Nos. A14-0304 and A14-0620

StateofMinnesota

In Courtof AppealsThe Bankof New York Mellon f/k/aa The Bank of New York,

as Trustee for the Certificateholdersof CWABS, Inc., Asset-backed Certificates, Series 2007-6,

Respondent, vs.

Alan G. Keiran,MaryJ ane Keiran,Appellants,

and

Provincial Bank, John Doe andMary Rowe, Defendants.

BRIEF AND ADDENDUM OF RESPONDENT THE BANK OF NEW YORK MELLON

JJ eramie Richard Steinert (#0309400) STEINERT, P.A. 707 North Third Street, Suite 203 Minneapolis, Minnesota 55401 (612) 353-4200

David R.Mortensen(#032906X) WILFORD, GESKE· & COOK, P.A 7616 Currell Boulevard, Suite 200 Woodbury, Minnesota 55125 (651) 209-3300

'

Attorneys for Appellants Attorneysfor Respondent Alan G. Keiran and Mary JaneKeiran The J3ankofNew York Mellon f/kk/a

TheBankof New York) as Trusteefor theCertificateholdersof CW ABS) Inc., Asset-backedCertificates, Series 200 7-6

2014- B-(\CHMANLEGALPRINTJNG- FAX(6J2) m-805J c...'~JIONE (612) .~39-9518or 1-800-715-3582

:'\' \

,.·.

: ; . ' :: '

The appendix to this brief is not available for online viewing as specified in the Minnesota Rules of Public Access to the Records of the Judicial Branch, Rule 8, Subd. 2(e)(2).

TABLE OF CONTENTS PAGE

TABLE OF AUTHORITIES ..................................................................... .ii

STATEMENT OF LEGAL ISSUES ............................................................. !

STATEMENT OF THE CASE AND PROCEDURAL HISTORY ....................... 2

STATEMENT OF THE FACTS .................................................................. 6

STANDARDS OF REVIEW ..................................................................... 11

ARGUMENT ....................................................................................... 12

I. BONYM WAS ENTITLED TO SUMMARY JUDGMENT AS A MATTER OF LAW ....................................................................... 12

A. The Record Demonstrated That BONYM Was Entitled to Judgment as a Matter of Law and That Appellants Raised No Genuine Issue of Material Fact. ............................................................... 12

B. BONYM's Foreclosure Claims Were Not Barred by Res Judicata and Enforcement of the Note and Mortgage Was Not, By Definition, A Compulsory Counterclaim .................................... 17

C. Appellants Have No Basis Upon Which To Request Recoupment ...... 21

II. THE DISTRICT COURT DID NOT ERR BY ENTERING SUMMARY JUDGMENT OR BY AMENDING ITS ORIGINAL JUDGMENT AND DECREE TO COMPLY WITH STATUTORY REQUIREMENTS ........................................................................ 22

III. THE DOCTRINE OF FIRST -ACQUIRED JURISDICTION DOES NOT APPLY IN THIS FORECLOSURE ACTION AND IT DID NOT PRECLUDE THE DISTRICT COURT FROM ENTERING SUMMARY JUDGMENT IN FAVOR OF BONYM ............................. 27

CONCLUSION .................................................................................... 28

CERTIFICATE OF BRIEF LENGTH ....................................................... 30

TABLE OF AUTHORITIES

Cases

Bixler v. Bixler, 376 N.W.2d 209 (Minn. 1985) ................................................ .13

Burnet Realty, Inc. v. Uppal, 2008 WL 1800103 (Minn. Ct. App. 2008) ................... 18

Cambern v. Hubbling, 238 N.W.2d 622 (Minn. 1976) ........................................ .11

Continental Sales and Equip. Co. v. Town of Stuntz, 257 N.W.2d 546 (Minn. 1977) ............................................................ 13

Del Hayes & Sons, Inc. v. Mitchell, 230 N.W.2d 588 (1975) .................... 1, 13, 25, 27

DLH, Inc. v. Russ, 566 N.W.2d 60 (Minn. 1997) ....................................... 1, 12, 13

Eidv. Hodson, 542 N.W.2d 402 (Minn. Ct. App. 1996.) .............................. 1, 22-23

Fabio v. Bellomo, 504 N.W.2d 758 (Minn. 1993) ............................................. .12

Federal Land Bank of St. Paul v. Obermoller, 429 N.W.2d 251 (Minn. Ct. App. 1988) ................................. 11, 26,27 (n.7)

Fox Chemical Co. v. Amsoil, Inc., 445 F.Supp. 1355 (D. Minn. 1978) ...................... .18

Havner v. Hegnes, 269 F. 537 (8th Cir. 1920) ................................................ 1, 27

Hunt v. IBM Mid Am. Employees Fed. Credit Union, 384 N.W.2d 853 (Minn. 1986) ................................................................. 1, 13

Johnson v. Canso!. Freightways, Inc., 420 N.W.2d 608 (Minn. 1988) ...................... 20

Kroningv. State Farm Auto. Ins. Co., 567 N.W.2d 42 (Minn. 1997) ....................... .15

K.R. v. Sanford, 605 N.W.2d 387 (Minn. 2000) ................................................. 11

Maness v. Meyers, 419 U.S. 449 (1975) ...................................................... 1, 28

Medtronic, Inc. v. Advanced Bionics Corp., 630 N.W.2d 438 (Minn. Ct. App. 2001) ......................................... 1, 23, 24

11

Midway Nat. Bank of St. Paul v. Bollmeier, 462 N.W.2d 401 (Minn. Ct. App. 1990) ................................................ 15

Niazi v. St. Paul Mercury Insurance Co., 121 N.W.2d 349 (1963) .................... 27 (n.7)

Osborne v. Twin Town Bowl, Inc., 749 N.W.2d 367 (Minn. 2008) ......................... .11

Phillips-Klein Cos. V. Tiffany P'ship, 474 N.W.2d 370 (Minn. Ct. App. 1991) ...... 17 (n.3)

Pischke v. Kellen, 384 N.W.2d 201 (Minn. App. 1986) ....................................... 12

POPP Telecom v. AmericanSharecom, Inc., 210 F.3d 928 (8th Cir. 2000) ............... .18

Pouliot v. Fitzsimmons, 582 N.W.2d 221 (Minn. 1998) ...................................... 13

Rathbun v. WT Grant Co., 219 N.W.2d 641 (Minn. 1974) ................................. 12

Savage v. Varey, 358 N.W.2d 102 (Minn. App. 1984) ........................................ 13

Septran, Inc. v. Independent School Dist. No. 271, Bloomington, Minn., 555 N.W.2d 915 (Minn. 1996) ...................................................... 11-12

State v. Joseph, 636 N.W.2d 322 (Minn. 2001) ........................................... 20-21

Theile v. Stich, 425 N.W.2d 580 (Minn. 1988) ............................................ 12, 15

