Vagle v. Flagstar Bank N.A.

CourtDistrict Court, D. Minnesota
DecidedApril 7, 2025
Docket0:24-cv-04637
StatusUnknown

This text of Vagle v. Flagstar Bank N.A. (Vagle v. Flagstar Bank N.A.) is published on Counsel Stack Legal Research, covering District Court, D. Minnesota primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Vagle v. Flagstar Bank N.A., (mnd 2025).

Opinion

UNITED STATES DISTRICT COURT DISTRICT OF MINNESOTA

Melissa K. Vagle, No. 24-cv-4637 (KMM/DLM)

Plaintiff,

v. ORDER Flagstar Bank N.A.,

Defendant.

Melissa K. Vagle brought this action in Sherburne County District Court claiming that the foreclosure of her property in Elk River, Minnesota was unlawful. Compl., Doc. No. 1-1. Ms. Vagle seeks a declaration that the foreclosure notice was invalid due to improper notice and procedural deficiencies, an injunction prohibiting the Defendant, Flagstar Bank N.A. (“Flagstar”), from proceeding with the foreclosure, damages under federal and state law, and the imposition of penalties on Flagstar for its handling of the foreclosure. Id. at 7, Prayer for Relief. Flagstar removed the case to federal court on December 26, 2024, asserting that there is subject matter jurisdiction based on the presence of federal questions and diversity of citizenship. 28 U.S.C. §§ 1331, 1332, 1441. Following removal, Flagstar moved to dismiss Ms. Vagle’s Complaint for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6). Def’s Mot., Doc. No. 4. For the reasons that follow, the motion is granted, and the Complaint is dismissed without prejudice. BACKGROUND1 On April 17, 2020, Ms. Vagle obtained a loan to purchase the Elk River property

at issue in this case. The loan was secured by a mortgage in favor of Mortgage Electronic Registration System, Inc. (MERS) as the nominee for the lender United Wholesale Mortgage (UWM). Compl. at 2, ¶ 1; id. at 6, ¶ 1; Doc. No. 15 a 22 (Notice of Servicing Transfer); Lovett Decl., Ex. A at 1–2, Doc. No. 6.2 UWM was the original servicer of the loan, but the mortgage provides that the note could be sold without prior notice to Ms. Vagle and might result in a change in the loan servicer that collects periodic

payments due under the note and the mortgage. Lovett Decl., Ex. A at 12, ¶ 20. On August 11, 2023, UWM sent Ms. Vagle a “Notice of Servicing Transfer,” which indicated that UWM had sold the rights to service the mortgage loan to an unaffiliated purchaser that engaged Flagstar as the new servicer of the loan effective September 1,

1 Because Flagstar seeks dismissal under Rule 12(b)(6), the Court’s focus is on the facts alleged in the Complaint. Watkins v. City of St. Louis, Mo., 102 F.4th 947, 951 (8th Cir. 2024). Without converting the motion to dismiss into a motion for summary judgment under Rule 56, Fed. R. Civ. P. 12(d), the Court may also consider materials incorporated by reference in the Complaint, matters embraced by the pleadings, and certain public records, Porous Media Corp. v. Pall Corp., 186 F.3d 1077, 1079 (8th Cir. 1999). 2 In support of its motion, Flagstar submitted the declaration of its counsel, attaching the following documents recorded by the Sherburne County Recorder’s Office: (a) a copy of the mortgage on the Elk River property recorded on April 29, 2020 (Ex. A); (b) a copy of an assignment of the mortgage recorded on January 10, 2024 (Ex. B); (c) a copy of the notice of pendency of proceeding and power of attorney on April 10, 2024 (Ex. C); and a copy of a sheriff’s certificate of sale and foreclosure record recorded on June 5, 2024 (Ex. D). Lovett Decl., Exs. A–D, Doc. No. 6. Courts have considered similar documents as matters embraced by the pleadings and of public record in other wrongful foreclosure cases. See, e.g., Haubrich v. U.S. Bank Nat’l Ass’n, No. 12-cv-565 (DSD/TNL), 2012 WL 3612023, at *3 (D. Minn. Aug. 21, 2012) (“In the present action, the court considers the notes, mortgages, assignments, and other foreclosure-related documents as they are necessarily embraced by the pleadings and most are public records.”), aff’d, 720 F.3d 979 (8th Cir. 2013). 2023. Doc. No. 15 at 22 (Notice of Servicing Transfer); see also Lovett Decl., Ex. B (recorded assignment by MERS, on behalf of UWM, to Onslow Bay Financial, LLC).

