United States District Court, D. Minnesota
M Eaton, Esq. and Christensen Law Office PLLC, counsel for
E Sater, Esq., Charles J. Schoenwetter, Esq. and Bowman &
Brooke LLP, counsel for defendants.
S. Doty, United States District Court.
matter is before the court upon the motion to dismiss the
amended complaint by defendants Fifth Third Bancorp and
Freddie Mac. Based on a review of the file, record, and
proceedings herein, and for the following reasons, the court
grants the motion.
mortgage dispute arises out of the foreclosure sale of the
home owned by plaintiffs William and Nancy
Armas. Armas purchased the subject property,
located at 6773 East Shadow Lake Drive, Lino Lakes,
Minnesota, in January 2006. Am. Compl. ¶¶ 4, 13. In
2011, Armas refinanced the original mortgage through a
mortgage loan with defendant Fifth Third Bancorp.
Id. ¶ 14. In 2013, Armas moved to California,
but kept the Minnesota home as a rental property.
Id. ¶¶ 15-16. In July 2015, Fifth Third
contacted Armas and notified him that the payment for that
month was overdue and that the monthly payment had increased
due to a change in his escrow payment amount. Id.
¶ 18. On July 30, Armas made a $2, 500 payment on the
loan, which included the monthly mortgage payment plus a late
fee ($2, 315.68) and an additional $184.32. Id.
¶ 23. Thereafter, Armas made monthly payments of at
least $2, 250, which he believed covered his monthly payment
plus an additional amount to be applied toward the
principal. Id. ¶ 24.
January 15, 2016, one day before the payment was due, Armas
contacted Fifth Third to see how much he owed that month.
Id. ¶ 25. Fifth Third told him that he owed $2,
433.24, but did not inform him that his account was in
arrears. Id. Armas made the January payment in full
and thereafter made monthly payments in the amount of $2, 250
through October 2016. Id. ¶¶ 26-27.
November 2016, Armas contacted Fifth Third to obtain a tax
statement for his 2015 taxes. Id. ¶ 28. Fifth
Third told him that his account was in arrears and that the
house had been sold to defendant Freddie Mac in a foreclosure
sale on May 27, 2016. Id. ¶¶ 29-30, 47.
Fifth Third fully refunded Armas's post-foreclosure
mortgage payments in December 2016 in the amount of $27,
066.76. Id. ¶¶ 31, 50.
Armas had not provided his forwarding address to Fifth Third,
the bank sent the foreclosure notice and related documents to
the Lino Lakes address. Id. ¶¶ 32-33. The
renters apparently did not forward those documents to Armas.
The bank also provided notice of the foreclosure by
advertisement under Minn. Stat. § 508.02. Id.
¶ 47. The notice stated that Armas was $15, 313.44 in
arrears. Id. ¶ 34. The amount was so large
despite Armas's monthly payments because Fifth Third
applied the payments made from September 2015 forward to an
“unapplied funds” or “suspense”
account. Id. ¶ 35. Fifth Third did so because
those payments were less than the full monthly amount due.
Id. ¶ 36. Specifically, in August 2015, the
payments increased from $2, 236.27 to $2, 433.24 per month,
but Armas continued to pay $2, 250 per month. Id.
¶¶ 27, 36-38. Under the terms of the mortgage,
Fifth Third holds insufficient payments in a suspense account
without applying them to the mortgage loan until the bank
receives funds that equal a full mortgage payment.
Id. ¶ 36; Sater Aff. Ex. A § 1. When the
bank receives sufficient funds, the amount due is withdrawn
from the suspense account and applied to the loan. Am. Compl.
¶ 36; Sater Aff. Ex. A § 1.
to Armas, Fifth Third should have withdrawn funds from the
suspense account as soon as there was a sufficient amount to
cover the previous month's mortgage payment, which would
have resulted in a deficit of less than $200 each month
rather than allowing the suspense account to accumulate each
month. Am. Compl. ¶ 40. Armas does not deny, however,
that his account was perpetually in arrears beginning in
September 2015 and was never made current. Id.
19, 2017, Armas filed suit against defendants in Anoka
County, and defendants timely removed. On February 28, 2018,
Armas filed an amended complaint, alleging (1) wrongful
foreclosure; (2) violation of Minnesota's foreclosure by
advertisement statute, Minn. Stat. § 580.02; (3) breach
of the implied covenant of good faith and fair dealing; and
(4) quiet title, Minn. Stat. § 559.01.Defendants now
move to dismiss the amended complaint.
Standard of Review
survive a motion to dismiss for failure to state a claim,
“‘a complaint must contain sufficient factual
matter, accepted as true, to state a claim to relief that is
plausible on its face.'” Braden v. Wal-Mart
Stores, Inc., 588 F.3d 585, 594 (8th Cir. 2009) (quoting
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)).
“A claim has facial plausibility when the plaintiff
[has pleaded] factual content that allows the court to draw
the reasonable inference that the defendant is liable for the
misconduct alleged.” Iqbal, 556 U.S. at 678
(citing Bell Atl. Corp. v. Twombly, 550 U.S. 544,
556 (2007)). Although a complaint need not contain detailed
factual allegations, it must raise a right to relief above
the speculative level. Twombly, 550 U.S. at 555.