Anthony Grygelko Sr. and Katie Grygelko v. Amerihome Mortgage Company

Background

Plaintiffs Anthony Grygelko Sr. and Katie Grygelko own a home in Blaine, Minnesota. They took out a mortgage originally payable to Bay Equity LLC, which was later assigned to Defendant Amerihome Mortgage Company, LLC (Amerihome). Plaintiffs contend that this assignment was void for lack of consideration — meaning no value was exchanged — and that Defendant Federal National Mortgage Association (Fannie Mae) is the true owner of the loan while Amerihome is only its servicer. On September 17, 2025, Defendant Trott Law, P.C. issued a Notice of Mortgage Foreclosure on behalf of Amerihome, scheduling a foreclosure sale for November 13, 2025.

Plaintiffs filed suit asserting four claims: (Count I) quiet title under Minnesota Statute § 559.01; (Count II) a declaratory judgment that defendants lack standing and authority to foreclose and that the mortgage assignments are void; (Count III) violation of Uniform Commercial Code (UCC) Article 2, § 201 and relevant Minnesota foreclosure statutes; and (Count IV) slander of title. Plaintiffs also filed a Motion for a Temporary Restraining Order seeking to halt the November 13 sheriff's sale.

Procedural History

United States Magistrate Judge David T. Schultz issued a Report and Recommendation (R&R) on October 16, 2025, recommending dismissal of the entire complaint for lack of subject matter jurisdiction — meaning the federal court had no authority to hear the case. Plaintiffs timely objected to the R&R, asserting both diversity jurisdiction and federal question jurisdiction.

Under 28 U.S.C. § 636(b)(1) and Federal Rule of Civil Procedure 72(b), the district court conducts a de novo (fresh, independent) review of the portions of an R&R to which a party objects. The court also noted it must apply liberal construction to filings by self-represented (pro se) litigants. However, the court emphasized its independent obligation to confirm subject matter jurisdiction exists, and that the burden falls on Plaintiffs to establish it.

Analysis

Diversity Jurisdiction

Diversity jurisdiction under 28 U.S.C. § 1332 allows federal courts to hear cases where the parties are citizens of different states and the amount in controversy exceeds $75,000. To properly invoke it, a plaintiff's complaint must specifically allege the citizenship of all parties. The court found that Plaintiffs' complaint alleged only federal question jurisdiction and contained no specific allegations about anyone's citizenship. The citizenship arguments raised in the objection were new facts not present in the complaint. Under Eighth Circuit precedent, that is insufficient to establish diversity jurisdiction.

Federal Question Jurisdiction

Federal question jurisdiction under 28 U.S.C. § 1331 allows federal courts to hear cases arising under federal law. Plaintiffs argued their complaint raised substantial federal questions under the Foreign Agents Registration Act (FARA), 22 U.S.C. § 611, and federal securitization accounting principles. The court rejected both arguments.

As to FARA, the court noted that the R&R had already acknowledged its mention in the complaint but correctly concluded that merely citing a federal statute without supporting factual allegations does not create a well-pleaded federal claim sufficient to establish jurisdiction.

As to the broader argument that the case raised a "substantial federal question" even without a federal cause of action, the court applied the standard from Grable & Sons Metal Products, Inc. v. Darue Engineering & Manufacturing, 545 U.S. 308 (2005), which recognizes a narrow category of state-law claims that nonetheless raise substantial federal questions. The court found this case did not fall into that narrow category. The underlying claims — concerning real property title and mortgage assignments — are quintessentially matters of state law. The court cited its own prior analysis that it is a "rare state title case that raises a contested matter of federal law," and concluded this is not that rare case. The court also found no explanation for how accounting principles could create federal question jurisdiction.

Disposition

Judge Jeffrey M. Bryan overruled Plaintiffs' objections, adopted the Magistrate Judge's R&R, and dismissed the matter with prejudice for lack of subject matter jurisdiction. Because the court lacked jurisdiction, it did not address the Motion for Temporary Restraining Order seeking to stop the foreclosure sale.