Source: http://stopforeclosurefraud.com/tag/minnesota/
Timestamp: 2019-04-20 20:52:21+00:00

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Army Staff Sgt. Phillip Harry learned his house had been foreclosed upon and sold in a letter forwarded to him while he was serving in Iraq.
Harry, a member of the Minnesota National Guard, filed suit on Friday against his mortgage company, alleging the company violated a federal law protecting service members from losing their homes while they are deployed.
Reflecting a convergence of two major social issues: the home foreclosure crisis and the return of thousands of members of the military from Iraq and Afghanistan, attorneys for Harry are seeking to have the suit certified as a class action, saying hundreds of service members are likely to have faced the same situation.
The U.S. Treasury launched an investigation last year into 10 leading banks that may have illegally foreclosed on the mortgages of almost 5,000 members of the U.S. military, some of them activated to duty in Iraq and Afghanistan.
The suit filed in U.S. District Court in Minnesota accuses Illinois-based HSBC Mortgage Services of violations of the Servicemembers Civil Relief Act, signed into law in 2003 as a way of easing the economic and legal burdens on military personnel called to service.
Wells Fargo Bank, N.A., Defendant.
Civil No. 10-4372 (DWF/JJG).United States District Court, D. Minnesota.
DONOVAN W. FRANK, District Judge.
David M. Cialkowski, Esq., Carolyn G. Anderson, Esq., Brian C. Gundmundson, Esq., and June Pineda Hoidal, Esq., Zimmerman Reed, P.L.L.P.; and Peter A. Binkow, Esq., Andy Sohrn, Esq., Casey E. Sadler, Esq., Elizabeth M. Gonsiorowski, Esq., Robin Bronzaft Howald, Esq., and Jill Duerler, Esq., Glancy Binkow & Goldberg LLP; and Thomas C. Michaud, Esq., VanOverbeke, Michaud & Timmony PC; Christopher D. Kaye, Esq. and E. Powell Miller, Esq., The Miller Law Firm, P.C.; and Avraham Noam Wagner, Esq., The Wagner Firm, counsel for Plaintiffs.
Lawrence T. Hoffman, Esq., Richard M. Hagstrom, Esq., James S. Reece, Esq., Rory D. Zamansky, Esq., Daniel J. Millea, Esq., and Michael R. Cashman, Esq., Zelle Hofmann Voelbel & Mason LLP; and Brooks F. Poley, Esq., and William A. McNab, Esq., Winthrop & Weinstine, PA, counsel for Defendant.
This matter is before the Court on Plaintiff’s Motion for Class Certification (Doc. No. 61). For the reasons set forth below, the Court grants Plaintiff’s motion.
[t]he act, use, or employment by any person of any fraud, false pretense, false promise, misrepresentation, misleading statement or deceptive practice, with the intent that others rely thereon in connection with the sale of any merchandise. . . .
A class action serves to conserve the resources of the court and the parties by permitting an issue that may affect every class member to be litigated in an economical fashion. Gen. Tel. Co. of Sw. v. Falcon, 457 U.S. 147, 155 (1982). Plaintiffs requesting class certification must satisfy both “implicit” and “explicit” legal requirements. Plaintiffs must first establish that a defined class exists and that the class representatives fall within that class. See Johnson v. Eveleth Taconite Co., 139 F.R.D. 657, 659-60 (D. Minn. 1991) (citing East Texas Motor Freight System v. Rodriguez, 431 U.S. 395, 403 (1977)). Rule 23 of the Federal Rules of Civil Procedure governs class certification.
To be certified as a class, plaintiffs must meet all of the requirements of Rule 23(a) and must satisfy one of three subsections of Rule 23(b). The Rule 23(a) requirements for class certification are: (1) the putative class is so numerous that it makes joinder of all members impracticable; (2) questions of law or fact are common to the class; (3) the class representatives’ claims or defenses are typical of the claims or defenses of the class; and (4) the representative parties will fairly and adequately protect the interests of the class.
In re St. Jude Med., Inc., 425 F.3d 1116, 1119 (8th Cir. 2005) (citing Fed. R. Civ. P. 23(a)) (citations omitted).
District courts retain broad discretion in determining whether to certify a class. Gilbert v. City of Little Rock, 722 F.2d 1390, 1399 (8th Cir. 1983). When considering a motion for class certification, a court need not ask “whether the plaintiff or plaintiffs have stated a cause of action or will ultimately prevail on the merits, but rather whether the requirements of Rule 23 are met.” Beckmann v. CBS, Inc., 192 F.R.D. 608, 613 (D. Minn. 2000) (citing Eisen v. Carlisle & Jaquelin, 417 U.S. 156, 178 (1974)). The party seeking class certification “carr[ies] the burden of proof regarding Rule 23’s requirements.” In re Worker’s Comp., 130 F.R.D. 99, 103 (D. Minn. 1990) (citation omitted). A court may only certify a class if it is “satisfied after a rigorous analysis that all of the prerequisites are met.” Bishop v. Comm. on Prof’l Ethics, 686 F.2d 1278, 1287 (8th Cir. 1982) (citing Gen. Tel. Co., 457 U.S. at 161). When a question arises as to whether certification is appropriate, the court should give the benefit of the doubt to approving the class. In re Worker’s Comp., 130 F.R.D. at 103 (citation omitted).
Wells Fargo does not dispute that the proposed class satisfies the numerosity and commonality requirements of Rule 23(a). Thus, the Court considers whether Plaintiff meets the typicality and adequacy of representation requirements of Rule 23(a) as well as one of the three subsections of Rule 23(b).
In order for a class to be certified, Rule 23(a) requires that the claims or defenses of the class representative be typical of the other members of the class. Fed. R. Civ. P. 23(a)(3). “This requirement is generally considered to be satisfied if the claims or defenses of the representatives and the members of the class stem from a single event or are based on the same legal or remedial theory.” Paxton v. Union Nat’l Bank, 688 F.2d 552, 561-62 (8th Cir. 1982) (citation omitted). Factual variations will not necessarily preclude certification if “the claim arises from the same event or course of conduct as the class claims, and gives rise to the same legal or remedial theory.” Alpern v. UtiliCorp United, Inc., 84 F.3d 1525, 1540 (8th Cir. 1996).
