S3 Holdings, LLC v. Stephen R. Niosi, John Doe ( 2015 )

This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (2014).
STATE OF MINNESOTA
IN COURT OF APPEALS
A14-1470
S3 Holdings, LLC,
Respondent,
vs.
Stephen R. Niosi, et al.,
Appellants,
John Doe, et al.,
Defendants.
Filed July 6, 2015
Affirmed
Peterson, Judge
Scott County District Court
File No. 70-CV-14-9903
Kelly V. Griffitts, Griffitts Law Office, PLLC, Bloomington, Minnesota (for respondent)
William B. Butler, Butler Liberty Law, LLC, Minneapolis, Minnesota (for appellants)
Considered and decided by Peterson, Presiding Judge; Ross, Judge; and Schellhas,
Judge.
UNPUBLISHED OPINION
PETERSON, Judge
In this appeal from a summary judgment in an eviction action, appellants argue
that respondent lacked standing to bring the action and that the district court erred by
granting summary judgment in favor of respondent and abused its discretion by refusing
to grant an unconditional stay of the eviction proceedings. We affirm.
FACTS
In 2003, appellants Stephen R. Niosi and Kimberly A. Niosi executed a mortgage
in favor of Washington Mutual Bank, F.A., on a house they owned in Prior Lake. The
mortgage was assigned to JP Morgan Chase in 2012. Appellants defaulted on the
mortgage, and JP Morgan Chase began foreclosure proceedings in February 2013.
In April 2013, appellants filed an affidavit of postponement under Minn. Stat.
§ 580.07, subd. 2(2) (2014), which postponed the sheriff’s sale for five months, but
shortened the redemption period from six months to five weeks. After several additional
postponements, the sheriff’s sale was held in January 2014. JP Morgan Chase purchased
the property and received the sheriff’s certificate of sale. The redemption period ended in
February 2014. Appellants did not exercise their redemption right. After the redemption
period expired, JP Morgan Chase conveyed its interest in the property to respondent S3
Holdings, LLC by quitclaim deed.
Appellants continued to occupy the property, and in June 2014, respondent filed
an eviction complaint. In August 2014, the district court issued its findings, conclusions,
and order for judgment, granting summary judgment in favor of respondent and an
immediate writ of recovery. Judgment was entered on the order, and appellants filed a
notice of appeal to this court and asked that execution of the writ of recovery be stayed
during the appeal. The district court ordered a stay of the writ of recovery conditioned on
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appellants’ posting a monthly bond of $2,975.67, an amount that would cover monthly
property taxes and foregone rental value of the property.
DECISION
We review the district court’s summary-judgment decision de novo to determine
whether there are genuine issues of material fact and whether the district court erred in its
application of the law. Ruiz v. 1st Fid. Loan Servicing, LLC, 829 N.W.2d 53, 56 (Minn.
2013).
I.
Appellants argue that respondent did not have standing to bring this eviction
action because the assignments of their mortgage to and from the parties to the trust that
held the mortgage are not recorded and, therefore, the foreclosure was void.
Alternatively, appellants argue that respondent lacked standing because JP Morgan Chase
transferred its interest in the sheriff’s certificate of sale to respondent more than ten years
after the closing date of the trust, which made the transfer void under New York law.
The district court concluded that it was not appropriate to litigate such issues in an
eviction action. We agree.
An eviction action is a summary proceeding intended to adjudicate the limited
question of who has a present possessory right to a property. Deutsche Bank Nat’l Trust
Co. v. Hanson, 841 N.W.2d 161, 164 (Minn. App. 2014); see also Minn. Stat.
§ 504B.001, subd. 4 (2014) (defining “eviction” as “a summary court proceeding to
remove a tenant or occupant from or otherwise recover possession of real property by the
process of law set out in this chapter”). “Parties generally may not litigate related claims
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in an eviction proceeding,” but defendants may “raise defenses and counterclaims that fit
within the limited scope of an eviction proceeding.” Hansen, 841 N.W.2d at 164.
