Federal Home Loan Mortgage Corporation v. Gary E. Mitchell, John Doe

STATE OF MINNESOTA
IN COURT OF APPEALS
A14-1037

Federal Home Loan Mortgage Corporation,
Respondent,

vs.

Gary E. Mitchell, et al.,
Appellants,

John Doe, et al.,
Defendants.

Filed March 30, 2015
Affirmed
Smith, Judge

Scott County District Court
File No. 70-CV-13-18934

Samuel R. Coleman, Schiller & Adam, P.A., St. Paul, Minnesota (for respondent)

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

Considered and decided by Chutich, Presiding Judge; Rodenberg, Judge; and

Smith, Judge.

SYLLABUS

1. Holder of sheriff’s certificate of sale suffers injury-in-fact when former owners of

the property sold at the sheriff’s sale remain in possession of the property after expiration

of the redemption period, giving holder of sheriff’s certificate of sale standing to bring an

eviction action.
 2. Former owners remaining in possession of property after a foreclosure and

sheriff’s sale are not “tenants” within the meaning of Minn. Stat. § 504B.121 (2014) in

the absence of a lease agreement with new owner.

3. A district court’s discretion to grant a stay in an eviction action pending resolution

of a related parallel civil action is only guided by Bjorklund v. Bjorklund Trucking, Inc.,

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

parallel action involves a claim of a breach of the agreement that gave the present

possessor the right of possession.

OPINION

SMITH, Judge

We affirm the district court’s grant of summary judgment to respondent because

appellants’ claims lie outside the scope of the summary nature of an eviction action. We

also affirm the district court’s denial of an unconditional stay of the eviction because

appellants do not contend that they did not default on their mortgage or that they lack an

alternative forum to litigate their other claims.

FACTS

In March 2002, appellants Gary and Leila Mitchell executed a mortgage of their

home in favor of Signal Bank. Shortly afterward, Signal Bank assigned its interest to

Wells Fargo Home Mortgage.

Wells Fargo initiated foreclosure proceedings against the property in November

2012. Wells Fargo posted a newspaper advertisement of the foreclosure, and it notified

the Mitchells of the impending foreclosure in December 2012. It also notified them that

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the property would be sold at a sheriff’s sale on February 5, 2013 unless they brought

their mortgage payments up-to-date.

The property was sold to Wells Fargo at a sheriff’s sale on February 5, 2013.

Wells Fargo obtained the sheriff’s certificate of sale, and the Mitchells did not redeem.

Wells Fargo then conveyed its interest in the mortgage to the Federal Home Loan

Mortgage Corporation (Freddie Mac) on August 7, 2013. The Mitchells remained in

possession of the property.

On October 3, 2013, Freddie Mac filed an eviction action in district court, citing

its receipt of Wells Fargo’s interest in the property as its interest. The Mitchells

answered, arguing that Freddie Mac lacked standing and that the foreclosure was void.

Noting that the Mitchells’ counsel based their answer solely on arguments that had

been repeatedly rejected by multiple state and federal courts, Freddie Mac moved the

district court for summary judgment. The district court granted the motion on June 5,

2014, ruling that the Mitchells’ claims were outside the scope of an eviction action. The

district court also denied the Mitchells’ motion for an unconditional stay of the eviction.

ISSUES

I. Did Freddie Mac have standing and legal capacity to bring an eviction action?

II. Did the district court err by granting summary judgment to Freddie Mac?

III. Did the district court abuse its discretion by denying an unconditional stay of the

eviction?

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 ANALYSIS

I.

The Mitchells first challenge Freddie Mac’s standing and legal capacity to bring

an eviction action. “Standing is a legal requirement that a party have a sufficient stake in

a justiciable controversy to seek relief from a court.” Enright v. Lehmann, 735 N.W.2d

326, 329 (Minn. 2007). A party may gain standing either by suffering an injury-in-fact or

by virtue of a legislative enactment granting standing. Id. We review de novo whether a

party has standing. Builders Ass’n of Minn. v. City of St. Paul, 819 N.W.2d 172, 176

(Minn. App. 2012).