In this case, Plaintiff claims, on behalf of itself and the proposed class members, that Wells Fargo breached the fiduciary duty it owed to the proposed class members, breached the terms of the contracts it entered into with the proposed class members, and violated provisions of the MCFA in its dealings with the proposed class members. The Court finds the typicality requirement satisfied because the claims of both Plaintiff and the class are based on the same legal theories and course of conduct.
Plaintiff claims typicality is met in this case because Wells Fargo entered into SLAs with each of the investors, all of which state that “the prime considerations for the investment portfolio shall be safety of principal and liquidity requirements.” (Doc. No. 63, at 20.) Further, Plaintiff asserts that similarly stringent investment criteria were applicable across all of the funds managed by Wells Fargo in the SLP. (Id. at 21.) Plaintiff’s claims arise from the purported, “grossly incompetent management of the Program’s investment risk, term, and liquidity,” and from Wells Fargo’s failure to conform the funds to the stated mandates. (Id.; Doc. No. 80, at 9, n.6.) The class members will likely rely on the same evidence regarding mismanagement of the funds and failure to follow investment mandates concerning risk, term, and liquidity to prove their claims.
Wells Fargo first argues that, because the proposed class members entered into different agreements and participated in different pools (trust vs. non-trust), the fiduciary duties and the contractual obligations owed to the investors are distinct from one another, and Plaintiff’s claims are thus atypical. (Doc. No. 71, at 27.) The Court notes, however, that a common mandate to ensure liquidity and safety of principal existed across all of the funds. Wells Fargo’s bald assertion that membership in a trust versus a non-trust pool would alter the contract and fiduciary duty claims is not enough to overcome the fact that all of the SLAs contained the same “prime considerations,” and Wells Fargo has failed to substantiate its claim.
Wells Fargo also argues that the fact that class members withdrew from the program at varying times throughout the class period defeats typicality. (Doc. No. 71, at 27.) Wells Fargo contends that certain entities will need to rely upon individualized proof to show they reasonably mitigated their damages when they chose not to exit the SLP. However, individual questions with respect to damages do not defeat class certification. See In re AM Int’l, Inc. Sec. Litig., 108 F.R.D. 190, 196 (S.D.N.Y.1985); In re Coll. Bound Consol. Litig., No. 93 CIV. 2348, 1994 WL 236163, at *3 (S.D.N.Y. May 31, 1994) (certifying a class in a securities action when faced with mitigation of damages issues). The time frame in which individuals class members sold their securities may be an issue when determining damages, but the class members are pursuing the same legal theories and will likely utilize the same evidence regarding Wells Fargo’s monitoring of the investments and alleged failure to invest the collateral in accordance with the investment guidelines to prove those legal theories. There are no defenses that are truly unique to any of the proposed class members in this case, especially since more than one hundred of them did not sell immediately after losses began to be incurred. Therefore, the Court concludes the claims of the class representative are typical of the claims of the class as a whole.
Rule 23(a)(4) requires plaintiffs to establish that the “representative parties will fully and adequately protect the interests of the class.” Fed. R. Civ. P. 23(a)(4). In order to satisfy the adequacy requirement, Plaintiff must show that: (1) the representative and its attorneys are able and willing to prosecute the action competently and vigorously; and (2) the representative’s interests are sufficiently similar to those of the class that it is unlikely that their goals and viewpoints will diverge. In re Potash Antitrust Litig., 159 F.R.D. 682, 692 (D. Minn. 1995).
Wells Fargo does not appear to contest the first prong. The Court thus finds that Plaintiff and its attorneys are able and willing to prosecute the action competently and vigorously.
With respect to the second prong, the Court finds Plaintiff’s interests to be sufficiently similar to those of the class that it is unlikely that their goals and viewpoints will diverge. Wells Fargo argues that Plaintiff will not adequately represent the class, citing an unavoidable tension between those investors that withdrew early and those that remained in the fund and experienced greater losses. (Doc. No. 71, at 30.) That some of the institutional investors such as Plaintiff may have suffered more substantial losses than others does not render Plaintiff’s interests adverse to those of any other proposed class member. Rather, the interests of Plaintiff and the proposed class members are certainly aligned in this case: they share the common goal of recovering damages from Wells Fargo as a result of the SLP’s losses. Notwithstanding that the amount of damages may vary from investor to investor, Plaintiff’s goals and viewpoints are unlikely to diverge from those of the remainder of the class. Because the proposed class representative’s interests are sufficiently similar to those of the class, and because Plaintiff and its counsel are able and willing to competently and vigorously prosecute this action, the Court concludes that Plaintiff has satisfied Rule 23(a)(4).
Under Rule 23(b)(3), a court must find that “questions of law or fact common to the members of the class predominate over any questions affecting only individual members” in order to certify a class. Fed. R. Civ. P. 23(b)(3). When considering the facts of a given case, “a claim will meet the predominance requirement when generalized evidence proves or disproves the elements of the claim on a class-wide basis, because such proof obviates the need to examine each class member’s individual position.” Buetow v. A.L.S. Enters., Inc., 259 F.R.D. 187, 190 (D. Minn. 2009) (citation omitted). The purpose of the predominance requirement is to “achieve economy and efficiency in the settlement of disputes.” Vernon J. Rockler & Co. v. Graphic Enters., Inc., 52 F.R.D. 335, 344 (D. Minn. 1971) (citing Fed. R. Civ. P. 23 advisory committee’s note). As discussed below, the Court concludes that common questions of law and fact predominate on all three claims for which Plaintiff seeks class certification.
