Butler v. Bank of Am., N.A.

• Decision Date: 24 September 2012
• Docket Number: No. 11–2653.,11–2653.
• Court: U.S. Court of Appeals — Eighth Circuit
• Parties: William B. BUTLER; Mary S. Butler, individually and as representatives for all others similarly situated, Plaintiffs–Appellants v. BANK OF AMERICA, N.A.; BAC Home Loans Servicing, L.P.; Peterson, Fram & Bergman, P.A., Defendants–Appellees.

690 F.3d 959

William B. BUTLER; Mary S. Butler, individually and as representatives for all others similarly situated, Plaintiffs–Appellants

v.BANK OF AMERICA, N.A.; BAC Home Loans Servicing, L.P.; Peterson, Fram & Bergman, P.A., Defendants–Appellees.

No. 11–2653.

United States Court of Appeals,

Eighth Circuit.

Submitted: May 17, 2012.

Filed: Aug. 27, 2012.

Rehearing and Rehearing En Banc Denied Sept. 24, 2012.^*

William B. Butler, Minneapolis, MN, for appellants.

Mark G. Schroeder, Minneapolis, MN, Thomas M. Hefferon, Washington, DC, for appellees Bank of America, N.A. and BAC Home Loans Servicing, L.P.

Jared M. Goerlitz, St. Paul, MN, for appellee Peterson, Fram & Bergman, P.A.

Before RILEY, Chief Judge, BYE and MELLOY, Circuit Judges.

BYE, Circuit Judge.

Mary and William Butler (“the Butlers”) brought this lawsuit in Minnesota state court challenging the foreclosure of the mortgage on their home. The complaint named as defendants Bank of America, N.A., BAC Home Loan Servicing (collectively, “the Bank Defendants”), and the law firm of Peterson, Fram, and Bergman, P.A. (“PFB”). The Bank Defendants removed the case to federal court and filed a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), as did PFB. The district court ¹ granted the motions to dismiss for failure to state a claim, and the Butlers timely appealed. We affirm.

I

On October 6, 2006, the Butlers borrowed $280,000 from Marshall & Isely Bank for the purpose of purchasing a home in Hennepin County, Minnesota (“the property”). The Butlers signed a note promising to repay the loan and executed a mortgage pledging the property as security for their promise to repay. Mortgage Electronic Systems, Inc. (“MERS”) was designated as the mortgagee and nominee for the lender. The mortgage provided that if the Butlers defaulted on their note, the lender “may require immediate payment in full ... and may invoke the power of sale and any other remedies permitted by [a]pplicable [l]aw.” Appellant's App. at 190.

On February 16, 2010, BAC Home Loan Servicing, as the servicer of the mortgage and note on behalf of the note holder, sent the Butlers a “Notice of Intent to Accelerate,” informing the Butlers the loan was in serious default. The notice further informed the Butlers that unless the arrearage was paid in full within one month, the lender would initiate a foreclosure by advertisement. The Butlers did not pay.

On April 19, 2010, MERS assigned the mortgage to BAC Home Loan Servicing. The assignment was recorded on May 19, 2010. On the same day, PFB, acting as counsel for BAC Home Loan Servicing, issued a notice of pendency, formally announcing its intent to initiate a foreclosure by advertisement proceedings on the mortgage. The foreclosure was indeed initiated and was completed by a valid sheriff's sale on July 23, 2010, at which time BAC Loan Servicing took title to the property.

