Great Southern Bank v. Gustavo Aguilar Guzman

• Court: Court of Appeals of Minnesota
• Decided: August 18, 2014
• Docket: A14-248
• Status: Unpublished

Opinion

This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (2012).

STATE OF MINNESOTA IN COURT OF APPEALS A14-0248

Great Southern Bank, Respondent,

vs.

Gustavo Aguilar Guzman, et al., Appellants.

Filed August 18, 2014 Affirmed Cleary, Chief Judge

Dakota County District Court File No. 19HA-CV-13-4527

John Michael Miller, Peterson, Fram & Bergman, P.A., St. Paul, Minnesota (for respondent)

William B. Butler, Butler Liberty Law, LLC, Minneapolis, Minnesota (for appellants)

Considered and decided by Worke, Presiding Judge; Cleary, Chief Judge; and

Rodenberg, Judge.

UNPUBLISHED OPINION

CLEARY, Chief Judge

Following a mortgage foreclosure, a sheriff’s sale, and expiration of the

redemption period, respondent Great Southern Bank commenced an eviction action to

recover possession of real property from appellants Gustavo Aguilar Guzman and Gabriela Tatiana Castro Serna. The district court granted summary judgment to

respondent, and appellants challenge that judgment, arguing that respondent lacks

standing to pursue eviction and that the foreclosure and sheriff’s sale are void.

Appellants also contend that the district court should have stayed the eviction action

pending the resolution of a related quiet-title action in federal court. Because the district

court did not err by granting summary judgment to respondent and did not abuse its

discretion by denying a stay of the eviction proceedings, we affirm.

FACTS

In October 2006, appellants executed a note in favor of Mortgage Electronic

Registration Systems, Inc. for a loan that was secured by a mortgage on real property. In

May 2011, the mortgage was purportedly assigned to Inter Savings Bank, FSB by

Mortgage Electronic Registration Systems. In January 2013, the mortgage was

purportedly assigned to respondent by the Federal Deposit Insurance Corporation as

receiver for Inter Savings Bank. Respondent then commenced a foreclosure-by-

advertisement proceeding, and a sheriff’s sale of the real property was held in April 2013.

A sheriff’s certificate of sale was completed showing that respondent was the successful

bidder at the sale. The sale was subject to a statutory six-month redemption period, but

appellants did not redeem the property during that period.

Appellants continued to occupy the property, and respondent commenced an

eviction action in November 2013. Appellants replied by alleging that the mortgage

assignments were ineffective and that respondent lacked standing to foreclose the

2 mortgage and pursue eviction.1 Appellants requested summary judgment, dismissal of

the eviction complaint, or a stay of the eviction proceedings pending the resolution of the

quiet-title action. Respondent moved for summary judgment, a writ of recovery, and an

order to vacate. Following a hearing, the district court issued an order denying

appellants’ motions, granting summary judgment to respondent, and directing that an

order of eviction and writ of recovery be issued. The district court held that there were

no genuine issues of material fact to be determined and that respondent was entitled to

judgment as a matter of law because respondent “is the fee owner of the property” and

appellants “do not have any right to the [p]roperty” and “are holding over after the

expiration of time for redemption from the foreclosure of the [m]ortgage.” This appeal

followed.

DECISION

I. The district court did not err by granting summary judgment to respondent.

Appellants contend that the district court erred by granting summary judgment to

respondent because genuine issues of material fact related to their defenses exist. A

summary-judgment decision is reviewed de novo. Riverview Muir Doran, LLC v. JADT

Dev. Grp., LLC, 790 N.W.2d 167, 170 (Minn. 2010). In an appeal from summary

judgment, an appellate court “must review the record to determine whether there is any

genuine issue of material fact and whether the district court erred in its application of the

law.” Dahlin v. Kroening, 796 N.W.2d 503, 504 (Minn. 2011). The appellate court may

1 Appellants also commenced a separate quiet-title action to challenge property title and the foreclosure; that action was removed to federal court.

3 not weigh the evidence or make factual determinations, but must consider the evidence in

the light most favorable to the party against whom judgment was granted. McIntosh

Cnty. Bank v. Dorsey & Whitney, LLP, 745 N.W.2d 538, 545 (Minn. 2008).

A motion for summary judgment shall be granted “if the pleadings, depositions,

answers to interrogatories, and admissions on file, together with the affidavits, if any,

show that there is no genuine issue as to any material fact and that either party is entitled

to a judgment as a matter of law.” Minn. R. Civ. P. 56.03. The party moving for

summary judgment has the burden to show that summary judgment is appropriate.

