Johnson v. Bank of N.Y. Mellon

• Decision Date: 17 January 2023
• Docket Number: 22-cv-2848 (ECT/LIB)
• Parties: Fred Johnson, Plaintiff, v. Bank of New York Mellon, formerly known as The Bank of New York; John Doe; and XYZ Firm, Defendants.
• Court: U.S. District Court — District of Minnesota

1

Fred Johnson, Plaintiff, v. Bank of New York Mellon, formerly known as The Bank of New York; John Doe; and XYZ Firm, Defendants.

No. 22-cv-2848 (ECT/LIB)

United States District Court, D. Minnesota

January 17, 2023

Morgan Smith, Smith & Raver, LLP, Minneapolis, MN, for Plaintiff Fred Johnson.

C Charles Townsend, Akerman LLP, Dallas, TX, and Quin C Seiler, Winthrop & Weinstine, PA, for Defendant Bank of New York Mellon.

OPINION AND ORDER

Eric C. Tostrud United States District Judge.

Since 2016, Plaintiff Fred Johnson^[1] has attempted to halt the foreclosure proceedings on real property initiated by Bank of New York Mellon (“the Bank”), the assignee of the mortgage securing the loan on the property. In this case Johnson claims that the Bank lacks authority to foreclose because the Bank has never proved that it owned the relevant loan. The Bank seeks dismissal of Johnson's Complaint under Federal Rule of Civil Procedure 12(b)(6). The motion will be granted because Johnson's claims are barred by claim preclusion. If that weren't so, the claims would fail on their merits.

I

The property and mortgage. Johnson owns real property at 3535 County Road #44 in Minnetrista, Minnesota, legally described as “Lot 2, Block 1, Smith Hill, according to the recorded plat thereof, Hennepin County, Minnesota” (the “Property”). Compl. [ECF No. 1-1] ¶ 1; see also ECF No. 1-1 Ex. 1 (warranty deed dated November 13, 1997, naming “Frederick Johnson” as Grantee). On November 9, 2005, Johnson executed a note and mortgage in favor of Mortgage Electronic Registration Systems, Inc., promising to repay a $1,500,000 loan to Countrywide Bank, N.A. and granting a lien on the Property. See ECF No. 8 at 40-57 (“Mortgage”). The Hennepin County Recorder recorded the Mortgage on December 29, 2005. Id. Subsequently, the Mortgage was assigned to the Bank, as evidenced by an Assignment of Mortgage recorded on August 30, 2011. See ECF No 1-1 Ex. 11. At some point, Johnson defaulted on the loan, and the Bank began foreclosure proceedings. According to the Bank, Johnson's debt has grown to more than $3,000,000 “due to his multiple defaults and years of litigation stall tactics.” ECF No. 7 at 1. The Property and its Mortgage have been the subject to two prior cases in this District, and a review of those cases informs the analysis of the Bank's motion.

Johnson I. In the first case brought in Hennepin County in 2016 and removed here, Johnson sued the Bank seeking to set aside a foreclosure sheriff's sale of the Property because, Johnson alleged, the Bank failed to comply with certain Minnesota statutory requirements regarding the foreclosure. See Frederick Johnson v. The Bank of NY Mellon, et al., File No. 17-cv-258 (SRN/DTS) (D. Minn.) (“Johnson I”). In particular, Johnson alleged that: (1) the Bank failed to comply with Minn. Stat. § 582.043 because it failed to evaluate Johnson for loss mitigation relief; (2) the Bank owed Johnson attorneys' fees and costs under Minn. Stat. § 582.043 for failing to set aside the sale; and (3) the Bank failed to comply with Minn. Stat. § 580.041, subd. 1b, because it did not serve a “Help for Homeowners in Foreclosure” notice with its communications to Johnson about the foreclosure sale. See Johnson I, ECF No. 1-1. Ultimately, Johnson I settled and, pursuant to the parties' stipulation, the sheriff's sale was rescinded and the claims in the lawsuit dismissed with prejudice. See Johnson I, ECF Nos. 13-14. Judgment was entered on June 26, 2017. Johnson I, ECF No. 15. Both the order dismissing the case and the judgment reflected the parties' stipulation that the Mortgage on the Property “was . . . assigned to Defendant The Bank of New York Mellon FKA The Bank of New York, as Trustee for the Certificateholders of CWBS, Inc., CHL Mortgage Pass-Through Trust 2006-3, Mortgage Pass-Through Certificates, Series 2006-3.” Johnson I, ECF Nos. 14, 15. Johnson did not challenge the assignment to the Bank as part of this first case.

