Cheesewright, et al v. Bank of America NA
OPINION and ORDER granting 10 Defendant's Motion for Summary Judgment. Signed by District Judge Gerald E. Rosen. (JOwe)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
WARREN T. CHEESEWRIGHT and
BRENDA J. CHEESEWRIGHT, a
Hon. Gerald E. Rosen
BANK OF AMERICA, N.A., a national
OPINION AND ORDER
GRANTING DEFENDANT’S MOTION FOR SUMMARY JUDGMENT
In this mortgage foreclosure action, Plaintiffs Warren and Brenda
Cheesewright challenge the foreclosure of their home by Defendant, Bank of
America, N.A. This action was filed in Washtenaw County Circuit Court on
December 14, 2011. Defendant removed the case to this Court on December
23, 2011. Discovery closed on May 15, 2012, and Defendant timely filed this
motion for summary judgment pursuant to Federal Rule of Civil Procedure
56 on June 15, 2012. On October 29, 2012 -- more than nineteen weeks after
Defendant’s motion -- Plaintiffs filed their response.
II. FACTUAL BACKGROUND
On June 24, 2005, Plaintiffs received a $252,000 loan from Mortgage
Electronic Registration Systems, Inc. (“MERS”), as nominee for Home Loan
Corporation (“HLC”), d/b/a Expended Mortgage Credit.
securing this loan was recorded on July 7, 2005.
Plaintiff Warren Cheesewright (“Warren”) lost his job sometime in
2008, causing him to fall behind on his mortgage payments. Plaintiffs allege
that throughout 2009, they contacted Defendant Bank of America to seek a
loan modification, and were instructed that the only way to receive a
modification was to intentionally fall behind on their mortgage payments.
However, the record contains no evidence to substantiate the timing, content,
or occurrence of any of the asserted 2009 communications between Defendant
On June 2, 2010, Defendant notified Plaintiffs that they were ineligible
for loan modification. However, Defendant conditionally approved Plaintiffs
for a loan modification in a letter dated June 30, 2010.
In that letter,
Defendant stated that “to complete the verification process, send the
documents listed on the following page by July 30, 2010.” The letter further
provided that, upon receipt of these documents and completion of the
verification process, Defendant would notify Plaintiffs of whether or not they
qualified for a Trial Period Plan, during which Plaintiffs would be required to
make timely mortgage payments for three months. The letter also stated
that, upon successful completion of this Trial Period, Plaintiffs (i) “may
receive a permanent modification” and, if approved, (ii) “will be notified in
writing that [their] permanent modification has been approved.”
Plaintiffs appear to contend that this document -- or some other,
unidentified document -- constituted a binding loan modification agreement.
Plaintiffs also contend that they successfully completed the three-month Trial
Period, at the end of which their conditional mortgage modification “would
automatically be converted into a permanent loan modification.” However,
the record contains no evidence of whether Plaintiffs (i) provided the
documentation requested by Defendant, (ii) were approved for the Trial
Period, (iii) successfully completed the Trial Period, or (iv) received a written
modification of their loan. Defendant asserts that Plaintiffs never submitted
the requested documentation, were never approved for a loan modification,
and consequently cannot offer any evidence to support their claim that the
loan was modified.
On September 6, 2011, Plaintiffs’ mortgage was assigned to Defendant
Bank of America, successor by merger to BAC Home Loans Servicing, LP,
f/k/a CountryWide Home Loans Servicing, LP. The mortgage was recorded
on September 12, 2011.
Following Plaintiffs’ default, Defendant initiated
foreclosure proceedings and scheduled an auction sale for December 15, 2011.
Plaintiffs filed the present action on December 14, 2011.
Summary Judgment Standard
Summary judgment is proper if the moving party “shows that there is
no genuine dispute as to any material fact and the movant is entitled to
judgment as a matter of law.” Fed. R. Civ. P. 56(a). As the Supreme Court
has explained, “the plain language of Rule 56 mandates the entry of
summary judgment, after adequate time for discovery and upon motion,
against a party who fails to make a showing sufficient to establish the
existence of an element essential to that party’s case, and on which that party
will bear the burden of proof at trial.” Celotex Corp. v. Catrett, 477 U.S. 317,
322, 106 S. Ct. 2548, 2552 (1986).
