Otremba v. CitiMortgage, Inc., Civil No. 13-871 (JRT/HB)
| Decision Date | 16 September 2014 |
| Docket Number | Civil No. 13-871 (JRT/HB) |
| Parties | GERALD M. OTREMBA and JULIE M. OTREMBA, Plaintiffs, v. CITIMORTGAGE, INC. and FEDERAL HOME LOAN MORTGAGE CORPORATION, Defendants. |
| Court | U.S. District Court — District of Minnesota |
Jonathan L. R. Drewes and Caitlin Guilford, DREWES LAW, PLLC, 1516 West Lake Street, Suite 300, Minneapolis, MN 55408, for plaintiffs.
Gerald G. Workinger, Jr. and Kevin T. Dobie, USSET, WEINGARDEN & LIEBO, PLLP, 4500 Park Glen Road, Suite 300, Minneapolis, MN 55416, for defendants.
Plaintiffs Gerald M. Otremba and Julie M. Otremba bring this action against Defendants CitiMortgage, Inc. ("CitiMortgage") and Federal Home Loan Mortgage Corporation ("Freddie Mac"), alleging that the foreclosure sale of their home was invalid. The Court previously dismissed without prejudice Plaintiffs' claims for violation of Minnesota Statutes §§ 580.03 and 580.07 and for quiet title because Plaintiffs' allegations that CitiMortgage failed to properly publish or mail notice of the foreclosure were insufficiently specific. Plaintiffs have since amended their complaint with regard to two of those counts and Defendants again move to dismiss, or, in the alternative, for summary judgment. Based on the Amended Complaint's amended allegations that CitiMortgagepublished notice of the foreclosure in a newspaper that did not provide sufficient notice to the relevant area and that CitiMortgage failed to mail notice of the sale's postponement to the occupants, the Court will deny the motion to dismiss the claims under Minn. Stat. § 580.03 and Minn. Stat. § 580.07.
The present action involves a house located in Elko, Minnesota, ("the Property") which Plaintiffs allege they possess and occupy as their principal place of residence. ( CitiMortgage obtained an assignment of a mortgage on the Property, which was recorded on January 17, 2012. (Id. ¶; 8.)
Plaintiffs allege that CitiMortgage attempted to foreclose on the Property, ultimately holding a sheriff's sale on June 5, 2012. (Id. ¶ 9.) Notice of the foreclosure appeared in the Belle Plaine Herald newspaper. (Id. ¶ 13.) Although originally scheduled for March 13, 2012, the foreclosure sale was later postponed to June 5, 2012. (Id. ¶ 27.) Plaintiffs allege that they did not receive notice of the postponement through first-class mail, as required by Minn. Stat. § 580.07, and that they continued to receive other mail during the time period. (Id. ¶¶ 28-30.) Plaintiffs thus allege the notice was not sent. (Id. ¶ 31.) On June 5, 2012 CitiMortgage purchased the Property for $363,759.71 at the sale, which was subsequently recorded. (Id., Ex. A at 2-3.)1
Plaintiffs' original complaint, which Defendants removed to this court on April 15, 2013, brought five claims against Defendants. First, Plaintiffs alleged that Defendants violated Minn. Stat. § 580.05 by publishing the Notice of Pendency to Foreclose Mortgage before executing the Power of Attorney to Foreclose. (Compl. ¶ 13.) Second, they alleged that the publication of the notice of sale failed to meet the requirements of Minn. Stat. §§ 580.03 and 331A.03 because "[t]he Belle Plaine Herald is not sufficiently circulated in Elko" and "did not provide sufficient notice to the people and area affected by the sale." (Id. ¶¶ 20-21.) Third, they alleged that Defendants failed to send notice of the postponement of the sale to the Plaintiffs by mail, as required by Minn. Stat. § 580.07. (Id. ¶ 26.) Finally, Plaintiffs brought claims for quiet title and slander of title, arguing that Defendants wrongfully claimed to have an interest in the Property. (Id. ¶¶ 29-46.)
After Defendants moved to dismiss, the Court dismissed with prejudice Plaintiffs' power of attorney claim (Count I) and slander of title claim (Count V). Otremba v.CitiMortgage, Inc., Civ. No. 13-871, 2013 WL 6388461, at *6 (D. Minn. Dec. 6, 2013). The Court dismissed without prejudice Plaintiffs' claims regarding the validity of the publication (Count II), the mailing of the notice of postponement (Count III), and quiet title (Count IV). Id. The Court reasoned that the claims regarding the validity of the publication were merely a formulaic recitation of the elements and required more factual allegations to show that the Belle Plaine Herald is not likely to give sufficient notice. Id. at *4. For Count III, the Court recognized there is little a plaintiff can plead regarding whether or not a letter was mailed, but noted that Plaintiffs had not alleged any fact to support their allegation that Defendants failed to mail the notice of postponement. Id. at *5. Indeed, Plaintiffs had not even alleged that they did not receive the letter. Id.
