Swanson v. Wilford, Geske & Cook

Background

Christopher Swanson sued Wilford, Geske, & Cook; Caliber Home Loans, Inc.; Rubicon Mortgage Advisors, LLC; and Mortgage Electronic Registration Systems, Inc. The complaint concerned a mortgage foreclosure involving property identified in the foreclosure notice. Swanson alleged, among other things, that the foreclosing party lacked authority, failed to obtain a valid mortgage assignment, and lacked contractual authority to execute the power of sale. When his filings were read broadly, the court understood him to be attempting to assert claims under federal wire-fraud and racketeering laws, the Fair Debt Collection Practices Act, the Truth in Lending Act, the Real Estate Settlement Procedures Act, and unspecified provisions of Chapter 514 of the Minnesota Statutes.

Swanson proceeded without a lawyer. The court noted that his complaint referred to defendants collectively and did not identify which defendant allegedly took which action. It also noted that some of his filings appeared to include copied material from unrelated cases. Swanson later sought to compel arbitration and filed a document purporting to register an arbitration award. Caliber, MERS, and Rubicon moved to vacate that award. Caliber and MERS also sought sanctions, and Swanson sought an automatic stay based on a Chapter 13 bankruptcy petition that had been dismissed and closed.

Rulings on the bankruptcy stay, arbitration, and sanctions

The court ordered that Swanson’s motion for an automatic stay be denied. In its analysis, it explained that the request was moot because the bankruptcy proceeding had been dismissed and closed. The court recommended that Swanson’s motion to compel arbitration be denied as moot because, according to Swanson’s own filings, the arbitration had already taken place.

The court recommended granting Caliber and MERS’s motion to vacate the arbitration award and granting Rubicon’s motion to vacate the award. Under the Federal Arbitration Act, a party cannot be bound by arbitration without agreeing to arbitrate. The court found that Swanson had not identified a valid agreement requiring the parties to arbitrate. It also concluded that, without such an agreement, the purported arbitrator had exceeded the arbitrator’s authority. The court therefore recommended vacating both the purported arbitration award and Swanson’s notice seeking to register it as a foreign judgment.

The court ordered that Caliber and MERS’s motion for sanctions be denied. Although the court had concerns about the purported arbitration award, it found no evidence that Swanson knew the award was improper or obtained it for an improper purpose. It also reasoned that the record suggested Swanson might be unable to pay substantial monetary sanctions, making them unlikely to deter the conduct at issue.

Motions to dismiss

The court recommended granting Wilford, Geske, & Cook’s motion to dismiss, granting Caliber and MERS’s motion to dismiss, and granting Rubicon’s motion to dismiss. It recommended that Swanson’s complaint be dismissed in its entirety. The opinion states the recommendations in those terms; it does not itself state that the motions were granted with prejudice or without prejudice.

The court first found that the complaint failed to satisfy Federal Rule of Civil Procedure 8 because it did not connect particular allegations to particular defendants. It also found that the complaint did not provide enough factual content to make liability plausible under the standards for a motion to dismiss for failure to state a claim.

The court separately analyzed the possible claims:

- Racketeering and wire fraud: The court found that Swanson did not plead the alleged fraud with the detail required by Rule 9(b), including identifying which defendant did what, and did not allege facts showing a pattern of racketeering activity. The allegations arose from a single mortgage transaction involving one alleged victim, which the court found insufficient to establish such a pattern. - Fair Debt Collection Practices Act: The court concluded that foreclosure proceedings and activities effectuating foreclosure do not constitute debt collection under the authority it discussed. It further found that Swanson’s “show me the note” theory did not state a claim because the holder of a recorded mortgage may foreclose without also holding the promissory note. - Truth in Lending Act: The court found no factual allegation that the defendants failed to provide required disclosures. It also concluded that the mortgage was used to acquire Swanson’s residence and therefore fell within the statute’s exclusion of rescission as a remedy for residential mortgage transactions. Independently, Swanson did not allege that he timely exercised a rescission right. - Real Estate Settlement Procedures Act: The court found no allegation that Swanson sent a qualifying written request or that a defendant failed to respond properly. It also found no alleged facts connecting a failure to respond to the foreclosure-related harm Swanson claimed. - Minnesota Statutes, Chapter 514: The court found that Swanson identified no particular provision of Chapter 514 and alleged no specific facts showing how any defendant violated that chapter.

Disposition and procedural status

Judge Brisbois issued an order on the sanctions and automatic-stay motions and a report and recommendation on the motions to dismiss and arbitration motions. The notice stated that the report and recommendation was not a district-court order or judgment and was not directly appealable to the Eighth Circuit. It allowed the parties to file specific written objections within 14 days after being served.