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Welk v. GMAC Mortgage, LLC
Citations: 850 F. Supp. 2d 976; 2012 WL 1035433; 2012 U.S. Dist. LEXIS 43618Docket: Case No. 11-CV-2676 (PJS/JJK)
Court: District Court, D. Minnesota; March 29, 2012; Federal District Court
Federal courts are experiencing a surge in lawsuits from homeowners contesting mortgage foreclosures, with many claims deemed frivolous, particularly those based on the "show-me-the-note" theory. This theory argues that a mortgage is invalid if the mortgagee (e.g., MERS) does not hold the note (e.g., U.S. Bank), but Minnesota law has consistently rejected this argument, affirming that the mortgage holder can foreclose regardless of who holds the note. Numerous courts, including the Minnesota Supreme Court and the Eighth Circuit, have upheld this position. Despite clear judicial guidance, plaintiffs, often self-represented and misled by online sources, continue to file such lawsuits. A significant number of these claims are being filed by attorney William B. Butler, who has built a practice around these actions, misleading clients about their legal standing and exploiting the system for his own gain. Butler has filed nearly 30 cases challenging mortgage validity, including one involving his own home. Butler has developed a systematic approach to litigation involving foreclosure cases, wherein he groups unrelated individuals facing foreclosure and files numerous claims against various defendants primarily based on the "show-me-the-note" theory. He consolidates these claims into a single state-court action and strategically includes a non-diverse defendant, often a law firm involved in foreclosure, to prevent removal to federal court. When cases are removed to federal court, Butler may seek remand; if unsuccessful, he often dismisses and refiles the case in state court to restart the process. He employs tactics such as altering the names of plaintiffs to disguise his actions. When faced with challenges to his claims, Butler resorts to false representations and inconsistent arguments, aiming to overwhelm opponents and the court. Throughout this process, he collects fees from clients while they occupy their homes rent-free. The court is currently addressing multiple motions, including defendants' motions to dismiss and for sanctions, as well as plaintiffs' remand motions. The court grants the defendants' motions to dismiss but stays the dismissal of Heather Welk's claims pending further examination of prior exclusive jurisdiction. Plaintiffs' motions to remand are largely denied, except concerning Welk’s claims. Butler is sanctioned $50,000 under Fed. R. Civ. P. 11 and must pay part of defendants' attorney fees under 28 U.S.C. § 1927. Sigmond Singramdoo’s proposed amended complaint is severed, and he is required to pay a civil filing fee of $350; his motion for a temporary restraining order is denied as moot. The court determines it necessary to first address the merits of the plaintiffs’ claims, given the fraudulent joinder argument, before considering the motions to remand. In reviewing motions to dismiss, the court accepts all factual allegations as true and draws reasonable inferences in favor of the plaintiffs. Plaintiffs must provide more than mere labels or a simple recitation of legal elements to establish a right to relief; factual allegations must surpass a speculative level per Bell Atlantic Corp. v. Twombly. When considering a Rule 12(b)(6) motion, if external matters are presented, it typically must be treated as a summary judgment motion, although the court can consider attached exhibits and necessary documents without this conversion. The court may also examine public records in dismissal motions. In this case, the plaintiffs, Minnesota homeowners, challenge the validity of mortgages held by defendants, claiming 13 counts against lenders and a law firm involved in non-judicial foreclosures. The uncontested facts indicate that all plaintiffs borrowed money, signed notes and mortgages, defaulted on loans, and that the defendants held record title to the mortgages. Consequently, the plaintiffs have not suffered an injustice since they failed to repay the borrowed amounts. However, plaintiffs argue that the mortgages are invalid because the defendants do not hold the associated notes, thus lacking the right to foreclose. This "show-me-the-note" argument has been universally rejected by courts under Minnesota law, including the Minnesota Supreme Court in Jackson v. Mortgage Electronic Registration Systems, which confirmed that a note's transfer does not need to be recorded when the mortgage remains unchanged. Plaintiffs believe Jackson should be interpreted narrowly, suggesting it only addresses recording requirements rather than the validity of mortgage liens when