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

• Citation: 914 F.Supp.2d 984
• Decision Date: 17 August 2012
• Docket Number: Civil No. 11–3240 (JRT/TNL).
• Court: U.S. District Court — District of Minnesota
• Parties: Randy S. BRINKMAN, Carol M. Brinkman, Dean J. Welk, Janet N. Rice, James L. Rice, Ge Vang, Melina Yang, Susan Maryann Amadick, Susan L. Grady, Jacob Yang, Kang T. Yang, Mona R. Horejsh, and Stephen Henry Quenroe, Plaintiffs, v. BANK OF AMERICA, N.A.; BAC Home Loans Servicing, LP; Mortgage Electronic Registration Systems, Inc.; Merscorp, Inc.; Wells Fargo Bank, N.A.; The Bank of New York Mellon, formerly known as The Bank of New York; and Peterson, Fram & Bergman, P.A., Defendants.

914 F.Supp.2d 984

Randy S. BRINKMAN, Carol M. Brinkman, Dean J. Welk, Janet N. Rice, James L. Rice, Ge Vang, Melina Yang, Susan Maryann Amadick, Susan L. Grady, Jacob Yang, Kang T. Yang, Mona R. Horejsh, and Stephen Henry Quenroe, Plaintiffs,

v.BANK OF AMERICA, N.A.; BAC Home Loans Servicing, LP; Mortgage Electronic Registration Systems, Inc.; Merscorp, Inc.; Wells Fargo Bank, N.A.; The Bank of New York Mellon, formerly known as The Bank of New York; and Peterson, Fram & Bergman, P.A., Defendants.

Civil No. 11–3240 (JRT/TNL).

United States District Court, D. Minnesota.

Aug. 17, 2012.

William B. Butler, Butler Liberty Law, LLC, Minneapolis, MN, for Plaintiffs.

Alan H. Maclin, Benjamin E. Gurstelle, and Mark G. Schroeder, Briggs & Morgan, P.A., Minneapolis, MN, and Thomas M. Hefferon, Goodwin Procter LLP, Washington, DC, for Defendants, Bank of America, N.A.; BAC Home Loan Servicing, LP; Mortgage Electronic Registration Systems, Inc; Merscorp, Inc; Wells Fargo Bank, N.A., and the Bank of New York Mellon.

Jared M. Goerlitz and Steven H. Bruns, Peterson, Fram and Bergman, P.A., St. Paul, MN, for Defendant, Peterson, Fram & Bergman, P.A.

MEMORANDUM OPINION AND ORDER

JOHN R. TUNHEIM, District Judge.

This case is one of a series of nearly thirty cases filed in this district where the plaintiffs are represented by William B. Butler—in each, the plaintiffs challenge the validity of their mortgages in an attempt to prevent foreclosure.¹ The matter is before the Court on Plaintiffs' motion to remand, Plaintiffs' motion to amend their Complaint, and motions to dismiss brought by Defendants Bank of America, N.A.; Bac Home Loans Servicing, LP; Mortgage Electronic Registration Systems, Inc.; Merscorp, Inc.; Wells Fargo Bank, N.A.; The Bank Of New York Mellon (collectively “Foreclosing Defendants”); and Peterson, Fram & Bergman, P.A (“Peterson”). On July 3, 2012, United States Magistrate Judge Tony N. Leung issued a Report and Recommendation (“R & R”) recommending that the Court deny Plaintiffs' motions to amend and to remand, and grant the Defendants' motions to dismiss. ² (Docket No. 68) Plaintiffs made timely objections to the R & R. Having conducted a de novo review of those portions of the R & R to which Plaintiffs object, see28 U.S.C. § 636(b)(1)(C), D. Minn. L.R. 72.2(b), and having carefully reviewed the submitted materials, the Court overrules the plaintiffs' objections and adopts in part the report ³ and adopts in full the recommendation of the R & R.

Also before the Court is Plaintiffs' motion to certify to the Minnesota Supreme Court the question of whether an eviction proceeding is in rem under Minnesota law. Because an eviction proceeding under Minnesota law is in personam, Plaintiffs' motion to certify question will be denied.

BACKGROUND⁴

Plaintiffs ⁵ brought this action in Ramsey County District Court on October 3, 2011. Plaintiffs allege that “Defendants assert invalid and voidable Mortgages” against them. (Compl. ¶ 18, Oct. 3, 2011, Docket No. 1.) Plaintiffs claim that Peterson is “Defendants' agent for purposes of enforcing falsely declared defaults....” ( Id. ¶ 16.) Plaintiffs originally brought thirteen claims for relief.⁶ Defendants removedthe case to this Court on November 2, 2011, and Peterson and the Foreclosing Defendants separately moved to dismiss. After Defendants filed their motions, Plaintiffs filed a motion to remand (Docket No. 23) and a motion to amend their Complaint (Docket No. 31). Plaintiffs seek to replace all of the previously pled claims with a quiet title claim and declaratory judgment claims against Foreclosing Defendants and a slander-of-tile claim against all Defendants. ( See Proposed Amended Complaint, Mar. 2, 2012, Docket No. 31.)

Shortly before the hearing date in this matter, another court in this district issued its order in another case in which Butler represented the plaintiffs, Welk v. GMAC Mortg., LLC, 850 F.Supp.2d 976 (D.Minn.2012), and it dismissed the bulk of the plaintiffs' claims. When directed by the Court to file supplemental briefing addressing the effect of Welk, Plaintiffs conceded that their original Complaint is almost identical to the one at issue in Welk. ( See Pl.'s Supp. Mem. at 3, May 4, 2012, Docket No. 47.)

