Summary of a Recent
Judicial Development in
Secured Transactions

Denial of Preliminary Injunction to Prevent Foreclosure

Walt McCarter
National AgLaw Center Research Associate

Summary of Decision

In Mayer v. Countrywide Home Loans, No. 08-CV-1071 (JMR/RLE), 2008 WL 4527800 (D. Minn. Sept. 29, 2008), the United States District Court for the District of Minnesota denied a plaintiffs' request for a preliminary injunction preventing foreclosure proceedings against her mortgaged property, because she had failed to demonstrate a likelihood of success on the merits, and the possibility of irreparable harm had largely been created due to her own inactivity.

Background

Plaintiff defaulted on her mortgage, and Countrywide Home Loans (Countrywide) initiated foreclosure proceedings. Id. at *1. The property was sold at auction, and once the redemption period expired, the plaintiff brought this action against Countrywide alleging that it had improperly foreclosed on her homestead without giving her notice of her right to mediation pursuant to the Minnesota Farmer Lender Mediation Act (FLMA), and asked the court to void the foreclosure sale and to enjoin Countrywide from conducting any future foreclosure proceedings. Id.

Arguments

Countrywide argued that the FLMA was inapplicable because the homestead (the portion mortgaged) was only 6.21 acres, and because the farm consistently grossed less than $20,000 per year. Id. at *2.

Plaintiff argued that the FLMA applies to any family farmer who owns at least 60 acres of agricultural property, regardless of how many acres are mortgaged. Id.

Analysis and Holdings

In determining whether a plaintiff is entitled to a preliminary injunction, courts weigh: "1) the threat of irreparable harm to the moving party; 2) the movant's likelihood of success on the merits; 3) the balance between the harm to the movant if the injunction is denied, and the harm to other parties if the injunction is granted; and 4) the public interest." Id. at *5. In considering the plaintiff's likelihood of success on the merits, the court first determined whether the FLMA was applicable in this situation, which depended on whether the plaintiff's homestead was an "agricultural property" under the Act. Id. at *8. The FLMA "does not apply to a debtor who owns and leases less than 60 acres if the debtor has less than $20,000 in gross sales of agricultural products the preceding year." Id. at *9. The plaintiff's farm admittedly grossed less than $20,000 per year, but it was unclear whether, in order to be protected by the act, a farmer must have $20,000 in gross sales and at least 60 acres, or whether the $20,000 requirement only applied when the farm consisted of less than 60 acres. Id. The court concluded that the plaintiff did not qualify for protection under the FLMA regardless, because she failed to satisfy the 60-acre minimum requirement of the FLMA, given her concession that the mortgage at issue only applied to her 6.21 acre homestead. Id. at *10. Furthermore, the court noted that the evidence did not support a finding that the homestead was "principally used for farming," and found that she was unlikely to succeed on the merits of her case. Id. at *11. Considering the possibility of irreparable harm, the court pointed out that the plaintiff's own failure to take timely action had created that possibility, so that factor also weighed against her. Id. at *12. The court did not consider the other relevant factors, as the first two weighed strongly in favor of denying the plaintiff's motion for a preliminary injunction. Id.

The case was decided on September 29, 2008.