Adams v. Mortgage Electronic Registration Systems Inc. et al

Filing 25

OPINION AND ORDER granting 6 Motion to Dismiss; denying 11 Motion for Summary Judgment; granting 14 Motion to Strike; denying 15 Motion for Summary Judgment; denying 21 Motion to Amend/Correct; denying 22 Motion for Permanent Injunction; denying 22 Motion for Leave to File; denying 23 Motion for Permanent Injunction. Signed by District Judge Patrick J. Duggan. (MOre)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
GRACE ADAMS,
Plaintiff,
v.

Case No. 11-14791
Honorable Patrick J. Duggan

MORTGAGE ELECTRONIC REGISTRATION
SYSTEMS, INC. and U.S. BANK,
Defendants.
____________________________/
OPINION AND ORDER (1) GRANTING DEFENDANTS’ MOTION TO DISMISS
(DOC. 6); (2) GRANTING DEFENDANTS’ MOTION TO STRIKE PLAINTIFF’S
“AMENDED MASS JOINDER COMPLAINT” (DOC. 14); AND (3) DENYING
PLAINTIFF’S MOTIONS FOR SUMMARY JUDGMENT (DOCS. 10, 11, 15, 19,
20), AND MOTIONS FOR LEAVE TO AMEND COMPLAINT AND/OR FOR
PERMANENT INJUNCTION (DOCS 21, 22, 23)
On or about September 28, 2011, Plaintiff filed this lawsuit against Defendants in
the Circuit Court for Oakland County, Michigan, raising claims associated with the
foreclosure of property in Rochester Hills, Michigan (“Property”). Plaintiff filed an
amended complaint on or about September 30, 2011; and Defendants removed the lawsuit
to this Court based on diversity jurisdiction on October 31, 2011. This is Plaintiff’s third
lawsuit in this District arising from the foreclosure; she also has filed five Chapter 13
petitions in the bankruptcy court seeking to forestall the foreclosure proceedings.1
Plaintiff’s previous actions have been dismissed, either for failure to state a claim upon
1

Adams v. Wilmington Finance, et al., No. 07-15494 (E.D. Mich. filed Dec. 27,
2007); In re Adams, No. 08-60296 (Bankr. E.D. Mich. filed Aug. 21, 2008); In re Adams,
No. 09-65692 (Bankr. E.D. Mich. filed Jan. 8, 2010); Adams v. U.S. Bank, No. 10-10567
(E.D. Mich. filed July 1, 2010); In re Adams, No. 10-44892 (Bankr. E.D. Mich. filed Feb.
19, 2010); In re Adams, No. 10-60057 (Bankr. E.D. Mich. filed June 21, 2010); In re
Adams, No. 11-45799 (E.D. Mich. filed Mar. 4, 2011).

