Beecroft v. Deutsche Bank National Trust Co.

Citations: 798 N.W.2d 78; 2011 Minn. App. LEXIS 42; 2011 WL 1544982Docket: No. A10-1144

Court: Court of Appeals of Minnesota; April 26, 2011; Minnesota; State Appellate Court

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Appellant-mortgagors, Barry Wayne Beecroft and Tracee Ann Beecroft, challenged the summary judgment favoring respondent-mortgagee Deutsche Bank, asserting disputed material facts regarding Deutsche Bank's right to foreclose on their property. The Beecrofts contended that the district court mistakenly found that Deutsche Bank met the statutory requirements for foreclosure by advertisement and that there was a genuine issue regarding whether the mortgage had been validly assigned to Deutsche Bank. 

The case originated in October 2009 when the Beecrofts sought to quiet title to their property, aiming to invalidate foreclosure proceedings initiated by Deutsche Bank. They executed a $279,000 promissory note secured by a mortgage to Ameriquest Mortgage Company in December 2005, recorded in January 2006. After ceasing mortgage payments in October 2008, Ameriquest assigned the mortgage to Deutsche Bank via its attorney-in-fact, Citi Residential Lending Inc., on March 4, 2009. The assignment was based on limited powers of attorney granted to Citi Residential by Ameriquest, with relevant documents recorded in 2007 and 2009.

Deutsche Bank began foreclosure proceedings on March 26, 2009, and advertised a sheriff's sale for September 21, 2009. The Beecrofts claimed a break in the chain of title from Ameriquest to Deutsche Bank, which led to their motion for a restraining order against the sheriff's sale, denied by the district court. The property was sold on November 10, 2009, starting a six-month redemption period. The Beecrofts' subsequent motion for summary judgment to vacate the foreclosure was denied by the district court, which found genuine issues of material fact regarding the mortgage's chain of title. The Beecrofts later sought a restraining order to stay the expiration of the redemption period, inviting the court to reconsider summary judgment for Deutsche Bank. The court affirmed in part and remanded the case.

Deutsche Bank agreed to have the district court consider the summary judgment issue regarding the Beecrofts' restraining order, which was ultimately denied, allowing Deutsche Bank's foreclosure to proceed. The court found an unbroken chain of title from Ameriquest to Deutsche Bank and dismissed the Beecrofts' claims with prejudice. The Beecrofts appealed, raising two main issues: (1) whether Minnesota law requires a recorded power of attorney for mortgage assignment before foreclosure, and (2) whether the district court erred in concluding that Deutsche Bank had valid title to the mortgage without genuine issues of material fact.

The review of the district court's summary judgment focuses on the existence of genuine material facts and correct application of law, as specified in Minnesota rules. Summary judgment is appropriate when the evidence shows no genuine disputes, and mere assertions in pleadings are insufficient to counter it. A genuine issue must be supported by specific, admissible evidence.

The Beecrofts argue that the foreclosure is void due to the absence of a recorded document authorizing Citi Residential to assign the mortgage from Ameriquest to Deutsche Bank. The interpretation of Minnesota's foreclosure-by-advertisement statute (Minn. Stat. 580.02) involves determining if pre-recording is necessary for the assignment to be valid. Statutory interpretation aims to reflect legislative intent, first assessing if the statute's language is ambiguous, which is only the case if it allows for multiple reasonable interpretations. The court will rely on the statute's plain language, adhering to its ordinary meaning unless the intent is clear.

A foreclosure by advertisement in Minnesota is valid only if specific statutory conditions are met: 1) there must be a default on the mortgage that activates the power to sell; 2) no legal action may be underway to recover the debt secured by the mortgage; 3) the mortgage must be recorded, and any assignments must also be recorded; and 4) prior to the recording of the notice of pendency, the foreclosing party must comply with section 580.021, which mandates providing information about foreclosure prevention counseling. Strict compliance with these requirements is necessary; failure to meet them renders the foreclosure void. The statutory recording requirements aim to ensure the mortgagor is notified and has the opportunity to redeem the property. For a mortgage assignee like Deutsche Bank to initiate foreclosure by advertisement, its title must be properly recorded, eliminating the need for external evidence to confirm title legitimacy. The statute only requires the mortgage and its assignments to be recorded, and prior rulings indicate that the power to assign by an attorney in fact does not need recording to fulfill the statute's requirements. The Minnesota Supreme Court has emphasized that only those assignments affecting legal title must be recorded to commence foreclosure by advertisement. Thus, the essential documents needed for Deutsche Bank to commence foreclosure by advertisement are the mortgage and the assignment from Ameriquest.

Under Minn. Stat. 580.02(3), there is no obligation to record the instruments appointing Citi Residential as Ameriquest’s attorney in fact for mortgage assignments or to memorialize the election of special officers to execute the mortgage assignment. The only requirements for recording are the Beecroft mortgage and Ameriquest’s assignment of that mortgage to Deutsche Bank, both of which were recorded in compliance with statutory mandates prior to Deutsche Bank's foreclosure initiation. The absence of recorded instruments authorizing Citi Residential did not invalidate the foreclosure.

The Beecrofts contest the validity of the mortgage assignment, claiming that the individuals executing it lacked authority. Linda Green and Tywanna Thomas, employees of DOCX LLC, were elected as special officers with limited authority to execute necessary documents for AHMSI. They were also appointed as special officers for Citi Residential, assuming the powers granted to Citi Residential by a prior limited power of attorney. A review of the election documentation confirms that Green and Thomas had the requisite authority.

The Beecrofts further argue the signatures of Green and Thomas are not authentic. The district court found no evidence establishing a genuine issue regarding the authenticity of these signatures. The Beecrofts did not present specific evidence contradicting the affidavits from Green and Thomas, which confirmed the signatures. Documents presented by the Beecrofts showing signature variances were unrelated to the relevant transactions. Consequently, the district court's conclusion regarding the validity of the signatures was supported by the absence of evidence rebutting the affidavits. The Beecrofts also question Citi Residential's authority to assign the Beecroft mortgage, suggesting a genuine issue exists regarding the extent of powers granted by the limited powers of attorney.

Citi Residential is appointed as Ameriquest’s attorney in fact through limited powers of attorney, granting it comprehensive authority to execute and manage transactions related to mortgages, deeds of trust, and promissory notes. Key transactions include the full assignment of a mortgage upon payment and discharge of secured sums, and actions related to foreclosure processes, such as taking a deed in lieu of foreclosure, issuing statements of breach, preparing notices of default, and substituting trustees. The district court determined that a clear chain of title exists from Ameriquest to Deutsche Bank, asserting that the assignments were properly executed. However, the court did not clarify its reasoning or the evidence supporting this conclusion, leaving uncertainty about Citi Residential's authority to assign the Beecroft mortgage. Therefore, the matter is remanded for the district court to provide a detailed explanation of its findings.

Additionally, the court affirmed that Deutsche Bank met the recording requirements for foreclosure under Minnesota law, which does not mandate recording a power of attorney for mortgage assignments. The Beecrofts did not contest the foreclosure process on this basis and lack factual support for their claims, as the limited power of attorney was recorded prior to the assignment and foreclosure. The court noted the absence of legal authority supporting the Beecrofts' assertion that powers of attorney must specifically name each mortgage involved.