Hubbard v. Nationwide Lending Corp et al

Filing 19

ORDER Denying 18 Motion for Reconsideration. Signed by District Judge Thomas L. Ludington. (KWin)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
NORTHERN DIVISION
SHERMAN M. HUBBARD,
Plaintiff,

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

v.
NATIONWIDE LENDING CORP, et al
Defendants.
__________________________________________/

ORDER DENYING MOTION FOR RECONSIDERATION
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.
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 objected, those objections
were overruled, and the complaint was dismissed. ECF Nos. 14, 16. Now, Hubbard has filed a
motion for reconsideration. ECF No. 18.
I.
The procedural history and facts underlying this matter were summarized in the Court’s
July 10, 2018, opinion and order. Because it will aid in understanding Hubbard’s present
arguments, that summary will be reproduced in full.

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-cv-11455. 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 original
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
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.

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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.
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

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New Century went bankrupt in 2008, Hubbard believes that the mortgage note has been
“extinguished.” Id. at 3.
II.
Plaintiffs have filed a motion for reconsideration. Pursuant to Eastern District of Michigan
Local Rule 7.1(h), a party can file a motion for reconsideration of a previous order, but must do so
within fourteen days. A motion for reconsideration will be granted if the moving party shows: “(1)
a palpable defect, (2) the defect misled the court and the parties, and (3) that correcting the defect
will result in a different disposition of the case.” Michigan Dept. of Treasury v. Michalec, 181 F.
Supp. 2d 731, 733-34 (E.D. Mich. 2002) (quoting E.D. Mich. LR 7.1(g)(3)). A “palpable defect”
is “obvious, clear, unmistakable, manifest, or plain.” Id. at 734 (citing Marketing Displays, Inc. v.
Traffix Devices, Inc., 971 F. Supp. 2d 262, 278 (E.D. Mich. 1997). “[T]he Court will not grant
motions for rehearing or reconsideration that merely present the same issues ruled upon by the
Court, either expressly or by reasonable implication.” E.D. Mich. L.R. 7.1(h)(3). See also Bowens
v. Terris, No. 2:15-CV-10203, 2015 WL 3441531, at *1 (E.D. Mich. May 28, 2015).
III.
In his objections to the report and recommendation, Hubbard argued that the purported
assignment to Deutsche Bank was invalid. In the Court’s July 10, 2018, opinion and order,
Defendants Select Portfolio and Deutsche Bank were dismissed with prejudice based on res
judicata. Those Defendants had been named in Hubbard’s first action, and thus “to the extent [the
claims Hubbard raised in the second suit were] not raised originally, [they] should have been.”
July 10, 2018, Op. & Order at 7. Defendants New Century and Nationwide were not named in the
first action. Accordingly, the claims against them were not barred based on res judicata. In her
report and recommendation, Judge Morris recommended that the claims against New Century and

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Nationwide be dismissed based on the doctrine of collateral estoppel. That doctrine only applies
when an issue of law was actually litigated on its merits in the previous litigation. Because it was
questionable whether that occurred here, the Court declined to dismiss New Century and
Nationwide based on collateral estoppel. However, the Court noted that the two Defendants had
not been served despite the deadline for service having long since passed. Accordingly, New
Century and Nationwide were dismissed without prejudice.
Now, Hubbard has filed a motion for reconsideration. While he makes many arguments,
none identify error in the Court’s prior opinion.
A.
First, Hubbard argues that the Court erred in dismissing New Century and Nationwide
because the Defendants were, in fact, served. Specifically, he argues that
Plaintiff served New Century Mortgage Corporation and Nationwide Lending
Corporation by certified mail by serving them at their last known address and
received back a notice that the certified letter was not deliverable as addressed and
was not able to be forwarded. In addition to this file which is supported by the Proof
of Service attached, Plaintiff actually sent by regular mail the same notice to the
Registered Agents of record for each corporation at their last known address which
was not returned.
Objs. at 2.
Hubbard’s actions were insufficient to effect service pursuant to M.C.L. 2.105(D)
(governing service of private corporations). Pursuant to the court rules, a corporation is to be
served by serving a summons on an agent or officer of the corporation, “serving a summons and a
copy of the complaint on a director, trustee, or person in charge of an office or business
establishment of the corporation” and sending a copy by registered mail to the principal office of
the corporation, or by “serving a summons and a copy of the complaint on the last presiding officer,
president, cashier, secretary, or treasurer of a corporation that has ceased to do business.” Id. If the

