McKinney v. Misico Investments, L L C et al

Filing 123

MEMORANDUM and ORDER granting Defendants' Motions to Dismiss and Dismissing Case re: 38 Motion to Dismiss; 71 Motion to Dismiss; 81 Motion to Dismiss; 84 Motion to Dismiss; 109 Motion to Dismiss; 5 Motion to Dismiss; 115 Motion to Dismiss. Signed by District Judge Avern Cohn. (JOwe)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
NORMAN ALLEN McKINNEY,
Plaintiff,
vs.

Case No. 11-10467

MISICO INVESTMENTS, LLC.,
ALEX DAVID MISICO, JULIE D. MISICO,
NORTHERN MICHIGAN REAL ESTATE
INVESTMENT ASSOCIATION, EQUITY TRUST
FUND CUSTODIAN, CROSSROADS TITLE,
STEWART TITLE, MORTGAGE ELECTRONIC
REGISTRATION SYSTEMS, HOMECOMINGS
FINANCIAL, PAVILION TITLE, E-TITLE AGENCY,
DEUTSCHE BANK, GARY KERN,
AND MICHAEL BOWKER,

HON. AVERN COHN

Defendants.
_________________________________________/
MEMORANDUM AND ORDER GRANTING DEFENDANTS’ MOTIONS TO DISMISS
(Docs. 5, 38, 71, 81, 84, 109, 115)
AND
DISMISSING CASE1
I. Introduction
This is a case essentially claiming mortgage fraud. Plaintiff is pro se. The
complaint names 14 defendants and contains six counts, as follows:
Count I

fraudulent and negligent misrepresentations, breach of law, breach
of contacts, failure in fiduciary duties

Count II

violations of the Truth in Lending Act (TILA), 15 U.S.C. 1601 et seq

Count III

violations of the Federal Trade Commission Act, 15 U.S.C. 41 et
seq

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Although these motions were scheduled for hearing, upon review of the parties’
papers, the Court deems this matter appropriate for decision without oral argument.
See Fed. R. Civ. P. 78(b); E.D. Mich. LR 7.1(f)(2).

Count IV

violations of the Equal Credit Protection Act (ECPA), 15 U.S.C.
1691 et seq

Count V

violations of the Real Estate Settlement Procedures Act (RESPA),
15 U.S.C. § 2601 et seq

Count IV

violations of civil and constitutional rights

Before the Court are motions to dismiss under Fed. R. Civ. P. 12(b)(6) filed by the
following defendants:2
•

e-Title Agency (e-Title) (Doc. 5)

•

Stewart Title Guaranty Company (Stewart Title) (Doc. 38)

•

Mortgage Electronic Registration System, Inc. (MERS) (Doc. 71)

•

Crossroads Title (Doc. 81)

•

Pavilion Title Agency, Inc. (Pavilion Title) (Doc. 84)

•

Homecomings Financial (Homecomings) and Deutsche Bank Trust
Company Americas’s (Deutsche Bank) (Doc. 109)

•

Gary Kern and Michael Bowker (Doc. 115)

For the reasons that follow, the motions will be granted. Plaintiff’s claims against
the moving defendants will be dismissed with prejudice. Further, the remaining
unserved defendants will be dismissed without prejudice. Finally, the defaulted party
will be dismissed for lack of prosecution. This order will close the case.
2

