MEMORANDUM OPINION AND ORDER

JOHN R. TUNHEIM, District Judge.

This case is one of a series of nearly thirty cases filed in this district where the plaintiffs are represented by William B. Butler — in each, the plaintiffs challenge the validity of their mortgages in an attempt to prevent foreclosure.1 The matter is before the Court on Plaintiffs' motion to remand, Plaintiffs' motion to amend their Complaint, and motions to dismiss brought by Defendants Bank of America, N.A.; Bac Home Loans Servicing, LP; Mortgage Electronic Registration Systems, Inc.; Merscorp, Inc.; Wells Fargo Bank, N.A.; The Bank Of New York Mellon (collectively "Foreclosing Defendants"); and Peterson, Fram & Bergman, P.A ("Peterson"). On July 3, 2012, United States Magistrate Judge Tony N. Leung issued a Report and Recommendation ("R & R") recommending that the Court deny Plaintiffs' motions to amend and to remand, and grant the Defendants' motions to dismiss.2 (Docket No. 68) Plaintiffs made timely objections to the R & R. Having conducted a de novo review of those portions of the R & R to which Plaintiffs object, see 28 U.S.C. § 636(b)(1)(C), D. Minn. L.R. 72.2(b), and having carefully reviewed the submitted materials, the Court overrules the plaintiffs' objections and adopts in part the report3 and adopts in full the recommendation of the R & R.

Also before the Court is Plaintiffs' motion to certify to the Minnesota Supreme Court the question of whether an eviction proceeding is in rem under Minnesota law. Because an eviction proceeding under Minnesota law is in personam, Plaintiffs' motion to certify question will be denied.

BACKGROUND4

Plaintiffs5 brought this action in Ramsey County District Court on October 3, 2011. Plaintiffs allege that "Defendants assert invalid and voidable Mortgages" against them. (Compl. ¶ 18, Oct. 3, 2011, Docket No. 1.) Plaintiffs claim that Peterson is "Defendants' agent for purposes of enforcing falsely declared defaults. . . ." (Id. ¶ 16.) Plaintiffs originally brought thirteen claims for relief.6 Defendants removed the case to this Court on November 2, 2011, and Peterson and the Foreclosing Defendants separately moved to dismiss. After Defendants filed their motions, Plaintiffs filed a motion to remand (Docket No. 23) and a motion to amend their Complaint (Docket No. 31). Plaintiffs seek to replace all of the previously pled claims with a quiet title claim and declaratory judgment claims against Foreclosing Defendants and a slander-of-tile claim against all Defendants. (See Proposed Amended Complaint, Mar. 2, 2012, Docket No. 31.)

Shortly before the hearing date in this matter, another court in this district issued its order in another case in which Butler represented the plaintiffs, Welk v. GMAC Mortg., LLC, 850 F.Supp.2d 976 (D.Minn. 2012), and it dismissed the bulk of the plaintiffs' claims. When directed by the Court to file supplemental briefing addressing the effect of Welk, Plaintiffs conceded that their original Complaint is almost identical to the one at issue in Welk. (See Pl.'s Supp. Mem. at 3, May 4, 2012, Docket No. 47.)

Plaintiffs object to the R & R's conclusion that this Court has subject matter jurisdiction because, they maintain, the Minnesota state courts had jurisdiction over the res of at least one plaintiff's property as the result of a pending eviction action. Plaintiffs also move to certify the question of whether an eviction action is in rem, arguing that if an eviction action is in rem, this Court would lack jurisdiction under prior exclusive jurisdiction doctrine. Plaintiffs further object to this Court's exercise of jurisdiction because they claim the R & R incorrectly concluded that Peterson was fraudulently joined (and therefore Plaintiffs' remand motion should be denied and Peterson's motion to dismiss granted). Finally, Plaintiffs object to the R & R's recommendation to grant the Foreclosing Defendants' motion to dismiss because Plaintiffs claim the R & R erred in its determination that their amended claims are based on a show-me-the-note theory.7

ANALYSIS

I. SUBJECT MATTER JURISDICTION

A. Prior Exclusive Jurisdiction

The Plaintiffs argue that this Court lacks jurisdiction because of the doctrine of prior exclusive jurisdiction. Under the doctrine of prior exclusive jurisdiction, "when one court is exercising in rem jurisdiction over a res, a second court will not assume in rem jurisdiction over the same res." Marshall v. Marshall, 547 U.S. 293, 311, 126 S.Ct. 1735, 164 L.Ed.2d 480 (2006). This Court joins the other courts in this district that have held a state eviction action in Minnesota to be an in personam action. Blaylock v. Wells Fargo Bank, N.A., No. 12-693, 2012 WL 2529197, at *7 (D.Minn. June 29, 2012); Pope v. Wells Fargo Bank, N.A., No. 11-2496, 2012 WL 1886493, *5 (D.Minn. May 23, 2012); Olson v. Bank of Am., N.A., No. 11-3710, 2012 WL 1660615, *3 (D.Minn. Apr. 19, 2012). The doctrine, therefore, is inapplicable, and the Court has jurisdiction over this case.

The R & R also found that the prior exclusive jurisdiction doctrine is inapplicable here. (See R & R at 22-24.) Plaintiffs object to the R & R's conclusion that a state eviction action is not a concurrent proceeding for the purposes of the prior exclusive jurisdiction doctrine. Because the Court finds that a state eviction action is in personam, whether it is a concurrent action is moot, and Plaintiffs' objections will be overruled.

Plaintiffs also move this Court to certify the question of whether an eviction proceeding is in rem to the Minnesota Supreme Court. "Whether a federal court should certify a question to a state court is a matter of discretion." Johnson v. John Deere Co., 935 F.2d 151, 153 (8th Cir.1991). The Court finds that the character of an eviction action has been long-settled under Minnesota law. See, e.g., Curran v. Nash, 224 Minn. 571, 29 N.W.2d 436, 438 (1947); Whalley v. Eldridge, 24 Minn. 358, 361 (1877) ("But an action to foreclose is not an action in rem. It is true the action has specific property for its subject or object. So has the action of ejectment. . . . But this does not make them actions in rem."). Because the issue in this case is not close enough to justify certification, Plaintiffs' motion to certify will be denied.

B. Fraudulent Joinder

Plaintiffs further object to this Court's exercise of jurisdiction because they claim the R & R incorrectly concluded that Peterson was fraudulently joined. In general, for a removed action, complete diversity must exist when the state complaint and the petition for removal are filed. See Knudson v. Sys. Painters, Inc., 634 F.3d 968, 975 (8th Cir.2011). Application of this rule here would mean the Court did not have jurisdiction pursuant to 28 U.S.C. § 1332(a)(1) because at the time of filing and removal, Peterson's citizenship destroyed diversity. The fraudulent-joinder exception, however, prevents a plaintiff from defeating a defendant's right of removal by fraudulently joining a plaintiff. Knudson, 634 F.3d at 976.