In deciding a motion brought under Rule 56, the Court must view the
evidence in a light most favorable to the nonmoving party. Pack v. Damon
Corp., 434 F.3d 810, 813 (6th Cir. 2006). Yet, “[t]he non-moving party may
not rest upon its mere allegations or denials of the adverse party's pleadings,
but rather must set forth specific facts showing that there is a genuine issue
for trial.” El-Seblani v. IndyMac Mortg. Services, 12-1046, 2013 WL 69226
(6th Cir. Jan. 7, 2013) (quoting White v. Baxter Healthcare Corp., 533 F.3d
381, 390 (6th Cir. 2008)).
Further, “the mere existence of a scintilla of
evidence that supports the nonmoving party’s claims is insufficient to defeat
summary judgment.” Pack, 434 F.3d at 814 (alteration, internal quotation
marks, and citation omitted).
Plaintiffs have alleged twelve causes of action against Defendant. Each
will be addressed in turn.
No Proof of Ownership of Loan / Authority to Foreclose
In Count 1, Plaintiffs allege that Defendant Bank of America lacks the
requisite ownership interest in their mortgage to initiate foreclosure
proceedings because Defendant’s interest in the mortgage was assigned by
MERS -- the nominee of mortgagee HLC -- rather than HLC itself. Plaintiffs
also allege that the assignment was invalid because it was “forged” through a
process known as “robo-signing.”
Plaintiffs, however, lack standing to challenge the validity of an
assignment between third parties. See, e.g., Livonia Prop. Holdings, L.L.C. v.
12840-12976 Farmington Rd. Holdings, L.L.C., 717 F. Supp. 2d 724, 746
(E.D. Mich. May 13, 2010), aff’d No. 10-1782, 399 Fed. App’x 97 (6th Cir. Oct.
28, 2010) (“Plaintiff here lacks standing to assert any breaches in the terms
of any contracts between the assigning entities.”); Ott v. Federal Home Loan
Mortgage Corp., No. 11-15153, 2012 WL 2359989, at *1, *3 (E.D. Mich. June
21, 2012). Because Plaintiffs lack standing to challenge the assignment of
their mortgage, Defendant’s motion for summary judgment on Count 1 must
Further, it should be noted that the Michigan Supreme Court has held
that the owner of an interest in the indebtedness -- in this case the assignee,
MERS -- is authorized to foreclose by advertisement under M.C.L.
§ 600.3204(1)(d). Residential Funding Co., LLC v. Saurman, 490 Mich. 909,
805 N.W.2d 183 (2011). This holding directly contradicts the central premise
of Plaintiffs’ claim: that MERS lacked the authority to foreclose on Plaintiffs’
property (and, therefore, lacked the ability to assign this authority to a third
party, i.e., Defendant). Thus, even if Plaintiffs had standing to challenge the
assignment of their mortgage to Defendant,1 the assignment and subsequent
The Court declines Plaintiffs’ invitation to reverse its conclusion in Livonia in
favor of Plaintiffs’ assertion that the Court is bound by Michigan -- rather than
federal -- standing jurisprudence. Plaintiffs must satisfy both state and federal
standing requirements to pursue a cause of action in federal court. See, e.g., MidHudson Catskill Rural Migrant Ministry, Inc. v. Fine Host Corp., 418 F.3d 168, 173
(2d Cir. 2005) (“Where, as here, jurisdiction is predicated on diversity of citizenship,
a plaintiff must have standing under both Article III of the Constitution and
applicable state law in order to maintain a cause of action.”); Bano v. Union Carbide
Corp., 361 F.3d 696, 713-14 (2d Cir. 2004) (applying federal law of standing in a
diversity action and holding that plaintiff organizations lacked standing to bring
damages claims belonging to their members); Official Comm. of the Unsecured
Creditors of Color Tile, Inc. v. Coopers & Lybrand, LLP, 322 F.3d 147, 156-57 (2d
Cir. 2003) (applying state law of standing in a diversity action to determine if
foreclosure of Plaintiffs’ property are legally sound under Michigan law.
