David R. Anderson v. Bank of the West; U.S. Bank, National Association

United States Court of Appeals
For the Eighth Circuit
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No. 20-3086
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David R. Anderson
lllllllllllllllllllllPlaintiff - Appellant
v.
Bank of the West; U.S. Bank, National Association, et al.
lllllllllllllllllllllDefendants - Appellees
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Appeal from United States District Court
for the District of Nebraska - Omaha
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Submitted: October 19, 2021
Filed: January 25, 2022
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Before SMITH, Chief Judge, WOLLMAN and LOKEN, Circuit Judges.
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LOKEN, Circuit Judge.
In 2005, David Anderson obtained a home loan from a predecessor of U.S.
Bank, N.A. The loan was secured by a promissory note and trust deed that authorized
the lender, as trustee, to sell Anderson’s Lincoln, Nebraska residential property by
foreclosure sale in the event of a qualifying breach of the loan. See Neb. Rev. Stat.
§ 76-1005. In February 2019, U.S. Bank exercised its power as trustee and sold the

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property at a non-judicial Trustee’s Sale. Bank of the West, which held a separate
deed of trust, was the high bidder.
In April 2019, Anderson sued Bank of the West in Nebraska state court,
seeking to set aside the Trustee’s Sale. Applying the Supreme Court of Nebraska’s
decision in Gilroy v. Ryberg, 667 N.W.2d 544 (Neb. 2003), the District Court of
Lancaster County dismissed this claim because Anderson “has not alleged any defects
that would render the Trustee’s Sale void or voidable.” Anderson then filed an
Amended Complaint adding U.S. Bank as a defendant. U.S. Bank removed the case
to the District of Nebraska with Bank of the West’s permission. See 28 U.S.C.
§§ 1441, 1446(b)(2)(A).
After removal, U.S. Bank moved to dismiss for failure to state a claim,
Anderson filed a Second Amended Complaint (SAC), and U.S. Bank renewed its
motion to dismiss. In a series of orders, the district court1 dismissed Anderson’s
claims against U.S. Bank and Bank of the West with prejudice and denied his motion
for leave to file a Third Amended Complaint (TAC). Anderson appeals those orders.
We affirm.
I. Background
The factual basis for Anderson’s claim to set aside the Trustee’s Sale are his
allegations that the lenders, U.S. Bank and its predecessors, “prior to the institution
and maintenance of any foreclosure activity,” failed to comply with “foreclosure
avoidance procedures” required by the federal Fair Debt Collection Practices Act, the
Real Estate Settlement Procedures Act, and a federal consent decree referred to as the
1The Honorable Robert F. Rossiter, Jr., now Chief Judge of the United States
District Court for the District of Nebraska.
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National Mortgage Settlement2 that were “conditions precedent” to foreclosure by a
Trustee’s Sale under Nebraska law. SAC Par. 14-16. In granting U.S. Bank’s motion
to dismiss, the district court ruled that, even if properly pleaded and assumed to be
true, the above-summarized allegations were insufficient to warrant equitable relief
setting aside a non-judicial Trustee’s Sale under Ryberg, the controlling Nebraska
precedent. The court ordered Anderson to show cause why Bank of the West should
not also be dismissed.
In opposing U.S. Bank’s motion to dismiss, Anderson alternatively asked for
leave to amend his SAC. This request is not “construed as a motion for leave to
amend.” Wolgin v. Simon, 722 F.2d 389, 394 (8th Cir. 1983). Then, in addition to
filing a “perfunctory response” to the court’s order to show cause, Anderson filed a
motion for leave to amend that included a proposed TAC asserting the same claims
against U.S. Bank and Bank of the West. See Fed. R. Civ. P. 15(a)(2). The district
court concluded that Anderson’s response to the order to show cause was
“inadequate” and his motion for leave to amend was “abandoned.” The court denied
the motion for leave to amend and dismissed the case with prejudice.