Plaintiffs subsequently filed an Amended Complaint addressing Counts II and III.2 To support their claim regarding the validity of the publication, Plaintiffs now allege that the Belle Plaine Herald provided insufficient notice because the paper generally focuses on local events concerning Belle Plaine and devotes one section exclusively to Belle Plaine news. (Am. Compl. ¶¶ 14-15). Plaintiffs allege that other legal newspapers are geographically closer to Elko than the Belle Plaine Herald and that gas stations within a few miles of the Property offer for sale several legal newspapers, but not the Belle Plaine Herald. (Id. ¶¶ 19-20.) Finally, they allege that bidders would expect to look for a notice of sale in a newspaper serving the area in which the Property is located. (Id. ¶ 22.) Tosupport their claim regarding the mailing of the notice of postponement, Plaintiffs now allege they continued to receive first-class mail during the relevant time period, but did not receive a notice of postponement. (Id. ¶¶ 29-30.)
Defendants have again moved to dismiss these claims,3 arguing Plaintiffs' Amended Complaint largely repeats the allegations dismissed in their original complaint.(Mem. in Supp. of Mot. to Dismiss First Am. Compl. at 11, Jan. 21, 2014, Docket No. 23.) Defendants also argue that the Sheriff's Certificate of Sale is prima facie evidence that the foreclosure was valid such that both of Plaintiffs' claims fail as a matter of law. (Id at 8.) Specifically with regard to Plaintiffs' claim under Minn. Stat. § 580.03, Defendants argue that the qualifications of other newspapers do not affect whether the Belle Plaine Herald is also a qualified newspaper. (Id. at 12.) They also argue that Plaintiffs do not have standing to bring a claim challenging the validity of the publication because the statute requiring publication of the sale was not intended to benefit homeowners. (Id. at 12-13.) With regard to mailing the notice of postponement, Defendants argue the notice was sent and that Minn. Stat. § 580.07 does not require the notice to be received. (Id. at 8.)
Reviewing a complaint under a Rule 12(b)(6) motion to dismiss, the Court considers all facts alleged in the complaint as true, and construes the pleadings in a light most favorable to the non-moving party. See Braden v. Wal-Mart Stores, Inc., 588 F.3d 585, 594 (8th Cir. 2009). To survive a motion to dismiss, a complaint must provide more than "'labels and conclusions' or 'a formulaic recitation of the elements of a cause of action.'" Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)). That is, to avoid dismissal, a complaint must include "sufficient factual matter, accepted as true, to 'state a claim to relief that isplausible on its face.'" Id. (quoting Twombly, 550 U.S. 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." Id. "Where a complaint pleads facts that are merely consistent with a defendant's liability, it stops short of the line between possibility and plausibility," and therefore must be dismissed. Id. (internal quotation marks omitted). In reviewing a motion to dismiss, "the court generally must ignore materials outside the pleadings, but it may consider some materials that are part of the public record or do not contradict the complaint, as well as materials that are necessarily embraced by the pleadings." Porous Media Corp. v. Pall Corp., 186 F.3d 1077, 1079 (8th Cir. 1999) (citations and internal quotation marks omitted).
Defendants argue that the presence of a Sheriff's Certificate of Sale provides prima facie evidence that the foreclosure was valid such that Plaintiffs' claims fail as a matter of law. See Minn. Stat. § 580.19 (). Given that this is the pleading stage, however, prima facie evidence is not dispositive of Plaintiffs' claims. Although Minnesota courts have not had many opportunities to determine what showing is sufficient to rebut the presumption created by the Sheriff's Certificate, as explained below the Court finds that the Amended Complaint adequately alleges violations of Minnesota's foreclosure procedures which, if true, would rebut this presumption ofvalidity. Cf. Walsh v. U.S. Bank, N.A., No. A13-0742, 2013 WL 6050427, at *3 (Minn. Ct. App. Nov. 18, 2013), ( that where "the complaint includes allegations contrary to the prima facie evidence provided by the sheriff's certificate," the "sheriff's certificate cannot be used as an alternative basis to show proper service" or as a basis to dismiss the action) review granted (Jan. 21, 2014). The Court will thus not dismiss the claims under Minn. Stat. §§ 580.03 and 580.07 on this ground.
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