Doris Ruiz, Appellant, vs. 1st Fidelity Loan Servicing, LLC, Respondent.
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This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (2010).
STATE OF MINNESOTA
IN COURT OF APPEALS
1st Fidelity Loan Servicing, LLC,
Filed March 12, 2012
Reversed and remanded
Hennepin County District Court
File No. 27-CV-11-2667
Jonathan L. R. Drewes, Michael J. Wang, Drewes Law, PLLC, Minneapolis, Minnesota
David R. Mortensen, Christina Weber, Wilford, Geske & Cook, P.A., Woodbury,
Minnesota (for respondent)
Considered and decided by Peterson, Presiding Judge; Larkin, Judge; and Cleary,
Appellant challenges the district court’s award of summary judgment for
respondent, arguing that the district court erroneously concluded that respondent’s
foreclosure by advertisement was valid despite respondent’s failure to strictly comply
with certain statutory requirements.
Because Minnesota Supreme Court precedent
requires strict compliance with statutory requirements in a foreclosure by advertisement
and because there are genuine issues of material fact regarding appellant’s unlawfuleviction claim, we reverse and remand.
On June 30, 2005, appellant Doris Ruiz executed a mortgage on a duplex located
in Minneapolis. By September 2008, appellant had failed to make payments on the
underlying debt and defaulted on the mortgage. On September 21, 2009, the mortgage
was assigned to respondent 1st Fidelity Loan Servicing, LLC. Respondent recorded the
mortgage assignment on November 17. But the recording identified respondent as 1st
Fidelity instead of 1st Fidelity Loan Servicing, LLC.
Later, respondent initiated a
foreclosure by advertisement.
Beginning on May 18, 2010, respondent published a notice of foreclosure sale for
six consecutive weeks in a designated legal newspaper. On that same day, respondent
filed a foreclosure-pendency notice with the Hennepin County Recorder and re-recorded
the September 2009 mortgage assignment to accurately state respondent’s legal name as
1st Fidelity Loan Servicing, LLC. A foreclosure sale was held on November 30,1 and
respondent purchased the property. Appellant failed to redeem the property, and the
redemption period expired on January 4, 2011.
The foreclosure sale was originally scheduled for June 30, 2010, but appellant filed an
affidavit to postpone the sale for five months in exchange for reduction of the redemption
period from six months to five weeks.
After the redemption period expired, a real estate agent visited the property at
respondent’s request. The agent concluded that although appellant continued to occupy
the lower unit of the duplex, the upper unit was vacant. The agent executed an affidavit
stating that the upper unit was dark and free of typical signs of occupancy, such as items
in the window.
Based on the agent’s representations, respondent hired a handyman to change the
locks to the upper unit. The handyman executed an affidavit stating that he changed the
locks on the front and back doors. The affidavit states that he only saw a chair, a plant
stand, and a few miscellaneous items in the unit; he did not observe a television,
entertainment center, dishes in the kitchen, or any of the “usual items one would see in an
occupied residence”; the items that were in the unit were disorganized; the counters were
clear of items associated with residency such as soap dispensers; and no mail or
newspapers were visible in the unit. Based on his observations, he concluded that no one
resided in the upper unit.
After discovering that the locks to the upper unit had been changed, appellant
called the real estate agent. The agent asserts that appellant was “quite angry” and would
not allow him “to get a word in to the conversation.” The agent called appellant back and
left her a voicemail, offering to provide her with a key to the upper unit. Appellant did
not respond to the voicemail.
Instead, appellant forcibly entered the upper unit,
damaging the door and doorframe in the process.
Appellant filed suit against respondent on February 3, seeking a declaration that
the foreclosure sale was “null and void” because respondent failed to strictly comply with
the statutes that govern a foreclosure by advertisement.
Appellant asserted three
instances of inadequate compliance: failure to accurately record the September 2009
mortgage assignment prior to publication of the foreclosure notice; failure to record the
foreclosure-pendency notice prior to publication of the foreclosure notice; and failure to
provide appellant with a pre-foreclosure counseling notice.
