Hubbard v. Nationwide Lending Corp et al

Filing 16

ORDER Overruling 14 Objections, Adopting 12 Report and Recommendation in Part, Granting 3 Motion to Dismiss and Dismissing 1 Complaint. Signed by District Judge Thomas L. Ludington. (KWin)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
NORTHERN DIVISION

SHERMAN M. HUBBARD,
Plaintiff,
v.

Case No. 17-cv-13232
Honorable Thomas L. Ludington
Magistrate Judge Patricia T. Morris

NATIONWIDE LENDING CORP, et al
Defendants.
__________________________________________/

ORDER OVERRULING OBJECTIONS, ADOPTING REPORT AND
RECOMMENDATION IN PART, GRANTING MOTION TO DISMISS, AND
DISMISSING COMPLAINT
On September 12, 2017, Plaintiff Sherman Hubbard filed a suit in Alcona County Circuit
Court which named Nationwide Lending Corporation, New Century Mortage Corporation,
Deutsche Bank National Trust Company, and Select Portfolio Servicing Incorporated as
Defendants. ECF No. 1. On October 3, 2017, the Defendants removed the case to federal court.
ECF No. 1. All pretrial matters were referred to Magistrate Judge Patricia T. Morris. ECF No. 6.
On October 10, 2017, Defendants Deutsche Bank National Trust Company and Select Portfolio
Servicing Incorporated filed a motion to dismiss. ECF No. 3. The remaining Defendants have not
been served.
On January 29, 2018, Judge Morris issued a report recommending that the motion to
dismiss be granted and the complaint dismissed. ECF No. 12. Hubbard timely objected, ECF No.
14, and the served Defendants have responded, ECF No. 15. For the following reasons, Hubbard’s
objections will be overruled, the report and recommendation will be adopted in part, the motion to
dismiss will be granted, and the complaint will be dismissed.

