Editor: David Reiss
Brooklyn Law School

July 10, 2013

Minnesota U.S. District Court Finds Homeowners’ Complaint Fails Procedurally and Sanctions Counsel for Frivolous Claims

By Shannon Daugherty

In Blaylock v. Wells Fargo Bank No. 12-693, 2012 WL 2529197, (D. Minn 2012) the court found six individual property mortgage assignments and foreclosures proper, dismissing the quiet title actions on both procedural and substantive grounds.   The court also sanctioned the plaintiff’s attorney for his repeated frivolous claims.

On procedural grounds the court dismissed the claim under FRCP 12 finding that the complaint failed to state a “short and plain” statement upon which relief could be granted for each claim and each party.

The court held that independent of procedural grounds for dismissal, the Plaintiffs lacked substantive theories upon which quiet title relief could be granted. The court quickly discounted the claim that mortgages must be perfected claiming that the argument was based upon the same “faulty logic” as the plaintiff’s second “show me the note” claim that in order to foreclose a party must hold both the note and mortgage on a property. “This argument has been rejected by every federal and state court that has considered it under Minnesota law.”  Minnesota and Eighth Circuit precedent clearly determined that a mortgagee may commence foreclosure even if the promissory note had been previously transferred to a third party. See Stein v. Chase Home Fin., LLC, 662 F.3d 976, 980 (8th Cir. 2011); Jackson v. Mortg. Elec. Reg Sys., Inc., 770 N.W. 2d 487 (Minn. 2009).  These cases are blogged here and here.

The court also found the assignment of the mortgage proper since each of the mortgages expressly permitted assignment. Each assignment in this case granted legal title, the power of sale, and the right to foreclose to the mortgagee and its successors.  The Minnesota MERS Statute §507.413 allows nominees to record an assignment to foreclose and district case law also supported a MERS assignment of a mortgage. See Kebasso v. BAC Home Loans Servicing, LP, 813 F. Supp. 2d 1104, 1109 (D. Minn. 2011).

The fact that some of the notes and mortgages for the plaintiffs were held in trust did not allow plaintiffs to challenge the transfer of the note. The court reaffirmed precedent noting that the plaintiffs had no standing to enforce a trust agreement because they were not party to the agreement between the banks. Furthermore, “securitization is standard practice, and Plaintiff’s loans specifically authorize securitization.”

Finally, the court dismissed the plaintiff’s slander of title claim for failure to establish all the elements of a prima facie claim and sanctioned Plaintiff’s counsel, William Butler, in the amount of $75,000 and awarded attorneys’ fees pursuant to FRCP 11 and 28 USC Sec. 1927 because of counsel’s repeated attempts to litigate frivolous slander and “show me the note” claims. Butler used the same theory and motioned for slander claims in multiple prior cases as well as some pending cases.


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