Summary judgment in favor of Defendant on Count 1 is therefore GRANTED.
Tortious Interference with Contractual Relations
In Count 2, Plaintiffs allege tortious interference with contractual
relations because Defendant “has rushed to rush to [sic] breach the Mortgage
contract” so it could collect federal bailout funds.
requires (i) the existence of a contract, (ii) a breach of that contract, and (iii)
an unjustified instigation of the breach by the defendant. Health Call v.
Atrium Home & Health Care Servs. Inc., 268 Mich. App. 83, 90-91, 706
N.W.2d 843 (2005). Further, “a plaintiff must demonstrate, with specificity,
affirmative acts by the interferer which corroborate the unlawful purpose of
the interference.” Formall, Inc. v. Community Nat’l Bank of Pontiac, 166
Mich. App. 772, 779, 421 N.W.2d 289 (1988).
Plaintiffs allege that Defendant breached its duty to put forth good
faith efforts to modify Plaintiffs’ loan or mitigate their loss.
Plaintiffs offer no evidence or argument identifying either (i) which provision
of the contract requires good faith or (ii) which provision of the contract was
plaintiffs had standing to bring claims of breach of fiduciary duty and breach of
contract); Metro. Express Servs., Inc. v. City of Kansas City, 23 F.3d 1367, 1369-70
(8th Cir.1994) (holding that a plaintiff in a diversity action must establish standing
under applicable state law as well as under Article III).
breached. The only indication that Defendant had a duty of good faith is
Plaintiffs’ statement in its complaint that “[t]he contract, as interpreted
under the HUD guidelines from which it originates, requires certain good
faith efforts to modify Plaintiff[s’] loan.” Not only does this duty not appear
in the express terms of the contract, but Plaintiffs do not point to any
evidence in the record supporting the existence of such a duty. Consequently,
Count 2 cannot survive Defendant’s motion for summary judgment.
In their response, Plaintiffs argue that Defendant’s motion should be
denied because “Plaintiffs’ well-pleaded Complaint clearly states the
‘qualifying elements for a tortuous [sic] interference with contract.’” This
statement indicates confusion regarding the difference between surviving a
Motion to Dismiss for Failure to State a Claim under Fed. R. Civ. P. 12(b)(6)
and the instant Motion for Summary Judgment, made pursuant to Fed. R.
Civ. P. 56. To survive a motion to dismiss, Plaintiffs’ complaint must make
allegations which, if they are accepted as true, are “enough to raise a right to
relief above the speculative level” and “state a claim to relief that is plausible
on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). Summary
judgment, on the other hand, does not allow the non-moving party to rest on
the allegations in its complaint. El-Seblani v. IndyMac Mortg. Services, 121046, 2013 WL 69226, at *1, *2 (6th Cir. Jan. 7, 2013) (quoting White v.
Baxter Healthcare Corp., 533 F.3d 381, 390 (6th Cir. 2008)). Rather, the non8
movant must “make a showing sufficient to establish the existence of an
element essential to that party’s case, and on which that party will bear the
burden of proof at trial.”
Celotex, 477 U.S. at 322.
Thus, the fact that
“Plaintiffs have stated a claim for tortious interference” does not save Count
2 from summary judgment, which is hereby GRANTED in Defendant’s favor.
Declaratory Relief - Foreclosure Barred by Unclean Hands
Count 3 states that Defendant’s alleged misrepresentations should bar
Defendant from foreclosing on Plaintiffs’ property under the doctrine of
However, the “unclean hands” doctrine does not state a
cause of action. Talton v. BAC Home Loans Servicing LP, 839 F. Supp. 2d
896, 911 (E.D. Mich. March 7, 2012) (citing Heritage Broad Co. v. Willson
Commc’ns, Inc., 170 Mich. App. 812, 819, 428 N.W.2d 784, 787 (1988)).
