Eighth Circuit Affirms Dismissal of Borrowers’ Lawsuit, Holds Deadline to File Lis Pendens and Challenge Sale of Home Could Not Be Extended

The United States Court of Appeals for the Eighth Circuit recently held that the plaintiff borrowers’ action challenging the sheriff's sale of their home was properly dismissed when they failed to file a lis pendens within the redemption period, and that this deadline could not be extended.  See Litterer v. Rushmore Loan Mgmt. Servs., LLC for U.S. Bank Nat’l Ass’n, 894 F.3d 1274 (8th Cir. 2018).  In the case, the property was sold at a sheriff’s sale in 2014 and purchased by the mortgagee.  On March 1, 2015, the borrowers’ time to redeem the property expired.  On March 2, 2015, the borrowers sued the defendant servicer for breach of contract, unjust enrichment, and injunctive relief.  On May 1, 2015, they filed a lis pendens against the property.  They later amended their complaint to add a claim that the servicer had violated a Minnesota statute that, among other things, prohibited dual tracking.  See Minn. Stat. § 582.043.  The borrowers eventually stopped pursuing all but this statutory claim.  Defendant moved for summary judgment, arguing that Minn. Stat. § 582.043 mandates that mortgagors file a lis pendens before the redemption period expires, and that the statute further states that “[t]he failure to record the lis pendens creates a conclusive presumption that the servicer has complied with this section.”  Thus, according to the servicer, the statutory claim was barred.  The borrowers opposed the motion, arguing that the Minnesota Rules of Civil Procedure gave the court discretion to extend any deadline for “excusable neglect.”  The District Court nonetheless granted the motion for summary judgment. 

On appeal, the Eighth Circuit affirmed.  The Court first certified a 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 answered in the negative, finding that the Rules of Civil Procedure cannot modify substantive law and the extension of this deadline “would alter the substantive rights of the litigants.”  Thus, because there was no question the borrowers filed their lis pendens after the redemption period expired, the Court affirmed the dismissal of the action.

For a copy of the decision, please contact Michael O’Donnell at modonnell@riker.com, Michael Crowley at mcrowley@riker.com, or Dylan Goetsch at dgoetsch@riker.com.