Kevin Murphy v. Aurora Loan Services
2012 U.S. App. LEXIS 23052
| 8th Cir. | 2012Background
- Homeowners borrowed to purchase homes, signed promissory notes, and gave mortgages with MERS as nominal mortgagee.
- Lenders pooled and securitized the notes; mortgages were assigned to Aurora after default; Aurora hired W&G for foreclosures under Minnesota’s foreclosure-by-advertisement statute.
- Homeowners alleged Aurora and MERS lacked authority to foreclose and that W&G made false representations about Aurora’s authority.
- Homeowners sued in state court; Aurora and MERS removed to federal court based on fraudulent Joinder of W&G; district court dismissed all claims with prejudice.
- Court treated remaining assertions as repackaged show-me-the-note theory rejected by Stein and Jackson; two quiet-title theories were not entirely based on the note.
- Court partially reversed the district court’s dismissal of the quiet-title claim but affirmed dismissal of other claims and remanded for further proceedings.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Was W&G fraudulently joined? | Homeowners asserted W&G liable under several theories beyond mere show-me-the-note. | W&G lacked a reasonable basis for liability under Minnesota professional-immunity and misrepresentation theories. | W&G properly dismissed as fraudulently joined. |
| Does Jackson bar certain quiet-title theories despite show-me-the-note rejection? | Two theories do not rely on the note and challenge assignment authority. | Jackson forecloses theories that resemble show-me-the-note implications. | Partial reversal; remaining quiet-title theories viable for district court to address. |
| Do the remaining two quiet-title theories require remand for development? | Assignment defects could deprive Aurora of foreclose authority. | The court should apply Jackson and dismiss or proceed as appropriate. | Remand for district court to consider the two theories with fuller development. |
| Was the district court's dismissal of other counts proper? | Counts other than quiet-title assert non-show-me-the-note theories. | Those counts rely on discredited theories and fail to plead damages. | Dismissal affirmed for the other counts. |
| Is the removal based on prior exclusive jurisdiction doctrine proper? | Doctrine bars in rem jurisdiction from affecting the case. | Removal remains proper; doctrine does not apply to removals. | Removal proper; doctrine inapplicable; court has jurisdiction. |
Key Cases Cited
- Stein v. Chase Home Fin., LLC, 662 F.3d 976 (8th Cir. 2011) (rejects show-me-the-note theory as a basis to foreclose)
- Jackson v. Mortg. Elec. Registration Sys., Inc., 770 N.W.2d 487 (Minn. 2009) (Minnesota rejected show-me-the-note theory)
- Block v. Toyota Motor Corp., 665 F.3d 944 (8th Cir. 2011) (fraudulent-joinder framework)
- Filla v. Norfolk S. Ry. Co., 336 F.3d 806 (8th Cir. 2003) (test for fraudulent joinder; no reasonable basis in fact and law)
- Ward v. Resolution Trust Co., 972 F.2d 196 (8th Cir. 1992) (in rem jurisdiction considerations in removal)
- Reeder v. Kan. City Bd. of Police Com’rs, 733 F.2d 543 (8th Cir. 1984) (remand when issues not adequately developed)
- Butler v. Bank of America, N.A., 690 F.3d 959 (8th Cir. 2012) (analysis of quiet-title theories post Jackson)