notes are not held by mortgagees. The Minnesota Supreme Court ruled that it is permissible for one entity to own a promissory note while another entity holds the mortgage securing that note, rejecting the plaintiffs' argument that a mortgagee must have an interest in the underlying debt to hold legal title to the mortgage. The court clarified that a party can have legal title to a mortgage without holding an interest in the associated note and emphasized the distinctions between legal, record, and equitable title. It established that only the holder of legal and record title can initiate foreclosure proceedings, regardless of potential disputes with the note holder, which do not invalidate the mortgage or impede the foreclosure process. This ruling binds both state and federal courts in Minnesota law, reinforcing that the legal title holder exercises the power of sale, as affirmed in prior case law. It is not required for a mortgage holder to obtain permission from the note holder to foreclose; any disputes between these parties are for them to resolve. The case of Jackson clarifies that: (1) an entity can hold legal and record title to a mortgage without an interest in the associated note; (2) only the holder of the mortgage can foreclose by advertisement, regardless of who holds the note; and (3) a mortgagor cannot contest a foreclosure based on disputes between the legal holder of the mortgage and the equitable holder. The Eighth Circuit has adopted this interpretation in Stein v. Chase Home Finance, LLC, where it affirmed that JPMorgan Chase Bank N.A. had the sole legal right to foreclose. Despite multiple rejections of the "show-me-the-note" theory by federal judges and the Eighth Circuit, Butler continues to file claims based on this theory. At a recent hearing, Butler was unable to adequately justify his continued reliance on a theory that has been widely rejected, even misrepresenting three state court decisions that do not support his claims. One cited case explicitly states that possession of the original note is not necessary for foreclosure as long as the entity has legal and record title to the mortgage. Consequently, several counts of the plaintiffs' complaint, based on the premise that original notes must be possessed for foreclosure, should be dismissed. Butler references prior cases to support his "show-me-the-note" theory, specifically highlighting Wollmering v. JP Morgan Chase Bank, where the court ruled that the security interest in the mortgage, separate from the note, was sufficient to allow foreclosure. Judge Zimmerman indicated that the plaintiffs' claim, which required proving ownership of the note to enforce the mortgage, lacked legal merit based on established case law. Butler also cites In re Banks, where the bankruptcy court ruled in favor of the claimant who owned both the note and the mortgage. The arguments in this case focused on the chain of title, with the debtors not contesting the claimant's ownership of the note. The Bankruptcy Appellate Panel noted a factual issue regarding the claimant's possession of the original note, emphasizing that possession was necessary to enforce it. However, it did not clarify whether note ownership affected the claimant's status as a secured creditor. Butler argues that the implications from Banks regarding the necessity of owning the note for valid mortgage title were incorrect and contradicted by later Eighth Circuit decisions. Most of the plaintiffs' claims, rooted in the show-me-the-note theory, are deemed frivolous, including their quiet-title claims. The plaintiffs assert that a quiet-title action can be initiated based solely on possession of the property and an adverse claim by the defendant, referencing old case law which suggests minimal requirements for such claims in Minnesota. Plaintiffs conceded that under Fed. R.Civ. P. 11, a quiet-title claim requires an objectively reasonable basis to contest the defendant's property interest, which they lack in this case. Consequently, their quiet-title claims are deemed frivolous, similar to claims based on the "show-me-the-note" theory. The court expressed concern about potentially overlooking viable claims amidst numerous frivolous ones, prompting a four-hour hearing to clarify which claims might survive if the "show-me-the-note" theory were rejected. During this inquiry, Butler, representing the plaintiffs, struggled to present claims that deviated from this theory, often reformulating his arguments. He contended that while a mortgagee could initiate foreclosure without holding the note, they could not bid at the sale without it. This argument misinterpreted case law, specifically Jackson and Stein, which confirm that a mortgagee with legal title can commence foreclosure, regardless of the note's holder. Butler's