Appellant also asserted
wrongful-eviction and quiet-title claims, seeking monetary damages on the wrongfuleviction claim and “[j]udgment quieting title to the Subject Property in [appellant]’s
name” on the quiet-title claim. Respondent moved to dismiss, or in the alternative for
summary judgment, all of appellant’s claims. Appellant moved for summary judgment
on her invalid-foreclosure and quiet-title claims. The district court denied appellant’s
motion but awarded summary judgment for respondent, dismissing all of appellant’s
claims with prejudice. This appeal follows.
“A motion for summary judgment shall be granted when the pleadings,
depositions, answers to interrogatories, and admissions on file, together with the
affidavits, if any, show that there is no genuine issue of material fact and that either party
is entitled to a judgment as a matter of law.” Fabio v. Bellomo, 504 N.W.2d 758, 761
(Minn. 1993). “[T]here is no genuine issue of material fact for trial when the nonmoving
party presents evidence which merely creates a metaphysical doubt as to a factual issue
and which is not sufficiently probative with respect to an essential element of the
nonmoving party’s case to permit reasonable persons to draw different conclusions.”
DLH, Inc. v. Russ, 566 N.W.2d 60, 71 (Minn. 1997). “[T]he party resisting summary
judgment must do more than rest on mere averments.” Id.
“[Appellate courts] review a district court’s summary judgment decision de novo.
In doing so, we determine whether the district court properly applied the law and whether
there are genuine issues of material fact that preclude summary judgment.” Riverview
Muir Doran, LLC v. JADT Dev. Grp., LLC, 790 N.W.2d 167, 170 (Minn. 2010) (citation
omitted). “On appeal, the reviewing court must view the evidence in the light most
favorable to the party against whom judgment was granted.” Fabio, 504 N.W.2d at 761.
Appellant argues that the foreclosure is void because respondent failed to strictly
comply with certain statutory requirements. Respondent argues, and the district court
agreed, that respondent substantially complied with the statutes and that substantial
compliance is sufficient. We disagree.
In 1910, the Minnesota Supreme Court adopted a strict-compliance standard in
foreclosure-by-advertisement proceedings, stating:
Foreclosure by advertisement is purely a statutory creation.
One who avails himself of its provisions must show an exact
and literal compliance with its terms; otherwise he is bound to
profess without authority of law. If what he does failed to
comply with the requirements of the statute, it is void.
Moore v. Carlson, 112 Minn. 433, 434, 128 N.W. 578, 579 (1910). The supreme court
has recently reiterated this strict-compliance requirement, citing Moore for the principle
that “[u]nder Minnesota law, a foreclosure by advertisement—non-judicial mortgage
foreclosure—is only valid if the party seeking to foreclose the mortgage meets certain
statutory requirements.” Jackson v. Mortg. Elec. Registration Sys., Inc., 770 N.W.2d
487, 492 (Minn. 2009).
The legal question in Jackson was “what constitutes an
assignment of a mortgage within the meaning of Minnesota’s foreclosure by
advertisement statutory scheme.” Id. at 489. In resolving this question, the supreme
court reviewed the history of Minnesota’s foreclosure-by-advertisement statutes and
Foreclosure by advertisement was developed as a non-judicial
form of foreclosure designed to avoid the delay and expense
of judicial proceedings.
Because foreclosure by
advertisement is a purely statutory creation, the statutes are
strictly construed. We require a foreclosing party to show
exact compliance with the terms of the statutes. If the
foreclosing party fails to strictly comply with the statutory
requirements, the foreclosure proceeding is void.
Id. at 494 (emphasis added) (quotations and citations omitted).
