Nationstar Mortgage, LLC v. Julie Quale, John Doe

• Court: Court of Appeals of Minnesota
• Decided: March 2, 2015
• Docket: A14-1227
• Status: Unpublished

Opinion

This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (2014).

STATE OF MINNESOTA IN COURT OF APPEALS A14-1227

Nationstar Mortgage, LLC, Respondent,

vs.

Julie Quale, et al., Appellants,

John Doe, et al., Defendants.

Filed March 2, 2015 Affirmed Cleary, Chief Judge

Hennepin County District Court File No. 27-CV-HC-14-2283

Orin J. Kipp, David R. Mortensen, Wilford, Geske & Cook, P.A., Woodbury, Minnesota (for respondent)

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

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

Chutich, Judge. UNPUBLISHED OPINION

CLEARY, Chief Judge

We affirm summary judgment because respondent had standing to bring an

eviction action and met all the requirements entitling it to eviction under Minn. Stat.

§ 504B.285, subd. 1 (2014). We also hold that the district court did not abuse its

discretion by denying appellants’ motion for a pre-judgment stay of the eviction

proceeding and requiring appellants to post a bond under Minn. Stat. § 504B.371, subd. 3

(2014) to get a stay of execution of the writ of recovery of the premises pending this

appeal.

FACTS

On August 31, 2006, appellants Julie and Paul Quale granted a mortgage to

Mortgage Electronic Registration Systems, Inc. (MERS) as nominee for MILA, Inc., for

real property located at 11568 Fetterly Lane, Minnetonka, Minnesota 55305, to secure a

promissory note. The mortgage was registered in the office of the Hennepin County

Registrar of Titles on September 13, 2006, as document number 4305414. Appellants

defaulted under the terms of the mortgage by failing to make payments as they became

due beginning on January 1, 2010.

After appellants defaulted, MERS executed an assignment of the mortgage to

Aurora Loan Services, LLC (Aurora). The assignment was registered in the office of the

Hennepin County Registrar of Titles as document number T4954987. Aurora began

foreclosure proceedings by advertisement in May 2012. A sheriff’s sale was held on

2 August 13, 2012, and Aurora was the successful purchaser of the property for the sum of

$517,029, subject to a six-month redemption period. Neither appellants nor any other

eligible party redeemed the property within the six-month redemption period ending on

February 13, 2013.

Aurora conveyed the property by a limited warranty deed to respondent Nationstar

Mortgage, LLC, on April 9, 2013. Respondent began the underlying eviction action

because appellants were holding over the property. Respondent moved for summary

judgment; appellants moved to stay the eviction proceedings. The housing court referee

granted summary judgment and held that respondent was entitled to an immediate writ of

recovery. Appellants filed a notice of appeal, and the housing court referee stayed the

issuance of the writ of recovery of premises pending a hearing to set an appeal bond

pursuant to Minn. Stat. § 504B.371 (2014). The referee granted a stay, but conditioned it

on appellants posting a lump-sum bond of $48,230.53, as well as monthly bond payments

in the amount of $2,198. The district court affirmed the referee’s order setting the bond.

Appellants failed to deposit the supersedeas bond and the district court lifted the stay on

the issuance of the writ of recovery of the premises.

DECISION

I.

Appellants argue that respondent lacks standing to bring an eviction action and

that they are entitled to summary judgment. An eviction proceeding is a summary court

proceeding to remove an occupant from possession of real property by the process of law.

3 Minn. Stat. § 504B.001, subd. 4 (2014). An eviction proceeding does not adjudicate the

ultimate legal right of ownership possessed by the parties, nor does it bar actions

challenging the title. Dahlberg v. Young, 231 Minn. 60, 68, 42 N.W.2d 570, 576 (1950).

Numerous precedents have established the limited nature and scope of an eviction

proceeding, which is summary in nature. Amresco Residential Mortg. Corp. v. Stange,

631 N.W.2d 444, 445 (Minn. App. 2001).

“[A]ny mortgage of real estate containing a power of sale, upon default being

made in any condition thereof, may be foreclosed by advertisement.” Minn. Stat.