"[T]o prove that a plaintiff fraudulently joined a diversity-destroying defendant. . . a defendant seeking removal [must] prove that the plaintiff's claim against the diversity-destroying defendant has `no reasonable basis in fact and law.'" Id. at 977 (citation omitted). "Fraudulent joinder exists if, on the face of plaintiff's state court pleadings, no cause of action lies against the resident defendant." Anderson v. Home Ins. Co., 724 F.2d 82, 84 (8th Cir. 1983) (emphasis added). The R & R concluded that in their original Complaint Plaintiffs failed to state a cause of action against Peterson because each claim was precluded by applicable state precedent, see Filla v. Norfolk S. Ry. Co., 336 F.3d 806, 810 (8th Cir.2003), and Plaintiffs did not specifically object to this determination except for the slander of title claim.8 The Court concludes that Plaintiffs' slander of title claim against Peterson is futile because it is premised on a show-me-the-note theory. See Blaylock, 2012 WL 2529197, at *6 (noting deficiencies in a similar slander of title claim); see also Dunbar, 853 F.Supp.2d at 847-48; Karnatcheva v. JPMorgan Chase Bank, N.A., 871 F.Supp.2d 834, 840-41 (D.Minn.2012).9 Because all claims against Peterson have no reasonable basis in fact or law, the Court concludes that Peterson was fraudulently joined. Without Peterson — whose citizenship may be disregarded — the Court has diversity jurisdiction over this action pursuant to § 1332. Because jurisdiction is proper, Plaintiffs' remand motion will be denied.

II. MOTIONS TO DISMISS

A. Standard of Review

Reviewing a complaint under a Rule 12(b)(6) motion to dismiss, the Court considers all facts alleged in the complaint as true to determine if the complaint states a "claim to relief that is plausible on its face." See, e.g., Braden v. Wal-Mart Stores, Inc., 588 F.3d 585, 594 (8th Cir. 2009) (citing Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009)). To survive a motion to dismiss, a complaint must provide more than "`labels and conclusions' or `a formulaic recitation of the elements of a cause of action. . . .'" Ashcroft, 556 U.S. at 678, 129 S.Ct. 1937 (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. "Where a complaint pleads facts that are merely consistent with a defendant's liability, it stops short of the line between possibility and plausibility," and therefore must be dismissed. Id. (internal quotation marks omitted). Finally, Rule 12(b)(6) "authorizes a court to dismiss a claim on the basis of a dispositive issue of law." Neitzke v. Williams, 490 U.S. 319, 326, 109 S.Ct. 1827, 104 L.Ed.2d 338 (1989).

B. Defendants' Motion to Dismiss

Defendants move to dismiss all of Plaintiffs' claims against them because Plaintiffs do not state a claim that is plausible on its face. The R & R recommended granting both motions. Plaintiffs specifically object that they have pled a viable slander of title claim against Peterson and quiet title claims against the Foreclosing Defendants. As noted, supra, Plaintiffs have not pled a viable slander of title claim against Peterson, and so Peterson's motion to dismiss will be granted.

Plaintiffs argue that their quiet title claim is adequately pled (because they have pled possession by the plaintiff and a claim adverse to him by the defendants) and is not dependent on a show-me-the-note theory. But Plaintiffs' claim (see Compl. ¶¶ 58-60) is nothing more than a restatement of the claim that a mortgagee must hold the note for the mortgage to be valid or — to the extent Plaintiffs list reasons the mortgages might be invalid (Compl. ¶ 60) — an unsupported "`shot in the dark' allegation[.]" See Blaylock, 2012 WL 2529197, at *5; Robinson v. Bank of Am., N.A., No. 11-2284, 2012 WL 2885128, at *9 n. 11 (D.Minn. May 31, 2012) ("Plaintiffs' assertion that they have stated a claim for quiet title merely by alleging that they are in possession and that the foreclosing party does not have possession of the promissory note or is not entitled to enforce the note is just as frivolous as any other claim that is premised on the show-me-the-note theory.") (internal quotation marks omitted), report and recommendation adopted, 2012 WL 2885477 (D.Minn. July 13, 2012). The Court adopts the R & R's analysis (at 26-28) on this point, and the Foreclosing Defendants' motion to dismiss will be granted.

III. PLAINTIFFS' MOTION TO AMEND

The Court finds that the Plaintiffs' motion to amend should be denied because it is brought in bad faith. Rule 15 allows a party to amend with the Court's consent, Fed.R.Civ.P. 15(a), and a "court abuses its discretion when it denies a motion to amend a complaint unless there exists . . . bad faith . . . or futility of amendment." Popoalii v. Corr. Med. Servs., 512 F.3d 488, 497 (8th Cir.2008). First, Plaintiffs attempt to use their Amended Complaint to state entirely new theories of liability — a practice that is consistent with their attempt to prolong this and related cases as long as possible. Second, to the extent Plaintiffs contend that they needed to amend in order to comply with the holdings in Jackson and Stein, the Court is nonplussed. Plaintiffs are represented by the same counsel — Butler — who represented appellants in Stein v. Chase Home Fin., LLC, 662 F.3d 976, 980 (8th Cir.2011). Given Butler's experience with this Court, the likely futility of his proposed amendments (discussed in the R & R), and the Court's inability to identify a good faith reason for the amendment, the Court refuses to needlessly prolong this litigation. Plaintiffs' motion to amend will be denied.

ORDER

Based on the foregoing, and all the files, records, and proceedings herein, the Court OVERRULES the plaintiffs' objections [Docket No. 69] and ADOPTS as modified above the Report and Recommendation of the Magistrate Judge dated July 3, 2012 [Docket No. 68]. Accordingly, IT IS HEREBY ORDERED that:

1. Peterson, Fram & Bergman, P.A.'s Motion to Dismiss [Docket No. 7] is GRANTED, and all claims against them are DISMISSED WITH PREJUDICE.

2. Defendants Bank of America, N.A.; Bac Home Loans Servicing, LP; Mortgage Electronic Registration Systems, Inc.; Merscorp, Inc.; Wells Fargo Bank, N.A.; and The Bank Of New York Mellon's Motion to Dismiss [Docket No. 12] is GRANTED, and all claims against them are DISMISSED WITH PREJUDICE.

3. Plaintiffs' Motion to Remand [Docket No. 23] is DENIED.

4. Plaintiffs' Motion to Amend [Docket No. 31] is DENIED.

5. Peterson, Fram & Bergman, P.A.'s Motion for Joinder in Supplemental Briefing Regarding Multiple Pending Motions [Docket No. 44] is GRANTED.

6. Peterson, Fram & Bergman, P.A.'s Motion for Joinder in Bank Defendants' Motion to Certify Question [Docket No. 67] is GRANTED.

7. Peterson, Fram & Bergman, P.A.'s Motion for Joinder in Bank Defendants' Response to Objections [Docket No. 72] is GRANTED.

IT IS HEREBY FURTHER ORDERED that Plaintiffs' Motion to Certify Question [Docket No. 50] is DENIED.

LET JUDGMENT BE ENTERED ACCORDINGLY.

REPORT & RECOMMENDATION

TONY N. LEUNG, United States Magistrate Judge.

I. INTRODUCTION

This matter is before the Court, United States Magistrate Judge Tony N. Leung, on the following motions: (1) Defendant Peterson, Fram & Bergman, P.A.'s Motion to Dismiss (Docket No. 7); (2) Defendants Bank of America, N.A., BAC Home Loans Servicing, LP, Mortgage Electronic Registration Systems, Inc., Merscorp, Inc., Wells Fargo Bank, N.A., and The Bank of New York Mellon's Motion to Dismiss the Complaint (Docket No. 12) (hereinafter "Foreclosing Defendants' Motion to Dismiss"); (3) Plaintiffs' Motion to Remand (Docket No. 23); (4) Plaintiffs' Motion to Amend (Docket No. 31); and (5) Defendant Peterson, Fram & Bergman's Joinder in Supplemental Briefing Regarding Multiple Pending Motions by Bank of America, N.A., BAC Home Loans Servicing, LP, Mortgage Electronic Registration Systems, Inc., Merscorp, Inc., Wells Fargo Bank N.A. and The Bank of New York Mellon F/K/A the Bank of New York (Docket No. 44) (hereinafter "Defendant Law Firm's Briefing Motion").

