Grygelko v. Amerihome Mortgage Company

Background

Plaintiffs Anthony Grygelko, Sr., and Katie Grygelko allege they own a house in Blaine, Minnesota. In June 2022, they executed a mortgage loan payable to Bay Equity LLC for $647,200. In December 2023, that mortgage was assigned to Defendant Amerihome Mortgage Company, LLC. Plaintiffs allege no value was paid for the assignment and that Freddie Mac is the true owner of the loan while Amerihome acts only as the loan servicer. On September 17, 2025, Amerihome, acting through Defendant Trott Law, P.C., issued a Notice of Mortgage Foreclosure Sale scheduling a Sheriff's Sale for November 13, 2025.

Plaintiffs filed their four-count complaint in federal court on October 8, 2025, seeking an emergency injunction halting the foreclosure. Their claims were: (1) quiet title under Minnesota Statute § 559.01; (2) declaratory judgment under 28 U.S.C. § 2201 that defendants lack standing and authority to foreclose and that mortgage assignments are void; (3) a claim that defendants initiated foreclosure without proof of ownership in violation of UCC Article 2, § 201 and Minnesota foreclosure statutes; and (4) slander of title.

Legal Standard: Subject Matter Jurisdiction

Federal courts have limited power and can only hear cases over which they have subject matter jurisdiction — the legal authority to decide a dispute. The court noted it has an independent obligation to examine jurisdiction even if no party raises the issue, and must dismiss any case in which jurisdiction is absent. Plaintiffs invoked federal question jurisdiction under 28 U.S.C. § 1331, which applies when a claim arises under the U.S. Constitution, federal laws, or treaties. Under the well-pleaded complaint rule, federal jurisdiction exists only if a federal question appears on the face of the plaintiff's complaint — either because federal law creates the cause of action, or because the plaintiff's right to relief necessarily depends on resolving a substantial question of federal law.

Analysis: No Federal Cause of Action

The court examined each of the four counts to determine whether any stated a federal cause of action.

- Count 1 (Quiet Title): Expressly brought under Minnesota Statute § 559.01, a state law claim. - Count 2 (Declaratory Judgment): Invokes 28 U.S.C. § 2201, but the court explained that the federal Declaratory Judgment Act is a procedural statute, not a jurisdictional one. It cannot by itself create federal subject matter jurisdiction; an underlying private federal right of action must exist, and none was identified here. - Count 3 (UCC / Foreclosure Statutes): Plaintiffs cited UCC Article 2, § 201, but Minnesota has adopted the UCC as state law under Minnesota Statute Chapter 336. A violation of the UCC is therefore a violation of Minnesota law, not federal law. Alleged violations of Minnesota foreclosure statutes are likewise state law claims. - Count 4 (Slander of Title): A state law cause of action.

The court concluded that none of the four counts establishes a federal cause of action.

Analysis: No Substantial Embedded Federal Question

Even when no federal cause of action exists, a state law claim can sometimes give rise to federal jurisdiction if a federal issue is (1) necessarily raised, (2) actually disputed, (3) substantial, and (4) capable of resolution in federal court without disrupting the balance of power between federal and state courts. This is a narrow exception covering only a "special and small category" of cases.

Plaintiffs alleged in the complaint that the case raises federal questions including violations of 22 U.S.C. § 611 (the Foreign Agents Registration Act, or FARA) relating to alleged disclosure obligations of foreign-controlled entities engaged in debt collection and foreclosure. The court found this single conclusory reference insufficient: the complaint includes no further mention of § 611, does not explain with particularity what federal issue is raised, and does not explain why resolution of any FARA issue would be necessary to the outcome of the foreclosure dispute. The court further found no basis to conclude that any such federal issue would be "substantial" — i.e., that there is a serious federal interest in adjudicating it in a federal forum rather than a state court. The dispute appeared instead to be a fact-specific foreclosure matter appropriate for state court.

Recommendation and Procedure

Magistrate Judge Schultz recommends that the case be dismissed without prejudice (meaning the plaintiffs are not barred from refiling) for lack of subject matter jurisdiction. This is a Report and Recommendation, not a final order. It was issued upon referral from United States District Judge Jeffrey Bryan. Under the court's local rules, any party may file written objections within 14 days of being served a copy of the recommendation, and may respond to the other party's objections within 14 days of being served those objections. The recommendation is not directly appealable to the Eighth Circuit Court of Appeals.