CASE NO. A14-0193

STATE OF MINNESOTA

IN COURT OF APPEALS

********* CitiMortgage, Inc.,

as successor by merger to ABN AMRO Mortgage Group, Inc.,

Appellant,

v.

Sandra Lee Akers, Respondent,

William Lee Akers, Respondent.

************* RESPONDENT SANDRA LEE AKERS' BRIEF

* * * * * * * * * * * * *

HOVERSON LAW OFFICES, P.A. MICHAEL K. HOVERSON (#0175948) 333 WASHINGTON AVE NORTH SUITE 308 MINNEAPOLIS, MN 55401 (612) 349-2728

SHOEMAKER & SHOEMAKER, PLLC PAUL F. SHOEMAKER (#0178226) 5270 WEST 84TH STREET SUITE 410 BLOOMINGTON, MN 55437 (952) 224-4600

ATTORNEYS FOR RESPONDENT SANDRA LEE AKERS

TIMOTHY J. NOLAN, PLLC TIMOTHY J. NOLAN (#203671) 4725 EXCELSIOR BOULEVARD SUITE402 SAINT LOUIS PARK, MN 55416 (952) 746-0040

ATTORNEYS FOR APPELLANT

WILLIAM LEE AKERS

PROSE RESPONDENT

TABLE OF CONTENTS

TABLE OF AUTHORITIES........................................................................................ ii

STATEMENT OF FACTS.......................................................................................... 1

ARGUMENT.......................................................................................................... 6

STANDARD OF REVIEW......................................................................................... 6

I. THE DISTRICT COURT CORRECTLY DECLARED THE DISPUTED MORTGAGE VOID AND UNENFORCEABLE AS A MATTER OF LAW.................................. 7

A. The Forged Power of Attorney in not Presumed Valid Under Minnesota Statutes§ 523.04 ........................................................ . 7

B. Appellant had Actual Knowledge that the Power of Attorney

was not Validly Executed ................................................................ . 15

c. The Mortgage is Void Under Minnesota Statutes§ 507.02 Because it Lacks the Signatures of Both the Spouses ...................... . 19

II. THE DISTRICT COURT CORRECTLY RULED THAT APPELLANT'S CLAIMS FOR EQUITABLE RELIEF FAIL AS A MATTER OF LAW........................................... 23

CONCLUSION........................................................................................................ 26

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TABLE OF AUTHORITIES

All Parks Alliance for Change v. Uniprop Manufactured Housing Communities Income Fund, 732 N.W.2d 189 (Minn. 2007) ....................................................................... 9

Anderson v. First National Bank of Pine City, 303 Minn 408, 228 N.W.2d 257 (1975) .................................................................................... 21, 22, 24, 25

Bengston v. Dzandzara, 2006 WL 538951 (Minn Ct. App. 2006) ................................... 9, 10

Butler Bros. Co. v. Levin, 166 Minn. 158, 207 N.W. 315 (1926) .......................................... 20

Dvorak v. Maring, 285 N.W.2d 675 (Minn.1979) ........................................................... 21,26

First Nat. Bank of Nevada v. Williams, 74 A.D.3d 740, 904 N.Y.S.2d 707 (N.Y. 2010) .............................................................................................. 23

Gores v. Schultz, 777 N.W.2d 522 (Minn. Ct. App. 2009) .................................................... 22

Holden v. Farwell, Ozmun, Kirk & Co., 223 Minn. 550, 27 N.W.2d 641 (1947) ..................... 21

Kingery v. Kingery, 185 Minn. 467, 241 N.W. 583 (1932) ................................................... 25

Larson v. Wells Fargo Bank, N.A., 799 F.2d 961 (D. Minn. 2011) ....................................... 26

Marine Credit Union v. Detlefson-Delano, 830 N.W.2d 859 (Minn. 2013) .................... 20, 21

N. Petrochemical Co. v. U.S. Fire Ins. Co., 277 N.W.2d 408 (Minn.1979) ............................ 25

Neuman v. Neuman, 109 A.D. 3d 886, 971 N.Y.S.2d 322 (N.Y. App. 2013) ........................ 22

Ofor v. Ocwen Loan Servicing, LLC, 649 F.3d 808 (8th Cir. 2011) .............................. 9, 10, 11

O'Malley v. Ulland Bros., 549 N.W2d. 889 (Minn. 1996) ...................................................... 7

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Premier Bank v. Becker Dev., LLC, 785 N.W.2d 753 (Minn. 2010) ....................................... 6

U.S. Fire Ins. Co. v. Minnesota State Zoological Bd., 307 N.W.2d 490 (Minn.1981) ........................................................................................................................ 25

Wells Fargo Home Mortgage, Inc. v. Chojnacki, 668 N.W. 2d 1 (Minn. Ct. App. 2003) ..................................................................................................... 25, 26

Weston v. McWilliams & Associates, Inc., 716 N.W.2d 634 (Minn. 2006) ............................ 7

Williams v. Nat'/ Football League, 794 N.W.2d 391 (Minn. Ct. App. 2011) ......................... 9

Statutes

Minn. Stat.§ 358.41(2) ........................................................................................................ 12

Minn. Stat.§ 358.42(a) ........................................................................................................ 12

Minn. Stat.§ 507.01 ............................................................................................................ 19

Minn. Stat.§ 507.02 ............................................................................. 19, 20, 22, 23, 25, 26

Minn. Stat.§ 523.01. ........................................................................... 7, 9, 10, 11, 13, 19, 23

Minn. Stat.§ 523.03 ........................................................................................ 7, 8, 11, 13, 15

Minn. Stat.§ 523.03(3) ..................................................................................................... 8, 9

Minn. Stat.§ 523.03(4) ......................................................................................................... 8

Minn. Stat.§ 523.04 ........................................................................ 7, 8, 9, 10, 13, 14, 15, 18

Minn. Stat.§ 523.17 .............................................................................................................. 14

Minn. Stat.§ 523.17, Subd. 2 ............................................................................................... 14

Minn. Stat.§ 523.20 ............................................................................................................. 13

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Minn. Stat.§ 523.23 ............................................................................................ 7, 10, 11, 13

