Rummell et al v. Vantium Capital, Inc., et al
Filing
27
ORDER granting 17 Motion to Dismiss. Signed by District Judge Nancy G. Edmunds. (CHem)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
CHAD RUMMELL and
SHERRIE RUMMELL,
Case No. 12-10952
Plaintiffs,
Honorable Nancy G. Edmunds
v.
VANTIUM CAPITAL, INC., d/b/a
ACQURA LOAN SERVICES; and
CITIMORTGAGE, INC.; and
CASTLE PEAK 2010-1 LOAN TRUST; and
U.S. BANK, N.A.,
Defendants.
___________________________________/
OPINION AND ORDER GRANTING DEFENDANT CITIMORTGAGE’S MOTION TO
DISMISS AND OTHER DEFENDANTS’ CONCURRENCE IN DEFENDANT
CITIMORTGAGE’S MOTION TO DISMISS OR FOR SUMMARY JUDGMENT
Chad and Sherrie Rummell (“Plaintiffs”) filed an action on February 3, 2012 in
Macomb County Circuit Court against Defendants Vantium Capital, Inc. d/b/a Acqura
Loan Services (“Acqura”), CitiMortgage, Inc. (“CitiMortgage”), Castle Peak 2010-1 Loan
Trust (“Castle Peak”), and U.S. Bank, N.A. (“U.S. Bank”) seeking to force Defendants to
modify Plaintiffs’ mortgage loan and to enjoin Defendants from proceeding with a
sheriff’s sale on Plaintiffs’ house. On February 21, 2012, the state-court judge issued a
preliminary injunction, to remain in effect while the action was pending, enjoining
Defendants Castle Peak and U.S. Bank from proceeding with any sheriff’s sale on
Plaintiffs’ house or from selling, transferring, or disposing of Plaintiffs’ house.
Defendants then removed this action to this Court on March 1, 2012. The suit arises out
of a letter sent by Defendant CitiMortgage to Plaintiffs discussing a possible
modification of Plaintiffs’ loan should a series of conditions be met. Plaintiffs argue that
all of these conditions have been met and that Defendants are therefore bound to
modify Plaintiffs’ loan.
This matter comes before the court on Defendant CitiMortgage’s motion to
dismiss and the other Defendants’ concurrence in Defendant CitiMortgage’s motion to
dismiss or for summary judgment. For the reasons stated below, both motions are
GRANTED.
I.
Facts
On April 30, 2004, Plaintiff Chad Rummell obtained a loan from Investaid
Corporation secured by a mortgage, granted to non-party Mortgage Registration
Systems, Inc. (“MERS”), to finance the purchase of real property located at 13479
Melanie, Sterling Heights, Michigan 48313. (Compl., ¶11; CitiMortgage Mot., Ex. B,
Mortgage.) Effective July 1, 2008, Defendant CitiMortgage became the servicer of the
mortgage loan. (Compl., ¶¶13-14.)
In 2009, as a result of financial hardship, Plaintiffs contacted Defendant
CitiMortgage to discuss the possibility of a loan modification to make their monthly
payments more affordable. On September 10, 2009, Defendant CitiMortgage sent
Plaintiffs a proposal for a three-month Trial Period Plan (“TPP”) under the Home
Affordable Modification Program (“HAMP”). Under the terms of the TPP, Plaintiffs were
required to make three monthly payments of $601.73 starting on October 1, 2009.
(Compl., ¶¶15-17.) Plaintiffs allege that they “accepted the TPP agreement offer by
2
signing the contract the contract on September 24, 2009 and returning it to Defendant
CitiMortgage.” (Compl., ¶19).
The TPP provides that:
If I [Plaintiff] am in compliance with this Trial Period Plan (the “Plan”) and my
representations in Section 1 continue to be true in all material respects, then the
servicer will provide me with a Home Affordable Modification Agreement
(“Modification Agreement”) as set forth in Section 3, that would amend and
supplement (1) the Mortgage on the property, and (2) the Note secured by the
Mortgage. . . .