Valspar Refinish, Inc. v. Gaylord’s, Inc., 764 N.W.2d 359, 364 (Minn. 2009). However,

a party opposing summary judgment “may not rest upon the mere averments or denials of

the adverse party’s pleading but must present specific facts showing that there is a

genuine issue for trial.” Minn. R. Civ. P. 56.05.

“The person entitled to the premises may recover possession by eviction when . . .

any person holds over real property . . . after the expiration of the time for redemption on

foreclosure of a mortgage . . . .” Minn. Stat. § 504B.285, subd. 1 (2012). An eviction is

“a summary court proceeding to remove a tenant or occupant from or otherwise recover

possession of real property by the process of law.” Minn. Stat. § 504B.001, subd. 4

(2012). An eviction proceeding “merely determines the right to present possession and

does not adjudicate the ultimate legal or equitable rights of ownership possessed by the

parties. It is not a bar to an action involving the title.” Dahlberg v. Young, 231 Minn. 60,

68, 42 N.W.2d 570, 576 (1950); see also Real Estate Equity Strategies, LLC v. Jones, 720

N.W.2d 352, 357–58 (Minn. App. 2006) (stating that the summary nature of eviction

4 proceedings remains even though district courts have subject-matter jurisdiction to

address title-related issues); Amresco Residential Mortg. Corp. v. Stange, 631 N.W.2d

444, 445–46 (Minn. App. 2001) (reviewing an eviction order and affirming the district

court’s dismissal of defenses and counterclaims that challenged the mortgage foreclosure

because the appellants had alternative procedures available to challenge the foreclosure

and title to the property in dispute).

Upon expiration of the statutory redemption period, a recorded certificate of sale

“shall operate as a conveyance to the purchaser or the purchaser’s assignee of all the

right, title, and interest of the mortgagor in and to the premises named therein at the date

of such mortgage, without any other conveyance.” Minn. Stat. § 580.12 (2012).

Every sheriff’s certificate of sale made under a power to sell contained in a mortgage shall be prima facie evidence that all the requirements of law in that behalf have been complied with, and prima facie evidence of title in fee thereunder in the purchaser at such sale, the purchaser’s heirs or assigns, after the time for redemption therefrom has expired.

Minn. Stat. § 580.19 (2012).

To prevail in this eviction action, respondent must show that the mortgage on the

property was foreclosed, that the time for redemption expired, that it is entitled to

possession of the property, and that appellants held over the property. See Minn. Stat.

§ 504B.285, subd. 1. Appellants do not dispute that they did not redeem within the six-

month redemption period and that they continued to possess the property after expiration

of that period. The sheriff’s certificate of sale is prima facie evidence that a foreclosure

occurred, that a foreclosure sale was held, that respondent was the successful bidder at

5 that sale, and that respondent is therefore entitled to possession of the property. See

Minn. Stat. §§ 580.12, .19.

Appellants have produced nothing to rebut this evidence. Instead, they challenge

the assignments of the mortgage and contend that, because the assignments were

ineffective, the foreclosure and sheriff’s sale are void. As the caselaw and statutes cited

above explain, a challenge to a mortgage assignment, foreclosure, or property title is

outside the scope of an eviction action, which is a summary proceeding to determine the

right to present possession of the property. Appellants have an alternative forum

available to dispute the foreclosure and property title in the form of their federal quiet-

title action.

Appellants argue that respondent lacks standing to pursue eviction. To have

standing to bring a lawsuit, a party must either have “suffered some ‘injury-in-fact’” or

be “the beneficiary of some legislative enactment granting standing,” such that the party

“has a sufficient stake in a justiciable controversy to seek relief from a court.” State by

Humphrey v. Philip Morris Inc., 551 N.W.2d 490, 493 (Minn. 1996). A successful

bidder at a sheriff’s sale of property has standing to pursue eviction after the redemption

period expires, as the bidder then has the legal right to possess the property and suffers an

injury-in-fact when others invade that right by holding over. See Minn. Stat. § 580.12

(stating that, upon expiration of the redemption period, a recorded certificate of sale

operates as a conveyance to the purchaser, or to the purchaser’s assignee, of all right,

title, and interest of the mortgagor in and to the premises); Harbal v. Fed. Land Bank of

St. Paul, 449 N.W.2d 442, 447 (Minn. App. 1989) (stating that a purchaser at a sheriff’s

6 sale acquires a type of vested ownership interest in the property subject to the limited

redemption rights of the foreclosed owner), review denied (Minn. Feb. 21, 1990). After

the redemption period expired, respondent had the right to possess the real property and

had standing to enforce that right through eviction when appellants held over.

