Banaszak v. CitiMortgage, Inc. et al
Filing
68
ORDER denying 67 Motion for Certificate of Appealability. Signed by District Judge Thomas L. Ludington. (SGam)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
NORTHERN DIVISION
ANTHONY J. BANASZAK,
Plaintiff,
Case No. 13-cv-13710
v
Honorable Thomas L. Ludington
CITIMORTGAGE, INC., et al.,
Defendants.
__________________________________________/
ORDER DENYING MOTION FOR CERTIFICATE OF APPEALABILITY
Plaintiff Anthony Banaszak filed this case against Defendant CitiMortgage, alleging that
it had violated several provisions of the Servicemembers Civil Relief Act, 50 U.S.C. §§ 501 et
seq. (“SCRA”) and had engaged in common-law fraud. The allegations relate to CitiMortgage’s
management of his residential mortgage loan while he was on active duty status.
On November 1, 2013, CitiMortgage filed a motion to dismiss Banaszak’s complaint
pursuant to Federal Rule of Civil Procedure 12(b)(6). Mot. Dismiss, ECF No. 20. The motion
was referred to United States Magistrate Judge Charles Binder, who issued a report
recommending that CitiMortgage’s motion be granted in full and that Banaszak’s complaint be
dismissed. Rep. & Rec., ECF No. 43.
On September 10, 2014, this Court issued an opinion and order adopting in part the
magistrate judge’s report and recommendation and granting in part Defendant’s motion to
dismiss. Op. & Order Adopting in Part, ECF No. 62. The Court dismissed Banaszak’s claims
for fraud and for violation of § 518, and it further determined that emotional damages were not
available for violations of § 527.
On September 23, 2014, Banaszak filed a motion for
reconsideration of the September 10, 2014 Order Adopting the Report in Part, which was denied
on October 1, 2014. Order Denying Recons., ECF No. 65.
Banaszak then filed the instant motion for a certificate of appealablity regarding, inter
alia, the Court’s dismissal of those claims. Mot. Certificate of Appealability, ECF No. 67.
Banaszak requests that four issues be certified for interlocutory appeal: (1) whether Plaintiff is
entitled to recover emotional damages for violations of 50 U.S.C. App. § 527; (2) whether
Plaintiff has adequately pleaded a claim for violation of 50 U.S.C. App. § 518; (3) whether
Plaintiff has adequately pleaded a claim for violation of 50 U.S.C. App. § 533; and (4) “not
allowing an amendment of the pleadings.” Id. at 1-2. Banaszak contends that a certificate of
appealability is warranted because there is “substantial ground for difference of opinion” with
respect to each issue.
I
Interlocutory appeals in the federal system generally are disfavored. Firestone Tire &
Rubber Co. v. Rijord, 449 U.S. 368 (1981). “Routine resort to § 1291(b) request would hardly
comport with Congress’ design to reserve interlocutory review for ‘exceptional’ cases while
generally retaining for the federal courts a firm final judgment rule.” Caterpillar v. Lewis, 519
U.S. 61, 74 (1996). Accordingly, a party seeking an interlocutory appeal has the burden of
showing exceptional circumstances exist that warrant an interlocutory appeal. W. Tenn. Chapter
of Assoc. Builders & Contractors, Inc. v. City of Memphis (In re City of Memphis), 293 F.3d 345,
350 (6th Cir. 2002); Vitols v. Citizens Banking Co., 984 F.2d 168, 170 (6th Cir. 1993).
To obtain a certificate of appealability, the moving party must show that: “(1) the
question involved is one of law; (2) the question is controlling; (3) there is substantial ground for
difference of opinion respecting the correctness of the district court’s decision; and (4) an
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immediate appeal would materially advance the ultimate termination of the litigation.” Vitols,
984 F.2d at 170 (citing Cardwell v. Chesapeake & Ohio Ry. Co., 504 F.2d 444, 446 (6th Cir.
1974)).
II
Banaszak requests that this Court grant a certificate of appealability with respect to four
issues: (1) whether Plaintiff is entitled to recover emotional damages for violations of 50 U.S.C.
App. § 527; (2) whether Plaintiff has adequately pleaded a claim for violation of 50 U.S.C. App.
§ 518; (3) whether Plaintiff has adequately pleaded a claim for violation of 50 U.S.C. App. §
533; and (4) “not allowing an amendment of the pleadings.” Mot. Certificate Appealability 1-2.
As explained in further detail below, Banaszak has not convinced the Court that he is
entitled to a certificate of appealability on any of his claims. At a minimum, he has not shown
that the third element—there is substantial ground for difference of opinion—can be met for any
claim.
A
First, Banaszak requests a certificate of appealability with respect to this Court’s
conclusion that he cannot recover emotional damages for violations of 50 U.S.C. App. § 527.