which relief may be granted or due to her failure to comply with court orders. For the
reasons discussed below, this lawsuit also must be dismissed. Therefore, this Court is
granting Defendants’ motion to dismiss pursuant to Federal Rule of Civil Procedure
12(b)(6), striking Plaintiff’s improperly filed second amended complaint, denying
Plaintiff’s motions to amend her complaint, and dismissing her pending motions for
summary judgment and/or permanent injunctive relief. On January 9, 2012, this Court
issued a notice informing the parties that it is dispensing with oral argument with respect
to the pending motions pursuant to Eastern District of Michigan Local Rule 7.1(f).
Factual and Procedural Background
On February 9, 2006, Plaintiff executed a note in the amount of $121,000 in favor
of Wilmington Finance, a division of AIG Federal Savings Bank (“AIG”). In connection
with the note, Plaintiff executed a mortgage on the Property in favor of Defendant
Mortgage Electronic Registration Systems, Inc. (“MERS”) as the nominee for the lender
and the lender’s successors and assigns. MERS assigned the mortgage to Defendant U.S.
Bank on August 13, 2008.
In early 2008, Plaintiff defaulted on her mortgage loan. In response, U.S. Bank
initiated foreclosure proceedings; however, those proceedings were stalled by Plaintiff’s
many subsequent legal filings in the district and bankruptcy courts in this District. See
supra at n.1. Eventually, U.S. Bank recommenced foreclosure by advertisement
proceedings on the Property and a sheriff’s sale occurred on March 29, 2011. U.S. Bank
purchased the Property at the sale for $80,000. The redemption period expired on
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September 29, 2011.
The day before the redemption period expired, Plaintiff initiated this lawsuit. In
her amended complaint, Plaintiff alleges numerous claims against Defendants based on
her assertion that the foreclosure was unlawful because it was initiated by MERS (Counts
I, III-VI, VIII-XI). Plaintiff relies on the Michigan Court of Appeals’ decision in
Residential Funding Co. v. Saurman, 292 Mich. App. 321, – N.W.2d – (2011). Plaintiff
further alleges in Count II of her amended complaint that Defendants engaged in fraud
and misrepresentation by informing the court (presumably the bankruptcy court in one of
the Chapter 13 proceedings) that they provided Plaintiff a loan modification in 2008. In
Count VII of her amended complaint, Plaintiff alleges unspecified violations of the Fair
Debt Collections Practices Act (“FDCPA”). Lastly, Plaintiff alleges in Count XII that
U.S. Bank violated the federal Home Affordable Modification Program (“HAMP”) by (a)
claiming that it received and then subsequently claiming that it did not receive Plaintiff’s
application for a loan modification; (b) testifying, fabricating, signing, and filing
fraudulent documents claiming to have modified Plaintiff’s loan in 2007; and (c) refusing
to consider a modification “even after being ordered by a US Bankruptcy Judge.” (Am.
Compl. ¶ 112.)
On November 7, 2011, Defendants filed a motion to dismiss pursuant to Rule
12(b)(6). (Doc. 6.) On November 9, 2011, without seeking leave of the Court, Plaintiff
filed an “Amended Mass Joinder Complaint” (Doc. 8), in which she seeks to bring her
action on behalf of all Michigan homeowners whose property was foreclosed by
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advertisement through proceedings initiated by MERS. (See, e.g., id. ¶ 85.) In this
second amended complaint, Plaintiff attempts to add another plaintiff, Ronald Kerkstra,
whose property also was foreclosed upon by advertisement; she also names as additional
defendants the Comptroller of Currency and Jonathan Rosenthal (who she alleges is U.S.
Bank’s attorney). (Id. ¶ 170.) On November 22, 2011, Defendants filed a motion to
strike, or in the alternative, to dismiss this pleading. (Doc. 14.)
Plaintiff has filed several pleadings in response to Defendants’ motion to dismiss,
including “answers,” “affirmative defenses,” an “amicus curiae brief,” and motions for
summary judgment. (Docs. 10-13, 15, 20.) On December 16, 2011, Plaintiff also filed a
motion to amend her complaint to add Carmen Oien (“Oien”) as a defendant. (Doc. 21.)
According to Plaintiff’s motion:
On or around September 2, 2010, Oien claimed falsely to the Office of the
Comptroller of the Currency, in her answer to a Complaint Plaintiff . . .
filed with the Comptroller of the Currency[] against Defendant’s [sic] U.S.
Bank and[] Jonathan Rosenthal[] for lying, manufacturing, and fabricating
loan modification documents . . . falsely claiming U.S. Bank had already
given Plaintiff a loan modification . . .
.
(Id. ¶ 1.) Plaintiff also alleges that Oien falsely represented that “‘U.S. Bank adjusted her
interest rate to 5 percent in December 2008, a rate which Ms. Adams stated she could
afford,’ which is untrue.” (Id. ¶ 2.)
Finally, Plaintiff filed two motions on December 22, 2011, which she identified on
the docket as motions for permanent injunction. (Docs. 22, 23.) In both documents,
however, Plaintiff seeks to further amend her complaint to add allegations against a new

