Lansing v. Wells Fargo Bank, N.A.

• Decision Date: 05 July 2018
• Docket Number: No. 17-1067,17-1067
• Citation: 894 F.3d 967
• Parties: Scott H. LANSING, Plaintiff-Appellant, v. WELLS FARGO BANK, N.A., successor by merger to Wells Fargo Bank Southwest, N.A., formerly known as Wachovia Mortgage, FSB, formerly known as World Savings Bank, FSB, Defendant-Appellee.
• Court: U.S. Court of Appeals — Eighth Circuit

894 F.3d 967

Scott H. LANSING, Plaintiff-Appellant,

v.WELLS FARGO BANK, N.A., successor by merger to Wells Fargo Bank Southwest, N.A., formerly known as Wachovia Mortgage, FSB, formerly known as World Savings Bank, FSB, Defendant-Appellee.

No. 17-1067

United States Court of Appeals, Eighth Circuit.

Submitted: February 12, 2018

Filed: July 5, 2018

Erik F. Hansen, BURNS & HANSEN, Minneapolis, MN, for Plaintiff-Appellant.

Ashley M. Brettingen, Ashley M. DeMinck, Ellen B. Silverman, HINSHAW & CULBERTSON, Minneapolis, MN, for Defendant-Appellee.

Before SMITH, Chief Judge, MURPHY and COLLOTON, Circuit Judges.^*

COLLOTON, Circuit Judge.

This appeal arises from a third lawsuit between Wells Fargo Bank and Scott Lansing involving foreclosure on Lansing’s property at 12015 Mayflower Circle in Minnetonka, Minnesota. In this case, after Wells Fargo foreclosed on the property, Lansing alleged that the bank violated Minn. Stat. § 582.043 when it continued with foreclosure proceedings after Lansing had submitted an application for a loan modification. Wells Fargo brought a counterclaim against Lansing for breach of a prior settlement agreement, and then moved for judgment on the pleadings. The district court¹ ruled for Wells Fargo, concluding that res judicata barred Lansing’s claims and that Wells Fargo was entitled to judgment as a matter of law on its counterclaim. The district court also denied Lansing leave to amend his complaint, and dismissed Lansing’s complaint with prejudice. Lansing appeals, and we affirm.

I.

In 2004, Lansing executed and delivered a note, secured by a mortgage, to World Savings Bank, FSB, in the amount of $203,500.00. World Savings Bank, FSB, changed its name to Wachovia Mortgage, FSB, and then merged with Wells Fargo in 2009. Under the merger, Wells Fargo acquired the mortgage interest in Lansing’s property. In late 2009, Lansing defaulted under the terms of the note and the mortgage by failing to make monthly payments. Wells Fargo initiated a foreclosure by advertisement, resulting in a sheriff’s sale of the property on August 30, 2011.

After the 2011 foreclosure sale, Lansing sued Wells Fargo in Minnesota state court for alleged violations of Minnesota’s foreclosure statutes and sought to set aside the sale. Wells Fargo removed the case to federal court, and the parties eventually settled the case in April 2013. Under the settlement agreement, which was described on the record at a hearing before a magistrate judge, Wells Fargo agreed to rescind the foreclosure sale in exchange for Lansing’s dismissal of the lawsuit. The parties further agreed to reinstate the previously existing mortgage so that Wells Fargo could proceed with re-foreclosure. Lansing "waive[d] the right to challenge any deficiencies in the future foreclosure."

The magistrate judge noted that it would be "appropriate" for the parties to memorialize their agreement in writing, and said that the court would resolve any future disputes over wording. Thereafter, Lansing affirmed that he understood that the agreement was "a final and fully enforceable settlement even in the absence of signatures." After the hearing, counsel for the parties exchanged drafts of a written settlement agreement, but the parties never signed an agreement.

On June 14, 2013, Wells Fargo commenced a second foreclosure on Lansing’s property by filing a complaint in Minnesota state court. Lansing, represented by counsel, filed an answer on August 2, 2013. The parties engaged in discovery, and on January 3, 2014, Wells Fargo moved for summary judgment. Lansing wrote a letter to the court on January 24, 2014, explaining that his counsel had withdrawn on January 10, 2014, contrary to Lansing’s wishes.

On January 31, 2014, the state court held a hearing on Wells Fargo’s motion for summary judgment. Lansing appeared pro se . On March 20, 2014, the court granted summary judgment for Wells Fargo and awarded it a decree of foreclosure on the property. Wells Fargo then purchased the property at a sheriff’s sale.

Lansing appealed the grant of summary judgment to the Minnesota Court of Appeals. He argued for the first time that Wells Fargo had improperly proceeded with foreclosure, in violation of Minn. Stat. § 582.043, after Lansing submitted a loan modification application. According to Lansing, he faxed Wells Fargo an application on November 21, 2013, at which point Wells Fargo had a legal obligation to cease foreclosure proceedings. The court of appeals rejected Lansing’s argument and affirmed the judgment for Wells Fargo. The court of appeals ruled that Lansing’s claim under § 582.043 was not properly before the court, because Lansing had failed to raise it in the trial court. Alternatively, the court reasoned that there was no evidence in the record that Lansing ever submitted a modification application.

