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A Cautionary Tale: Foreclosed Borrowers Sue Bank and Others Claiming Personal Injury and Unlawful Conversion

Posted By USFN, Tuesday, May 15, 2018
Updated: Thursday, May 10, 2018

May 15, 2018

by Brian Liebo
Usset, Weingarden & Liebo, PLLP – USFN Member (Minnesota)

In Schulz v. Power Movers of Minnesota, Inc. (Minn. Ct. App., unpub. Apr. 16, 2018), the plaintiff-former homeowners (a couple) had lived in the property where they operated a fertilizer business. The bank had foreclosed its mortgage and was the successful bidder at the sheriff’s sale; when the borrowers failed to redeem, the bank commenced an eviction action.

Eviction
After the district court issued a writ of recovery and ordered the borrowers to vacate, the bank hired a moving company to remove and store the borrowers’ personal property. The property was in a difficult condition for moving. There were cluttered business records “stacked helter-skelter on tables, chairs, desks, and floors,” complaints of “odors akin to animal feces,” and “a frozen cat in a freezer.” It was a “massive disarray of furnishings, records ….” To top it off, one of the movers suffered a puncture wound from a hypodermic needle in a pile of papers on the floor during the moving process. “It took the movers 687 boxes and six days to complete the move into 14 storage bays.”

The borrowers gained access to their business records and property after the move. Following many hours hunting through boxes, one of the borrowers said a wardrobe box (beside her) buckled under the weight of items stacked on top of it, knocking her to the floor and seriously injuring her shoulder.

Post-Eviction Claims, including Negligence and Conversion
The borrowers sued the bank and moving company, alleging violations of multiple statutes (including the Minnesota eviction statute, found under chapter 504B; and tort claims of negligence and conversion, among other claims). The applicable eviction statute under chapter 504B.365, subd. 3(f) provides the following: “The [eviction] plaintiff is responsible for the proper removal, storage, and care of the defendant’s personal property and is liable for damages for loss of or injury to it caused by the plaintiff’s failure to exercise the same care that a reasonably careful person would exercise under similar circumstances.” The borrowers settled with the bank.

The district court granted summary judgment to the moving company, concluding that the eviction statute applies only to rental-property disputes and not to matters arising out of mortgage foreclosures. However, the Minnesota Court of Appeals ultimately determined that even though the Minnesota eviction statutes are under a chapter titled “Landlord and Tenant” and the chapter focuses mostly on landlord-tenant disputes, it doesn’t state that it applies to those disputes exclusively. Instead, chapter 504B defines eviction not only as a landlord’s process for removing tenants but more broadly as a summary court proceeding to remove tenants “or occupants” from real property. The appellate court held that the eviction statute creates a private cause of action for persons injured in connection with evictions and, further, that the plaintiffs could proceed with their negligence cause of action (for an alleged breach of a duty of reasonable care by the stacking of heavy objects over lighter items at the storage facility).

The plaintiffs also alleged damaged and missing items in their conversion cause of action. One of the borrowers offered testimony that her neighbors witnessed the movers drinking beer, throwing items, and mishandling boxes; this was inadmissible hearsay. Accordingly, those claims were dismissed since they lacked admissible evidence.

Closing Words
As a practice pointer, it is important for foreclosing banks to hire agents, property preservation companies, movers, and storage companies that have significant experience and provide high quality services in the securing, moving, and storing of property. These agents and companies should also be fully versed in the laws that impact their work from their own legal counsel. Moreover, foreclosing banks should ensure that these agents and companies are fully insured and in a position to protect and fully indemnify the foreclosing bank from claims that may arise from their work.

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Note for consideration of the USFN Award of Excellence: This article is not a "Feature."

 

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