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Johnson v. North Dakota Guaranty and Title Co.

United States District Court, D. North Dakota

December 20, 2018

John W. Johnson, as the administrator of the John Wesley Johnson PS Define Benefit Pension Plan, Plaintiff,
v.
The North Dakota Guaranty and Title Co., Defendant.

          ORDER

          Charles S. Miller, Jr., Magistrate Judge

         Before the court is a Motion for Stay of All Proceedings filed by defendant on September 6, 2018. For the reasons set forth below, the motion is granted.

         I. BACKGROUND

         This action arises out of an alleged error made an agent of the North Dakota Guaranty and Title Company (“NDG&T”) when recording a mortgage obtained by the John Wesley Johnson PS Define Benefit Pension Plan against Lot 2R, Block 10, Madison Ridge Subdivision in Williams County, North Dakota (hereafter referred to as the “Subject Property"). It was initiated by Complaint on June 8, 2017, by John W. Johnson in his capacity as the aforementioned plan's administrator.[1]Johnson alleges:

• On or about December 13, 2013, Clear Creek Retirement Plan (“CCRP”) granted Johnson a mortgage against the Subject Property. Said mortgage was recorded on February 5, 2014.
• CCRP subsequently contacted the Johnson to (1) advise that the mortgage was recorded in the incorrect lien position, and (2) request that the mortgage be satisfied and a replacement mortgage be recorded in the correct fifth lien position.
• Johnson contacted an escrow agent with NDG&T with instructions to record a replacement mortgage in the fifth lien position, and upon confirmation that the replacement mortgage was so recorded, to record a satisfaction of the original mortgage.
• The replacement mortgage was recorded by the escrow agent, albeit not in the fifth lien position per Johnson's instructions. At the time this mortgage was recorded, the fair market value of the Subject Property was reported by CCRP to be approximately $450, 000.
• Johnson contacted the escrow agent with further instructions. Specifically, he directed the escrow agent to record a second replacement mortgage. He further directed the escrow agent to record a satisfaction of the first replacement mortgage upon receiving confirmation that the second replacement mortgage had been recorded in the fifth lien position. Finally, he directed that a lender's title insurance policy be forwarded with the recorded second replacement mortgage.
• The second replacement mortgage was ultimately recorded in the eighth lien position, putting it behind approximately $1, 367, 200 in senior mortgage claims.
• NDG&T did not advise Johnson that its escrow agent had not recorded the second replacement mortgage in the fifth lien position and did not provide Johnson with a lender's title insurance policy.
• The fair market value of the Subject Property is not sufficient to secure any portion of Johnson's second replacement mortgage as presently recorded. If the second replacement mortgage had been recorded in the fifth lien position as directed, Johnson would have been adequately secured.

(Doc. No. 1). Johnson seeks to recover damages from NDG&T under the theories of negligence, breach of contract, and breach of fiduciary duty.

         On September 6, 2018, NDG&T filed a motion to stay of the instant action pending resolution of a State foreclosure action initiated by Robert and Shannon Doremus against individuals and/or entities, Johnson ...


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