Luster et al v. Mortgage Electronic Registration Systems et al
Filing
11
OPINION AND ORDER GRANTING DEFENDANTS' 8 MOTION to Dismiss. Signed by District Judge Gerald E. Rosen. (RGun)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
ARNOLD LUSTER and
ERMA LUSTER,
Plaintiffs,
No. 11-CV-14166
vs.
Hon. Gerald E. Rosen
MORTGAGE ELECTRONIC
REGISTRATION SYSTEMS, et al.,
Defendants.
___________________________________/
OPINION AND ORDER GRANTING
DEFENDANTS’ MOTION TO DISMISS
At a session of said Court, held in
the U.S. Courthouse, Detroit, Michigan
on
January 17, 2011
PRESENT: Honorable Gerald E. Rosen
United States District Chief Judge
I. INTRODUCTION
This mortgage foreclosure matter is presently before the Court on the October 28,
2011 Motion to Dismiss filed by Defendants Mortgage Electronic Registration Systems,
Inc. (“MERS”), BAC Home Loans Servicing, L.P., and Federal National Mortgage
Association (“Fannie Mae”). Plaintiffs did not respond to Defendants’ Motion, and as a
consequence, on December 6, 2011, the Court ordered Plaintiffs to do so within 21 days.
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The time for responding in compliance with the Court’s order now has expired.1 Having
reviewed Plaintiffs’ Complaint, Defendants’ Motion and the exhibits attached thereto, the
Court has concluded that oral argument would not assist in the resolution of this matter.
Therefore, pursuant to Eastern District of Michigan Local Rule 7.1(f)(2), the Court will
dispense with any hearing and will decide this motion based on the record as it presently
exists, including the brief filed by Defendants in support of their dispositive motion.
II. PERTINENT FACTS
On March 8, 2007, Plaintiffs Arnold and Erma Luster obtained a $100,000.00 loan
from non-party America’s Wholesale Lender (“AWL”). As security for the loan,
Plaintiffs executed a promissory note which was secured by a mortgage (the “Mortgage”).
Mortgage Electronic Registrations Systems, Inc. (“MERS”) was the mortgagee under the
Mortgage, as nominee for the lender, AWL. On December 27, 2010, MERS, acting on
behalf of AWL, assigned the Mortgage to BAC Home Loans Servicing, L.P. The
Assignment of Mortgage was recorded in the Oakland County Register of Deeds.
Plaintiffs defaulted on their repayment obligations, and Bank of America, N.A.
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The Order for Response was originally mailed to Plaintiffs at the address they
listed in the heading of their Complaint, 342 Nelson Street, Pontiac, MI 48342.
However, the mailing was returned to the Court as undeliverable, with the Postal
Service’s notation that there was “no such number”. Upon examination of the property
records appended to Plaintiffs’ Complaint, however, the Court discovered that the
Plaintiffs’ address actually is “324 Nelson Street.” Therefore, on December 16, 2011, the
Court re-issued its Order and mailed it to Plaintiffs at the 324 address. Plaintiffs’
response, accordingly, was due on January 6, 2012.
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(“BANA”), the successor-in-interest to BAC Home Loans Servicing, L.P., foreclosed on
the property. The sheriff’s sale on the property occurred on March 1, 2011. BANA was
the successful bidder at the sale. On April 19, 2011, BANA, by quit claim deed,
conveyed any interest it held in the property to Federal National Mortgage Association
(“Fannie Mae”). The redemption period expired on September 1, 2011. On August 31,
2011, merely one day before the expiration of the redemption period, Plaintiffs, acting
pro se, filed this action in the Oakland County Circuit Court, seeking a determination
that they are the fee simple holders of the property, that Defendants’ interests are invalid
and extinguished, and that the property should be returned to Plaintiffs and its value
doubled. Defendants timely removed the action to this Court on September 22, 2011.