On January 21, 2011, the Butlers filed the instant action in Minnesota state court challenging the validity of the foreclosure on the property.² The Butlers brought the action on their own behalf and on behalf of a putative class of “all individuals who initiated mortgage loans with Countrywide and whose loans were subsequently allegedly acquired by [Bank of America].” Complaint ¶¶ 93–98. The complaint enumerated sixteen causes of action: (1) “The Mortgage [is] Invalid and Unenforceable;” (2) “Slander of Title;” (3) “Defendants are Not Holders in Due Course of the Original Note;” (4) “Due Process Violation;” (5) “Defendants Do Not Have Legal Standing to Foreclose [the] Mortgage;” (6) “Defendants are Not Real Parties in Interest;” (7) “Fraud;” (8) “Negligent Misrepresentation;” (9) “Unjust Enrichment;” (10) “Declaratory Judgment—Original Note is Void as Negotiable Instrument;” (11) “Equitable Estoppel;” (12) “Qui Tam—Private Attorney General Enforcement of Minn.Stat. §§ 357.18, 508.82, 508A.82;” (13) “Third Party Beneficiary;” (14) “Accounting;” (15) “Class Action Allegations;” and (16) “Demand to Exhibit the Original Note.”

The Bank Defendants removed the case to federal court, and subsequently filed a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim upon which relief can be granted. PFB also moved to dismiss or, in the alternative, moved for a more definite statement. The Butlers opposed the respective motions and filed a motion to remand the case to state court. On July 13, 2011, the district court issued a memorandum opinion and order denying the Butlers' motion to remand and dismissing the complaint in its entirety, with prejudice. The district court explained all sixteen causes of action asserted in the complaint were premised on a single theory—the theory that the foreclosure of the property is invalid because the entity holding the mortgage, BAC Home Loan Servicing, does not also hold the promissory note ( i.e., the “show-me-the-note” theory). Observing Minnesota law clearly forecloses this argument, the district court dismissed the claims against the Bank Defendants. Further, because the complaint failed “to identify a single factual allegation of wrongdoing on behalf of” PFB, the district court dismissed the Butlers' claims against the law firm. The Butlers timely appealed.

II

We review de novo the district court's grant of a motion to dismiss an action for failure to state a claim under Rule 12(b)(6), taking the factual allegations in the complaint as true and affording the non-moving party all reasonable inferences from those allegations. Palmer v. Ill. Farmers Ins. Co., 666 F.3d 1081, 1083 (8th Cir.2012).

On appeal, the Butlers first challenge the dismissal of their claims against PFB, asserting the complaint sufficiently alleged facts tending to show PFB committed fraud. We disagree. The complaint references PFB twice: once in the caption of the lawsuit, as a named defendant, and once in paragraph 20, which in its entirety states: “Peterson, Fram & Bergman, P.A. (“PFB”) is a law firm with principal offices located at Suite 800, 55 East Fifth Street, St. Paul, Minnesota 55101.” The complaint does not set forth any allegations of wrongdoing on the part of PFB and we decline the Butlers' invitation to read certain paragraphs in the complaint, which allege, generally, that defendants recorded documents containing materially false information and falsely represented the status and validity of the mortgage, as implicating fraud on the part of PFB. See Appellant's Br. at 15 (referencing paragraphs 27–32 and 54–59 of the complaint). Such general allegations are not only insufficient to state a claim for relief that is plausible on its face, see Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009) (stating that although a complaint need not contain “detailed factual allegations” to withstand dismissal, it must contain “more than an unadorned, the-defendant-unlawfully-harmed-me accusation[s]”), but are also utterly inadequate to meet the requirement of pleading fraud with particularity, see BJC Health Sys. v. Columbia Cas. Co., 478 F.3d 908, 917 (8th Cir.2007) (explaining a party alleging fraud must plead “such matters as the time, place and contents of false representations, as well as the identity of the person making the misrepresentation and what was obtained and given up thereby”). We therefore conclude that the lack of any factual allegations regarding PFB renders the Butlers' complaint deficient and the district court did not err in dismissing it for failure to state a claim.

The Butlers next challenge the district court's dismissal of their claims against the Bank Defendants, asserting the district court erroneously characterized their claims as a single “show-me-the-note” claim rather than as a quiet title action. We have carefully reviewed the factual allegations in the Butlers' complaint and have cautiously examined each of the sixteen causes of action the complaint advances. We find no merit to any of them. Instead, we agree with the district court the Butlers' numerous causes of action are simply an attempt to invalidate the foreclosure on the property based on the flawed theory the mortgage and the foreclosure of that mortgage are...