Section 527 provides that obligations incurred by a servicemember before entering military
service may not bear an interest rate greater than 6% during the period of military service and, in
some cases, for a year after discharge from the military. Any interest charged over the 6% rate
must be forgiven.
In the instant case, Banaszak alleges that CitiMortgage violated § 527 by charging
mortgage interest at a rate of 6.725%. The Court concluded that, although Banaszak had stated a
claim for violation of § 527, emotional damages are not recoverable for such a violation because
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Michigan law does not permit recovery of emotional damages related to breach of contract
claims.
Banaszak contends that a certificate of appealability is warranted on this issue because
“there is substantial ground for difference of opinion on whether or not emotional damages are
recoverable for violations under the SCRA, more specifically 50 U.S.C. App. § 527.”1 In
support of his contention, Banaszak cites the same cases that he cited in his motion for
reconsideration—which this Court has already found, for the most part, inapplicable. See Mot.
Certificate Appealability (citing Brewster v. Sun Trust Mortgage, Inc., No. 12-56560 (9th Cir.
Feb. 7, 2014); Hurley v. Deutsche Bank, 2009 WL 701006 (W.D. Mich. March 13, 2009);
Rowles v. Chase Home Finance, LLC, 2012 WL 80570 (D.S.C. Jan. 10, 2012); and Wray v.
CitiMortgage, Inc., 3:12-3628 (D.S.C. June 26, 2013).
Here, the question of whether emotional damages are available for violations of § 527 is a
question of law, and therefore the first element is met. However, Banaszak has not shown that
the remaining three elements have been met. With respect to the requirement that there is
“substantial ground for difference of opinion,” the Court has already twice surveyed the current
law on the issue. See Order; Order Denying Recons. 5 (“The Brewster court explicitly refused to
address whether punitive damages—let alone emotional damages—were recoverable under
SCRA § 533 . . . .), id. (“Wray does not discuss which types of damages are available for
violations of § 527.”), at 6 (“Rowles does not reference § 527, punitive damages, or emotional
damages, and thus it provides no guidance for this Court.”); id. (“Although the Hurley court
addressed punitive damages, it did not address § 527 or emotional damages.”). The only case
1
Notably, this is the only argument Banaszak advances that is relevant to the determination of whether a certificate
of appealability is warranted. Banaszak does explain how the other three elements of the test are met; instead, he
attempts a public policy argument: “If the only remedy available to Plaintiff is to force Defendant to re-examine his
loan obligation, making sure the bank has not overcharged him, what punishment/remedy will cause Defendant to
not violate the SCRA in the future or against other servicemembers?” Mot. Certificate Appealability 10.
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that is directly on point—Newton v. Bank of McKenney, 2012 WL 1752407 (E.D. Va. May 16,
2012)—concluded that, because the applicable state law prohibits an award of emotional
damages for breach of contract, the plaintiff could not recover emotional damages for violation
of §527. Because every case that Banaszak cites is either distinguishable or inapposite to the
issue, he has not shown that there is “substantial ground for difference of opinion.”
But even if Banaszak had shown that there is substantial ground for difference of opinion,
he cannot meet the second and fourth elements: that the issue of law is controlling and an
immediate appeal would materially advance the ultimate termination of the litigation. For an
issue to materially advance the litigation, the issue would need to be dispositive on the issue of
liability. Here, the issue of whether emotional damages are available does not affect whether
CitiMortgage is liable to Banaszak. Indeed, even if the Sixth Circuit, on interlocutory appeal,
held that emotional damages were available, that determination would have no bearing on the
issue of whether CitiMortgage is liable for the alleged violation of § 527. For example, the
parties would still need to proceed through motion practice (such as motions for summary
judgment) and then to trial. Thus, an interlocutory appeal on this damages issue would not
advance the ultimate termination of the litigation. Accordingly, a certificate of appealability is
denied with respect to the issue of whether emotional damages are available for violations of §
527.
B
Second, Banaszak seeks a certificate of appealablity with respect to the dismissal of his
claim pursuant to 50 U.S.C. App. § 518. Section § 518 prohibits a creditor from making an
adverse credit report simply because a plaintiff invoked the provisions of the SCRA. This claim
was dismissed because Banaszak admitted that he was seeking prospective relief—which is not
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cognizable on a claim for violation of § 518. Obj. at 3, ECF No. 44 (Banaszak is asserting a §
518 “simply as a matter of precluding the Defendants from adversely reacting.”). Indeed,
prospective relief was the only relief requested in Banaszak’s complaint with respect to this
claim. Therefore, Banaszak’s claim for violation of § 518 was dismissed.
In his motion for certification of this claim, Banaszak does not cite any law for the
proposition that he is entitled to a certificate of appealability. Indeed, Banaszak cannot even
meet the first element—that the issue is an issue of law. Banaszak contends that CitiMortgage
did in fact hurt his credit score, and therefore he has suffered a violation of § 518.2 Whether
Plaintiff’s credit or credit score suffered is an issue of fact—and therefore this issue does not
even meet the first element of the test, which only permits certification of issues of law.
