Douglas Drews v. Federal National Mortgage Association

STATE OF MINNESOTA
IN COURT OF APPEALS
A13-1135

Douglas Drews,
Appellant,

vs.

Federal National Mortgage Association,
Respondent.

Filed July 21, 2014
Affirmed
Halbrooks, Judge

Scott County District Court
File Nos. 70-CV-12-944, 70-CV-11-21921

Lawrence A. Moloney, Michael Hagedorn, Southern Minnesota Regional Legal Services,
Inc., St. Paul, Minnesota (for appellant)

Amanda M. Govze, Kalli L. Ostlie, Shapiro & Zielke, LLP, Burnsville, Minnesota (for
respondent)

Considered and decided by Hudson, Presiding Judge; Halbrooks, Judge; and

Smith, Judge.

SYLLABUS

Minn. Stat. § 580.03 (2012) requires a notice of foreclosure sale to be served in

like manner as a summons in a civil action. Service cannot be avoided by physically

refusing to accept the papers. When a party produces evidence of proper service, the

burden shifts to the party challenging service to show by clear and convincing evidence

that service was improper. Shifting the burden of production is not inconsistent with the

strict-compliance standard applicable to Minn. Stat. § 580.03.
 OPINION

HALBROOKS, Judge

Following a bench trial in a quiet-title action, appellant argues that the district

court erred when it ruled that service of the notice of foreclosure sale was properly

effectuated under Minn. Stat. § 580.03. Because we conclude that the service

requirements of the statute were satisfied, we affirm.

FACTS

In 2004, appellant Douglas Drews borrowed money from Key Mortgage

Corporation to refinance a loan for the home where he had lived since 1984. He secured

the loan with a mortgage on the property, which was ultimately assigned to Everhome

Mortgage Company. After Drews failed to make payments on the loan in the summer of

2010, Everhome Mortgage began a foreclosure by advertisement.

On November 3, 2010, after 15 earlier unsuccessful attempts, a Metro Legal

process server purportedly served Drews with a notice of foreclosure sale and related

documents (foreclosure documents) at his home. The original affidavit of service states

that the process server “served the attached by handing to and leaving with Douglas H.

Drews personally one (1) true and correct copy thereof.” The foreclosure sale occurred

on December 16, 2010, and on January 14, 2011, the purchaser, Everhome Mortgage,

assigned the sheriff’s certificate of mortgage sale to respondent Federal National

Mortgage Association (Fannie Mae). By complaint filed October 10, 2011, Fannie Mae

began eviction proceedings seeking to recover possession of the premises.

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 On January 12, 2012, Drews filed a quiet-title action against Fannie Mae, asserting

that the foreclosure sale was defective because he had not been properly served with the

notice of foreclosure sale. Fannie Mae moved for summary judgment on October 22,

2012, attaching a second, more detailed affidavit by the process server. This affidavit

states that on November 3, after numerous unsuccessful service attempts and based on

information from Drews’s ex-wife, the process server performed a “stakeout” at Drews’s

property from 6:00 p.m. through 8:15 p.m. Neighbors had confirmed that Drews was the

only occupant of the property, and the process server had previously left voicemail

messages for Drews at two different phone numbers, explaining that he had foreclosure

papers to serve.

Through an open, lower-level window, the process server observed a man who fit

Drews’s description standing about 10-15 feet away from him, working on a lathe or

grinding machine. After about 90 minutes, the man walked within three feet of the

window and made eye contact with the process server, who explained that he was there to

serve foreclosure documents. The process server asked the man to come to the door to

accept the papers, but the man froze and did not respond. The man eventually walked

away from the window. The process server “vocalized that since Mr. Drews would not

accept the service documents, I would tape the foreclosure documents to the front door of

the house.” The man left the room and closed an interior door. The process server taped

the foreclosure documents to the front door of the house and left. Later, when the process

server returned, the documents remained taped to the door.

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 Drews responded to Fannie Mae’s summary-judgment motion with his own

affidavit stating that it was not possible to see his grinding machine from the window,

denying that he had a conversation with the process server on November 3 or on any

other date, and stating that in mid-December he had found the notice of foreclosure sale

on the ground outside his house near a door he never uses. The district court denied

Fannie Mae’s summary-judgment motion because, viewing the facts in the light most

favorable to the plaintiff, there was a genuine issue of material fact as to whether the

process server “took the type of action that would convince a reasonable person that

personal service was being attempted.”