***
If I have not already done so, I am providing confirmation of the reasons I cannot
afford my mortgage payment and documents to permit verification of all of my
income . . . to determine whether I qualify for the offer described in this Plan (the
“Offer”). I understand that after I sign and return two copies of this Plan to the
Lender, the Lender will send me a signed copy of this Plan if I qualify for the
Offer or will send me written notice that I do not qualify for the Offer. This Plan
will not take effect unless and until both I and the Lender sign it and Lender
provides me with a copy of this Plan with the Lender’s signature.
(Compl., Ex. 1, TPP at 1 (emphasis added).)
The TPP, in Section 3, sets out the certain conditions that must be met before
the loan documents will be modified. It states, “If I comply with the requirements of
Section 2 and my representations in Section 1 continue to be true in all material
respects, the Lender will send me a Modification Agreement. . . .” (Compl., Ex. 1, TPP
at 3, ¶3.)
Section 2 of the TPP expressly provides that the Plaintiffs’ loan will not be
modified and the TPP will be terminated if certain conditions are not met:
If prior to the Modification Effective Date, (i) the Lender does not provide me a
fully executed copy of the Modification Agreement; (ii) I have not made the Trial
Period Payments required under Section 2 of this plan; or (iii) the Lender
determines that my representations in Section 1 are no longer true and correct,
the Loan Documents will not be modified and this Plan will terminate.
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(Compl., Ex. 1, TPP at 2, ¶2.F.) Furthermore, by signing the TPP, Plaintiffs
acknowledged that Defendant CitiMortgage was not agreeing to a loan modification and
that certain conditions must be met before their loan would be modified:
I understand that the plan is not a modification of the Loan Documents and that
the Loan Documents will not be modified unless and until (i) I meet all of the
conditions required for modification, (ii) I receive a fully executed copy of the
Modification Agreement, and (iii) the Modification Effective Date has passed. I
further understand and agree that the lender will not be obligated or bound to
make any modification of the Loan Documents if the Lender determines that I do
not qualify or if I fail to meet any one of the requirements under this plan. . . .
(Compl., Ex. 1, TPP at 2, ¶2.G (emphasis added).)
Plaintiffs claim that that they provided Defendant CitiMortgage with all of the
necessary information to confirm that they were eligible for a HAMP loan modification
and that they made the three monthly payments to Defendant CitiMortgage required
under the TPP. (Compl., ¶¶21-22.) Defendant CitiMortgage never signed the TPP or
returned a signed copy to Plaintiffs. (Compl., Ex. 1, TPP at 3.) Following the third
payment, Defendant CitiMortgage advised Plaintiffs to continue making the same
monthly payments because Defendant CitiMortgage was backed up in processing
permanent loan modifications due to the volume of requests. (Compl., ¶23.) Plaintiffs
continued making the reduced $601.73 monthly payments.
In May 2010, Defendant CitiMortgage notified Plaintiffs that their mortgage loan
would now be serviced by Defendant Acqura. (Compl., ¶25; Def.’s Mot., Ex. C, 2010
Notice of Transferring Servs. Rights.) On April 27, 2011, the mortgage on Plaintiffs’
home was assigned from MERS, as nominee for Investaid, to Defendant Castle Peak.
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That assignment was recorded on May 19, 2011. (Defs.’ Concurrence, Ex. 5,
Assignment.)
Plaintiffs continued making the reduced monthly payments of $601.73 to Acqura
from June 2010 until April 2011, when a representative from Defendant Acqura told
Plaintiffs that they should stop making payments because they would not be given a
permanent HAMP loan modification. (Compl., ¶¶26-27.) After acquiring the servicing
rights to the loan, Defendant Acqura offered Plaintiffs a new TPP with scheduled
payments on November 1, 2011, December 1, 2011, and January 1, 2012 in the
amount of $1,113.21. (Defs.’ Concurrence, Ex. 6, 2011 TPP.) However, because
Plaintiffs failed to make the November 1, 2011 payment, Defendant Acqura notified
them that they were no longer HAMP eligible. (Defs.’ Concurrence, Ex. 7, Denial Letter.)
On or about March 29, 2011, Defendant Acqura sent a notice of default to
Plaintiffs which indicated that they were in default on their loan for failure to make their
required payments. (Defs.’ Concurrence, Ex. 8, Notice of Default.) Per the notice of
default, Plaintiffs were required to pay $31,813.45 by April 28, 2011 to cure the default.
