Sembly et al v. U.S. Bank National Association ND

Filing 9

OPINION AND ORDER GRANTING DEFENDANT'S 4 MOTION to Dismiss. Signed by District Judge Gerald E. Rosen. (RGun)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION

JESSE SEMBLY and TYESE
GRAHAM,
Plaintiffs,

No. 11-12322
Hon. Gerald E. Rosen

vs.

U.S. BANK NATIONAL ASSOCIATION,
Defendants.
___________________________________/
OPINION AND ORDER GRANTING DEFENDANT’S MOTION TO DISMISS
I. INTRODUCTION
This case involves a challenge by Plaintiffs Jesse Sembly and Tyese Graham
(“Plaintiffs”) to the foreclosure of their home. Plaintiffs’ complaint attempts to allege
seven separate claims against Defendant U.S. Bank National Association (“Defendant”).
Defendant has moved to dismiss all of Plaintiffs’ claims. Having reviewed the parties’
briefs, the Court finds that the pertinent allegations and legal arguments are sufficiently
addressed in these materials and that oral argument would not assist in the resolution of
this motion. Accordingly, the Court will decide Defendant’s motion “on the briefs.” See
L.R. 7.1(f)(2). The Court’s opinion and order is set forth below.
II. FACTUAL BACKGROUND
Plaintiffs entered into an $180,000 mortgage for their home on January 26, 2006.
That mortgage was later assigned to Defendant. During 2008 and 2009, Defendant

entered into multiple agreements with Plaintiffs regarding their mortgage, including at
least one loan modification and at least one loan deferment. Despite these arrangements,
Plaintiffs ultimately defaulted on their loan in September 2009. In May 2010, Defendant
initiated foreclosure proceedings, which culminated in the sale of Plaintiffs’ home on
August 25, 2010.
The statutory redemption period for Plaintiffs’ home expired on February 25,
2011. Accordingly, Defendant instituted eviction proceedings on March 29, 2011.
Plaintiffs did not contest the mortgage default or subsequent foreclosure until filing the
instant seven-count complaint on April 20, 2011. Defendant removed the case to this
Court on May 26, 2011 and filed a motion to dismiss Plaintiffs’ entire complaint on June
2, 2011.
III. ANALYSIS
A.

Plaintiffs Have Standing to Challenge Their Foreclosure
“In order for a federal court to exercise jurisdiction over a matter, the party

