Fiecke-Stifter v. MidCountry Bank

Background

Doris M. Fasching owned a home in Hutchinson, Minnesota, secured by a line of credit from MidCountry Bank. After Doris died, Sandra continued living in the home and made payments. MidCountry began a foreclosure-by-advertisement proceeding on February 1, 2022, and Taft represented MidCountry. The property was sold at a sheriff’s auction on April 7, 2022; Sandra later redeemed it.

Sandra alleged that Taft violated sections 1692f(6)(A) and (C) of the Fair Debt Collection Practices Act (FDCPA). Section 1692f(6)(A) prohibits a debt collector from taking or threatening nonjudicial action to dispossess property when there is no present right to possess property claimed as collateral. Section 1692f(6)(C) addresses property exempt from dispossession. Sandra argued that MidCountry lacked a present right to possession when it foreclosed.

Motion-to-dismiss standard

The court applied Rule 12(b)(6), which tests whether a complaint states a legally sufficient claim. The court accepted the complaint’s factual allegations as true and drew reasonable inferences for Sandra, but required the allegations to make liability plausible rather than merely possible.

Analysis

The mortgage stated that a borrower was in default if an obligated party failed to make a payment when due. The court concluded that Sandra’s allegations showed she made late payments, so she was in default under the mortgage. The court rejected her argument that the mortgage required a written default notice because the mortgage’s notice provision applied only to a “conventional loan” under Minnesota law, and the parties did not dispute that this loan was issued under an exception to that statutory definition.

The court also rejected Sandra’s arguments concerning acceleration and cure. The mortgage did not require MidCountry to accelerate the loan before foreclosing. Although Sandra argued that she could cure the default before acceleration, the court concluded that she did not completely cure the default. The court noted that MidCountry began foreclosure before Sandra made a January payment and that the amount she paid in February was less than the amount the complaint alleged she owed.

Sandra separately alleged that MidCountry violated Minnesota Statutes section 580.30 by failing to provide the amount needed to reinstate the mortgage within three days after receiving her request. The court found that allegation plausible and predicted that such a statutory violation could make the foreclosure void. But the court rejected Sandra’s further argument that a void foreclosure necessarily meant MidCountry lacked a present right to possession under section 1692f(6)(A). The court held that “present right to possession” concerned prerequisites to initiating foreclosure, such as the borrower’s default and the mortgage’s power of sale, rather than every procedural violation of Minnesota’s foreclosure statutes.

Sandra’s claim under section 1692f(6)(C) was waived because she conceded that she did not know of any basis to claim that the home was exempt from dispossession.

Disposition

Judge Eric C. Tostrud granted Taft Stettinius & Hollister LLP’s Motion to Dismiss. The court dismissed the Corrected Second Amended Complaint with prejudice and ordered judgment entered accordingly.