Date: 07-12-2018

Case Style:

Case Number: 16-3060

Judge: Colloton

Court: United States Court of Appeals for the Eighth Circuit on appeal from the District of Minnesota (Hennepin County)

Plaintiff's Attorney: John Neve and Evan Weiner

Defendant's Attorney: Kalli L Ostlie

Description: This appeal arises from a foreclosure on the home of Thomas and Mary Litterer
in Burnsville, Minnesota. The home was sold at a sheriff’s sale to U.S. Bank, the
mortgage owner, in November 2014. The redemption period—that is, the period
during which the Litterers could pay off their debt and “redeem” their
property—expired on March 1, 2015. On March 2, the Litterers sued their loan
servicer, Rushmore Loan Management Services, in Minnesota state court for breach
of contract, unjust enrichment, and injunctive relief. On May 6, 2015, the Litterers
filed a lis pendens—a notice in the property’s chain of title that the property is the
subject of ongoing litigation.
Rushmore removed the suit to federal district court, where the Litterers
amended their complaint to add a claim that Rushmore violated the Minnesota
statutory requirements for handling foreclosures. See Minn. Stat. § 582.043. They
also added U.S. Bank as a party. In federal court, the Litterers pursued only their
claim under § 582.043 and abandoned the others.
Minn. Stat. § 582.043, subdiv. 7(a) gives mortgagors like the Litterers a cause
of action to set aside a foreclosure sale if the loan servicer violated the section’s
substantive provisions. Section 582.043, subdiv. 7(b), however, requires a mortgagor
bringing an action under subdivision 7(a) to file a lis pendens within the mortgagor’s
redemption period. “The failure to record the lis pendens creates a conclusive
presumption that the servicer has complied with this section.” § 582.043, subdiv.
7(b). Because the Litterers filed the lis pendens two months after their redemption
period expired, normal operation of § 582.043, subdiv. 7(b) would create the
conclusive presumption that Rushmore complied with the statute and thereby bar any
relief to the Litterers.
Minnesota Rule of Civil Procedure 6.02, however, authorizes courts in their
discretion to extend a deadline in certain circumstances. As relevant here, Rule 6.02
provides: “When by statute . . . an act is required or allowed to be done at or within
a specified time, the court for cause shown may . . . upon motion made after the
expiration of the specified period permit the act to be done where the failure to act
was the result of excusable neglect . . . .” If Rule 6.02 may be used to extend the
deadline in § 582.043, subdiv. 7(b), then the Litterers’ failure to file the lis pendens
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within the redemption period does not necessarily trigger the provision’s conclusive
presumption, and the Litterers may still have a viable claim for relief.
Rushmore and U.S. Bank moved for summary judgment in part on the ground
that the Litterers did not file the lis pendens within the redemption period as required
by § 582.043, subdiv. 7(b). In response, the Litterers conceded that they were late in
filing the lis pendens but urged that the court should extend the filing deadline for
“excusable neglect” under Minnesota Rule of Civil Procedure 6.02. Applying
Minnesota law, the district court concluded that Rule 1 6.02 may not be used to extend
the lis pendens deadline, and therefore granted summary judgment in favor of
Rushmore and U.S. Bank.
The Litterers appeal and argue that the district court erred by concluding that
it could not employ Rule 6.02 to extend the lis pendens deadline. Because the
Litterers’ claim turns on the application of Rule 6.02, we certified the following
question to the Minnesota Supreme Court: “May the lis pendens deadline contained
in Minn. Stat. Sec. 582.043, subd. 7(b) be extended upon a showing of excusable
neglect pursuant to Minn. R. Civ. P. 6.02?”
The Minnesota Supreme Court accepted the certified question and issued an
opinion answering the question in the negative. Litterer v. Rushmore Loan Mgmt.
Servs., LLC, 905 N.W.2d 623, 624 (Minn. 2018). The court explained that
Minnesota’s Rules of Civil Procedure cannot modify substantive law, id. at 626, and
determined that “extending the deadline in Minn. Stat. § 582.043, subd. 7(b), would
alter the substantive rights of the litigants.” Id. at 628. As a result, the court
concluded that “Rule 6.02 may not be used to extend this deadline.” Id.
1The Honorable Paul A. Magnuson, United States District Judge for the District
of Minnesota.
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The Minnesota Supreme Court’s decision resolves this appeal. There is no
dispute that the Litterers failed to file the lis pendens within their redemption period
as required by § 582.043, subdiv. 7(b). Because Rule 6.02 may not be used to extend
the deadline, subdivision 7(b) required the district court to apply the conclusive
presumption that Rushmore complied with the requirements of § 582.043. The
district court therefore correctly determined as a matter of law that the Litterers were
not entitled to relief on their claim under § 582.043.

Outcome: The judgment of the district court is affirmed.

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