure sale. The Estate now seeks monetary damages and injunctive relief, arguing that CMG violated an agreement to refinance the mortgage.

This matter is now before the Court on both defendants' motions to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6). Because the Court finds that the complaint does not allege any actual wrongdoing against Flagstar, the Court will grant Flagstar's motion and dismiss the complaint as to Flagstar. Accepting as true all facts alleged in the complaint, the Court finds that the Estate's claims against CMG are either barred by statute or do not allege sufficient facts to state a claim on which relief may be granted. Therefore, the Court will also grant CMG's motion to dismiss.



On July 8, 2009, Steven Lane filled out a form to execute a statutory power of attorney naming his children, Corey D. Lane and Kathleen M. Christy, as his attorneys-in-fact. (Notice of Removal, Ex. A ("Compl.") ¶ 8, Aug. 27, 2014, Docket No. 1.) This form, entitled "Statutory Short Form Power of Attorney Minnesota Statutes, Section 523.23, " is included as an exhibit to the Estate's complaint. (Id., Ex. A.) The form includes a field labeled "Specimen Signature of Attorney-in-Fact, " but the field is blank and does not contain any signatures. (Id. at 18.) The field for an optional expiration date is also blank. (Id. at 16.)

The form lists several powers that a Principal may grant to an attorney-in-fact. The first of those powers is "real property transactions." (Id. at 17.) Lane placed an "X" next to this power. (Id. ) He did not limit the power in any way or specify any particular real property transactions on the form. Among other powers, Lane also placed an "X" next to "banking transactions." (Id. )


Lane purchased the Property - located in Aitkin, Minnesota - in 1992. (Compl. ¶ 7.) Flagstar possesses a mortgage against the Property. (Id. ) In 2013, Lane, a veteran of the United States Army, began working to refinance his mortgage loan through the United States Department of Veterans' Affairs ("the VA"). (Id. ¶¶ 9-10.) CMG was to be the lender in the refinancing transaction. (Id. ¶ 11.) If the refinancing had been completed, the monthly mortgage payments for the Property would have been reduced from $1, 228.31 to $846.45. (Id. ¶ 12.)

Lane was never able to close the refinancing. In May 2013, he was diagnosed with esophageal cancer. (Id. ¶ 13.) He planned to undergo surgery in September 2013 and asked Christy, his daughter and attorney-in-fact, to close the refinancing transaction if he was not able to do so himself. (Id. ¶ 14.) Lane underwent surgery on September 23, 2013, suffered various complications, and was sedated for approximately six weeks. (Id. ¶ 15.)

During the period that Lane was sedated following his surgery, a loan officer named Justus Koelliker[1] contacted Christy about the refinancing transaction. (Id. ¶ 16.) Koelliker is described in the complaint as "the loan officer who was helping Lane with his home refinance transaction." (Id. ¶ 16.) In his correspondence with Christy, he is identified as a Mortgage Loan Officer for Flagship Financial Group, LLC, which is a company that serves as "a broker for mortgage loans." (Id., Ex. B at 20.) As such, Koelliker was not an agent of CMG or Flagstar.

On October 6, 2013, Christy initiated email correspondence with Koelliker and updated him on Lane's health condition. (Id., Ex. B at 27-28.) Christy informed Koelliker that she had power of attorney, and inquired whether she could close the refinancing for Lane. (Id., Ex. B at 26-27.) In response, Koelliker requested on October 9 that Christy send him a copy of the power of attorney so that he could forward it on to the lender for approval. (Id. ¶ 18; id., Ex. B at 26.) On October 10, 2013, Koelliker informed Christy that he "received a full approval on the loan from the lender last night" but still needed the power of attorney and repeated his request from the previous day that she send it to him. (Id., Ex. B at 24.) Christy subsequently provided Koelliker with the Statutory Short Form Power of Attorney document that Lane executed in 2009. (Id. ¶ 18.)

Later the same day, Koelliker informed Christy that the lender was requesting an updated power of attorney specific to the transaction. (Id., Ex. B at 23-24.) Koelliker quoted the lender as saying the following: "The power of attorney provided was issued back in 2009. We require current power of attorney, specific to our transaction, with address, CMG as lender, and loan # required. Also, the borrower is retired, why is he using power of attorney, and who are the people that are listed?" (Id. ) In light of CMG's request for a power of attorney specific to the refinancing transaction, Koelliker suggested that Christy have Lane execute a new power of attorney. (Id. ) Christy expressed that she was unwilling to acquire one because she would "look a little shady in the ICU with a notary having [Lane] sign documents" shortly after his surgery. (Id., Ex. B at 22-23.) She did not challenge CMG's refusal to accept the power of attorney she provided at that time. ( See id. ) Instead, she told Koelliker that "[a]s of now, I would say the loan will have to go back to underwriting, " and she would contact him when Lane's health improved enough that he was ready and able to close the loan. (Id., Ex. B at 22-23.) Lane passed away one month later, on November 11, 2013. (Id. ¶ 22.) He did not execute a different power of attorney form prior to his death. (Id. )

On January 9, 2014, two months after her father's death, Christy sent Koelliker an email insisting that the refusal to accept the power of attorney she provided was in violation of Minnesota Statute § 523.23. (Id., Ex. B at 21.) The Estate became unable to afford the monthly payments for the Property. (Id. ¶ 23.) In August 2014, Flagstar initiated a foreclosure proceeding for the Property and subsequently sold the property at a foreclosure sale on November 6, 2014. (Pl.'s Req. for Judicial Notice, Ex. A (Notice of Mortgage Foreclosure Sale), Sept. 26, 2014, Docket No. 22.)


The Estate filed a complaint against CMG and Flagstar on July 15, 2014.[2] (Compl.) The complaint alleges that CMG was not within its rights when it refused the power of attorney Christy provided. ( See id. ) There are eight counts: breach of contract, unjust enrichment, promissory estoppel, specific performance, injunction/injunctive relief, equitable estoppel/declaratory judgment, breach of fiduciary duty, and violation of Minnesota Statute § 523.20, which establishes a cause of action for refusing the authority of an attorney-in-fact to act on a principal's behalf. (Id. ¶¶ 25-107.) The Estate seeks monetary damages, specific performance as to the closing of the refinancing, and an injunction against foreclosure on the mortgage and Property. ( See id. ) On August 27, 2014, CMG removed the action to federal court. (Notice of Removal.)

Flagstar filed a motion to dismiss on September 2, 2014. (Def. Flagstar's Mot. to Dismiss, Sept. 2, 2014, Docket No. 12.) Three days later, CMG also moved to dismiss. (Def. CMG's Mot. to Dismiss, Sept. 5, 2014, Docket No. 15; Def. CMG's Req. for Judicial Notice in Supp. of Notice of Mot. & Mot. to Dismiss the Compl. Pursuant to Federal Rule of Civil Procedure 12(b)(6) ("CMG's Req. for Judicial ...

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