Wilson v. City of Fergus Falls, 232 N.W. 322 (Minn. 1930) .............................. 1, 23

Wilson v. Comm'r of Revenue, 619 N.W.2d 194 (Minn. 2000) .............................. 20

Winkler v. Magnuson, 539 N.W.2d 821 (Minn. Ct. App. 1995) ............................ .11

Minnesota Statutes

§ 581.03 ...................................................................................................................... 5, 9, 23

§ 582.041 .......................................................................................................................... 4, 9

§ 587.03 ........................................................................................................................ 23, 24

Minnesota Rules

Minn. R. Civ. P 13.01 .......................................................................... 18, 19

iii

Minn. R. Civ. P. 56.03 .............................................................................. 12

Minn. R. Civ. P. 56.05 .............................................................................. 13

Minn. R. Civ. P. 60.01 ................................................................... 5, 9, 22, 24

Minn. R. Civ. P. 61 .......................................................................... 27 (n.7)

Federal Authority

U.S. Const., art. I, § 10, cl. 1. ............................................................... 19 (n.6)

lV

STATEMENT OF LEGAL ISSUES

I. WAS RESPONDENT ENTITLED TO SUMMARY JUDGMENT ON ALL CLAIMS AS A MATTER OF LAW?

• Ruling below: The district court answered in the affirmative, disposed of the Appellants' defenses in their entirety and granted summary judgment to Respondent.

• Apposite Authority: Del Hayes & Sons, Inc. v. Mitchell, 230 N.W.2d 588 (1975)

DLH, Inc. v. Russ, 566 N.W.2d 60 (Minn. 1997)

Hunt v. IBM Mid Am. Employees Fed. Credit Union, 384 N.W.2d

853 (Minn. 1986)

II. DID THE DISTRICT COURT ERR BY ENTERING SUMMARY JUDGMENT AND THEREAFTER AMENDING ITS JUDGMENT AND DECREE TO COMPLY WITH STATUTORY REQUIREMENTS?

• Ruling Below: The district court entered summary judgment and later amended its judgment and decree to comply with statutory foreclosure requirements based upon the applicable rules of court allowing for amendments.

• Apposite authority: Eid v. Hodson, 542 N.W.2d 402 (Minn. Ct. App. 1996) Wilson v. City of Fergus Falls, 232 N.W. 322 (Minn. 1930) Medtronic, Inc. v. Advanced Bionics Corp., 630 N.W.2d 438 (Minn.

Ct. App. 2001)

III. DID THE DISTRICT COURT PROPERLY DECIDE THAT IT WAS NOT PRECLUDED BY THE DOCTRINE OF FIRST-ACQUIRED JURSIDICTION?

• Ruling below: Although the district court did not address this issue directly, it determined that Respondent was entitled to summary judgment as a matter of law on all claims.

• Apposite Authority: Havner v. Hegnes, 269 F. 537 (8th Cir. 1920)

Maness v. Meyers, 419 U.S. 449 (1975)

1

STATEMENT OF THE CASE AND PROCEDURAL HISTORY

Appellants Alan G. Keiran and Mary Jane Keiran ("Appellants") bring this appeal

out of the First Judicial District Court, County of Dakota, Minnesota, presided over by

the Honorable Arlene Perkkio. (Appellant's Addendum ("A.A.") pp. 6, 8). Since the

date this matter was commenced over two and a half years ago by The Bank of New

York Mellon fka The Bank of New York, as Trustee for the Certificateholders of

CW ABS, Inc., Asset-Backed Certificates, Series 2007-6 ("BONYM"), Appellants have

continually attempted to find some way to avoid foreclosure despite their undisputed

default on the mortgage loan.

The issues in this case are categorically simple. BONYM commenced this judicial

foreclosure action as a direct result of Appellants' default in their mortgage payments.

(A.A. p. 9 [Am. Judgment and Decree entered Feb. 10, 2014].) Appellants responded to

BONYM's Complaint for foreclosure by generally denying the allegations and asserting

that their rights of rescission of the mortgage loan, which had already been dismissed in a

separate federal action and pending appeal, precluded the district court from acting in this

matter. (Answer.) However, Appellants now attempt to complicate this appeal by

polluting the straight-forward foreclosure issues with irrelevant background and

arguments that are not under consideration here and which only serve to deflect from the

real issue- i.e. whether BONYM is entitled to a decree of foreclosure.

On or about October 20, 2010, Appellants commenced a separate action in federal

court claiming they rescinded and canceled their mortgage loan, which is the same

mortgage loan at issue in the foreclosure action herein. (Aff. of Christina M. Weber

2

dated Apr. 3, 2012, Ex. 2.) This federal action was assigned Court File No. CV-10-4418

(DSD/JSM) ("Federal Action"). (ld.) On November 30, 2011, the Hon. DavidS. Doty

dismissed Appellants' claims in the Federal Action in their entirety and with prejudice.

(I d. at Ex. 8.) On December 21, 2011, Appellants appealed the dismissal of their claims

to the Eighth Circuit Court of Appeals. (ld. at Ex. 1.)

BONYM commenced the underlying foreclosure action on or about December 14,

20 11, asserting that it is entitled to a decree of foreclosure. (See Com pl.) Appellants

filed their Answer in February 2012. (See Answer.) On April3, 2012, BONYM moved

for summary judgment, with a hearing scheduled for May 1, 2012. (BONYM's Mot. for

Summ. Judgment dated Apr. 3, 2012.) In response to BONYM's motion, Appellants re­

raised issues already heard and dismissed in their Federal Action. (Apps.' Memo. of Law

in Opp'n. to BONYM's Mot. for Summ. Judgment.) In addition, Appellants were

provided a second opportunity to respond to BONYM's motion in September 2012.

(Apps.' Supplement to Oppose Summ. Judgment dated Sept. 20, 2012.) On December

13, 2012, the district court issued its decision denying BONYM's motion and granting a

stay of the action pending the decision of the Eight Circuit Court of Appeals. (A.A. p. 1

[Order entered Dec. 13, 20 12].) The district court reasoned that staying the foreclosure

proceeding was the "most conservative" course of action and, further, that its decision in

no way weighed the merits of the case. (ld. at p. 3.) In granting the stay, the district

court ordered Appellants to pay a monthly bond in the amount of $4,020.80 while the

stay was in effect. (!d. at p. 2.) However, at no time did Appellants make any bond

payment as ordered by the district court. (A.A. p. 4 [Order entered Oct. 14, 20 13].)