The Court concludes that the elements of the fiduciary duty claim are subject to proof by generalized evidence on a class-wide basis. See Buetow, 259 F.R.D. at 190. There appears to be no dispute that Wells Fargo entered into SLAs with each participant in the SLP, all of which required Wells Fargo to serve as a fiduciary for the purposes of securities lending; and Wells Fargo acted in a fiduciary capacity as the administrator of the program. Plaintiff alleges that Wells Fargo owed a fiduciary duty to all class members to follow the investment mandates contained within the SLAs and to monitor the SLP’s assets to ensure that the investment selections continued to reflect those mandates. Notably, Wells Fargo’s actions and conduct, not the conduct of any individual class member, is the focal point of the fiduciary duty claim. Common issues such as whether Wells Fargo knew or should have known that the investments it selected did not comport with investment mandates, whether Wells Fargo failed to monitor the investments to ensure they were not overly risky or illiquid, and whether the class members sustained losses as a result of the alleged breach of Wells Fargo’s fiduciary duty to select proper investments and monitor the funds for undue risk, will likely turn on substantially the same evidence for the class as a whole. See AFTRA Ret. Fund v. J.P. Morgan Chase Bank, N.A., 269 F.R.D. 340, 349 (S.D.N.Y. 2010) (granting class certification on fiduciary duty claim by seventy-six investors in a securities lending program). Claims concerning Wells Fargo’s purported failure to perform any monitoring, failure to maintain a list of its approved investments, and failure to apprehend or respond to information about high-risk, long-term securities, are all subject to proof through generalized evidence in light of Wells Fargo’s standardized investment guidelines. See id. Thus, the Court concludes that class members can rely on generalized evidence to prove that Wells Fargo breached its fiduciary duty to the class as a whole.
The Court concludes that generalized evidence can be used to prove Plaintiff’s breach of contract claim on a class-wide basis. Here, the entire class participated in the SLP, and each class member entered into an SLA with Wells Fargo that contained the following statement: “The prime considerations for the investment portfolio shall be safety of principal and liquidity requirements.” (Sohrn Decl. ¶ 2, Ex. 8, at 2.) The class members will likely all rely on that statement to prove that Wells Fargo breached their respective contracts.
Plaintiff has alleged that Wells Fargo violated an express mandate contained within the SLAs when it invested collateral in illiquid and risky assets. (Doc. No. 63, at 29.) Whether Wells Fargo breached the terms of each of the SLAs by selecting the investments it did will be subject to common proof through generalized evidence. Thus, the class members need not rely upon individualized evidence to prove their breach of contract claims. Moreover, whether Wells Fargo did in fact select investments that did not conform to the investment mandates in the SLAs will not require a foray into any individualized understanding of the agreements by the plan participants. Contra Avritt v. Reliastar Life Ins. Co., 615 F.3d 1023, 1029-30 (8th Cir. 2010) (determining that each proposed class member’s individualized understanding of a contractual provision stating that non-guaranteed interest would be credited “in a way set by our Board of Directors” was central to the dispute). The Court concludes that the breach of contract claim is subject to proof by generalized evidence on a class-wide basis.
Finally, Plaintiff claims that common questions predominate on its MCFA claim because Wells Fargo intended for the class members to rely on the statement in the SLA concerning safety of principal and liquidity requirements, a statement Plaintiff alleges was fraudulent. (Doc. No. 63, at 32.) Wells Fargo asserts that common issues of law and fact do not predominate on the MCFA claim because the claim requires proof of individual reliance. (Doc. No. 71, at 39-40.) While the Court acknowledges that some claims under the MCFA are not subject to class certification, the Court concludes that Plaintiff’s MCFA claim in this case can be proven on a class-wide basis through the use of generalized evidence.
The Minnesota Legislature has eliminated the requirement of pleading and proving traditional common law reliance as an element of a statutory misrepresentation in a sales action; however, causation remains an element of such a claim. Grp. Health Plan, Inc. v. Philip Morris Inc., 621 N.W.2d 2, 13 (Minn. 2001). It is still necessary to prove reliance on the alleged misrepresentations or conduct in order to satisfy the causation requirement. Id. What is required to prove this reliance is a causal nexus between the plaintiff’s damages and the defendant’s wrongful conduct. Id. at 14. This causal nexus, however, “need not include direct evidence of reliance by individual consumers.” Id. Plaintiffs may utilize circumstantial evidence of reliance to prove the causation element of their consumer fraud claims. Id.; Curtis v. Altria Grp., Inc., 792 N.W.2d 836, 858 (Minn. Ct. App. 2011), rev. granted March 15, 2011 (noting “that the required causal nexus may be established when there is something to connect the claimed damages and the alleged prohibited conduct”) (internal quotations omitted).
Here, the parties acknowledge that the SLA for each participant in the SLP contained the statement: “The prime considerations for the investment portfolio shall be safety of principal and liquidity requirements.” There is no dispute that each member of the class signed a document containing the alleged misrepresentation. See Mooney v. Allianz Life Ins. Co., Civ. No. 06-545, 2008 WL 2952055, at *2-3 (D. Minn. Jul. 28, 2008) (upholding class certification where there was no question that each member of the putative class had received the alleged misrepresentation and determining that the plaintiffs could “prove a causal nexus on a class-wide basis through direct and circumstantial evidence that policyholders were misled to their detriment by the references to an `up-front’ and `immediate’ bonus”). Contra In re St. Jude Medical, Inc., 522 F.3d 836, 838-40 (8th Cir. 2008) (“St. Jude II“) (acknowledging questions over whether patients and doctors had received the alleged misrepresentations concerning the relevant product and ultimately concluding, in light of the lack of consistency in what alleged misrepresentations were communicated and how they were communicated, that individual issues as to causation and reliance would predominate).
The impact of Wells Fargo’s statement regarding safety of principal and liquidity requirements was likely the same for all class members — namely, to instill a belief about the nature of the risk of the investment. See Curtis, 792 N.W.2d at 858. Further, Wells Fargo has not, at this point in the litigation, negated the common sense inference in this case that the statement in the SLA may have successfully persuaded the class members of the safety of their investments. See id. at 859. Because each member of the putative class signed an SLA containing the alleged misrepresentation and because Plaintiff can rely upon direct and circumstantial evidence to prove reliance on a class-wide basis, common questions predominate over questions affecting individual class members. Therefore, the Court finds that class certification on the MCFA claim is appropriate.
(A) the class members’ interests in individually controlling the prosecution or defense of separate actions; (B) the extent and nature of any litigation concerning the controversy already begun by or against class members; (C) the desirability or undesirability of concentrating the litigation of the claims in the particular forum; and (D) the likely difficulties in managing a class action.
Id. Having considered the relevant factors, the Court finds that a class action is the superior method of adjudication.
First, as to the class members’ interests in individually controlling the prosecution of separate actions, the Court finds that such interests are minimal and outweighed by the greater interest in having the claims heard as a class action. While Wells Fargo points out that some of the SLP participants are capable of bringing individual claims against Wells Fargo, Plaintiff notes that smaller investors may not have the financial means to bring suit against Wells Fargo on their own. See AFTRA, 269 F.R.D. at 355; (Doc. No. 63, at 34). While it is certainly true that some institutional investors could effectively bring their own claims, on the whole, the Court finds that a class action is preferable.
