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Durand v. Bank of America

United States District Court, D. Minnesota

May 30, 2017

Scott Durand and The Estate and Trust of Mary Idella Durand, Plaintiffs,
v.
Bank of America, Countrywide Home Loans, Residential Credit Solutions, Inc., and The Bank of New York as trustee for the Certificateholders of CWMBS, Inc. CHL Mortgage Pass-Through Trust 2007-20, Mortgage Pass-Through Certificates, Series 2007-20, Defendants.

          Todd Murray, Friedman Iverson, for Plaintiffs.

          Curt N. Trisko, The Academy Law Group, P.A., Jared M. Goerlitz, PFB LAW, P.A., Keith S. Anderson, Bradley Arant Boult Cummings LLP, Mark G. Shroeder, Briggs and Morgan, P.A., for Defendants.

          MEMORANDUM OPINION AND ORDER

          Susan Richard Nelson United States District Judge

         This matter is before the Court on Defendants' Joint Motion for Summary Judgment [Doc. No. 69]. For the reasons stated below, Defendants' Motion is granted.

         I. BACKGROUND

         A. Loan and Mortgage Origination

         This lawsuit arises from the circumstances surrounding a loan purportedly obtained by Mary Idella Durand (“Mary”) on August 3, 2007 and the related mortgage (the “Mortgage”) placed on her home in Burnsville, Minnesota (the “Property”). The Mortgage identified the Property as collateral for a promissory note in the amount of $105, 000.00 (the “Note”). (Decl. of Curt Trisko (“Trisko Decl.”) [Doc. No. 72], Ex. A; Decl. of Jennifer Moure (“Moure Decl.”) [Doc. No. 73], Ex. 1.) Of the amount borrowed, $54, 257.38 was used to pay off a previous mortgage on the Property[1] and $47, 106.26 was available for direct disbursal to the borrower. (Aff. of Todd Murray (“Murray Aff.) [Doc. No. 77], Ex. 9 at 34.) According to a disbursal authorization form, purportedly bearing Mary's signature, the funds were disbursed via overnight courier to “JD” at an address in Apple Valley, Minnesota. (Moure Decl., Ex. 2 at 9; Murray Aff., Ex. 3 at 19.) The initials JD apparently signified Jeff Durand (“Jeff”), one of Mary's four children. (See Am. Compl. at ¶¶ 11, 20-27 [Doc. No. 26].)

         The Mortgage was delivered to Mortgage Electronic Registration Systems, Inc. (“MERS”) as nominee for Defendant Countrywide Home Loans (“Countrywide”). (Trisko Decl., Ex. A; Moure Decl., Ex. 1.) Defendant Bank of America, N.A. (“BANA”) is the successor-by-merger to Countrywide and was a servicer of the Mortgage. Defendant Residential Credit Solutions, Inc. (“RCS”) later obtained the Mortgage and serviced it until March 1, 2016. (Aff. of Marlon Frazier (“Frazier Aff.”) at 1 [Doc. No. 74].) On April 5, 2012, the Mortgage was assigned to Defendant Bank of New York Mellon fka The Bank of New York (“BNYM”), as trustee for the Certificateholders of CWMBS, Inc. CHL Mortgage Pass-Through Trust 2007-20, Mortgage Pass-through Certificates, Series 2007-20 (“CWMBS Trust”). (Trisko Decl., Exs. B-1, B-2.) CWMBS Trust, with BYNM serving as trustee, was the last holder of the Mortgage and is the current owner of the Property. (See Aff. of Jared M. Goerlitz (“Goerlitz Aff.”) [Doc. No. 5], Exs. 4, 5, 7, 8, 10.)