inconsistent positions not only conflicted with earlier allegations in his pleadings but also demonstrated a misunderstanding of judicial opinions as inflexible statutes. The Jackson case clarified that disputes between a mortgagee and note holder do not impact the mortgagor's status in foreclosure situations. Butler's argument regarding a mortgagee's ability to bid on the debt without holding the note or acting as an agent for the note holder is dismissed, as it was not properly presented to the Court. The mortgagor cannot object to the mortgagee using the legal title due to the presence of equitable rights held by others. Disputes between the note holder and mortgagee do not grant the mortgagor standing to challenge the mortgagee's right to foreclose. Souza, as the mortgagor, lacks standing to argue about the distinction between legal and equitable interests. Butler introduced the concept of "perfection" of a mortgage, suggesting that a mortgage is invalid unless the ownership of the note and mortgage coincide at critical moments. However, this is merely a reiteration of his earlier argument that the mortgagee must hold the note for validity. Furthermore, Butler's claim that all mortgages must be "perfected" was not clearly defined, and the defendants demonstrated that all relevant mortgages were properly recorded. Butler also argued that a recent change in MERS's internal rules impacts the ability of third-party nominees to foreclose without possessing the note. This argument was not presented in his pleadings, making it improper for consideration. Moreover, MERS's policy change concerning foreclosure actions does not affect the legal rights of mortgagees under Minnesota law. Lastly, Butler contended that the specific notes and mortgages in this case reserve powers of sale and loan acceleration to the note holder, although this was not supported by the existing law. Butler misrepresented the facts regarding the power of sale associated with mortgages granted to MERS, as these mortgages clearly convey both the mortgage interest and the power of sale to MERS and its successors. Similarly, mortgages directly granted to lenders explicitly transfer both the mortgage interest and the power of sale to them and their successors. The established chain of title allows current mortgagees to exercise these powers. Butler's argument that the notes reserve the power to accelerate solely to the note holder is irrelevant to the plaintiffs' claims, as they did not assert any improper acceleration of their loans. In their amended complaint, the plaintiffs vaguely allege that Shapiro, acting as an agent for the defendants, enforced falsely declared defaults, but do not claim they are not in default. The court found Butler's arguments regarding acceleration and default notices to be irrelevant. The court identified several claims independent of the plaintiffs' "show-me-the-note" argument, including conversion/unjust enrichment (Counts V and VI), slander of title and misrepresentation (Counts IV, IX, X, and XIV), and accounting (Count XIII). The conversion claim alleges that defendants accepted and wrongfully retained mortgage payments, depriving plaintiffs of their property. The unjust enrichment claim asserts that plaintiffs conferred a financial benefit to defendants under the belief that they held legal title to the original notes. Unlike a show-me-the-note claim, which contests the right to foreclose, these claims focus on whether defendants improperly accepted payments owed to the note holder. Both claims are improperly pleaded under Federal Rules of Civil Procedure 8, as they are asserted against all defendants without specificity. Plaintiffs conceded during oral arguments that they do not claim every defendant wrongfully retained mortgage payments from every plaintiff, which contradicts their amended complaint. This inconsistency leaves defendants unable to identify specific wrongful actions against individual plaintiffs. The only example provided was against GMAC Mortgage, LLC, concerning plaintiff Susie Jones. Given the plaintiffs' previous opportunities to amend their claims without doing so, the Court dismissed all conversion and unjust enrichment claims with prejudice, except for Jones's claims against GMAC, which were dismissed without prejudice due to her identified basis for liability. Regarding slander of title and misrepresentation claims, many allegations were found to be based on a flawed "show-me-the-note" theory, equating foreclosure actions with possession of the underlying note. Most claims were deemed frivolous as they relied on this erroneous equivalence. However, the Court noted three types of misrepresentations not based on that theory: (1) false claims of amounts due on mortgages that were actually due on notes; (2) allegations that