Second, that four other lawsuits challenging Wells Fargo’s SLP have been filed does not render a class action here an inferior method of adjudication. It is true that some investors have initiated separate actions against Wells Fargo. Notably, however, in each of the other lawsuits, multiple parties joined together as plaintiffs. Additionally, as noted earlier, simply because some investors have the resources to devote to a lawsuit of this nature does not mean the same holds true for all members of the putative class. Rather, class members who may not otherwise have the means to litigate their claims will likely benefit greatly from a class action, and a class action will ensure that class members who are otherwise unaware that they possess a claim will have their rights represented. Furthermore, minimizing the number of individual lawsuits filed on this basis (which, given the size of the class, could potentially total in the hundreds) promotes the interests of judicial economy and efficiency.
Third, it appears that Wells Fargo does not dispute the desirability of concentrating the litigation of these claims in this forum. Even if that were not the case, the Court finds that the presence of Wells Fargo, the relevant documents, and many of the administrators of the SLP in Minnesota makes it desirable to concentrate the claims in this forum.
Finally, the Court foresees little difficulty in managing a class action based on the similarity of the contracts and the likely ability of the class members to prove their claims with generalized evidence. The Court further notes that class actions of this size and complexity are common. See, e.g., AFTRA, 269 F.R.D. at 355.
In light of the relevant considerations, the Court concludes that a class action is the superior method for adjudicating these claims pursuant to Rule 23(b)(3).
For the foregoing reasons, the Court finds that Plaintiff has satisfied the requirements of Rules 23(a) and 23(b)(3) with respect to its breach of fiduciary duty, breach of contract, and MCFA claims against Wells Fargo. A class action in this matter will prevent further, duplicative litigation of the relevant claims and will serve to conserve the resources of the Court and the parties by permitting the issues to be litigated in an economical fashion. The Court further notes that a class action will likely minimize the costs and expenses of litigation without compromising the rights of the parties. Therefore, the Court certifies the proposed class with respect to Counts I, II, and III of Plaintiff’s Class Action Complaint (Doc. No. 1, Ex. 1).
1. Plaintiff’s Motion for Class Certification (Doc. No. ) is GRANTED as to Count I (Breach of Fiduciary Duty), Count II (Breach of Contract), and Count III (Violation of Minnesota Prevention of Consumer Fraud Act — Minn. Stat. § 325F.69) of Plaintiff’s Class Action Complaint (Doc. No. 1, Ex. 1).
All participants in Defendant Wells Fargo Bank, N.A.’s securities lending program (the “Program”) from any time in the period January 1, 2006 to the present who suffered losses due to the Program’s purchase and maintenance of high risk, long-term securities.
3. The parties shall negotiate the content of the class notice. Within fourteen (14) days of the date of this Order, the parties shall submit a joint proposed notice to the Court. If the parties are unable to agree on the content of the notice, the parties shall each submit a proposed notice, together with briefing not to exceed ten (10) pages per side, within twenty-one (21) days of the date of this Order.
4. The Court appoints the City of Farmington Hill Employees Retirement System as class representative.
5. Having considered the requirements of Rule 23(g) of the Federal Rules of Civil Procedure, the Court appoints Glancy Binkow & Goldberg LLP, the Miller Law Firm, P.C., VanOverbeke Michaud & Timmony, P.C., and Zimmerman Reed, PLLP, as class counsel.
 Plaintiff submitted three SLAs that do not appear to contain the language concerning safety of principal and liquidity requirements. (Doc. No. 63, at 7, n.3; Doc. No. 65, Sohrn Decl. ¶ 2, Exs. 9-11.) One of these SLAs is from 1994 and outside the class period, so the Court need not consider it. (See Sohrn Decl. ¶ 2, Ex. 9, at 7.) One of the SLAs contains substantially similar language concerning liquidity and safety of principal. (See id., Ex. 10, at 23) (“The key objective of the management of cash collateral supporting securities loans are to: safeguard principal [and] . . . maintain adequate liquidity. . . .”). The final agreement does not appear to be an SLA, but rather an agreement for the services of an independent contractor. (See id., Ex. 11.) Plaintiff, however, provides only a single SLA containing the sentence “[t]he prime considerations for the investment portfolio shall be safety of principal and liquidity requirements.” (Id., Ex. 8, at 2.) While the Court questions Plaintiff’s decision to provide only a single SLA to support its claim that the SLAs entered into between Wells Fargo and more than one hundred other class members contain exactly the same language, Wells Fargo does not appear to dispute Plaintiff’s assertion that all the SLAs contained this language.
 Nothing on the face of the Declaration of Trust (Zamansky Aff. ¶ 4, Ex. 80) appears to alter the fiduciary duties or contractual obligations owed by Wells Fargo to the investors as those duties are articulated in the SLAs and investment guidelines. Notably, all of the SLAs signed by the participants, including participants in the non-trust pools, represent that the prime considerations of the funds are safety of principal and liquidity requirements. Further, the investment guidelines for all three trust pools contained this same language.
 Here, there are no fewer than 132 potential class members and Wells Fargo concedes that only approximately twenty sought to exit the program immediately after they began to incur losses. (Doc. No. 80, at 16, n.10.) There is no evidence that Plaintiff was made aware of Wells Fargo’s alleged fraudulent activity but opted to continue investing in the program, despite having knowledge of the purported fraud. Contra Gary Plastic Packaging v. Merrill Lynch, 903 F.2d 176, 179-80 (2d Cir. 1990) (finding that continued investment after having notice of and investigating alleged fraud created defenses unique to the proposed representative). Furthermore, there does not appear to be an issue arising from the comparative sophistication of the investors here; rather, Wells Fargo claims that the members of the putative class were all sophisticated investors who knew and understood the risks involved in participating in the SLP. Contra Baffa v. Donaldson, Lufkin & Jenrette Sec. Corp., 222 F.3d 52, 59-60 (2d Cir. 2000) (concluding that the claims of the proposed class representative were atypical because she “was a sophisticated broker who had access to more information than other investors in the putative class”).