III. DISCUSSION
A. APPLICABLE STANDARDS
Fed. R. Civ. P. 12(b)(6) authorizes the Court to dismiss a complaint if it “fail[s] to
state a claim upon which relief can be granted. . . .” In deciding a motion brought under
Rule 12(b)(6), the Court must construe the complaint in the light most favorable to the
plaintiff and accept all well-pled factual allegations as true. League of United Latin
American Citizens v. Bredesen, 500 F.3d 523, 527 (6th Cir. 2007). Yet, “the tenet that a
court must accept as true all of the allegations contained in a complaint is inapplicable to
legal conclusions.” Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009). Moreover, “[w]hile
a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual
allegations, a plaintiff’s obligation to provide the grounds of his entitlement to relief
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requires more than labels and conclusions, and a formulaic recitation of the elements of a
cause of action will not do.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555, 127 S.
Ct. 1955, 1964-65 (2007) (internal quotation marks, alteration, and citations omitted).
Rather, to withstand a motion to dismiss, the complaint’s factual allegations, accepted as
true, “must be enough to raise a right to relief above the speculative level,” and to “state a
claim to relief that is plausible on its face.” Twombly, 550 U.S. at 555, 570, 127 S. Ct. at
1965, 1974. “A claim has facial plausibility when the plaintiff pleads factual content that
allows the court to draw the reasonable inference that the defendant is liable for the
misconduct alleged.” Iqbal, 129 S. Ct. at 1949.
B.
PLAINTIFFS CANNOT OBTAIN THE RELIEF THEY SEEK IN THEIR
COMPLAINT
In their pro se Complaint, Plaintiffs seek, under various theories, the reversal of
the foreclosure sale and an order quieting title to the property. However, Plaintiffs’ claims
fail because—once the redemption period following foreclosure of a property has
expired—the former owner’s rights in and title to the property are extinguished. At that
point, the former owner loses standing to assert claims with respect to the property. This
principle is well-established. In Piotrowski v. State Land Office Board, 302 Mich. 179, 4
N.W.2d 514 (1942), the Michigan Supreme Court held that the mortgagors had “lost all
their right, title, and interest in and to the property at the expiration of their right of
redemption.” Id. at 185, 4 N.W.2d 514. The standard under Piotrowski has been applied
by Michigan courts, and by federal courts applying Michigan law, to bar former owners
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from making any claims with respect to foreclosed property after the end of the
redemption period. See e.g., Stein v. U.S. Bancorp, 2011 WL 740537 (E.D. Mich.,
Feb.24, 2011); Overton v. Mortg. Elec. Registration Sys., 2009 WL 1507342 (Mich. App.,
May 28, 2009) (dismissing former owner’s claim of fraud where redemption period had
expired); Kama v. Wells Fargo Bank, 2010 WL 4386974, *2 (E.D. Mich., Oct. 29, 2010)
(dismissing plaintiff’s claims for violation of the foreclosure statute, to quiet title and for
promissory estoppel because redemption period had expired); Moriarty v. BNC Mortg.,
Inc., 2010 WL 5173830 (E.D. Mich. Dec.15, 2010) (dismissing action for declaratory
judgment voiding foreclosure proceedings).
Furthermore, “[t]he law in Michigan does not allow an equitable extension of the
period to redeem from a statutory foreclosure sale in connection with a mortgage
foreclosed by advertisement and posting of notice in the absence of a clear showing of
fraud, or irregularity.” Schulthies v. Barron, 16 Mich. App. 246, 247-48, 167 N.W.2d
784 (1969); see also Sweet Air Investment, Inc, v. Kenney, 275 Mich. App. 492, 497, 729
N.W.2d 656 (2007) (“The Michigan Supreme Court has held that it would require a
strong case of fraud or irregularity, or some peculiar exigency, to warrant setting a
foreclosure sale aside.” Id. quoting United States v. Garno, 974 F. Supp. 628, 633 (E.D.
Mich., 1997)). Plaintiffs’ conclusory allegations that there were “certain bogus
instruments” and “bogus documents,” and that the Sheriff’s Deed is a “malicious
misrepresentation” and the Assignment of Mortgage is a “Fraudulent transaction” [sic],
see Complaint, ¶¶ 5-8, do not even come close to making the required showing of fraud.