The dispositive motions were referred to the undersigned magistrate judge for report and recommendation to the district court under 28 U.S.C. § 636 and Local Rule 72.2(b). See Order, (D. Minn. Dec. 22, 2011) (Docket No. 19). A hearing was held on the motions on May 31, 2012. William B. Butler appeared on behalf of Plaintiffs. Thomas Heffron appeared on behalf of Foreclosing Defendants. Jared M. Goerlitz appeared on behalf of Peterson, Fram & Bergman, P.A. ("Defendant Law Firm").

Because these motions are interrelated, this Court has addressed them all in this Report and Recommendation. For the reasons set forth herein, IT IS HEREBY RECOMMENDED as follows: (1) Defendant Peterson, Fram & Bergman, P.A.'s Motion to Dismiss (Docket No. 7) be GRANTED; (2) Foreclosing Defendants' Motion to Dismiss (Docket No. 12) be GRANTED; (3) Plaintiffs' Motion to Remand (Docket No. 23) be DENIED; (4) Plaintiffs' Motion to Amend (Docket No. 31) be DENIED; and (5) Defendant Law Firm's Briefing Motion (Docket No. 44) be GRANTED.

II. BACKGROUND

A. Original Complaint

Plaintiffs—who are all Minnesota residents—allege that they executed promissory notes and mortgages in favor of certain Foreclosing Defendants for the purchase of real property located in the State of Minnesota.1 It is undisputed that the Foreclosing Defendants—i.e., Bank of America, N.A.; BAC Home Loan Servicing LP; Mortgage Electronic Registration Systems, Inc. (MERS); MERSCORP, Inc.; Wells Fargo Bank, N.A.; and The Bank of New York Mellon—are neither incorporated nor headquartered in Minnesota; thus, they are diverse from all Plaintiffs for the purposes of diversity of citizenship jurisdiction. Compl. at ¶¶ 9-14, Oct. 3, 2011 (Docket No. 1). Defendant Law Firm is a Minnesota professional association. Id. at ¶ 16.

The crux of Plaintiffs' Complaint is that Foreclosing Defendants did not have the right to initiate foreclosure proceedings because Foreclosing Defendants do not possess the promissory notes and Foreclosing Defendants are not entitled to enforce the promissory notes. Compl. at ¶¶ 18-41. Plaintiffs allege that the promissory notes "were securitized and sold ... into a `pooling and serving agreement'" and the rights under the promissory notes were sold to third-party purchasers of mortgage-back securities. Compl. at ¶ 32. This sort of allegation is

Stein v. Chase Home Fin., LLC, 662 F.3d 976, 978 (8th Cir.2011). Plaintiffs further allege that, because Foreclosing Defendants did not have a right to foreclosure, Defendant Law Firm wrongfully represented the status of the Foreclosing Defendants' rights in foreclosure by advertisement proceedings. Id. at ¶ 16.

Based upon these allegations, Plaintiffs assert 13 separate claims for relief. Plaintiffs assert the following claims against all Defendants: slander of title (IV), conversion (V), civil conspiracy (VII), negligent misrepresentation (X), and equitable estoppel (XII). Plaintiffs assert the following claims against Foreclosing Defendants: quiet title (I), "Defendants are not real parties in interest" (II), "Lack of Legal Standing to Foreclose" (III), unjust enrichment (VI), breach of fiduciary duty (VIII), fraud (IX), and accounting (XIII). Plaintiffs assert a claim of fraud ("XIV [sic]") against Defendant Law Firm.

B. Procedural Posture

1. Motion Practice before this Court

Plaintiffs commenced this action in Ramsey County District Court in October 2011. On November 2, 2011, this matter was removed to the United State District Court for the District of Minnesota. Thereafter, Defendant Law Firm filed its Motion to Dismiss, arguing that it was fraudulently joined as a party. Foreclosing Defendants filed their Motion to Dismiss, arguing Plaintiffs' lack standing to bring their claims; the Complaint does not satisfy the requirements of Fed.R.Civ.P. 8; and the Complaint fails to state claims upon which relief can be granted.

Plaintiffs oppose Defendants' motions. See generally, Pl.'s Mem. Dec. 19, 2011 (Docket No. 17); Pl.'s Mem. Dec. 22, 2011 (Docket No. 20). Plaintiffs also filed a Motion to Remand, arguing "the Court does not have subject matter jurisdiction because this is a quasi in rem action over which the Ramsey County District Court first acquired jurisdiction." Pl.'s Mem. at 3, Feb. 27, 2012 (Docket No. 25). After Defendants' motions to dismiss were fully briefed, Plaintiffs filed a Motion to Amend. The contents of the proposed amended complaint will be discussed later.

Defendants oppose Plaintiffs' motions. Foreclosing Defendants also moved for Sanctions (Docket No. 54) under Federal Rule of Civil Procedure 11 and 28 U.S.C. § 1927, arguing that the filing and continuing prosecution of a meritless complaint warrants sanctions. Foreclosing Def.'s Mem. at 2, May 17, 2012 (Docket No. 56). Defendant Law Firm filed Defendant Peterson, Fram & Bergman's Joinder in Motion for Sanctions by Bank Defendants (Docket No. 59). Plaintiffs oppose the Motion for Sanctions. These motions will be address in a separate order.

In addition to the motions before this Court, Plaintiffs filed a Motion to Certify Question (Docket No. 50), seeking direction from the Minnesota Supreme Court as to whether an eviction proceeding is in rem. Plaintiffs contend that if the Minnesota Supreme Court holds that a Minnesota eviction proceeding is in rem, then this Court lacks jurisdiction to consider the present action under the prior-exclusive-jurisdiction doctrine. The Motion to Certify Question will be considered by the Honorable John R. Tunheim, United States District Court Judge for the District of Minnesota. See Docket No. 64. The certification motion pertains to Plaintiffs' Motion for Remand because, as will be discussed, Plaintiffs contend that Minnesota state courts have prior exclusive jurisdiction over at least one property at issue because both the present action and the eviction proceedings are in rem (or quasi in rem) proceedings.

2. Supplemental Briefing

This is not the only case of this kind brought by Plaintiffs' counsel, William B. Butler, and adjudicated in the United States District Court for the District of Minnesota.3 Typically, the fact that an attorney has brought multiple actions of a similar nature is neither surprising nor noteworthy. Butler's cases, however, are exceptional because they have all followed the same unavailing course: Butler brings a complaint on behalf of multiple Minnesota plaintiff mortgagors against jurisdictionally diverse foreclosing defendants and a Minnesota law firm. The complaint asserts numerous show-me-the-note claims. The complaint is removed to federal court based upon the fact that the Minnesota law firm defendant was fraudulently joined. The motion to remand is denied. The foreclosing defendants' motions to dismiss are granted.

Days before the hearing date in this matter, another court in this district ruled against Butler in Welk v. GMAC Mortgage, LLC, 850 F.Supp.2d 976 (D.Minn. 2012). After thoroughly vetting the claims brought by Butler, the Welk court denied the motion to remand, granted the foreclosing defendants' motion to dismiss, and levied a significant sanction against Butler.4

Plaintiffs concede that the original Complaint before this Court is almost identical to the one at issue in Welk. See Pl.'s Supp. Mem. at 3, May 4, 2012 (Docket No. 47). Recognizing the significance of the Welk sanction order for Butler and the persuasive relevance of the Welk decision, this Court continued the hearing and directed the parties to file supplemental briefs in this matter addressing what effect, if any, the Welk decision had on the issues before this Court.