§ 580.01 (2014). 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 (2014). A certificate of sale made under a power to sell is “prima facie

evidence” that the purchaser has title and that every requirement of law necessary to

complete the sale has been complied with. Minn. Stat. § 580.19 (2014). The person

entitled to the premises has the right to recover possession by eviction after the expiration

of the time for redemption. Minn. Stat. § 504B.285, subd. 1 (2014).

A.

The district court held that respondent had standing and legal capacity to bring this

eviction action. Appellants argue that respondent lacked standing to bring an eviction

action because the mortgage was not properly transferred. When the relevant facts

4 necessary to decide standing are undisputed, courts determine standing de novo. Olson v.

State, 742 N.W.2d 681, 684 (Minn. App. 2007). A plaintiff has standing when he or she

“is the beneficiary of some legislative enactment granting standing.” Enright v.

Lehmann, 735 N.W.2d 326, 329 (Minn. 2007).

Appellants’ arguments fail because respondent had standing to bring an eviction

action under Minn. Stat. § 504B.285 as the purchaser’s assignee. Aurora, respondent’s

predecessor in interest, purchased the property at a sheriff’s sale, acquired a sheriff’s

certificate of sale, and recorded it. The certificate of sale acted as a conveyance of “all

the right, title, and interest of the mortgagor.” Minn. Stat. § 580.12. It was prima facie

evidence that Aurora had title and complied with every requirement of law necessary to

complete the sale. Minn. Stat. § 580.19. Aurora then properly conveyed the property to

respondent. Section 504B.285 gave respondent standing to recover possession by

eviction because appellants were holding over the property after the redemption period.

Minn. Stat. § 504B.285, subd. 1.

B.

The district court granted respondent’s motion for summary judgment based on

the deed respondent acquired from its predecessor in interest. Appellants argue that they

were entitled to summary judgment because respondent acquired title to the property

from Aurora, which acquired title from an unnamed trust that closed in 2006, which made

the transfer void. The undisputed facts establish that all of the requirements entitling

5 respondent to eviction pursuant to section 504B.285 were met, and respondent was

entitled to summary judgment as a matter of law.

The supreme court has succinctly stated the standard of review on an appeal from

summary judgment:

On appeal from summary judgment, we review whether there are any genuine issues of material fact and whether the district court erred in its application of the law. We view the evidence in the light most favorable to the party against whom summary judgment was granted. We review de novo whether a genuine issue of material fact exists. We also review de novo whether the district court erred in its application of the law.

STAR Ctrs., Inc. v. Faegre & Benson, L.L.P., 644 N.W.2d 72, 76-77 (Minn. 2002)

(citations omitted). A district court shall grant a motion for summary judgment “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. To

prevail in an eviction action on summary judgment, 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. Minn.

Stat. § 504B.285, subd. 1.

There are no genuine issues as to any material facts. Appellants defaulted on their

mortgage and Aurora began foreclosure proceedings by advertisement. The property was

purchased by Aurora at a sheriff’s sale. Appellants did not redeem the property during

the statutory redemption period. Aurora received a sheriff’s certificate of sale, which is

6 prima facie evidence that a foreclosure occurred, that a foreclosure sale was held, that

Aurora was the successful bidder at that sale, and that Aurora was therefore entitled to

possession of the property. See Minn. Stat. §§ 580.12, .19. Aurora conveyed the

property to respondent, giving respondent the right to evict appellants under Minn. Stat.

§ 504B.285, subd. 1. Because all of the statutory requirements are met and there are no

genuine issues as to any material facts, respondent is entitled to summary judgment.

Even if there were questions of fact regarding the validity of the title, those

arguments are beyond the summary nature and limited scope of an eviction proceeding,

and this court does not need to consider them. Stange, 631 N.W.2d at 445-46 (rejecting

appellant’s argument to enlarge the scope of eviction proceedings to adjudicate title

claims).

II.

The district court denied appellants’ motion for a pre-judgment stay of the eviction

proceeding. After granting respondent’s motion for summary judgment, the district court

granted a stay of the issuance of the writ of recovery, but required appellants to post a

supersedeas bond to remain in possession of the property pending appeal. Appellants

argue that the district court abused its discretion by refusing to grant a stay to allow the

related civil proceedings to be resolved and, alternatively, that the bond was too high.