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corporation’s term of existence has expired, service may occur by “sending a summons and a copy
of the complaint by registered mail to the corporation or an appropriate corporation officer and to
the Michigan Bureau of Commercial Services, Corporation Division if (a) the corporation has
failed to appoint and maintain a resident agent or to file a certificate of that appointment as required
by law.” Id. at (D)(4).
Importantly, officers or agents cannot be served by mail. Walker v. Aleritas Capital Corp.,
No. 326354, 2016 WL 3749410, at *4 (Mich. Ct. App. July 12, 2016). See also Bullington v.
Corbell, 293 Mich. App. 549 (2011) (“The court rules simply do not contemplate that a plaintiff
may use certified mail as an initial form of service on corporate entities of any kind.”). The court
rules do allow for “substituted service” pursuant to M.C.R. 2.2015(I)(1), but Hubbard did not seek
leave of the state court for alternate service. Thus, New Century and Nationwide were never
served, contrary to Hubbard’s assertion.
B.
Next, Hubbard argues that he has been prejudiced because the Court denied his request to
amend his complaint in the original action. Specifically,
In the Court of Appeals, Plaintiff proceeded on the basis that the amendment should
have been granted and had it been granted, the issue presented would have been
found in his favor. However, the Court of Appeals took the position that since the
lower court did not allow the amendment, it did not happen and, accordingly,
Plaintiff’s fact and law based on the Amended Complaint which should have been
granted fail on merit in the Court of Appeals and the appeal was denied.
Objs. at 3.
Hubbard thus argues this Court (and the Court of Appeals) refused to consider the new
factual allegations he sought to add in an amended complaint. But Hubbard’s argument
fundamentally misses the reason why his original complaint and the complaint in this action were
dismissed. The factual allegations in Hubbard’s complaints are, of course, exceedingly relevant to
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his requests for relief. But relevant factual allegations are only part of a viable complaint. The suit
must also include a cognizable claim for relief which sets forth a valid legal theory entitling the
plaintiff to relief. The Court has sought to liberally construe Hubbard’s factual allegations at each
stage of his various proceedings. But Hubbard has never satisfied the second element of a viable
suit: a cognizable claim for relief. See Order Adopt Rep. & Rec. at 4–5, 7–9, Case No. 16-cv11455, ECF No. 50 (finding repeatedly that Hubbard has not identified a claim upon which relief
can be based); Order Deny Mot. Recon. at 2, Case No. 16-cv-11455, ECF No. 53 (“Hubbard’s
complaint was dismissed because he had not alleged a cognizable cause of action.”); Order Adopt
Rep. & Rec. at 7, Case No. 17-cv-13232, ECF No. 16 (“Hubbard’s complaint in the present case
does not clearly identify any causes of action.”) (emphasis in original).
Hubbard’s present motion for reconsideration appears to be premised on the idea his factual
allegations can suffice to state a claim. That is simply inaccurate. Hubbard’s motion for leave to
file an amended complaint in the original action was denied because Hubbard had not identified
any cognizable causes of action. See Order Adopt Rep. & Rec. at 11, Case No. 16-cv-11455, ECF
No. 53. That conclusion was affirmed by the Court of Appeals. Because Hubbard had the
opportunity to advance the factual allegations he continues to advance, but failed to identify their
legal significance, his second suit was dismissed on res judicata grounds. Hubbard contends that,
given his pro se status during the first suit, the outcome is unfair. See Objs. at 6. But the entire
purpose of the doctrine of res judicata is to ensure finality of actions. Parties litigate at their own
risk.
The majority of Hubbard’s motion for reconsideration consists of generalized assertions of
wrongdoing by Deutsche Bank and Selective Portfolio. These arguments largely reiterate claims
previously made by Hubbard. These nonspecific arguments fall far short of identifying a palpable

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error in the Court’s prior opinion. Indeed, Hubbard never identifies the theory of relief upon which
he is relying. That fatal flaw has existed in Hubbard’s complaints from the beginning to this end.
IV.
Accordingly, it is ORDERED that Plaintiff Hubbard’s motion for reconsideration, ECF
No. 18, is DENIED.

Dated: July 31, 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 31, 2018.
s/Kelly Winslow
KELLY WINSLOW, Case Manager

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