Edgarline Dunbar v. Wells Fargo Bank, N.A.
709 F.3d 1254
| 8th Cir. | 2013Background
- Homeowners challenge foreclosure by Wells Fargo on Minnesota properties.
- Wells Fargo foreclosed non-judicially under Minnesota Statutes §580 et seq., later purchasing all properties at sheriff’s sales.
- Homeowners sued in state court naming Wells Fargo, MERS, MERSCORP, Fannie Mae, and Reiter & Schiller; defendants removed to federal court.
- District court dismissed under Rule 12(b)(6) and sanctioned Homeowners’ counsel under Rule 11.
- On appeal, court held Reiter & Schiller fraudulently joined; subject matter jurisdiction exists notwithstanding prior exclusive jurisdiction concerns.
- Two quiet-title theories relying on “show-me-the-note” were rejected; other theories were also insufficient; slander-of-title claim dismissed; sanctions against counsel affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Subject-matter jurisdiction and fraudulent joinder | Homeowners argue lack of complete diversity and impossibility of removal | Wells Fargo asserts jurisdiction despite joinder issues and removal proper | Affirmed district court; Reiter & Schiller not indispensable; jurisdiction exists |
| Quiet-title theories under §559.01 | Grounds attack holder's title; rely on show-me-the-note and related theories | Show-me-the-note theory rejected; other theories insufficient | District court's dismissal affirmed; theories not adequately pleaded under federal pleading standards |
| Slander of title claim viability | Wells Fargo recorded notices/assignments falsifying title and acted with malice | Pleadings amount to bare conclusions, not plausible malice | Dismissed; failure to plead plausible malice per Iqbal/Ashcroft standard |
| Sanctions against counsel under Rule 11 | Sanctions inappropriate given case similarities to Murphy | Sanctions warranted due to frivolous, duplicative, and fraudulent-joinder tactics | Sanctions affirmed; district court within discretion |
Key Cases Cited
- Karnatcheva v. JPMorgan Chase Bank, N.A., 704 F.3d 545 (8th Cir. 2013) (jurisdiction and pleading standards in similar contexts)
- Murphy v. Aurora Loan Servs., LLC, 699 F.3d 1027 (8th Cir. 2012) (reiterates show-me-the-note theory rejection and sanctions context)
- Stein v. Chase Home Fin., LLC, 662 F.3d 976 (8th Cir. 2011) (Minnesota rejection of show-me-the-note theory cited)
- Jackson v. Mortg. Elec. Registration Sys., Inc., 770 N.W.2d 487 (Minn. 2009) (MERS mechanics; authority to foreclose in title chain)
- Reed v. Great Lakes Cos., 330 F.3d 931 (7th Cir. 2003) (pleading standards and frivolousness considerations)
- Paidar v. Hughes, 615 N.W.2d 276 (Minn. 2000) (elements of slander of title; damages requirement)
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (pleading standard; plausibility requirement)
- Contract Dev. Corp. v. Beck, 627 N.E.2d 764 (Ill. App. Ct. 1994) (burden on pleading falsity in certain tort contexts)