Both parties filed the required supplemental briefs. Defendants argue that this matter is not materially different from any actions brought by Plaintiffs' counsel and should be dispatched accordingly. Plaintiffs acknowledge that this matter is not materially different from Welk, but Plaintiffs contend that the proposed amended complaint changes the character of this action and warrants a different outcome.

III. DISCUSSION: DEFENDANT LAW FIRM

"It is axiomatic that a court may not proceed at all in a case unless it has jurisdiction." Crawford v. F. Hoffman-La Roche Ltd., 267 F.3d 760, 764 (8th Cir. 2001). In the present action, two jurisdictional issues need to be addressed. First, this Court will consider whether Defendant Law Firm was fraudulently joined. In considering the fraudulent joinder issue, this Court will first consider whether joinder was fraudulent under the original Complaint and then the Court will consider Plaintiffs' Motion to Amend.5 Second, after considering the fraudulent joinder issue, this Court will consider Plaintiffs' Motion for Remand.

For the reasons set forth below, this Court recommends as follows: (1) it be held that joinder of Defendant Law Firm in the original Complaint was fraudulent; (2) Defendant Law Firm's Motion to Dismiss be granted; (3) Plaintiffs' Motion to Amend be denied as it pertains to Defendant Law Firm; and (4) Plaintiffs' Motion for Remand be denied.

A. Fraudulent Joinder

After a case has been removed to federal court, "[i]f at any time before final judgment it appears that the district court lacks subject matter jurisdiction, the case shall be remanded." 28 U.S.C. § 1447(c); see also Fed.R.Civ.P. 12(h)(3) ("If the court determines at any time that it lacks subject-matter jurisdiction, the court must dismiss the action."). This Court must "resolve all doubts about federal jurisdiction in favor of remand." In re Bus. Men's Assur. Co. of Am., 992 F.2d 181, 183 (8th Cir.1993).

Jurisdiction under 28 U.S.C. § 1332 requires an amount in controversy greater than $75,000 and complete diversity of citizenship. "Where applicable state precedent precludes the existence of a cause of action against a defendant, joinder is fraudulent." Filla v. Norfolk S. Ry. Co., 336 F.3d 806, 810 (8th Cir.2003); see also Knudson v. Sys. Painters, Inc., 634 F.3d 968, 977 n. 7 (8th Cir.2011) (stating that "the Filla standard remains good law in this circuit"). "However, if there is a colorable cause of action—that is, if the state law might impose liability on the resident defendant under the facts alleged—then there is no fraudulent joinder." Filla, 336 F.3d at 810 (quotation omitted). "In order to establish fraudulent joinder, the defendant must `do more than merely prove that the plaintiff's claim should be dismissed pursuant to a Rule 12(b)(6) motion.'" Block v. Toyota Motor Corp., 665 F.3d 944, 948 (8th Cir.2011).

1. Defendant Law Firm's Motion to Dismiss (Docket No. 7)

In the original Complaint, Plaintiffs assert a claim of slander of title (IV), conversion (V), civil conspiracy (VII), negligent misrepresentation (X), equitable estoppel (XII), and fraud ("XIV [sic]") against Defendant Law Firm. Plaintiffs allege that Defendant Law Firm pursued foreclosure by advertisement as agents for the Foreclosing Defendants and misrepresented the Foreclosing Defendants' rights to foreclose in the Notice of Mortgage Foreclosure Sale, Notice of Pendency and Power of Attorney to Foreclose, and Sheriff's Certificate and Foreclosure Record. See Compl. at ¶¶ 43-44, 47, 49-51, and 52-54.

Minnesota Statute section 580.02 states that, for any party to foreclose by advertisement, it is requisite:

(Emphasis added.). In Jackson v. Mortgage Electronic Registration Systems, Inc., the Minnesota Supreme Court explained that, historically, promissory notes and security instruments (i.e. mortgages) have been treated as two distinct documents that are legally intertwined. 770 N.W.2d 487, 493 (Minn.2009). The Jackson court considered Minn. Stat. § 580.02 and held that "while a promissory note assignment ... constitute[s] an equitable assignment of the security instrument, a promissory note assignment is not an assignment affecting legal title, and only assignments of legal title of the security instrument must be recorded in order to commence a foreclosure by advertisement." Id. at 501. Applying Jackson, the Eighth Circuit Court of Appeals held that

Stein v. Chase Home Finance, LLC, 662 F.3d 976, 980 (8th Cir.2011) (quoting Jackson, 770 N.W.2d at 497).

Given Minnesota's foreclosure by advertisement statutes, as interpreted in Jackson and Stein, there is no basis where Defendant Law Firm might be liable to Plaintiffs for slander of title, conversion, civil conspiracy, negligent misrepresentation, and equitable estoppel, and fraud as asserted in the original Complaint.

Plaintiffs' slander of title, equitable estoppel, civil conspiracy, and fraud claims are all premised upon Plaintiffs' flawed contention that only the holder of the note can foreclose by advertisement. See Compl. at ¶¶ 70-74 (slander of title), 84-88 (civil conspiracy), 115-119 (fraud), 120-123 (equitable estoppel). For example, Plaintiffs' fraud claim is premised upon Plaintiffs' allegation that Defendant Law Firm committed fraud by "falsely represent[ing] that its clients were entitled to enforce promissory notes through foreclosure." Pl.'s Mem. at 12, Dec. 19, 2011 (Docket No. 17) (citing Compl. at ¶¶ 41-55). As held by the Minnesota Supreme Court, the Eighth Circuit Court of Appeals, and every court in this district to consider these claims, Plaintiffs' theory of liability is without merit. Furthermore, Minnesota does not recognize civil conspiracy as an independent tort, see D.A.B. v. Brown, 570 N.W.2d 168, 172 (Minn.App. 1997), and Plaintiffs' fraud claim is not pleaded with particularity, as required by Fed.R.Civ.P. 9. See also Minn. R. Civ. P. 9.02. Therefore, Plaintiffs have not alleged colorable claims of slander of title, equitable estoppel, civil conspiracy, or fraud against Defendant Law Firm.

Plaintiffs' conversion claim is based on Plaintiffs' allegation that Foreclosing Defendants wrongfully received payments from Plaintiffs on the promissory notes. See Compl. ¶ 75-79. Plaintiffs baldly assert that Defendant Law Firm is liable for conversion because it acted as an agent for Foreclosing Defendants. Plaintiffs, however, have made no allegations to support that Defendant Law Firm even so much as opened the envelopes containing the payments to Foreclosing Defendants. Plaintiffs' allegations concerning Defendant Law Firm in no way pertain to Plaintiffs' conversion claim. Therefore, this Court concludes that Plaintiffs have not asserted a colorable claim of conversion against Defendant Law Firm.

