Minnesota Foreclosed Borrowers Sue Bank

In Schulz v. Power Movers of Minnesota, Inc. (Minn. App. 2018), a bank foreclosed its mortgage granted by the plaintiff homeowners. 

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

By ALFN Member: Brian Liebo, Esq. - Usset, Weingarden & Liebo, PLLP

In Schulz v. Power Movers of Minnesota, Inc. (Minn. App. 2018), a bank foreclosed its mortgage granted by the plaintiff homeowners.  The couple lived in the home where they operated a fertilizer business.  The bank was the successful bidder at the sheriff's sale and commenced an eviction action after the borrowers failed to redeem. 

After the 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.”  To top it all 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.  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, including negligence and conversion, among other claims.  The applicable statute under Chapter 504B 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 and the moving company moved the court for summary judgment, claiming that the eviction statute only applies to rental-property disputes, rather than those arising out of mortgage foreclosures.  The Minnesota Court of Appeals ultimately held 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 nowhere states that it applies to them 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 court held that the eviction statute creates a private cause of action for persons injured in connection with evictions.  The court further held that the plaintiffs could proceed forward with their negligence claim of breaching a duty of reasonable care by stacking heavy objects over lighter objects at the storage facility. 

The plaintiffs also claimed damaged and missing items resulting in conversion.  One of the borrowers offered testimony that her neighbors witnessed the movers drinking beer, throwing items, and mishandling boxes, but those claims were dismissed since they were lacking admissible evidence.  Instead, those claims were only supported by inadmissible hearsay.