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Johnson v. Wells Fargo Bank, N.A.

United States Court of Appeals, Eighth Circuit

February 25, 2014

Michael H. Johnson, Jr., Plaintiff - Appellant
v.
Wells Fargo Bank, N.A., as trustee for the Holders of the SASCO 2007 MLN1 Trust Fund, Defendant - Appellee

Submitted November 19, 2013

Appeal from United States District Court for the District of Minnesota - Minneapolis.

For Michael H. Johnson, Jr., Plaintiff - Appellant: Paul J. Bosman, Minneapolis, MN; Moshe Mortner, MORTNER LAW OFFICE, New York, NY.

For Wells Fargo Bank, N.A., as trustee for the Holders of the SASCO 2007 MLN1 Trust Fund, Defendant - Appellee: Steven H. Bruns, Jared Matthew Goerlitz, PETERSON & FRAM, Saint Paul, MN.

Before RILEY, Chief Judge, MELLOY and KELLY, Circuit Judges.

OPINION

Page 540

KELLY, Circuit Judge.

Michael Johnson is a homeowner attempting to save his home from foreclosure. Johnson alleges that the mortgage trust that claims to hold his mortgage was not validly assigned the mortgage, and therefore, his mortgage may not be foreclosed by the trust. Wells Fargo, acting as trustee for the mortgage trust, moved for summary judgment. The district court[1] granted summary judgment in favor of Wells Fargo, finding the assignment to the mortgage trust was valid. We affirm.

I. Background

Wells Fargo Bank, N.A., acting as trustee of the SASCO 2007 MLN1 Trust Fund (" Trust" ), commenced foreclosure of the Johnson mortgage in early 2011, scheduling a sheriff's sale for May 6, 2011. Johnson brought suit to stop the foreclosure, and Wells Fargo removed the case to federal court.

Page 541

Johnson claims that the assignment of the mortgage to the mortgage trust was void under New York law because it violated the terms of the trust agreement. The Trust is organized under New York law as a Real Estate Mortgage Investment Conduit (" REIMC" ), with a startup date of March 13, 2007. The parties agree that the Trust may not be assigned a new mortgage (i.e., acquire a new mortgage) after its startup date because any attempted purchase of a mortgage after the startup date is void under New York trust law.[2] In this case, the mortgage was assigned to the Trust February 1, 2011, almost four years after the startup date of the Trust.

The parties also agree, however, that there is an exception to the restriction on the assignment of mortgages after a trust's startup date. A trust may be assigned a mortgage after its startup date if the trust held the promissory note underlying the mortgage on its startup date. Thus, if the underlying note was acquired on or before March 13, 2007, the mortgage was validly assigned to the Trust, and the Trust may foreclose. If, however, the note was not acquired by the Trust until after March 13, 2007, then the assignment of the mortgage is prohibited by the trust agreement and void under New York law, and the Trust may not foreclose. The dispute in this case is thus primarily a factual dispute regarding whether the note was physically received by the Trust prior to the startup date.[3]

Johnson claims his promissory note was not physically received by the Trust prior to the startup date and therefore does not qualify for the exception. Wells Fargo contends that the Trust did indeed receive the promissory note before the startup date. The district court granted summary judgment in favor of the Trust, finding no reasonable jury could ...


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