Also before the Court are plaintiff’s motions for discovery against some of the
moving defendants. Docs. 64, 88, 89, 90, 91. Given the Court’s determination on
defendants’ motion to dismiss, and because plaintiff’s discovery requests do not save
his complaint from dismissal, these motions are DENIED AS MOOT. Plaintiff’s motion
for rescission and the right of rescission, Doc. 62, is likewise DENIED.
Additionally, Gary Kern and Michael Bowker filed a motion to amend their
answer, Doc. 114, on the grounds that they retained counsel who desired to file an
amended answer on their behalf. Plaintiff opposes the motion. The motion is
GRANTED.
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II. Background
As best as can be gleaned from the complaint, plaintiff owned property in
Wexford County on which he began building a home. In April of 2004, plaintiff entered
into a financial arrangement with the Misico defendants in order that Plaintiff could
obtain financing to complete the construction of the home on the Wexford property.
(Complaint at ¶ 25). Specifically, Plaintiff alleges that he was induced into transferring
the Wexford property to the Misico defendants in order to secure financing to complete
the construction of the home. (Complaint at ¶ 25). After plaintiff conveyed title to Misico
Investments, Misico Investments quit claimed the property to Alex D. Misico who in
2005 obtained a mortgage from Homecomings. The mortgage was later assigned to
Deutsche Bank. Plaintiff alleges he was not aware of the mortgage.
Plaintiff further alleges that according to his agreement with the Misico
defendants, he made monthly payments to them. Alex D. Misico subsequently
defaulted on the mortgage. Deutsche Bank foreclosed on the property and purchased it
at a Sheriff’s sale, obtaining a Sheriff’s deed.
On August 21, 2009, Gary Kern and Michael Bowker purchased the property
from Deutsche Bank for $24,000.
Plaintiff alleges that as a result of the foreclosure, foreclosure sale, and
subsequent sale, he has been wrongfully deprived of his interest in the property.
The complaint essentially allege that defendants defrauded plaintiff out of his
ownership interest in the property. Plaintiff asserts a variety of claims and names the
following defendants:

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Misico Investments LLC
Alex David Misico
Julie D. Misico3
Northern Michigan Real Estate Investment Association
Equity Trust Fund Custodian
Crossroads Title
Stewart Title
MERS
Homecomings
Pavilion Title
e-Title
Deutsche Bank
Gary Kern
Michael Bowker
It appears that neither the Misico defendants nor Northern Michigan Real Estate
Investment Association have not been served. A Clerk’s entry of default was entered
against Equity Trust Fund Custodian (Doc. 13). However the Clerk denied entry of a
default judgment because the form of judgment was not proper. (Doc. 15). The
remaining defendants, as noted above, have all filed motions to dismiss.
III. Legal Standard
A motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6) tests
the sufficiency of a complaint. To survive a Rule 12(b)(6) motion to dismiss, the
complaint's “factual allegations must be enough to raise a right to relief above the
speculative level on the assumption that all of the allegations in the complaint are true.”
Bell Atlantic Corp. v. Twombley, 550 U.S. 544, 545 (2007). See also Ass’n of Cleveland
Fire Fighters v. City of Cleveland, Ohio, 502 F.3d 545, 548 (6th Cir.2007). The court is
“not bound to accept as true a legal conclusion couched as a factual allegation.”