II. Dismissal of Anderson’s SAC
We review de novo the district court’s dismissal for failure to state a claim
under governing state law, taking the facts alleged in the SAC as true and drawing all
reasonable inferences in Anderson’s favor. See Nelson Auto Ctr., Inc. v. Multimedia
Holdings Corp., 951 F.3d 952, 955 (8th Cir. 2020). “In applying state law, we are
bound to apply the law of the state as articulated by the state’s highest court.”
Travelers Prop. Cas. Ins. Co. of Am. v. Nat’l Union Ins. Co. of Pittsburgh, 621 F.3d
697, 707 (8th Cir. 2010). Here, no party contests the district court’s conclusion that
the Supreme Court of Nebraska’s decision in Ryberg is controlling authority on the
2United States v. Bank of Am. Corp., 1:12-cv-00361 (D.D.C. Apr. 4, 2012).
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critical question -- when should a court of equity “set aside a foreclosure sale
conducted under a power of sale in a trust deed.” 667 N.W.2d at 550.
The Nebraska Trust Deeds Act,3 first enacted in 1965, “altered the landscape
of real estate financing” by permitting foreclosure sales without the necessity of
judicial proceedings, a change that “provide[d] lenders with a remedy for recovering
collateral that is quicker and less expensive than judicial foreclosure.” Ryberg, 667
N.W.2d at 552-53. In Ryberg, consistent with this purpose, the Court rejected a
contention “that the use of the power of sale in a trust deed must strictly adhere to
both the requirements of the Act and the trust deed’s terms,” because such a rule
“would render that remedy unworkable [as] any error by the trustee, no matter how
trivial, would void the sale.” Id. at 553. Instead, consistent with decisions in other
jurisdictions, the Court “recognized three categories of defects in a trustee’s sale
conducted under a power of sale in a trust deed: (1) those that render the sale void,
(2) those that render the sale voidable, and (3) those that are inconsequential.” Id. at
553. On appeal, Anderson argues the SAC stated a claim for relief because he alleged
lender violations of federal requirements that rendered the Trustee’s Sale voidable.
When a defect renders a completed trustee’s sale voidable, “bare legal title” passes
to the purchaser, but an injured party “can have the sale set aside so long as the legal
title has not moved to a bona fide purchaser.” Id. at 554 (cleaned up). The issue on
appeal is whether the violations Anderson alleged, if proved, were defects that
rendered the Trustee’s Sale voidable and therefore form the basis for equitable relief
from the underlying foreclosure sale.
The Court in Ryberg addressed whether plaintiff Gilroy, who was an obligor
on the foreclosed promissory note at issue, “established a defect in the [trustee’s] sale
that warrants setting the sale aside.” Id. at 555. The Court concluded that the notice
of default and a nine-day delay in the purchaser completing his foreclosure payment
3Neb. Rev. Stat. § 76-1001 et seq.
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complied with the Act, and that his payment by personal check, though contrary to
the terms of the trust deed, did not prejudice Gilroy. Accordingly, the Court held that
Gilroy “failed to establish a prejudicial defect in the trustee’s sale.” Id. at 560.
Here, Anderson asserts that he is relying on Federal regulations that “require[]
those servicing home loans to affirmatively undertake foreclosure avoidance
protocols before going forward with foreclosures.” Reply Brief of the Appellant at
6. He argues that Manard v. Williams, 952 S.W.2d 387 (Mo. App. 1997), a case cited
in Ryberg, recognized that “relatively minor errors in the processes” can be
“irregularities” that justify setting aside a trustee’s sale. Brief of the Appellant at 20.
Therefore, non-judicial foreclosures may be set aside if, as he alleged, the foreclosing
lender failed to “observe each condition precedent” to foreclosure. Like the district
court, we disagree.
