Etta Bracewell v. U.S. Bank National Association

United States Court of Appeals
For the Eighth Circuit
___________________________
No. 13-1164
___________________________
Etta Bracewell; Samuel Parsons,
lllllllllllllllllllll Plaintiffs - Appellants,
v.
U.S. Bank National Association,
lllllllllllllllllllll Defendant - Appellee.
____________
Appeal from United States District Court
for the District of Minnesota - Minneapolis
____________
Submitted: October 21, 2013
Filed: April 4, 2014
____________
Before RILEY, Chief Judge, MURPHY and COLLOTON, Circuit Judges.
____________
COLLOTON, Circuit Judge.
Etta Bracewell and Samuel Parsons, a married couple, sued U.S. Bank National
Association (“U.S. Bank”), seeking to void a mortgage foreclosure sale of their home.
Bracewell and Parsons allege that U.S. Bank represented orally that it would postpone
the foreclosure sale, but then proceeded anyway. They seek relief based on common-
law claims of negligent misrepresentation and equitable estoppel. The district court1
granted the bank’s motion to dismiss the case, and we affirm.
I.
Bracewell borrowed money from U.S. Bank in 2003 to purchase a home. She
fell behind on her loan payments, and the bank invited her in September 2011 to
apply for a loan modification. Bracewell faxed an application to the bank in October
2011, but in November, the bank served Bracewell with a Notice of Mortgage
Foreclosure Sale. Later that month, the bank sent Bracewell another letter, requesting
that she submit more documentation to complete the application for modification of
the loan.
In late December 2011, Bracewell faxed the requested documents, and Parsons
called the bank to confirm receipt. Parsons spoke with “Paul” at U.S. Bank, who
stated that the bank needed another form from Bracewell; she faxed the requested
document the next day. Parsons called U.S. Bank again on or about December 22.
“Paul” allegedly told Parsons that he had received all the necessary documents, and
that the sheriff’s sale, then scheduled for December 29, was “off.” According to
Parsons, “Paul” said the bank would review the application and give Bracewell and
Parsons a response after the holidays. But on December 29, U.S. Bank purchased the
home at the sheriff’s sale.
Bracewell and Parsons responded by suing the bank in state court. The two-
count complaint alleged claims of negligent misrepresentation and equitable estoppel,
and sought an order declaring void the sheriff’s sale of the home. The bank removed
the case to federal court based on diversity of citizenship and moved to dismiss the
1
The Honorable Richard H. Kyle, United States District Judge for the District
of Minnesota.
-2-
complaint. The district court determined that the claims were barred by the
Minnesota Credit Agreement Statute, Minn. Stat. § 513.33, and granted the motion.
We review the decision de novo. Walker v. Trinity Marine Prods., Inc., 721 F.3d 542,
544 (8th Cir. 2013).
II.
The Minnesota Credit Agreement Statute provides: “A debtor may not
maintain an action on a credit agreement unless the agreement is in writing, expresses
consideration, sets forth the relevant terms and conditions, and is signed by the
creditor and the debtor.” Minn. Stat. § 513.33, subd. 2. A “credit agreement” is “an
agreement to lend or forbear repayment of money, . . . to otherwise extend credit, or
to make any other financial accommodation.” Id. § 513.33, subd. 1. A promise to
postpone a foreclosure sale is a “financial accommodation,” and therefore a “credit
agreement,” within the meaning of the statute. Brisbin v. Aurora Loan Servs., LLC,
679 F.3d 748, 752 (8th Cir. 2012). The statute thus “prohibits the enforcement of an
oral promise to postpone a foreclosure sale.” Id. at 753. This court in Brisbin
affirmed the dismissal of a promissory estoppel claim because it was barred by the
Minnesota Credit Agreement Statute.
