Zemer v. American Home Mortgage Servicing, Inc.

Filing 19

ORDER granting 7 Motion to Dismiss. Signed by District Judge Victoria A. Roberts. (CPin)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
DAVID ZEMER,
Plaintiff,

CASE NUMBER: 11-15364
HONORABLE VICTORIA A. ROBERTS

v.
AMERICAN HOME MORTGAGE SERVICING
INC.,
Defendant.
/
ORDER GRANTING DEFENDANT’S MOTION TO DISMISS

I.

INTRODUCTION
American Home Mortgage Servicing Inc. (“American Home”), foreclosed by

advertisement on David Zemer’s (“Zemer”) home after he defaulted on his mortgage.
Zemer says the foreclosure is invalid because he was not offered a proper loan
modification. He also says that American Home applied unauthorized fees to his loan
account, thereby increasing the amount of default. He asks the Court to declare the
sale void.
Zemer asserts seven claims:
(I) Fraud, failing to provide written explanation of account information and
collection of kickback and unearned fees under the Real Estate Settlement
Procedures Act (“RESPA”), 12 U.S.C. § 2601 et seq. (Count One);
(II) Equitable Relief (Count Two);
(III) Breach of Contract/Wrongful Foreclosure (Count Three);
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(IV) Violation of Michigan Foreclosure Law, MCL 600.3205a (Count Four);
(V) Violation of Michigan's Mortgage Brokers, Lenders, and Servicers Licensing
Act (“MBLSLA”) for Failure to provide a loan Modification, MCL 445.1651 et seq.
(Count Five);
(VI) Intentional Infliction of Emotional Distress (Count Six);
(VII) There is no Count Seven; and
(VIII) Violation of Michigan Foreclosure Law for failure to provide loan
modification, MCL 600.3205a (Count Eight).
American Home moves to dismiss all claims for failure to state a claim on which
relief can be granted. Zemer agrees to the dismissal of Count VI and that there is no
Count VII. He disputes all other claims.
American Home’s motion is GRANTED.
II.

BACKGROUND
On February 23, 2006, Zemer obtained a mortgage loan from Argent Mortgage

Company, LLC. In exchange for the loan, Zemer signed a note and a mortgage as
security. American Home later purchased the loan.
In 2010, Zemer fell behind on his monthly mortgage payments and, to cure the
default, he applied for a loan modification. He says he was not offered a proper loan
modification. Zemer says he was approved for a loan modification but did not accept it
because the modified monthly payment was higher than his current one.
On November 7, 2011, American Home began foreclosure proceedings. The
property was sold on December 14, 2011.

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On November 21, 2011, Zemer wrote American Home requesting that it provide
him with a complete payment history. The letter says that Zemer requests an
itemization of fees applied to his account, such as interest, attorney fees, foreclosure
costs, late charges and loan modification fees. In the letter, Zemer also disputes that
his insurance was not paid. Zemer says American Home did not provide a timely or
adequate response to his letter.
On December 7, 2011, Zemer filed this action. His right to redeem the property
expired on December 14, 2012. Among other things, Zemer asks the Court to award
him monetary damages, set aside, enjoin and declare the foreclosure action void ab
initio or voidable, and award him attorney fees.
II.

STANDARD OF REVIEW

A. Motion to Dismiss
Fed. R. Civ. P. 12(b)(6) dismissal is warranted “only if it appears beyond doubt
that the plaintiff can prove no set of facts in support of the claims that would entitle him
or her to relief.” Zaluski v. United Am. Healthcare Corp., 527 F.3d 564, 570 (6th Cir.
2008). The court treats all well-pleaded allegations in the complaint as true. Id.
However, to survive a motion to dismiss, “[f]actual allegations must be enough to raise a
right to relief above the speculative level.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555
(2007). A plaintiff must include in the complaint enough facts which allow the court to
“draw the reasonable inference that the defendant is liable for the misconduct alleged.”
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2010).
III.

ANALYSIS

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A.