Minn. Stat.§ 523.23, Subd. 3 ................................................................................... 11, 13, 14

Other Legal Authorities

23 Am. Jur. 2d Deeds§ 164 (2002) ..................................................................................... 22

BLACK'S LAW DICTIONARY, page 450 (5th Ed. 1979) ........................................................... 19

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STATEMENT OF FACTS

The undisputed facts in the record upon which summary judgment was based are

as follows. Sandra Akers purchased her homestead property located at

, Bloomington, Minnesota and legally described as Lot 9, Block 2, Penn Lake Ridge

Second Addition, Hennepin County, Minnesota (the "Property") in April1970. Respondent's

App. 156 ("RA"). Ms. Akers married William Akers on May 26, 1983. Appellant's App. 49

("A"). In 1996, she was the sole owner of the Property; and, she owned the Property free

and clear of any mortgages, liens, or encumbrances. In October 1997, she and Mr. Akers

took out a home improvement loan with First Bank in the amount of $24,000.00 and a

mortgage was put on the Property ("First Bank Mortgage"). Subsequent to the First Bank

Mortgage, Ms. Akers has never mortgaged the Property, nor has she ever consented to

placing a mortgage on the Property. RA 156.

In September 2008 Ms. Akers obtained a credit report on herself, at which time she

discovered a CitiMortgage loan obligation in the amount of $232,800, along with numerous

other credit card debt obligations, that were not her debts. She later discovered that all

correspondence and statements from CitiMortgage, and the credit card companies were

being mailed to either a business address of Mr. Akers at

Richfield, MN 55423 or a P.O. Box in Bloomington, MN, belonging solely to Mr. Akers. RA

157.

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Ms. Akers then engaged legal counsel and the subsequent investigation in early

2009 discovered a trail of fraud committed by Mr. Akers against Ms. Akers going back in

time to 2001. It not only included the CitiMortgage mortgage and previous mortgages on

the Property, but also included over $84,000 of credit card debt. /d. After further

investigation, Ms. Akers determined that Mr. Akers prepared a fraudulent Statutory Short

Form Power of Attorney dated May 26, 2004 (the ((Forged Power of Attorney"), appointing

him attorney-in-fact for Sandra Lee Akers, granting him powers with respect to real

property transactions. RA 152-153, 157. Mr. Akers forged Ms. Akers' signature as Principal

on the Forged Power of Attorney, without her knowledge, consent, or permission. RA 10,

157-158.

In June 2004, Mr. Akers sought to borrow funds secured by a mortgage against the

Property without Ms. Akers' knowledge. RA 17. He submitted a loan application on behalf

of himself and Ms. Akers under the Forged Power of Attorney. RA 11-14. The loan in this

transaction r'Loan") was originated by ABN AMRO Mortgage Group, Inc. (uABN"),

Appellant's predecessor in interest. A 92 and RA 157. The Loan was secured by a mortgage

against the Property (the ((Mortgage"). A 80-88. Mr. Akers signed and initialed the

Mortgage on behalf of Ms. Akers as her attorney-in-fact, pursuant to the Forged Power of

Attorney. RA 15-16. The proceeds from the Loan were used to pay off a previous ABN

fraudulent mortgage against the Property obtained by Mr. Akers, in the amount of

$133,640.67; and, to pay off the First Bank Mortgage in the amount of $17,714.66. A 92.

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The remaining proceeds of $75,525.63 were disbursed to Mr. Akers. /d. Mr. Akers forged

Ms. Akers' signature on the check disbursing the remaining proceeds from the Mortgage

and she had no idea of the checks existence at this time. RA 16-17, 158.

Ms. Akers did not sign any of the documents associated with the Loan or Mortgage

and had no knowledge whatsoever of the Forged Power of Attorney. RA 157. Mr. Akers

admitted he forged Sandra Akers' signature on the May 26, 2004 Statutory Short Form

Power of Attorney, in the presence of notary public Sarah K. Prout on May 26, 2004. He

further admitted that he signed his signature above the line 11Signature of Principal" in the

presence of notary public Sarah K. Prout on May 26, 2004. RA 9-10. He also testified that

Ms. Akers had no knowledge of the power of attorney, nor did she give him permission or

consent to sign her name to this document. RA 10. He testified that Ms. Akers had no

knowledge of the ABN Mortgage transaction, nor did she consent or give him permission

to enter into this mortgage transaction. RA 17. He further testified that he caused all

documents, correspondence, and statements associated with this mortgage to be sent to

his business address at Richfield, MN 55423 or his P.O. Box

at Bloomington, MN 55420, so that Ms. Akers would not find out about the

mortgage. RA 7, 14-16, 22, 26-27. Ms. Akers had no knowledge of the P .0. Box, she did not

have a key to it, nor was her name on the account. RA 7.

Additionally, Janis S. Tweedy, Forensic Document Examiner, examined the May 26,

2004 Power of Attorney (item 1 in report), along with four other questionable mortgage

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related documents, and issued her report concluding that "[b]ased on the above

observations and others that were made when comparing the questioned signatures and

known signatures, there is a strong probability that the questioned signatures depicted by

Items 1 through 5 were not produced by the writer said to be Sandra Akers (Items 7 and 9}."

RA 83-134. Additionally, Janis S. Tweedy's report supports Ms. Akers' position that she did

not endorse the $75,525.63 check. !d.

Ms. Akers' investigation, through review of records from the Hennepin County

Recorders Office, further discovered that Mr. Akers had fraudulently mortgaged/refinanced

the Property on six (6) separate occasions without her knowledge, consent, or permission.

Those transactions included the following:

RA 157.

Rand Corporation Mortgage in the amount of $88,250 on 5/30/01; Ameriquest Mortgage in the amount of $123,200 on 6/7 /02; ABN AMRO Mortgage in the amount of $140,000 on 3/28/03; ABN AMRO Mortgage in the amount of $232,800 on 6/17/04 (now held by CitiMortgage); Bremer Bank Mortgage in the amount of $50,000 on 6/27 /06; Bremer Bank Mortgage in the amount of $65,000 on 3/29/07.