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Fed . R. Civ. P. 9(b) requires that “[i]n all averments of fraud or mistake, the
circumstances constituting fraud or mistake shall be stated with particularity.” The Sixth
Circuit has “further interpreted Rule 9(b) to require that a plaintiff allege the time, place,
and content of the alleged misrepresentations on which he or she relied; the fraudulent
scheme; the fraudulent intent of the defendants; and the injury resulting from the fraud.”
Sanderson v. HCA-The Healthcare Co., 447 F.3d 873, 877 (6th Cir. 2006) (citation
omitted). Complaints that fail to conform to the requirements of Rule 9(b) are subject to
dismissal. Id.
Plaintiffs also challenge the assignment of their mortgage by MERS to
BAC/BANA (and BANA’s subsequent foreclosure of their property pursuant to the
assignment). As the basis for this challenge, Plaintiffs rely upon the Michigan Court of
Appeals decision in Residential Funding Co. LLC v. Saurman, et al., Nos. 290248,
291443, ___ Mich. App. ___, ____ N.W.2d ___, 2001 WL 1516819 (Mich. App., Apr.
21, 2011), in which the Court of Appeals held that MERS lacked the authority to
foreclose by advertisement. However, the Michigan Supreme Court REVERSED the
Court of Appeals’ ruling in Saurman. See Residential Funding Co, LLC v. Saurman, ___
Mich. ___, ___ N.W.2d ___, 2011 WL 5588929 (Nov. 16, 2011). The Supreme Court
found that the Court of Appeals erroneously construed M.C.L. § 600.3204(1)(d) and
determined that MERS is statutorily authorized to foreclose by advertisement. That
reversal also sub silentio reversed another Court of Appeals decision, Bakri v. Mortgage
Electronic Registration System, et al., No. 297962, 2011 WL 3476818 (Mich. App., Aug.
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9, 2011) (unpublished decision). Relying on the Court of Appeals’ decision in Saurman,
the Bakri court determined that the Bank of New York Mellon, the assignee of a
mortgage granted to MERS, stood in the shoes of MERS and, as such, had no more right
to foreclose on the mortgage than did MERS. The Michigan Supreme Court, however,
determined that MERS does have statutory authority to enforce a mortgage granted to it
as nominee for the lender. Therefore, neither Bakri nor Saurman provides any legal basis
for Plaintiffs to challenge MERS’ assignment of the mortgage to BANA or BANA’s
foreclosure of the mortgage.
Plaintiffs also allege that Defendants violated the Home Affordable Modification
Program (“HAMP”). See Complaint, ¶ 4. That claim fails because, as recognized by
both Michigan and federal courts, there is no private right of action under HAMP. See,
e.g., Hart v. Countrywide Home Loans, Inc., 735 F. Supp. 2d 741, 748 (E.D. Mich. 2010)
(quoting Aleem v. Bank of America, 2010 WL 532330 at *4 (C.D.Cal. Feb. 9, 2010))
(“[A]ssuming Plaintiff is eligible for modification (which she is not) and assuming that
the Lending Statutes impose a duty on Defendant to modify Plaintiff’s mortgage (which
they do not), the statutes do not create a private right of action under which Plaintiff may
seek relief. ‘There is no express or implied right to sue fund recipients . . . under TARP or
HAMP.’”). Because there is no right to sue under HAMP, to the extent Plaintiffs allege a
violation of HAMP or the “Servicer Performance Agreement,” the claim fails as a matter
of law.
CONCLUSION
The foregoing discussion makes clear that Plaintiffs have failed to state any claim
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in their Complaint upon which relief may be granted. Therefore,
IT IS HEREBY ORDERED that Defendants’ Motion to Dismiss is GRANTED.
Accordingly,
IT IS FURTHER ORDERED that Plaintiffs’ Complaint be, and hereby is,
DISMISSED in its entirety, with prejudice.
s/Gerald E. Rosen
Chief Judge, United States District Court
Dated: January 17, 2012
I hereby certify that a copy of the foregoing document was served upon counsel of record
on January 17, 2012, by electronic mail and upon Arnold and Erma Luster, 324 Nelson
Street, Pontiac, MI 48342 by ordinary mail.
s/Ruth A. Gunther
Case Manager
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