seeking relief must have standing to sue.” Zurich Ins. Co., v. Logitrans, Inc., 297 F.3d
528, 531 (6th Cir. 2002) (quoting Kardules v. City of Columbus, 95 F.3d 1335, 1346 (6th
Cir. 1996)). The “irreducible constitutional minimum” of standing requires that Plaintiffs
show: “(1) [they have] suffered an ‘injury in fact’ that is (a) concrete and particularized
and (b) actual or imminent, not conjectural or hypothetical; (2) the injury is fairly
traceable to the challenged action of the defendant; and (3) it is likely, as opposed to
speculative, that the injury will be redressed by a favorable decision.” Friends of the
Earth, Inc. v. Laidlaw Envtl. Servs., 528 U.S. 167, 180–81 (2000) (citing Lujan v.
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Defenders of Wildlife, 504 U.S. 555, 560–61 (1992)). Redressability, the only prong
contested here, requires “a likelihood that the requested relief will redress the alleged
injury.” Nader v. Blackwell, 545 F.3d 459, 471 (6th Cir. 2008) (quoting Steel Co. v.
Citizens for a Better Env’t, 523 U.S. 83, 103 (1998)).
When a mortgage foreclosure is initiated, Michigan law provides a six month
redemption period for most mortgages; the redemption period is a span of time during
which the foreclosed mortgagor can remit the amount owed, thereby averting foreclosure.
Mich. Comp. Laws § 600.3240(1)-(2), (8). Generally, once the redemption period
expires, so too does the mortgagor’s rights in the property. Salman v. U.S. Bank, NA, No.
11-10253, 2011 WL 4945845, at *3 (E.D. Mich. Oct. 18, 2011). The redemption period
generally serves as a mortgagor’s last chance to avoid losing their home after a valid
foreclosure sale. Courts will only interfere when there is a clear showing of fraud,
accident, or mistake. Overton v. Mortg. Elec. Registration Sys., No. 284950, 2009 WL
1507342, at *1 (Mich. Ct. App. May 28, 2009); Freeman v. Wozniak, 617 N.W.2d 46,
48-49 (Mich. Ct. App. 2000) (discussing Senters v. Ottawa Sav. Bank, 503 N.W.2d 639
(Mich. 1993)).
Here, Plaintiffs admit that their redemption period expired on February 25, 2011.
Defendant thus claims that Plaintiffs fail the redressability prong of standing because the
redemption period expired, meaning the foreclosure sale had finalized. In other words,
Defendant argues that the remedy sought by Plaintiffs -- rescission of the foreclosure sale
-- will not redress the injury alleged because the remedy is not available: the expiration of
the redemption period extinguished Plaintiffs’ rights in their home.
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On the one hand, Defendant is correct in stating that Plaintiffs’ rights in, and title
to, their home were extinguished when the statutory redemption period expired. See
Mich. Comp. Laws § 600.3240; Salman v. U.S. Bank, NA, No. 11-10253, 2011 WL
4945845, at *3 (E.D. Mich. Oct. 18, 2011). However, while the expiration of the
redemption period has serious consequences for Plaintiffs’ legal rights, the Court retains
the power to rescind the foreclosure sale -- even after the expiration of the redemption
period -- if the sale itself was invalid based on a showing of fraud or irregularity. Id.;
Overton v. Mortg. Elec. Registration Sys., No. 284950, 2009 WL 1507342, at *1 (Mich.
Ct. App. May 28, 2009).
Redressability is thus only lacking if the redemption period has expired and the
foreclosure sale was valid. “Otherwise, statutory foreclosures could never be set aside
once the redemption period had expired. While ‘statutory foreclosures should not be set
aside without very good reason,’ it is possible for courts to set statutory foreclosures
aside.” Hornbuckle v. Mortg. Elec. Registration Sys., Inc., No. 10–14306, 2011 WL
5509214, at *5 (E.D. Mich. Nov. 10, 2011) (quoting United States v. Garno, 974 F. Supp.
628, 633 (E.D. Mich. 1997)). See also Langley v. Chase Home Fin. LLC, No. 10–604,
2011 WL 1130926, at *2 n. 2 (W.D. Mich. Mar. 28, 2011). Here, setting aside the
foreclosure sale remains a viable remedy since Plaintiffs challenge the validity of the sale
for fraud. As such, redressability is not lacking. Nader v. Blackwell, 545 F.3d 459, 471
(6th Cir. 2008) (citation omitted). Therefore, Plaintiffs have standing to challenge their
foreclosure.

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B.

Applicable Standards
In asserting a claim for relief, the Federal Rules of Civil Procedure require a short

and plain statement of the claim, entitlement to relief, and the relief requested. Fed. R.
Civ. P. 8(a). Furthermore, when alleging fraud or mistake, Rule 9(b) requires that “a
party must state with particularity the circumstances constituting fraud or mistake.” Fed.
R. Civ. P. 9(b). The Sixth Circuit has interpreted Rule 9(b) as requiring that Plaintiffs
describe specific statements, identify the speaker, specify when and where the statement
was made, and explain why the statements were fraudulent. Frank v. Dana Corp., 547
F.3d 564, 569-70 (6th Cir. 2008). “The threshold test is whether the complaint places the
[D]efendant on sufficient notice of the misrepresentation, allowing the [Defendant] to
answer, addressing in an informed way the [Plaintiffs’] claim of fraud.” Kashat v.
Paramount Bancorp, Inc., No. 09-10863, 2010 WL 538295, at *4 (E.D. Mich. Feb. 10,
2010). When a party fails to meet its Rule 9(b) burden, dismissal is warranted.
In deciding a motion brought under Rule 12(b)(6), the Court must construe the
complaint in the light most favorable to the Plaintiffs and accept all well-pled factual
allegations as true. League of United Latin Am. Citizens v. Bredesen, 500 F.3d 523, 527
(6th Cir. 2007). To withstand a motion to dismiss, however, a complaint “requires more
than labels and conclusions, and a formulaic recitation of the elements of a cause of
action will not do.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). The factual
allegations in the complaint, accepted as true, “must be enough to raise a right to relief
above the speculative level,” and must “state a claim to relief that is plausible on its
face.” Id. at 570. “A claim has facial plausibility when the [Plaintiffs] pleads factual
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content that allows the court to draw the reasonable inference that the [D]efendant is
liable for the misconduct alleged.” Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009). The
Court must “construe the complaint in the light most favorable to the [Plaintiffs], accept
[their] allegations as true, and draw all reasonable inferences in favor of the [Plaintiffs].”
DirecTV, Inc. v. Treesh, 487 F.3d 471, 476 (6th Cir. 2007). However, the Court “need
not accept as true legal conclusions or unwarranted factual inferences.” Id. (quoting
Gregory v. Shelby Cnty., 220 F.3d 433, 446 (6th Cir. 2000)).
C.

