Judgment Against Title Company Upheld in Massive MN Identity Theft Case

Minnesota case law summary by Attorney Richard Clem: Default judgment, notary liability.

Melony Michaels v. First USA Title, LLC. MN notary liability, default judgment

This case arose out of the massive mortgage fraud scheme perpetrated by Larry Maxwell and Jerome KingRussell in the mid-2000's. That scheme is documented in more detail in the affirmance of Maxwell's criminal conviction in State v. Maxwell, 802 N.W.2d 849, 851 (Minn. Ct. App. 2011). The victims of the scheme included John Foster and his wife Melony Michaels. Larry Maxwell acted as the real-estate agent, and KingRussell stole Foster's identity and impersonated him at the closings. The closing agent was Janie Coates, a notary public who had know knowledge of the fraud. Foster and Michaels suffered huge damages as a result of the fraud and finally brought a suit against Maxwell, KingRussell, Coates, and First USA Title, LLC, in Hennepin County District Court. They argued that Coates was negligent in verifying KingRussell's identity, and that she was acting as agent for First USA. First USA took the position that Coates was not its agent.

The plaintiffs moved for summary judgment. First USA relied on an affidavit of its founder, Sheryl Aarnio, who testified that Coates was never an employee or agent of First USA. The trial court held that this was a factual issue, and held a bench trial on the issue. First USA, however, did not appear at the trial. After hearing the evidence, the trial court concluded that Coates was the agent for First USA, and entered a default judgment against First USA for over $800,000. First USA then appealed to the Minnesota Court of Appeals.

The Court of Appeals first held that since First USA didn't appear at trial or make any post-trial motions, that the scope of review was very limited. Coates had testified at trial that she was First USA's agent, and the Court of Appeals declined the invitation to reverse the lower court's factual findings based on nothing more than First USA's earlier affidavit to the contrary. Upon examining the evidence, the Court of Appeals affirmed.

No. A13-0757 (Minn. Ct. App. Mar. 17, 2014)).

Please see the original opinion for the court's exact language.


Richard P. Clem is an attorney and continuing legal education (CLE) provider in Minnesota. He has been in private practice in the Twin Cities for 25 years. He has a J.D., cum laude, from Hamline University School of Law in St. Paul and a B.A. in History from the University of Minnesota. His reported cases include: Asociacion Nacional de Pescadores a Pequena Escala o Artesanales de Colombia v. Dow Quimica de Colombia, 988 F.2d 559, rehearing denied, 5 F.3d 530 (5th Cir. 1993), cert. denied, 510 U.S. 1041 (1994); LaMott v. Apple Valley Health Care Center, 465 N.W.2d 585 (Minn. Ct. App. 1991); Abo el Ela v. State, 468 N.W.2d 580 (Minn. Ct. App. 1991).

For more information about attorney Clem, please visit his website.
For more information about his low-cost CLE programs, please visit his CLE page.
Return to index of case summaries

Copyright 2014, Richard P. Clem.
Attorney Richard P. Clem is responsible for the content of this page.

Richard P. Clem, Attorney
PO Box 14957
Minneapolis, MN 55414
Phone: +1-612-378-7751
e-mail: clem.law@usa.net
Minnesota Attorney Registration Number 0192648

Books by Richard Clem:

Please visit my author page at amazon.com

Copyright and privacy notice.