Plaintiffs object to the R & R's conclusion that this Court has subject matter jurisdiction because, they maintain, the Minnesota state courts had jurisdiction over the res of at least one plaintiff's property as the result of a pending eviction action. Plaintiffs also move to certify the question of whether an eviction action is in rem, arguing that if an eviction action is in rem, this Court would lack jurisdiction under prior exclusive jurisdiction doctrine. Plaintiffs further object to this Court's exercise of jurisdiction because they claim the R & R incorrectly concluded that Peterson was fraudulently joined (and therefore Plaintiffs' remand motion should be denied and Peterson's motion to dismiss granted). Finally, Plaintiffs object to the R & R's recommendation to grant the Foreclosing Defendants' motion to dismiss because Plaintiffs claim the R & R erred in its determination that their amended claims are based on a show-me-the-note theory.⁷

ANALYSIS

I. SUBJECT MATTER JURISDICTION

A. Prior Exclusive Jurisdiction

The Plaintiffs argue that this Court lacks jurisdiction because of the doctrine of prior exclusive jurisdiction. Under the doctrine of prior exclusive jurisdiction, “when one court is exercising in rem jurisdiction over a res, a second court will not assume in rem jurisdiction over the same res.” Marshall v. Marshall, 547 U.S. 293, 311, 126 S.Ct. 1735, 164 L.Ed.2d 480 (2006). This Court joins the other courts in this district that have held a state eviction action in Minnesota to be an in personam action. Blaylock v. Wells Fargo Bank, N.A., No. 12–693, 2012 WL 2529197, at *7 (D.Minn. June 29, 2012); Pope v. Wells Fargo Bank, N.A., No. 11–2496, 2012 WL 1886493, *5 (D.Minn. May 23, 2012); Olson v. Bank of Am., N.A., No. 11–3710, 2012 WL 1660615, *3 (D.Minn. Apr. 19, 2012). The doctrine, therefore, is inapplicable, and the Court has jurisdiction over this case.

The R & R also found that the prior exclusive jurisdiction doctrine is inapplicable here. ( See R & R at 22–24.) Plaintiffs object to the R & R's conclusion that a state eviction action is not a concurrent proceeding for the purposes of the prior exclusive jurisdiction doctrine. Because the Court finds that a state eviction action is in personam, whether it is a concurrent action is moot, and Plaintiffs' objections will be overruled.

Plaintiffs also move this Court to certify the question of whether an eviction proceeding is in rem to the Minnesota Supreme Court. “Whether a federal court should certify a question to a state court is a matter of discretion.” Johnson v. John Deere Co., 935 F.2d 151, 153 (8th Cir.1991). The Court finds that the character of an eviction action has been long-settled under Minnesota law. See, e.g., Curran v. Nash, 224 Minn. 571, 29 N.W.2d 436, 438 (1947); Whalley v. Eldridge, 24 Minn. 358, 361 (1877) (“But an action to foreclose is not an action in rem. It is true the action has specific property for its subject or object. So has the action of ejectment.... But this does not make them actions in rem.”). Because the issue in this case is not close enough to justify certification, Plaintiffs' motion to certify will be denied.

B. Fraudulent Joinder

Plaintiffs further object to this Court's exercise of jurisdiction because they claim the R & R incorrectly concluded that Peterson was fraudulently joined. In general, for a removed action, complete diversity must exist when the state complaint and the petition for removal are filed. See Knudson v. Sys. Painters, Inc., 634 F.3d 968, 975 (8th Cir.2011). Application of this rule here would mean the Court did not have jurisdiction pursuant to 28 U.S.C. § 1332(a)(1) because at the time of filing and removal, Peterson's citizenship destroyed diversity. The fraudulent-joinder exception, however, prevents a plaintiff from defeating a defendant's right of removal by fraudulently joining a plaintiff. Knudson, 634 F.3d at 976.

“[T]o prove that a plaintiff fraudulently joined a diversity-destroying defendant ... a defendant seeking removal [must] prove that the plaintiff's claim against the diversity-destroying defendant has ‘no reasonable basis in fact and law.’ ” Id. at 977 (citation omitted). “Fraudulent joinder exists if, on the face of plaintiff's state court pleadings, no cause of action lies against the resident defendant.” Anderson v. Home Ins. Co., 724 F.2d 82, 84 (8th Cir.1983) (emphasis added). The R & R concluded that in their original Complaint Plaintiffs failed to state a cause of action against Peterson because each claim was precluded by applicable state precedent, see Filla v. Norfolk S. Ry. Co., 336 F.3d 806, 810 (8th Cir.2003), and Plaintiffs did not specifically object to this determination except for the slander of title claim.⁸ The Court concludes that Plaintiffs' slander of title claim against Peterson is futile because it is premised on a show-me-the-note theory. See Blaylock, 2012 WL 2529197, at *6 (noting deficiencies in a similar slander of title claim); see also Dunbar, 853 F.Supp.2d at 847–48;Karnatcheva v. JPMorgan Chase Bank, N.A., 871 F.Supp.2d 834, 840–41 (D.Minn.2012).⁹ Because all claims against Peterson have no reasonable basis in fact or law, the Court concludes that Peterson was fraudulently joined. Without Peterson—whose citizenship may be disregarded—the Court has diversity jurisdiction over this action pursuant to § 1332. Because jurisdiction is proper, Plaintiffs' remand motion will be denied.

II. MOTIONS TO DISMISSA. Standard of Review

Reviewing a complaint under a Rule 12(b)(6) motion to dismiss, the Court considers all facts alleged in the complaint as true to determine if the complaint states a “claim to relief that is plausible on its face.” See, e.g., Braden...