certain defendants recorded mortgage assignments without holding the notes; and (3) the misleading representation made by bidders at foreclosure sales suggesting they held the note or acted on behalf of the note holder. While plaintiffs acknowledged that the terminology used in recorded documents could be misleading, they argued that it should be clarified that amounts are due on notes secured by mortgages. The Court recognized that the term "mortgage" is commonly misused to refer to the underlying note in both casual language and legal contexts. The court finds that the term "mortgage payments," used by Butler in the amended complaint, cannot be deemed false or misleading, given that Minnesota statutes reference amounts "due on" a mortgage. The Minnesota Supreme Court previously ruled that such statutory references do not imply that "mortgage" and "note" are synonymous, and therefore do not require the recording of note assignments. The central issue is whether using "mortgage" as shorthand for a note secured by a mortgage constitutes fraudulent misrepresentation. The court concludes that no reasonable jury could find it to be fraudulent, especially as plaintiffs admitted they did not rely on any allegedly false representations, negating claims of misrepresentation and slander of title, which require proof of reliance and damages. Additionally, the plaintiffs' claims regarding recorded mortgage assignments and foreclosure bids lack evidence of reliance, leading to their dismissal. Regarding the accounting claim, plaintiffs assert that defendants violated federal law by not responding to requests for information about loan ownership. However, this claim does not align with the actual pleadings, which seek an accounting of debt owed to certificate holders, and plaintiffs fail to identify any specific federal law purportedly violated. This inconsistency suggests that plaintiffs may not intend to invoke federal law, which would conflict with their efforts to keep the case in state court. Plaintiffs' attempt to frame their claims under state law while relying on federal law has been disclaimed by Butler during the hearing. The Court questions the validity of plaintiffs' demand for ownership information through an accounting claim, noting that an accounting is only applicable when there is a fiduciary relationship and funds received by the fiduciary can be accounted for. The plaintiffs failed to support their accounting claim and subsequently disclaimed the claim in their briefs, leading to the Court granting defendants' motions to dismiss it. Consequently, all of the plaintiffs' claims are dismissed with prejudice, except for Jones's claims for conversion and unjust enrichment against GMAC, which are dismissed without prejudice. Regarding jurisdiction, the Court addresses two motions to remand filed by plaintiffs. The first motion asserts a lack of complete diversity since all plaintiffs are citizens of Minnesota, while only one defendant, Shapiro (a Minnesota law firm involved in foreclosures), is also a citizen of Minnesota. The Court recognizes that complete diversity is absent and considers the defendants' argument of fraudulent joinder to disregard Shapiro's claims. Although the Court acknowledges that Butler may have joined Shapiro to impede removal to federal court, establishing fraudulent joinder requires demonstrating that there is no reasonable basis for any claim against the nondiverse defendant, which has not been conclusively shown. The excerpt addresses the issue of fraudulent joinder, referencing case law that indicates a nondiverse defendant's joinder is not deemed fraudulent if there is a reasonable basis for predicting state law liability. Courts may consider evidence outside the pleadings to assess claims of fraudulent joinder. In this case, the plaintiffs' claims against Shapiro, primarily based on the "show-me-the-note" theory, are deemed frivolous, lacking a reasonable basis in fact or law. The plaintiffs failed to demonstrate damages from misrepresentation or identify any converted funds related to Shapiro, who was not involved in handling mortgage payments. Consequently, the Court concludes that Shapiro was fraudulently joined, denying the plaintiffs' motion to remand based on diversity jurisdiction. Additionally, Butler's second motion to remand, arguing that the doctrine of prior exclusive jurisdiction should preclude federal jurisdiction, is considered despite procedural violations, as it pertains to subject-matter jurisdiction. The Court discusses that under this doctrine, when one court has in rem jurisdiction over a property, another court cannot assume jurisdiction over the same property. The plaintiffs argue that because the state court had in rem jurisdiction before removal, the federal court lacks jurisdiction. If