On February 20, 2013, the district court held a trial on the sole issue of whether

service of the notice of foreclosure sale was properly effectuated under Minn. Stat.

§ 580.03. The district court heard testimony from the process server, Drews, and three

witnesses called by Drews. The process server testified that on November 3, between

6:00 p.m. and 8:15 p.m., he observed through a window of Drews’s home a man who fit

Drews’s description, who was working on a grinding machine that was just out of sight.

The process server eventually made contact with Drews to explain his purpose and then

taped the foreclosure documents to the front door when Drews failed to emerge.

Drews testified that he was not at home during the evening of November 3, he had

never seen the process server before the day of trial, and he had found the notice of

foreclosure sale on the ground outside his house in mid-December. Drews specifically

testified that during the evening of November 3, he was working on a rooftop

construction project in Minneapolis. Drews offered receipts and invoices relating to the

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construction work he was doing around that date, but none of those exhibits showed that

Drews was away from home between 6:00 p.m. and 8:15 p.m. on November 3. And none

of Drews’s witnesses could recall where Drews had been during that time.

The district court found that the process server’s testimony was credible and

plausible. The district court noted, “[t]his is not to say that [Drews] was not credible. It

is quite possible that he simply does not remember what happened that night because it

was a surprising and stressful situation.” The district court found that Drews is a partially

disabled Vietnam veteran who suffers from post-traumatic-stress disorder. It also found

that “[t]he only reasonable way a person outside the home would know [that Drews’s

grinding] machine was there would be to hear it in operation and partially see the person

using it through the door while not seeing the machine itself.”

The district court observed that, although the litigation had been pending for more

than a year and Drews had submitted affidavits to the district court regarding the issue of

service, he had never asserted until trial that he was not at home during the evening of

November 3. The district court noted that service cannot be avoided by physically

refusing to accept the papers. The district court determined that Drews had raised some

doubts about service, but had not “produced clear and convincing evidence that service

was not accomplished as alleged by [the process server].” The district court therefore

ruled that Fannie Mae had properly foreclosed upon the property. This appeal follows.

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 ISSUE

Did the district court err in ruling that service of the notice of foreclosure sale was
properly effectuated?

ANALYSIS

“Whether service of process was effective is a question of law that [appellate

courts] review de novo.” Roehrdanz v. Brill, 682 N.W.2d 626, 629 (Minn. 2004). In

conducting this review, appellate courts apply the facts as found by the district court

unless those factual findings are clearly erroneous. Shamrock Dev., Inc. v. Smith, 754

N.W.2d 377, 382 (Minn. 2008) (citing Minn. R. Civ. P. 52.01). We defer to the district

court’s credibility determinations. Sefkow v. Sefkow, 427 N.W.2d 203, 210 (Minn. 1988).

Minn. Stat. § 580.03

When a property is foreclosed by advertisement, a copy of the notice of

foreclosure sale “shall be served in like manner as a summons in a civil action” on “the

person in possession of the mortgaged premises, if the same are actually occupied.”

Minn. Stat. § 580.03. It is undisputed that the premises here were occupied by Drews,

who lived alone. Service was therefore required to be made personally on Drews.

Unlike the related eviction statute, the foreclosure-by-advertisement statute includes no

qualifiers on the “like manner as a summons in a civil action” clause when the defendant

or occupant cannot be found. Compare Minn. Stat. § 580.03, with Minn. Stat.

§ 504B.331(a)-(d) (2012) (stating that in situations where the occupant cannot be found,

the summons may be left at the defendant’s last place of abode with a person of suitable

age and discretion or the summons may be posted in a conspicuous place on the

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property); see also Koski v. Johnson, 837 N.W.2d 739, 744-45 (Minn. App. 2013)

(interpreting Minn. Stat. § 504B.331), review denied (Minn. Dec. 17, 2013).

Strict-Compliance Standard

The Minnesota Supreme Court has articulated a strict-compliance standard for

specific sections of the foreclosure-by-advertisement statute. See, e.g., Ruiz v. 1st Fid.

