Thomas J. Litterer v. Rushmore Loan Management Services, LLC

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.

The judgment of the district court is affirmed.