I.
The premise of the motion to dismiss and the basis on which Judge Morris recommended
dismissal is the same. Hubbard previously filed an action involving two of the same parties and
alleging the same misconduct. See Hubbard v. Select Portfolio Servicing, Inc., Case No. 16-cv11455. That action was dismissed because Hubbard failed to state a claim. Case No. 16-cv-11455,
ECF No. 50. Hubbard appealed that dismissal. ECF No. 54. On June 7, 2018, the Sixth Circuit
affirmed the dismissal. ECF No. 56.
In the Court’s August 30, 2017, opinion and order adopting Judge Morris’s report and
recommendation in the first case, the Court summarized the allegations in Hubbard’s complaint.
Case No. 16-cv-11455, ECF No. 50. These allegations were all drawn directly from Hubbard’s
complaint. And it is, of course, axiomatic that at the pleading stage all well-pleaded allegations in
a plaintiff’s complaint are assumed to be true.
. . . According to Hubbard, he is bringing claims of breach of contract and
fraud. Compl. at 2, ECF No. 1. On January 14, 2004, Hubbard entered into an
“Adjustable Rate Note” with Nationwide Lending. Id. The loan was assigned to
Bank of America and then sold to Deutsche Bank. In 2008, Hubbard paid $41,887
to Bank of America during a bankruptcy proceeding. Id. at 3.2 In 2012, Select
Portfolio Servicing became the loan servicer. Id.
In 2013, Hubbard was informed that he would receive a loan modification
pursuant to “the US Justice Department and State Attorney General’s Global
Settlement.” Id. After making three trial payments of $1,375.74, Hubbard was
informed that “the monthly payments would be Substantially less than $1,375.74
and the interest rate on the loan would be at market Rate of 2.75-3.75% The final
loan modification offer was $136,000 loan amount Interest Rate of 8.78% and a
monthly payment amount of $1375.74.” Id. (sic throughout).
Accordingly, Hubbard argues that Defendants “failed to perform on the
federally ordered settlement by not offering [a]n at market interest rate at the time
of the loan modification.” Id. He alleges that “Defendants have knowingly and
willfully . . . fraudulently deceived Plaintiff and Plaintiffs Attorney by having them
submit loan modification documentation in excess of 15 time Each and every time
claiming some form of paperwork is missing, incomplete, or Expired. Defendant
has repeatedly changed or assigned a new loan servicer to Further delay the loan
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modification process.” Id. (sic throughout). Hubbard further alleges that on “4
separate occasions defendant has offered loan modifications without Any paper
work to plaintiff with deceptive open ended terms.” Id.
As a result of Defendants’ alleged misconduct, Hubbard’s home was
foreclosed upon for “nonpayment of taxes.” Id. He asserts that, because Defendants
are unwilling to complete the mortgage modification mandated by the federal
settlement, he is “unable to repair credit” and “unable to make necessary repairs to
property.” Id. at 4.
Id. at 1–3.
Hubbard’s complaint in the present action includes similar allegations. He frames the
action as one “to quiet title to real property” which he owns. Compl. at 1, ECF No. 1, Ex. A. Like
in his original complaint, Hubbard alleges that he “entered into a note and mortgage with
Defendant Nationwide Lending corp on January 14 2004.” Id. at 2. He then alleges that on
December 20, 2004, Nationwide “assigned the mortgage and note to Defendant New Century
Mortgage Corporation.” Id. Several weeks later, Nationwide “filed another assignment of
mortgage to Defendant Deutsche Bank National Trust. Id. In 2008, Hubbard “filed chapter 7
bankruptcy.” Id.
Years later, on February 10, 2015, “Defendant Deutchse Bank has Defendant Select
Portfolio Serving file an affidavit regarding lost or misplaced assignment.” Id. In March of 2015,
Defendant Select Portfolio Servicing hired Trott and Trott to start a foreclosure proceeding.” Id.
Around the same time, “Plaintiff sent Trott and Trott a letter disputing Defendants claims.” Id.
According to Hubbard, “Defendant Deutchse Bank claims Plaintiffs’ mortgage is part of a trust of
pass through certificates.” Id. Hubbard alleges that “this is impossible as the mortgage and note
were not in possession of Deutsche Bank [but] in fact New Century Mortgage Corp still had
possession of the mortgage and the note.” Id.

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Thus, the gravamen of Hubbard’s factual allegations is that his mortgage was assigned by
Nationwide to New Century, and so the later assignment to Deutchse Bank was invalid. Because
New Century went bankrupt in 2008, Hubbard believes that the mortgage note has been
“extinguished.” Id. at 3.
II.
Pursuant to Federal Rule of Civil Procedure 72, a party may object to and seek review of a
magistrate judge’s report and recommendation. See Fed. R. Civ. P. 72(b)(2). Objections must be
stated with specificity. Thomas v. Arn, 474 U.S. 140, 151 (1985) (citation omitted). If objections
are made, “[t]he district judge must determine de novo any part of the magistrate judge’s
disposition that has been properly objected to.” Fed. R. Civ. P. 72(b)(3). De novo review requires
at least a review of the evidence before the magistrate judge; the Court may not act solely on the
basis of a magistrate judge’s report and recommendation. See Hill v. Duriron Co., 656 F.2d 1208,
1215 (6th Cir. 1981). After reviewing the evidence, the Court is free to accept, reject, or modify
the findings or recommendations of the magistrate judge. See Lardie v. Birkett, 221 F. Supp. 2d
806, 807 (E.D. Mich. 2002).
Only those objections that are specific are entitled to a de novo review under the statute.
Mira v. Marshall, 806 F.2d 636, 637 (6th Cir. 1986). “The parties have the duty to pinpoint those
portions of the magistrate’s report that the district court must specially consider.” Id. (internal
quotation marks and citation omitted). A general objection, or one that merely restates the
arguments previously presented, does not sufficiently identify alleged errors on the part of the
magistrate judge. See VanDiver v. Martin, 304 F. Supp. 2d 934, 937 (E.D. Mich. 2004). An
“objection” that does nothing more than disagree with a magistrate judge’s determination, “without
explaining the source of the error,” is not considered a valid objection. Howard v. Sec’y of Health