3

On July 12, 2013, the Eighth Circuit Court of Appeals affirmed the federal district

court's dismissal of Appellants' TILA rescission claims in the Federal Action. (Aff. of

Christina M. Snow dated Oct. 8, 2013, Ex. 1) In light of the court of appeals decision, on

September 19, 2013, BONYM renewed its motion for summary judgment in this matter

for entry of a decree of foreclosure, to be heard on October 14, 2013. (BONYM's Mot.

for Summ. Judgment dated Sept. 19, 2013.) The district court did not rule on BONYM's

motion for summary judgment, but determined that because Appellants had not made a

single bond payment, it would give Appellants until November 15, 2013 to cure the

outstanding amount of $40,208.00 to maintain the stay while Appellants petitioned the

Federal Action to the United States Supreme Court. (A.A. p. 4 [Order entered Oct. 14,

2013]; Tr. from Oct. 14, 2013, pp. 3-4.)

On or about October 15, 2013, BONYM filed an Amended Summons and

Amended Complaint, which included the statutorily required Homestead Designation

Notice pursuant to Minn. Stat. § 582.041. (See Am. Summons and Am. Compl.)

Appellants, through their attorney at the October 14, 2013 hearing, agreed and consented

to BONYM serving and filing this Amended Summons and Complaint. (Tr. from Oct. 14,

2013, p. 8.) Appellants failed to respond or file a new Answer.

On December 17, 2013, in light of Appellants' failure to cure their default in bond

payments by November 15, 2013, the district court entered an order lifting the December

7, 2012 stay and granting BONYM's motion for summary judgment. (A.A. pp. 6-7

[Order and Judgment entered Dec. 20, 2013].) The Order and Judgment, however,

4

mistakenly did not provide for the decree of foreclosure and other statutory requirements,

which was the substance ofBONYM's request. (!d.)

On February 10, 2014, BONYM filed a letter motion pursuant to Minnesota Rule

of Civil Procedure 60.0 1, requesting the district court issue an amended order and

judgment containing the required language for a decree of foreclosure in compliance with

Minnesota Statute Section 581.03. (BONYM's letter motion dated Feb. 10, 2014.) To

permit the district court to comply with statutory requirements, BONYM provided

updated amounts due under Appellants' note and mortgage. (!d.) The district court

issued its amended order and judgment on February 10,2014. (A.A. p. 8 [Am. Judgment

and Decree entered Feb. 10, 2014].)

Appellants now bring the present appeal, claiming the district court erred by

granting summary judgment on December 20, 2014 and that the district court further

erred by correcting its own clerical error and issuing an amended judgment on February

10,2014. (Apps.' Statements of the Case dated Feb. 18, 2013 [sic] and Apr. 11, 2014.)

5

STATEMENT OF THE FACTS

This action involves real property located at , Lakeville,

Minnesota 55044. (A.A. p. 9 [Am. Judgment and Decree~ 5].) This property is legally

described as:

The West 660.00 feet of the East 1980.00 feet of the North 660.00 feet of the North-half (N 112) of the Northeast Quarter (NE V..) of Section Twenty-Eight (28), Township One Hundred Fourteen (114), Range Twenty (20), according to the Government Survey thereof.

("Property") (I d.)

On or about December 30, 2005, Appellants executed and delivered a Note to

Home Capital Inc., in the principal amount of$404,000.00 ("Note"). (ld. at 4.) To secure

repayment of the indebtedness evidenced by the Note, Appellants simultaneously

executed and delivered to Mortgage Electronic Registration Systems, Inc., as nominee for

Home Capital Inc., a mortgage encumbering the Property dated December 30, 2006,

which was filed with the Dakota County Recorder on January 17,2007 as Document No.

2488942 ("Mortgage") (the Note and Mortgage together are referred to as "Mortgage

Loan"). (!d. at~ 6.) BONYM is the mortgagee of record by virtue of an Assignment of

Mortgage from Mortgage Electronic Registration Systems, Inc., as nominee for Home

Capital Inc. (ld. at ~ 7.) The Assignment of Mortgage was filed for record with the

Dakota County Recorder on August 17, 2011 as Document No. 2814889 ("AOM"). (ld.)

Appellants subsequently defaulted under the terms of the Note and Mortgage by failing to

make monthly payments since the payment due and owing on October I, 2008. (I d. at

[second]~ 5.)

6

On or about October 20, 2010, Appellants commenced a separate action in federal

court claiming they rescinded and canceled their Mortgage Loan. (Aff. of Christina M.

Weber dated Apr. 3, 2012, Ex. 2.) This federal action involved the Mortgage Loan that is

at issue in this matter, and was assigned Court File No. CV -10-4418 (DSD/JSM)

("Federal Action"). (!d.) On November 30, 2011, the Hon. David S. Doty dismissed

Appellants' claims in the Federal Action in their entirety and with prejudice. (!d. at Ex.

8.) On December 21, 2011, Appellants appealed the dismissal of their claims to the

Eighth Circuit Court of Appeals. (ld. at Ex. 1.)

Following the dismissal of Appellants' claims in the Federal Action, and as a

direct result of ongoing Appellants' default on the Mortgage Loan, BONYM commenced

this underlying foreclosure action. (See Compl.) On or about December 14, 2011,

BONYM filed this matter with the district court, asserting that it is entitled to a decree of

foreclosure. (Jd.) Appellants filed their Answer in February 2012, alleging that their

claims in the federal action precluded foreclosure. (See Answer.) On April 3, 2012,

BONYM moved for summary judgment, with a hearing scheduled for May 1, 2012.

(BONYM's Mot. for Summ. Judgment dated Apr. 3, 2012.) In response to BONYM's

motion, Appellants re-raised issues already heard and dismissed in their Federal Action.

(Apps.' Memo. of Law in Opp. to BONYM's Mot. for Summ. Judgment.) Due to issues

with Appellants' legal representation, the matter was eventually continued to September

12,2012. (Order dated July 16, 2012.) After a series of additional scheduling issues and

a request by Appellants' then-new counsel to submit a supplemental opposition to

BONYM's summary judgment motion - none of the procedural steps of which are at

7

issue on appeal here - the district court issued its decision denying BONYM' s motion and

granting a stay of the foreclosure action pending the decision of the Eighth Circuit Court

of Appeals. (A.A. p. 1 [Order entered Dec. 13, 2012].) This order denying BONYM's

motion for summary judgment was: 1) based solely on pendency of the federal appeal

and the district court's desire to stay its own action, 2) not based on the merits of the

motion for summary judgment (e.g. was not a finding that BONYM was precluded from

enforcing the note and mortgage); and 3) without prejudice to being renewed after the

Eighth Circuit ruling, should the borrowers remain in default on the Mortgage Loan. (!d.

at p. 3.) In granting the stay, the district court ordered Appellants to pay a monthly bond

in the amount of$4,020.80 while the stay was in effect. (!d. at p. 2.)