Bracewell and Parsons argue that the Minnesota Credit Agreement Statute does
not bar their claim of negligent misrepresentation as pleaded in Count I of the
complaint. They observe that Brisbin, 679 F.3d at 754, and Greuling v. Wells Fargo
Home Mortgage, Inc., 690 N.W.2d 757, 761 (Minn. Ct. App. 2005), rejected claims
of negligent misrepresentation on the merits without mentioning the statute. But as
the Minnesota Court of Appeals explained in responding to a similar argument, that
a previous negligent misrepresentation claim was dismissed on other grounds does
not mean the statute “could not bar a claim for negligent misrepresentation.” Alliance
Bank v. Dykes, Nos. A12-0455, A12-0485, A12-0486, 2012 WL 6734457, at *6
-3-
(Minn. Ct. App. Dec. 31, 2012) (unpublished). The decisions in Brisbin and Greuling
simply did not address the question.
We conclude that the claim of negligent misrepresentation in this case is barred
by the Minnesota Credit Agreement Statute. It is “an action on a credit agreement,”
and the debtors thus “may not maintain” it unless the agreement purportedly arising
from the alleged misrepresentation is in writing. Minn. Stat. § 513.33, subd. 2. “Any
party asserting the existence of a ‘credit agreement’ must comply with the writing and
signature requirements of section 513.33, regardless of the type of claim the
agreement is alleged to support.” BankCherokee v. Insignia Dev., LLC, 779 N.W.2d
896, 903 (Minn. Ct. App. 2010) (emphasis added). We think it likely that the
Minnesota Supreme Court would conclude that the Minnesota Credit Agreement
Statute precludes the negligent-misrepresentation claim brought by Bracewell and
Parsons. Accord Alliance Bank, 2012 WL 6734457, at *6; see also Labrant v. Mortg.
Elec. Registration Sys., Inc., 870 F. Supp. 2d 671, 681 n.3 (D. Minn. 2012).
Bracewell and Parsons argue, however, that equitable estoppel is available as
a defense to the bank’s reliance on the Minnesota Credit Agreement Statute.
Equitable estoppel is “a judicial remedy in which one party to a controversy is
precluded because of some improper action on his part from asserting a particular
claim or defense, even one with merit.” Ridgewood Dev. Co. v. State, 294 N.W.2d
288, 293 (Minn. 1980). The homeowners cite Brickwell Community Bank v. Wycliff
Associates II, LLC, No. A10-1396, 2011 WL 1237524, at *5-6 (Minn. Ct. App. Apr.
5, 2011) (unpublished), where the Minnesota Court of Appeals held that equitable
estoppel is available as a defense to reliance on the writing requirement of the
Minnesota Credit Agreement Statute. See also Stumm v. BAC Home Loans Servicing,
LP, 914 F. Supp. 2d 1009, 1016-17 & n.4 (D. Minn. 2012) (collecting cases).
In our view, the complaint in this case—despite using the label of “Equitable
Estoppel” in Count II—does not in substance plead a claim of equitable estoppel.
-4-
Rather, looking beyond the label to the actual nature of the cause of action pleaded,
see Olson v. Synergistic Techs. Bus. Sys., Inc., 628 N.W.2d 142, 153 (Minn. 2001),
the complaint in substance alleges a claim of promissory estoppel. As one treatise
summarizes the difference, “[a] claim is more appropriately analyzed under the
doctrine of promissory estoppel, not equitable estoppel, where representations upon
which the plaintiff allegedly relied are more akin to statements of future intent than
past or present fact.” 28 Am. Jur. 2d Estoppel & Waiver § 34 (2014).
Bracewell and Parsons rely in Count II of their complaint on “U.S. Bank’s
representations related to its intent to cancel the sheriff’s sale.” R. Doc. 1-1, at 9
(emphasis added). They urge that “U.S. Bank’s representation that it would postpone
the sheriff’s sale must be enforced.” Id. at 10 (emphasis added). The homeowners
do not really seek, based on a misrepresentation of past or present fact, to estop the
bank from asserting the statute of frauds as a defense against a claim of negligent
misrepresentation. Instead, they wish to enforce the bank’s alleged oral promise that
the sheriff’s sale would not proceed in the future. Therefore, the claim in Count II is
barred by the Minnesota Credit Agreement Statute, and the district court properly
dismissed it. Brisbin, 679 F.3d at 753; see also BankCherokee, 779 N.W.2d at 903.
* * *
The judgment of the district court is affirmed.
______________________________
-5-