         B. Attempted Rescission of the Mortgage

         Plaintiff Scott Sponslier Durand[2] (“Durand”) is another of Mary's children. (Am. Compl. at ¶ 11 [Doc. No. 26].) In September 2009, more than two years after the closing, Durand drafted a letter to BANA on behalf of his mother (the “Rescission Notice”). (First Aff. of Scott Durand (“First Durand Aff.”) [Doc. No. 78-1], Ex. A.) The Rescission Notice alleged that the Mortgage was the result of a fraud wherein Jeff, by virtue of a “relationship” he had with BANA/Countrywide, used the Property as collateral for the Note without Mary's knowledge or consent. (Id.) Notably, Jeff is not a Defendant in this case.

         The Rescission Notice also purported to assert Mary's right to rescind the Mortgage. (Id.) It did not bear Mary's signature, or any other signature, but stated that it was “[d]rafted by Scott Durand.” (Id.) There is no evidence, other than Durand's assertion, that the Rescission Notice was in fact sent to BANA.

         C. The Trust Agreement and Will

         On December 16, 2009-two years after the execution of the Mortgage and shortly after the Rescission Notice was sent-Mary executed a trust agreement (the “Trust Agreement”). (First Durand Aff., Ex. B.) In it, Mary acknowledged the Mortgage, noting “I have lent to my son, Jeffrey Durand, the sum of $105, 000, which has been obtained by placing a mortgage on the homestead.” (Id. at 6.) The document also reflects Mary's understanding that Jeff was responsible for paying the Mortgage's monthly statements. The agreement states that “[i]f Jeffrey fails to pay the monthly payments on the mortgage, the balance that he owes to me (represented by the mortgage balance) shall be immediately due and payable to the trust.” (Id.) Durand believes that the Trust Agreement was binding and legally enforceable. (First Durand Aff. at ¶ 21.)

         Under the terms of the Trust Agreement, Durand held the right to continue residing at the Property after Mary's death, so long as he paid the utilities and insurance and performed necessary maintenance and repairs. (Id.) Upon the sale of the Property, the Trust Agreement directed that the sale proceeds be divided equally among Mary's four children. (Id. at 6-7.) If the balance owed on the Mortgage at the time of the sale was greater than one quarter of the sale price, Jeff was to receive nothing and pay to the Trust the difference between the Mortgage balance and one quarter of the sale price. (Id. at 7.) Otherwise, Jeff's portion of the sale proceeds was to be decreased by the amount remaining on the Mortgage. (Id.)

         The Trust Agreement appointed Mary's daughter, Kim Durand (“Kim”), as trustee. (Id. at 8.) In the event that Kim was unwilling or unable to serve as trustee, the Trust Agreement designated Durand as trustee. (Id.) Mary also executed a last will and testament on December 16, 2009 (the “Will”). (Trisko Decl., Ex. C). Mary passed away in 2012.

         D. The Attempted Modification, Foreclosure, and Postponement

         As a result of a default on the Mortgage, foreclosure proceedings were initiated against the Property in March of 2014. (Goerlitz Aff., Ex. 8 at 3.) On April 18, 2014, Durand was personally served with a Notice of Mortgage Foreclosure Sale dated March 24, 2014 (the “Foreclosure Notice”). (Id., Ex. 10 at 8.) The Foreclosure Notice was also published in local newspapers from April 6, 2014 through May 11, 2014. (Id. at 2.) At the time Durand was served, the foreclosure sale date was set for May 27, 2014. (Id. at 10.)

         RCS's loan servicing records reflect that after Durand was served with the Foreclosure Notice, he contacted RCS to inquire about the possibility of a mortgage modification. (Frazier Aff., Ex. 1 at 4.) On April 14, 2014, Durand requested a financial package for a loan modification and the next day RCS mailed the requested materials to him. (Id.) On a phone call with RCS, Durand acknowledged receipt of the financial package. (Id. at 5.) Durand notified RCS that he intended to apply for a mortgage modification and submit the required documentation. (Id. at 6.) However, the application RCS received on May 13, 2014 was incomplete. (See id.) RCS's records reflect that they attempted to contact Durand regarding the missing documentation, but ultimately never received the paperwork necessary to process Durand's requested mortgage modification. (See Id. at 6-17.)