 Further, Wells Fargo voices its concern about the need for each class member to separately and independently prove its individualized damages. (See Doc. No. 71, at 42.) Nevertheless, “the mere existence of individual questions such as damages does not automatically preclude satisfaction of the predominance requirement . . . so long as there is some common proof to adequately demonstrate some damage to each plaintiff.” Bokusky v. Edina Realty, Inc., No. 3:92-cv-00223, 1993 WL 515827, at *8 (D. Minn. 1993) (citing In re Worker’s Comp., 130 F.R.D. 99, 108 (D. Minn. 1990)).
 Wells Fargo argues that, because at least eleven participants in the SLP negotiated choice-of-law provisions, the proposed class members have a strong interest in controlling their own litigation. The Court finds, however, that the potential interest of eleven investors in controlling the prosecution of separate actions does not outweigh the interest of the more than 100 additional class members in having their claims heard as part of a class action.
 Litigating this dispute as a class action will foster judicial economy, as certifying this class may resolve the claims of over 100 potential plaintiffs. A class action will further serve the interests of economy and efficiency given that the parties will likely rely on common evidence to prove their claims with respect to Wells Fargo’s management of the portfolios’ liquidity and risk.
1st Fidelity Loan Servicing, LLC, Respondent.
No. A11-1081.Court of Appeals of Minnesota.Filed March 12, 2012.
Jonathan L. R. Drewes, Michael J. Wang, Drewes Law, PLLC, Minneapolis, Minnesota, for appellant.
David R. Mortensen, Christina Weber, Wilford, Geske & Cook, P.A., Woodbury, Minnesota, for respondent.
Considered and decided by Peterson, Presiding Judge; Larkin, Judge; and Cleary, Judge.
Appellant challenges the district court’s award of summary judgment for respondent, arguing that the district court erroneously concluded that respondent’s foreclosure by advertisement was valid despite respondent’s failure to strictly comply with certain statutory requirements. Because Minnesota Supreme Court precedent requires strict compliance with statutory requirements in a foreclosure by advertisement and because there are genuine issues of material fact regarding appellant’s unlawful-eviction claim, we reverse and remand.
On June 30, 2005, appellant Doris Ruiz executed a mortgage on a duplex located in Minneapolis. By September 2008, appellant had failed to make payments on the underlying debt and defaulted on the mortgage. On September 21, 2009, the mortgage was assigned to respondent 1st Fidelity Loan Servicing, LLC. Respondent recorded the mortgage assignment on November 17. But the recording identified respondent as 1st Fidelity instead of 1st Fidelity Loan Servicing, LLC. Later, respondent initiated a foreclosure by advertisement.
Beginning on May 18, 2010, respondent published a notice of foreclosure sale for six consecutive weeks in a designated legal newspaper. On that same day, respondent filed a foreclosure-pendency notice with the Hennepin County Recorder and re-recorded the September 2009 mortgage assignment to accurately state respondent’s legal name as 1st Fidelity Loan Servicing, LLC. A foreclosure sale was held on November 30, and respondent purchased the property. Appellant failed to redeem the property, and the redemption period expired on January 4, 2011.
After the redemption period expired, a real estate agent visited the property at respondent’s request. The agent concluded that although appellant continued to occupy the lower unit of the duplex, the upper unit was vacant. The agent executed an affidavit stating that the upper unit was dark and free of typical signs of occupancy, such as items in the window.
Based on the agent’s representations, respondent hired a handyman to change the locks to the upper unit. The handyman executed an affidavit stating that he changed the locks on the front and back doors. The affidavit states that he only saw a chair, a plant stand, and a few miscellaneous items in the unit; he did not observe a television, entertainment center, dishes in the kitchen, or any of the “usual items one would see in an occupied residence”; the items that were in the unit were disorganized; the counters were clear of items associated with residency such as soap dispensers; and no mail or newspapers were visible in the unit. Based on his observations, he concluded that no one resided in the upper unit.
After discovering that the locks to the upper unit had been changed, appellant called the real estate agent. The agent asserts that appellant was “quite angry” and would not allow him “to get a word in to the conversation.” The agent called appellant back and left her a voicemail, offering to provide her with a key to the upper unit. Appellant did not respond to the voicemail. Instead, appellant forcibly entered the upper unit, damaging the door and doorframe in the process.
Appellant filed suit against respondent on February 3, seeking a declaration that the foreclosure sale was “null and void” because respondent failed to strictly comply with the statutes that govern a foreclosure by advertisement. Appellant asserted three instances of inadequate compliance: failure to accurately record the September 2009 mortgage assignment prior to publication of the foreclosure notice; failure to record the foreclosure-pendency notice prior to publication of the foreclosure notice; and failure to provide appellant with a pre-foreclosure counseling notice. Appellant also asserted wrongful-eviction and quiet-title claims, seeking monetary damages on the wrongful-eviction claim and “[j]udgment quieting title to the Subject Property in [appellant]’s name” on the quiet-title claim. Respondent moved to dismiss, or in the alternative for summary judgment, all of appellant’s claims. Appellant moved for summary judgment on her invalid-foreclosure and quiet-title claims. The district court denied appellant’s motion but awarded summary judgment for respondent, dismissing all of appellant’s claims with prejudice. This appeal follows.
“A motion for summary judgment shall be granted when the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue of material fact and that either party is entitled to a judgment as a matter of law.” Fabio v. Bellomo, 504 N.W.2d 758, 761 (Minn. 1993). “[T]here is no genuine issue of material fact for trial when the nonmoving party presents evidence which merely creates a metaphysical doubt as to a factual issue and which is not sufficiently probative with respect to an essential element of the nonmoving party’s case to permit reasonable persons to draw different conclusions.” DLH, Inc. v. Russ, 566 N.W.2d 60, 71 (Minn. 1997). “[T]he party resisting summary judgment must do more than rest on mere averments.” Id.
“[Appellate courts] review a district court’s summary judgment decision de novo. In doing so, we determine whether the district court properly applied the law and whether there are genuine issues of material fact that preclude summary judgment.” Riverview Muir Doran, LLC v. JADT Dev. Grp., LLC, 790 N.W.2d 167, 170 (Minn. 2010) (citation omitted). “On appeal, the reviewing court must view the evidence in the light most favorable to the party against whom judgment was granted.” Fabio, 504 N.W.2d at 761.
