Evans v. LNV Corporation

Filing 6

ORDER granting 2 Motion to Dismiss. Signed by District Judge Nancy G. Edmunds. (CHem)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION

Caleb Evans,
Case No. 12-12287
Plaintiff,
Honorable Nancy G. Edmunds
v.
LNV Corporation,
Defendant.
/

ORDER GRANTING DEFENDANT’S MOTION TO DISMISS [2]
Before the Court is Defendant LNV Corporation’s motion to dismiss Plaintiff Caleb
Evan’s foreclosure-related complaint.1 (Dkt. 2.) Having reviewed the pleadings, the Court
finds that a hearing is not necessary in its disposition of the case. The Court therefore
dispenses with a hearing pursuant to Eastern District of Michigan Local Rule 7.1(f)(2).
Because Plaintiff fails to state a plausible claim with his complaint, the Court GRANTS
Defendant’s motion to dismiss.
I.

Facts
A. Plaintiff’s complaint
Plaintiff seeks to recover property at 250 Madeleine Lane, in Waterford, Michigan that

was foreclosed upon, sold at a sheriff’s sale, and ultimately assigned to Defendant.
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The Court is aware, as Defendant points out, that Plaintiff’s counsel has filed this exact
complaint with different plaintiffs throughout this district and that the courts that have
addressed this complaint have dismissed it summarily. See Enyia v. Federal Home Loan
Mortg. Corp., 12-12118, 2012 WL 3779188 (E.D.Mich. Aug. 31, 2012) (Battani, J.) See
also Smith v. Fannie Mae, 11-15560, 2012 WL 3758087 (E.D.Mich. Aug. 30, 2012)
(Roberts, J.) and Saxton v. Wells Fargo, N.A., 12-11670, 2012 WL 3568806 (E.D.Mich.
Aug. 17, 2012) (Cohn, J.) (All dismissing identical complaints filed by Plaintiff’s counsel.).

(Compl. ¶ 5.) Plaintiff states that he had purchased that property and that he currently
resides in the property. (Comp. ¶ 8.)
Plaintiff does not state the exact date, but he alleges that he “attempted to get a loan
modification and/or negotiate in good faith a settlement for the subject property.” (Compl.
¶ 9.) Given the Court’s familiarity with these mortgage causes, the Court understands that
Plaintiff implies that he fell behind on some sort of payment for his property.
Plaintiff then states that a sheriff’s sale was held in 2011.2 (Compl. ¶ 10.) Plaintiff
alleges that, since the sheriff’s sale, he “attempted in good faith to continue with the
[s]ettlement process[,] to no avail.” (Id. ¶ 11.) Plaintiff notes that the redemption period for
the sheriff’s sale has expired. (Id. ¶ 12.)
Plaintiff finally alleges that Defendant “must be ordered to continue the processing of
the [l]oan [m]odification and/or negotiate in good faith a settlement on the subject property
so that [Plaintiff] can enter into a [l]oan [m]odification.” (Compl. ¶ 13.)
Plaintiff requests that the Court award Plaintiff: all legal title to the property; damages;
attorneys’ fees and costs; and any other relief the Court finds just and equitable. (Compl.
¶ 17.)
B. Facts from Defendant’s motion
Defendant provides a more thorough background in its motion. Defendant states that,
on May 31, 2007, Plaintiff received a loan for $392,000.00 from Main Street Bank. (Def.’s
Mot. to Dismiss at 2, Ex. A.) Defendant adds that the mortgage was secured by the

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In its notice of removal, Defendant has attached the Sheriff’s Deed on the mortgage
foreclose. (Dkt. 2, Notive of Removal, Ex. B.) The Sheriff’s Deed was executed on
November 15, 2011 and recorded on November 29, 2011. (Id.)
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Madeleine Lane property. (Id.) Defendant also adds that the mortgage was assigned to
it on August 24, 2009 and Defendant explains that the assignment was recorded on
September 9, 2009. (Id., Ex. B.)
Defendant states that “Plaintiff does not dispute . . . that he defaulted on his
obligations under the [m]ortgage.” (Def.’s Mot. to Dismiss at 2.) Defendant states that it
foreclosed on the property by advertisement and then states that, on November 15, 2011,
it purchased the property at the sheriff’s sale and that it then received the sheriff’s deed.
(Id.) Defendant adds that the statutory redemption period expired on May 15, 2012, and
that Plaintiff did not redeem the property and instead chose to file the present lawsuit, on
April 17, 2012. (Id.)
II.