Violation of RESPA (Count One)
Count One alleges that American Home violated RESPA by failing to provide a

timely and adequate explanation for the fees on Zemer’s account after he submitted a
qualified written request (“QWR”).
American Home says Zemer fails to plead a sufficient RESPA violation because
its response was timely and adequate. American Home also says that Zemer’s claim
fails because he did not properly plead damages.
There is no need for the Court to determine whether American Home adequately
responded to Zemer’s QWR because Zemer did not state a claim. RESPA is a federal
statute which prohibits kickbacks and unearned fees. 12 U.S.C. § 2607; see also
Egerer v. Woodland Realty, Inc., 556 F.3d 415 (6th Cir. 2009). RESPA says that a
borrower may submit a QWR to its loan servicer for "information relating to the servicing
of such loan." 12 U.S.C. § 2605(e)(1)(A). Under RESPA, a servicer has twenty days to
acknowledge receipt of a borrower’s QWR and sixty days to respond to it. 12 U.S.C. §§
2605(e)(1)(A) and 2605(e)(2). Failure to timely or adequately respond entitles a
borrower to actual damages. 12 U.S.C. § 2605(f).
When Zemer filed this action, there could not have been a RESPA violation; the
time frame for American Home to respond to Zemer’s QWR had not passed. Pinchot v.
Bank of Am., N.A., No. 12-cv-12994, 2012 U.S. Dist. LEXIS 178415 ( E.D. Mich. Dec.
18, 2012)(finding there was no RESPA violation because sixty day period to respond
had not passed before bringing suit). Zemer sent his QWR on November 21, 2011.
This action was filed on December 7, 2011; more than a month remained before a
response was due.
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Indeed, American Home timely responded to Zemer’s QWR; it sent
acknowledgment of receipt of the QWR on December 1, 2012, and responded on
January 11, 2012. These responses fell within the statutory time frame.
Furthermore, Zemer’s general allegation of damages is not sufficient to state a
claim. Courts hold that to maintain a RESPA claim, a plaintiff must allege that the
violation resulted in actual pecuniary damages. See Pliam v. Cendant Mortg. Corp., Civ.
No. 11-3720 (RHK/JSM), 2012 U.S. Dist. LEXIS 58222, at *3 (D. Minn. Apr. 26, 2012)
("While RESPA itself does not set a pleading standard, courts have interpreted the
statute to require a showing of pecuniary damages in order to state a claim."). Zemer’s
damages allegation is, “As a result of these violations, the Plaintiff suffered damages.”
This allegation is insufficient.
Count One is dismissed.
B.

Wrongful Foreclosure
1.

Breach of Contract/Wrongful Foreclosure (Count Three)

In Count Three Zemer alleges American Home foreclosed while he was current
on his mortgage loan, and thus breached their mortgage agreement. This claim
contradicts other allegations in Zemer’s complaint and response brief. At all times
Zemer says that he defaulted on his loan due to a hardship.
Count Three is dismissed.
2.

Violation of Michigan Foreclosure Law for failure to comply with MCL
600.3205a (Counts Four and Eight)

Zemer says that American Home violated Michigan’s foreclosure laws by failing
to: (1) prepare proper affidavits, (2) accurately list the contents of the advertisement, (3)
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file a notice of adjournment, (4) notify him of the notice of adjournment, (5) notify him of
foreclosure proceedings, and (6) modify his loan. Zemer also says American Home
charged him unauthorized attorney fees.
American Home says that because Zemer’s right to redeem the property expired,
Zemer must establish irregularities in the foreclosure proceeding, and prejudice to set
aside the sale. Zemer’s complaint supports neither.
In Kim v. JPMorgan Chase Bank, N.A., No. 144690, 2012 Mich. LEXIS 2220
(Mich. Dec. 2012), the Michigan Supreme Court set forth the standard to challenge a
foreclosure after the redemption period has expired. The Kim court held “defects or
irregularities in a foreclosure proceeding result in a foreclosure that is voidable.” Id. at
*21. Thus, a foreclosure may only be set aside if a plaintiff establishes irregularities in
the foreclosure proceedings and that he was prejudiced by these irregularities. Id.
Many courts have held that the irregularities Zemer pled do not warrant setting
aside a sale. Count Four is dismissed.
3.

MBLSLA Violations (Count Five)

