Dunbar v. Wells Fargo Bank, N.A., 853 F. Supp. 2d 839

Background

This is a mortgage-foreclosure dispute where Wells Fargo Bank, N.A. foreclosed by advertisement and is named as an assignee/owner of the relevant notes and mortgages; plaintiffs challenge the foreclosure and sue multiple defendants including MERS, Merscorp, FNMA, and Reiter & Schiller.
Five plaintiffs (Dunbar, Jenkins, Olson, Herr, Her) allege various defects including lack of real-party-in-interest status, standing, and other claims such as slander of title, conversion, fraud, and equitable claims.
Wells Fargo obtained title and/or mortgage interests through assignments across several properties, with sheriffs’ sales occurring between 2010 and 2011 and subsequent transfers to Wells Fargo.
Plaintiffs argue, among other things, that the foreclosure documents and assignments were invalid, that the note/mortgage unity requirement was violated, and that the trust/pooling-service arrangements affected validity, while defendants contend the records prove valid foreclosure authority.
The district court granted the motions to dismiss, denied the remand motion, and denied leave to amend; it held that foreclosure by advertisement complied with Minnesota law and that the challenged theories were unsupported, resulting in dismissal of all claims.
The court also noted prosecutors’ sanctions-related matters would be addressed in a forthcoming order.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether federal jurisdiction exists and remand is appropriate	Dunbar argues lack of complete diversity due to Minnesota plaintiffs; seeks remand.	Wells Fargo argues diversity exists and fraudulent joinder of Reiter & Schiller defeats remand.	Remand denied; jurisdiction established; Reiter & Schiller fraudulently joined.
Whether the prior exclusive jurisdiction doctrine bars this action	State court had ongoing exclusive in rem jurisdiction over the property.	Doctrine does not apply post-removal; no ongoing state control over the res here.	Doctrine inapplicable; remand not warranted.
Whether leave to amend the complaint should be granted	New precedent (Stein) supports amendment.	Amendment would be futile and filed in bad faith given existing precedent.	Leave to amend denied; amendment futile and contrary to settled law.
Whether quiet-title and related claims survive given foreclosure-by-advertisement	Mortgages may be invalid for various reasons, including lack of possession of the original notes.	Foreclosure by advertisement requires four statutory criteria; record and title show compliance; claims lack factual support on possession/ownership.	Dismissed; foreclosure authority established and challenges to the mortgage/notes failed as a matter of law.
Whether remaining claims (standing, real party in interest, slander, etc.) survive	Multiple independent theories survive scrutiny and raise triable issues.	These claims rest on the erroneous assumption that enforcement requires possession of the original note; otherwise they fail.	All remaining claims dismissed.

Key Cases Cited

Jackson v. Mortgage Elec. Registration Sys., Inc., 770 N.W.2d 487 (Minn. 2009) (assignment of note vs. mortgage; foreclose by advertisement requires record/title alignment)
Stein v. Chase Home Fin., LLC, 662 F.3d 976 (8th Cir. 2011) (foreclosure standing and note/mortgage considerations in mortgage-backed context)
In re Trust Created by Hill on December 31, 1917 for the Benefit of Schroll, 728 F. Supp. 564 (D. Minn. 1990) (trusts and ongoing state supervisory jurisdiction considerations)
Mattes v. ABC Plastics, Inc., 323 F.3d 695 (8th Cir. 2003) (public-record and pleadings integration in 12(b)(6) context)
McDonald v. Stewart, 182 N.W.2d 437 (Minn. 1970) (attorney immunity for actions within scope of employment)
Welk v. GMAC Mortg., LLC, 850 F. Supp. 2d 976 (D. Minn. 2012) (prior decisions regarding fraudulent joinder and foreclosure defenses)