Mr. Akers used a forged Power of Attorney for all the aforementioned mortgage

transactions, with the exception of the Ameriquest Mortgage, where he testified that he

directly forged Sandra Akers' signature to the mortgage document. !d. Mr. Akers testified

that in each of these six (6) transactions, he used a mortgage broker, Referral Mortgage,

Inc. RA 5-6, 17-30. Specifically, Greg Bertagnoli, the owner of the company, and Drew

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McKinney, an employee of the company, actively participated in the fraudulent actions and

assisted Mr. Akers in each mortgage transaction. !d. Mr. Akers testified that Ms. Akers had

no knowledge of these mortgage transactions, nor did she consent or give him permission

to enter into any of these mortgage transactions. RA 17-28. He further testified that he

caused all documents, correspondence, and statements associated with all these mortgage

transactions to be sent to his business address or P.O. Box address, so that Ms. Akers would

not find out about the mortgages. RA 7, 14-16, 22, 26-27.

On January 7, 2009, Ms. Akers filed a criminal complaint with the City of

Bloomington Police Department reporting Mr. Akers' identity theft and fraud. RA 139-146,

157. On February 11, 2009, counsel for Ms. Akers wrote to Appellant advising it of the

fraudulent nature of the Loan and Mortgage. RA 136-146. The letter disputed the validity

of the Mortgage under Minnesota Statutes §507.02, which requires any mortgages of

homestead property be signed by both spouses in order to be valid. On June 4, 2009,

Appellant requested that Ms. Akers submit an affidavit of forgery in support of her claim

that the Forged Power of Attorney was invalid. RA 148. The first time Ms. Akers ever saw

the Forged Power of Attorney was in June 2009 when Appellant provided a copy of it to her.

RA 158. On June 10, 2009, Ms. Akers completed and signed the Affidavit of Forgery wherein

she attested that the signature on the Forged Power of Attorney was not her own, that she

had never been in possession of the Forged Power of Attorney, and that she had never

authorized anyone to sign the document on her behalf. RA 150-153.

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With the assistance of her legal counsel, Ms. Akers provided Bremer Bank with the

facts of the fraud and forgery committed by Mr. Akers, and Bremer Bank subsequently

released her from all liability under the loan and released its lien against the real property

in July 2009. Likewise, with the assistance of her legal counsel, Ms. Akers provided the

various credit card companies affidavits of forgery and they released her from all liability

under those fraudulent debts incurred by Mr. Akers in her name. RA 157-158.

On February 7, 2009 Ms. Akers separated from Mr. Akers and she subsequently

began a marriage dissolution action against him in Hennepin County District Court. RA 158.

Thereafter, the divorce was finalized on April 26, 2010, when the court entered its

Judgment and Decree. /d. Pursuant to the divorce decree, Ms. Akers was awarded all right,

title, interest and equity, in the Property; and, Mr. Akers was ordered to pay the

encumbrances on the Property. The Court found that Mr. Akers was solely responsible for

repayment of the mortgages because they had been obtained without Ms. Akers'

knowledge or consent. The Court further found that she had a non-marital claim in and to

the Property. !d. Mr. Akers has failed to make payments on the Loan, which is presently

in default.

ARGUMENT

STANDARD OF REVIEW

A district court's decision to grant summary judgment is reviewed de novo. Premier

Bank v. Becker Dev., LLC, 785 N.W .2d 753,758 (Minn. 2010). The interpretation of a statute

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is a question of law that is also subject to de novo review. Weston v. McWilliams &

Associates, Inc., 716 N.W.2d 634, 638 (Minn. 2006). See also O'Malley v. Ulland Bros., 549

N.W2d. 889, 892 (Minn. 1996) (application of a statute to undisputed facts is a question of

law).

I. THE DISTRICT COURT CORRECTLY DECLARED THE DISPUTED MORTGAGE VOID AND UNENFORCEABLE AS A MATTER OF LAW.

For the reasons set forth below, the District Court properly declared the disputed

mortgage void and unenforceable as a matter of law.

A. The Forged Power of Attorney is Not Presumed Valid Under Minnesota Statutes §523.04.

Initially, Appellant's reliance upon Minnesota Statutes Section 523.04 is misplaced

because it fails to recognize the express requirements set forth in Sections 523.01, 523.03

and 523.23. Minnesota Statutes Section 523.01 provides as follows:

A person who is a competent adult may, as principal, designate another person or an authorized corporation as the person's attorney-in-fact by a written power of attorney. The power of attorney is validly executed when it is dated and signed by

the principal and, in the case of a signature on behalf of the principal, by another, or by a mark, acknowledged by a notary public. Only powers of attorney validly

created pursuant to this section or section 523.02 are validly executed powers of attorney for the purposes of sections 523.01 to 523.24.

Minn. Stat. §523.01 (2013) (emphasis added).

It is undisputed that Ms. Akers, as principal, never designated another person to act

as her attorney-in-fact. She never dated or signed the Forged Power of Attorney in the

presence of a notary public, nor was she even aware such action had been completed by

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Mr. Akers; hence, the undisputed facts as applied to the foregoing statute lead to the

uncontestable conclusion that the forged power of attorney was not a validly executed

power of attorney.

Minnesota Statutes Section 523.03 sets out the definitions applicable to this chapter,

which provides that as used in Chapter 523, "power of attorney" refers solely to a "validly

executed power of attorney." Minn. Stat. §523.03{3) (2013). Hence, every and £11

references to a "power of attorney" in any section of chapter 523 are qualified by this

definition. The use of this term in Section 523.04 is controlled by the definition in Section

523.03. Minnesota Statutes Section 523.04 provides as follows:

A written power of attorney that is dated and purports to be signed by the principal named in it is presumed to be valid. All parties may rely on this presumption except those who have actual knowledge that the power was not validly executed.

Minn. Stat. §523.04 {2013).