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Misico Investments, LLC, Alex Misico, and Julie Misico will be collectively
referred to as “the Misico defendants.”
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Aschcroft v. Iqbal, ___ U.S. ___, 129 S.Ct. 1937, 1950 (internal quotation marks and
citation omitted). Moreover, “[o]nly a complaint that states a plausible claim for relief
survives a motion to dismiss.” Id. Thus, “a court considering a motion to dismiss can
choose to begin by identifying pleadings that, because they are no more than
conclusions, are not entitled to the assumption of truth. While legal conclusions can
provide the framework of a complaint, they must be supported by factual allegations.
When there are well-pleaded factual allegations, a court should assume their veracity
and then determine whether they plausibly give rise to an entitlement to relief.” Id. In
sum, “[t]o survive a motion to dismiss, a complaint must contain sufficient factual matter,
accepted as true, to state a claim for relief that is plausible on its face.” Id. at 1949
(internal quotation marks and citation omitted).
In ruling on a motion to dismiss, the Court may consider the complaint as well as
(1) documents referenced in the pleadings and central to plaintiff's claims, (2) matters of
which a court may properly take notice, (3) public documents, and (4) letter decisions of
government agencies may be appended to a motion to dismiss. Tellabs, Inc. v. Makor
Issues & Rights, Ltd., 551 U.S. 308, 127 S.Ct. 2499, 2509 (2007). Here, the Court has
considered documents relating to the foreclosure which are referenced in the complaint
and central to plaintiff’s claims.
Pro se pleadings filed in civil rights cases are liberally construed and held to a
less stringent standard than formal pleadings drafted by lawyers. McNeil v. United
States, 508 U.S. 106, 113 (1993); Boag v. MacDougall, 454 U.S. 364, 365 (1982).
However, pro se plaintiffs must comply with Rule 8 of the Federal Rules of Civil
Procedure which provides that a complaint must contain “a short and plain statement of
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the claim showing that the pleader is entitled to relief....” LRL Properties v. Portage
Metro Housing Authority, 55 F.3d 1097, 1104 (6th Cir. 1995).
A. Initial Matters
All of the defendants have moved to dismiss for the same reasons. In light of the
overlapping arguments, rather than discuss each motion separately, the Court will
analyze each claim of the complaint and determine whether it states a plausible claim
against any of the moving defendants. Before addressing each claim, three of the
motions require some comment.
As to Crossroads Title’s motion, plaintiff did not file a response. Standing alone,
plaintiff's failure to respond is insufficient grounds upon which to dismiss the complaint
in its entirety. See Carver v. Bunch, 946 F.2d 451, 455 (6th Cir.1991). Rather, in
analyzing whether any of plaintiff’s claims state a viable claim against the moving
defendants, the Court has considered Crossroad Title’s arguments. As will be
explained, plaintiff’s claims fail to state a claim against any of the moving defendants,
and those reasons apply equally to Crossroads Title.
As to Stewart Title’s motion, Stewart Title says dismissal is appropriate because
it is not mentioned anywhere in the complaint except in the case caption. Stewart Title
further argues that while there are allegations of “defendants” lumped together, there
are insufficient facts within any of the paragraphs or counts from which one could infer
any allegations of wrongdoing against Stewart Title. The Court agrees. The complaint
does not name Stewart Title under any of the counts; allegations as to “defendants” are
insufficient to give Stewart Title notice of what claims are being asserted against it.
Dismissal on these grounds is appropriate. Moreover, even if plaintiff named Stewart
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Title in the allegations under the counts of the complaint, the complaint is still deficient
for the reasons explained below.
As to e-Title’s motion, e-Title says that the complaint must be dismissed as to it
because e-Title is named in only two paragraphs of the complaint, paragraphs 8 and 9,
in which plaintiff is describing the parties. There are no specific allegations of
wrongdoing against it in the counts of the complaint. E-Title argues, like Stewart Title,
that the complaint fails to put it on fair notice of what claims it must defend. The Court
agrees. The complaint is subject to dismissal against e-Title on these grounds.
Moreover, as with Crossroads Title and Stewart Title, even if plaintiff named e-Title in
the allegations under the counts of the complaint, the complaint is still deficient.
B. The Complaint
1. Count I - fraudulent and negligent misrepresentations, breach of law, breach of
contracts, failure in fiduciary duties
As to plaintiff’s breach of contract claim, defendants argue that plaintiff has not
alleged a contractual relationship with any of the moving defendants. To state a claim
for breach of contract, plaintiffs must plead: (1) the existence of a contract between
them and the defendant; (2) the terms of the contract; (3) breach of the contract by the
defendant; and (4) that the breach caused plaintiff’s injury. See Webster v. Edward D.
Jones & Co., 197 F.3d 815, 819 (6th Cir. 1999).
The complaint fails to (1) allege the existence of a contract between him and any
of the moving defendants; (2) point to the provision of a contract breached
by any of the moving defendants; or (3) allege a breach committed by any of the
defendants. At best, plaintiff alleges that defendants “allowed” breaches. This is
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insufficient to state a breach of contract claim. Moreover, to the extend plaintiff is
seeking relief based on the mortgage between the Misico defendants and Deutsch
Bank, he was not a party to that contract; therefore, he has no basis to sue for breach.
Plaintiff’s breach of fiduciary duty claim likewise fails because there is no
fiduciary relationship between plaintiff and any of the moving defendants. To establish
a fiduciary relationship, one must repose faith, confidence, and trust in the fiduciary and
rely on the judgment and advice of the fiduciary. Ulrich v. Federal Land Bank of St.