In May 2011, Defendant Acqura initiated foreclosure proceedings against
Plaintiffs. Defendant Acqura’s designated agent, Potestivo and Associates, P.C., sent
Plaintiff Chad Rummell a notice as required by Mich. Comp. Laws § 600.3205a advising
him of his right to request a meeting within 14 days of the date of the notice to discuss a
loan modification. (Compl., ¶28.) Mr. Rummell requested a meeting, which was held on
June 3, 2011 via telephone. (Compl., ¶¶29-30.)
At this meeting, Plaintiffs allege that a representative from Defendant Acqura told
Mr. Rummell that he was denied a permanent HAMP loan modification because Mr.
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Rummell failed to send one of the three payments that were initially due under the
CitiMortgage TPP. (Compl., ¶34.) Plaintiffs deny this and claim that they have fulfilled
their obligations under the TPP offered by Defendant CitiMortgage. (Compl., ¶35.)
Plaintiffs also allege that while Defendant Acqura did extend a second TPP to
them, they had no reason to enter into a second TPP after complying with the first TPP
offered by Defendant CitiMortgage. Furthermore, Plaintiffs allege, Defendant Acqura’s
continued acceptance of the payments under the 2009 TPP offered by Defendant
CitiMortgage shows that the 2009 TPP remained in effect. Therefore, according to
Plaintiffs, Defendant Acqura assumed Defendant CitiMortgage’s obligation to grant a
permanent loan modification to Plaintiffs and failed to do so.
Nevertheless, Plaintiffs failed to cure the default. Therefore, in accordance with
the Michigan foreclosure by advertisement statute, Mich. Comp. Laws. §§ 600.3201, et.
seq., Castle Peak initiated foreclosure proceedings. (Compl., Ex. 6, 1/19/12 Foreclosure
Notice.)
On January 12, 2012, a Notice of Foreclosure was posted on the property.
(Defs.’ Concurrence, Ex. 9, Affidavit of Posting.) The Notice of Foreclosure was also
published in the Macomb County Legal News on January 19, January 26, February 2,
and February 9, 2012. (Id., Ex. 10, Affidavit of Posting.) On each notice, the foreclosure
entity is identified as Castle Peak. (Id., Ex. 9; Id., Ex. 10.)
The mortgage foreclosure sale was scheduled to be held on February 16, 2012.
However, on February 3, 2012, Plaintiffs filed a Complaint, as well as an Ex Parte
Motion for a Temporary Restraining Order in state court. Plaintiffs’ Complaint and
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Motion allege that Defendants should be enjoined from carrying out the foreclosure and
that Plaintiffs are entitled to a permanent loan modification.
II.
Standards of Review
A. Rule 12(b)(6) Standard
A motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6) tests
the sufficiency of a complaint. In a light most favorable to the plaintiff, the court must
assume that the plaintiff’s factual allegations are true and determine whether the
complaint states a valid claim for relief. See Albright v. Oliver, 510 U.S. 266 (1994);
Bower v. Fed. Express Corp., 96 F.3d 200, 203 (6th Cir. 1996). To survive a Rule
12(b)(6) motion to dismiss, the complaint’s “factual allegations must be enough to raise
a right to relief above the speculative level on the assumption that all of the allegations
in the complaint are true.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007)
(internal citations and emphasis omitted). See also Ass’n of Cleveland Fire Fighters v.
City of Cleveland, Ohio, 502 F.3d 545, 548 (6th Cir. 2007). “[T]hat a court must accept
as true all of the allegations contained in a complaint is inapplicable to legal
conclusions. Threadbare recitals of all of the elements of a cause of action, supported
by mere conclusiory statements do not suffice.” Ashcroft v. Iqbal, 556 U.S. 662, 678
(2009). The court is “not bound to accept as true a legal conclusion couched as a
factual allegation. Id. (internal quotation marks and citation omitted). Moreover, “[o]nly a
complaint that states a plausible claim for relief survives a motion to dismiss.” Id. at 679.
