The North Dakota Supreme Court has upheld a district court’s decision to grant summary judgment to MidFirst Bank in a foreclosure action against James and Tahnee Young. The high court found that while the district court may have technically erred by denying the Youngs access to audio recordings of hearings, this error was “harmless” because the core legal arguments raised by the Youngs—particularly their challenges to the mortgage assignment—lacked merit or standing.
The case centers on a $275,793 mortgage taken out by the Youngs in 2016. MidFirst Bank acquired the loan in 2022 and initiated foreclosure proceedings in early 2024 after the Youngs stopped making payments.
The Core Issue: Standing to Challenge the Assignment
When MidFirst filed its foreclosure complaint, the Youngs responded with several counterclaims, including allegations of fraudulent misrepresentation, violations of consumer protection statutes (FDCPA, FCRA, RESPA), and claims of unjust enrichment and constructive fraud.
The Youngs’ primary theory for these counterclaims rested on assertions that the assignment of the mortgage to MidFirst was invalid, allegedly due to a forged or “robo-signed” signature. They supported this with affidavits from handwriting experts.
However, the North Dakota Supreme Court, in an opinion authored by Justice Tufte, firmly sided with the district court’s ruling that the Youngs lacked the necessary legal standing to challenge the assignment itself.
“Under North Dakota law, a nonparty to a contract has no rights infringed by fraud in that contract,” the opinion stated. Because the Youngs were not parties to the contract that transferred the mortgage servicing rights between the original lender and MidFirst, they could not claim injury from any alleged fraud in that transfer.
The Court noted that courts consistently hold that a mortgagor lacks standing to challenge a mortgage assignment they were not a party to. Since the Youngs failed to demonstrate that their rights were infringed by the assignment, their central fraud claim could not raise a “genuine issue of material fact” necessary to defeat summary judgment.
Right to Foreclose Unimpaired
Crucially, the Supreme Court determined that MidFirst was entitled to judgment as a matter of law regardless of the assignment dispute. Under North Dakota law, ownership of the mortgage follows ownership of the note. The record confirmed that MidFirst held the note and had not violated the mortgage terms or any applicable law in pursuing foreclosure.
With the fraud claim defeated on standing grounds, the remaining counterclaims against MidFirst were also dismissed. The claims involving the FDCPA and FCRA were barred by the doctrine of *res judicata* because those issues had already been decided in federal court. The RESPA claim failed for lack of proof of actual damages.
Bias Claims and Procedural Disputes
The Youngs, who represented themselves (*pro se*) throughout the district court proceedings, also argued that the trial judge, the Honorable Cherie L. Clark, displayed bias.
They pointed to the judge’s suggestion that they retain counsel, noting that the judge expressed confusion over their filings and recommended they get a lawyer “so that we can follow the rules and do it right.” The Supreme Court found no evidence of bias here, explaining that an attorney generally assists in asserting rights and promotes judicial efficiency.
The Youngs further argued that the judge used “narrow procedural technicalities” to dismiss their claims unfairly, especially considering their lack of legal expertise. The Court reviewed a transcript excerpt where the judge paused proceedings to allow the Youngs time to look up specific rules supporting their motion for sanctions, viewing this action as an accommodation rather than bias. The Supreme Court concluded the Youngs did not meet the “high standard required to establish bias.”
The Audio Recording Error
A significant procedural point involved the Youngs’ request for audio recordings of two hearings, which they claimed would reveal the judge’s tone and context missing from the official transcript. The district court denied this request, stating the transcript is the official record.
The Supreme Court found that the district court abused its discretion by denying access. Administrative rules allow parties to access recordings unless access is restricted by a specific court order addressing legitimate concerns. The district court’s explanation—that the transcript is official—did not justify denying access to another record when the Youngs wanted to verify accuracy.
However, this abuse of discretion was deemed harmless error. The Court reasoned that even if the audio recordings had shown the tone the Youngs alleged, the judicial bias claim would still have failed because expressions of judicial impatience or annoyance generally do not meet the high threshold for proving bias. Furthermore, the Youngs failed to follow the proper appellate procedure (a motion to correct the record) to dispute the accuracy of the transcript itself.
The Court also declined to reconsider a decision by the Chief Justice denying the Youngs’ motion to disqualify MidFirst’s appellate brief as untimely.
Ultimately, the Supreme Court affirmed the district court’s judgment, confirming MidFirst Bank’s right to proceed with the foreclosure.