Jackson concluded with a statement that “[a]s a court that reviews and interprets
the laws of this state, we must apply the foreclosure by advertisement statutes as they
have been written by the legislature and as they have been applied and interpreted in the
past.” Id. at 502-03. The supreme court’s statements regarding the strict-compliance
standard, although dicta, are entitled to “great weight.” In re Wylde, 454 N.W.2d 423,
425 (Minn. 1990); see Simons v. Shiltz, 741 N.W.2d 907, 910 (Minn. App. 2007) (relying
on dicta in a supreme court opinion), review denied (Minn. Feb. 19, 2008). Moreover,
the statements provide no indication that the court is willing to depart from the standard
that it adopted in 1910.
Despite the supreme court’s recent reiteration of the strict-compliance
requirement, the district court accepted respondent’s arguments that substantial
compliance with foreclosure-by-advertisement statutory requirements is nonetheless
sufficient. The district court reasoned: “Although [appellant]’s reading of Jackson is
technically correct, [appellant] does not take into account the entire context of decisions
concerning foreclosure and real property, and that minor errors should not and do not
invalidate a foreclosure.”
In concluding that substantial compliance is sufficient, the district court relied on
Hudson v. Upper Mich. Land Co., 165 Minn. 172, 206 N.W. 44 (1925), Sieve v. Rosar,
613 N.W.2d 789 (Minn. App. 2000), and State by Spannaus v. Dangers, 368 N.W.2d 384
(Minn. App. 1985), review denied (Minn. Aug. 20, 1985). This reliance was misplaced.
Although language in Hudson is inconsistent with the strict-compliance standard, see
Hudson, 165 Minn. at 174, 206 N.W. at 45 (“Whether a sale on the foreclosure of a
mortgage pursuant to a power of sale is void or voidable by reason of an irregularity in
the proceedings depends upon the nature of the irregularity.”), Hudson does not provide a
basis to reject the supreme court’s much more recent reiteration of the strict-compliance
standard in Jackson. And Rosar and Dangers are factually distinguishable and therefore
not on point. See Rosar, 613 N.W.2d at 793 (requiring only substantial compliance to
effect a valid redemption after a foreclosure sale); Dangers, 368 N.W.2d at 386
(requiring only substantial compliance in condemnation proceedings).
The district court also reasoned that “[i]n the foreclosure and real property context,
[appellant]’s reliance on Jackson and the standard of strict compliance is inflexible and
does not correspond to the reality of the foreclosure process.” But the supreme court
clearly requires strict compliance with the foreclosure-by-advertisement statutes, and
“[t]he district court, like this court, is bound by supreme court precedent.” State v.
M.L.A., 785 N.W.2d 763, 767 (Minn. App. 2010), review denied (Minn. Sept. 21, 2010).
We therefore review respondent’s foreclosure by advertisement for strict compliance with
the relevant statutory requirements.
Recording of the Mortgage Assignment
Minn. Stat. § 580.02 (2010) requires that all assignments of a mortgage be
recorded as “a condition precedent to the right to foreclose by advertisement.” Jackson,
770 N.W.2d at 497. “[P]roceedings to foreclose a real estate mortgage by advertisement
shall be deemed commenced on the date of the first publication of the notice of sale.”
Minn. Stat. § 541.03, subd. 2 (2010).
The mortgage in this case was assigned to respondent in September 2009, and the
assignment was recorded on November 17.
But this recording inaccurately stated
respondent’s legal name. The notice of foreclosure sale was published on May 18, 2010.
On May 18, respondent once again recorded the September 2009 mortgage assignment to
correct the inaccuracy in the first recording. Appellant argues that because respondent
did not accurately record the mortgage assignment prior to publishing the notice of sale,
the foreclosure is invalid. Respondent counters that the November 2009 recording was
sufficient and that it only re-recorded the assignment “out of an abundance of caution.”
But respondent offers no legal argument or authority indicating that the first recording
was legally sufficient even though it inaccurately stated the assignee’s legal name. And
the second recording was untimely under Minn. Stat. § 580.02. Because respondent
failed to strictly comply with section 580.02, “the foreclosure proceeding is void.”
Jackson, 770 N.W.2d at 494.