We hold that the district court did not abuse its discretion.

Appellants first argue that there is a related state court proceeding involving the

same defenses and counterclaims necessary to the eviction action. Because of the related

7 state proceeding, appellants argue a stay is necessary under Bjorklund v. Bjorklund

Trucking, Inc., 753 N.W.2d 312 (Minn. App. 2008), review denied (Minn. Sept. 23,

2008). A district court’s decision not to grant a stay is reviewed for abuse of discretion.

Deutsche Bank Nat’l Trust Co. v. Hanson, 841 N.W.2d 161, 164 (Minn. App. 2014). A

district court abuses its considerable discretion “if it refuses to stay an eviction

proceeding when defenses or counterclaims that are essential in the eviction action are

also at issue in a pending civil case.” Id. A party seeking a stay must provide a “case-

specific justification” for the stay, but a dispute regarding the underlying mortgage is not

a case-specific reason. Id. Even if a party provides a case-specific reason, the district

court is not obligated to grant the stay. Id.

Instead of providing a case-specific justification for a pre-judgment stay of

the eviction proceeding, appellants make a series of conclusory and inaccurate

statements: respondent lacks standing and the right to possession, appellants were denied

due process, and related proceedings exist so a stay is required. These statements are not

counterclaims or defenses necessary to the fair determination of the eviction action also

at issue in a related civil proceeding. See id. (“Resolving a challenge to the validity of

the foreclosed mortgage is not essential to an eviction action.”). The district court did not

abuse its considerable discretion by refusing to grant a pre-judgment stay.

Appellants next argue that the district court abused its discretion by requiring an

unreasonably large lump-sum bond to stay execution of the writ of recovery of the

premises pending this appeal. Appellants argue that the district court should have granted

8 an unconditional stay, meaning a no-bond stay. An appellate court reviews the district

court’s issuance of a bond for an abuse of discretion. DRJ, Inc. v. City of St. Paul, 741

N.W.2d 141, 144 (Minn. App. 2007); see also Axford v. W. Syndicate Inv. Co., 141 Minn.

412, 414, 168 N.W. 97, 97 (1918), overruled on other grounds, Barrett v. Smith, 184

Minn. 107, 237 N.W. 881 (1931). If the district court grants a stay pending appeal, the

appealing party in possession of the premises during appeal “must give a bond.” Minn.

Stat. § 504B.371, subd. 3 (emphasis added). The bond must provide that all costs of the

appeal will be paid, the posting party will comply with the court’s order, and “all rent and

other damages due to the party excluded from possession during the pendency of the

appeal will be paid.” Id.

We first note that appellants’ bond arguments are likely moot because respondent

was entitled to summary judgment at the eviction proceeding. Because respondent is

entitled to possession, we are no longer able to grant effective relief by reducing the

bond. See Kahn v. Griffin, 701 N.W.2d 815, 821 (Minn. 2005) (“Generally, we will

dismiss a case as moot if we are unable to grant effectual relief.”). If appellants wanted

to effectively challenge the bond for the stay pending appeal, they should have done so

under Minnesota Rule of Civil Appellate Procedure 108.02. See Minn. R. Civ. App. P.

108.02, subd. 6 (stating that on a motion under Rule 127, a party may challenge the

“amount of security pending appeal”). However, the bond issue is arguably capable of

repetition so we will address the substance of the arguments. See Kahn, 701 N.W.2d at

9 821 (“[W]e will not deem a case moot if it implicates issues that are capable of repetition,

yet likely to evade review.”).

Appellants argue that they should not have to pay a bond, but that argument is

contrary to the plain language of section 504B.371, subd. 3, which specifically requires a

party appealing eviction to pay a bond if the party remains in possession. Based on the

evidence in the record, the district court conditioned a stay on the posting of a one-time

bond of $48,230.53, which represented the amount of missed mortgage payments (17)

since the expiration of the redemption period, as well as a monthly bond of $2,198 based

on an estimated rental value of the property provided by an online real estate agency. In

doing so, the district court did not abuse its discretion.

Affirmed.