Loan Servicing, LLC, 829 N.W.2d 53, 56-58 (Minn. 2013) (requiring strict compliance

with Minn. Stat. § 580.02(3) (2012)); Jackson v. Mortg. Elec. Registration Sys., Inc., 770

N.W.2d 487, 494-501 (Minn. 2009) (addressing Minn. Stat. §§ 580.02, .04 (2006), and

noting the requirement of strict compliance, but determining that assignment of

underlying indebtedness is not an assignment of mortgage and therefore need not be

recorded before a foreclosure by advertisement can be commenced); Moore v. Carlson,

112 Minn. 433, 434, 128 N.W. 578, 579 (1910) (applying strict-compliance standard to

foreclosure-by-advertisement requirement that all assignments be included in notice of

foreclosure sale). It follows that a strict-compliance standard also applies to the service

requirements of Minn. Stat. § 580.03. See Hunter v. Anchor Bank, N.A., 842 N.W.2d 10,

14 (Minn. App. 2013), review denied (Minn. Mar. 18, 2014) (interpreting Minn. Stat.

§ 580.08 (2012) and noting that “[t]he Jackson opinion suggests that strict compliance is

required for all statutes within chapter 580, not just for section 580.02.”).

Strict compliance requires a foreclosing party to demonstrate “exact compliance”

with a statute’s requirements. Beecroft v. Deutsche Bank Nat’l Trust Co., 798 N.W.2d

78, 83 (Minn. App. 2011) (quoting Jackson, 770 N.W.2d at 494), review denied (Minn.

July 19, 2011). Absent strict compliance with the foreclosure statute, the foreclosure

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proceeding is void. See Beecroft, 798 N.W.2d at 83. Here, service of the notice of

foreclosure sale must have strictly complied with the statutory requirement that it be

“served in like manner as a summons in a civil action,” Minn. Stat. § 580.03, or the

foreclosure proceeding is void. See Beecroft, 798 N.W.2d at 83.

Minn. R. Civ. P. 4.03(a)

A summons in a civil action is served “by delivering a copy to the individual

personally or by leaving a copy at the individual’s usual place of abode with some person

of suitable age and discretion then residing therein.” Minn. R. Civ. P. 4.03(a). Personal

delivery is satisfied “if the process server and the defendant are within speaking distance

of each other, and such action is taken as to convince a reasonable person that personal

service is being attempted,” because “service cannot be avoided by physically refusing to

accept the summons.” Nielsen v. Braland, 264 Minn. 481, 484, 119 N.W.2d 737, 739

(1963); see also Carlson v. Cohen, 302 Minn. 531, 531, 533, 223 N.W.2d 810, 811-12

(1974) (personal service effected by placing the summons and complaint under the

windshield wiper of car “as [defendant] attempted to evade service in the driveway of her

home”); cf. Kmart Corp. v. Cnty. of Clay, 711 N.W.2d 485, 489 (Minn. 2006) (service

not effected when process server “was never in close physical proximity to” the

defendants and neither defendant “took any extraordinary step to avoid service”).

After a full trial on the sole issue of service, the district court here credited the

process server’s account of events: on the evening of November 3, Drews and the process

server were within speaking distance of each other, the process server explained that he

was there to serve foreclosure documents, Drews refused to accept the papers, and the

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process server taped the foreclosure documents to the door of his house. Giving due

deference to the district court’s credibility determinations, we conclude that the record

supports the district court’s determination about the exchange between Drews and the

process server during the evening of November 3. Because the district court’s factual

findings are not clearly erroneous, we will not disturb them. See Shamrock, 754 N.W.2d

at 382.

We now turn to whether these findings of fact support a legal conclusion that

Drews was properly served. There is ample evidence in the record that Drews had taken

“extraordinary steps to avoid service.” This was Metro Legal’s sixteenth attempt at

service and involved a “stakeout” of the property based on information obtained from

Drews’s neighbors and ex-wife. The district court noted that this particular process

server “had made repeated efforts at serving [Drews] over multiple days.”

The process server spoke to Drews from approximately three feet away, through

an open window containing a “permeable wire-mesh screen.” Although the process

server was not able to reach out and touch Drews with the papers (as the process server

had in Nielsen, 264 N.W.2d at 482, 119 N.W.2d at 738), we conclude that taping the

papers to Drews’s front door after speaking to him through a window is analogous to

placing the papers under a windshield wiper of an occupied vehicle (as the process server

did in Carlson, 302 Minn. at 531, 223 N.W.2d at 811).