this were accurate, it would necessitate remanding numerous pending mortgage cases removed from state courts. The doctrine of prior exclusive jurisdiction applies in two primary scenarios: when multiple courts are vying for jurisdiction over the same property simultaneously, and when a court has continuing jurisdiction over a property. In the first scenario, precedence is given to the first-filed case, whether state or federal, as illustrated by several case precedents. The second scenario involves a court maintaining ongoing jurisdiction, which prevents other courts from asserting jurisdiction over the same property. In the present case, however, neither scenario applies. The case originated in state court and was subsequently removed to federal court, resulting in the state court being completely divested of jurisdiction. This removal aligns with legal standards, which state that once a case is removed, the state court cannot proceed unless the case is remanded. Consequently, the federal court's jurisdiction does not conflict with state court jurisdiction. Plaintiffs argue that since some federal cases involving prior exclusive jurisdiction have been removed from state to federal court, the doctrine should apply here, necessitating a remand. However, this argument fails because the critical circumstances required for the doctrine's application are absent in this case. Two main points are addressed regarding in rem jurisdiction in federal court after removal from state court. First, the doctrine of prior exclusive jurisdiction applies universally in federal cases, irrespective of how a case regarding property arrived in federal court. This means that if in rem jurisdiction was established before removal, federal courts can exercise that jurisdiction just as state courts would. The excerpt references several cases affirming that once in rem jurisdiction is acquired, it continues to be effective in federal court. Second, the plaintiffs' argument against the court's ability to exercise in rem jurisdiction is deemed frivolous. While the plaintiffs initially claimed that the origin of the case in state court barred federal jurisdiction, they later acknowledged ongoing state-court unlawful-detainer actions involving specific properties. However, these actions were filed after jurisdiction had already attached in federal court, thus not preventing the exercise of federal jurisdiction over the claims related to those properties. Consequently, there is no evidence of conflicting jurisdiction, and the federal court retains authority over the matters concerning the properties in question. The Welk action was initiated in August 2011 and subsequently closed in October 2011, shortly after the removal of the current case. The plaintiffs did not mention the Welk action in their initial memorandum, which was deemed a significant oversight since Butler represented Welk. Consequently, the parties have not discussed the implications of the Welk action's pendency and closure on the Court's jurisdiction over Welk's claims or whether an unlawful-detainer action is in rem. The Court found plaintiffs’ initial arguments for remand to be meritless, leading defendants to forgo addressing the in rem issue. As a result, the Court lacks sufficient briefing on its jurisdiction over Welk's claims and will stay the dismissal of those claims while the parties address four key matters: 1) whether the proceeding is in rem; 2) whether an unlawful-detainer action is in rem; 3) the current status of the Welk unlawful-detainer action; and 4) whether the Welk action's pendency at the time of removal affects the Court's jurisdiction over Welk's claims, given its closure. Additionally, the Court will consider if Butler should be ordered to pay the defendants’ attorney fees under 28 U.S.C. § 1927 due to his frivolous arguments and his pattern of filing remand motions with different grounds, which the Court deemed unreasonable and vexatious. Defendants also sought sanctions against Butler under 28 U.S.C. § 1927 due to his conduct and the filing of claims that contradict established legal precedents from the Minnesota Supreme Court and the Eighth Circuit regarding the validity of mortgages and foreclosure rights. The Court issued an order for Butler to justify why he should not face sanctions, citing his history of filing frivolous lawsuits and employing delay tactics. Numerous cases involving similar plaintiffs have been removed to federal court, with specific instances noted for comparison. The case no. 11-2385, involving plaintiffs from Jaakola and Lundeen, was removed on August 18, 2011. This was contrasted with the voluntarily dismissed case Rother v. Wells Fargo Bank, N.A. no. 11-1703, on August 1, 2011, and with Pope v. Wells Fargo Bank, N.A. no. 11-2496, removed on