• February 5, 2020
Three Card Monte: A Game of No Chance…

Nancy and Monti Moreno borrowed $333,700 from a mortgage lender to buy a house and a barn in Marine on St. Croix, Minnesota in 2004. They failed to make payments on the loan. The lender, Wells Fargo, brought a lawsuit to foreclose on the property. In that proceeding, in 2015, the court held that the Morenos owed $521,842.75 to Wells Fargo on the loan they took out.

In the meantime, a fire and a hail storm damaged the property to the tune of about $190,500 worth of damages (the cost of repair as determined by the insurer). Because of the loan default, Wells Fargo had the money put into escrow. Under the terms of the mortgage, the Morenos could use the money to fix the home or pay down their debt to Wells Fargo but couldn’t otherwise get at the $190,500 in cash.

The Morenos did not undertake repairs (nor did they surrender any claim to it in favor of Wells Fargo). The money sat in escrow.

The property went up for auction. Wells Fargo was the highest bidder at the auction, buying the fire-and-hail-damaged property for $187,910. As many Minnesota Litigator readers know, after a foreclosure sale, the foreclosed party has a limited time to “redeem,” that is, to buy the property back from the highest bidder. The Morenos paid $208,263.62 to redeem and take posession of the fire-and-hail-damaged property.

So far, so good.

But here’s where the Morenos went a step too far only to be rebuffed by U.S. District Court Judge Patrick J. Schiltz (D. Minn.).

After stiffing Wells Fargo for over $300,000, the Morenos claimed that, after redeeming the property, they owned the property free and clear of Wells Fargo’s mortgage (which is, in fact, true) and, once again owners of the property but now not subject to the mortgage, they were entitled to the escrowed $190,500 insurance proceeds for repair of the property (which is not true).

Judge Schiltz rejected the Morenos’ gambit. In a nutshell, Judge Schiltz pointed to a provision in the mortgage loan agreement that entitled the lender to have rights to insurance proceeds to repair the property or pay down the borrowers’ indebtedness “whether or not then due.” In light of these terms in the agreement, the Morenos breach of contract claim had no merit.

We cannot blame the Morenos for trying, I suppose. Sometimes criminals “get off on technicalities,” sometimes corporations win based on “the fine print,” and the Morenos hoped that for a kind of amoral, rigid, and legalistic court ruling in their favor. (After all, that is exactly what Wells Fargo got when it foreclosed on the debt, some might argue. Presumably the court was indifferent as to how an original debt of $333,700 incurred in 2004 resulted in debt of $521,842.75 eleven years later.)


The Moreno v. Wells Fargo battle was a waste of time and a bit of a “procedural mess” (see the linked Order at p. 12) and, in Wells Fargo’s summary judgment motion, Wells Fargo submitted two declarations with its reply brief. This, Judge Schiltz ruled, was a “no-no.” (“Wells Fargo’s supposedly undisputed evidence should have been submitted with its initial summary judgment motion, which would have given the Morenos a chance to contest the evidence in their response.” (here at p.11)). Nevertheless, the Morenos’ “motion to strike” was also a no-no (even if the challenge to Wells Fargo’s late-submitted declarations had merit):

As this Court has long made clear, motions to strike affidavits, exhibits, or other materials submitted in connection with a motion for summary judgment are not authorized by either the Federal Rules of Civil Procedure or the local rules of this Court. See Carlson Mktg. Group, Inc. v. Royal Indem. Co., No. 04‐CV‐3368, 2006 WL 2917173, at *2 (D. Minn. Oct. 11, 2006). If a party believes that there is something wrong with an affidavit, exhibit, or other document—and if the party believes that, because of that problem, the Court should ignore the affidavit, exhibit, or other document—then the party should simply say that in the party’s memorandum supporting or opposing the summary‐judgment motion. The party should not file a separate ‘motion to strike’ and a separate memorandum supporting that motion.

Moreno v. Wells Fargo Bank, N.A., Court File No. 18-cv-2760 (PJS/DTS) (Order dated January 22, 2020).

Judge Schiltz has repeatedly raised the issue of improper “motions to strike.” Although many Minnesota judges frankly don’t care if litigants bring improper “motions to strike,” Minnesota civil litigators would be wise to heed Judge Schiltz if only to avoid needless extra effort, expense and, in state court, additional court filing fees, of a needless motion.