The purchaser of a sheriff’s certificate acquires a vested ownership interest in the

property, subject to divestment arising from the exercise of any redemption rights held by

the foreclosed owner. See Harbal v. Fed. Land Bank of St. Paul, 449 N.W.2d 442, 447

(Minn. App. 1989) (stating this principle in the context of an agricultural-land

foreclosure), review denied (Minn. Feb. 21, 1990). Under Minn. Stat. § 580.12 (2014),

“[w]hen any sale of real property is made under a power of sale contained in any

mortgage, the officer shall make and deliver to the purchaser a certificate” and, after the

certificate has been recorded and the redemption period has expired, it “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.” Further, “[e]very sheriff’s

certificate of sale made under a power to sell contained in a mortgage shall be . . . prima

facie evidence of title in fee thereunder in the purchaser at such sale . . . .” Minn. Stat.

§ 580.19 (2014) (emphasis added).

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 The Mitchells assert that Freddie Mac lacked standing to bring the eviction action

because its foreclosure was void. They acknowledge that a certificate of a sheriff’s sale

is prima facie proof of title, but cite Casey v. McIntyre, 45 Minn. 526, 48 N.W. 402

(1891), and Nelson v. Johnson, 167 Minn. 430, 209 N.W. 320 (1926), to argue that

defects in the sheriff’s sale rebut that presumption. But these cases do not support the

Mitchells’ argument. Casey involved a plaintiff who had not received notice of the

foreclosure proceedings and resulting sheriff’s sale; it did not hold that a properly noticed

foreclosure and sheriff’s sale was void based on the title challenges the Mitchells raise

here. See 45 Minn. at 529-30, 48 N.W. at 403. And the Nelson court held only that a

defendant can overcome the presumption of title validity from a sheriff’s-sale certificate

by affirmatively proving that no default occurred and that any foreclosure was therefore

“wholly unauthorized and void;” it does not support the Mitchells’ claim that a

certificate-holder lacks standing whenever a plaintiff challenges its title on the basis of a

defective assignment. See 167 Minn. at 435, 209 N.W. at 322. Neither case applies here.

The record contains no claim that the Mitchells did not default on their mortgage, and it

is undisputed that they received proper notice of both the foreclosure and the sheriff’s

sale. By remaining in possession of the property after the expiration of the redemption

period, the Mitchells invaded Freddie Mac’s legally protected interest in the property.

We therefore hold that Freddie Mac suffered an injury-in-fact that gave it standing to

commence an eviction action against the Mitchells.

Related to their standing argument, the Mitchells also assert that Freddie Mac

lacked legal capacity to bring an eviction action, alleging that Freddie Mac had failed to

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prove that it had properly acquired or recorded its interest. But “[e]very sheriff’s

certificate of sale made under a power to sell contained in a mortgage shall be prima facie

evidence that all the requirements of law in that behalf have been complied with . . . .”

Minn. Stat. § 580.19 (emphasis added). Since an eviction action “merely determines the

right to present possession and does not adjudicate the ultimate legal or equitable rights

of ownership possessed by the parties,” Dahlberg v. Young, 231 Minn. 60, 68, 42 N.W.2d

570, 576 (1950); cf. Deutsche Bank Nat’l Trust Co. v. Hanson, 841 N.W.2d 161, 166

(Minn. App. 2014) (“Resolving a challenge to the validity of [a] foreclosed mortgage is

not essential to an eviction action.”), their challenge to Freddie Mac’s legal capacity to

bring an eviction action is meritless.

The Mitchells also argue that the district court was required to accept the validity

of their standing and defective-title arguments as “adjudicative facts” under Minn. R.

Evid. 201(d). A district court’s decision whether to take judicial notice of proffered facts

is an evidentiary ruling that we review only for abuse of discretion. See In re Zemple,

489 N.W.2d 818, 820 (Minn. App. 1992). A district court is only required to accept

adjudicative facts that are “not subject to reasonable dispute” or are “capable of accurate

and ready determination by resort to sources whose accuracy cannot reasonably be

questioned.” Minn. R. Evid. 201(b).

