Grygelko v. Amerihome Mortgage Company
Anthony Grygelko, Sr., and Katie Grygelko v. Amerihome Mortgage Company, LLC, et al.
- David Schultz
- 0:25-cv-03883
- U.S. District Court · District of Minnesota
- 6
In Grygelko v. Amerihome Mortgage Company, LLC, Magistrate Judge David T. Schultz recommends dismissing the case without prejudice — meaning the plaintiffs may refile — because the federal court lacks the power to hear it, as all of the plaintiffs' claims are based on state law rather than federal law.
Homeowners facing mortgage foreclosure who file federal lawsuits asserting only state-law claims (such as quiet title, UCC violations, or slander of title) and who invoke the federal Declaratory Judgment Act without an underlying federal cause of action. This ruling also affects borrowers who make passing, unsupported references to federal statutes in an attempt to establish federal court jurisdiction.
What happened
In Grygelko v. Amerihome Mortgage Company, LLC, Anthony Grygelko, Sr., and Katie Grygelko sued their mortgage servicer and related parties in federal court, asking the court to stop a foreclosure sale of their Blaine, Minnesota home scheduled for November 13, 2025. The Grygelkos claimed the defendants lacked authority to foreclose because the mortgage assignment was invalid and no money was paid for it, and they sought an emergency order halting the sale.
The Grygelkos brought four claims: a quiet title claim (asking the court to declare who truly owns the property) under Minnesota law, a request for a declaratory judgment under a federal procedural statute, a claim that defendants violated the Uniform Commercial Code and Minnesota foreclosure statutes, and a slander of title claim. They also briefly mentioned a federal law called the Foreign Agents Registration Act in their complaint, suggesting it applied to the defendants' debt collection activities.
Magistrate Judge Schultz recommends dismissing the case without prejudice — which means the Grygelkos are not permanently barred from pursuing their claims — because the federal court does not have authority to hear it. The court found that every one of the four claims is rooted in state law, not federal law. The federal declaratory judgment statute is a procedural tool, not an independent source of federal court power. The Uniform Commercial Code, as adopted by Minnesota, is a state statute. Slander of title is a state-law claim. And the single passing mention of the Foreign Agents Registration Act was too vague and unsupported in the complaint to establish a real federal issue. The parties have 14 days to file written objections to this recommendation with United States District Judge Jeffrey Bryan.
The detailed version
Case: Anthony Grygelko, Sr., and Katie Grygelko v. Amerihome Mortgage Company, LLC, et al., No. 25-cv-3883 (JMB/DTS), United States District Court, District of Minnesota. Report and Recommendation issued October 16, 2025, by United States Magistrate Judge David T. Schultz, upon referral from District Judge Jeffrey Bryan.
Background
Plaintiffs Anthony Grygelko, Sr., and Katie Grygelko allege they own a home in Blaine, Minnesota. In June 2022, they executed a mortgage loan originally payable to Bay Equity LLC for $647,200. In December 2023, the mortgage was assigned to Defendant Amerihome Mortgage Company, LLC, which plaintiffs allege paid no value for the assignment. Plaintiffs further allege that Freddie Mac records show Freddie Mac as the true owner of the loan while Amerihome acts only as servicer. On September 17, 2025, Amerihome, through co-defendant Trott Law, P.C., issued a Notice of Mortgage Foreclosure Sale scheduling a Sheriff's Sale for November 13, 2025. Plaintiffs filed their complaint on October 8, 2025, seeking emergency injunctive relief to halt the sale.
The Four Claims
(1) Quiet title under Minnesota Statutes § 559.01; (2) Declaratory judgment under 28 U.S.C. § 2201, seeking a declaration that defendants lack standing and authority to foreclose and that mortgage assignments are void; (3) Violation of UCC Article 2, § 201 and Minnesota foreclosure statutes for initiating foreclosure without proof of ownership; and (4) Slander of Title under state law.
Subject Matter Jurisdiction Analysis
Magistrate Judge Schultz conducted an independent review of subject matter jurisdiction — a threshold requirement that courts must examine at any stage, even without a challenge from the parties. See Fed. R. Civ. P. 12(h)(3). Plaintiffs asserted federal question jurisdiction under 28 U.S.C. § 1331, which requires that the claim arise under federal law as shown on the face of the complaint (the 'well-pleaded complaint rule').
No Federal Cause of Action: The court found that none of the four counts states a federal cause of action. Count 1 expressly relies on Minnesota state law. Count 2 invokes 28 U.S.C. § 2201, but the court explained that the federal Declaratory Judgment Act is a procedural statute, not a jurisdictional one; it can only provide relief if an independent private right of action underlies the claim, which is absent here. Count 3 invokes the UCC, which Minnesota has adopted as state law (Minn. Stat. Ch. 336), and Minnesota foreclosure statutes — both state-law sources. Count 4, slander of title, is a state-law tort claim.
No Substantial Embedded Federal Question: The court also considered whether, under the doctrine articulated in Grable & Sons Metal Products, Inc. v. Darue Engineering & Manufacturing, 545 U.S. 308 (2005), the state-law claims nonetheless implicate a substantial federal issue requiring federal resolution. This doctrine applies only in a 'special and small category' of cases. Plaintiffs' complaint mentioned 22 U.S.C. § 611, the Foreign Agents Registration Act, in a single conclusory sentence, claiming it applies to 'disclosure obligations of foreign-controlled entities engaged in debt collection and foreclosure activities.' The court found this allegation insufficient: it does not identify with particularity any federal issue, does not explain why that issue is necessary to resolving the case, and does not demonstrate the kind of serious, nationally significant federal interest that would justify federal court jurisdiction rather than resolution in state court.
Recommendation
Magistrate Judge Schultz recommends that the case be dismissed without prejudice (meaning plaintiffs are not permanently barred from bringing their claims in the proper forum) for lack of subject matter jurisdiction.
Objection Procedure
This is a Report and Recommendation, not a final order. Under Local Rule 72.2(b)(1), any party may file written objections within 14 days of being served. Responses to objections are due within 14 days after service of the objections. The report is not directly appealable to the Eighth Circuit Court of Appeals at this stage.
Reviewer note from the AI+
Read the full 6-page opinion on CourtListener, the free public archive maintained by the Free Law Project.