The District Court thoroughly analyzed the legislative history of these three {3)

statutes as follows:

Section 523.03's definitional provision specifically limiting all of Chapter 523's references to "power[s] of attorney" to mean only "validly executed power[s] of attorney" was enacted by the Legislature in 1992, nearly a decade after it adopted § 523.04's language regarding the presumption of the validity of signed powers-of­attorney. A.150 .... In reviewing § 523.03's definitional provisions in 1992, the Legislature specifically eliminated language providing that its definitions applied "unless context otherwise requires." See Minn. Stat. § 523.03 {1990). In so eliminating this language, the Legislature made it clear that the definitions applied throughout Chapter 523, regardless of context. See Minn. Stat.§ 523.03{4) {1993) ("As used in this chapter .... (4) 'power of attorney' means a validly executed power of attorney.") A.150, footnote 5.

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After providing this analysis of legislative history, the District Court properly

concluded that in applying Sections "523.01 and 523.03(3)'s definitional language to §

523.04 compels the conclusion that its presumption is limited to "validly executed power[s]

of attorney," i.e., those powers of attorney "dated and signed by the principal."" A.150. The

District Court then held that "[a]s a matter of law, the Court must apply the definitional

provision of§ 523.03(3) when interpreting§ 523.04." The district court cited as support A//

Parks Alliance for Change v. Uniprop Manufactured Housing Communities Income Fund, 732

N.W.2d 189, 194 (Minn. 2007) and Williams v. Nat'/ Football League, 794 N.W.2d 391, 396

(Minn.Ct.App. 2011). A.150.

Based on the undisputed facts, Ms. Akers never dated, signed or executed the

Forged Power of Attorney. She was not aware of, did not adopt, confirm, endorse or

participate in any manner in its creation. Thus the instrument was not "validly executed"

by her as "principal." Given its failure to meet the threshold statutory definition, the

instrument is not presumed valid under Section 523.04.

Appellant relies upon two cases, Bengston v. Dzandzara, 2006 WL 538951 (Minn Ct.

App. 2006) and Ofor v. Ocwen Loan Servicing, LLC, 649 F.3d 808 (8th Cir. 2011), in support

of its arguments. Appellant's reliance on these two cases is misplaced as neither case

involved the factual pattern present here. The Bengston case involved a wife who had

actually signed the power of attorney. A 102. She made no claim of forgery by any other

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person. Her husband attempted to void the mortgage by arguing that he had obtained her

signature on the power of attorney by lying to her that the power of attorney was intended

to be used to enter into a living will, rather than for the sale of real property. /d. Thus, in

Bengston, the power of attorney was in fact signed and dated by the principal, and thus was

"validly executed" under Section 523.01 and enforceable under the presumption of Section

523.04 notwithstanding the subsequent challenges to its validity on grounds that it was

executed in reliance on a misrepresentation./d. The Court found the power of attorney was

presumed valid because the wife signed and dated it; and, the bank properly relied on that

presumption because it did not have actual knowledge that the husband obtained his wife's

signature by lying to her. /d. Bengtston has no application whatsoever to the case at hand

where it is undisputed that Ms. Akers never signed the Forged Power of Attorney. This is

not an instance where Ms. Akers signed a power of attorney that was later used by her

attorney in fact under false pretenses.

In like manner, the Ofer case involved a power of attorney that was actually signed

by the principal spouse and the spouse made no claim of a forgery. 649 F.3d at 811. The

husband (mortgagor) attempted to distinguish Bengston by arguing that Minnesota Statute

Section 523.23, as opposed to Section 523.01, applied to his case./d. at 814. The mortgagor

contended there was no proper acknowledgment as required for the statutory short form

power of attorney, making the power of attorney invalid./d. at 814-815. The Court declined

to hear the mortgagor's Section 523.23 arguments because they were never brought up

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and addressed by the trial court. /d. The Ofer decision has no application to the instant

facts.

In addition to the requirements set forth in Minnesota Statutes Sections 523.01 and

523.03, Section 523.23 provides strict form requirements when using the Statutory Short

Form Power of Attorney. The Forged Power of Attorney is presented in a form purporting

to follow the form and language promulgated as a 11Statutory short form power of

attorney," and it is thus subject to the form requirements in Section 523.23. To qualify as

a valid statutory short form power of attorney 11the wording and content ofthe form ... must

be duplicated exactly and with no modifications ... and the signature of the principal must

be acknowledged." Minn. Stat. §523.23, Subd. 3 (2013) (emphasis added).

On its face, the Forged Power of Attorney did not meet this express and conditional

statutory requirement as to its form and the form is thus facially defective. The wording

in the acknowledgment section of the Forged Power of Attorney is defective in that the

acknowledgment section omitted the required words 111nsert Name of Principal" under the

line used to identify the name of the principal who appeared before the Notary Public to

execute the instrument. RA 153. Further, the Forged Power of Attorney includes two

separate signature lines for the ((Principal," instead of the statutory form that provides for

only one signature of the Principal.

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The Forged Power of Attorney is also not properly acknowledged. Minnesota

Statutes Section 358.41 (2) defines the legally proper manner in which an acknowledgment

may be taken and provides as follows:

(2) "Acknowledgment" means a declaration by a person that the person has executed an instrument or electronic record for the purposes stated therein and, if the instrument or electronic record is executed in a representative capacity, that the person signed the instrument with proper authority and executed it as the act of the person or entity represented and identified therein.

Minn. Stat.§ 358.41(2) (2013).

Minnesota Statutes Section 358.42(a) provides the legal requirements for taking an

acknowledgment by a notary public:

(a) In taking an acknowledgment, the notarial officer must determine, either from personal knowledge orfrom satisfactory evidence, that the person appearing before the officer and making the acknowledgment is the person whose true signature is on the instrument or electronic record.

Minn. Stat. §358.42(a) (2013).

The line on page 2 of the Forged Power of Attorney that should contain the name of

the Principal whose signature was notarized and who had acknowledged the instrument

before the Notary Public does not properly identify the person (it is left blank) who

acknowledged the instrument before the Notary Public (by personal appearance). RA 153.

The instrument fails to use the approved statutory form as to the identification of the

person who appeared and signed the instrument as Principal to ensure the signature of the

correct (and only) Principal named in the instrument was the person who actually and duly

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acknowledged the instrument in the physical presence of the Notary Public. By this

omission, the form of the acknowledgment is thereby rendered defective and improper

under Minnesota law for acknowledgments and Minnesota Statutes Section 523.23, Subd.

3.