Rather, it is a defense that “depends upon the connection between the
complainant’s iniquitous acts and the defendant's conduct which the
complainant relies upon as establishing his cause of action.”
Manufacturers Life Ins. Co., 567 F.3d 787, 797 (6th Cir. 2009). The doctrine
of unclean hands “closes the doors of a court of equity to one tainted with
inequitableness or bad faith relative to the matter in which he seeks relief.”
Stachnik v. Winkel, 394 Mich. 375, 382; 230 N.W.2d 529 (1975). Plaintiffs
concede in their response that the doctrine of unclean hands is more of a
defense to the foreclosure than a claim for relief; however, they have pled the
doctrine as a basis for affirmative relief. As Count 3 does not allege a cause
of action, Defendant’s motion for summary judgment on that count is
Breach of Contract - Implied Duty of Good Faith and Fair
Count 4 of Plaintiffs’ Complaint alleges that “Michigan courts recognize
a duty of good faith in a contractual relationship where a party is given
discretion to make a determination under the contract.” However, “[i]t is well
established . . . that Michigan ‘does not recognize a cause of action for breach
of the implied covenant of good faith and fair dealing.’” Pendracki v. BAC
Home Loans Servicing, LP, Case No. 11-14588, 2012 WL 3887509, at *1, *5
(E.D. Mich. Sept. 7, 2012) (quoting Baumgartner v. Wells Fargo Bank, N.A.,
No. 11-14065, 2012 WL 2223154, at *1, *5 (E.D. Mich. June 15, 2012); Meyer
v. Citimortgage, Inc., 2012 WL 511995, at *1, *6 (E.D. Mich. February 16,
2012) (“Michigan law simply ‘does not recognize a cause of action for breach
of the implied covenant of good faith and fair dealing.’”) (citing Fodale v.
Waste Management of Michigan, 271 Mich. App. 11, 35 (2006)).
Plaintiffs rely on Burkhardt v. City National Bank of Detroit, 57 Mich.
App. 649, 652, 226 N.W.2d 678, 680 (1975), for the proposition that Michigan
courts will recognize an action for breach of an implied covenant of good faith
and fair dealing where “a party to a contract makes the manner of its
performance a matter of its own discretion.” This argument is unavailing.
As this Court stated in Soto v. Wells Fargo Bank, N.A., Case No. 11-14064,
2012 WL 113534, at *1, *5 (E.D. Mich. Jan. 13, 2012), the policy concern at
issue in Burkhardt -- which dealt with escrow accounts -- “no longer applies
after the enactment of the Real Estate Settlement Procedures Act.” More
advertisement upon default, . . . the discretion discussed in Burkhardt does
The Third and Fifth Circuits also have recognized that
“Michigan law does not imply the good faith covenant where parties have
unmistakably expressed their respective rights.”
Cutrone v. Daimler-
Chrysler Motors Co.¸ LLC, 160 F. App’x 215, at *1, *3 (3d Cir. 2005) (citing
Hubbard Chevrolet Co. v. Gen. Motors Corp., 873 F.2d 873, 877 (5th Cir.
Because Michigan law does not recognize an implied duty of good faith
and fair dealing, particularly when, as here, the parties have unmistakably
expressed their rights in a written contract, summary judgment is
GRANTED in favor of Defendant on Count 4.
Federal Fair Debt Collection Practices Act
Count 5 alleges violations of the Fair Debt Collection Practices Act, 15
U.S.C. § 1692, et seq.
However, Plaintiffs’ Complaint contains no factual
allegations beyond (i) listing the subsections of § 1692 that Defendant
allegedly violated and (ii) concluding that the asserted violations caused
Plaintiffs harm. Conspicuously absent from the Complaint are any details
regarding how Defendant supposedly violated this statute.
FDCPA “does not apply to creditors who attempt to collect their own debts in
their own name.” Powell v. Computer Credit, Inc., 975 F. Supp. 1034, 1041
(S.D. Ohio 1997). As 15 U.S.C.A. § 1692a(6) states, “[t]he term ‘debt collector’
means any person who uses any instrumentality of interstate commerce or
the mails in any business the principal purpose of which is the collection of
any debts, or who regularly collects or attempts to collect, directly or
indirectly, debts owed or due or asserted to be owed or due another.”