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and Human Servs., 932 F.2d 505, 509 (6th Cir. 1991). Without specific objections, “[t]he functions
of the district court are effectively duplicated as both the magistrate and the district court perform
identical tasks. This duplication of time and effort wastes judicial resources rather than saving
them, and runs contrary to the purposes of the Magistrate’s Act.” Id.
III.
In her report and recommendation, Judge Morris concluded that Hubbard’s present suit is
barred by issue preclusion and claim preclusion. As to his claims against Deutsche Bank National
Trust Company and Select Portfolio Servicing Incorporated (which were named Defendants in the
first suit), Judge Morris concluded that his present claim arose out of the same factual transaction.
For that reason, it was barred by res judicata. Judge Morris acknowledged that neither New
Century nor Nationwide have been served (much less filed a motion to dismiss), but concluded
that the issues “were central and conclusive to the prior case and remain as such to the new claims
against New Century and Nationwide.” Rep. & Rec. at 9, ECF No. 12. Because Hubbard
previously enjoyed a full and fair opportunity to litigate these issues, Judge Morris recommended
dismissal.
Hubbard, now represented by an attorney, has filed nine objections to Judge Morris’s report
and recommendation. The objections generally contend that Judge Morris and the Court made
certain factual errors in their adjudication of the prior case and this case. Several of the alleged
factual errors can in fact be traced to specific allegations in Hubbard’s original complaint. But the
primary assertion Hubbard makes (repeatedly) in his objections is that “[t]here was never any other
valid assignment of Hubbard’s mortgage [aside from to New Century] and the chain of title to
resolve clear title in Hubbard requires a quiet title action.” Objs. at 2, ECF No. 14. See id. at 2
(arguing, in Objection 2, that New Century was the loan servicer at origination); id. at 4 (arguing,

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in Objection 3, that “the assignment from Nationwide Lending to Deutsche Bank occurred after
the Mortgage had already been assigned to New Century Mortgage Corporation”); id. (arguing, in
Objection 4, that “no one other than New Century Bank has or had any interest in Hubbard’s
mortgage”); id. at 5 (arguing, in Objection 5, the same thing); id. at 8 (arguing, in Objection 9, that
Deutsche Bank’s claim of assignment from Nationwide was “a void transaction”).
Hubbard only directly challenges the legal basis for Judge Morris’s recommendation that
the complaint be dismissed in three objections. In his sixth objection, Hubbard argues that “the
suit filed to quiet title in Alcona County Circuit Court” is not successive litigation that would
warrant res judicata because “there are different parties and the case in Alcona County is singular
in that it attempted to quiet title in the real property owned by Hubbard without any other claims
that are found in the original law suit.” Id. at 6. In his seventh objection, Hubbard takes issue with
Judge Morris’s conclusion that his claims are barred by issue preclusion. Several of Hubbard’s
arguments are especially telling:
(2) The case was actually to be litigated in the prior action but the Court dismissed
Hubbard’s effort to proceed. (3) the resolution of the issues was necessary and
essential to a Judgment on the merits in the prior litigation but the Court made
factual errors leading him to the wrongful conclusion, all of which is on appeal. (5)
The parties to be estopped had a fair and full opportunity to litigate the issue which
never happened.
Id. at 7 (sic throughout).
And, in his eighth objection, Hubbard argues that neither New Century nor Nationwide should be
dismissed sua sponte because “[o]nly New Century Mortgage Corporation which no longer exists
has a right to foreclose Hubbard’s mortgage.” Id.
A.
According to the Sixth Circuit,