Flagstar later asserted that Ms. Vagle defaulted on the loan. Compl. at 2, ¶ 3; id. at 6, ¶ 2. On April 5, 2024, Flagstar initiated proceedings to foreclose the mortgage on the Elk River property by advertisement. Lovett Decl., Ex. C. On April 25, 2024, Flagstar affixed a foreclosure notice to Ms. Vagle’s garage door. Compl. at 2, ¶ 2. On May 4, 11, 18, and 25, 2024, a notice of foreclosure was published in the Elk River Star News. Lovett Decl., Ex. D at 2. On May 6, 2024, a process server personally served the notice

of mortgage foreclosure sale and other documents on Ms. Vagle, identified as “Jane Doe.” Id. at 3. The Elk River property was sold in a Sheriff’s sale on June 5, 2024. Id. at 4. The Complaint includes four Counts setting forth Ms. Vagle’s claims, three of which assert that Flagstar violated Minnesota law in connection with the foreclosure on

the Elk River property. In Count I, Ms. Vagle asserts that Flagstar violated Minnesota Statutes Chapter 580 by failing to serve the foreclosure notice personally or by certified mail as required by Minnesota law. Id. at 2, Count I ¶ 1. She asserts that by affixing the notice to the property’s “external structure,” Defendant deprived her of “adequate notice and due process.” Id. at 3, Count I ¶ 2. And she claims that Defendant omitted “critical

details regarding the alleged default, obstructing Plaintiff’s ability to cure or contest the foreclosure.” Id. at 3, Count I ¶ 3. Count II of the Complaint is titled “Fraudulent Documentation and Lack of Standing.” Id. at 3, Count II. Ms. Vagle alleges that Flagstar failed to produce a valid and executed promissory note; “[p]rovid[ed] defective or fraudulent documentation lacking proper endorsements, breaking the chain of title”; and “[a]ssert[ed] foreclosure rights without legal standing, in violation of Minnesota Statutes

Chapter 580.02.” Id. And in Count IV (“Wrongful Foreclosure Due to Procedural Irregularities and Misrepresentation”), Ms. Vagle claims that Defendant asserted that she defaulted on the loan without evidence; mishandled her account records and loan documentation; and engaged in misrepresentation and negligence in foreclosure proceedings. Id., Count IV, ¶¶ 1–3. Ms. Vagle asserts violations of federal law in Count III of her Complaint.

Ms. Vagle claims that Defendant failed to comply with the Real Estate Settlement Procedures Act (RESPA) and the Truth in Lending Act (TILA). Id., Count III. Flagstar allegedly violated RESPA by failing to provide accurate account records and failing to respond to qualified written requests (QWR). Id., Count III ¶ 1. Ms. Vagle claims that Defendant violated TILA because it did not properly disclose the terms of the loan. Id. at

3, Count III, ¶ 2. After Flagstar removed this case to federal court, it filed a motion to dismiss for failure to state a claim on January 2, 2025. Pursuant to the Local Rules for the United States District Court in the District of Minnesota, Ms. Vagle was required to file a response to the motion no later than January 23, 2025. D. Minn. LR 7.1(c)(2) (requiring a

responding party to file and serve a memorandum of law and other supporting materials within 21 days after the filing of a dispositive motion). Ms. Vagle did not file a response by that date. However, on February 25, 2025, and again on March 18, 2025, the Court received certain documents from Ms. Vagle that the Court has reviewed in connection with Flagstar’s motion to dismiss.3

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