Finally, Defendant Law Firm is immune from negligent misrepresentation claims. Generally, "an attorney acting within the scope of his employment as attorney is immune from liability to third persons for actions arising out of that professional relationship." McDonald v. Stewart, 289 Minn. 35, 40, 182 N.W.2d 437, 440 (1970). There are dicta by the Minnesota Supreme Court that attorneys can be liable for "fraudulent or unlawful act[s]." McDonald v. Stewart, 289 Minn. 35, 40, 182 N.W.2d 437, 440 (1970); L & H Airco, Inc. v. Rapistan Corp., 446 N.W.2d 372, 380 (Minn.1989) (citing Hoppe v. Klapperich, 224 Minn. 224, 239, 28 N.W.2d 780, 791 (Minn.1947)). But, the Minnesota Supreme Court explicitly declined to impose any duty upon attorneys to their client's adversary, which forestalls any cause of action premised on negligence brought by a client's adversary against the client's attorney. L & H Airco, Inc., 446 N.W.2d at 378-80. Moreover, any claim of fraud must assert "affirmative misrepresentations" or "other active steps to conceal" fraud in order to be actionable. Id. at 380. Thus, Plaintiffs have not asserted a colorable negligent misrepresentation claim against Defendant Law Firm.

Plaintiffs originally argued that all of their claims against Defendant Law Firm are valid because Stein and Jackson do not preclude a challenge to the validity of the mortgage or the power to sell. See Pl.'s Mem. at 3, Dec. 19, 2011 (Docket No. 17). Plaintiffs cite In re Banks, 457 B.R. 9 (8th Cir. BAP 2011), to support this proposition. See id. at 9. Plaintiffs' argument misses the mark. First, Plaintiffs did not plead this theory of liability. Second, "Plaintiffs misconstrue In re Banks . . . [, which] addressed a creditor's right to enforce a promissory note endorsed in blank; it did not concern foreclosure by advertisement." Dunbar, 853 F.Supp.2d at 847 n. 6; cf. Welk, 850 F.Supp.2d at 987-88 (interpreting In re Banks and concluding "it is likely that the court was addressing only the claimant's ability to collect on the note and not the claimant's ability to foreclose on the mortgage"). Finally, this theory of liability is premised on the flawed belief that the power to foreclose is found, defined, and held exclusively in the promissory note, rather than the mortgage. This theory of liability is contradicted by over 100 years of real property law in the State of Minnesota.

Therefore, this Court concludes that jurisdiction is proper because Defendant Law Firm was fraudulently joined in the original Complaint; accordingly, this Court recommends that all claims against Defendant Law Firm within the original Complaint be dismissed with prejudice.

2. Plaintiffs' Motion to Amend (Docket No. 31)

The proposed amended complaint proffers a new styling of the show-me-the-note claim.6 Plaintiffs allege that the notes and mortgages contractually vest exclusive authority to foreclose in the holders of the notes. See Mutua v. Deutsche Bank Nat. Trust Co., 11-CV-3761 PJS/AJB, 2012 WL 1517241, at *9 (D.Minn. Apr. 30, 2012) (distinguishing a "show-me-the-note statute claim" and a "show-me-the-note contract claim"). Plaintiffs' allegation consists of three major premises and a conclusion. First, Plaintiffs cite that a "Note Holder" is defined in each promissory note as "[t]he Lender or anyone who takes this Note by transfer and who is entitled to receive payments under this Note." Prop. Amend. Compl. at ¶ 29. Second, Plaintiffs cite the following language in the promissory notes:

Prop. Amend. Compl. at ¶ 29. Finally, Plaintiffs cite language in the mortgages that states, "[i]f the [borrower's] default is not cured on or before the date specified in the notice [of default], Lender at its option may require immediate payment in full of all sums secured by this Security Instrument without further demand and may invoke the power of sale and any other remedies permitted by Applicable Law." Prop. Amend. Compl. at ¶ 30. Based upon these three quoted passages (or premises), Plaintiffs conclude that the mortgages and notes at issue must be read together to vest exclusive authority to accelerate and foreclose in the Lender. Prop. Amend. Compl. at ¶ 31. Plaintiffs further allege generally that Defendants were not the "Note Holders" because the interests in the notes and mortgages were assigned to third parties. See Pl.'s Supp. Mem. at 8, May 4, 2012 (summarizing their amended theory of liability in their supplemental brief to this Court, and explaining that their claims "are based on Defendants' failure to comply with Minn. Stat. § 580.02... and Defendants breach of the mortgage agreement").

Based upon these allegations, Plaintiffs propose to assert four claims: First, Plaintiffs assert a quiet title claim against the Foreclosing Defendants, asserting that the mortgage liens are invalid. Second, Plaintiffs assert a declaratory judgment claim against the Foreclosing Defendants, seeking an order holding that the assignments of the rights under the notes and mortgages violated the terms of the trust agreements under which the rights to the notes and mortgages were assigned. Third, Plaintiffs assert a second declaratory judgment claim against Foreclosing Defendants, holding that only the "Note Holder" can declare a default. Finally, Plaintiffs propose to assert a slander-of-title claim against all Defendants. See id. at ¶¶ 61-66.

"There is no absolute right to amend." Becker v. Univ. of Nebraska at Omaha, 191 F.3d 904, 908 (8th Cir.1999). "Permission to file a first amended complaint 'shall be freely given when justice so requires.'" U.S. ex rel. Gaudineer & Comito, L.L.P. v. Iowa, 269 F.3d 932, 936 (8th Cir.2001) (quoting Fed.R.Civ.P. 15(a)). But, the district court should deny a motion to amend "in those limited circumstances in which undue delay, bad faith on the part of the moving party, futility of the amendment, or unfair prejudice to the non-moving party can be demonstrated." Roberson v. Hayti Police Deft, 241 F.3d 992, 995 (8th Cir.2001) (citing Foman v. Davis, 371 U.S. 178, 182, 83 S.Ct. 227, 9 L.Ed.2d 222 (1962)). "Denial of a motion for leave to amend on the basis of futility means the district court has reached the legal conclusion that the amended complaint could not withstand a motion to dismiss under Rule 12(b)(6) of the Federal Rules of Civil Procedure." Zutz v. Nelson, 601 F.3d 842, 850 (8th Cir.2010), cert. denied, ___ U.S. ___, 131 S.Ct. 524, 178 L.Ed.2d 373 (U.S. 2010). This is the standard of review articulated by Plaintiffs in their brief in support of their Motion to Amend. See PL's Mem. 2, Mar. 2, 2012 (Docket No. 33).

"To suivive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)). "A pleading that offers 'labels and conclusions' or 'a formulaic recitation of the elements of a cause of action will not do.' Nor does a complaint suffice if it tenders 'naked assertion^]' devoid of 'further factual enhancement.'" Id. at 678, 129 S.Ct. at 1949 (quoting Twombly, 550 U.S. at 555, 557, 127 S.Ct. 1955). The court must analyze whether the plaintiff has put forth factual allegations that "raise the right to relief above the speculative level on the assumption that all of the complaint's allegations are true." Twombly, 550 U.S. at 545, 127 S.Ct. at 1959. When considering a motion under Fed. R.Civ.P. 12(b)(6), "the court generally must ignore materials outside the pleadings, but it may consider some materials that are part of the public record or do not contradict the complaint as well as materials that are necessarily embraced by the pleadings." Porous Media Corp. v. Pall Corp., 186 F.3d 1077, 1079 (8th Cir.1999) (quotations omitted).