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a claim will be barred by prior litigation if the following elements are present: (1)
a final decision on the merits by a court of competent jurisdiction; (2) a subsequent
action between the same parties or their “privies”; (3) an issue in the subsequent
action which was litigated or which should have been litigated in the prior action;
and (4) an identity of the causes of action.
Bittinger v. Tecumseh Prod. Co., 123 F.3d 877, 880 (6th Cir. 1997) (emphasis omitted).
All of these elements are met here with respect to Selective Portfolio and Deutsche Bank.
His prior suit, which named those Defendants, was dismissed and that final order has been affirmed
on appeal.1 As discussed below, the factual argument he now makes (that any purported
assignments of his mortgage to any company other than New Century are void) was raised below,
albeit indirectly. And to the extent this argument was not raised originally, it should have been.
Prewett v. Weems, 749 F.3d 454, 462 (6th Cir. 2014) (“The rule [of claim preclusion] prevents a
plaintiff from ‘splitting a cause of action’ into separate lawsuits and requires him to litigate all the
claims he can raise in one case.”). See Restatement (Second) of Judgments § 24 (1982) (cited by
Prewett). Hubbard now argues that the present suit raises a different cause of action, but “quiet
title actions are remedies, not independent causes of action.” Berry v. Main St. Bank, 977 F. Supp.
2d 766, 776 (E.D. Mich. 2013). See also Restatement (Second) of Judgments § 25 (1982) (“The
rule [of claim preclusion] applies to extinguish a claim by the plaintiff against the defendant even
though the plaintiff is prepared in the second action (1) To present evidence or grounds or theories
of the case not presented in the first action, or (2) To seek remedies or forms of relief not demanded
in the first action.”). Indeed, Hubbard’s complaint in the present case does not clearly identify any
causes of action. Because the two suits are materially identical both in factual and legal terms,
Hubbard’s present claim (to the extent one can be identified) against Selective Portfolio and
Deutsche Bank is barred by claim preclusion.

1

Hubbard’s assertion that res judicata cannot bar his suit because the case is still on appeal is resolved by the Sixth
Circuit’s June 7, 2018, opinion.

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B.
Hubbard also objects to Judge Morris’s decision to sua sponte dismiss New Century and
Nationwide based on the doctrine of collateral estoppel. In the Sixth Circuit, the doctrine of
collateral estoppel applies
only when (1) the issue in the subsequent litigation is identical to that resolved in
the earlier litigation, (2) the issue was actually litigated and decided in the prior
action, (3) the resolution of the issue was necessary and essential to a judgment on
the merits in the prior litigation, (4) the party to be estopped was a party to the prior
litigation (or in privity with such a party), and (5) the party to be estopped had a
full and fair opportunity to litigate the issue.
Hammer v. I.N.S., 195 F.3d 836, 840 (6th Cir. 1999).
The Second Restatement defines the doctrine as follows: “When an issue of fact or law is actually
litigated and determined by a valid and final judgment, and the determination is essential to the
judgment, the determination is conclusive in a subsequent action between the parties, whether on
the same or a different claim.” Restatement (Second) of Judgments § 27 (1982).
It is questionable whether the issues Hubbard now raises were actually litigated on their
merits in the prior litigation. In his motion for reconsideration, Hubbard argued that “it [sic] clear
that no existing banking institution of any kind now in existence owns the original Hubbard
mortgage nor does any such institution have standing to foreclose or otherwise have any
proceeding against Plaintiff in any respect and to the extent they have tried, they are acting
fraudulently causing Plaintiff damages.” Case No. 16-cv-11455, Mot Recon. at 2, ECF No. 52. In
denying that motion for reconsideration, the Court emphasized Hubbard’s failure to state a claim:
Hubbard’s complaint was dismissed because he did not specifically allege facts
sufficient to establish a claim for fraud and because the TARP and HAMP programs
did not create a private cause of action. In other words, Hubbard’s complaint was
dismissed because he had not alleged a cognizable cause of action. Hubbard’s
current contention that Nationwide Lending Corporation (which originally
provided the mortgage to him) is now out of business does nothing to change that
conclusion. Hubbard alleges in his own complaint (and proposed amended
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complaint) that his mortgage was reassigned to Bank of America and then to
Deutsche Bank. Compl. at 2, ECF No. 1–3. There is no allegation or reason to
believe that the assignment was invalid. As such, it is not relevant whether
Nationwide Lending Corporation is still in business or not. Hubbard’s motion for
reconsideration will be denied.
Case No. 16-cv-11455, September 19, 2017, Op. & Order at 2–3, ECF No. 53.
Thus, Hubbard previously raised the theory that he now relies on, and that theory was
rejected. But the rejection was not premised on a conclusion that, as a matter of law, Hubbard’s
mortgage had been validly assigned to anyone. Rather, Hubbard’s complaint was dismissed
because the factual allegations in his complaint did not substantiate any cognizable causes of
action. Given the context in which this issue was previously raised and its relevance to the Court’s
grounds for dismissal, it cannot be said that this issue was actually litigated in the prior action. For
that reason, the report and recommendation will only be adopted insofar as it recommends
dismissal of Selective Portfolio and Deutsche Bank.
However, as discussed above, the complaint in the present action does not include any
causes of action, cognizable or otherwise. Hubbard requests that the Court quiet title, which is
merely a remedy. And it is frankly unclear what claim Hubbard could advance against Nationwide
and New Century. Hubbard’s present theory is that Nationwide initially issued him the mortgage
and then assigned that mortgage to New Century. Compl. at PageID.11. He contends that because
that assignment was valid, the later attempted assignment to Deutsche Bank was invalid. In other
words, under Hubbard’s present theory, New Century is the valid possessor of the mortgage which
Nationwide assigned. Neither company has harmed Hubbard in any way according to his
allegations.
And regardless, or perhaps relatedly, Hubbard has not served either Nationwide or New
Century. Federal Rule of Civil Procedure 4(m) provides the time limit for service:

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If a defendant is not served within 90 days after the complaint is filed, the court-on motion or on its own after notice to the plaintiff--must dismiss the action without
prejudice against that defendant or order that service be made within a specified
time. But if the plaintiff shows good cause for the failure, the court must extend the
time for service for an appropriate period.
Id. (emphasis added).
The complaint was originally filed on October 3, 2017. The 90 day period elapsed in the beginning
of January 2018. Judge Morris issued her report and recommendation that the complaint be
dismissed on January 29, 2018. In the months since, Hubbard has made no apparent efforts to serve
Nationwide and New Century and has not requested an extension of the time for service. Given
Hubbard’s apparent disinterest in serving these Defendants and the lack of any claims (or plausible
theory of wrongdoing) against them, there is no good cause for this failure of service. Nationwide
and New Century will be dismissed without prejudice.2
IV.
Accordingly, it is ORDERED that Plaintiff Hubbard’s objections, ECF No. 14, are
OVERRULED.
It is further ORDERED that Judge Morris’s report and recommendation, ECF No. 12, is
ADOPTED in part.
It is further ORDERED that Defendants Selective Portfolio’s and Deutsche Bank’s motion
to dismiss, ECF No. 3, is GRANTED.
It is further ORDERED that Defendants Selective Portfolio and Deutsche Bank are
DISMISSED with prejudice.

2

Because the claims against Selective Portfolio and Deutsche Bank must be dismissed on res judicata grounds,
Hubbard’s assertions that the Court made factual errors in the prior case are irrelevant. Those arguments should have
been (and were) made during the original case, and the dismissal of that action has been affirmed by the Sixth Circuit.

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It is further ORDERED that Defendants Nationwide Lending Corporation and New
Century Mortgage Corporation are DISMISSED without prejudice.

Dated: July 10, 2018

s/Thomas L. Ludington
THOMAS L. LUDINGTON
United States District Judge

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 July 10, 2018.
s/Kelly Winslow
KELLY WINSLOW, Case Manager

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