On July 12, 2013, the Eighth Circuit Court of Appeals affirmed the federal district

court's dismissal of Appellants' TILA rescission claims in the Federal Action. (Aff. of

Christina Snow dated Oct. 8, 2013, Ex. 1.) On September 19, 2013, BONYM renewed

its motion for summary judgment in this matter for entry of a decree of foreclosure, to be

heard on October 14, 2013. (BONYM's Mot. for Summ. Judgment dated Sept. 19,

2013.) The district court did not rule on BONYM's motion for summary judgment, but

determined that because Appellants had not made a single bond payment, it would give

Appellants until November 15, 2013 to cure the outstanding amount of $40,208.00 to

maintain the stay while Appellants petitioned the Federal Action to the United States

Supreme Court. (A.A. p. 4 [Order entered Oct. 14, 2013]; Tr. from Oct. 14, 2013, pp. 3-

4.) The district court expressly stated that failure to cure by November 15, 2013 "will

result in the lifting of the stay ordered on December 7, 20 12." (A.A. p. 5.)

8

On or about October 15, 2013, BONYM filed an Amended Summons and

Amended Complaint, which included the statutorily required Homestead Designation

Notice pursuant to Minn. Stat. § 582.041. (See Am. Summons and Am. Compl.)

Appellants, through their attorney at the October 14, 2013 hearing, agreed and consented

to BONYM serving and filing this Amended Summons and Complaint, service of which

would be completed through Appellants' counsel. 1 (Tr. from Oct. 14, 2013, p. 8.)

Appellants failed to respond or file a new Answer.

On December 1 7, 2013, in light of Appellants' failure to cure their default in bond

payments by November 15, 2013, the district court entered an order lifting the December

7, 2012 stay and granting BONYM' s motion for summary judgment. (A.A. p. 6-7 [Order

and Judgment entered Dec. 20, 2013].) The Order and Judgment, however, mistakenly

did not provide for the decree of foreclosure or other statutory requirements, which was

the substance of BONYM' s request. (!d.)

On February 10, 2014, BONYM filed a letter motion pursuant to Minnesota Rule

of Civil Procedure 60.0 1, requesting the district court issue an amended order and

judgment containing the required language for a decree of foreclosure in compliance with

Minnesota Statute Section 581.03. (BONYM's letter motion dated Feb. 10, 2014.) To

permit the district court to comply with statutory requirements, which were already

intended in the district court's initial December 20, 2013 Order and Judgment, BONYM

1 Service of the Amended Summons and Complaint was completed on October 16, 2013 by United States Mail pursuant to the of-record discussion at the hearing on October 14, 2013, which is confirmed by the transcript. Attorneys for BONYM served the Amended Summons and Complaint upon Appellants' attorney, with a request for execution and return of a Notice and Acknowledgment of Service.

9

provided updated amounts due under Appellants' note and mortgage, which had never

been contested before. (I d.) The district court issued its amended order and judgment on

February 10, 2014. (A.A. p. 8 [Amended Judgment and Decree entered Feb. 10, 2014].)

However, at no time prior to the present had Appellants ever provided any information,

argument, or objection to the district court contesting the amounts claimed to be due or

owing under the Mortgage Loan, or that the documents underlying the foreclosure were

invalid or improper. (See Apps.' Memo. of Law in Opp. to BONYM's Mot. for Summ.

Judgment; Apps.' Supplement to Oppose Summ. Judgment dated Sept. 20, 2012.)

Appellants' arguments always were focused on legal issues related to whether BONYM

had standing to foreclosure and whether the district court could enter decree of

foreclosure in light of Appellants' [now-dismissed] TILA claims. (!d.)

10

STANDARDS OF REVIEW

On appeal from a summary judgment, the appellate court is tasked with reviewing

the record below for the purpose of answering: (I) whether there are any genuine issues

of material fact; and (2) if the district court erred in its application of the law. Osborne v.

Twin Town Bowl, Inc., 749 N.W.2d 367, 371 (Minn. 2008) (citing K.R. v. Sanford, 605

N.W.2d 387, 389 (Minn. 2000)). In general, on review, the evidence must be viewed in

the light most favorable to the party against whom summary judgment was granted and

questions of law must be reviewed de novo; however this Court has also opined that

summary judgment should be affirmed if it can be sustained on any ground, and this

Court need not adopt the reasoning of the district court. Winkler v. Magnuson, 539

N.W.2d 821, 825, 828 (Minn. Ct. App. 1995); see also Cambern v. Hubbling, 238

N.W.2d 622, 624 (Minn. 1976) (stating the general rule that if a district court's "rule is

correct, it is not reversed solely because its stated reason was not correct"). Furthermore,

a reviewing court will not disturb the district court's "inherent power to grant summary

judgment" unless the objecting party can show prejudice from lack of notice, from

procedural irregularities, or from the lack of a meaningful opportunity to oppose

summary judgment. Federal Land Bank of St. Paul v. Obermoller, 429 N.W.2d 251, 255

(Minn. Ct. App. 1988), pet. For rev. denied (Minn. Oct. 26, 1988.) Finally, the appellate

court may only reverse a lower court's decision to grant or deny equitable relief if it finds

the lower court clearly abused its discretion in making that decision. Septran, Inc. v.

Independent School Dist. No. 271, Bloomington, Minn., 555 N.W.2d 915, 918 (Minn.

1 1

1996). Finally, an appellate court may not consider matters not produced and received in

evidence below. Theile v. Stich, 425 N.W.2d 580, 582-83 (Minn. 1988).

ARGUMENT

I. BONYM WAS ENTITLED TO SUMMARY JUDGMENT AS A MATTER OF LAW.

Based upon the entirety of the record, the district court properly determined that

there was no genuine issue of material fact and that BONYM was entitled to judgment as

a matter of law. Appellants cannot rely on mere averments or denials to overcome

summary judgment, and the district court properly granted BONYM's motion. In

addition, neither the additional arguments related to res judicata, compulsory

counterclaims, and recoupment are applicable here and do not affect the district court's

decision.

A. The Record Demonstrated That BONYM Was Entitled to Judgment as a Matter of Law and That Appellants Raised No Genuine Issue of Material Fact.

Summary judgment is proper when there are no genuine issues of material fact and

the moving party is entitled to judgment as a matter of law. Minn. R. Civ. P. 56.03

(2011); Fabio v. Bellomo, 504 N.W.2d 758, 761 (Minn. 1993). An "issue of material

fact" is one that would affect the outcome of the case. Pischke v. Kellen, 384 N.W.2d

201, 205 (Minn. App. 1986) (citing Rathbun v. WT Grant Co., 219 N.W.2d 641, 646

(Minn. 1974 )). There is no genuine issue of material fact when the record on the whole

"could not lead a rational trier of fact to find for the non-moving party." DLH, Inc. v.

Russ, 566 N. W.2d 60, 69 (Minn. 1997) (quotation omitted). Nor is there a genuine issue

12

of material fact when the nonmovmg party presents evidence that creates only 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., 566 N.W.2d at 71.