(emphasis added). Thus, since Defendant was collecting a debt in its own
name, and is not principally in the business of collecting debts, the FDCPA is
not applicable. See Montgomery v. Huntington Bank, 346 F.3d 693, 700 (6th
Cir. 2003) (“Congress drew a distinction between a debt collector and an
enforcer of a security interest.”); see also, Wadlington v. Credit Acceptance
Corp., 76 F.3d 103, 104 (6th Cir. 1996) (“[A] debt collector does not include
the consumer’s creditors.”).
Absent any evidence from Plaintiffs that
Defendant is a debt collector under the FDCPA, summary judgment in
Defendant’s favor is GRANTED on Count 5.
MI Fair Debt Collection Practices Act
Despite captioning Count 6 as a Michigan Fair Debt Collection
Practices Act claim, Plaintiffs’ claim actually alleges that Defendant violated
the Michigan Occupational Code (“MOC”), Mich. Comp. Laws § 339.901 et
seq., by (i) failing to give Plaintiffs validation notice; (ii) threatening to
initiate legal action; and (iii) communicating with Plaintiffs after being
notified that they were represented by an attorney. Count 6 fails for the
same reasons as Count 5.
Most basically, the claim includes no factual
allegations to plausibly establish a violation of the MOC, and contains only
“bare assertions of legal conclusions.” Tahfs v. Proctor, 316 F.3d 584, 590
(6th Cir. 2003). This type of pleading cannot survive a motion to dismiss for
failure to state a claim, let alone a motion for summary judgment. See Iqbal,
556 U.S. at 678.
Additionally, Plaintiffs fail to demonstrate that the MOC applies to
Defendant. Courts have held that “the MOC does not apply to mortgage
foreclosures.” Agbay v. Wells Fargo Bank, N.A., 2012 WL 3029825, at *1, *7
(E.D. Mich. July 25, 2012) (citing Soto v. Wells Fargo Bank, N.A., No. 1114064, 2012 WL 113534 (E.D. Mich. Jan. 13, 2012)). Specifically, the MOC
does not apply to those entities “whose collection activities are confined and
are directly related to the operation of a business other than that of a
collection agency . . . .” Mich. Comp. Laws § 339.901(b). Indeed, the term
“Collection Agency” under the statute does not refer to “[a] state or nationally
chartered bank when collecting its own claims.”
Mich. Comp. Laws
Accordingly, any actions by Defendant to foreclose on
Plaintiffs’ residence or to collect outstanding loan payments do not constitute
debt collection under the MOC. Summary judgment must be GRANTED in
favor of Defendant on Count 6.
Count 7 requests that this Court compel Defendant to “prepare, at their
sole expense, a true and accurate accounting of all of activities relative to
Plaintiffs’ account, including but not limited to an accounting of any/all trial
period/forebearance payments made based on Defendants’ promise to grant a
permanent loan modification.” An action for an accounting “is equitable in
nature, but whether a plaintiff has stated a cause of action for an accounting
must be determined from the facts pled in the plaintiff's complaint rather
than from the prayer for relief.” Boyd v. Nelson Credit Centers, Inc., 132
Mich. App. 774, 779, 348 N.W.2d 25, 27 (1984) (citing Marshall v. Ullmann,
335 Mich. 66, 71, 55 N.W.2d 731 (1952)).
However, “[a]n accounting is
unnecessary where discovery is sufficient to determine the amounts at issue.”
Cyril J Burke, Inc. v. Eddy & Co. Inc., 332 Mich. 300, 303, 51 N.W.2d 238
Plaintiffs’ need to calculate the payments made by them on their own
mortgage is insufficiently complex to justify the invasive action of requiring
Defendant to undertake an accounting. Boyd, 132 Mich. App. at 779-80 (“The
allegations in plaintiffs’ complaint do not support an inference that the
transactions at issue are so complex that ordinary discovery procedures
would be inadequate.”). Indeed, it seems that simply looking at Plaintiffs’
checkbook or attaining a current mortgage statement from Defendant would
be sufficient to determine this information.2 Thus, summary judgment is
GRANTED on Count 7.