Although the Mitchells proffered records and statements from Freddie Mac’s

website that might (if relevant within the limited scope of an eviction action) have

qualified as adjudicative facts, the inferences they draw regarding Freddie Mac’s

standing, legal capacity, and the validity of its interest in the property are arguments, not

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facts. Those arguments have been vigorously disputed in this and numerous other

proceedings involving the Mitchells’ attorney. Moreover, the lengthy list of appellate

opinions rejecting similar or identical arguments made by the Mitchells’ attorney amply

demonstrates that the merits of the Mitchells’ arguments can be reasonably questioned.

See, e.g., Fed. Nat’l Mortg. Ass’n v. Lee, No. A11-1890, 2012 WL 3023437 (Minn. App.

July 23, 2012); CitiMortgage, Inc. v. McGlory, No. A12-0415, 2012 WL

3641360 (Minn. App. Aug. 27, 2012); Wells Fargo Bank, NA, v. Rother, No. A12-0003,

2012 WL 3641292 (Minn. App. Aug. 27, 2012); Value Props. v. Dunbar, No. A12-0646,

2012 WL 5896824 (Minn. App. Nov. 26, 2012); Fed. Nat’l Mortg. Ass’n v. Forseth, No.

A12-0691, 2013 WL 141698 (Minn. App. Jan. 14, 2013); Bank of N.Y. Mellon v. Cordes,

No. A12-0869, 2013 WL 400142 (Minn. App. Feb. 4, 2013); Fed. Nat’l Mortg. Ass’n v.

Lysne, No. A12-1385, 2013 WL 599464 (Minn. App. Feb. 19, 2013); Nationwide

Advantage Mortg. Co. v. Pehlke, No. A13-0569, 2013 WL 5976082 (Minn. App. Nov.

12, 2013); Wells Fargo Bank, N.A. v. Perez, No. A13-1418, 2014 WL 1126415 (Minn.

App. Mar. 24, 2014); Fed. Home Loan Mortg. Corp. v. Briggs, No. A13-2089, 2014 WL

3397124 (Minn. App. July 14, 2014); Bank of Am., N.A. v. Smith, No. A13-2299, 2014

WL 3801306 (Minn. App. Aug. 4, 2014); Fed. Home Loan Mortg. Ass’n v. Robinson,

No. A14-0023, 2014 WL 3802216 (Minn. App. Aug. 4, 2014); Great S. Bank v. Guzman,

No. A14-0248, 2014 WL 4056254 (Minn. App. Aug. 18, 2014); U.S. Bank Nat’l Ass’n v.

Twigg, No. A13-2237, 2014 WL 4289194 (Minn. App. Sept. 2, 2014); Fed. Home Loan

Mortg. Corp. v. Mikelson, No. A14-0915, 2015 WL 134166 (Minn. App. Jan. 12, 2015);

CitiMortgage, Inc. v. Kraus, No. A14-0922, 2015 WL 134180 (Minn. App. Jan 12,

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2015). The district court therefore did not abuse its discretion by implicitly denying their

request to take judicial notice of adjudicative facts.

II.

The Mitchells contend that the district court erred by granting summary judgment

to Freddie Mac. We review a district court’s grant of summary judgment de novo,

“determin[ing] whether there is any genuine issue of material fact and whether the district

court erred in its application of the law.” Dahlin v. Kroening, 796 N.W.2d 503, 504

(Minn. 2011).

The Mitchells assert that the district court’s basis for granting summary

judgment—that the Mitchells’ claims were outside the scope of an eviction action—was

erroneous. “Eviction actions are summary proceedings that are intended to adjudicate

only the limited question of present possessory rights to the property.” Hanson, 841

N.W.2d at 164. “Parties generally may not litigate related claims in an eviction [action].”

Id. The purpose of an eviction action is only to determine “present possession” and “not

to adjudicate the ultimate legal or equitable rights of ownership.” Dahlberg, 231 Minn.

at 68, 42 N.W.2d at 576. Challenges to the validity of a foreclosure may be litigated in

an eviction action “only” when it is the sole forum available. Fraser v. Fraser, 642

N.W.2d 34, 40-41 (Minn. App. 2002) (emphasis added).

The Mitchells do not claim that the eviction action is the only forum available to

them to litigate their challenges to the foreclosure. Rather, they cite Minn. Stat.