Appellant contends that the District Court's interpretation of Sections 523.01,

523.03, and 523.04 would render the provisions of Section 523.20 governing liability to a

principal of parties refusing authority of an attorney-in-fact meaningless. This contention

is erroneous and misapp_lied to the instant instrument. Section 523.20 only applies to a

statutory short form power of attorney form that meets the strict form requirements of

Section 523.23, Subd. 3. Minn. Stat. §523.20 (2013). The Section provides: "A power of

attorney that does not satisfy the requirements of this subdivision ... but purports to be a

statutory short form power of attorney, may constitute a common law power of attorney

... however, a party refusing to accept the authority of the common law attorney-in-fact

is not liable under section 523.20." Minn. Stat.§ 523.23, Subd. 3 (2013) (emphasis added).

As stated above, the "presumption" of validity in Section 523.04 applicable to a

"written power of attorney" is first conditioned on the chapter's statutory definition to

include only a validly executed power of attorney. Further, if the written power of attorney

is presented as a Section 523.23 "statutory short form power of attorney," it must satisfy

the strict form requirements set out in Minnesota Statutes Section 523.23. If the

instrument deviates from these strict form requirements, a third party rightly loses the

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protections of the "presumption" of validity contained in Section 523.04. While a power

of attorney that deviates from the strict form requirements may still operate as a "common

law" power of attorney, the third party may legally question the actual authority of the

attorney-in-fact, and, in such a case, the third party would not be liable to the principal for

refusing to accept the instrument as legal authority for the attorney-in-fact to act on behalf

of the principal. Minn. Stat. §523.23, Subd. 3 (2013).

Appellant also attempts to whitewash the Forged Power of Attorney by arguing that

Mr. Akers attested to the validity of the Forged Power of Attorney by signing a subsequent

Affidavit of Attorney in Fact (A 91} that was used at the time of the closing on June 17,2004.

This argument is without any merit as this second instrument simply builds one layer of

fraud upon another. Minnesota Statutes Section 523.17 provides the form and effect of an

affidavit of attorney in fact. Minn. Stat. §523.17 (2013}. The affidavit of attorney in fact is

merely an attestation that the power of attorney has not been terminated or revoked.

Minn. Stat.§ 523.17, Subd. 2 (2013). Nowhere in the form (nor in the statute itself) does

it state that the affiant is attesting to the validity of the power of attorney, nor that the

power of attorney was "validly executed."

Appellant further contends the District Court's interpretation would never allow the

presumption of validity to apply where it is later determined that a power of attorney was

forged or fraudulently obtained. This contention is flawed generally and as applied to this

transaction. The District Court's interpretation applies to a "validly executed power of

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attorney." This conclusion is reasoned from the statutory definition in Section 523.03. The

District Court properly acknowledged that a fraudulently obtained power of attorney could

be "validly executed" and enforceable under the presumption of Section 523.04. A 150,

footnote 6.

In this proceeding, the presumption does not apply because the instrument itself was

forged by the fraudulent act of the would be attorney in fact; the instrument was never

dated or signed by the principal. An attorney-in-fact relationship was never thereby actually

created by a knowing and consensual act of the principal, nor by any acceptance,

confirmation or endorsement oft he instrument by the principal. By plain application ofthe

statutory definition, the presumption advanced in Section 523.04 is inapplicable to these

facts.

B. Appellant had Actual Knowledge that the Power of Attorney was not Validly Executed.

The District Court properly concluded that the Forged Power of Attorney is not

presumed valid under Section 523.04 as a matter of law. However, the undisputed facts

make it clear that the District Court could have also easily found thatABN and its agents had

actual (or constructive) knowledge that the Forged Power of Attorney was not validly

executed based upon the facial irregularities and defectiveness of the document itself. The

Forged Power of Attorney was examined by Executive Title, agent for ABN (RA 51), and

presumably by ABN, prior to the closing. Even if ABN did not examine the power of

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attorney prior to closing, Executive Title's actual knowledge is imputed to the principal, ABN

(and its successor, Appellant).

Ms. Anderson, Executive Title's closer for the Mortgage transaction, testified at her

deposition that the lender ABN sent Executive Title closing instructions, a nine (9) page

document entitled "lnterFirst Wholesale Mortgage Lending Loan Closing Instructions" that

included detailed instructions regarding powers of attorney, which she and Executive Title

were required to follow in this mortgage transaction. RA 50-55, 64-72. The instructions at

page 5 contain a paragraph 12 entitled "POWERS OF ATIORNEY." That paragraph provides

in part as follows:

RA68.

In the event a borrower has authorized another party to act as their attorney­in-fact, the original or a Certified True Copy of the original of the Power of Attorney was sent for recording, given by the borrower to the signatory, must be included by you with the Note and returned to the Lender. You are to verify that the Power of Attorney is specific in nature and must clearly identify the powers granted to the attorney-in-fact. In the case of a borrower, the Power of Attorney must: Be in recordable form; Be specific to the transaction, i.e. the Power of Attorney must contain a legal description of the subject property that is on the mortgage and title commitment authorizing the attorney-in-fact to negotiate checks, to mortgage property, and to sign any other documents necessary to the specific mortgage loan; Be executed by the borrowers and witnessed where required.

Ms. Anderson testified that it was Executive Title's duty to examine and review the power

of attorney used in the Mortgage transaction. RA 53.

-16-

The numerous deficiencies on the face of the document put Executive Title and ABN

on notice that the Forged Power of Attorney was not validly executed. First, the document

contains handwritten entries that cause increased scrutiny. The inconsistency between the

typed-in areas and handwritten areas makes the document suspect. RA 152-53. Second,

the document shows that above the left hand "(Signature of Principal)" area is the

purported signature of "William Lee Akers". RA 153. However, on the first page of the

document William Akers is listed only as the Attorney-in-Fact, and not as Principal. RA 152.

The only Principal identified on page one in the power of attorney is "Sandra Lee Akers".

RA 152. The addition of William Lee Akers as an additional signing Principal creates

additional suspicion in the irregular form of the instrument and in its execution because it

deviates from the statutory form and is internally inconsistent.