In determining whether the moving party has sustained its burden, the court must

view the evidence in a manner most favorable to the non-moving party. Pouliot v.

Fitzsimmons, 582 N. W.2d 221 (Minn. 1998). Once the movant has satisfied its burden,

the burden shifts to the non-moving party to show the existence of a genuine issue of

material fact. Bixler v. Bixler, 376 N.W.2d 209, 215 (Minn. 1985) (citing Continental

Sales and Equip. Co. v. Town of Stuntz, 257 N.W.2d 546, 550 (Minn. 1977). If the non­

moving party fails to present specific facts indicating that a genuine issue of material fact

exists, summary judgment is proper. Hunt v. IBM Mid Am. Employees Fed. Credit

Union, 384 N.W.2d 853, 855 (Minn. 1986) (emphasis added). That is, the non-moving

party cannot rely upon mere averments or denials set forth in its pleadings, but must offer

particular facts showing that there is a genuine issue for trial. Minn. R. Civ. P. 56.05

(2013); see DLH, 566 N.W.2d at 69-71 (the non-moving party must produce "substantial

evidence" to establish a genuine issue of fact). Moreover, "[t]he court is not required to

save the non-moving party by drawing unreasonable inferences." Savage v. Varey, 358

N.W.2d 102, 105 (Minn. App. 1984). Finally, "[a] district court may, sua sponte, grant

summary judgment if, under the same circumstances, it would grant summary judgment

on motion of a party. Del Hayes & Sons, Inc. v. Mitchell, 230 N.W.2d 588, 591-92

(1975).

13

Here, Appellants indisputably defaulted on the Note and Mortgage by failing to

make monthly payments since October 1, 2008. The Note itself defines a Payment

Default as the failure as the failure "to meet the repayment terms of [the] Note for any

outstanding balance." (Compl. Ex. C.) A Payment Default occurred when Appellants

failed to make the monthly payments in October 2008 and thereafter. (!d. at ~ 8.)

Appellants cannot possibly attempt to argue they actually made the payment or the final

full payment upon maturity, and they cannot offer any substantive evidence to address

this allegation, so their rote denials were not enough to create a genuine issue of material

fact to defeat summary judgment. Therefore, BONYM was entitled to summary

judgment, because no genuine issue of material fact exists as to whether Defendant

defaulted on the Note and Mortgage.

Appellants' assertion that BONYM failed to show that it accelerated the balance

due on the defaulted Note is also erroneous. BONYM alleged this issue in its Complaint,

stating that the amounts due under the Mortgage Loan are due in full. (Compl. ~ 9.)

Moreover, Appellants' only response regarding this issue came from their supplemental

response dated September 20, 2012, in which they generally denied the issue in three

sentences without any evidence, direction to a specific fact in the record, or foundation

requiring said notice. (Defs.' Supplement to Opp. Summ. Judgment, p. 6.) Therefore,

Appellants' reliance on a general denial does not create more than a metaphysical doubt

as to whether there is a material fact issue. Further, Appellants failed to raise many of

these arguments in the district court, meaning that they cannot now be raised here for the

14

first time. See Theile v. Stich, 425 N.W.2d 580, 582-83 (Minn. 1988) (holding that

appellate court may not consider maters not produced and received in evidence below).

The district court also properly considered evidence within the scope of

documents on summary judgment. The district court ruled on evidence fairly submitted

in connection with BONYM's September 2013 motion for summary judgment, as well as

supporting materials submitted to update the court prior to the amended judgment and

decree - documents which had never before been contested. See e.g., Kroning v. State

Farm Auto. Ins. Co., 567 N.W.2d 42, 45-46 (Minn. 1997) (holding that question of

whether to admit or exclude evidence is within the district court's discretion.)

Appellants' reliance on Midway Nat. Bank of St. Paul v. Bollmeier, 462 N.W.2d 401

(Minn. Ct. App. 1990), is misplaced because they mischaracterize the proceedings. In

Bollmeier, the court determined that the additional materials could not be considered after

summary judgment because they were first submitted in the non-prevailing party's

motion for reconsideration. Id. at 404. Here, however, the materials considered by the

district court were properly part of the record, first because they were submitted by

BONYM in connection with a duly noticed summary judgment motion, and second,

because updated materials were provided by BONYM (i.e. the prevailing party) as part of

the court's correction of its original judgment. BONYM never filed a motion for

reconsideration. Thus, the district court properly considered BONYM's evidence with

respect to the summary judgment motion. 2

2 Appellants also assert the Amended Summons and Complaint, which only differed from the original Summons and Complaint by including Homestead Designation Notice,

15

Ultimately, Appellants had no valid basis to file an opposition to BONYM's

renewed motion for summary judgment. Appellants were indisputably in default on their

Mortgage Loan and their TILA rescission claims had been rejected by both the federal

district court and the Eighth Circuit Court of Appeals. The district court's decision

following BONYM's initial motion for summary judgment was not upon the merits, but

was of the district court's own accord. Specifically, the district court's order denial of

BONYM's first motion for summary judgment was: 1) based solely on pendency of the

federal appeal and the district court's desire to stay its own action, 2) not based on the

merits of the motion for summary judgment (i.e. was not a finding that BONYM was

precluded from enforcing the note and mortgage); and 3) without prejudice to being

renewed after the Eighth Circuit ruling, should the borrowers remain in default on the

Mortgage Loan. (A.A. p. 3 [Order entered Dec. 13, 2012].) At the time the district court

entered summary judgment on December 20, 2013, all issues had been raised and fully

briefed. The issues did not change between the time of BONYM's initial summary

judgment motion and its renewed summary judgment motion. The district court also did

not simply have a "change of heart"- it never denied summary judgment based upon the

merits in the first place. And, at no time prior to the present had Appellants ever provided

appeared from nowhere, despite Appellants' counsel expressly agreeing to BONYM's service and filing of the document (Tr. from Oct. 14, 2013, p. 8), and despite BONYM's counsel serving said documents by U.S. Mail on October 16, 2014. Appellants assert that the Amended Summons and Complaint prejudices them, even though they never filed an Answer, because of said Homestead Designation Notice. However, no such prejudice is present because Appellants have failed to provide any factual basis demonstrating that their inability to elect the option has caused them damage or that the Property was of such a type that application of the designation option would conform to zoning requirements and ordinances.

16

any information, argument, or objection to the district court contesting the amounts

claimed to be due or owing under the Mortgage Loan, or that the documents underlying

the foreclosure were invalid or improper. (See Apps.' Memo. of Law in Opp. to

BONYM's Mot. for Summ. Judgment; Apps.' Supplement to Oppose Summ. Judgment

dated Sept. 20, 20 12.) Only after the fact do they now claim there is an issue.3

Accordingly, the district court properly held that no genuine issue of fact was at issue and

granted summary judgment.