Count Five alleges a violation of MBLSLA. Zemer says American Home
fraudulently led him to believe that his loan would be modified. Zemer acknowledges
that American Home offered him a loan modification; however, he says it was a sham.
He says American Home’s failure to offer a loan modification with a lower monthly
payment than his current loan establishes that American Home did not intend to modify
his loan. American Home says this claim must be dismissed because Zemer fails to
plead fraud with particularity. The Court agrees.
To establish fraud Zemer must allege:
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(1) the defendant made a material representation; (2) the
representation was false; (3) when the defendant made the
representation, the defendant knew that it was false, or made
it recklessly, without knowledge of its truth and as a positive
assertion; (4) the defendant made the representation with the
intention that the plaintiff would act upon it; (5) the plaintiff
acted in reliance upon it; and (6) the plaintiff suffered damage.
Belle Isle Grill Corp, 256 Mich. App. 463, 477; 666 N.W.2d 271 (2003).
Under Rule 9(b) of the Federal Rules of Civil Procedure, fraud must be pled with
particularity. Fed. R. Civ. 9(b). To meet this pleading standard, Zemer “must at the
minimum allege the time, place and contents of the misrepresentation(s) upon which
[he] relied.” Bender v. Southland Corp., 749 F.2d 1205, 1216 (6th Cir. 1984).
Zemer’s fraud claim is void of facts and specificity and fails to allege and support
the necessary elements. Zemer alleges American Home “engaged in fraud, deceit,
and/or material misrepresentations in connection with this transaction.” He does not
say when the fraud occurred or that American Home had a duty to offer him a loan with
a lower monthly mortgage payment.
In Count Five, Zemer also alleges that American Home charged him
unreasonable, illegal fees; but, this allegation is also insufficient to state a claim under
MBLSLA. Iqbal requires that a plaintiff allege enough facts for a court to “draw the
reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal, 556
U.S. at 678. Zemer fails to allege what fees were charged and why they were not
supported by law; no reasonable inference concerning American Home’s liability can be
made.
Zemer’s general allegation that American Home “fail[ed] to conduct their
business in accordance with the Act and other laws[,]” is also insufficient for these same
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reasons.
Count Five is dismissed.
4.

Equitable Relief (Count Two)

Zemer seeks equitable relief to enjoin the foreclosure. Injunctive relief is
awarded only under extraordinary circumstances. Overstreet v. Lexington–Fayette
Urban Cnty. Gov't, 305 F.3d 566, 573 (6th Cir.2002). Zemer’s case is not extraordinary;
equitable relief will not be granted.
When deciding whether to issue a preliminary injunction, the district court
considers the following factors: “(1) whether the movant has a "strong" likelihood of
success on the merits; (2) whether the movant would otherwise suffer irreparable injury;
(3) whether issuance of a preliminary injunction would cause substantial harm to others;
and (4) whether the public interest would be served by issuance of an injunction.”
Bonnell v. Lorenzo, 241 F.3d 800, 809 (6th Cir. 2001) (quoting Rock & Roll Hall of Fame
v. Gentile Prods., 134 F.3d 749, 753 (6th Cir. 1998)).
The Court has already found that dismissal is warranted on all substantive
Counts. Zemer does not address the other factors or carry his burden to show that he
is entitled to extraordinary relief.
Count Two is dismissed.
C.

Leave to Amend
In his response brief Zemer requests leave to amend his complaint. But, leave to

amend is not warranted.
Rule 15(a)(2) of the Federal Rules of Civil Procedure says that a court may freely

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grant leave to amend a pleading "when justice so requires," in order to ensure that a
case is tried on its merits "rather than [on] the technicalities of the pleadings." Moore v.
City of Paducah, 790 F.2d 557, 559 (6th Cir. 1986) (per curiam). "In deciding whether to
grant a motion to amend, courts should consider undue delay in filing, lack of notice to
the opposing party, and futility of amendment." Brumbalough v. Camelot Care Ctrs.,
Inc., 427 F.3d 996, 1001 (6th Cir. 2005).
Zemer acted dilatory in requesting leave to amend. American Home filed its
motion to dismiss in March of 2012; it is now February of 2013. Zemer has been on
notice for the last eleven months that his complaint is deficient and yet he filed no
proposed amended complaint. Pursuant to E.D. Mich. LR 15.1, "[a] party who moves
to amend a pleading shall attach the proposed amended pleading to the motion." It is
not an abuse of this Court’s discretion to deny leave to amend when a plaintiff fails to
comply with this local rule. Lessl v. Citimortgage, Inc., No. 11-2285, 2013 U.S. App.
LEXIS 3718 (6th Cir. 2013)(citing cases).
Leave to amend is denied.
IV.

CONCLUSION
American Home’s motion is GRANTED. Zemer’s claims are DISMISSED.
IT IS ORDERED.

Dated: February 28, 2013

S/Victoria A. Roberts
Victoria A. Roberts
United States District Judge

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The undersigned certifies that a copy of this
document was served on the attorneys of
record by electronic means or U.S. Mail on
February 28, 2013.
S/Carol A. Pinegar
Deputy Clerk

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