Ruiz v. 1st Fid. Loan Servicing, LLC, A11–1081.
| Citation | 829 N.W.2d 53 |
| Decision Date | 17 April 2013 |
| Docket Number | No. A11–1081.,A11–1081. |
| Parties | Doris RUIZ, Respondent, v. 1ST FIDELITY LOAN SERVICING, LLC, Appellant. |
| Court | Supreme Court of Minnesota (US) |
OPINION TEXT STARTS HERE
Syllabus by the Court
Under Minn.Stat. § 580.02 (2012), all assignments of a mortgage must be recorded before the mortgagee begins the process of foreclosure by advertisement. Absent strict compliance with this requirement, a foreclosure by advertisement is void.
Jonathan L.R. Drewes, Michael J. Wang, Drewes Law, PLLC, Minneapolis, MN, for respondent.
Eric D. Cook, David R. Mortensen, Christina M. Weber, Wilford, Geske & Cook, P.A., Woodbury, MN, for appellant.
Kevin J. Dunlevy, Michael E. Kreun, Beisel & Dunlevy, P.A., Minneapolis, MN, for amici curiae Minnesota Land Title Association, the Minnesota Bankers Association, and the Minnesota Association of Realtors.
John M. Wendland, Christopher K. Loftus, Minnesota Credit Union Network, Saint Paul, MN, for amicus curiae Minnesota Credit Union Network.
We consider in this case whether a foreclosure by advertisement initiated by appellant 1st Fidelity Loan Servicing, LLC (1st Fidelity), to collect the debt secured by a mortgage on the home of respondent Doris Ruiz (Ruiz) resulted in a valid foreclosure despite 1st Fidelity's failure to comply with certain statutory requirements. The district court granted summary judgment in favor of 1st Fidelity on the ground that 1st Fidelity had substantially complied with the relevant statutes. The court of appeals reversed and remanded the case to the district court, concluding that Minnesota's foreclosure by advertisement statutes require strict compliance and that a foreclosing party's failure to strictly comply renders the foreclosure void. For the reasons addressed below, we conclude that a party must strictly comply with Minn.Stat. § 580.02(3) (2012), which requires that all assignments of a mortgage be recorded before a party may begin a foreclosure by advertisement. Because 1st Fidelity did not strictly comply with section 580.02(3), we affirm the decision of the court of appeals and remand to the district court for further proceedings.
In 2005, appellant Doris Ruiz executed a promissory note payable to Chase Bank, NA, and a mortgage deed on a duplex located in Minneapolis to secure the indebtedness under the note. The mortgage deed was recorded by the Hennepin County Recorder in August 2005. In May 2006, the original lender, Chase Bank, NA, assigned the mortgage to JP Morgan Chase Bank, NA. This first assignment was recorded in June 2006 by the Hennepin County Recorder. Ruiz defaulted under the terms of the note and mortgage in September 2008. A second assignment of the mortgage was executed in September 2009. The second assignment, which was recorded in November 2009, listed as the assignee “1st Fidelity,” rather than “1st Fidelity Loan Servicing, LLC.” In March 2010, 1st Fidelity sent Ruiz a demand letter. When Ruiz did not respond or cure the default, 1st Fidelity commenced proceedings to foreclose the mortgage by advertisement.
A foreclosure by advertisement proceeding involves the publication and recording of various notices. See Minn.Stat. ch. 580 (2012). On May 18, 2010, 1st Fidelity published the first notice of foreclosure sale and recorded a notice of pendency of foreclosure. In addition, a third assignment was recorded. “JP Mortgage [sic] Chase Bank, NA” is listed as the assignor and “1st Fidelity Loan Servicing, LLC” is listed as the assignee. The law firm representing 1st Fidelity hand-delivered the third assignment and the notice of pendency to the Hennepin County Recorder on May 14, 2010. But this third assignment and the notice of pendency were not recorded until May 18, 2010.
1st Fidelity served Ruiz with a notice of foreclosure sale and several other notices required by Minn.Stat. § 580.03. Ruiz then served and filed an affidavit of postponement, which postponed the original foreclosure sale date for five months but reduced the redemption period from six months to five weeks. SeeMinn.Stat. § 580.07, subd. 2. 1st Fidelity purchased the property at the foreclosure sale on November 30, 2010. Ruiz failed to redeem the property.
Ruiz subsequently filed a complaint alleging four claims: (1) failure to strictly comply with the assignment recording requirement, Minn.Stat. § 580.02(3); (2) failure to strictly comply with the notice of pendency of foreclosure requirement, Minn.Stat. § 580.032, subd. 3; (3) failure to strictly comply with the pre-foreclosure counseling notice requirement, Minn.Stat. § 580.021, subd. 2; and (4) wrongful eviction, in violation of Minn.Stat. §§ 557.08–.09 (2012). Ruiz sought both a declaration that the sheriff's sale was null and void and the recovery of monetary damages. Ruiz subsequently amended the complaint to include a quiet-title action, Minn.Stat. § 559.01 (2012).