Paul, 192 Mich. App. 194, 196 (1991); Farm Credit Services v. Weldon, 232 Mich. App.
662, 680-681 (1998). Relief is granted when such confidence has been reposed and
betrayed. Id.
Here, there was no contractual relationship between plaintiff and any of the
moving defendants. None of the moving defendants entered into any loan agreements
with plaintiff. Even if they had, the relationship between a borrower and a lender will
generally not establish a fiduciary relationship. Id. As such, plaintiff’s fiduciary duty
claim must be dismissed.
Finally, plaintiff’s fraud claims for fraudulent and negligent misrepresentation fail
because plaintiff has not alleged any of the elements of fraud against the moving
defendants. Fed. R. Civ. P. 9(b) requires that claims concerning allegations of fraud be
stated with particularity. Coffey v. Foamex L.P., 2 F.3d 157, 161-162 (6th Cir. 1993).
General, conclusory allegations do not satisfy this requirement. Craighead v. E.F.
Hutton & Co., 899 F.2d 485, 491 (6th Cir. 1990). Rather, a plaintiff must specify: “the
parties and the participants to the alleged fraud, the representations made, the nature in
which the statements are alleged to be misleading and false, the time, place and
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contents of the representations, the fraudulent scheme, the fraudulent intent of the
defendants, reliance on the fraud, and the injury resulting from the fraud.” Eby v.
Producers Co-Op, Inc., 959 F. Supp. 428, 431 (W.D. Mich. 1997) (citing Michaels
Building Co. v. Ameritrust Co. N.A., 848 F.2d 674 (6th Cir. 1998).)
To state a claim for negligent misrepresentation, plaintiff must allege that he
“justifiably relied to his detriment on information prepared without reasonable care by
one who owed the relying party a duty of care.” See, Law Offices of Lawrence J
Stockler v. Rose, 174 Mich. App. 14, 30 (1989).
Here, plaintiff has not alleged fraud in any respect. All that plaintiff alleges is
that: 1) “Defendants in a Leaseback/rent-to-buy-back scheme, fraudulently and
negligently, misrepresented the Defendants actions to Plaintiff, ***;” and 2) “said
misrepresentations and actions of Defendants in this action, were made to induce
Plaintiff, . . .” (Complaint at ¶¶ 41 and 42). These allegations fail to state a plausible
claim for fraud as to any of the moving defendants.
2. Count II- Violations of TILA
Defendants argue that plaintiff’s claim for violation of the TILA should be
dismissed for several reasons. First, defendants say that plaintiff fails to allege which
sections of TILA were allegedly violated, and the claim should be dismissed for that
reason alone. Moreover, plaintiff has not alleged any actions or omissions by any of the
moving defendants that constitute a violation of TILA. The Court agrees. The complaint
alleges is that “Defendants in this action, refused, conspired, and failed to provide the
proper written disclosures, and other important documentation and charges . . . ”
(Complaint at ¶ 43). This is insufficient to state a TILA claim.
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Defendants also contend that plaintiff’s claim is barred by the statute of
limitations. TILA actions must be brought within one year from the date of the
occurrence of the violation. 15 U.S.C. 1640(e)(“Any action under this section may be
brought . . . within one year from the date of the occurrence of the violation”). See also,
Rudisell v. Fifth Third Bank, 622 F.2d. 243, 246 (6th Cir. 1980).
According to the complaint, the mortgage at issue (with the Misico defendants)
was consummated in 2005. Plaintiff did not file this action until February 2011, more
than six years later. As such, a TILA claim, even if properly plead, it time barred and
subject to dismissal.
3. Count III - Violations of the FTCA
Defendants argue that like plaintiff’s TILA claim, plaintiff’s FTCA claim is flawed
because plaintiff has failed to allege how any of the moving defendants violated it.
Moreover, plaintiff fails to allege which sections of the FTCA were allegedly violated.
Instead, plaintiff merely states that “the FTC Act was also violated by Defendants unfair
acts, and practices . . . . (Complaint at ¶ 45). The Court agrees. Plaintiff has not stated
a claim for violation of the FTCA.
Moreover, the FTCA does not provide for a private right of action. Because the
interest protected by the statute is that of the public at large, there is no private right of
action to enforce its provisions. 15 U.S.C. § 45 speaks only in terms of the Federal
Trade Commission’s power to enforce the Act. See Greenberg v. Michigan Optometric
Ass'n, 483 F.Supp. 142 (E.D. Mich. 1980).
4. Count IV - Violations of the ECPA
Defendants argue that this claim fails because plaintiff has not alleged that any of
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the moving defendants violated the ECPA. The Court agrees. All that plaintiff has
alleged is that “The EOCA [sic] Regulation B, sec. 706, prohibits Defendants from
discriminating against Plaintiff exercising his rights.” (Complaint at ¶ 47). Plaintiff has
not alleged any actions or omissions by the moving defendants that constitute a
violation of ECPA (nor can he). Moreover, as stated above, plaintiff did not have a
contractual relationship with any of the moving defendants. This count must be
dismissed.
5. Count V - Violations of RESPA
Defendants argue that plaintiff’s RESPA claim should be dismissed for several
reasons. First, plaintiff does not allege which sections of RESPA were allegedly
violated. This alone is grounds for dismissal. Moreover, to the extent plaintiff alleges
that certain disclosures were not provided, in violation of § 2604, the claim should be
dismissed because “there is no private civil action for a violation of 12 U.S.C. § 2604(c),
or any regulations relating to it.” Collins v. FMHA-USDA, 105 F.3d 1366, 1368 (11th
Cir. 1997).
Third, to the extent plaintiff intended to allege a violation of § 2605, it must be
dismissed because it is time-barred. Section 2605 of RESPA governs, among other
things, the transfer or assignment of the right to service a mortgage loan, and must be
brought within one year from the date of the violation. See 12 U.S.C. § 2614. Here,
plaintiff alleges that the assignment occurred in March 2008, but did not file the action
until three years later. (Complaint at ¶ 34). Thus, the claim, even if properly plead, is
time-barred.