Third, the first page of the document lists Sandra Akers' address at

Richfield, MN 55423. RA 152. But this is not her actual residence address. Her

residence address is the homestead address she lives at - ,

Bloomington, MN 55431, as is reflected on the HUD Settlement Statement prepared by

Executive Title as the address of the Borrower and the property location. See A 22. The

Settlement Statement was prepared less than 1 month following the purported execution

of the Forged Power of Attorney.

Likewise, the address listed at the second page of the document under the heading

"[t]his document was drafted by" lists Sandra Akers' address incorrectly again. RA 153.

-17-

ABN and their agent Executive Title clearly knew that the property being mortgaged at

, Bloomington, MN was the Akers' residence and homestead and

what the Akers' correct residence address was. The wrong address for Sandra Akers on the

Forged Power of Attorney creates further suspicion in the irregular form of the instrument.

Finally, the instrument is not properly acknowledged, as discussed previously. The line on

the second page of the Forged Power of Attorney that should contain the name of the

Principal whose signature was notarized and who had acknowledged the instrument before

the Notary Public does not identify the person (it is left blank) who acknowledged the

instrument before the Notary Public. RA 153.

Appellant's actual or constructive knowledge that the Forged Power of Attorney

was not validly executed destroys its ability to rely on Minnesota Statutes Section 523.04.

At a minimum, the presumption of the validity of the power of attorney is lost and no

longer applies because oft he numerous facial deficiencies in the Forged Power of Attorney.

If this were not the case, an instrument containing innumerable facial deficiencies and

irregularities would insulate a third party or lender from any defenses asserted by an

innocent spouse. Had ABN and its agent, Executive Title, exercised due care and diligence

in this matter, the Forged Power of Attorney used by Mr. Akers would have been detected,

discovered and declined, resulting in no mortgage transaction. Appellant is in this position

because of its lack of due care in its comparison and examination of the forged document

and other transactional documents.

-18-

C. The Mortgage is Void Under Minnesota Statutes§ 507.02 Because it Lacks the Signatures of Both the Spouses.

The mortgage in question lacks the signatures of both of the spouses and is therefore

void under the provisions of Minnesota Statutes Section 507.02. Minnesota Statutes Section

507.02 provides, in relevant part:

If the owner is married, no conveyance of the homestead, except a mortgage for purchase money unpaid thereon, ***shall be valid without the signatures of both spouses. A spouse's signature may be made by the spouse's duly appointed attorney-in-fact.

Minn. Stat.§ 507.02 {2013).

As applied to this proceeding, the signature of Ms. Akers to the mortgage at issue is

only valid by Mr. Akers if Mr. Akers was Ms. Akers "duly appointed attorney-in-fact." /d. This

conclusion cannot be reached on the undisputed facts in this proceeding.

Furthermore, Minnesota Statutes Section 507.01 defines a "conveyance" to include

"every instrument in writing whereby any interest in real estate is created, aliened,

mortgaged, or assigned or by which the title thereto may be affected in law or in equity."

Minn. Stat. §507 .01 {2013 ). Ms. Akers' signature on the Mortgage was not made by a "duly

appointed" attorney-in-fact -because the Forged Power of Attorney instrument was never

actually executed by Ms. Akers as principal- as is required under Minnesota Statute Section

523.01 for it to be "proper." Black's Law Dictionary defines the word "duly" as follows: "[i]n

due or proper form or manner; according to legal requirements." BLACK'S LAW

DICTIONARY, page 450 (5th Ed. 1979).

-19-

Pursuant to Section 507.02 the mortgage must either be 1) signed (in person) by

both spouses, or 2) if a power of attorney is used for the absent spouse's signature to

encumber a homestead, the power of attorney must have been duly (i.e., properly)

executed by the absent spouse in the strictest sense. Anything short of this construction

fa lis short of the protection the legislature has intended for the homestead exemption. The

requirements of Section 507.02 have long been strictly enforced by the Minnesota

appellate courts. The importance and reverence that the courts have given the strictures

of this statute over the decades were aptly described by the Minnesota Supreme Court as

follows:

[The] statute, which renders any attempted alienation of the homestead of a married owner, not executed by both spouses, not unenforceable merely but void. It is a statute which courts are bound to regard 'in equity as well as at law.' Glass v. Hulbert, 102 Mass. 24, 28, 3 Am. Rep. 418. It is 'not a mere rule of evidence, but a limitation of judicial authority to afford a remedy.' If statutory limitations upon judicial action were to be so disregarded, the purpose of the lawmaking power, which here is to protect the homestead from creditors, would be thwarted, and the door opened to the very thing which the Legislature intended to prevent, an alienation of the homestead without the formal written consent of both husband and wife. It is not for judicial power so to thwart legislative purpose.

Butler Bros. Co. v. Levin, 166 Minn. 158, 207 N.W. 315, 316 {1926).

The reverence and protection of the exemption was recently confirmed again in a

2013 decision. In Marine Credit Union, the Minnesota Supreme Court stated that it has

"consistently held that when no exception to section 507.02 applies, a conveyance of the

homestead by a married person without the signatures of both spouses is not merely

-20-

voidable but is void." Marine Credit Union v. Detlefson-Delano, 830 N.W.2d 859,864 {Minn.

2013). In another decision, the Court pronounced that Section 507.02 "evidences the clear

and unambiguous legislative policy of ensuring a secure homestead for families." Dvorak

v. Maring, 285 N.W.2d 675, 677-78 (Minn.1979). The basic policy objective of the statute

is "protecting the alienation of the homestead without the willing signatures of both

spouses." /d. at 678 (emphasis added). In yet another prior decision, the Court in Holden

announced:

In order to insure a stable and independent citizenry and thereby promote the public welfare, it has always been the policy of the law to protect with jealous zeal the homestead right of the citizen and his wife and minor children. This right is based on the fundamental conception that the home should be a citadel of security against the misfortunes and uncertainties of life. Our statutes have been carefully designed to effectuate this policy and to preserve the homestead to the family even at the sacrifice of just demands.

Holden v. Farwell, Ozmun, Kirk & Co., 223 Minn. 550, 558-59, 27 N.W.2d 641, 646 {1947)

(citations omitted). See also Anderson v. First National Bank of Pine City, 303 Minn 408,

411, 228 N.W.2d 257 {1975) (where Minnesota Supreme Court held that without the

spouse's signature to the mortgage covering the property held by husband and wife as joint

tenants, the mortgage was void).