Burden of Production

In reaching its determination regarding the effectiveness of service, the district

court relied on caselaw providing that when evidence of proper service is produced, the

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burden shifts to the party challenging service to show by clear and convincing evidence

that service was improper. Drews argues that shifting the burden of production to the

party challenging service is inconsistent with the strict-compliance requirement of Minn.

Stat. § 580.03. We disagree. As the plaintiff, Drews bears an overall burden, and the

burden of production can shift from party to party throughout the litigation. Cf. Thiele v.

Stich, 425 N.W.2d 580, 583 (Minn. 1988) (“The party moving for summary judgment

under Rule 56, Minn. R. Civ. P., must demonstrate no genuine issue of material fact

exists. One asserting the statute of limitations also has the burden of proving all the

elements of that affirmative defense. However, when the moving party makes out a

prima facie case, the burden of producing facts that raise a genuine issue shifts to the

opposing party.” (citations omitted)).

In Shamrock, our supreme court concluded that Minn. R. Civ. P. 4.04(a), which

provides for service of process by publication, is subject to a strict-compliance standard

because it is in derogation of the common law. 754 N.W.2d at 382-83. In determining

whether a plaintiff had strictly complied with the requirements of service by publication,

the supreme court applied the burden-shifting analysis that Drews asserts is incompatible

with a strict-compliance standard. Id. at 384 (“Once the plaintiff submits evidence of

service, a defendant who challenges the sufficiency of service of process has the burden

of showing that the service was improper.”). A party challenging strict compliance with

service requirements is therefore not excused from rebutting prima facie evidence of

proper service with clear and convincing evidence that service was invalid.

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 Drews relies heavily on Jackson, arguing that the district court here ignored

Jackson’s “mandate” that the foreclosing party “show exact compliance” with the terms

of the statute. 770 N.W.2d at 494. But Jackson’s directive is not a new statement of the

law, see Moore, 112 Minn. at 434, 128 N.W.2d at 579 (“One who avails himself of [the

foreclosure-by-advertisement statute]’s provisions must show an exact and literal

compliance with its terms . . . .”), and it is not central to its analysis. After reviewing the

strict-compliance standard, the supreme court in Jackson held that an assignment of the

underlying indebtedness is not an assignment of a mortgage for purposes of section

580.02 and therefore need not be recorded before commencing foreclosure by

advertisement. 770 N.W.2d at 498.

Fannie Mae presented two affidavits of the process server and his trial testimony

as evidence of proper service of the notice of foreclosure sale. “[A]n affidavit of service

is usually strong evidence of proper service . . . [which] may [only] be overcome by the

production of clear and convincing evidence.” Peterson v. Eishen, 495 N.W.2d 223, 225-

26 (Minn. App. 1993) (citation omitted), aff’d, 512 N.W.2d 338 (Minn. 1994). Drews

attempted to rebut Fannie Mae’s evidence of service with his own affidavit and testimony

disputing that he was served and by challenging the legitimacy of the process server’s

original affidavit of service.

After considering all of the evidence presented at trial, the district court found that,

although the original affidavit of service was neither fact-based nor detailed, it did not

impair the credibility of the process server as Drews had urged. And it was not the only

evidence of service offered by Fannie Mae. The district court determined that although

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Drews “raised some doubts about service . . . he has not produced clear and convincing

evidence that service was not accomplished as alleged by [the process server].” Having

determined that Fannie Mae served the notice of foreclosure sale as required by section

580.03 and Minn. R. Civ. P. 4.03(a), the district court ruled that Fannie Mae properly

foreclosed upon the property. We agree.

Giving due deference to the district court’s factual findings about the events of

November 3, in light of the caselaw regarding avoidance of service, and applying the

proper burden-shifting framework, we conclude that the district court properly

determined that service of the notice of foreclosure sale was valid and effective. We

therefore conclude that the property was foreclosed upon in strict compliance with Minn.

Stat. § 580.03.

DECISION

Because appellant failed to overcome evidence of service of the notice of

foreclosure sale and no other statutory requirements were challenged, the strict-

compliance standard of Minn. Stat. § 580.03 was satisfied, and respondent properly

foreclosed upon the property. We therefore affirm the district court’s decision.

Affirmed.

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