Intentional and Constructive Fraud
Counts 8 and 9 of Plaintiffs Complaint, respectively, allege intentional
fraud and constructive fraud, stating that (i) Defendant lied to Plaintiffs by
informing them that the only way to receive a modification was to
intentionally fall behind on their loan payments and (ii) that Plaintiffs relied
To the extent that Plaintiffs’ request for an Accounting is specifically limited to
funds paid in accordance with Defendant’s asserted promise to modify Plaintiffs’
loan, Plaintiffs’ request must be rejected as moot in light of the Court’s
determination that Plaintiffs have failed to provide any evidence that Defendant
made such a promise. See infra, §§ III.B.8, 10-11.
on those statements to their detriment. To succeed on a claim for fraud,
Plaintiffs must plead and prove that “(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 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.” M & D, Inc. v. McConkey, 231 Mich. App. 22, 27
(1998). Indeed, in pleading fraud, 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 statements were 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 *1, *4 (E.D. Mich. Feb. 10, 2010).
When a party fails to meet its Rule 9(b) burden, dismissal is warranted.
It is clear that Counts 8 and 9 could not even survive a Rule 12(b)(6)
motion to dismiss, let alone summary judgment. Plaintiffs’ Complaint does
not describe any specific statements, does not identify the speaker, the time
or place of the statements, or explain how the statements were fraudulent.
Thus, these claims should be dismissed under Rule 12(b)(6) for failure to
state a claim.
Even if Plaintiffs are correct that specific pleading is not required
because the necessary facts were in Defendant’s exclusive control at the time
the complaint was filed, they must still present sufficient evidence of fraud to
defeat Defendant’s motion for summary judgment. They have not done so.
Rather, Plaintiffs’ counsel -- once again confused between a motion to dismiss
and a motion for summary judgment -- cites only to the allegations in the
Complaint to support Counts 8 and 9, stating: “[t]he touchstone of [Plaintiffs]
factual basis is whether Plaintiffs’ allegations state a claim for relief.”
Because Plaintiffs may not merely rely on the allegations in their pleadings
to defeat a motion for summary judgment, Defendant’s motion must be
GRANTED for Counts 8 and 9.
Count 10 of Plaintiffs’ Complaint -- unjust enrichment -- must be
dismissed because an unjust enrichment claim is barred by the mortgage.
Baumgartner, 2012 WL 2223154, at *8. This is because “[c]laims of unjust
enrichment cannot proceed where there is an express contract covering the
subject matter; they are only applicable where a contract is implied.” Id.
(citing Fodale v. Waste Management of Michigan, Inc., 271 Mich. App. 11, 36,
718 N.W.2d 827 (2006) (holding that the existence of an express loan
agreement governing a contractual relationship is sufficient ground to defeat
a debtor’s claim of unjust enrichment.).
Thus, Defendant’s motion for
summary judgment on Count 10 is GRANTED.
Breach of Contract
Count 11 of Plaintiffs’ Complaint alleges breach of contract for failure
to permanently modify their loan. Plaintiffs contend that a valid contract
exists because “Plaintiffs’ allege that Plaintiffs took all necessary actions to
create a valid, binding contract.”
Once again, the allegations listed in a
Complaint, standing alone, are insufficient to survive a properly-supported
motion for summary judgment.
Further, the June 30, 2010 letter from Defendant to Plaintiffs -- which
conditionally approved a modification of Plaintiffs’ mortgage -- does not
constitute a binding contract.
The letter (i) requires further actions by
Plaintiffs “to complete the verification process” and provides a timeframe in
which those actions must be completed; (ii) explicitly states that Plaintiffs are
not obligated to participate in the modification program; and (iii) indicates
that Plaintiffs “may receive a permanent modification if [they] successfully
make all of [their] Trial Period Plan Payments.” (emphasis added). Nothing
in this letter indicates that Defendant promised to modify Plaintiffs’
mortgage. Consequently, there can be no contract.
