Scott H. Lansing v. Wells Fargo Bank, N.A. , 894 F.3d 967 ( 2018 )

United States Court of Appeals
For the Eighth Circuit
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No. 17-1067
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Scott H. Lansing,
lllllllllllllllllllllPlaintiff - Appellant,
v.
Wells Fargo Bank, N.A., successor by merger to Wells Fargo Bank Southwest,
N.A., formerly known as Wachovia Mortgage, FSB, formerly known as World
Savings Bank, FSB,
lllllllllllllllllllllDefendant - Appellee.
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Appeal from United States District Court
for the District of Minnesota - Minneapolis
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Submitted: February 12, 2018
Filed: July 5, 2018
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Before SMITH, Chief Judge, MURPHY and COLLOTON, Circuit Judges.*
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*
This opinion is filed by Chief Judge Smith and Judge Colloton under Eighth
Circuit Rule 47E.
COLLOTON, Circuit Judge.
This appeal arises from a third lawsuit between Wells Fargo Bank and Scott
Lansing involving foreclosure on Lansing’s property at 12015 Mayflower Circle in
Minnetonka, Minnesota. In this case, after Wells Fargo foreclosed on the property,
Lansing alleged that the bank violated Minn. Stat. § 582.043 when it continued with
foreclosure proceedings after Lansing had submitted an application for a loan
modification. Wells Fargo brought a counterclaim against Lansing for breach of a
prior settlement agreement, and then moved for judgment on the pleadings. The
district court1 ruled for Wells Fargo, concluding that res judicata barred Lansing’s
claims and that Wells Fargo was entitled to judgment as a matter of law on its
counterclaim. The district court also denied Lansing leave to amend his complaint,
and dismissed Lansing’s complaint with prejudice. Lansing appeals, and we affirm.
I.
In 2004, Lansing executed and delivered a note, secured by a mortgage, to
World Savings Bank, FSB, in the amount of $203,500.00. World Savings Bank, FSB,
changed its name to Wachovia Mortgage, FSB, and then merged with Wells Fargo
in 2009. Under the merger, Wells Fargo acquired the mortgage interest in Lansing’s
property. In late 2009, Lansing defaulted under the terms of the note and the
mortgage by failing to make monthly payments. Wells Fargo initiated a foreclosure
by advertisement, resulting in a sheriff’s sale of the property on August 30, 2011.
After the 2011 foreclosure sale, Lansing sued Wells Fargo in Minnesota state
court for alleged violations of Minnesota’s foreclosure statutes and sought to set aside
1
The Honorable Michael J. Davis, United States District Judge for the District
of Minnesota, adopting the report and recommendations of the Honorable Janie S.
Mayeron, United States Magistrate Judge for the District of Minnesota.
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the sale. Wells Fargo removed the case to federal court, and the parties eventually
settled the case in April 2013. Under the settlement agreement, which was described
on the record at a hearing before a magistrate judge, Wells Fargo agreed to rescind
the foreclosure sale in exchange for Lansing’s dismissal of the lawsuit. The parties
further agreed to reinstate the previously existing mortgage so that Wells Fargo could
proceed with re-foreclosure. Lansing “waive[d] the right to challenge any
deficiencies in the future foreclosure.”
The magistrate judge noted that it would be “appropriate” for the parties to
memorialize their agreement in writing, and said that the court would resolve any
future disputes over wording. Thereafter, Lansing affirmed that he understood that
the agreement was “a final and fully enforceable settlement even in the absence of
signatures.” After the hearing, counsel for the parties exchanged drafts of a written
settlement agreement, but the parties never signed an agreement.
On June 14, 2013, Wells Fargo commenced a second foreclosure on Lansing’s
property by filing a complaint in Minnesota state court. Lansing, represented by
counsel, filed an answer on August 2, 2013. The parties engaged in discovery, and
on January 3, 2014, Wells Fargo moved for summary judgment. Lansing wrote a
letter to the court on January 24, 2014, explaining that his counsel had withdrawn on
January 10, 2014, contrary to Lansing’s wishes.
On January 31, 2014, the state court held a hearing on Wells Fargo’s motion
for summary judgment. Lansing appeared pro se. On March 20, 2014, the court
granted summary judgment for Wells Fargo and awarded it a decree of foreclosure
on the property. Wells Fargo then purchased the property at a sheriff’s sale.