Count I - Quiet Title
A quiet title action is an attempt to establish a substantive right in property. Beach

v. Twp. of Lima, 802 N.W.2d 1, 8 (Mich. 2011). Plaintiffs attempts to ground their quiet
title claim in a variety of vague allegations ranging from the “robo-signing”1 of affidavits
to misleading conduct more generally. This claim fails as a matter of law because
Plaintiffs have not pled sufficient facts to raise their right to relief above the speculative
level. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). Accordingly, the Court will
dismiss this claim.
Under Michigan law, any individual who claims a right in or title to land may
bring an action against anyone who claims an inconsistent interest. Mich. Comp. Laws
§ 600.2932(1). In order to establish superior title, however, Plaintiffs bear the initial
burden of proof and must establish a prima facie case for title, at which point the burden
1

“Robo-signing” in the foreclosure context refers to the practice of approving
foreclosures without proper reviewing of documentation. Robostop, The Economist, Oct.
14, 2010, available at http://www.economist.com/node/17257787 (last accessed Dec. 29,
2011).
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of proving superior title shifts to Defendant. Beulah Hoagland Appleton Qualified Pers.
Residence Trust. v. Emmet Cnty Rd. Comm’r, 600 N.W.2d 698, 700 (Mich. Ct. App.
1999); Stinebaugh v. Bristol, 347 N.W.2d 219, 221 (Mich. Ct. App. 1984). Establishing
a prima facie case of title requires a description of the chain of title through which
ownership is claimed. Johns v. Dover, No. 291028, 2010 WL 2696656, at *1 (Mich. Ct.
App. July 8, 2010).
Plaintiffs, however, have made no attempt to show a chain of title, let alone one
that demonstrates a superior claim of ownership in Plaintiffs’ favor. Plaintiffs have failed
to make any pertinent factual allegations, instead resorting to conclusory statements. Bell
Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). As such, Plaintiffs have failed to state
a claim for which relief can be granted. Fed. R. Civ. P. 12(b)(6). Furthermore, to the
extent Plaintiffs’ quiet title claim relies on allegedly fraudulent conduct, Plaintiffs have
failed to allege any specific conduct such that their complaint falls well short of Rule
9(b). See Frank v. Dana Corp., 547 F.3d 564, 569-70 (6th Cir. 2008). Therefore,
dismissal is appropriate.2

2

Plaintiffs attempt to integrate a supposed violation of Mich. Comp. Laws § 600.3205c
throughout their complaint, apparently in the hope that this allegation will salvage their
complaint. Section 600.3205c establishes rules for mortgage parties engaging in loan
modification discussions. Plaintiffs claim that Defendant violated portions of this statute.
However, Plaintiffs’ reliance on this statute fails as a matter of law. While § 600.3205c
indeed establishes procedural requirements the mortgagee must comply with, they only
govern the parties when the mortgagor contacts a housing counselor under § 600.3205b.
Mich. Comp. Laws § 600.3205c(1). Nowhere in Plaintiffs’ complaint is there any
intimation that Plaintiffs contacted a housing counselor. As such, Plaintiffs’ claim under
§ 600.3205c fails as a matter of law.
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D.