Amidst the allegations outlined above, Plaintiffs allege that, "[u]pon information and belief, the chain of title to Plaintiffs' Mortgages is broken and Defendants have no[ ] right, title, or interest in Plaintiffs' property." Prop. Amend. Compl. at ¶ 27 (Docket No. 31-5). This is the only allegation pertaining to the slander-of-title claim. Based upon this allegation, Plaintiffs assert their slander-of-title claim as follows: (1) Defendant Law Firm "publicly recorded mortgage deeds in the name of a nominee, which did not have legal title to either the Original Notes or the Mortgages," id. at 1162; (2) Defendant Law Firm "maliciously published Notices of Foreclosure, Notices of Pendency and Sheriffs Sale Certificates regarding the Plaintiffs' properties, purporting that Defendants were holders in due course of Plaintiffs' Original Notes, and falsely indicating that Defendants are entitled to enforce Plaintiffs' Mortgages and foreclose and take possession of Plaintiffs' homes," id. at 1163; (3) Defendant Law Firm "knew or should have known that the statements contained in the publications were false," id. at H 64; (4) Defendant Law Firm prepared and recorded documents against Plaintiffs' properties, without verifying certain information, id. at 1165; and (5) Plaintiffs suffered special damages, including but not limited "to payment on non-negotiable Original notes." Id, at 1166.

Plaintiffs' proposed slander-of-title claim is futile.

Paidar v. Hughes, 615 N.W.2d 276, 279-80 (Minn.2000). "The filing of an instrument known to be inoperative is a false statement that, if done maliciously, constitutes slander of title." Id. at 280. First, to the extent that this claim is premised on the mortgage liens being invalid because the Foreclosing Defendants did not hold the notes, such a claim has no merit for the reasons set forth above. See Karnatcheva, 871 F.Supp.2d at 841-42. Second, Plaintiffs' assertion that "the chain of title was broken" is a naked assertion, devoid of factual support. Plaintiffs have failed to allege any facts to support that any filed instrument was inoperative. Third, Plaintiffs' special damages, which purport to include "payment on non-negotiable Original notes," bear no relation to any element of Plaintiffs' slander-of-title claim. Cf. Quevli Farms of Lakefield v. Union Sav. Bank & Trust Co. of Davenport., Iowa, 178 Minn. 27, 30, 226 N.W. 191, 192 (1929) (stating "special damages are the gist of the [slander of title] action and without them the action cannot be maintained"); Hayward Farms Co. v. Union Sav. Bank & Trust Co., 194 Minn. 473, 475, 260 N.W. 868, 869 (1935) (stating that special damages must be "properly alleged"). Finally, Plaintiffs' allegation that recording a mortgage in the name of the nominee slanders a title is forestalled by the Minnesota Supreme Court's holding in Jackson.

Defendant Law Firm argues that Plaintiffs cannot assert a slander-of-title claim against it because Defendant Law Firm relied upon foreclosure related documents provided by the Foreclosing Defendant, which in turn constitute prima facie evidence that the documents were executed and delivered with proper authority under Minn. Stat. § 358.50. See Def.'s Mem. at 8, Mar. 26, 2012 (Docket No. 40). Defendant Law Firm's argument goes to Plaintiffs' contention that Defendant Law Firm failed to verify certain facts, but verification is not an element of a slander-of-title claim.

Defendants also argue that Plaintiffs' Motion to Amend evinces bad faith and should be denied accordingly. This Court agrees. Plaintiffs grossly mischaracterize the nature of their proposed amendments. Plaintiffs contend that their motion to amend "seek[s] to remove all unnecessary and duplicative claims and fully plead relevant facts regarding the remaining claims." PL's Mem. at 1, Mar. 2, 2012 (Docket No. 33). But, their proposed amended complaint purports to assert a new theory of liability. Plaintiffs concede as much when they liken the original Complaint to the one in Welk and distinguish the same from the proposed amended complaint, which Plaintiffs liken to the amended Complaint in Mutua, 2012 WL 1517241 (D.Minn. Apr. 30, 2012). PL's Mem. at 2-3, Mar. 2, 2012. This mischaracterization might be overlooked but for the fact that Plaintiffs state that they "do not waive any of the arguments presented in their Response to Defendants' motions to dismiss," id. at 1, at the same time they contend that their motion to amend is for the purpose of "comply[ing] with the holdings in Jackson and Stein." Id. at 3. These assertions are mattering double-speak. Moreover, the latter statement lacks all credulity because Butler represented the Plaintiffs in Stein. Therefore, Plaintiffs cannot credibly assert that they could not plead an action that comports with Stein until after the Welk decision and after Defendants moved to dismiss. Dunbar, 853 F.Supp.2d at 845 (denying a motion to amend brought by Butler for bad faith where Butler asserted that the amendment was based upon Stein and it was "new precedent").

Therefore, for the reasons set forth above, this Court recommends that Plaintiffs' Motion to Amend be denied as it pertains to Defendant Law Firm.

B. Plaintiffs' Motion to Remand (Docket No. 23)

Plaintiffs contend that remand is mandated under the prior-exclusive-jurisdiction doctrine because (1) the action commenced by Plaintiffs is a "quasi in rem. action over which the Ramsey County District Court first acquired jurisdiction," PL's Mem. at 3, Feb. 7, 2012 (Docket No. 25); (2) there is an eviction action against two of the Plaintiffs, PL's Mem. at 6, Feb. 7, 2012; and (3) there are Torrens properties at issue in this action. PL's Reply, at 8, Mar. 6, 2012 (Docket No. 35). Foreclosing Defendants oppose the motion, arguing that the prior-exclusive-jurisdiction doctrine is inapplicable. For the reasons set forth below, this Court recommends that the motion for remand be denied.

"The prior exclusive jurisdiction doctrine holds that 'when one court is exercising in rem jurisdiction over a res, a second court will not assume in rem jurisdiction over the same res.'" Chapman v. Deutsche Bank Nat. Trust Co., 651 F.3d 1039, 1043 (9th Cir.2011) (quoting Marshall v. Marshall, 547 U.S. 293, 311, 126 S.Ct. 1735, 164 L.Ed.2d 480 (2006)); see also Perm Gen. Cas. Co. v. Commonwealth of Pennsylvania, ex ret Schnader, 294 U.S. 189, 195, 55 S.Ct. 386, 389, 79 L.Ed. 850 (1935) (holding that "if the two suits are in rem or quasi in rem, requiring that the court or its officer have possession or control of the property which is the subject of the suit in order to proceed with the cause and to grant the relief sought, the jurisdiction of one court must of necessity yield to that of the other"). The prior-exclusive-jurisdiction doctrine is premised on the fact that "[t]he possession of the res vests the court which has first acquired jurisdiction with the power to hear and determine all controversies relating thereto, and for the time being disables other courts of coordinate jurisdiction from exercising a like power." Farmers' Loan & Trust Co. v. Lake St. Elevated R. Co., 177 U.S. 51, 61, 20 S.Ct. 564, 568, 44 L.Ed. 667 (1900) (emphasis added). "This rule is essential to the orderly administration of justice, and to prevent unseemly conflicts between courts whose jurisdiction embraces the same subjects and persons." Merritt v. Am. Steel-Barge Co., 79 F. 228, 231 (8th Cir.1897).

The prior-exclusive-jurisdiction doctrine is inapplicable here. First, there are not concurrent proceedings as anticipated by the prior-exclusive-jurisdiction doctrine. There is just one proceeding that began in state court and was removed to federal court. See Dunbar, 853 F.Supp.2d at 843-45, as amended (Apr. 12, 2012) (holding that the prior-exclusive-jurisdiction doctrine is inapplicable where only "a single action exists in federal court following removal"). Plaintiffs seem to contend that there are, in fact, concurrent proceedings because this action was commenced in state court, which would be the first proceeding, and was removed to federal court, which would be the second proceeding. This argument is without merit. Welk, 850 F.Supp.2d at 996 (rejecting argument that there are concurrent proceedings barring removal).

