Salcedo v. Uecker

Background

Brenda Salcedo, Dennis M. Novack, and Janet C. Novack sued numerous defendants, including Ramsey County officials, Commissioner Jim Schowalter, and AlexSoft, LLC. They alleged that Ramsey County registrars issued certificates of title that referred to earlier certificates or documents containing illegal racial covenants. The Plaintiffs asserted 16 federal- and state-law claims and sought damages, attorney fees, injunctive relief, and certification of plaintiff and defendant classes.

The opinion explains that Minnesota’s Torrens system uses certificates of title to record ownership interests and encumbrances. Minnesota law provides a process for an examiner of titles to order the amendment or cancellation of a memorial relating to a racial restriction. The opinion states that racial covenants are illegal and unenforceable in Minnesota and that no defendant had attempted or threatened to enforce one or refused a request to cancel one.

Salcedo alleged that she rented a room and common space in a house whose original warranty deed contained a racial covenant. The Novacks alleged that they owned a house with a similar covenant. The Plaintiffs alleged emotional distress, and the Novacks also alleged economic harm related to removing the covenant from their certificate of title.

Motions to Dismiss

The court granted Schowalter’s motion to dismiss. The Plaintiffs sued him in his official capacity as administrator of the Torrens assurance fund and sought recovery based on alleged negligence by the registrars. The court interpreted Minnesota law as allowing recovery from that fund when a person is precluded from bringing an action by the Torrens registration laws. Because the Plaintiffs did not allege that the Torrens bar prevented their discrimination or negligence claims against the registrars, the court concluded that they had no claim against the Torrens fund. The court also noted that the Plaintiffs did not contest Schowalter’s other arguments for dismissal. Schowalter’s motion to dismiss was granted, and the claims against him were dismissed with prejudice.

The court also granted AlexSoft’s motion to dismiss and dismissed the claims against AlexSoft with prejudice. The Plaintiffs argued that AlexSoft, a private company, acted under color of state law because it performed public functions connected to creating, numbering, indexing, and organizing certificates of title. AlexSoft argued that it provided software for compiling, accessing, storing, and preserving records and did not create or control the certificates’ contents.

The court found that the complaint did not provide specific factual support for the Plaintiffs’ broad allegations about AlexSoft’s role. The court concluded that the allegations and cited exhibit did not support an inference that AlexSoft controlled, changed, or edited the content of government records. Instead, the allegations showed, at most, that AlexSoft provided a means for counties to view and print records. The court therefore found that the Plaintiffs had not stated a claim against AlexSoft under the pleading standard for a motion to dismiss.

Preliminary Injunction

The Plaintiffs sought a preliminary injunction to stop the creation of certificates of title that referred to racial or time-barred restrictions and to prevent fees for removing those provisions. The court denied the motion. It found that the Plaintiffs had not shown irreparable harm because Ramsey County had waived fees for removing racial covenants, any fees could be addressed through monetary relief, and the alleged emotional distress was not shown to be imminent or irreparable. The court also found that the Plaintiffs had not demonstrated a likelihood of success because their supporting argument consisted primarily of conclusory statements and a reference to the complaint.

Class Certification

The Plaintiffs sought provisional class certification for purposes of pursuing preliminary injunctive relief. Because the court denied the requested preliminary injunction, it denied the motion to certify a class as moot.

Motion to Amend

The Plaintiffs sought to add two plaintiffs, eight counts, and a claim for punitive damages. The court denied the motion to amend. It found that the Plaintiffs had not explained why the proposed parties and claims were omitted from the original complaint, that the proposed allegations concerned the same basic facts, and that the amendments did not appear directed at correcting deficiencies identified in the pending dismissal motions or responding to changed circumstances. The court also stated that the proposed punitive-damages allegations did not plausibly show the level of deliberate disregard, evil motive, reckless conduct, or callous indifference required for such damages.

Disposition

Judge Donovan W. Frank ordered that Schowalter’s motion to dismiss be granted; AlexSoft’s motion to dismiss be granted; the claims against Schowalter and AlexSoft be dismissed with prejudice; the motion for a preliminary injunction be denied; the motion to certify a class be denied as moot; and the motion to amend be denied. The Plaintiffs’ claims against the Ramsey County Defendants remained in the action.