Natalia Karnatcheva v. JP Morgan Chase Bank
2013 U.S. App. LEXIS 1851
| 8th Cir. | 2013Background
- Mortgagors sued in Minnesota state court against MERS, MERSCORP, and related entities alleging deficiencies in mortgage assignments and foreclosures.
- Defendants removed to federal court, asserting fraudulent joinder of a non-diverse law firm defendant.
- District court denied remand and dismissed all claims against non-firm defendants under Rule 12(b)(6).
- Plaintiffs amended to seek quiet title, slander of title, and declaratory judgments on foreclosure rights and note acceleration.
- Court rejects show-me-the-note theory and disfavors trust-based declaratory relief claims for mortgagors, and analyzes pleading sufficiency under Rule 8(a).
- Court concludes certain quiet-title theories do not rely on the note and are not foreclosed, but the pleadings fail under Iqbal/Twombly for other theories.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Remand proper due to fraudulent joinder? | Mortgagors contend remand was improper. | District court correctly found fraudulent joinder; remand inappropriate. | Remand properly denied. |
| Slander of title claim viability? | Claim stands to challenge foreclosure validity. | Claim duplicative of rejected show-me-the-note theory. | Dismissed on grounds consistent with Butler/Murphy. |
| Declaratory relief on true foreclosure interest? | Requests declaration of parties’ interests under trust agreements. | mortgagors lack standing; claims inadequately pleaded. | Dismissed; standing and pleading failures affirmed. |
| Declaratory relief on proper note acceleration? | Notes may have been accelerated improperly; pleadings show plausible rights. | Rule 8(a) pleading deficiencies; conclusory assertions. | Dismissed for failure to plead plausible claims under Rule 8(a). |
| Quiet title theories against invalid assignments? | Two theories not relying on note production survive Murphy. | Other theories rely on show-me-the-note; Jackson bars. | Three non-precluded theories rejected for lack of support; remaining theories not sustained. |
Key Cases Cited
- Wiles v. Capitol Indem. Corp., 280 F.3d 868 (8th Cir. 2002) (fraudulent joinder standard for removal?)
- Murphy v. Aurora Loan Servs., LLC, 699 F.3d 1027 (8th Cir. 2012) (rejects similar show-me-the-note reasoning and supports dismissal.)
- Butler v. Bank of America, NA., 690 F.3d 959 (8th Cir. 2012) (slander-of-title and related claims rejected.)
- Jackson v. Mortgage Electronic Registration Sys., 770 N.W.2d 487 (Minn. 2009) (rejects show-me-the-note theory.)
- Stein v. Chase Home Fin., LLC, 662 F.3d 976 (8th Cir. 2011) (analysis related to show-me-the-note theory.)