Count II - Unjust Enrichment
The text comprising Count II of Plaintiffs’ complaint, a claim for unjust

enrichment, is copied nearly identically from Count I of Plaintiffs’ complaint.3
Establishing a claim for unjust enrichment requires (1) receipt of a benefit by Defendant
from Plaintiffs, and (2) an inequity resulting to Plaintiffs because of Defendant’s
retention of the benefit. J&J Plumbing & Heating LLC v. Tate, Nos. 277824, 279838,
2008 WL 4891807, at *4 (Mich. Ct. App. Nov. 13, 2008). Predictably, this claim also
fails to state a claim upon which relief can be granted since Plaintiffs’ allegations are
chiefly concerned with procedural defects in the loan modification process and alleged
“robo-signing”. That is, Plaintiffs’ allegations bear little relation to a claim of unjust
enrichment; Plaintiffs have not specified the benefit received by Defendant or the
inequity resulting from the retention thereof. Furthermore, to the extent Plaintiffs allege
that Defendant’s conduct “constituted a deceptive act[,]” this claim sounds in fraud and
fails to pass muster under Rule 9(b) because Plaintiffs have made no attempt at
describing allegedly deceptive conduct in any detail whatsoever. Therefore, dismissal is
warranted. Fed. R. Civ. P. 9(b), 12(b)(6).
E.

Count III - Innocent/Negligent Misrepresentation
Plaintiffs’ third claim mistakenly conflates two separate causes of action: innocent

misrepresentation and negligent misrepresentation. Innocent misrepresentation requires
3

At this point it should be noted that Plaintiffs’ attorney has reused vast swaths of this
complaint in other cases in this District, with minimal success. See, e.g., Smith v. Bank of
America Corp., No. 10-14161 (E.D. Mich. filed Oct. 18, 2010); Bingham v. Bank of
America, N.A., No. 10-11917 (E.D. Mich. filed May 12, 2010); Smith v. Wells Fargo
Home Mortg., No. 09-13988 (E.D. Mich. filed Oct. 8, 2009).
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showing that Plaintiffs detrimentally relied upon a false representation such that Plaintiffs
were injured to Defendant’s benefit. Unibar Maint. Serv., Inc. v. Saigh, 769 N.W.2d 911,
919 (Mich. Ct. App. 2009). Fraudulent intent is not required. Id. Negligent
misrepresentation requires Plaintiffs to prove that they justifiably relied to their detriment
on information prepared by Defendant, and that Defendant owed a duty of care.” Id.
However titled, Plaintiffs allege that Defendant misled them regarding the prospect of a
loan modification. (Pls.’ Compl. ¶ 54.)
Plaintiffs rely on vague, conclusory statements and thus have failed to meet the
standard established by Rule 9(b). Plaintiffs have not specified what misrepresentations
were made, let alone who made them and when. As such, there is no way Plaintiffs’
complaint can be read as putting Defendant on notice so as to enable an informed and
competent response. Kashat v. Paramount Bancorp, Inc., No. 09-10863, 2010 WL
538295, at *4 (E.D. Mich. Feb. 10, 2010). Plaintiffs instead make vague
characterizations and legally conclusory statements. Therefore, this claim will be
dismissed as well. Fed. R. Civ. P. 9(b).
F.

Count IV - Fraud
Count IV of Plaintiffs’ complaint, alleging fraud, completely falls short of both

Rule 9(b) and Rule 12(b)(6). Plaintiffs’ most substantive allegations regarding fraud
merely allege that “Defendant failed to disclose to Plaintiffs their intention to go forward
with the Sheriff Sale[]” and that “Defendant’s representations were false, when they were
made, as Defendant did not intend to fulfill its obligations to the Plaintiffs.” (Pls.’
Compl. ¶ 61-62.) Plaintiffs’ complaint attempts to plead the elements of fraud and little
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more. Consequently, Plaintiffs have failed to allege specific facts raising the right to
relief above the speculative level, and have failed to put Defendant on notice regarding
the specific misrepresentations allegedly made. Bell Atl. Corp. v. Twombly, 550 U.S.
544, 570; Kashat v. Paramount Bancorp, Inc., No. 09-10863, 2010 WL 538295, at *4
(E.D. Mich. Feb. 10, 2010). Therefore, dismissal is appropriate. Fed. R. Civ. P. 9(b),
12(b)(6).
G.