August 31, 2011. Further comparisons include Joppru v. JP Morgan Chase Bank, N.A. no. 11-2276, voluntarily dismissed on October 12, 2011, and Jerde v. JP Morgan Chase Bank, N.A. no. 11-2666, which included plaintiffs from Joppru in an amended complaint filed the same day. The conduct of attorney Butler is criticized for repetitively initiating lawsuits that restart lengthy processes, particularly highlighted by a case he dismissed while an adverse recommendation was pending, only to refile in state court the same day. Examples include Larsen v. Bank of America, N.A. no. 11-1775, and Robinson v. Bank of America, N.A. no. 11-2284, which involved overlapping plaintiffs and were part of a pattern where Butler reshuffles plaintiffs to conceal repetitive claims. The lead plaintiff, Heather Welk, is involved in multiple cases alongside her husband, Dean Welk, who is also a plaintiff in several other actions. Similar patterns are noted with other plaintiffs, indicating Butler's strategy of dividing claims among different cases while bundling unrelated plaintiffs together. This behavior is deemed an abuse of the judicial system, potentially violating the Minnesota Rules of Professional Conduct. The Court intends to report Butler's conduct to the Minnesota Lawyers Professional Responsibility Board, which will determine any disciplinary action, while the Court will decide on sanctions specifically for this case. Rule 11(b) mandates that attorneys certify to the court that their client's claims and defenses are supported by existing law or a nonfrivolous argument for changing the law. Courts assess compliance by evaluating whether a reasonable attorney would find merit in the argument. Additionally, attorneys must ensure their pleadings and motions are not intended for improper purposes, such as harassment or unnecessary delay, with violations potentially leading to sanctions. In this case, Butler's claim that a mortgage is invalid unless the mortgagee holds the underlying note is deemed frivolous under Minnesota law. Despite Butler's attempts to obscure this argument, it consistently leads back to the invalidity claim based on the mortgagee's lack of note ownership. Butler's response to a show-cause order included points that were either irrelevant or baseless, such as references to state-court cases that do not support his theory, the dissenting opinion of Justice Page, and concerns about double liability for his clients. The court clarified that two of the cases cited by Butler reject his theory, and emphasized that Minnesota law, as established by the majority opinion, deems his argument frivolous. Furthermore, Butler misinterprets Minnesota law regarding mortgage and note debts, suggesting a distinction that does not exist. Under Minn.Stat. 580.225, the amount received from a foreclosure is considered full satisfaction of the mortgage debt, which is the debt on the note secured by the mortgage, thereby negating claims of double recovery. Mortgagees in Minnesota have the option to pursue either mortgage foreclosure or an action on the note, provided there is no double recovery on the debt. The Minnesota Supreme Court has established that a mortgagee does not need to hold an interest in the note to foreclose on the mortgage, and this relationship does not impact the mortgagor's status in foreclosure proceedings. Concerns about potential double liability, as raised by Butler and referenced in cases from other jurisdictions, are not considered a risk under Minnesota law. Butler's claims regarding possible violations of constitutional rights during the foreclosure process are deemed irrelevant since he did not bring due-process challenges in his complaint, which primarily concerns the validity of the lien rather than the foreclosure itself. The court noted that Butler's assertion that the mortgages are invalid because the mortgagees do not hold the notes is frivolous. His litigation tactics, including repeated dismissals, refilings, and inconsistent arguments, suggest bad faith. Consequently, the court determined that Butler violated Rule 11(b) by presenting claims that lack a legal basis and do not offer a nonfrivolous argument for changing the law. Butler has violated Rule 11(b) by filing claims intended to harass and delay litigation, ultimately increasing costs. The Court, referencing Judge Ann Montgomery, noted that while many banks may have violated homeowners' rights during the housing crisis, Butler's baseless claims detract from legitimate cases. The Court found no legitimate claims among Butler's filings, asserting that even if it were mistaken, sanctions would still be warranted due to Butler's frivolous arguments and bad-faith actions that impose unnecessary burdens on the court and opposing parties. Monetary sanctions, rather than