         Meanwhile, acting on behalf of the Trust, Kim filed an Affidavit of Postponement, dated May 8, 2014 and recorded it in Dakota County on May 12, 2014, thereby postponing the foreclosure sale until October 27, 2014. (Trisko Decl., Ex. G at 1-2; Frazier Aff., Ex. 1 at 7.) Sometime in 2014, Durand obtained legal assistance from Lawrence Maloney, an attorney and foreclosure prevention counselor. Mr. Maloney sent a letter to BANA, dated September 12, 2014, stating that he was “investigating apparent or possible impropriety in connection with the loan, ” requesting certain documentation from BANA, and requesting that BANA investigate the purported fraud by Jeff. (Trisko Decl., Ex. F at 83-84.) There is no response from BANA in the record.

         Durand filed for Chapter 13 bankruptcy on October 24, 2014. (Trisko Decl., Exs. H, I.) As a result, the foreclosure sale was postponed until November 18, 2014. (Frazier Aff., Ex. 1 at 13.) The sale was later postponed to January 6, 2015. (Frazier Aff., Ex. 1 at 17; Compl. [Doc. No. 1-1].) BNYM ultimately bought the Property at the foreclosure sale and held it subject to the statutorily mandated five week redemption period. (Goerlitz Aff., Ex. 10 at 19-20.) However, Durand was unable to raise the funds necessary to redeem the Property and the sale was finalized.

         E. This Lawsuit

         Durand initiated this lawsuit pro se in Minnesota state court on November 17, 2014-asserting numerous claims related to the execution and validity of the Mortgage-on behalf of himself and the “Trust of Mary Idella Durand.”[3] (Compl. at 1 [Doc. No. 1-1].) BANA removed the action to this Court on January 20, 2015. (Notice of Removal [Doc. No. 1-5].) Defendants then moved to dismiss the suit. (Defs.' Joint Mot. to Dismiss [Doc. No. 3].) However, pursuant to a joint stipulation, several of Plaintiffs' original claims were dismissed with prejudice and Defendants withdrew their Joint Motion to Dismiss based on Durand's agreement to amend the Complaint. (See Doc. Nos. 21, 24, 25.)

         While this suit was pending before the Court, Durand filed another complaint pro se in Minnesota state court on June 24, 2015. (See D. Minn. case no. 15-cv-3721 [Doc. No. 1-1].) Substantively, the allegations in the second case are identical to those in the first case, except that the second case omits Count IV and names RCS as the sole defendant. RCS subsequently removed the second case to federal court and it was consolidated with this case. (See Consolidation Order [Doc. No. 55].)

         After securing counsel, Durand filed his Amended Complaint on July 14, 2015. (See Am. Compl.) In it, he asserts six claims: (1) mortgage rescission pursuant to 15 U.S.C. § 1635 (Count I); (2) quiet title (Count II); (3) a request for a writ of mandamus directing the registrar of titles to destroy any relevant encumbrance on the Property (otherwise known as “expungement”) (Count III); (4) “mortgage fraud” by Countrywide (Count IV); (5) negligent misrepresentation by BANA (Count V); and (6) fraud by RCS (Count VI). (See Am. Compl. at ¶¶ 48-93.)

         Defendants now move for summary judgment on all of Durand's claims and filed briefing in support of that motion (See Defs.' Joint Mot. for Summ. J.; Defs.' Mem. in Supp. of Summ. J. (“Defs.' Mem. in Supp.”) [Doc. No. 71]; Defs.' Reply Mem. in Supp. (“Defs.' Reply”) [Doc. No. 80].) Durand opposes Defendants' Motion. (See Pls.' Mem. in Opp. [Doc. No. 76].)

         II. DISCUSSION

         A. Potential Waiver ...


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