Lansing appealed the grant of summary judgment to the Minnesota Court of
Appeals. He argued for the first time that Wells Fargo had improperly proceeded
with foreclosure, in violation of Minn. Stat. § 582.043, after Lansing submitted a loan
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modification application. According to Lansing, he faxed Wells Fargo an application
on November 21, 2013, at which point Wells Fargo had a legal obligation to cease
foreclosure proceedings. The court of appeals rejected Lansing’s argument and
affirmed the judgment for Wells Fargo. The court of appeals ruled that Lansing’s
claim under § 582.043 was not properly before the court, because Lansing had failed
to raise it in the trial court. Alternatively, the court reasoned that there was no
evidence in the record that Lansing ever submitted a modification application.
On August 24, 2015, Lansing, acting pro se, commenced this third lawsuit. He
alleged, among other things, that Wells Fargo violated Minn. Stat. § 582.043 when
it proceeded to seek a foreclosure judgment after receiving Lansing’s loan
modification documents. Wells Fargo removed the action to the federal district court
and filed a counterclaim for breach of contract. According to Wells Fargo, because
Lansing agreed not “to challenge any deficiencies in the future foreclosure,” he
breached the settlement agreement by opposing the 2013 judicial foreclosure and
filing the instant complaint. Wells Fargo moved for judgment on the pleadings.
Lansing moved for leave to amend his complaint to allege breach of contract against
Wells Fargo on the ground that the bank violated the settlement agreement by taking
“bad faith actions” on Lansing’s loan modification requests.
The district court granted judgment on the pleadings for Wells Fargo on
Lansing’s claims and Wells Fargo’s counterclaim, denied Lansing leave to amend his
complaint, and dismissed Lansing’s complaint with prejudice. The court concluded
that res judicata barred Lansing’s claims, that he had violated the April 2013
settlement agreement by continuing to challenge the foreclosure, and that his
proposed breach of contract claim was futile. The parties stipulated to no damages
on Wells Fargo’s counterclaim, and the district court entered final judgment.
Lansing appeals. We review the district court’s grant of judgment on the
pleadings de novo. Elnashar v. U.S. Dep’t of Justice, 446 F.3d 792, 794 (8th Cir.
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2006). “Judgment on the pleadings is appropriate where no material issue of fact
remains to be resolved and the movant is entitled to judgment as a matter of law.”
Faibisch v. Univ. of Minn., 304 F.3d 797, 803 (8th Cir. 2002). We review the district
court’s decision to deny Lansing leave to amend his complaint for abuse of discretion.
Sorace v. United States, 788 F.3d 758, 767 (8th Cir. 2015).
II.
Lansing first contends that res judicata does not bar his claim that Wells Fargo
violated Minn. Stat. § 582.043 by proceeding with foreclosure despite an application
for loan modification. Under Minnesota’s doctrine of res judicata, the disposition of
an earlier claim bars the litigation of a subsequent claim where “(1) the earlier claim
involved the same set of factual circumstances; (2) the earlier claim involved the
same parties or their privies; (3) there was a final judgment on the merits; [and] (4)
the estopped party had a full and fair opportunity to litigate the matter.” Laase v.
County of Isanti, 638 F.3d 853, 856 (8th Cir. 2011) (alteration in original) (quoting
Hauschildt v. Beckingham, 686 N.W.2d 829, 840 (Minn. 2004)). “Res judicata
applies equally to claims actually litigated and to claims that could have been litigated
in the earlier action.” Id. (quoting Brown-Wilbert, Inc. v. Copeland Buhl & Co., 732
N.W.2d 209, 220 (Minn. 2007)).
Lansing urges that the first requirement is not met because his claim under
Minn. Stat. § 582.043 involves a different set of factual circumstances than the 2013
foreclosure action. He argues that Wells Fargo’s 2013 foreclosure action involved
Lansing’s failure to make mortgage payments, while Lansing’s § 582.043 claim
involves Wells Fargo’s failure to process his loan modification request and to cease
foreclosure proceedings. Lansing asserts that the factual circumstances that gave rise
to his § 582.043 claim did not occur until “well after” Wells Fargo initiated the 2013
foreclosure.