non-monetary, are deemed necessary to deter Butler, who is described as an intelligent and aggressive lawyer aware of his misconduct. The Court imposed a $50,000 sanction, considering the egregiousness of Butler's actions, the burdens on the court and opponents, his history of disregarding warnings, and the financial exploitation of his clients, which obscures any legitimate claims they may have. Evidence was presented showing Butler's clients pay significant fees, corroborating allegations of his questionable marketing practices aimed at group litigation against lenders. Submissions indicate that Butler's clients might be compensating him for delaying foreclosure through frivolous legal actions rather than for legitimate claims. This behavior potentially diverts clients' funds away from debt repayment or securing affordable housing. Butler appears to derive a significant income from these frivolous lawsuits, with earnings potentially amounting to tens or hundreds of thousands of dollars from "show-me-the-note" cases marketed online. A substantial monetary sanction is deemed necessary to eliminate his incentive to continue this model. The Court concludes Butler should pay some of the defendants' attorney fees under 28 U.S.C. § 1927, which allows for such fees against attorneys who unreasonably and vexatiously multiply proceedings. Despite Butler's argument that filing a frivolous complaint alone does not warrant sanctions under § 1927, case law supports that sanctions apply only to unnecessary filings after a lawsuit's initiation. While Butler's initial complaint filing cannot be sanctioned under § 1927, his continual advocacy of frivolous claims during the proceedings warrants sanctions for multiplying the litigation unnecessarily. He should compensate the defendants for fees incurred in responding to his motions and attending the related hearings, as his conduct significantly extended the proceedings. Counsel for plaintiffs cannot be sanctioned for initiating an action, but their awareness of case weaknesses may lead to questions about whether they unreasonably multiplied the proceedings. Imposing sanctions under Rule 11 and fees under 1927 serves different purposes; Rule 11 aims to deter baseless filings, while 1927 focuses on preventing the abuse of court processes without regard to the outcome of the case. Although Butler's frivolous lawsuit is problematic, it is not actionable under 1927, which may not sufficiently deter future misconduct on its own. Consequently, the Court deems Rule 11 sanctions appropriate but cannot award attorney fees under that rule when imposed sua sponte. Thus, fees under 1927 are justified to compensate defendants for Butler's actions, with a lesser Rule 11 sanction due to the 1927 assessment. Subsequently, plaintiff Sigmond Singramdoo, now represented by new counsel, filed a motion to amend his complaint and a temporary restraining order against eviction. His new claims, including illegal foreclosure during a loan modification application and violations of RESPA, were not previously mentioned by Butler. The Court finds that the current plaintiffs likely do not meet the joinder requirements under Federal Rule of Civil Procedure 20, as Singramdoo's claims are unrelated. The Court will treat Singramdoo's motion to amend as a motion to sever his claims, granting it and directing that his proposed amended complaint be filed as a new case. Singramdoo must pay the $350 filing fee to pursue his claims, or his case will be dismissed for lack of prosecution. Singramdoo filed a motion for a temporary restraining order less than 24 hours before his scheduled eviction, resulting in the Court being unable to assess the merits in time, rendering the motion moot, and leading to its denial. The Court ordered the following: 1. Defendants’ motions to dismiss (Docket Nos. 18, 22, 24, 29, and 51) are granted, and plaintiffs’ amended complaint (Docket No. 20) is dismissed with prejudice, except: a. Heather Welk’s claims are stayed pending jurisdiction determination. b. Susie Jones’s claims against GMAC Mortgage for conversion and unjust enrichment are dismissed without prejudice. 2. Plaintiffs’ motions to remand (Docket Nos. 36, 92) are denied, except for the second motion concerning Heather Welk’s claims. Each party must file a brief within 14 days addressing specific jurisdictional issues. 3. Attorney William Butler is ordered to pay a $50,000 sanction immediately under Fed. R.Civ. P. 11. 4. Defendants’ motion for sanctions under 28 U.S.C. 1927 (Docket No. 72) is granted, requiring defendants to submit affidavits for excess fees incurred due to Butler's actions within 14 days, with Butler allowed to respond within 21 days. 5. Singramdoo’s motion to amend (Docket No. 109) is granted, directing the Clerk to docket his proposed amended complaint as a new case, with a requirement for Singramdoo to pay a $350 filing fee or seek to proceed in forma pauperis within 14 days or risk dismissal. 