B. BONYM's Foreclosure Claims Were Not Barred by Res Judicata and Enforcement of the Note and Mortgage Was Not, By Definition, A Compulsory Counterclaim.

Appellants conclude that BONYM's exercise of its right to enforce the terms of

the Note and Mortgage is barred because it should have brought its foreclosure claims in

the federal court as a compulsory counterclaim. They also assert that under the

(misapplied) doctrine of res judicata, the allegations made in this action are barred

because they could have been litigated in Federal Action (See Apps.' Br. p. 40.)

However, not only is Appellants' application of res judicata on its face incorrect, the

3 Appellants attempt to support their claim that the underlying foreclosure documents are improper by creating confusion through speculation, conjecture, and false inconsistencies, especially as they relate to affidavits submitted on behalf of BONYM. However, these amount to nothing more than reliance upon general denials and conclusory statements, all of which fail to raise a genuine issue of material fact that overcomes a summary judgment standard. Appellants' arguments have no bearing on whether BONYM is entitled to foreclose, whether Appellants' are in default, and they do nothing to rebut the prima facie case BONYM put forth. See Phillips-Klein Cos. V TiffanyP'ship, 474 N.W.2d 370,373 (Minn. Ct. App. 1991) (holding that when record lacked evidence rebutting movant's affidavits, nonmovant failed to meet its burden of demonstrating an issue of material fact.)

17

practical effect of Appellants' position, if taken as true, Is illogical and leads to

unintended results.

First and foremost, Appellants' categorization of BONYM's foreclosure claims as

being compulsory counterclaims to their Federal Action is entirely unpersuasive. A

claim may be considered to be a compulsory counterclaim if it "arises out of the

transaction that is the subject matter of the opposing party's claim." Minn. R. Civ. P.

13.01 (2012).4 Although Appellants cite to this rule, they ignore the important case law

defining it. In determining whether a counterclaim arises out of the same transaction,

"[t]he most widely accepted test ... is whether the counterclaim is logically related to the

claim being asserted by the opposing party." Burnet Realty, Inc. v. Uppal, No. A07-

0732, 2008 WL 1800 I 03, *3 (Minn. Ct. App. Apr. 22, 2008) (quoting Fox Chemical Co.

v. Amsoil, Inc., 445 F.Supp. 1355, 1361 (D. Minn. 1978)). "Claims are logically related

if the same aggregate of operative facts serve as the basis of both." !d. (citing Fox

Chemical Co., 445 F.Supp. at 1361); see also POPP Telecom v. American Sharecom,

Inc., 210 F.3d 928, 941 (8th Cir. 2000) (applying Fox Chemical in the context of a

compulsory counterclaim analysis under Minn. R. Civ. P. 13.01).

In this case, as discussed below regarding jurisdiction, see infra section III, it is

clear that BONYM's foreclosure claims are not part of the same transaction as

4 Minnesota's Rule 13 differs from the Federal Rule in that the former precludes independently bringing a claim arising from the same "transaction" while the Federal Rule precludes the independent assertion of any claim arising from the same "transaction or occurrence.'' Therefore, federal case law provides additional guidance on compulsory counterclaims.

18

Appellants' currently-dismissed federal court claims. The contractual enforcement of the

Note and Mortgage as a direct result of Appellants' failure to make payments (i.e. post-

origination issues) is not logically related to Appellants' TILA claims related to

commencement of the loan (i.e. pre-origination and origination issues). The issues of fact

and law regarding these separate issues are not largely the same. Foreclosure is based

upon default in the terms of a contractual mortgage; whereas, TILA claims are based

upon compliance with RESPA requirements. Moreover, the same evidence does not

support both types of issues. Foreclosure depends on the failure to pay and is based upon

money. TILA issues, like those here, depend on the delivery of notices at origination.

Therefore, BONYM' s foreclosure claims cannot be considered to be compulsory

I . 5

counterc mms.

The practical effect of Appellants' position- if taken as true- is nothing short of

disastrous. If Appellants are correct and lenders are compelled to bring foreclosure

actions in response to any litigation commenced by a borrower that is in any way related

to the note or mortgage, the lenders' ongoing contractual rights (including enforcement)

are stripped away.6 Lenders would be forced to forego their ability to elect their remedy

when they determine it is appropriate. A defaulting borrower should not have the ability

to force a lender to commence foreclosure; the lender must be free to choose its remedy

5 Even under the tests set forth by Appellants under federal case law (Apps.' Br. p. 30), Appellants' argument that foreclosure is a compulsory counterclaim still fails. 6 Any reading of Rule 13.0 1 and its related case law consistent with Defendants' arguments would necessarily interfere with Plaintiffs contractual rights and is directly inconsistent with the constitutional prohibition stating that, "No state shall. .. pass any ... law impairing the obligation of contracts ... " U.S. Canst., art. I,§ 10, cl. 1.

19

under contract, and may decide that foreclosure is not appropriate. Moreover,

Appellants' assertion that a lender is forever barred from its enforcement remedies for

failing to plead claims in response to borrower's lawsuit results in a windfall to the

borrower. Appellants' position has the untenable effect of precluding the lender from

enforcing its lien interest or suit to recover payments.

In addition, Appellants' argument regarding res judicata is misplaced. Even if

Appellants' res judicata argument is somehow relevant (which BONYM does not

concede because its elements are simply inapplicable), the doctrine is not to be applied

rigidly. Wilson v. Comm'r of Revenue, 619 N.W.2d 194, 198 (Minn. 2000); Johnson v.

Canso/. Freightways, Inc., 420 N.W.2d 608, 613 (Minn. 1988). The court must exercise

discretion in its application. !d. The focus is on whether application would work an

injustice on the party against whom the doctrine is urged. Johnson, 420 N.W.2d at 613-

14. Here, it is clear that an injustice would result from barring BONYM from exercising

its ongoing contractual rights under the Note and Mortgage, effectively creating a

windfall in favor of Appellants. It is important to remember that Appellants' claims in

Federal Action were dismissed on summary judgment, and later affirmed by the Eight

Circuit, which confirmed the validity of the Note and Mortgage underlying the issues

here. Moreover, the issue of foreclosure was never at issue in the Federal Action, and

BONYM did not have an affirmative claim pending in that action. Therefore, the two

matters do not involve the same factual circumstances, there is no final judgment barring

recovery by BONYM on foreclosure, and BONYM did not have a full and fair

opportunity to litigate the foreclosure issue in the Federal Action. See State v. Joseph,

20

636 N.W.2d 322, 327 (Minn.2001); accord Wilson, 619 N.W.2d at 198. Thus, the

doctrine of res judicata does not apply.

Based upon these reasons, Appellants' arguments that BONYM's foreclosure

claims are unsupported, and the district court's orders must be affirmed.