“Determining whether a complaint states a plausible claim for relief will . . . be a context
specific task that requires the reviewing court to draw on its judicial expertise and
common sense. But where the well-pleaded facts do not permit the court to infer more
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than the mere possibility of misconduct, the complaint has alleged – but it has not
shown – that the pleader is entitled to relief. Id. (internal quotation marks and citation
omitted). Thus, “a court considering a motion to dismiss can choose to begin by
identifying pleadings that, because they are no more than conclusions, are not entitled
to the assumption of truth. While legal conclusions can provide the framework for a
complaint, they must be supported by factual allegations. When there are well-pleaded
factual allegations, a court should assume their veracity and then determine whether
they plausibly give rise to an entitlement of relief.” Id. In sum, “[t]o survive a motion to
dismiss, a complaint must contain sufficient factual matter, accepted as true, to state a
claim for relief that is plausible on its face.” Id. at 678 (internal quotation marks and
citation omitted).
In reviewing and ruling upon a motion to dismiss, a court may look to documents
that are “not formally incorporated by reference or attached to a complaint,” if the
“document is referred to in the complaint and central to the plaintiff's claims.” Greenberg
v. Life Ins. Co. of Virginia, 177 F.3d 507, 514 (6th Cir.1999) (citation omitted). A court's
consideration of these documents does not convert the motion to dismiss into a motion
for summary judgment. Id. (citation omitted).
B. Summary Judgment Standard
“The court shall grant summary judgment if the movant 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). A moving party may meet that burden “by
‘showing’—that is, pointing out to the district court-that there is an absence of evidence
8
to support the nonmoving party's case.” Celotex Corp. v. Catrett, 477 U.S. 317, 325
(1986). Revised Rule 56 expressly provides that:
A party asserting that a fact cannot be or is genuinely disputed must support the
assertion by:
(A) citing to particular parts of materials in the record, including depositions,
documents, electronically stored information, affidavits or declarations,
stipulations (including those made for purposes of the motion only), admissions,
interrogatory answers, or other materials; or
(B) showing that the materials cited do not establish the absence or presence of
a genuine dispute, or that an adverse party cannot produce admissible evidence
to support the fact.
Fed. R. Civ. P. 56(c)(1). The revised Rule also provides the consequences of failing to
properly support or address a fact:
If a party fails to properly support an assertion of fact or fails to properly address
another party's assertion of fact as required by Rule 56(c), the court may:
(1) give an opportunity to properly support or address the fact;
(2) consider the fact undisputed for purposes of the motion;
(3) grant summary judgment if the motion and supporting materials—including
the facts considered undisputed—show that the movant is entitled to it; or
(4) issue any other appropriate order.
Fed. R. Civ. P. 56(e). “The court need consider only the cited materials, but it may
consider other materials in the record.” Fed. R. Civ. P. 56(c)(3).
When the moving party has met its burden under Rule 56, “its opponent must do
more than simply show that there is some metaphysical doubt as to the material facts.”
Matsushita Electric Industries Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986).
Ultimately a district court must determine whether the record as a whole presents a
genuine issue of material fact, id. at 587, drawing “all justifiable inferences in the light
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most favorable to the non-moving party,” Hager v. Pike County Bd. Of Education, 286
F.3d 366, 370 (6th Cir. 2002).
III.
Analysis
Plaintiffs assert claims for: (1) breach of contract and specific performance (count
I); promissory estoppel (count II); and (3) injunctive relief (count III). In their motions,
Defendants argue that: (1) Plaintiffs’ claims for breach of contract, specific performance,
and promissory estoppel are barred by the statute of frauds; (2) even if not barred,
these claims should be dismissed because no contract for a loan modification was ever
formed; and (3) in light of the above, Plaintiffs are not entitled to injunctive relief.
Plaintiffs respond that: (1) because Defendant CitiMortgage’s cover letter accompanying
the 2009 TPP had an electronic signature, their breach of contract, specific
performance, and promissory estoppel claims are not barred by the statute of frauds; (2)
the TPP constitutes a binding contract obligating Defendant CitiMortgage to
permanently modify their mortgage loan; and (3) Defendant Acqura is also obligated to
permanently modify their mortgage loan because it accepted Plaintiffs’ reduced monthly
payments set out under the 2009 TPP offered by Defendant CitiMortgage to Plaintiffs,
and this caused the 2009 TPP to remain in effect. Defendants’ arguments are
persuasive, and Defendant CitiMortgage’s motion to dismiss and the other Defendants’
concurrence in the motion to dismiss or, in the alternative, for summary judgment are
granted.