Appellant argues that the foreclosure is void because respondent failed to strictly comply with certain statutory requirements. Respondent argues, and the district court agreed, that respondent substantially complied with the statutes and that substantial compliance is sufficient. We disagree.
Foreclosure by advertisement is purely a statutory creation. One who avails himself of its provisions must show an exact and literal compliance with its terms; otherwise he is bound to profess without authority of law. If what he does failed to comply with the requirements of the statute, it is void.
Foreclosure by advertisement was developed as a non-judicial form of foreclosure designed to avoid the delay and expense of judicial proceedings. Because foreclosure by advertisement is a purely statutory creation, the statutes are strictly construed. We require a foreclosing party to show exact compliance with the terms of the statutes. If the foreclosing party fails to strictly comply with the statutory requirements, the foreclosure proceeding is void.
Id. at 494 (emphasis added) (quotations and citations omitted).
Jackson concluded with a statement that “[a]s a court that reviews and interprets the laws of this state, we must apply the foreclosure by advertisement statutes as they have been written by the legislature and as they have been applied and interpreted in the past.” Id. at 502-03. The supreme court’s statements regarding the strict-compliance standard, although dicta, are entitled to “great weight.” In re Wylde, 454 N.W.2d 423, 425 (Minn. 1990); see Simons v. Shiltz, 741 N.W.2d 907, 910 (Minn. App. 2007) (relying on dicta in a supreme court opinion), review denied (Minn. Feb. 19, 2008). Moreover, the statements provide no indication that the court is willing to depart from the standard that it adopted in 1910.
In concluding that substantial compliance is sufficient, the district court relied on Hudson v. Upper Mich. Land Co., 165 Minn. 172, 206 N.W. 44 (1925), Sieve v. Rosar, 613 N.W.2d 789 (Minn. App. 2000), and State by Spannaus v. Dangers, 368 N.W.2d 384 (Minn. App. 1985), review denied (Minn. Aug. 20, 1985). This reliance was misplaced. Although language in Hudson is inconsistent with the strict-compliance standard, see Hudson, 165 Minn. at 174, 206 N.W. at 45 (“Whether a sale on the foreclosure of a mortgage pursuant to a power of sale is void or voidable by reason of an irregularity in the proceedings depends upon the nature of the irregularity.”), Hudson does not provide a basis to reject the supreme court’s much more recent reiteration of the strict-compliance standard in Jackson. And Rosar and Dangers are factually distinguishable and therefore not on point. See Rosar, 613 N.W.2d at 793 (requiring only substantial compliance to effect a valid redemption after a foreclosure sale); Dangers, 368 N.W.2d at 386 (requiring only substantial compliance in condemnation proceedings).
The district court also reasoned that “[i]n the foreclosure and real property context, [appellant]’s reliance on Jackson and the standard of strict compliance is inflexible and does not correspond to the reality of the foreclosure process.” But the supreme court clearly requires strict compliance with the foreclosure-by-advertisement statutes, and “[t]he district court, like this court, is bound by supreme court precedent.” State v. M.L.A., 785 N.W.2d 763, 767 (Minn. App. 2010), review denied (Minn. Sept. 21, 2010). We therefore review respondent’s foreclosure by advertisement for strict compliance with the relevant statutory requirements.
Minn. Stat. § 580.02 (2010) requires that all assignments of a mortgage be recorded as “a condition precedent to the right to foreclose by advertisement.” Jackson, 770 N.W.2d at 497. “[P]roceedings to foreclose a real estate mortgage by advertisement shall be deemed commenced on the date of the first publication of the notice of sale.” Minn. Stat. § 541.03, subd. 2 (2010).
The mortgage in this case was assigned to respondent in September 2009, and the assignment was recorded on November 17. But this recording inaccurately stated respondent’s legal name. The notice of foreclosure sale was published on May 18, 2010. On May 18, respondent once again recorded the September 2009 mortgage assignment to correct the inaccuracy in the first recording. Appellant argues that because respondent did not accurately record the mortgage assignment prior to publishing the notice of sale, the foreclosure is invalid. Respondent counters that the November 2009 recording was sufficient and that it only re-recorded the assignment “out of an abundance of caution.” But respondent offers no legal argument or authority indicating that the first recording was legally sufficient even though it inaccurately stated the assignee’s legal name. And the second recording was untimely under Minn. Stat. § 580.02. Because respondent failed to strictly comply with section 580.02, “the foreclosure proceeding is void.” Jackson, 770 N.W.2d at 494.
A person foreclosing a mortgage by advertisement shall record a notice of the pendency of the foreclosure with the county recorder or registrar of titles in the county in which the property is located before the first date of publication of the foreclosure notice but not more than six months before the first date of publication.
Minn. Stat. § 580.032, subd. 3 (2010).
Appellant argues that respondent failed to satisfy this requirement, because it recorded the notice of pendency on the first date of publication. The district court disagreed, relying on a substantial-compliance standard. The district court reasoned that “[respondent] sent the Notice of Pendency for recording on May 14, 2010 by personal courier and attempted to have the Notice of Pendency recorded prior to the first date of publication.” But the date that respondent attempted to record the notice is irrelevant. See Jackson, 770 N.W.2d at 494 (stating that the supreme court requires “a foreclosing party to show exact compliance with the terms of the statutes” (quotation omitted)). Because respondent failed to strictly comply with section 580.032, subd. 3, “the foreclosure proceeding is void.” Id.
Having concluded that respondent’s foreclosure by advertisement is void for failure to strictly comply with sections 580.02 and 580.032, we reverse the district court’s summary-judgment dismissal of appellant’s claims under these sections. And we remand for entry of judgment for appellant on these claims, as well as on her quiet-title claim. It is therefore unnecessary to review the district court’s dismissal of appellant’s claim that the foreclosure is void because respondent did not provide appellant with a pre-foreclosure counseling notice under Minn. Stat. § 580.021, subd. 2 (2010).