C. Appellants Have No Basis Upon Which To Request Recoupment.

Although their Answer is completely devoid of any mention of this issue (again,

therefore, waiving their right to this argument), Appellants assert they are entitled to a

setoff or some sort of recoupment for certain amounts paid. In fact, Appellants asserted

no counterclaims. (See Answer.) The basis for Appellants' argument is that even though

the federal court dismissed their initial claims, they somehow can resurrect their

substantive claim and apply it here. Essentially, Appellants are arguing that even though

their claim is barred by law, they are still entitled to the effective relief. In other words,

Appellants are asserting a claim even though the federal court said they had no

affirmative claim.

Appellants' factual basis for their entire argument on this point, which has already

been analyzed in the Federal Action and is now irrelevant here, is that Appellants

"collectively received a single TILA disclosure statement despite being entitled to a

separate copy," and that "[t]his is a violation of TILA." (See Apps.' Br. p. 38.)

Surprisingly, these statements contains no cite to the factual record and have absolutely

no foundation. In addition, the federal court never made any such determination. Yet

Appellants desire to use this unproven, irrelevant fact to assert recoupment as a claim or

defense. Moreover, Appellants themselves attached the requisite number of copies of the

21

initial disclosures as exhibits to their own federal court complaint. (Aff. Christina M.

Weber, Ex. 2.) Interestingly, Appellants did not attach those exhibits to their responsive

submissions in this case. As it relates to the record in this matter, even if these arguments

are relevant in this foreclosure action, Appellants have failed to provide a shred of

evidence to support their setoff and recoupment arguments - a burden which they

undoubtedly have. As such, because Appellants' factual assertion is untrue, their

arguments must fail, and the district court's orders should be affirmed.

II. THE DISTRICT COURT DID NOT ERR BY ENTERING SUMMARY JUDGMENT OR BY AMENDING ITS ORIGINAL JUDGMENT AND DECREE TO COMPLY WITH STATUTORY REQUIREMENTS.

The district court did not err, either substantively or procedurally, by entering

summary judgment on December 20, 2013. See supra section I. In addition, by

amending its original judgment and decree, the district court was implementing the

decision it made at the outset when granting summary judgment. In a perfect world, the

district court would have included in its original summary judgment order the required

language for foreclosures by action. By mistake, it did not. However, district courts are

given inherent and liberal power to make these amendments in the interests of justice.

"Clerical mistakes in judgments, orders, or other parts of the record and errors therein

arising from oversight or omission may be corrected by the court at any time upon its

own initiative or on the motion of any party and after such notice, if any, as the court

orders." Minn. R. Civ. P. 60.0 1. When judgment omits a finding that is clearly apparent

on the face of the record, the court can correct the mistake pursuant to Rule 60.01 to

make the judgment speak the truth. Eid v. Hodson, 542 N.W.2d 402, 406 (Minn. Ct. App.

22

1996). A clerical error is usually one of form. Wilson v. City of Fergus Falls, 232 N.W.

322, 332 (Minn. 1930). "A clerical error in reference to an order for judgment or

judgment, as regards correction, includes one made by the court which cannot reasonably

attributed to the exercise of judicial consideration or discretion." !d. Because a court

may, on its own initiative and without notice, correct a clerical error, notions of due

process and notice or opportunity to respond are not violated. Medtronic, Inc. v.

Advanced Bionics Corp., 630 N.W.2d 438, 448 (Minn. Ct. App. 2001). Based upon the

aforementioned law, the district court did not abuse its discretion.

In this case, the basis for the district court to correct its clerical mistakes was to

comply with Minnesota Statute Section 581.03. (2013). This statute requires that in a

foreclosure by action, a judgment:

be entered, under the direction of the court, adjudging the amount due, with costs and disbursements, and the sale of the mortgaged premises, . . to satisfy such amount, and directing the sheriff to proceed to sell the same according to the provisions of law relating to the sale of real estate on execution, and to make report to the court."

Minn. Stat. § 587.03 (2013). BONYM provided a proposed amended judgment and

decree, which was almost identical to each of the three prior proposed judgments and

decree in this case (from April 2012, September 2012, and October 2013), for the district

court's consideration. Even though the language in the amended judgment was corrected

to comply with statutory foreclosure requirements, the basis entitling BONYM to

summary judgment- i.e. a Note and Mortgage, Appellants' undisputed default, exercise

of foreclosure as a remedy - and the district court's decision to grant BONYM its relief

set out in its Complaint did not change. The lack of language required by statute to

23

implement the district court's decision is apparent from the record, and the use said

statutory language is not discretionary - it is what must be used in the final order after the

court makes its determination. See Wilson, 232 N.W. at 323. By permitting the

additional language in the amended judgment and decree, the district court did not

suddenly expand the scope of its decision - it was merely implementing the decision it

already made. In granting BONYM summary judgment in the December 20, 2013 order,

the district court already made its decision that BONYM was entitled to everything

described in Minnesota Statute Section 587.03. In addition, BONYM was not asking for,

and the district court did not order, more than what had already been granted in the initial

judgment and decree, or more than what was set out in the Complaint or BONYM's

motions for that matter. Moreover, like in Medtronic, there is no requirement that

Appellants had the right to be heard or that they receive an opportunity to respond. The

district court could have sua sponte amended the judgment and foreclosure decree to

comport with statutory foreclosure requirements. See Minn. R. Civ. P. 60.01. BONYM

provided updated judgment figures - which judgment figures and affidavits Appellants

never contested or objected to before - so that the foreclosure decree could be as timely as

possible.

It is also apparent that Appellants' argument concerning the alleged lack of notice

before entry of summary judgment and entry of the amended order is equally

disingenuous. First, BONYM properly noticed its renewed summary judgment motion

on September 19, 2013. (BONYM's Notice of Mot. and Mot. dated Sept. 19, 20 13.)

Then on October 8, 2013, BONYM submitted updated judgment figures and amounts

24

due, including an affidavit on behalf of BONYM. Appellants failed to respond to this

motion. In fact, Appellants' even failed to respond to the court's generous extension of

time to cure their failure to make any payment of bond. (A.A. p. 4 [Order entered Oct.

14, 2013].) The district court's order expressly stated that failure to comply by

November 15, 2013 "will result in the lifting of the stay ordered on December 7, 20 12."

(!d.) This logically serves as an admonition to Appellants that, if they failed to cure the

default in bond payments, the then-pending renewed motion for summary judgment

would be considered, and that Appellants should submit a response. And, the district

court did not simply have a "change of heart"- it never denied summary judgment on the

merits in the first place. Instead, Appellants now want to complain about the process

despite their own ignorance of what motions were pending, which appears consistent

with their laissez fa ire attitude driving their failure to make any bond payment for over

ten months. Further, even if BONYM did not have a pending summary judgment motion

at the time the stay was lifted, the district court was still permitted to enter summary

judgment sua sponte. See e.g. Del Hayes & Sons, Inc. v. Mitchell, 230 N.W.2d 588, 591-

902 (1975) (holding that a district court may, sua sponte, grant summary judgment if,

under the same circumstances, it would grant summary judgment on motion of a party.)

