553 F. App'x 652
8th Cir.2014Background
- In Jan 2008, Sheng Lee and Cheng Lee refinanced with SunTrust Mortgage, Inc., secured by a mortgage to MERS on their Ramsey County home.
- On Nov 20, 2009, MERS assigned the mortgage to SunTrust; SunTrust recorded a Notice of Pendency and Power of Attorney to Foreclose (Nov 24, 2009).
- The Lees later entered a loan modification; after modification, they defaulted again; MERS assigned the mortgage to SunTrust on Feb 1, 2012; SunTrust recorded another Notice to Foreclose (Apr 6, 2012).
- A Sheriff’s Certificate of Sale and Foreclosure Record reflecting non-judicial foreclosure and sale to SunTrust was recorded on May 29, 2012; sale occurred May 25, 2012.
- SunTrust assigned the Sheriff’s Certificate of Sale to FNMA on July 3, 2012.
- The Lees sued FNMA, SunTrust, and Wilford challenging the foreclosure and seeking to quiet title, arguing (a) unrecorded pre-foreclosure assignment to FNMA violated Minn. Stat. § 580.02 and Hathorn, and (b) improper authority of those who executed the assignments and power-of-attorney.
- The district court dismissed for failure to state a claim under Rule 12(b)(6); the Lees appeal and the Eighth Circuit affirms the dismissal.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Lees’ quiet-title claim was properly pleaded. | Lees rely on unrecorded pre-foreclosure assignment to FNMA. | Defendants argue Rule 8 requires plausible allegations; record supports validity of assignments. | Affirmed the district court’s dismissal. |
| Whether the pre-foreclosure assignment to FNMA was unrecorded and invalid. | Claim unrecorded assignment invalidates foreclosure. | Record shows assignments were timely and properly recorded. | Affirmed; no pleading shows invalid pre-foreclosure assignment. |
| Whether the officers who executed the mortgage assignments and power of attorney were legally authorized. | Officers lacked authority to execute instruments. | Authority derived from corporate and statutory framework; no defect pleaded. | Affirmed; pleadings insufficient to show lack of authority. |
Key Cases Cited
- Karnatcheva v. JPMorgan Chase Bank, N.A., 704 F.3d 545 (8th Cir. 2013) (quiet-title pleading requires more than mere speculation; adequate facts must support invalidity of adverse claims)
- Ashcroft v. Iqbal, 556 U.S. 662 (U.S. 2009) (pleading must show plausible claim, not mere speculation)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (U.S. 2007) (pleading standard requires plausible entitlement to relief)
- Shady Grove Orthopedic Assocs., P.A. v. Allstate Ins. Co., 559 U.S. 393 (U.S. 2010) (federal courts apply state substantive law and federal procedural law in diversity)
- Blankenship v. USA Truck, Inc., 601 F.3d 852 (8th Cir. 2010) (Rule 8 pleading must allege facts supporting claims; conclusory statements insufficient)