Challenges to the validity of the mortgage or foreclosure process may be raised in a
separate proceeding, in which the party raising the challenges may seek a stay of the
eviction action. AMRESCO Residential Mortg. Corp. v. Stange, 631 N.W.2d 444, 445-46
(Minn. App. 2001); see also Real Estate Equity Strategies, LLC v. Jones, 720 N.W.2d
352, 359-60 (Minn. App. 2006) (identifying remedies a tenant may pursue outside of an
eviction action).
Furthermore, this court recently held that when the former owners of property that
was sold at a sheriff’s sale remain in possession of the property after the redemption
period expires, the holder of the sheriff’s certificate of sale suffers an injury in fact and
has standing to bring an eviction action. See Fed. Home Mortg. Corp. v. Mitchell, 862
N.W.2d 67, 71 (Minn. App. 2015), pet. for review filed (Minn. Apr. 30, 2015).
Appellants’ challenges to respondent’s standing are meritless.
Appellants argue that Minn. Stat. § 504B.121 (2014) specifically permits them to
challenge respondent’s title in this eviction action because they obtained their interest in
the property before respondent obtained its interest. That statute states:
A tenant in possession of real property under a lawful lease
may not deny the landlord’s title in an action brought by the
landlord to recover possession of the property. This
prohibition does not apply to a tenant who, prior to entering
into the lease, possessed the property under a claim of title
that was adverse or hostile to that of the landlord.
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Id. Because appellants have not entered into a lease and are not in possession of the
property under a lease, this statute does not apply to this eviction action. See Mitchell,
862 N.W.2d at 72-73 (explaining that former owners who remain in possession of
property following foreclosure and sheriff’s sale are not “tenants” within meaning of
Minn. Stat. § 504B.121).
II.
Appellants argue that the district court erred by granting summary judgment in
favor of respondent. A district court must grant summary judgment if there are no
genuine issues of material fact and a party is entitled to judgment as a matter of law.
Minn. R. Civ. P. 56.03. A party seeking eviction after a foreclosure must demonstrate
that (1) the other party remains in possession of the property; (2) the mortgage on the
property has been foreclosed; (3) the time for redemption has expired; and (4) the party
seeking eviction has a right to possession of the property. Minn. Stat. § 504B.285, subd.
1(1)(ii) (2014). The record shows that appellants remain in possession of the property,
the mortgage was foreclosed, the time for redemption has expired, and JP Morgan Chase,
the holder of the sheriff’s certificate of sale, transferred its interest in the property to
respondent, which gave respondent a right to possess the property. The district court did
not err by granting summary judgment to respondent.
III.
Relying on Bjorklund v. Bjorklund Trucking, Inc., 753 N.W.2d 312, 318-19
(Minn. App. 2008), review denied (Minn. Sept. 23, 2008), appellants argue that the
district court abused its discretion by denying an unconditional stay of the eviction
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proceeding when there is a pending title action that involves the same defenses and
counterclaims. The district court’s decision on whether to grant a stay is reviewed under
an abuse-of-discretion standard. Id. at 317.
Although it appears that appellants brought an action to register title in district
court after the redemption period ended, appellants have provided no information about
that proceeding. Another proceeding subsequent, which was brought by JP Morgan
Chase, was dismissed. Thus, appellants have not demonstrated that the district court
abused its discretion by refusing to grant a stay under Bjorklund.
Nor have appellants demonstrated that the district court abused its discretion by
refusing to grant an unconditional stay of the writ of recovery during this appeal. Minn.
R. Civ. App. P. 108.01, subd. 1, states “Except as otherwise provided by rule or statute,
an appeal from a judgment or order does not stay enforcement of the judgment or order in
the [district] court unless that court orders relief in accordance with Rule 108.02.” The
eviction statute provides that a party who remains in possession of the property while
appealing “must give a bond that provides that: (1) all costs of the appeal will be paid; (2)
the party will comply with the court’s order; and (3) all rent and other damages due to the
party excluded from possession during the pendency of the appeal will be paid.” Minn.
Stat. § 504B.371, subds. 3 (2014).
The district court stayed execution of the writ but determined that appellants
should make monthly payments of $2,975.67, to cover property taxes and the anticipated
rental value of the property. This was not an abuse of discretion.
Affirmed.
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