§ 504B.122 and Real Estate Equity Strategies, LLC v. Jones, 720 N.W.2d 352 (Minn.

App. 2006), to support a claim that they are holdover tenants statutorily permitted to

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challenge Freddie Mac’s title as a defense to its eviction action. But no section 504B.122

exists in the Minnesota Statutes.

Assuming that the Mitchells intended to cite Minn. Stat. § 504B.121 (as applied in

Jones), their argument fails because they are not tenants within the meaning of that

section. Minn. Stat. § 504.121 generally prohibits tenants “under a lawful lease” from

defending against an eviction action based on a claim that the landlord lacks title. But it

creates an exception for tenants who, “prior to entering into the lease, possessed the

property under a claim of title that was adverse or hostile to that of the landlord.” Id.

Chapter 504B defines a “residential tenant” as “a person who is occupying a dwelling . . .

under a lease or contract . . . .” Minn. Stat. § 504B.001, subd. 12 (2014) (emphasis

added). It also defines “tenancy at will” as “a tenancy in which the tenant holds

possession by permission of the landlord.” Id., subd. 13 (2014) (emphasis added).

Unlike the tenants in Jones, the Mitchells did not enter into a lease with the

owners of the property after the foreclosure. Cf. 720 N.W.2d at 353-54 (describing

tenancy arrangement after foreclosure). Since the Mitchells did not enter into a lease

with either Wells Fargo or Freddie Mac after foreclosure and did not have either Wells

Fargo’s or Freddie Mac’s permission to remain in possession of the property after

foreclosure, they are not tenants for purposes of Minn. Stat. § 504B.121. See Fed. Land

Bank of St. Paul v. Obermoller, 429 N.W.2d 251, 258 (Minn. App. 1988) (holding under

a precursor to Minn. Stat. § 504B.121 that former owners are not “tenants” after a

foreclosure), review denied (Minn. Oct. 26, 1988). The provisions of Minn. Stat. §

504B.121 therefore do not apply here, and the district court did not err by granting

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summary judgment to Freddie Mac. Cf. Jones, 720 N.W.2d at 358 (holding that Minn.

Stat. § 504B.121 does not deprive the district court subject-matter jurisdiction over

ownership claims in an eviction action when a tenant “challenges a landlord’s title”).

III.

The Mitchells next argue that the district court abused its discretion by denying

their motion for a stay of the eviction pending resolution of a parallel proceeding

addressing their title challenges.1 “District courts have discretion when deciding whether

to grant a stay in an eviction.” Hanson, 841 N.W.2d at 164. “We review [its] decision

not to grant a stay only for abuse of discretion.” Id. “[A] party attempting to stay an

eviction action must provide a case-specific justification for granting a stay.” Id. “A

dispute regarding the underlying mortgage is not such a reason.” Id. “And the district

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

reason.” Id.; see also Fed. Home Loan Mortg. Corp. v. Nedashkovskiy, 801 N.W.2d 190,

192 (Minn. App. 2011) (“Even where a moving party provides the district court with a

reason for a stay, a stay is not required.”).

The Mitchells cite Bjorklund, 753 N.W.2d at 319-20, to support their argument

that a district court is required to grant a stay in an eviction action pending the resolution

of a pending civil action involving a title challenge. In Hanson, this court rejected an

1
The existence of this parallel proceeding addressing the Mitchells’ title claims
reinforces our holding that their title claims are outside the scope of an eviction
proceeding because another forum is available to them. See Fraser, 642 N.W.2d at 40.

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interpretation of Bjorklund identical to that asserted by the Mitchells’ attorney2 here,

noting that “Bjorklund presented an unusual factual scenario that emerged from a dispute

about the ownership of shares in a family-run corporation.” Hanson, 841 N.W.2d at 165.

We observed that the Bjorklund district court’s refusal to grant a stay was an abuse of

discretion only because the “alleged agreement to sell the property” that was at issue in

the pending proceeding “was central to the eviction” and the eviction court could not

determine whether there was any basis for eviction until the terms of the parties’

agreement had been determined by the district court in the parallel civil action. Id.