Appellant argues that respondent wrongfully evicted her from the upper unit of the property, asserting that because the upper unit was not vacant, respondent was not authorized to change the locks to the unit. See Minn. Stat. § 582.031, subd. 1(a) (2010) (“If premises described in a mortgage or sheriff’s certificate are vacant or unoccupied, the holder of the mortgage or sheriff’s certificate or the holder’s agents and contractors may enter upon the premises to protect the premises from waste and trespass, until the holder of the mortgage or sheriff’s certificate receives notice that the premises are occupied.”). The district court granted summary judgment because “[a]lthough [appellant] denies that the Upper Unit was vacant, she does not adequately rebut [respondent]’s evidence. Essentially, [appellant]’s evidence is conclusory in nature, and she has not pointed to any specific, admissible facts in the record to overcome [respondent]’s assertions or the standard for summary judgment.” We disagree.
Appellant’s affidavit states: “When speaking with [respondent’s real estate agent] . . . in January 2011, I specifically told him that my family occupies both units in the duplex. . . . Upon the contractor’s entry into the property, furniture, clothes, and all normal items demonstrating occupancy would have been readily apparent to the intruding contractor.” Appellant also submitted utility bills showing gas and electricity usage at the unit. Appellant’s affidavit is no more conclusory than the affidavits that respondent submitted in support of summary judgment. Moreover, the real estate agent’s affidavit acknowledges that appellant informed him, before respondent changed the locks, that “her family had a right to have access to both upper and lower units.” On this record, there is a genuine issue of material fact regarding whether the upper unit was “vacant or unoccupied” under Minn. Stat. § 582.031, subd. 1(a).
The district court also reasoned that “even if . . . there remains a genuine issue of material fact that is in dispute,” it could not “ignore the actions of [appellant] in this matter” in re-entering the upper unit because neither party is entitled to self-help. In arriving at this conclusion, the district court appears to have weighed the evidence, which is not permitted on summary judgment. See Fairview Hosp. & Health Care Servs. v. St. Paul Fire & Marine Ins. Co., 535 N.W.2d 337, 341 (Minn. 1995) (“It is axiomatic that on a summary judgment motion a court may not weigh the evidence or make factual determinations, but must take the evidence in a light most favorable to the nonmoving party.”). We therefore reverse the district court’s award of summary judgment to respondent on appellant’s wrongful-eviction claim and remand for further proceedings on this claim.
 The foreclosure sale was originally scheduled for June 30, 2010, but appellant filed an affidavit to postpone the sale for five months in exchange for reduction of the redemption period from six months to five weeks.
Just today we learned that Legal Action Against MERS Has Been Dropped in Kentucky, so lets see what develops from this. Keep in mind that this does not rule out other states as there are different laws in each. Also, KY AG has subpoenaed MERS.
MERS et al. are probably going after the states that might appear easy.
Every time a mortgage changes hands in Kentucky, the transaction is to be registered at the county clerk’s office and a fee is to be paid.
On Thursday, Mason County joined with several other counties, including Franklin and Warren counties, across the state in a class action lawsuit against a mortgage registration company which has failed to comply with the law, which is regulated under KRS 382.110(1).
Mortgage Electronic Registration Systems, also known as MERS, is comprised of shareholders of some of the largest mortgage lending institutions in the nation.
While details remain scarce, it is expected that Warren County will enter a class-action lawsuit Monday against several banks involved with Mortgage Electronic Registration System Inc., county officials indicated Thursday.
Warren County Fiscal Court voted unanimously Thursday to grant authority for the county to engage the law firms of Spurgeon & Tinker, Gregory Stumbo, and Whiteford Taylor & Preston, to represent Warren County in a class-action lawsuit.
Last week, Kentucky Attorney General Jack Conway said he subpoenaed MERS, which he believes might have circumvented Kentucky law by failing to properly record mortgage assignments or pay filing fees with county clerks throughout the state.
Dear Attorneys General: If You Want to Be Re-elected, Sue the Banks.
If you want to be reelected–in those 41 states where voters get to have their say on how well you’re doing your job–you’d better get busy and indict some document fraudsters, or at least sue the big banks for their deceptive and deeply damaging practices. That’s because voters are catching on to just how above the law bankers believe they are. And if you don’t make a real effort to hold the banks accountable–NO, the “50 state” settlement Santa’s supposedly giving to the banks doesn’t count, as I’ll get to–if you don’t make a real effort to hold the banks to account, you’ll get voted out for any candidate that credibly promises accountability.
See, the gig is up.
The impasse over the nationwide mortgage foreclosure settlement continues, but could a meeting Tuesday provide the much needed breakthrough that brings the California Attorney General into the settlement and paves the way for a deal?
Some people close the negotiations say yes. That is because California Attorney General Kamala Harris will be attending a meeting with Iowa’s Attorney General, Tom Miller, who is leading the negotiations with the banks over faulty mortgage foreclosures and who is likely to press Harris to join the broader group.
Absolutely no respect for the AG’s who are doing their jobs. Absolutely no consideration for the valid reasons why they simply will not settle to the greatest heist in American History.
Bank representatives and government officials are working on a broad settlement of most state and federal foreclosure-practices investigations that could move forward without the participation of California, long considered a key to any deal, people familiar with the negotiations said.
The terms of the deal remain fluid. Banks have proposed a deal excluding California that would carry a value of $18.5 billion, though the final outcome remains uncertain, people familiar with the discussion said.
A recent editorial in the LA Times, “California Should Make that Mortgage Deal,” admonishes California Attorney General Kamala Harris for her insistence on ensuring that the big banks that caused the foreclosure crisis in our state pay their fair share to our homeowners. The editors urge Attorney General Harris to take the deal that’s currently on the table, even though she knows–and California’s homeowners know–that the deal isn’t good enough.
The proposed settlement reportedly would prevent the states from pursuing claims against banks relating to fraud or abuse in the origination of loans during the bubble. (In some states, the statute of limitations has expired for bringing challenges for faulty originations but not on all loans in all states.) It would also prevent states from pursuing claims for foreclosure abuses, like improper denial of loan modifications. And it would prevent them from pursuing banks’ misconduct in their dealings with the Mortgage Electronic Registration Systems database, or MERS, a land registry system implicated in bubble-era violations of tax, trust and property law. The proposal would not preclude the states from pursuing the banks for wrongdoing in the repackaging and marketing of loans as mortgage-backed securities. But, as a practical matter, the ability to fully press such claims — and to achieve significant redress — could be impeded or blocked by the other constraints. Once one avenue of inquiry is closed off, it can be difficult to ascertain what happened along other points in the mortgage chain. In effect, the legal waivers being contemplated would let the banks pay up to sweep wrongdoing under the rug.
