William B. Butler v. Bank of America, N.A.
2012 U.S. App. LEXIS 18101
| 8th Cir. | 2012Background
- Butlers challenged foreclosure on their Minnesota home by Bank Defendants and PFB after default on a 2006 loan.
- MERS was named as the mortgagee and nominee; BAC Home Loan Servicing serviced the loan for the note holder.
- Notice of Intent to Accelerate issued Feb 16, 2010, threatening foreclosure if arrears were not paid in a month.
- MERS assigned the mortgage to BAC Home Loan Servicing on Apr 19, 2010; assignment recorded May 19, 2010; PFB issued a notice of pendency the same day.
- Foreclosure by advertisement was completed via sheriff's sale on Jul 23, 2010, with BAC taking title.
- Butlers filed a state court lawsuit on Jan 21, 2011 alleging sixteen causes of action, primarily challenging the foreclosure under a “show-me-the-note” theory; district court dismissed, and appeal followed.
- The district court held Minnesota law allows foreclosure by the mortgagee of record even if it does not hold the promissory note; the court dismissed the fraud claims against PFB for lack of particularized allegations.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether PFB can be liable for fraud based on general allegations | Butlers allege PFB recorded documents with false information | PFB had no specific factual allegations of wrongdoing | PFB claims properly dismissed for failure to plead fraud with particularity |
| Whether foreclosure upheld under show-me-the-note theory | Butlers claim foreclosure invalid because holder lacks note | Foreclosure valid if mortgagee of record holds mortgage and can initiate foreclosure | District court correctly dismissed show-me-the-note theory claims; Minnesota law supports foreclosure by the mortgagee of record |
| Whether district court properly dismissed all Bank Defendants claims | All sixteen causes of action allege wrongdoing by Bank Defendants | Claims premised on flawed theory; no factual showing of wrongdoing | District court's dismissal affirmed; no viable claims against Bank Defendants |
Key Cases Cited
- Ashcroft v. Iqbal, 556 U.S. 662 (U.S. 2009) (pleading standards require more than conclusory statements)
- BJC Health Sys. v. Columbia Cas. Co., 478 F.3d 908 (8th Cir. 2007) (fraud must plead time, place, content of statements, identity, and what was exchanged)
- Stein v. Chase Home Finance LLC, 662 F.3d 976 (8th Cir. 2011) (foreclosure by advertisement lies with legal holder of mortgage; note may differ from mortgagee)
- Jackson v. Mortgage Electronic Registration Systems, Inc., 770 N.W.2d 487 (Minn. 2009) (foreclosure by advertisement may proceed by the mortgagee of record even if not holder of the note)