The United States Court of Appeals for the Eighth Circuit dismissed another class action premised upon the largely discredited “show me the note” theory of challenging foreclosures, affirming the district court’s dismissal of the action for failure to state a claim as a matter of law. Plaintiffs raised 16 separate causes of action, on behalf of a putative class of defaulted mortgage borrowers, all based on the argument that the foreclosures were invalid because the entity holding the mortgage did not also hold the note. Calling this argument “flawed” and “borderline frivolous,” the Eighth Circuit affirmed the district court’s dismissal on grounds that the plain language of the Minnesota foreclosure statute permits the record holder of title to the mortgage to foreclose upon a borrower’s failure to make payment. While courts around the country have dismissed similar claims, the tone of the Eighth Circuit’s opinion may itself be of some significance. Addressing in several paragraphs and an extensive footnote the pattern of meritless and repetitive litigation filed by plaintiffs’ counsel, the Court pointedly reminded counsel of the requirements imposed by the Federal Rules of Civil Procedure – that the filing of a complaint implies a certification by counsel that the claims are “warranted by existing law or by a nonfrivolous argument for extending, modifying, or reversing existing law or for establishing new law.” The opinion suggests a growing impatience by courts with the still ongoing flood of mortgage litigation premised upon rejected or patently frivolous theories.
Alert September 05, 2012