Recording of the Notice of Pendency
A person foreclosing a mortgage by advertisement shall
record a notice of the pendency of the foreclosure with the
county recorder or registrar of titles in the county in which the
property is located before the first date of publication of the
foreclosure notice but not more than six months before the
first date of publication.
Minn. Stat. § 580.032, subd. 3 (2010).
Appellant argues that respondent failed to satisfy this requirement, because it
recorded the notice of pendency on the first date of publication. The district court
disagreed, relying on a substantial-compliance standard. The district court reasoned that
“[respondent] sent the Notice of Pendency for recording on May 14, 2010 by personal
courier and attempted to have the Notice of Pendency recorded prior to the first date of
publication.” But the date that respondent attempted to record the notice is irrelevant.
See Jackson, 770 N.W.2d at 494 (stating that the supreme court requires “a foreclosing
party to show exact compliance with the terms of the statutes” (quotation omitted)).
Because respondent failed to strictly comply with section 580.032, subd. 3, “the
foreclosure proceeding is void.” Id.
Having concluded that respondent’s foreclosure by advertisement is void for
failure to strictly comply with sections 580.02 and 580.032, we reverse the district court’s
summary-judgment dismissal of appellant’s claims under these sections. And we remand
for entry of judgment for appellant on these claims, as well as on her quiet-title claim. It
is therefore unnecessary to review the district court’s dismissal of appellant’s claim that
the foreclosure is void because respondent did not provide appellant with a preforeclosure counseling notice under Minn. Stat. § 580.021, subd. 2 (2010).
Appellant argues that respondent wrongfully evicted her from the upper unit of the
property, asserting that because the upper unit was not vacant, respondent was not
authorized to change the locks to the unit. See Minn. Stat. § 582.031, subd. 1(a) (2010)
(“If premises described in a mortgage or sheriff’s certificate are vacant or unoccupied, the
holder of the mortgage or sheriff’s certificate or the holder’s agents and contractors may
enter upon the premises to protect the premises from waste and trespass, until the holder
of the mortgage or sheriff’s certificate receives notice that the premises are occupied.”).
The district court granted summary judgment because “[a]lthough [appellant] denies that
the Upper Unit was vacant, she does not adequately rebut [respondent]’s evidence.
Essentially, [appellant]’s evidence is conclusory in nature, and she has not pointed to any
specific, admissible facts in the record to overcome [respondent]’s assertions or the
standard for summary judgment.” We disagree.
Appellant’s affidavit states: “When speaking with [respondent’s real estate
agent] . . . in January 2011, I specifically told him that my family occupies both units in
the duplex. . . . Upon the contractor’s entry into the property, furniture, clothes, and all
normal items demonstrating occupancy would have been readily apparent to the intruding
contractor.” Appellant also submitted utility bills showing gas and electricity usage at the
unit. Appellant’s affidavit is no more conclusory than the affidavits that respondent
submitted in support of summary judgment. Moreover, the real estate agent’s affidavit
acknowledges that appellant informed him, before respondent changed the locks, that
“her family had a right to have access to both upper and lower units.” On this record,
there is a genuine issue of material fact regarding whether the upper unit was “vacant or
unoccupied” under Minn. Stat. § 582.031, subd. 1(a).
The district court also reasoned that “even if . . . there remains a genuine issue of
material fact that is in dispute,” it could not “ignore the actions of [appellant] in this
matter” in re-entering the upper unit because neither party is entitled to self-help. In
arriving at this conclusion, the district court appears to have weighed the evidence, which
is not permitted on summary judgment. See Fairview Hosp. & Health Care Servs. v.
St. Paul Fire & Marine Ins. Co., 535 N.W.2d 337, 341 (Minn. 1995) (“It is axiomatic that
on a summary judgment motion a court may not weigh the evidence or make factual
determinations, but must take the evidence in a light most favorable to the nonmoving
We therefore reverse the district court’s award of summary judgment to
respondent on appellant’s wrongful-eviction claim and remand for further proceedings on
Reversed and remanded.
Judge Michelle A. Larkin