Moreover, as noted in the Order and the Order denying Reconsideration, Banaszak did not
affirmatively plead that his credit score suffered as a result of his invocation of his right—as is
his burden under Federal Rule of Civil Procedure 8.3
Nor can Banaszak show that the third element is met. The only argument Banaszak
makes is that “there is a substantial ground for difference of opinion as to the amount Plaintiff’s
credit/credit score suffered.” He does not provide an explanation for this conclusion, nor does he
cite any caselaw to support that proposition. Accordingly, a certificate of appealability will be
denied as to this claim.
2
As noted in its Order Denying Reconsideration, Banaszak did not plead this theory of liability in his complaint, in
his response to CitiMortgage’s motion to dismiss, at the Magistrate Judge’s hearing on CitiMortgage’s motion to
dismiss, or in his objections to the Magistrate Judge’s report and recommendation. Rather, Banaszak raised the
argument for the first time in his motion for reconsideration.
3
It is true that documents filed pro se are “to be liberally construed . . . .” Estelle v. Gamble, 429 U.S. at 106 (“[A]
pro se complaint, however inartfully pleaded, must be held to less stringent standards than formal pleadings drafted
by lawyers . . . .”). Here, however, Banaszak is represented by counsel, and therefore this Court need not “liberally
construe” the complaint, much less re-write his complaint to include allegations counsel omitted. Gause v. Byars,
2011 WL 3489836, at *1 (D.S.C. Aug. 9, 2011) (While reviewing a pro se complaint, “a district court may not
rewrite a petition to conjure up questions never squarely presented, nor can the court ignore a clear failure in the
pleadings to allege facts which set forth a cognizable claim”); see also Gerrior v. Stoddard, 2014 WL 4284649, at
*2 (E.D. Mich. Aug. 29, 2014).
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C
Third, Banaszak seeks a certificate of appealability with respect to whether he has stated
a claim for violation of 50 U.S.C. § 533. Section 533 prohibits the sale, foreclosure, or seizure of
property during or within one year after a servicemember’s military service. However, as noted
in the Order Denying Reconsideration, Banaszak never pleaded an independent claim for
violation of § 533. Instead, Banaszak alleged that Defendants committed fraud by violating §
533:
Defendant committed fraud and misrepresented their intentions/actions and
deceived the Plaintiff Banaszak when Defendant . . .
(E)
Failed and/or refused to stay proceedings and/or adjust Plaintiff
Banaszak’s obligations under the note & mortgage so as to
preserve Plaintiff Banaszak’s interest in said obligation. 50 U.S.C.
App. § 533.
Comp. ¶80(E). The plain terms of Banaszak’s complaint indicate that he is asserting that
CitiMortgage committed fraud by violating § 533. Nowhere in the complaint does Banaszak
allege an independent violation of § 533. There is no substantial ground for difference of
opinion on this issue. Therefore, a certificate of appealability will be denied with respect to this
issue.
D
Lastly, Banaszak seeks a certificate of appealability on the issue of whether he should be
allowed to amend his complaint to include a claim under § 533. But Banaszak has never filed a
motion to amend his complaint.
True, in his objections to the Magistrate Judge’s recommendation, Banaszak sought leave
to amend his complaint to allege a violation of § 561: “Plaintiff desires an opportunity to amend
his Complaint to include this violation [of § 561] by Defendant.” Obj. 12. This request was
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denied because this Court’s rules prohibit parties from making independent motions as part of a
response to an opponent’s motion or as objections to a Magistrate Judge’s report. Op. & Order
Adopting in Part 18 (citing Motion Practice Guidelines for Judge Thomas L. Ludington, Separate
Motion
and
Brief,
available
at
http://www.mied.uscourts.gov/Judges/guidelines/topic.cfm?topic_id=360 ).
In other words, Banaszak has never filed a motion seeking leave to amend his complaint
to include a claim under § 533. Thus, there is no substantial ground for difference of opinion
regarding whether this Court should have sua sponte granted Banaszak leave to amend his
complaint. A certificate of appealability will be denied with respect to this issue.
III
Banaszak has not shown that this is an exceptional case that is appropriate for
interlocutory review under § 1291(b). Banaszak has not shown that there is substantial ground
for a difference of opinion with respect to each issue, and therefore a certificate of appealability
will be denied.
Accordingly, it is ORDERED that Banaszak’s Motion for Certificate of Appealability
(ECF No. 67) is DENIED.
s/Thomas L. Ludington
THOMAS L. LUDINGTON
United States District Judge
Dated: October 21, 2014
PROOF OF SERVICE
The undersigned certifies that a copy of the foregoing order was served
upon each attorney or party of record herein by electronic means or first
class U.S. mail on October 21, 2014.
s/Tracy A. Jacobs
TRACY A. JACOBS
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