6. Singramdoo’s motion for a temporary restraining order (Docket No. 110) is denied as moot. 7. Butler’s motion to withdraw as Singramdoo's attorney (Docket No. 111) is granted. 8. Butler’s motion to withdraw without substitution for plaintiffs Alison and James Willis Konobeck (Docket No. 119) is denied. The Court sought clarification on whether the mortgagees of record were the same entities that initiated foreclosure proceedings, which was confirmed through plaintiffs’ admissions and public records. Mortgagees of record for properties in this case, including the Albers, Rucci, and Tibke properties, initiated foreclosure proceedings. The court references exhibits showing a complete recorded chain of title from the original mortgagee to the foreclosing entity for each property. Plaintiffs contest the validity of the mortgages, arguing that defendants do not hold the underlying notes and are not authorized agents for the note holders. The court finds these challenges to be frivolous. Citing relevant cases, the court notes that while standing to seek relief from an automatic stay in bankruptcy may require production of the note and mortgage, Minnesota law does not impose the same requirement for foreclosure. It emphasizes that legal title to the mortgage is sufficient for foreclosure under state law. The court also indicates uncertainty about the binding nature of Bankruptcy Appellate Panel decisions on district courts, agreeing with other courts that such decisions are not binding. The Patterson mortgage grants MERS the authority to foreclose and sell the property but does not explicitly grant this power to MERS's successors and assigns. However, general principles of contract law allow for the assignment of rights, meaning an assignee inherits the same legal rights as the assignor. The Court addresses allegations regarding the execution of documents by unauthorized individuals, which Butler clarified are rooted in the claim that these individuals or entities did not hold the notes or act for the note holders. This indicates that such claims essentially reiterate the "show-me-the-note" argument. The Court finds the plaintiffs' allegations about the Jones and Heinzman assignments to be without merit, as both mortgages were originally granted to the respective lenders, Ameriquest Mortgage Company and Bankers Mortgage Company, LLC, who had the authority to assign the notes and mortgages. The assignment from Ameriquest to GMAC concerning Jones's mortgage does not mention the note, and several Minnesota statutes referenced reinforce the specificity required in foreclosure notices regarding the mortgage and amounts due. Plaintiffs claim that Jones made erroneous mortgage payments to GMAC, but they failed to link these payments to any fraudulent or negligent misrepresentation. Furthermore, the Court notes that claims for quiet title are dependent on the show-me-the-note argument, which it views as frivolous. The Court questions whether a false representation about note ownership could be deemed slander of title since the note itself does not represent an interest in land. The defendants inform the Court that Butler has filed additional show-me-the-note cases and referenced two other cases that may be relevant for contrasting with the current motion for sanctions. Legitimate mortgage-related claims were presented in the cases of Ruiz and Geweke, where plaintiffs challenged the validity of foreclosures based on alleged non-compliance with statutory requirements, specifically citing unrecorded mortgage assignments prior to foreclosure. In contrast, the current plaintiffs concede that the foreclosing entities held proper record title to the mortgage and have not disputed the timing of recordation. The plaintiffs here are not contesting the foreclosures but are instead disputing the validity of the mortgage liens, relying on a legal theory rejected by the Minnesota Supreme Court. While the Ruiz case resulted in a quiet-title claim's favor due to the foreclosure being found void, there was no challenge to the underlying mortgage’s validity, indicating it remained intact for eviction purposes. The argument that prior invalid foreclosures obstruct future sales has been rejected in precedent cases. Additionally, the current plaintiffs' amended complaint explicitly disputes the defendants' foreclosure rights, countering claims of lack of reference to foreclosure. The Court has expressed concern over the attorney Butler's misleading assertions and is requiring him to justify why he should not be sanctioned for costs incurred due to his actions, noting he has not addressed his ability to pay such sanctions.