Johnson II. In the second case, Patricia Johnson attempted to void the Mortgage under Minn. Stat. § 507.02 because it conveyed the homestead Property without her signature. See Patricia Johnson v. The Bank of New York Mellon, et. al, File No. 19-cv-1561 (NEB/BRT) (D. Minn.) (“Johnson II”). Though (Frederick) Johnson alone owned the Property prior to the couple's marriage, Patricia alleged that when they married on January 5, 2005, she took a marital interest in the homestead Property. See Johnson II, ECF No. 1. Patricia alleged that she “did not review, approve of, or consent to the [subsequent] Mortgage in any way,” the Mortgage incorrectly described Frederick as “an unmarried man,” and the Mortgage closing agent told Frederick that Patricia's involvement was unnecessary. Id. Patricia did not challenge the assignment to the Bank. This case settled, too. On December 29, 2020, the parties filed a Stipulation by which they agreed, in relevant part:

The Mortgage was assigned to BNYM by assignment of mortgage dated August 22, 2011 and recorded August 30, 2011 with the Hennepin County Recorder as document number A9688116.

The Mortgage is a valid and enforceable mortgage against the entire fee title to the Property as of November 9, 2005 even though Patricia Johnson did not sign the Mortgage. Any interests Patricia Johnson may have in the Property are subject to the Mortgage as of November 9, 2005.

and

The Mortgage can be enforced against the Property by BNYM and its successors and assigns.

See Johnson II, ECF No. 53 ¶¶ 5, 6, 9. All claims in the action were dismissed with prejudice, and judgment was entered on January 11, 2021. Johnson II, ECF Nos. 55, 56.

This case. In this case filed in Hennepin County on October 12, 2022, and removed to this Court, Johnson sued the Bank regarding its noticed October 20, 2022 sheriff's sale of the Property. See ECF Nos. 1, 1-1 ¶¶ 17-18. Johnson primarily challenges the Assignment of Mortgage that resulted in the Bank's claim of ownership over the securitized note and Mortgage on the Property. Id. ¶¶ 20-30. Johnson says that the Bank has ignored numerous requests to provide the Pooling and Servicing Agreement (“PSA”) governing the Mortgage, and that the Bank “obdurately forged ahead without confirming that BNYM is the legal owner of the securitized note and mortgage.” Id. ¶¶ 29-30. Johnson also alleges that the affiant who executed the assignment to the Bank lacked personal knowledge of its contents. Id. ¶¶ 32-33. Accordingly, Johnson alleges that the Bank does not have a right to foreclose on the Property. In Count 1 of the Complaint, Johnson seeks to quiet title. Id. ¶¶ 38-48. Count 2 raises a “slander of title” claim as a result of the Bank's allegedly false statements in published Notice of Foreclosure Sale documents. Id. ¶¶ 49-56. Johnson seeks “an order declaring that Plaintiff has the exclusive right to continue to possess and own the Property and Defendant(s) have no such right to claim possession or ownership of the Property and that Defendant(s) shall remove all clouds on the title of Property and shall cease placing such clouds on the title to the Property,” damages for alleged slander of title, and an award of attorneys' costs and fees. See ECF No. 1-1 at 14-15.^[2]

II

In reviewing a motion to dismiss for failure to state a claim under Rule 12(b)(6), a court must accept as true all of the factual allegations in the complaint and draw all reasonable inferences in the plaintiff's favor. Gorog v. Best Buy Co., 760 F.3d 787, 792 (8th Cir. 2014) (citation omitted). Although the factual allegations need not be detailed, they must be sufficient “to raise a right to relief above the speculative level.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (citation omitted). The complaint must “state a claim to relief that is plausible on its face.” Id. at 570. “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).

Analyzing the current motion requires both a careful review of the filings in this case and certain filings in earlier litigation between Johnson, Johnson's wife, and the Bank. In resolving a Rule 12(b)(6) motion, courts ordinarily do not consider matters outside the pleadings. See Fed.R.Civ.P. 12(d); Zean v. Fairview Health Servs., 858 F.3d 520, 526 (8th Cir. 2017). Courts may, however, “additionally consider matters incorporated by reference or integral to the claim, items subject to judicial notice, matters of public record, orders, items appearing in the record of the case, and exhibits attached to the complaint whose authenticity is unquestioned.” Zean, 858 F.3d at 526 (internal quotation marks and citations omitted). No party has questioned the authenticity of the filings from Johnson I and Johnson II, which are matters of public record. The filings in the earlier litigation are therefore appropriate to consider here.

III

A

Start with claim preclusion. The Bank's primary argument in support of dismissal is that res judicata bars this case based on the judgment in Johnson I and Johnson II. “The preclusive effect of a judgment is defined by claim preclusion and issue preclusion, which are collectively referred to as ‘res judicata.'” Taylor v. Sturgell, 553 U.S. 880, 892 (2008). Res judicata is an affirmative defense that a defendant must plead and prove, but a court may nonetheless dismiss an action on this basis under Rule 12(b)(6) if the complaint (including public records and documents it embraces) establishes that the plaintiff's claims are precluded. C.H. Robinson Worldwide, Inc. v Lobrano, 695 F.3d 758, 763-64 (8th Cir. 2012).

“The law of the forum that...