In Anderson, the homeowners desired a consolidation loan to reduce the monthly

payments on other loans made to them and, for that purpose, consulted with the bank.

Anderson, 228 N.W.2d at 258. Mrs. Anderson went to the bank for the purpose of procuring

the loan and returned home with papers for her husband to sign. ld. He refused to sign

-21-

because the blanks in the papers were not filled in. /d. Thereafter, Mrs. Anderson signed

Mr. Anderson's name and her own to the papers, a promissory note and a mortgage deed

on their homestead, and she delivered them to the bank./d. An officer oft he bank executed

the notary acknowledgment on the mortgage deed even though Mr. Anderson did not

authorize his wife to affix his signature and was not present at the time of delivery. /d. On

these facts, the Court held the mortgage was void because it did not contain Mr. Anderson's

signature. /d. at 259.

Furthermore, a lender's lack of knowledge that a mortgagor forged his spouse's

signature on loan and mortgage documents is not a defense to a party's claim that the

lender's mortgage was void under Section 507.02. Gores v. Schultz, 777 N.W.2d 522, 527

(Minn. Ct. App. 2009). The Court stated: liThe Goreses cite no legal basis for the proposition

that lack of knowledge by the lenders prevents the mortgage from being void under section

507.02. Indeed, we cannot identify any legal principle that upholds a forged signature to a

document because another party innocently relies on what appears to be a valid signature.

The general rule is that forgery renders an instrument void. 23 Am. Jur. 2d Deeds§ 164

{2002)." /d.

The same conclusion has been reached in other decisions. See Neuman v. Neuman,

109 A.D. 3d 886, 971 N.Y.S.2d 322, 324 (N.Y. App. 2013) (in an action by a property owner

to set aside, on the ground of fraud, a conveyance of real property and five mortgages

encumbering the real property, Court held where a power of attorney was forged, and as

-22-

a result, was void, the subject deed and mortgage are, therefore, also void); First Nat. Bank

of Nevada v. Williams, 74 A.D.3d 740, 904 N.Y.S.2d 707, 708 (N.Y. 2010) (Court held if a

signature on a power of attorney is forged, the document executed by the purported

attorney-in-fact pursuant to the power of attorney is also void). While these decisions serve

as persuasive authority only to this Court, the decisions reached in other jurisdictions that

a fraudulent agency instrument cannot serve to validly convey an interest run parallel to

the statutory limitation expressed in the definition set out in Section 523.01.

In the instant matter, Ms. Akers was married to Mr. Akers at the time of the June

2004 mortgage transaction. They were joint owners of the homestead Property. The

Mortgage was not a purchase money mortgage. It is undisputed that Mr. Akers forged Ms.

Akers' signature on the Forged Power of Attorney and that he was never duly appointed by

Ms. Akers to act as her attorney-in-fact. The Mortgage was not signed by two spouses; it

was signed twice by one spouse, without any legal authority to sign for the absent spouse.

Accordingly, Mr. Akers' signature on her behalf under the Forged Power of Attorney does

not satisfy the spousal signature requirements of Section 507.02, and thus, the Mortgage

is void under the provisions of Section 507.02.

II. THE DISTRICT COURT CORRECTLY RULED THAT APPELLANT'S CLAIMS FOR

EQUITABLE RELIEF FAIL AS A MATTER OF LAW.

The District Court concluded that the requirements of Section 507.02 "cannot be

circumvented by claiming a right to equitable mortgage and equitable estoppel." Al52. The

-23-

District Court correctly ruled that the Appellant's claim for equitable relief must fail as a

matter of law. Mr. Akers is the only one who benefitted from the Mortgage transaction.

The fraudulent Mortgage Mr. Akers obtained on the homestead Property did not benefit

Ms. Akers. She owned her home, free and clear, subject to no mortgages, liens, or

encumbrances in 1996. She received none of the monies from the mortgage transactions.

RA 158. Also, she received none of the monies from the $75,525.63 check. /d. Likewise,

she received no benefit from the mortgage interest deductions on the tax returns. /d.

Arguably, Ms. Akers received some benefit when the home improvement loan with First

Bank was paid off. /d. With respect to the $75,525.63 check, Mr. Akers testified that the

money would be run through his business account and would go into his business. RA 131.

He testified that Ms. Akers did not receive any of the $75,525.63 funds directly. RA 17. He

further testified that the majority of the funds were used to pay off his sole credit card debt.

/d. At the time of the June 17, 2004 mortgage transaction, Mr. Akers' credit card liabilities

exceeded $122,000. RA 11-13,35-40. He further testified that some ofthe funds were used

for travel and golf they did together. "It wasn't much. ... I would say there was some

minimal things we did." RA 31.

In Anderson infra, the lender unsuccessfully argued equitable estoppel. In that case,

the proceeds of the loan totaled $9,321.07. The proceeds were used to pay off smaller

loans of both the husband and wife (as forger) they had with the lender, along with other

debt. Anderson, 228 N.W.2d at 410. The Court held that Mr. Anderson was never in a

-24-

position to accept or reject the proceeds and thus could not be estopped from repudiating

the loan agreement. /d. at 413. The Court found that the harm had been done by the time

Mr. Anderson learned that his wife had signed his name to the loan papers. "At that point

the benefit had already been conferred and the proceeds used. The trial court was justified

in holding as a matter of law that there was no estoppel." /d.

Similarly, in the instant matter, by the time Ms. Akers discovered the fraudulent

Mortgage in September 2008, the harm had been done and the First Bank home

improvement loan was paid off from some of the proceeds. Ms. Akers was never in a

position to accept or reject any loan proceeds and thus cannot be estopped from

repudiating the mortgage transaction.

The equitable estoppel doctrine was further elaborated upon by the Court in Wells

Fargo Home Mortgage, Inc. v. Chojnacki, 668 N.W.2d 1, 5 (Minn. Ct. App. 2003), where the

Court held the requirements of Section 507.02 cannot be circumvented by claiming a right

to equitable relief. In Wells Fargo, the court stated that estoppel is an equitable remedy.