Mark my words, Someone is going to die from all the frustration these banks are causing and they are going to regret they ever fraudulently foreclosed on that person. If it hasn’t occurred already.
There are very ill people out there and this is going to cause a severe tragedy, for an unavoidable circumstance.
A banker says Nancy Gosselin made the mortgage payments on her St. Louis Park house, but CitiMortgage seems determined to foreclose.
Nancy Gosselin cannot understand why CitiMortgage is about to foreclose on her St. Louis Park house. Neither can her local banker or the Minnesota attorney general.
At the heart of the dispute is a single monthly payment of $584 that CitiMorgage says she failed to make more than two years ago, according to the attorney general’s office. Gosselin says she made all her payments. A loan officer at Bremer Bank agrees. The attorney general’s office, which says it can’t get a straight answer from CitiMortgage, has urged the mortgage giant to stop the foreclosure and work out a deal.
“I did nothing wrong. This is very frustrating,” said Gosselin, standing on the sidewalk last week in front of her house on Xenwood Avenue S.
she shares them with President Obama, who endorsed her late in 2010 for the AG office. Her brother-in-law, Tony West, was key fundraiser for Obama in California, having helped raise $65 million for Obama in the state, and he is considered a rising star in the Democratic Party. He now works at the DOJ and has expanded the Civil Rights department to take on some elements of mortgage fraud. The DOJ has an internal directive to make mortgage fraud a top priority, but what mortgage fraud means to the DOJ are mortgage modification scams and penny ante borrowers ripping off fly-by-night lenders. West, while not the direct actor in the DOJ’s settlement talks, is in all likelihood involved in pressure on state AGs to sign on to a settlement. And it’s simply inconceivable he hasn’t dealt with his sister-in-law and political ally on the matter. Harris and West are part of a coherent political network, and much of the strength of that network has to do with reinforcing the traditional bank-friendly policies of the Democratic elite and then using that to create political support.
The first indication that as California AG Harris was more sympathetic to the Obama side of the ledger on banking is that one of her first decisions as AG was to let off Angelo Mozilo without admitting to wrong-doing or personally paying a fine (the small money that went to restitution came from Bank of America shareholders). I suspect the issue is actually more personal to her than legal, not because she particularly cares about finance or foreclosures, but because her friends and allies are very concerned about ensuring that the banks get a release. In their view, this will cause the housing market to clear, the economy to recover, and then help reelection chances.
The political problem for Harris is that she was elected by liberal votes, and she’s getting enormous public pressure to resist signing on to a settlement that is perceived as favorable to the banks. While she backed out of an immediate settlement a few weeks ago, she refused to join the joint investigation by Eric Schneiderman and Beau Biden of the foreclosure fraud crisis. She has sat on the sidelines, trying to figure out what to do.
There is no three-strikes law for crooked bankers, not even a law for a fifth strike, as The New York Times reported in the case of Citigroup, cited last month in a $1 billion fraud case. Unlike the California third-striker I once wrote about whom a district attorney wanted banished forever to state prison for stealing a piece of pizza from the plate of a person dining outdoors, Citigroup executives get off with a fine and by offering a promise not to do it again, and again and again.
Those of you who accept this better save these “pennies” so when they try to come at you with a deficiency!
Start planning ahead because they already are.
The deal as currently stands would extract $17 billion worth of mortgage modifications and principal reduction for struggling borrowers, among other things, according to a source familiar with the situation. Another $3 billion would be set aside to boost refinancing. And from $5 billion paid directly to state and federal governments, foreclosure victims abused by one of the five banks would be eligible for restitution payments of around $1,500 or $2,000.
Attorney General Martha Coakley,calling the foreclosure crisis a key challenge to the state’s economic recovery, yesterday urged Massachusetts lawmakers to approve legislation meant to push more lenders into helping financially-stressed homeowners save their homes.
Coakley testified before the Joint Committee on Financial Services in favor of a bill that would require lenders to modify certain mortgage loans when such agreements make more economic sense than property seizures.
The banks want California, and the Obama administration hopes they can get it.
In September, the attorney general of California, Kamala Harris, withdrew from settlement talks between the banks and federal and state officials over mortgage abuses. Ms. Harris said California was being asked to excuse bank conduct that has not been adequately investigated and to grant the banks an unacceptably broad release from legal liability for the mortgage mess.
We undertook such an inquiry, building on the work of many others. And we know time is of the essence. Homeowners and investors are suffering every day, and patterns of abuse and misconduct are continuing. We’re working hard to complete the first — and most critical — phase of our investigation before the end of 2011.
America’s free markets work only when there is one set of rules for everyone — and everyone plays by those rules.
It is now clear, however, that many in the mortgage finance industry ignored the rules over the past decade. This led to a breakdown in our housing market and in the market for mortgage-backed securities.
I clearly see this as one thing, FHFA’s Ed DeMarco is keeping CA AG Harris from moving forward on the Foreclosure Fraud Settlement. Hmm this is getting interesting.
California Attorney General Kamala Harris has called on the head of the agency that houses Fannie Mae and Freddie Mac to “step aside” if he continues to refuse to reduce mortgage loans for underwater homeowners.
“It has become clear to me that the only way to keep distressed California homeowners in their homes is through meaningful principal reduction,” Harris said in a statement Thursday.
The lack of meaningful principal reduction is what drove Harris in late September to exit the multistate settlement talks with major banks that are led by Iowa Attorney General Tom Miller with the support of the Obama administration. The attorneys general of Massachusetts, New York, Kentucky, Minnesota, Delaware and Nevada have also bridled at the settlement efforts, finding the banks’ expected $25 billion write-down to be inadequate to protect their states’ homeowners from losing their property.
The NY Times had some details today about the multi-state attorney general mortgage servicing settlement in the works. It looks every bit as awful as one might have feared. Here’s the criticial take-away: this is bupkis. It gives meaningless relief to a meaningless number of randomly or adversely selected homeowners. It doesn’t do justice, even by halves.
There’s a critical implication here, then about the scope of the multi-state settlement: at best 20% of the population of underwater mortgagees will be helped by this settlement, say 2.2 million homeowners. The other 8.8 million (and probably 10 million by my reckoning) are SOL. How do you think they’re going to feel about their AGs? About their President? Too many times have American homeowners been promised help without receiving any. It’s getting old.

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