Indeed, the letter expressly states that Plaintiffs are not obligated to
enter the modification program -- demonstrating that Plaintiffs were not
bound by the letter -- and premises their eligibility for a modification upon
future actions. Plaintiffs’ have also provided no evidence -- aside from the
allegations in their Complaint -- that they complied with the requirements
outlined in the letter.
Because there can be no breach without a valid
contract, and because Plaintiffs cannot even demonstrate compliance with
the contract they allege exists, summary judgment in Defendant’s favor is
GRANTED on Count 11.
Plaintiffs’ final Count -- Promissory Estoppel based upon an alleged
promise by Defendant to modify their loan -- is barred by the Statute of
To succeed in a claim for promissory estoppel, Plaintiffs must
establish the existence of “(1) a promise, (2) that the promisor should
reasonably have expected to induce action of a definite and substantial
character on the part of the promisee, and (3) that in fact produced reliance
or forbearance of that nature in circumstances such that the promise must be
enforced if injustice is to be avoided.” Novak v. Nationwide Mut. Ins. Co., 235
Mich. App. 675, 686-87, 599 N.W.2d 546 (1999).
In Michigan, however, certain types of promises or agreements must be
in writing before they can be enforced.
Crown Technology Park v. D&N
Bank, F.S.B., 242 Mich. App. 538, 548 (2000). The burden of proving an
enforceable agreement is even heavier when bringing a claim against a
financial institution. Specifically, M.C.L. § 566.132(2) provides, in relevant
part, that an action cannot be brought against a financial institution to
enforce any “financial accommodation,” unless the promise or commitment “is
in writing and signed with an authorized signature by the financial
institution.” In Crown Technology, the plaintiff sued the bank to enforce an
alleged unwritten promise by the bank to waive a prepayment penalty
provision in the plaintiff’s mortgage loan. The Court of Appeals of Michigan
held that plaintiff’s promissory estoppel claim was barred by § 566.132(2),
which “plainly states that a party is precluded from bringing a claim -- no
matter its label -- against a financial institution to enforce the terms of an
oral promise to waive a loan provision.”
Id. at 550.
In reaching its
conclusion, the court noted that its ruling extended beyond promissory
estoppel claims, and that §566.132(2) barred all unwritten promises,
regardless how such claims were labeled, explaining:
However, as we noted above, the Legislature used the broadest
possible language in M.C.L. § 566.132(2); M.S.A. 26.922(2) to
protect financial institutions by not specifying the types of
“actions” it prohibits, eliminating the possibility of creative
pleading to avoid the ban.
Plaintiffs have failed to present any evidence of a signed, written
agreement wherein Defendant promised to modify their loan. Consequently,
Defendant’s motion for summary judgment is GRANTED on Count 12.3
For all of the foregoing reasons,
IT IS HEREBY ORDERED that Defendant’s Motion for Summary
Judgment is GRANTED on all counts.
IT IS SO ORDERED.
Dated: February 21, 2013
s/Gerald E. Rosen
GERALD E. ROSEN
CHIEF JUDGE, U.S. DISTRICT COURT
Plaintiffs claim that Mich. Comp. Laws § 566.132 does not bar their claim because
they “are not seeking to enforce the terms of an oral promise to modify the Loan.
Plaintiffs are suing Defendant for monetary damages as a result of Defendant’s
fraudulent representations that caused Plaintiffs to default on her [sic] loan.”
However, this Court has already dismissed Plaintiffs’ claims for Intentional Fraud
(Count 8) and Constructive Fraud (Count 9). Thus, to the extent that Count 12 may
be interpreted as alleging fraud, summary judgment in favor of Defendant is
GRANTED for the reasons laid out in § III.B.8.
CERTIFICATE OF SERVICE
I hereby certify that a copy of the foregoing document was mailed to
the attorneys of record on this date, Thursday, February 21, 2013, by
electronic and/or ordinary mail.
Case Manager, (313) 234-5135
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?