Count V - Constructive Trust
Plaintiffs’ fifth claim is titled constructive trust. However, a constructive trust is a

remedy, not a cause of action. As such, the Court will dismiss this claim as well. See
Gaymar Indus., Inc. v. Firstmerit Bank, N.A., 311 Fed. App’x 814, CITE (6th Cir. 2009)
(citation omitted); Fawaz v. Metro. Life Ins. Co., No. 09-14407, 2010 WL 3325220, at *2
(E.D. Mich. Aug. 20, 2010).
H.

Count VI - Mich. Comp. Laws § 600.3205c
Count VI of Plaintiffs’ complaint attempts to allege a violation of Mich. Comp.

Laws § 600.3205c, which controls the loan modification process. Aside from Plaintiffs’
reliance on inaccurate statutory text, this claim fails for the reason stated in note 1, supra:
Plaintiffs have not alleged that they met with a housing counselor, as required by
§ 600.3205c. Rather, the complaint substantially quotes outdated statutory text and relies
on a single, conclusory allegation. (Pls.’ Compl. ¶ 83.) As such, dismissal is appropriate.
Fed. R. Civ. P. 12(b)(6).

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I.

Count VII - Deceptive Act/Unfair Practice
Plaintiffs’ final claim suggests that Defendant’s alleged “robo-signing” of

affidavits constituted a deceptive act or unfair practice in violation of state law.
However, there is no cause of action under Michigan law for a deceptive act or unfair
practice. Salman v. U.S. Bank, NA, No. 11–10253, 2011 WL 4945845, at *6 (E.D. Mich.
Oct. 18, 2011). As such, the Court will construe Plaintiffs’ claim as arising under the
Michigan Consumer Protection Act (“MCPA”). Id.
Nevertheless, Plaintiffs’ claim fails as a matter of law, even construing it as arising
under the MCPA. Section 445.904(1)(a) of the MCPA states that the entire MCPA does
not apply to “transaction[s] or conduct specifically authorized under laws administered
by a regulatory board or officer acting under statutory authority of this state or the United
States.” Mich. Comp. Laws § 445.904(1)(a). “It is settled Michigan law that state
savings banks conducting residential mortgage loan transactions fall under this exemption
and are thus not bound by the MCPA.” Salman v. U.S. Bank, NA, No. 11–10253, 2011
WL 4945845, at *6 (E.D. Mich. Oct. 18, 2011) (citations omitted). “Both Michigan
courts and federal courts applying Michigan law have consistently held that the MCPA
does not apply to claims arising out of residential mortgage loan transactions.” Chungag
v. Wells Fargo Bank, N.A., No. 10–14648, 2011 WL 672229, at *4 (E.D. Mich. Feb.17,
2011). Plaintiffs’ claim under the MCPA thus fails because the MCPA’s strictures do not
apply to the mortgage transaction at issue.4

4

In the alternative, Plaintiffs’ claim also fails as a result of perfunctory pleading. Each of
Plaintiffs’ allegations is couched in conditional language: “the facts asserted in the
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IV. CONCLUSION
For the reasons set forth in this opinion, the Court holds that Defendant is entitled
to dismissal of all claims in Plaintiffs’ complaint. Therefore,
IT IS HEREBY ORDERED that Defendant’s motion to dismiss [Dkt. # 4] is
GRANTED.

Dated: January 6, 2012

s/Gerald E. Rosen
GERALD E. ROSEN
Chief Judge, United States District Court

I hereby certify that a copy of the foregoing document was served upon counsel of record on
January 6, 2012, by electronic and/or ordinary mail.
s/Ruth A.Gunther
Case Manager
[phone]

document may have been forged” and “Michael L. Rich may have signed the affidavit
outside of the presence of a notary public”. (Pls.’ Compl. ¶¶ 88-89) (emphasis added.)
“[I]ssues adverted to in a perfunctory manner, unaccompanied by some effort at
developed argumentation, are deemed waived. It is not sufficient for a party to mention a
possible argument in the most skeletal way, leaving the court to . . . put flesh on its
bones.” Garner v. Cuyahoga Cnty. Juvenile Court, 554 F.3d 624, 640–41 (6th Cir. 2009)
(quoting McPherson v. Kelsey, 125 F.3d 989, 995–96 (6th Cir. 1997)).
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