A. Plaintiffs’ Claims are Barred by the Statute of Frauds
Plaintiffs’ claims for breach of contract, specific performance, and promissory
estoppel are barred by the statute of frauds because the 2009 TPP was not “signed with
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an authorized signature by the financial institution.” Mich. Comp. Laws § 566.132(2)(c).1
“Under Michigan’s statute of frauds, a financial institution’s promise regarding financial
accommodation, like a loan modification, is not enforceable unless it is (1) in writing,
and (2) signed by an authorized agent of the financial institution.” Heikkinen v. Bank of
America, N.A., No. 11-12532, 2012 WL 628608, at *7 (E.D. Mich. Feb. 27, 2012) (citing
Mich. Comp. Laws § 566.132(2)(c)). See also Brady v. Chase Home Finance, LLC, No.
1:11-CV-838, 2012 WL 1900606, at *8 (W.D. Mich. May 24, 2012) (“Michigan courts
interpret the requirement of an ‘authorized signature’ as that of an ‘authorized
representative’ of the financial institution.”) (quoting Cadle Co. II, Inc. v. P.M. Group,
Inc., No. 275099, 2007 WL 3119569, at *2 (Mich Ct. App. Oct. 25, 2007) (per curiam)).
This statute applies to any “claim – no matter its label – brought against a financial
institution to enforce the terms of an oral promise to waive a loan provision.” Crown
Tech Park v. D & N Bank, FSB, 619 N.W.2d 66, 72 (Mich. Ct. App. 2000). Thus,
Plaintiffs’ claims for promissory estoppel, as well as for breach of contract and specific
performance are barred. See Ajami v. Indymac Mortg. Servs., No. 09-13488, 2009 WL
3874680, at *2 (E.D. Mich. Nov. 13, 2009).
1
Mich. Comp. Laws § 566.132(2)(c) provides that:
(2) An action shall not be brought against a financial institution to enforce any of the
following promises or commitments of the financial institution unless the promise or
commitment is in writing and signed with an authorized signature by the financial
institution:
...
(c) A promise or commitment to waive a provision of a loan, extension of credit, or
other financial accommodation.
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Neither Defendant CitiMortgage nor any other Defendant signed the 2009 TPP.
That portion of the signature line on the final page of the 2009 TPP is blank, and there is
no other spot where any Defendant signed it. There is no evidence that the 2009 TPP
was signed by an authorized agent of a Defendant financial institution. Plaintiffs’
argument that the electronic “Sincerely, CitiMortgage Inc.” on the cover letter
accompanying the 2009 TPP, (Compl., Ex. 1, Cover Letter), satisfies the statue of
frauds fails because it is not a writing signed by “an authorized agent of the financial
institution” as required by Mich. Comp. Laws § 566.132(2)(c). See Heikinnen, 2011 WL
628608, at *7; Brady, 2012 WL 1900606, at *8 (holding that a cover letter
accompanying a TPP signed “Sincerely, CHASE HOME FINANCE LLC” did not satisfy
the statute of frauds because it was not an authorized signature).
Although Plaintiffs’ claims are barred by the statute of frauds, they also are
dismissed for the following reasons.
B.
The 2009 TPP Did Not Create a Binding Contract
Plaintiffs’ breach of contract and specific performance claims fail because the
2009 TPP did not create a binding contract between any Defendant and Plaintiffs
regarding a permanent loan modification. “Under Michigan Law, the elements of a
breach of contract claim are: (1) the existence of a contract between the parties, (2) the
terms of the contract require performance of certain actions, (3) a party breached the
contract, and (4) the breach caused the other party injury.” Burton v. William Beaumont
Hosp., 373 F. Supp. 2d 707, 718 (E.D. Mich. 2005). As this Court has previously
observed, the TPP is only a proposal, and it does not create a binding contract when
only one party has signed it. Heikkinen v. Bank of America, N.A., No. 11-12532, 2012
12
WL 628608, at *6 (observing that “the loan modification proposal [the plaintiff] signed
‘[does] not ripen into a binding agreement, primarily because [it] bears only [the
plaintiff]’s signature, and therefore, does not objectively reflect a meeting of the minds
regarding the essential modification terms” and quoting Voydanoff v. Select Portfolio
Serv., Inc., No. 298098, 2011 WL 6757841 (Mich. App. Dec. 22, 2011)).