On August 24, 2015, Lansing, acting pro se , commenced this third lawsuit. He alleged, among other things, that Wells Fargo violated Minn. Stat. § 582.043 when it proceeded to seek a foreclosure judgment after receiving Lansing’s loan modification documents. Wells Fargo removed the action to the federal district court and filed a counterclaim for breach of contract. According to Wells Fargo, because Lansing agreed not "to challenge any deficiencies in the future foreclosure," he breached the settlement agreement by opposing the 2013 judicial foreclosure and filing the instant complaint. Wells Fargo moved for judgment on the pleadings. Lansing moved for leave to amend his complaint to allege breach of contract against Wells Fargo on the ground that the bank violated the settlement agreement by taking "bad faith actions" on Lansing’s loan modification requests.

The district court granted judgment on the pleadings for Wells Fargo on Lansing’s claims and Wells Fargo’s counterclaim, denied Lansing leave to amend his complaint, and dismissed Lansing’s complaint with prejudice. The court concluded that res judicata barred Lansing’s claims, that he had violated the April 2013 settlement agreement by continuing to challenge the foreclosure, and that his proposed breach of contract claim was futile. The parties stipulated to no damages on Wells Fargo’s counterclaim, and the district court entered final judgment.

Lansing appeals. We review the district court’s grant of judgment on the pleadings de novo .

Elnashar v. U.S. Dep’t of Justice , 446 F.3d 792, 794 (8th Cir. 2006). "Judgment on the pleadings is appropriate where no material issue of fact remains to be resolved and the movant is entitled to judgment as a matter of law." Faibisch v. Univ. of Minn. , 304 F.3d 797, 803 (8th Cir. 2002). We review the district court’s decision to deny Lansing leave to amend his complaint for abuse of discretion. Sorace v. United States , 788 F.3d 758, 767 (8th Cir. 2015).

II.

Lansing first contends that res judicata does not bar his claim that Wells Fargo violated Minn. Stat. § 582.043 by proceeding with foreclosure despite an application for loan modification. Under Minnesota’s doctrine of res judicata , the disposition of an earlier claim bars the litigation of a subsequent claim where "(1) the earlier claim involved the same set of factual circumstances; (2) the earlier claim involved the same parties or their privies; (3) there was a final judgment on the merits; [and] (4) the estopped party had a full and fair opportunity to litigate the matter." Laase v. County of Isanti , 638 F.3d 853, 856 (8th Cir. 2011) (alteration in original) (quoting Hauschildt v. Beckingham , 686 N.W.2d 829, 840 (Minn. 2004) ). "Res judicata applies equally to claims actually litigated and to claims that could have been litigated in the earlier action." Id. (quoting Brown-Wilbert, Inc. v. Copeland Buhl & Co. , 732 N.W.2d 209, 220 (Minn. 2007) ).

Lansing urges that the first requirement is not met because his claim under Minn. Stat. § 582.043 involves a different set of factual circumstances than the 2013 foreclosure action. He argues that Wells Fargo’s 2013 foreclosure action involved Lansing’s failure to make mortgage payments, while Lansing’s § 582.043 claim involves Wells Fargo’s failure to process his loan modification request and to cease foreclosure proceedings. Lansing asserts that the factual circumstances that gave rise to his § 582.043 claim did not occur until "well after" Wells Fargo initiated the 2013 foreclosure.

We reject this contention because Lansing’s § 582.043 claim is a challenge to the very foreclosure that was the subject of the 2013 civil action. Lansing could have asserted this claim during the 2013 litigation as an affirmative defense to the foreclosure that he now seeks to nullify. We agree with the district court that "Wells Fargo’s right to foreclose on the Property and Lansing’s right to challenge the foreclosure on the Property arose out of the same factual predicates." Both claims arose out of Lansing’s failure to make payments under the terms of the note and mortgage held by Wells Fargo.

Lansing relies on Lundquist v. Rice Memorial Hospital , 238 F.3d 975 (8th Cir. 2001) (per curiam), a case applying federal law, for the proposition that claims arise from different factual circumstances if a second cause of action arises after a first lawsuit is filed. In Lundquist , an employer terminated the plaintiff’s employment after she filed a first lawsuit alleging disability discrimination, and it was not possible for the plaintiff to bring a wrongful termination claim in the first lawsuit. Id. at 978. Here, although Lansing’s proffered defense to foreclosure arose only after Wells Fargo commenced 2013 foreclosure proceedings, the case was still pending when Lansing allegedly requested a loan modification, and Lansing does not explain why he could not have raised the defense before the foreclosure case was resolved. We thus conclude that the first prerequisite for res judicata in Minnesota—that the claims involved the "same set of factual circumstances"—is satisfied here. Laase , 638 F.3d at 856.

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