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We reject this contention because Lansing’s § 582.043 claim is a challenge to
the very foreclosure that was the subject of the 2013 civil action. Lansing could have
asserted this claim during the 2013 litigation as an affirmative defense to the
foreclosure that he now seeks to nullify. We agree with the district court that “Wells
Fargo’s right to foreclose on the Property and Lansing’s right to challenge the
foreclosure on the Property arose out of the same factual predicates.” Both claims
arose out of Lansing’s failure to make payments under the terms of the note and
mortgage held by Wells Fargo.
Lansing relies on Lundquist v. Rice Memorial Hospital, 238 F.3d 975 (8th Cir.
2001) (per curiam), a case applying federal law, for the proposition that claims arise
from different factual circumstances if a second cause of action arises after a first
lawsuit is filed. In Lundquist, an employer terminated the plaintiff’s employment
after she filed a first lawsuit alleging disability discrimination, and it was not possible
for the plaintiff to bring a wrongful termination claim in the first lawsuit. Id. at 978.
Here, although Lansing’s proffered defense to foreclosure arose only after Wells
Fargo commenced 2013 foreclosure proceedings, the case was still pending when
Lansing allegedly requested a loan modification, and Lansing does not explain why
he could not have raised the defense before the foreclosure case was resolved. We
thus conclude that the first prerequisite for res judicata in Minnesota—that the claims
involved the “same set of factual circumstances”—is satisfied here. Laase, 638 F.3d
at 856.
Lansing next asserts that he did not have a “full and fair opportunity” to litigate
his § 582.043 claim in the prior action. He argues that he could not have raised the
claim earlier because Wells Fargo deprived him of an opportunity to raise defenses
to foreclosure when it refused to allow adequate discovery. Lansing, however, does
not identify evidence that Wells Fargo refused to engage in discovery or explain
adequately why any deficiencies in discovery hindered him from so much as pleading
an affirmative defense under § 582.043.
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Insofar as Lansing argues that he lacked a full and fair opportunity to litigate
the § 582.043 claim because he was proceeding pro se, we disagree. Minnesota
courts will not apply res judicata when “there were significant procedural limitations
in the prior proceeding,” such as a lack of jurisdiction, or when “effective litigation
was limited by the nature or relationship of the parties,” such as when a party enjoys
sovereign immunity. State v. Joseph, 636 N.W.2d 322, 328 (Minn. 2001) (quoting
Sil-Flo, Inc. v. SFHC, Inc., 917 F.2d 1507, 1521 (10th Cir. 1990)); see also Wilson
v. Comm’r of Revenue, 619 N.W.2d 194, 199-200 (Minn. 2000) (jurisdiction);
Breaker v. Bemidji State University, 899 N.W.2d 515, 524-25 (Minn. Ct. App. 2017)
(sovereign immunity). A plaintiff’s pro se status, however, is not an analogous
limitation and does not deprive the plaintiff of a full and fair opportunity to litigate.
Parties proceeding pro se are not exempt from the doctrine of claim preclusion.
Lansing was not prevented from raising his § 582.043 claim during the 2013
foreclosure litigation, and he had an opportunity to litigate the claim fairly if he had
timely raised it. Lansing does not dispute that the 2013 foreclosure proceedings
involved the same parties as this action or that there was a final judgment on the
merits in the earlier action. Accordingly, we conclude that Lansing’s § 582.043 claim
is barred by res judicata. The district court properly granted judgment on the
pleadings for Wells Fargo.
III.
Lansing next contends that the district court erred in granting judgment on the
pleadings for Wells Fargo on the bank’s counterclaim for breach of the April 2013
settlement agreement. The district court concluded that Lansing and Wells Fargo
entered into a fully enforceable settlement agreement at the hearing before the
magistrate judge, where Lansing “agreed to cooperate with the re-foreclosure process
and waive the right to challenge any deficiencies in the future foreclosure.” The
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district court found that Lansing had breached this agreement by opposing the judicial
foreclosure in 2013 and by filing the instant complaint.