The 2009 TPP Plaintiffs signed contains the same language as the TPP in
Heikkinen. (Compl., Ex. 1, TPP.) “That document expressly provides that the Trial
Period Plan is not a loan modification and Plaintiff’s loan documents would not be
modified ‘unless and until’ Plaintiff met all the conditions for modification….” Heikkinen,
2012 WL 628608, at *6. One of the conditions is that the “Loan Documents will not be
modified unless and until . . . I [Plaintiff] receive a fully executed copy of a Modification
agreement. . . .” (Compl., Ex. 1, TPP at 2, ¶2.G.) The TPP also states that it “will not
take effect unless and until both I [the borrower] and the Lender sign it and Lender
provides me with a copy of this plan with Lender’s signature.” (Compl., Ex. 1, TPP at 1.)
Defendant CitiMortgage never signed the 2009 TPP and never returned a signed copy
to Plaintiffs. Therefore, similarly to Heikkinen, the 2009 TPP did not “ripen into a binding
contract” obligating any Defendant to provide Plaintiffs with a loan modification.
Heikkinen, 2012 WL 628608, at *6.
To the extent that Plaintiffs rely on nonbinding decisions to the contrary, this
Court declines to follow those decisions.
Plaintiffs further argue that Defendant CitiMortgage’s execution of the 2009 TPP
is a condition precedent, and Defendant CitiMortgage cannot use its own failure to sign
the TPP as an excuse for nonperformance. See Harbor Park Market v. Gronda, 743
13
N.W.2d 585, 588-89 (Mich. Ct. App. 2007) (“[Promisors] cannot avoid liability on the
contract for the failure of a condition precedent where they caused the failure of the
condition.”). This Court disagrees. The requirement that the TPP be signed by the
Lender is not a condition precedent to the formation of the contract. Rather, it is a
further manifestation of assent required by the Lender for there to be a valid offer. See
Wigod v. Wells Fargo Bank, N.A., 673 F.3d 547, 561 (7th Cir. 2012) (observing that
“[u]nder contract law principles, when ‘some further act of the purported offeror is
necessary, the purported offeree has no power to create contractual relations, and there
is yet no operative offer’” and quoting 1 Joseph M. Perillo, Corbin on Contracts § 1.11,
at 31 (rev. ed. 1993)). See also Restatement (Second) of Contracts § 26 (1981) (“A
manifestation of willingness to enter into a bargain is not an offer if the person to whom
it is addressed knows or has reason to know that the person making it does not intend
to conclude a bargain until he has made a further manifestation of assent.”).
Unlike the TPP in Wigod, the 2009 TPP here was not countersigned by
Defendant CitiMortgage, and an executed copy was not mailed back to Plaintiffs with a
letter congratulating them on their approval for a trial modification. See Wigod, 673 F.3d
at 562 (observing that “when Wells Fargo executed the TPP, its terms included a
unilateral offer to modify Wigod’s loan conditioned on her compliance with the stated
terms of the bargain.”). Here, because Defendant CitiMortgage did not countersign the
2009 TPP and did not return a signed copy to Plaintiffs, there was no offer, and there
was no binding contract. Furthermore, because there was no binding contract to modify
Plaintiffs’ loan in 2009, Defendant Acqura’s acceptance of reduced monthly payments
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addressed in that TPP could not possibly create or continue a contract that never
existed. Accordingly, Plaintiffs’ breach of contract claims are dismissed.2
C. Plaintiffs Did Not Reasonably Rely on a Promise by Any Defendant
Plaintiffs’ promissory estoppel claim also fails. The elements of promissory
estoppel are:
(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., 599 N.W.2d 546, 552 (Mich. Ct. App. 1999). The
promise must be “actual, clear and definite.” State Bank of Standish v. Curry, 500
N.W.2d 104, 107 (Mich. 1993). “Reliance is reasonable only if it is induced by an actual
promise.” Id. See also McMath v. Ford Motor Co., 259 N.W.2d 140, 143 (Mich. Ct. App.
1986) (Plaintiff's allegations do not support a promise definite enough to justify his
reliance.”).
Defendants did not make a clear and definite promise to provide Plaintiffs with a
permanent loan modification. The 2009 TPP provides that the lender must return a
signed copy of the TPP to the borrower before there will be a loan modification.