Second, this Court has been presented with no authority to support that the state courts in any way retained jurisdiction over the properties at issue. Compare with Matter of Trust Created by Hill on Dec. 31, 1917 for Ben. of Schroll, 728 F.Supp. 564, 567 (D.Minn.1990). Contrary to Plaintiffs contention, the fact that state courts have "jurisdiction," — i.e., the "power to exercise authority over all persons and things within its territory" — does not mean that the state courts have retained jurisdiction over the properties relevant to this litigation. See BLACK'S LAW DICTIONARY 927 (9th ed. 2009).

Third, regardless of whether an eviction action under Minnesota law is in rem, quasi in rem, or in personam, the eviction action against Plaintiffs Yang in Ramsey County District Court7 is neither a concurrent action in state court nor amounts to retained jurisdiction over the res for the purposes of the prior-exclusive-jurisdiction doctrine.

The governing statutory chapter for an eviction, or unlawful detainer, action is Minn. Stat. ch. 504B. See Univ. Cmty. Properties, Inc. v. Norton, 311 Minn. 18, 21, 246 N.W.2d 858, 860 (1976) (citing Minn. Stat. ch. 566, successor to Minn. Stat. ch. 504B). Under Minnesota law, an eviction action is "a summary court proceeding to remove a[n] ... occupant from or otherwise recover possession of real property by the process of law." Minn. Stat. § 504B.001, subd. 4 (emphasis added). Thus, the long held rule in Minnesota is that an eviction action is limited to adjudication of "present possession" only. Keller v. Henvit, 219 Minn. 580, 585, 18 N.W.2d 544, 547 (1945). Counterclaims and equitable defenses are raised directly in a separate proceeding.8 Id.; Amresco Residential Mortg. Corp. v. Stange, 631 N.W.2d 444, 445-46 (Minn.App.2001). Once a separate proceeding is commenced, the eviction court has discretion to stay the eviction proceedings. See Bjorklund v. Bjorklund Trucking, Inc., 753 N.W.2d 312, 318-19 (Minn.App.2008) (holding that when a separate proceeding is initiated and "when the counterclaims and defenses are necessary to a fair determination of the eviction action, it is an abuse of discretion [for the court considering the eviction action] not to grant a stay of the eviction proceedings when an alternate civil action that involves those counterclaims and defenses is pending"), rev. denied (Minn. Sept. 23, 2008); Fed. Home Loan Mortg. Corp. v. Nedashkovskiy, 801 N.W.2d 190, 193 (Minn.App.2011) (noting that the eviction court must be provided "a case-specific reason why a stay [is] necessary").

The commencement of a state eviction action against Plaintiffs Yang is not a concurrent proceeding under the prior-exclusive-jurisdiction doctrine because the claims in the instant Complaint and the issue of present possession in the eviction action do not arise out of "like" jurisdiction. Farmers' Loan & Trust Co., 177 U.S. at 61, 20 S.Ct. at 568. A state eviction court does not require jurisdiction "to hear and determine all controversies relating" to the property, which is a condition precedent to the application of the prior-exclusive-jurisdiction doctrine. Id. at 61, 20 S.Ct. at 568. Thus, the commencement of an eviction action does not preclude an "alternate civil action," such as the one before this Court. Bjorklund, 753 N.W.2d at 318-19. Just the contrary is true. The eviction statutory chapter expressly anticipates alternate civil actions, such as the present action.

Finally, the fact that three of the properties at issue in present case are Torrens properties does not support the proposition that the state courts retained jurisdiction. "Torrens refers to a real estate titling system under which ownership is initially established by registering for a certificate of title through court proceedings," in contrast to the abstract system. United Fire & Cas. Co. v. Fid. Title Ins. Co., 258 F.3d 714, 716 (8th Cir.2001). Plaintiffs contend that Minn. Stat. § 508.10 dictates that Minnesota state courts have exclusive, continuing jurisdiction over Torrens property. Minn. Stat. § 508.10 states in relevant part as follows:

(Emphasis added.) Plaintiffs' argument ignores the fact that the present action does not come under Minn. Stat. § 508.10 and Plaintiffs' expansive reading of Minn. Stat. § 508.10 is forestalled by Minn. Stat. § 508.02. As the Honorable Paul A. Magnuson, United States District Court Judge for the District of Minnesota, concluded in Olson v. Bank of America, N.A., Civil No. 11-3710 (PAM/FLN), Mem. & Order, at 6, 2012 WL 1660615 (Docket No. 33) (D.Minn. Apr. 19, 2012), "[t]his argument is wholly without merit and deserves no discussion."

For the first time, in their supplemental brief, Plaintiffs identified a Torrens proceeding: In re Certificate of Title No. 566452, Case No. 62-CV-l 1-3023 (Ramsey County Minn. Apr. 12, 2011). See PL's Supp. Mem. at 7; see also Aff. Butler, at Ex. 4-5 (Docket Nos. 49-6, 49-7). This Torrens proceeding was commenced on April 12, 2011, prior to the commencement of the present litigation. Nevertheless, this Torrens proceeding was stayed on November 3, 2011, pending completion of the present litigation. Therefore, for the reasons set forth above, this Torrens proceeding neither implicates the prior-exclusive-jurisdiction doctrine nor otherwise warrants remanding this matter.

IV. DISCUSSION: FORECLOSING DEFENDANTS

A. Foreclosing Defendants' Motion to Dismiss (Docket No. 12)

This Court need only briefly consider Foreclosing Defendants' arguments on the following claims: quiet title (I), "Defendants are not real parties in interest" (II), "Lack of Legal Standing to Foreclose" (III), slander of title (IV), conversion (V), unjust enrichment (VI), civil conspiracy (VII), breach of fiduciary duty (VIII), fraud (IX), negligent misrepresentation (X), equitable estoppel (XII), and accounting (XIII). For the reasons set forth herein, this Court recommends that Foreclosing Defendants' Motion to Dismiss be granted and all claims against Foreclosing Defendants be dismissed with prejudice.

Most of Plaintiffs' claims are show-me-the-note claims or claims premised on the show-me-the-note theory of foreclosure law. Specifically, Plaintiffs' quiet title (I), "Defendants are not real parties in interest" (II), "Lack of Legal Standing to Foreclose" (III), slander of title (IV), civil conspiracy (VII), equitable estoppel (XII), and misrepresentation (IX and X) claims are premised upon this flawed theory and must be dismissed accordingly. Moreover, as stated above, civil conspiracy is not an independent tort, see D.A.B., 570 N.W.2d at 172, and Plaintiffs' misrepresentation claims are not pleaded with particularity, as required by Fed.R.Civ.P. 9.