1st Fidelity moved to dismiss Ruiz's complaint for failure to state a claim on which relief can be granted and, alternatively, for summary judgment. The district court granted 1st Fidelity summary judgment, concluding that the second assignment transferred title to the property to 1st Fidelity before the first publication of the notice of sale, and that there was no genuine issue of material fact as to whether 1st Fidelity provided Ruiz the pre-foreclosure counseling notice. The district court also observed that, under Minn.Stat. § 582.25 (2012) (the Curative Act), a notice of pendency recorded after the date of first publication of the notice of foreclosure sale is an issue “of less concern.” Finally, holding that a substantial-compliance standard applies to the statutory requirements at issue, the district court concluded that 1st Fidelity had at least substantially complied with the assignment and notice of pendency provisions.
Ruiz appealed. The court of appeals reversed the decision of the district court, holding that a strict compliance standard applies to Minnesota's foreclosure by advertisement process. Ruiz v. 1st Fidelity Loan Servicing, LLC, A11–1081, 2012 WL 762313, at *2–4 (Minn.App. Mar. 12, 2012). The court of appeals concluded that the foreclosure is void because 1st Fidelity failed to strictly comply with the statutes at issue when it recorded the notice of pendency and the third assignment after publishing the notice of sale. Id. at *4. In light of its conclusion, the court of appeals did not address issues related to the pre-foreclosure counseling notice. Id. at *5. We granted 1st Fidelity's petition for review.1
We review de novo the district court's grant of summary judgment to determine whether genuine issues of material fact exist and whether the district court erred in applying the law. Stringer v. Minn. Vikings Football Club, LLC, 705 N.W.2d 746, 754 (Minn.2005); Minn. R. Civ. P. 56.03. Statutory interpretation presents a question of law subject to de novo review. State v. Bluhm, 676 N.W.2d 649, 651 (Minn.2004).
Foreclosure by advertisement is governed by Minn.Stat. ch. 580. An alternative to foreclosure by action, foreclosure by advertisement was “devised to avoid the delay and expense of judicial proceedings.” Soufal v. Griffith, 159 Minn. 252, 256, 198 N.W. 807, 809 (1924) (internal quotation marks omitted). Foreclosure by advertisement provides a foreclosing party with a faster and more efficient means to foreclose and allows a party to foreclose in the absence of judicial supervision. See 6A Steven J. Kirsch, Minnesota Practice—Method of Practice § 49.2 (3d ed.1990). A foreclosing party may foreclose by advertisement pursuant to a power of sale in the mortgage, but the exercise of that power is regulated by statute. SeeMinn.Stat. § 580.01.
We begin our consideration of the issues presented by analyzing whether strict or substantial compliance with Minn.Stat. § 580.02(3) is required. Although 1st Fidelity argues that it strictly complied with this statute, this argument is founded on 1st Fidelity's contention that the statute requires the recording of all assignments of the mortgage before the foreclosure sale, rather than before the initiation of foreclosure by advertisement proceedings.2 Ruiz contends that strict compliance with foreclosure by advertisement statutes is required, and she maintains that 1st Fidelity failed to strictly comply with the assignment recording requirement, rendering the foreclosure void.3 In advancing her argument for strict compliance, Ruiz relies on several cases in which we have articulated a strict compliance standard in the context of foreclosures by advertisement. See, e.g., Jackson v. Mortg. Elec. Registration Sys., Inc., 770 N.W.2d 487, 494 (Minn.2009); Moore v. Carlson, 112 Minn. 433, 434, 128 N.W. 578, 579 (1910). Because the recording of an assignment of the mortgage is a condition precedent to foreclosure by advertisement, Ruiz argues, it must be completed before a party can initiate the foreclosure by advertisement process.
Alternatively, 1st Fidelity argues that a foreclosing party need only substantially comply with the statutory requirements for foreclosure by advertisement, and a foreclosure is voidable only when a complaining party establishes that she is the intended beneficiary of the protection afforded by the statutory requirements at issue and that the foreclosing party's non-compliance with such requirements is prejudicial. See, e.g., Willard v. Finnegan, 42 Minn. 476, 478–79, 44 N.W. 985–86 (1890); Holmes v. Crummett, 30 Minn. 23, 25, 13 N.W. 924, 924 (1882). According to 1st Fidelity, section 580.02(3) does not “impose[ ] a precise deadline for accomplishing the recording of all assignments of [a] mortgage.” Section 580.02(3), 1st Fidelity maintains, merely requires the recording of all assignments of the mortgage anytime before the sale, rather than requiring all mortgage assignments to be recorded before the foreclosure by advertisement process begins.
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