Finally, any feigned surprise Appellants claim regarding what language BONYM

requested in the amended judgment and decree is equally disingenuous. Appellants knew

from the three prior proposed orders, submitted in connection with the summary

judgment motions, exactly what provisions BONYM was looking for and what needed to

be ordered by statute.

25

Second, at no time prior to the present did Appellants ever raise, object to, or

dispute the issue of the amount due, affidavits, or the basis for summary judgment. All

arguments from Appellants were focused on whether the district court was empowered to

enter judgment at all due to their TILA claims. (See Apps.' Memo. ofLaw in Opp. to

BONYM's Mot. for Summ. Judgment; Apps.' Supplement to Oppose Summ. Judgment

dated Sept. 20, 20 12.) Only now do Appellants take issue with the actual figures and

documentation. It is Appellants themselves that undeniably put themselves in this

position by not responding to motions and avoiding court orders.

Even so, the entirety of the record shows that Appellants had absolutely no valid

basis to file an opposition to BONYM's second motion for summary judgment.

Appellants were indisputably in default on their Mortgage Loan, and they had not made a

loan payment since October 2008. Moreover, both the federal district court and the

Eighth Circuit Court of Appeals rejected Appellants' TILA rescission arguments and

dismissed their Complaint in its entirety. Even if the district court erred by entering

summary judgment or by amending its own judgment to comply with statutory

requirements (which BONYM does not concede), such an amendment would be harmless

error. See e.g. Federal Land Bank of St. Paul v. Obermoller, 429 N.W.2d 251, 255

(Minn. Ct. App. 1988), pet. for rev. denied (Minn. Oct. 26, 1988) (holding that a

reviewing court will not disturb the district court's "inherent power to grant summary

judgment" unless the objecting party can show prejudice from lack of notice, from

procedural irregularities, or from the lack of a meaningful opportunity to oppose

26

summary judgment).7 Here, Appellants have failed to demonstrate that they have

suffered from any prejudice, especially because they chose not to respond to BONYM's

second summary judgment motion (despite having the opportunity), they never before

contested the amounts due on the mortgage loan, and they were in default since October

2008. Appellants simply have no valid basis to dispute the entry of judgment. See supra

section I(A). Thus, the district court properly entered summary judgment and also

properly amended its own judgment in order to correct clerical issues. Therefore, this

Court should affirm the decisions of the district court.

III. THE DOCTRINE OF FIRST -ACQUIRED JURISDICTION DOES NOT APPLY IN THIS FORECLOSURE ACTION AND IT DID NOT PRECLUDE THE DISTRICT COURT FROM ENTERING SUMMARY JUDGMENT IN FAVOR OF BONYM.

Appellants assert that the district court was divested of jurisdiction under the rule

of first-acquired jurisdiction. (Apps'. Br. p. 41.) However, their arguments must fail for

two reasons. First, the rule of first-acquired jurisdiction does not apply- and no conflict

is present - where the cases in controversy are not the same, the issues are different in

one suit from the other, and the subject-matter is not identical. Havner v. Hegnes, 269 F.

537, 540 (81h Cir. 1920). Here, this foreclosure action centers on enforcing the terms of

the Note and Mortgage; whereas Appellants' Federal Action centered on the affirmed

dismissal of claims regarding TILA origination and rescission issues. Statutory

7 In support of its holding, the Court in Obermoller also cited to Del Hayes & Sons, Inc. v. Mitchell, 230 N.W.2d 588, 592 (1975), Niazi v. St. Paul Mercury Insurance Co., 121 N.W.2d 349, 353 (1963), as well as Minn. R. Civ. P. 61, which expresses a mainstay of judicial consideration - "The court at every stage of the proceeding must disregard any error or defect in the proceeding which does not affect the substantial rights of the parties."

27

origination issues are inherently different than post-origination contractual enforcement

issues (i.e. foreclosure). See supra section I(B). Moreover, Appellants' Federal Action

did not involve the property itself - it merely related to the contract between the

originating parties (of which BONYM was not a part).

Second, Appellants conveniently fail to acknowledge that their Federal Action has

been dismissed, and that the Eighth Circuit Court of Appeals has affirmed this dismissal.

The general rule is that the district court order remains in full force and effect absent a

stay. See e.g. Maness v. Meyers, 419 U.S. 449, 458 (1975). Here, the affirmed dismissal

of Appellants' claims remains in effect, and there is no dispute that they have failed -

dispute the opportunity - to maintain a stay of the district court's December 13, 2012

Order, all due to their undisputed failure to pay bond. Therefore, the district court

remams divested of jurisdiction with respect to Appellants' claims. Accordingly, the

district court exercised proper jurisdiction in this separate foreclosure matter.

Accordingly, Appellant's claims must fail and the district court's judgment must be

affirmed.

CONCLUSION

For the foregoing reasons, the district court properly granted summary judgment in

favor ofBONYM. Therefore, the district court's order should be affirmed in its entirety.

28

Respectfully submitted,

Dated: September 15, 2014

WILFORD GESKE & COOK, P.A.

By:~~~~~~~~~~~ Christina M. Sn , #034963X

29

vDavid R. Mort sen, #032906X Attorneys for Respondent 7616 Currell Boulevard, Suite 200 Woodbury, Minnesota 55125 (651) 209-3300

CERTIFICATION OF BRIEF LENGTH

I hereby certify that this brief conforms to the requirements of Minn. R. Civ. App.

P. 132.01, subds. 1 and 3, for a briefproduced with a proportional font. The length ofthis

brief is 7, 798 words. This brief was prepared using Microsoft Word 2010 in Times New

Roman style font at size 13 point type.

Dated: September 15,2014

WILFORD, GESKE & COOK, P.A.

By:~~~~~4U~~~~~~ Christina M. Sno\\l #034963X

30

vf:>avid R. Mortensen, #032906X Attorneys for Respondent 7616 Currell Boulevard, Suite 200 Woodbury, MN 55125 (651) 209-3300

~tate of J'li{iuucsotu )

) SS.SS. CCouut~ of Jflcuncpin )

Stephen M. West, being first duly sworn, states that he is an employee of Bacfr!~Qal Printing, located at 733 Marquette Avenue, Suite 109, Minneapolis, MN 55402. That on September 15, 2014, he prepared the Brief and Addendum of Respondent The Bank of New York Mellon, case numbers A14-0304 and A14-0620, and served 2 copies of same upon the following attorney(s) or responsible person(s) by First Class Mail postage prepaid.

J eramie Richard Steinert STEINERT, P.A. 707 North Third Street, Suite 203 Minneapolis, MN 55401

Subscribed and sworn to before me on Septentber15,2014

Signed