2
Although this court has rejected the arguments raised by the Mitchells’ attorney more
than 20 times in unpublished and order opinions, he continues to bring identical claims to
this court. When asked at oral argument whether he could recall any positive outcome
for any of his clients, he cited a case where the delay caused by pursuing the appeal had
allowed his clients to remain in possession of the property for a few more months. We
note that Minn. R. Civ. P. 11.02 requires attorneys to certify that they are not filing
actions “for any improper purpose, such as . . . to cause unnecessary delay,” and that
Minn. R. Civ. P. 11.03 authorizes district courts to sanction attorneys who violate rule
11.02. The Mitchells’ attorney conceded during oral argument that this court has similar
authority to impose sanctions for frivolous appeals. Without deciding the issue here, we
note that a statute authorizes “a court,” either by motion of a party or on its own motion,
to impose sanctions for filings made for the purpose of causing delay or that are based on
frivolous arguments. See Minn. Stat. § 549.211, subds. 2, 4 (2014); see also Minn. R.
Civ. App. P. 138 (authorizing the court of appeals to award double costs to respondent
when “an appeal delays proceedings on a judgment of the trial court and appears to have
been taken merely for delay”); Minn. R. Civ. App. P. 139.06, subd. 1 (allowing the court
of appeals to award “reasonable attorneys’ fees to any party” on its own motion). Further
iterations of frivolous arguments rejected as meritless by this court may compel this court
to consider the full extent of its sanctioning authority.
We also note that the Mitchells’ attorney conceded during oral argument that he
has charged clients a total of at least $50,000 for pursuing the arguments that have been
repeatedly rejected by this court. Cf. Minn. R. Prof. Conduct 1.5(a)(4) (requiring that
attorneys consider “the results obtained” when charging clients), 3.1 (mandating that
attorneys “not bring or defend a proceeding, or assert or controvert an issue therein,
unless there is a basis in law and fact for doing so that is not frivolous”).

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 The situation in Bjorklund was thus similar to that in Nelson, where the merits of

an eviction action depended entirely on whether the current possessor of the property was

in breach of an agreement allowing them to possess it. Cf. Nelson, 167 Minn. at 435, 209

N.W. at 322. In both cases, determining whether the actual terms of the agreement had

been violated (either by addressing the issue in the eviction action itself, as in Nelson, or

by staying the eviction action pending a parallel action, as in Bjorklund) was an essential

prerequisite to resolving the eviction action because the eviction action otherwise risked

dispossessing a party that had never been legitimately subject to dispossession at all.

Bjorklund does not, however, support the Mitchells’ argument that other issues—such as

the legitimacy of an assignment, whether an assignment has been properly recorded, and

which among several possible parties may bring the eviction action—must be resolved

before resolving an eviction action brought by a holder of a sheriff’s certificate of sale.

See Hanson, 841 N.W.2d at 165 (“A dispute over ownership alone does not show

necessity under Bjorklund.”); accord Amresco Residential Mortg. Corp. v. Stange, 631

N.W.2d 444, 446 (Minn. App. 2001) (“Using the alternate procedure instead of

expanding the eviction proceeding accords with the appellate courts’ prior determinations

that the district court should uphold the summary nature of eviction proceedings.”).

Rather, “a stay is not necessary in an eviction action when adequate alternatives are

available, such as filing a notice of lis pendens or seeking an injunction from the court

where other claims are pending.” Hanson, 841 N.W.2d at 166.

The Mitchells do not contend that they were not in default on their mortgage, nor

do they contend that they lack alternatives for addressing their challenges to Freddie

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Mac’s title. We therefore conclude that Bjorklund does not apply here, and the district

court did not abuse its discretion by denying the Mitchells’ motion for a stay of the

eviction.

DECISION

Because the Mitchells’ challenges to Freddie Mac’s property interest were outside

the scope of an eviction action, the district court did not err by granting summary

judgment to Freddie Mac. And because the issues the Mitchells raise do not involve a

claim that they had not defaulted on their mortgage or that they lacked alternatives for

pursuing their challenges to Freddie Mac’s title, the district court did not abuse its

discretion by denying their motion for a stay of the eviction.

Affirmed.

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