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defendant, “Lamco,” which she states is U.S. Bank’s REO division and asset
management company. (See Doc. 22 ¶ 1.) According to Plaintiff, on December 20, 2011,
she “received a voice message left by a contractor of Lamco, threatening legal action
against Plaintiff” if Lamco failed to pay him for services on Plaintiff’s property and
“threatening to place a lien on Plaintiff’s property if Plaintiff failed to return his call.”
(Id. ¶¶ 2, 3.) Plaintiff further alleges that she recently learned that Lamco is responsible
for “the continuous diggings in [her] yard” and “engaged in illegal credit collection
activities” in violation of the Fair Debt Collection Practices Act. (Id. ¶ 4; Doc. 23.)
Analysis
Any of Plaintiff’s claims premised on the Michigan Court of Appeals’ decision in
Saurman fail because the Michigan Supreme Court reversed that decision on November
16, 2011. Residential Funding Co. v. Saurman, 490 Mich. 909, 805 N.W.2d 183 (2011).
The Michigan Supreme Court held that MERS, as record holder of a mortgage, may
initiate foreclosure proceedings by advertisement. Id. Moreover, Plaintiff’s Saurmanrelated claims would have failed for the simple reason that U.S. Bank, not MERS,
initiated the foreclosure proceedings related to the Property. For these reasons, and
because Plaintiff failed to seek leave of Court before filing her “Amended Mass Joinder
Complaint” (which constituted her second amended complaint), see Fed. R. Civ. P.
15(a)), the Court is granting Defendants’ motion to strike that pleading.
Plaintiff fails to plead specific facts to support her claim that Defendants violated
the FDCPA. In any event, the claim fails because the statute does not apply to
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Defendants. “It is well settled that the provisions of the FDCPA apply only to
professional debt collectors, not creditors or mortgagors.” Partlow v. Aurora Loan
Servs., LLC, No. 11–12940, 2012 WL 12766, at *5 (E.D. Mich. Jan. 4, 2012) (citing
Herman v. Citimortgage, Inc., No. 08–11215, 2008 WL 927779, at *2 (E.D. Mich. Apr.
4, 2008) (citing 15 U. S.C. § 1692a(6); Scott v. Wells Fargo Home Mortgage, 326 F.
Supp. 2d 709, 717 (E.D. Va.2003), aff’d 67 F. App’x 238 (4th Cir. 2003); Pollice v. Nat’l
Tax Funding, 225 F.3d 379 (3d Cir. 2000); and Perry v. Stewart Title Co., 756 F.2d 1197
(5th Cir.1985)). The statute does not apply to an entity attempting to collect its own debt.
Montgomery v. Huntington Bank, 346 F.3d 693, 699 (6th Cir. 2003).
Finally, Plaintiff states to state a claim upon which relief may be granted under
HAMP. As this Court has held, there is no private right of action under this statute. See
Hart v. Countrywide Home Loans, Inc., 735 F. Supp. 2d 741, 748 (E.D. Mich. 2010)
(collecting cases).
For the above reasons, the Court concludes that Plaintiff’s claims in her amended
complaint fail to state a claim upon which relief may be granted. The Court therefore is
granting Defendants’ motion to dismiss and denying Plaintiff’s motions for summary
judgment and for injunctive relief.
With respect to Plaintiff’s recent attempts to amend her complaint, the Court
denies her requests for leave to do so because the proposed amendments would be futile.
See Colvin v. Caruso, 605 F.3d 282, 294 (6th Cir.2010) (quoting Crawford v. Roane, 53
F.3d 750, 753 (6th Cir.1995) (“‘A motion to amend a complaint should be denied if the
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amendment is brought in bad faith, for dilatory purposes, results in undue delay or
prejudice to the opposing party, or would be futile.””))
In her motion filed December 16, 2011, Plaintiff seeks to add a claim against Oien
for making a false statements in September 2010. See supra at 4-5. Even if Oien made
the alleged statements (i.e. that U.S. Bank already gave her a loan modification and
adjusted her interest rate to a rate she could afford) and those statements were untrue,
Plaintiff knew (or believed) the statements were false. Under Michigan law, “a
misrepresentation is not actionable as fraud where the plaintiff knew or reasonably should
have known the statement was false.” Appalachian Railcare Servs., Inc. v. Boatright
Enters., Inc., 602 F. Supp. 2d 829, 881 (W.D. Mich. 2008) (citing McIntyre v. Lyon, 325
Mich. 167, 37 N.W.2d 903, 906 (1949) ( “Knowledge of the falsity of representations is
inconsistent with reliance thereon.”) (citing Candler v. Heigho, 208 Mich. 115, 175 N.W.
141, 143-44 (1919)); see also Nieves v. Bell Indus., Inc., 204 Mich. App. 459, 517
N.W.2d 235, 238 (1994) (“[T]here can be no fraud where a person has the means to
determine that a representation is not true.”) Moreover, Plaintiff fails to allege facts to
suggest that she somehow relied to her detriment on these statements.
Plaintiff’s requests, filed December 22, 2011, to amend her complaint to join
Lamco as a defendant are futile because, for the reasons discussed earlier, she cannot
assert a FDCPA against this defendant.
Conclusion
For the reasons set forth above, the Court is denying Plaintiffs’ attempts to amend
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her complaint and is dismissing the claims she asserts against Defendants in her amended
complaint. Accordingly,
IT IS ORDERED, that Defendants’ motion to dismiss pursuant to Federal Rule of
Civil Procedure 12(b)(6) [Doc. 6] is GRANTED;
IT IS FURTHER ORDERED, that Defendants’ motion to strike [Doc. 14] is
GRANTED and Plaintiff’s “Amended Mass Joinder Complaint” [Doc. 8] is
STRICKEN;
IT IS FURTHER ORDERED, that Plaintiff’s motions for summary judgment
[Docs. 10, 11, 15, 19, 20] are DENIED;
IT IS FURTHER ORDERED, that Plaintiff’s motions for leave to amend
complaint and/or for permanent injunction [Docs. 21-23] are DENIED.
Date: January 12, 2012

s/PATRICK J. DUGGAN
UNITED STATES DISTRICT JUDGE

Copies to:
Grace Ellis Adams
Edward C. Cutlip, Jr., Esq.
Davidde A. Stella, Esq.

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