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6. Count VI - Violations of Plaintiff’s Civil and Constitutional Rights
Defendants are correct in arguing that Count VI should be dismissed because
plaintiff has not alleged any wrongdoing by any of the moving defendants which would
constitute a violation of plaintiff’s constitutional rights. The complaint contains only
conclusory allegations that “Defendants actions, acting in concert, in a conspiracy
against Plaintiff, has allowed violations of Plaintiff’s rights, including but not limited to,
violation of due process of the law.” (Complaint at ¶ 53).
While the Court agrees that this claim is plead in a conclusory fashion, there is
another reason for dismissal. That is, plaintiff has not alleged any state action in this
case. While plaintiff alleges a violation of his Fourteenth Amendment rights, “a
predicate to finding a due process violation is a finding of state action.” Northrip v.
Federal National Mortgage Association, 527 F.2d 23, 25 (6th Cir. 1975). The Michigan
Court of Appeals, interpreting the due process clause, has held that “foreclosure by
advertisement is not a judicial action and does not involve state action for purposes of
the Due Process Clause, but rather is based on contract between the mortgagor and
the mortgagee.” Cheff v. Edwards, 203 Mich. App. 557, 560 (1994). Plaintiff has not
alleged that any of the moving defendants are state actors or how any other state
action occurred in this case. Count VI must be dismissed.
V. Conclusion
For the reason stated above, defendants’ motions to dismiss are GRANTED.
Crossroads Title, e-Title, Stewart Title, MERS, Pavilion Title, Homecomings and
Deutsche Bank, and Gary Kern and Michael Bowker are DISMISSED WITH
PREJUDICE.
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As noted above, the Misico defendants and Northern Michigan Real Estate
Investment Association have not been served. Federal Rule of Civil Procedure 4(m)
provides that:
[i]f a defendant is not served within 120 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.
Fed R. Civ. P. 4(m). The 120-day period allowed by Rule 4(m) has expired. Plaintiff
has not moved for an extension of time to serve the summons and complaint on the
unserved defendants nor otherwise demonstrated why service has not been made.
Accordingly, the unserved defendants are DISMISSED WITHOUT PREJUDICE.
As to the defaulted party, Equity Trust Fund Custodian, on March 7, 2011, the
Clerk denied entry of a default judgment because plaintiff failed to comply with Fed. R.
Civ. P. 55(b)(1). To date, plaintiff has taken no action to cure the deficiencies.
Accordingly, plaintiff’s claims against Equity Trust Fund Custodian are DISMISSED for
lack of prosecution. See E.D. Mich. LR 41.2 (which provides that if a party has not
taken action within a reasonable time, the court may enter an order dismissing the case
for lack of prosecution.)
This case is CLOSED.
SO ORDERED.

Dated: November 3, 2011

S/Avern Cohn
AVERN COHN
UNITED STATES DISTRICT JUDGE

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11-10467 McKinney v. Misico Investments, LLC, et al
Memorandum & Order Granting Defendants’ Motions to Dismiss

CERTIFICATE OF SERVICE

I hereby certify that a copy of the foregoing document was mailed to Norman Allen
McKinney, 3401 Whisper Ridge Drive, Lapeer, MI 48446 and the attorneys of record on
this date, November 3, 2011, by electronic and/or ordinary mail.

S/Julie Owens
Case Manager, [phone]

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