(Compl., Ex. 1, TPP at 2, ¶2.G.). It also states that it “will not take effect unless and until
both I [the borrower] and the Lender sign it and Lender provides me with a copy of this
plan with Lender’s signature.” (Compl., Ex. 1, TPP at 1). Because Defendant
CitiMortgage never returned a signed copy of the TPP to Plaintiffs, it never made a clear
2
In light of this ruling, it is unnecessary to address Defendants’ additional arguments for
dismissal of Plaintiffs’ breach of contract claims.
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and definite promise to permanently modify Plaintiffs’ loan. Thus, any reliance by
Plaintiffs on the representations in the 2009 TPP would be unreasonable. See Brady,
2012 WL 1900606, at *9 (holding that the borrower’s reliance on a promise for a loan
modification would have been unreasonable because the TPP requires that the lender
sign and return the TPP to the borrower before any loan modification would occur).
Plaintiffs argue that the TPP does make a clear and definite promise to provide a
loan modification because it states:
If I [Plaintiff] am in compliance with this Trial Period Plan . . . and my
representations in Section 1 continue to be true in all material respects, then the
servicer will provide me with a Home Affordable Modification Agreement . . ., as
set forth in Section 3 . . . .”
(Compl., Ex. 1, TPP at 1) (emphasis added).) Plaintiffs argue that this language conflicts
with the language in the TPP that requires the lender to return a signed copy of the TPP
to the borrower before the loan will be modified and thus creates an ambiguity that is “to
be construed against the drafter.” Klapp v. United Ins. Group Agency, 663 N.W.2d 447,
445 (Mich. 2003). Therefore, Plaintiffs assert, their reliance was justified because “any
reasonable person reading [the above] language would rightfully assume that all they
need to do to earn a HAMP modification is to comply with the TPP by making three
timely payments.” (Pls.’ Resp. at 15). This Court disagrees.
The language of the TPP is not ambiguous. First, the language from Section 3 of
the TPP requires compliance “with the requirements in Section 2. . .” (Compl., Ex. 1,
TPP at 3, ¶3.) Section 2 expressly states that the “Loan documents will not be modified
unless and until . . . I [Plaintiff] receive a fully executed copy of the modification
agreement.” (Compl., Ex. 1, TPP at 2, ¶2.G.) Plaintiffs never received a fully executed
16
copy of the TPP. Second, it is a well-established contract principle that language is not
to be read out of a contract. Klapp, 663 N.W.2d at 468 (“[C]ourts must . . . give effect to
every word, phrase, and clause in a contract and avoid an interpretation that would
render any part of the contract surplusage or nugatory.”). Plaintiffs’ interpretation would
not give effect to the requirement that an executed TPP be returned to the Plaintiffs.
Plaintiffs cite a Seventh Circuit case for the proposition that a reasonable person
would read the language of the TPP as an offer to provide a permanent loan
modification. (Pls.’ Resp. to Defs.’ Concurrence at 12-13, citing Wigod, 673 F.3d at
563.) Plaintiffs’ reliance on Wigod is misplaced. In that case, unlike this one, the bank
had signed and returned the TPP to the borrower. That is what made the borrowers
reliance reasonable. Wigod, 673 F.3d at 563.3
D. There is No Basis for Injunctive Relief
Based on the above, Plaintiffs have no right to injunctive relief. Moreover,
pursuant to the terms of the state-court injunction, because Plaintiffs’ action is
dismissed, the injunction no longer remains in effect. (Compl., Ex. 14, 2/21/12 Order.)
IV.
Conclusion
For the above stated reasons, Defendant Citimortgage’s motion to dismiss and
the other Defendants’ concurrence in Defendant Citimortgage’s motion to dismiss or for
summary judgment are GRANTED.
3
In light of this ruling, it is unnecessary to address Defendants’ additional arguments for
dismissal of Plaintiffs’ promissory estoppel claim.
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SO ORDERED.
s/Nancy G. Edmunds__________________
Nancy G. Edmunds
United States District Judge
Dated: June 27, 2012
I hereby certify that a copy of the foregoing document was served upon counsel of
record on June 27, 2012, by electronic and/or ordinary mail
s/Carol A. Hemeyer____________________
Case Manager
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