In addition, Plaintiffs lack standing to maintain these claims. Although Plaintiffs have alleged that foreclosure proceedings were initiated, Plaintiffs lack standing to assert their "Defendants are not real parties in interest" (II), "Lack of Legal Standing to Foreclose" (III), slander of title (IV), civil conspiracy (VII), equitable estoppel (XII), and misrepresentation (IX and X) claims. Pursuant to Article III of the United States Constitution, "judicial power exists only to redress or otherwise to protect against injury to the complaining party.... A federal court's jurisdiction therefore can be invoked only when the plaintiff ... has suffered 'some threatened or actual injury resulting from the putatively illegal action...."' Warth v. Seldin, 422 U.S. 490, 499, 95 S.Ct. 2197, 2205, 45 L.Ed.2d 343 (1975) (quoting Linda R.S. v. Richard D., 410 U.S. 614, 617, 93 S.Ct. 1146, 1148, 35 L.Ed.2d 536 (1973)). Plaintiffs' injury is contingent upon the foreclosure by advertisement proceedings being illegal.9 Plaintiffs' allegations, however, do not allege any injury under Minn. Stat. § 580.02: Plaintiffs have made no allegations that a default in a condition of the mortgage has or has not occurred. Plaintiffs have made no allegations that a collateral proceeding to recover the debt has or has not been instituted. Plaintiffs have made no allegations that the mortgage and assignments have not been recorded. Plaintiffs have not even alleged the status of the foreclosure proceedings. See Tally v. Bank of Am. N.A., CIV. 10-4734 DWF/JSM, 2011 WL 1882665, *5 (D.Minn. May 17, 2011) (holding that plaintiffs lacked standing where "[the plaintiffs] d[id] not allege when the Notices of Foreclosure were published or when the alleged foreclosure sales are scheduled to occur. Nor d[id] [the plaintiffs] allege facts with respect to whether any of the mortgages have already been foreclosed upon and, if so, whether the redemption period has expired"). Therefore, Plaintiffs have not alleged an injury because Minn. Stat. § 580.02 does not require possession of the note to foreclose by advertisement. Plaintiffs have only alleged the show-me-the-note theory of liability for these claims.

Plaintiffs' conversion (V) and unjust enrichment (VI) claims are premised on Plaintiffs' allegation that all Foreclosing Defendants wrongfully accepted monthly payments from all Plaintiffs. This is simply not the case and this form of pleading is plainly improper under Fed. R.Civ.P. 8. Welk, 850 F.Supp.2d at 990-91.

Plaintiffs' breach of fiduciary duty (VIII) and accounting (XIII) claims also fail. Plaintiffs have neither alleged nor argued that "special circumstance exist[s]" to overcome the general principle that "that when a bank transacts business with a depositor or other customer, it has no special duty to ... the customer." See Klein v. First Edino Nat. Bank, 293 Minn. 418, 422, 196 N.W.2d 619, 623 (1972). Plaintiffs have asserted no legal authority to support their accounting claim.

B. Plaintiffs' Motion to Amend (Docket No. 31)

Plaintiffs' Motion to Amend also pertains to Foreclosing Defendants. The proposed allegations and claims against the Foreclosing Defendants are summarized earlier in this Report and Recommendation. See supra § II.A.2. For the reasons set forth below, this Court recommends that Plaintiffs' Motion to Amend be denied as to Foreclosing Defendants because Plaintiffs' claims are futile and Plaintiffs' motion is brought in bad faith.

As a general matter, Plaintiffs' motion can be denied outright for bad faith for the reasons set forth above. See supra § II.A.2. Moreover, to the extent that any of these claims are premised on the mortgage liens being invalid because the Foreclosing Defendants did not hold the notes, for the reasons set forth above, such claims have no merit. See Kamatcheva, 871 F.Supp.2d at 841-42.

Turning to the specific claims against the Foreclosing Defendants, this Court concludes that Plaintiffs propose to assert four futile claims against Foreclosing Defendants. As explained earlier, Plaintiffs proposed slander-of-title claim is futile because Plaintiffs have failed to allege any facts to support how title was broken or what false statements were made. Further, Plaintiffs lack standing to assert their first declaratory judgment claim that the assignments of the rights under the notes and mortgages violate the terms of the trust agreements "because they are not parties or third-party beneficiaries to such agreements." Kamatcheva, 871 F.Supp.2d at 841-42. Moreover, Plaintiffs allege no facts to support their first declaratory judgment claim.

For the purposes of Plaintiffs' quiet title claim, Plaintiffs have failed to plead any facts to support that the mortgage or any assignment of the mortgage was not properly recorded. Thus, Plaintiffs have alleged no objectively reasonable basis for asserting that Foreclosing Defendants' mortgages are invalid. Likewise, for the purposes of Plaintiffs' second declaratory judgment claim, Plaintiffs alleged no facts to support that the wrong party accelerated the balances on their notes. Moreover, Plaintiffs' general allegations that all Foreclosing Defendants clouded the title of all Plaintiffs' properties and all Foreclosing Defendants were parties to the acceleration of all Plaintiffs' notes are inaccurate and improper pleading under Fed.R.Civ.P. 8.

Plaintiffs make three contentions within their supplemental brief that warrant some address. First, Plaintiffs seem to argue that the assignment of rights pursuant to the trust agreements, or pooling and serving agreements, support that assignments were not recorded. See PL's Supp. Mem. at 4-6. Neither Plaintiffs' submissions nor allegations in the original Complaint or proposed amended complaint support that the assignments cited by Plaintiffs were of the type that needed to be recorded under Minnesota law.

Second, Plaintiffs cite Gewecke v. U.S. Bank et al, No. 09-1890, 2011 WL 4538088 (D.Minn. Sep. 29, 2011), for the proposition that mortgage assignments must be recorded before the mortgagee can proceed under Minn. Stat. § 580.02. PL's Supp. Mem. at 8. While Gewecke stands for that uncontroversial proposition, Gewecke does not serve Plaintiffs' case. In contrast to the present case, Gewecke did not involve mortgages, for the most part, originally executed in favor of MERS as nominal mortgagee. Moreover, the plaintiffs in Gewecke provided a factual basis for such a claim. Id. at *4. There was evidence that the assignments in Gewecke were of the type that needed to be recorded under Minnesota law. Here, Plaintiffs have neither provided evidence nor alleged facts to support the claim that the mortgages were not properly recorded.

Finally, Plaintiffs cite Mutua for the proposition that the claims in the proposed amended complaint are not precluded by Jackson and Stein. PL's Supp. Mem. at 2-3. The Mutua court stated, in a footnote, that the contractual show-me-the-note theory is distinguishable from the statutory show-me-the-note theory rejected by Jackson and Stein. Mutua, 2012 WL 1517241, at *4 n. 5. But, the Mutua court only addressed whether the plaintiffs had asserted a colorable slander-of-title claim against the defendant law firm for the purposes of fraudulent joinder. Mutua, 2012 WL 1517241 ("The Court emphasizes that its holding is very narrow" and "[n]either the Court's decision to remand this case — nor any comments made by the Court at the hearing — are intended to suggest that Butler's 'contractual' show-me-the-note claims have more merit than his 'public-law' show-me-the-note claims"). The scope of the Mutua court's inquiry did not extend to adjudicating the merits of the contractual show-me-the-note claim. Therefore, the Mutua decision has no bearing on the present action.

Thus, for all these reasons, this Court recommends that Plaintiffs' motion to amend be denied.

V. DEFENDANT LAW FIRM'S BRIEFING MOTION (Docket No. 44)

This Court recommends that Defendant Law Firm's Briefing Motion (Docket No. 44) be granted. Defendant Law Firm moves to join the briefing by Foreclosing Defendants. There has been no objection to Defendant Law Firm's motion. Moreover, there is good cause to permit Defendant Law Firm to join the briefing by Foreclosing Defendants because Defendant Law Firm shares a common interest with Foreclosing Defendants, and permitting Defendant Law Firm to join the briefing spares the parties and the Court the burden of reviewing and responding to duplicative motion papers.

VI. RECOMMENDATION

Based upon the record, memoranda, and oral arguments of counsel, IT IS HEREBY RECOMMENDED that:

July 3, 2012