Appellants also make a show-me-the-note argument, claiming that respondent

cannot have foreclosed the mortgage and cannot have been the successful bidder at the

sheriff’s sale because respondent was not the owner or holder of the note. A show-me-

the-note argument claims that, “as a prerequisite to the foreclosure of a mortgage, the

foreclosing entity must show either that it owns both the mortgage being foreclosed and

the note associated with that mortgage, or that it is acting on behalf of one who does.”

JPMorgan Chase Bank, N.A. v. Erlandson, 821 N.W.2d 600, 604 (Minn. App. 2012).

Minnesota courts have determined that the show-me-the-note argument is without merit.

See, e.g., Jackson v. Mortg. Elec. Registration Sys., Inc., 770 N.W.2d 487, 501 (Minn.

2009); Erlandson, 821 N.W.2d at 609 (“The holder of legal title to a mortgage can

foreclose its mortgage by action regardless of whether it also holds the note associated

with the mortgage.”).

Respondent has established the elements necessary to prevail in this eviction

action, and appellants have not presented facts showing that there is a genuine issue for

trial. Respondent is entitled to judgment as a matter of law, and the district court did not

err by granting summary judgment to respondent.

7 II. The district court did not abuse its discretion by denying appellants’ motion to stay the eviction proceedings pending the resolution of the federal quiet- title action.

Appellants contest the district court’s decision not to stay the eviction proceedings

pending the outcome of the quiet-title action in federal court. “Generally, whether to stay

a proceeding is discretionary with the district court, [and] its decision on the issue will

not be altered on appeal absent an abuse of that discretion.” Bjorklund v. Bjorklund

Trucking, Inc., 753 N.W.2d 312, 317 (Minn. App. 2008) (alteration in original)

(quotation omitted), review denied (Minn. Sept. 23, 2008).

“[W]hen [] counterclaims and defenses are necessary to a fair determination of the

eviction action, it is an abuse of discretion not to grant a stay of the eviction proceedings

when an alternate civil action that involves those counterclaims and defenses is pending.”

Id. at 318–19 (holding that a district court abused its discretion by refusing to stay

eviction proceedings pending the outcome of related litigation in which rights to the

property were disputed); cf. Deutsche Bank Nat’l Trust Co. v. Hanson, 841 N.W.2d 161,

165 (Minn. App. 2014) (stating that “Bjorklund presented an unusual factual scenario that

emerged from a dispute about the ownership of shares in a family-run corporation” and

that “[a] dispute over ownership alone does not show necessity under Bjorklund”).

[A] party to an eviction proceeding is not entitled to a stay merely because a related action is pending[.] . . . In the absence of some showing that the lack of a stay will compromise a party’s interests in the subject property, a district court does not abuse its discretion by denying a motion to stay an eviction proceeding. And even when such a showing is made, the decision whether to grant the stay is entrusted to the district court’s discretion.

8 Fed. Home Loan Mortg. Corp. v. Nedashkovskiy, 801 N.W.2d 190, 193 (Minn. App.

2011); see also Hanson, 841 N.W.2d at 164 (stating that “a party attempting to stay an

eviction action must provide a case-specific justification for granting a stay” and that “the

district court is not obligated to grant a stay even when the party does provide a case-

specific reason”).

Given that an eviction action is a summary proceeding to determine only the right

to present possession of property, appellants’ challenges to the mortgage assignments and

foreclosure are not “counterclaims and defenses [] necessary to a fair determination of the

eviction action” that mandate a stay under the rule articulated in Bjorklund. See id. at

165–66 (holding that a district court did not abuse its discretion by refusing to stay

eviction proceedings pending the outcome of litigation in which the validity of a

mortgage was challenged); Nedashkovskiy, 801 N.W.2d at 193 (holding that a district

court did not abuse its discretion by refusing to stay eviction proceedings pending the

outcome of litigation in which a mortgage foreclosure was challenged). Appellants did

not provide a case-specific justification for a stay, and the district court did not abuse its

discretion by denying appellants’ motion for a stay of the eviction proceedings pending

the resolution of the federal quiet-title action.

Affirmed.