44 F. Supp. 3d 846
E.D. Wis.2014Background
- Defendants Andre van Hoornaar and Astrid Groenveld obtained a mortgage from PNC’s predecessor on property in Kenosha, WI; PNC filed state-court foreclosure and the case was removed to federal court.
- Van Hoornaar filed class-styled counterclaims: breach of contract and declaratory relief (based on HUD/FHA servicing regulations and alleged de facto federal guarantee), violation of Wisconsin recording statute (failure to record mortgage satisfaction), and trespass (PNC’s agents entered and winterized the house during foreclosure).
- PNC moved to dismiss the counterclaims under Fed. R. Civ. P. 12(b)(6) and to exclude settlement-related material; Defendants sought dismissal of foreclosure if they could deliver a deed-in-lieu and sought leave to file a PNC settlement offer under seal.
- Court evaluated pleading plausibility under Twombly/Iqbal standards and considered mortgage terms (esp. ¶¶ 7 and 9) and statutory requirements for the recording claim (Wis. Stat. § 706.05(10)).
- Key factual concessions: Defendants did not send the satisfaction request by certified mail (they used FedEx) and Defendant had defaulted on the loan before PNC’s entry.
- Court dismissed all counterclaims, denied leave to amend as futile, excluded the settlement-offer material from the reply brief, and denied Defendants’ request to force foreclosure dismissal in exchange for a deed-in-lieu.
Issues
| Issue | Plaintiff's Argument (PNC) | Defendant's Argument (van Hoornaar) | Held |
|---|---|---|---|
| Whether HUD/FHA regulations or HERA/FHFA actions create enforceable contract rights or private remedy incorporated into mortgage | Regulations do not apply to a non–FHA-insured loan and do not create a private cause of action | Loan’s governing-law/applicable-law clause and FHFA/Treasury actions created a de facto federal guaranty and incorporated HUD servicing rules; asks for stay pending other cases | Dismissed — HUD regs do not apply to Fannie Mae mortgages; even if applicable most courts reject a private cause of action; stay denied; amendment futile |
| Whether recording-statute claim under Wis. Stat. § 706.05(10)(b) is viable without certified-mail request | Statute requires receiving the request by certified mail; failure to comply defeats statutory penalty claim | Actual notice (FedEx delivery) suffices despite not using certified mail | Dismissed — statute unambiguous; certified-mail receipt required; no relief where plaintiff conceded no certified mail was sent |
| Whether PNC’s entry and winterization constituted trespass given mortgage language | Mortgage ¶9 authorizes lender, upon borrower default or abandonment, to secure/enter and take steps (e.g., change locks, drain pipes) to protect its interest | Entry was unreasonable, ¶7 requires notice and reasonable cause for interior inspection; property was not abandoned | Dismissed — borrower default triggered ¶9; by signing mortgage borrower consented to reasonable securing measures; trespass claim fails |
| Whether court should order foreclosure dismissed in exchange for deed-in-lieu / accept documents under Rule 67 or 54(b) | Foreclosure claim is proper; court should not alter contractual rights or compel lender to accept surrender; Rule 67 not meant to rewrite obligations | Dismiss foreclosure if defendants deposit deed-in-lieu and related documents to avoid deficiency risk | Denied — foreclosure claim states a right to foreclose; Rule 67/54(b) not an avenue to force the remedy sought by defendants |
Key Cases Cited
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (pleading must be plausible)
- Ashcroft v. Iqbal, 556 U.S. 662 (courts need not accept legal conclusions; plausibility standard)
- Landis v. N. Am. Co., 299 U.S. 248 (standards for staying proceedings)
- DeKalb Cnty. v. Fed. Hous. Fin. Agency, 741 F.3d 795 (nature of Fannie Mae and conservatorship)
- Herron v. Fannie Mae, 857 F. Supp. 2d 87 (district-court decision rejecting HUD-regulation private right theory for GSE loans)
- Adams v. City of Indianapolis, 742 F.3d 720 (leave to amend may be denied as futile)
- Antoniewicz v. Reszcynski, 70 Wis.2d 836 (Wis. law: trespass and consent/privilege defenses)