A settlement agreement is contractual in nature and “can be enforced by an
ordinary action for breach of contract.” Mr. Steak, Inc. v. Sandquist Steaks, Inc., 245
N.W.2d 837, 838 (Minn. 1976). To prevail on its claim that Lansing breached the
2013 settlement agreement, Wells Fargo must establish: “(1) formation of a contract,
(2) performance by plaintiff of any conditions precedent to his right to demand
performance by the defendant, and (3) breach of the contract by defendant.” Park
Nicollet Clinic v. Hamann, 808 N.W.2d 828, 833 (Minn. 2011). “[A] written
agreement is not a prerequisite to the enforcement of a settlement.” Schumann v.
Northtown Ins. Agency, Inc., 452 N.W.2d 482, 483 (Minn. Ct. App. 1990).
Lansing contends that he did not breach the settlement agreement because the
parties did not intend Lansing’s waiver of future claims to extend to claims related
to loan modification requests. He notes that the settlement agreement was silent on
the issue of loan modifications. The parties, he says, did not “anticipate that Wells
Fargo would refuse to consider a loan modification request by Lansing, or that Wells
Fargo would not suspend the foreclosure process if it received such a modification
request.” At the very least, Lansing argues, the settlement agreement is ambiguous
as to the intended scope of his waiver of future claims, so the court erred in entering
judgment on the pleadings for Wells Fargo. We disagree.
“The objective of judicial interpretation of disputed provisions of a contract is
to ascertain and give effect to the parties’ intention.” Midway Ctr. Assocs. v. Midway
Ctr., Inc., 237 N.W.2d 76, 78 (Minn. 1975). Courts may ascertain the parties’ intent
“upon consideration of the agreement as a whole and the plain meaning of the
language used, viewed in the light of the surrounding circumstances, endeavoring to
arrive at what the parties must have reasonably contemplated.” Id.-8-
The plain language of the settlement agreement shows that the parties intended
Lansing’s waiver to include claims relating to loan modification. The parties agreed
that Lansing would “waive the right to challenge any deficiencies in the future
foreclosure.” Having chosen to cover “any” deficiencies, without qualification, the
parties did not need to delineate loan modification requests or anything else.
Lansing’s position that deficiencies are waived only if mentioned specifically would
render the waiver provision a nullity, because no specific deficiencies were
mentioned.
Lansing says that he is not liable for breaching the agreement because Wells
Fargo committed an anticipatory breach of contract by refusing to reduce the
settlement agreement to writing. Lansing did not plead this allegation in his
complaint, and he did not file a response to Wells Fargo’s counterclaim, so the
assertion was not properly presented to the district court.
In any event, Wells Fargo’s alleged conduct was not an anticipatory breach of
the agreement. Under the doctrine of anticipatory breach in Minnesota, “one party’s
refusal to perform a contract before the time for performance gives the injured party
the right to treat the entire contract as broken.” Sheet Metal Workers Local No. 76
Credit Union v. Hufnagle, 295 N.W.2d 259, 262 (Minn. 1980). Here, the parties
expressed their intent to reduce the agreement to writing, and the court deemed this
plan “appropriate,” but there is no showing that the parties intended written
memorialization to be a term of the contract. Thus, Wells Fargo’s alleged refusal to
reduce the settlement agreement to writing was not a “refusal to perform a contract.”
Id. As Lansing was not discharged from his obligation to perform under the
settlement agreement, the district court properly granted judgment on the pleadings
for Wells Fargo on its counterclaim for breach of contract.
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IV.
Lansing complains finally that the district court erred when it denied him leave
to amend his complaint. On appeal, Lansing characterizes his proposed amended
complaint as adding a claim for anticipatory breach of contract based on Wells
Fargo’s supposed refusal to reduce the settlement agreement to writing. But
Lansing’s proposed amendment added a different claim—namely, that Wells Fargo
breached the settlement agreement by failing to respond in good faith to Lansing’s
loan modification requests. Although leave to amend shall be given freely when
justice so requires, see Fed. R. Civ. P. 15(a)(2), a district court properly denies leave
when a proposed amendment would be futile. Sorace, 788 F.3d at 768. The district
court concluded that it would be futile for Lansing to amend his complaint, because
the April 2013 settlement agreement did not impose obligations on Wells Fargo with
respect to loan modification requests. We agree and see no abuse of discretion.
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The judgment of the district court is affirmed.
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