Litterer v. Rushmore Loan Management Services, LLC, 011018 MNSC, A17-0472

Docket Nº:A17-0472
Opinion Judge:HUDSON, Justice.
Party Name:Thomas J. Litterer and Mary L. Litterer, Appellants, v. Rushmore Loan Management Services, LLC as Servicing Agent for U.S. Bank National Association as Legal Title Trust for Truman 2012 S.C. Title Trustand U.S. Bank National Association as Legal Title Trust for Truman 2012 S.C. Title Trust, Respondents.
Attorney:John R. Neve, Evan H. Weiner, Neve Webb, PLLC, Edina, Minnesota, for appellants. Kalli L. Ostlie, Shapiro & Zielke, LLP, Burnsville, Minnesota, for respondents.
Case Date:January 10, 2018
Court:Supreme Court of Minnesota
 
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Thomas J. Litterer and Mary L. Litterer, Appellants,

v.

Rushmore Loan Management Services, LLC as Servicing Agent for U.S. Bank National Association as Legal Title Trust for Truman 2012 S.C. Title Trustand U.S. Bank National Association as Legal Title Trust for Truman 2012 S.C. Title Trust, Respondents.

No. A17-0472

Supreme Court of Minnesota

January 10, 2018

         Certified Question United States Court of Appeals for the Eighth Circuit Office of Appellate Courts

          John R. Neve, Evan H. Weiner, Neve Webb, PLLC, Edina, Minnesota, for appellants.

          Kalli L. Ostlie, Shapiro & Zielke, LLP, Burnsville, Minnesota, for respondents.

         SYLLABUS

         Applying the excusable neglect standard of Minnesota Rule of Civil Procedure 6.02 to the lis pendens deadline contained in Minn. Stat. § 582.043, subd. 7(b) (2016), would alter the substantive rights provided by the statute. Therefore, Rule 6.02 may not be applied to extend the deadline.

         Certified question answered in the negative.

          OPINION

          HUDSON, Justice.

         In this mortgage foreclosure dispute, the United States Court of Appeals for the Eighth Circuit asks us to decide whether the lis pendens deadline in Minn. Stat. § 582.043, subd. 7(b) (2016), may be extended upon a showing of excusable neglect under Minn. R. Civ. P. 6.02. Appellants, Thomas J. Litterer and Mary L. Litterer, argue that the lis pendens recording requirement is procedural in nature, and thus the excusable neglect provision of Rule 6.02 may be used to extend the time limit for recording a lis pendens. Respondents, Rushmore Loan Management Services, LLC and U.S. Bank National Association, take the opposite position, contending that the lis pendens requirement is substantive in nature, and therefore Rule 6.02 may not be used to extend the deadline for recording a lis pendens. We hold that applying Rule 6.02 to extend the lis pendens deadline is prohibited because to do so would impermissibly modify the substantive rights provided by the statute. We therefore answer the certified question in the negative.

         FACTS

         This case requires us to determine the legal relationship between the recording deadline for a lis pendens in Minn. Stat. § 582.043, subd. 7(b), and the excusable neglect provision in Minn. R. Civ. P. 6.02.

         Enacted by the Legislature in 2013, Minn. Stat. § 582.043 (2016) requires mortgage servicers to notify mortgagors of loss mitigation options before referring the mortgage for foreclosure. Minn. Stat. § 582.043, subds. 3, 5. The statute prohibits "dual tracking, " in which a servicer refers a mortgage to an attorney for foreclosure while simultaneously processing a loss mitigation application. Minn. Stat. § 582.043, subd. 6. The statute also creates a cause of action for mortgagors to enjoin or set aside a foreclosure sale based on a violation of section 582.043. Minn. Stat. § 582.043, subd. 7(a). For an action under subdivision 7(a), "[a] lis pendens must be recorded prior to the expiration of the mortgagor's applicable redemption period, " Minn. Stat. § 582.043, subd. 7(b).1 Failure to record a lis pendens prior to this deadline "creates a conclusive presumption that the servicer has complied with this section." Id.

         The relevant facts of this case are undisputed. Appellants, Thomas J. Litterer and Mary L. Litterer ("Litterers"), financed the purchase of their home in 2004 with a loan from Wells Fargo secured by a mortgage. The Litterers began to have trouble making the payments on their loan in late 2011, when Thomas Litterer lost his job. For more than two years, the Litterers sought to either modify their mortgage or enter into a repayment plan with their mortgage servicer. During this time, their mortgage was transferred from Wells Fargo to U.S. Bank. U.S. Bank eventually transferred the servicing of the loan to Rushmore Loan Management Services, LLC ("Rushmore"). The Litterers repeatedly completed the required applications and submitted the documentation Rushmore told them was needed for a loan modification. Throughout the application process, Rushmore gave the Litterers conflicting information regarding the status of the mortgage modification application and the appropriate person to contact at Rushmore, and was frequently nonresponsive to the Litterers. After receiving erroneous and conflicting information from different Rushmore agents, the Litterers were told that their modification was denied, and that they could not appeal the denial, even if the denial...

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