/d. (citing N. Petrochemical Co. v. U.S. Fire Ins. Co., 277 N.W.2d 408,410 (Minn.1979)). The

Wells Fargo court concluded "that application of an equitable remedy should not allow

Wells Fargo to avoid the spousal-signature requirement of section 507.02." ld. at 5. The

court advised that "a court of equity will not disregard statutory law or grant relief

prohibited thereby." /d. (citing Kingery v. Kingery, 185 Minn. 467, 470, 241 N.W. 583, 584

(1932}}. See also U.S. Fire Ins. Co. v. Minnesota State Zoological Bd., 307 N.W.2d 490, 497

-25-

(Minn.1981) (denying equitable relief when it would circumvent statutory restrictions). The

Wells Fargo court held that "Section 507.02 unambiguously requires the signatures of both

spouses for non-purchase-money mortgages. To hold that respondent is estopped from

asserting the protection of the requirement would be to circumvent the requirement. 668

N.W.2d at 5.

Additionally, for estoppel to apply, Appellant must establish that Ms. Akers

consented and had full knowledge of the mortgage transaction. Dvorak, 285 N.W.2d at 678.

See also Larson v. Wells Fargo Bank, N.A., 799 F.2d 961, 965-66 (D. Minn. 2011) (citing

Dvorak, stating that in "order to establish an estoppel defense, the party seeking relief must

show that ... the non-signing spouse consented and had prior knowledge of the

transaction").

In the instant matter, the undisputed facts are clear: Ms. Akers had no knowledge

of the Forged Power of Attorney and Mortgage in 2004, and thus Appellant cannot establish

a right to relief under an equitable estoppel argument. To hold that Ms. Akers is estopped

from asserting the protection of the requirement in Section 507.02 would be to circumvent

the plain statutory requirement. The District Court correctly ruled that Appellant's claims

for equitable relief fail as a matter of law.

CONCLUSION

For the reasons stated above, Respondent Sandra Lee Akers respectfully requests

that this Court affirm the judgment entered below in the District Court in all respects.

-26-

Dated:

Respectfully Submitted,

HOVERSON LAW OFFICES, P.A.

-~;/)? __ Michael K. Hoverson #175948 333 Washington Avenue N., Suite 308 Minneapolis, MN 55401 (612) 349-2728

SHOEMAKER & SHOEMAKER, PLLC

Paul F. Shoemaker #178226 5270 West 84th Street, Suite 410 Bloomington, MN 55437 (952) 224-4600

Attorneys for Respondent Sandra Lee Akers

-27-

CERTIFICATE OF COMPLIANCE

This brief, exclusive of the Table of Contents and the Table of Authorities, contains

7139 words as confirmed by the Word Count feature of WordPerfect 12, which word

processing program was used to prepare this brief. This brief also complies with the

typeface requirements of Rule 132.01 of the Minnesota Rule of Civil Appellate Procedure

as the printed material appears in 13-point proportional font.

Dated: __ ~£_/_·~-+-~-~-' ~_r _ Michael K. Hoverson (#175948)

-28-

AFFIDAVIT OF SERVICE BY U.S. MAIL

June 5, 2014

See Attached letter

RE: CitiMortgage, Inc., a successor by merger to ABN AMRO Mortgage Group, Inc. vs. Sandra Lee Akers and William Lee Akers Court of Appeals Case No.: A14-0193

STATE OF MINNESOTA) )ss.

COUNTY OF HENNEPIN )

Michael K. Hoverson, being first duly sworn, deposes and says that the attached letter and document(s} described in the attached letter(s) were served to the party(ies) named in the attached letter on the above-mentioned date by United States Mail.

Subscribed and sworn to before me -

this :J day of June, 2014.

&Jv• Notary

CHAD IHICHWAlD Notary Public

State ot Minnesota My Commission Expires

January.S1.2018

-~~~-~ Michael K. Hoverson

June 5, 2014

Timothy J. Nolan, Esq. Attorney at Law 4725 Excelsior Blvd., Ste 402 St. Louis Park, MN 55416

William Akers

RE: CitiMortgage, Inc., a successor by merger to ABN AMRO Mortgage Group, Inc. vs. Sandra Lee Akers and William Lee Akers District Court File No.: 27-CV-12-20264 Court of Appeals Case No.: A14-0193

Dear Mr. Nolan and Mr. Akers:

Enclosed herein and served upon you by US Mail please find two copies of each of RESPONDENT SANDRA LEE AKERS' BRIEF and RESPONDENT SANDRA LEE AKERS' APPENDIX regarding the above-mentioned matter.

Sincerely,

/\A.__- 0 ,t_~ --i1ichaeiK.Hoverson Attorney at Law

enclosure

cc: Sandra Akers Paul F. Shoemaker

The appendix to this brief is not available for online viewing as specified in the Minnesota Rules of Public Access to the Records of the Judicial Branch, Rule 8, Subd. 2(e)(2).

June 5, 2014

Clerk of the Appellate Court 305 Minnesota Judicial Center 25 Rev. Dr. Martin Luther King, Jr. Blvd. St. Paul, MN 55155

OFFICE OF APPELLATE COURTS

JUN 0 5 2014

FJLED

HAND DELIVERED

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pf-1 612 );,9 2728 1-\ 612 )1,9 2726 ho\ ci-'C)I1· 0 ·Dilslrr'um net

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RE: CitiMortgage, Inc., a successor by merger to ABN AMRO Mortgage Group, Inc. vs. Sandra Lee Akers and William Lee Akers District Court File No.: 27-CV-12-20264 Court of Appeals Case no.: A14-0193

Dear Clerk of the Appellate Court :

Enclosed herein for filing please find the following:

1. Original and 6 copies of Respondent Sandra Lee Akers' Brief;

2. Original and 6 copies of Respondent Sandra Lee Akers' Appendix; and,

3. Affidavit of Service By U.S. Mail.

Sincerely,

/V" :__(.) {/!. )1.____--------Michael K. Hoverson

Attorney at Law

enclosures

cc: Sandra Akers Paul F. Shoemaker