As the district court recognized, the flaw in this argument is that Anderson’s
SAC does not allege that U.S. Bank lacked a right to exercise the trustee’s power of
sale, or that there was a defect in the sale itself. Rather, the alleged Federal law
violations as alleged in the SAC all occurred “prior to the institution and maintenance
of any foreclosure activity.” Therefore, they were not “defects in the trustee’s sale”
within the meaning of Ryberg. Anderson misstates the decision in Manard, where the
court in declining to set aside the foreclosure sale at issue, expressly stated that
voidable defects are substantial irregularities that occur in the “execution of a
foreclosure sale.” 952 S.W.2d. at 392 (emphasis added). In Ryberg, the controlling
authority, the Supreme Court of Nebraska quoted that specific passage, 667 N.W.2d
at 554, and then crafted its own guidance for when a court of equity should set aside
a completed foreclosure sale. We conclude the district court’s resolution of this issue
is consistent with that guidance:
Broadly construing every potentially related contractual, statutory, and
regulatory requirement as a “condition precedent” to an effective
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foreclosure, as Anderson suggests, largely ignores Ryberg’s materiality
and prejudice requirements and would render non-judicial foreclosure
“unworkable” as “a remedy for recovering collateral that is quicker and
less expensive than judicial foreclosure.” As the Ryberg Court put it,
“[t]he resulting uncertainty and increased chance of litigation would
deter bidders from participating at sales and lead lenders to choose
judicial foreclosure.”
Anderson v. Bank of the West, No. 8:20CV114, Mem. & Order, at 7-8 (D. Neb. July
22, 2020) (citations omitted).
III. Denial of Anderson’s Motion to Amend
Anderson further argues the district court improperly denied his motion for
leave to file a Third Amended Complaint. He argues leave to amend was warranted
under the liberal standard that courts “freely give leave [to amend] when justice so
requires.” Fed. R. Civ. P. 15(a)(2). However, it is well established, at least in this
circuit, that when a motion for leave to amend is filed after a complaint is dismissed,
“interests of finality dictate that leave to amend should be less freely available.” U.S.
ex rel. Roop v. Hypoguard USA, Inc., 559 F.3d 818, 823 (8th Cir. 2009).
A court does not abuse its discretion in denying a motion for leave to amend
when there are “compelling reasons such as undue delay, bad faith, or dilatory
motive, repeated failure to cure deficiencies by amendments previously allowed,
undue prejudice to the non-moving party, or futility of the amendment.” Moses.com
Sec., Inc. v. Comprehensive Software Sys., Inc., 406 F.3d 1052, 1065 (8th Cir. 2005)
(cleaned up). Reviewing the denial of leave to amend for abuse of discretion and the
issue of futility de novo, we agree with the district court that multiple “compelling
reasons” justified denying Anderson’s motion.
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First, the motion was procedurally defaulted. Anderson’s initial request to file
an amended complaint was a “passing mention” in his opposition to U.S. Bank’s
motion to dismiss that failed to comply with Federal Rule of Civil Procedure 7(b)(1)
and District of Nebraska Local Civil Rule 7.1(a)(1)(a). When he finally filed a Rule
15 motion for leave to amend, it was untimely and failed to include a supporting brief,
as the Local Rule required. See id. Therefore, the district court did not abuse its
discretion in concluding that, given Anderson’s “repeated failure to follow the local
rules,” he “abandoned his motion for leave to amend.”
Second, we agree with the district court that granting leave to amend would be
futile because the proposed TAC relied on the same claims for setting aside the
foreclosure sale based on non-compliance with “conditions precedent” that had been
rejected in both state and federal court. “Futility constitutes a valid reason for denial
of a motion to amend.” Ryan v. Ryan, 889 F.3d 499, 508 (8th Cir. 2018) (quotation
omitted). As the district court observed, Anderson “has never adequately addressed
. . . the Court’s rejection of [his] expansive reading of [Ryberg].”
The Judgment of the district court is affirmed.
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