Rule 12(b)(6) motion to dismiss 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 the elements
of a cause of action, supported by mere conclusory statements do not suffice.” Ashcroft
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v. Iqbal, ___ U.S. ___, 129 S. Ct. 1937, 1949 (2009) The court is “not bound to accept as
true a legal conclusion couched as a factual allegation.” Id. at 1950 (internal quotation
marks and citation omitted). Moreover, “[o]nly a complaint that states a plausible claim for
relief survives a motion to dismiss.” Id. “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 experience and common sense. But where the well-pleaded facts
do not permit the court to infer more 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 of 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 to 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 1949 (internal quotation marks
and citation omitted).
Under rule 12(d), if on a Rule 12(b)(6) motion , a party presents documents or other
evidence outside the pleadings, a court must treat the motion as one for summary
judgment under Rule 56. Fed. R. Civ. P. 12(d). But if the documents or evidence attached
are referred to in the complaint and central to the claim, then the documents are a part of
the pleadings and the court does not have to convert the 12(b)(6) motion into a motion for

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summary judgment. Campbell v. Deutsche Bank Nat’l Trust Co., No. 11-10068, 2011 WL
2533577, at *2 (E.D.Mich. June 27, 2011) (Rosen, C.J.) (citations omitted).
III.

Analysis
Plaintiff asserts four claims against Defendant: quiet title; unjust enrichment; breach

of implied agreement/specific performance; and breach of Michigan Compiled Law §
600.3205c. These claims fail because, under Michigan law, Plaintiff failed to redeem the
property within the statutory redemption period, and under federal law, Plaintiff has failed
to allege facts supporting his claims necessary to survive a Rule 12(b)(6) motion.
A. Plaintiff failed to redeem the property within the statutory redemption
period
Defendant first argues that Plaintiff lacks standing to sue because the statutory
redemption period has expired. (Def.’s Mot. to Dismiss at 4.) Defendant argues that
Plaintiff lacks standing to sue under Michigan law. See Morell v. Star Taxi, 343 F.App’x 54
(6th Cir. 2009) (“When jurisdiction is premised on diversity of citizenship, a plaintiff must
have standing under both Article III and state law in order to maintain a cause of action.”).
While the Court does not entirely agree with the way Defendant has phrased its
argument–in terms of ‘standing’–the Court does agree that Plaintiff’s failure to redeem the
property within the statutory redemption period and his failure to allege fraud or irregularity
adequately does require dismissal of his case.
Defendant relies on Overton v. Mortgage Electronic Registration System, Inc.,
284950, 2009 WL 1507342 (Mich. Ct. App. May 28, 2009) to support its argument that
Plaintiff lacks standing to challenge the foreclosure sale because the redemption period
expired. The Overton court addressed a plaintiff’s challenge to a foreclosure once the
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statutory redemption period expired. Id. at *1. The court held that “[o]nce the redemption
period expire[s], all of [the] plaintiff’s right[s] in and title to the property [are] extinguished.”
Id. The court further stated “[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.” Id. (citation omitted). The court couched the terms of its dismissal
on the plaintiff’s lack of “standing.”
Awad v. General Motors Acceptance Corp., 302692, 2012 WL 1415166, at *3 (Mich.
Ct. App. Apr. 24, 2012) applied Overton’s holding, dismissed the case due to a lack of
“standing,” and restated that Michigan law does not set aside a foreclosure absent a clear
showing of fraud or irregularity. The Awad court concluded that, although the plaintiff filed
suit before the end of the redemption period, the fact that the plaintiff did not redeem the
property before the redemption period ended the plaintiff’s lawsuit. Id. at *4.
Federal courts in Michigan have disagreed on how to view the Overton opinion. At
least one federal court in Michigan has addressed courts’ use of lack of “standing” to
dismiss these mortgage-related claims. In Langley v. Chase Home Fin. LLC, No. 10-604,
2011 WL 1130926, at *2 n 2 (W.D.Mich. Mar. 28, 2011) (Jonker, J.), the court discussed
Overton and held that the “standing” discussion that many defendants raise is a bit of a red
herring, and that courts should view Overton as a merits decision and not a standing
decision: “Many [d]efendants suggest the basis for the ruling in Overton is a lack of [a
p]laintiff’s standing once the redemption period expires, but the [Michigan court of appeals]
does not actually say this. Nor would it seem like Article III standing could possibly be in
doubt. After all, the [p]laintiffs in such cases are the last lawful owner and possessor of the
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property.

Moreover, they often remain in continuing possession of the property

notwithstanding any [s]heriff’s sale and expiration of a redemption period. Moreover,
[p]laintiffs in such cases claim a continuing right to lawful ownership and possession based
on defects in the process used by [d]efendants to divest them of those rights. This certainly
seems to satisfy this basic Article III requirement of “injury in fact,” as well as any prudential
considerations tied to a “zone of interests” analysis. Indeed, it is hard to imagine a person
with a better claim to standing to challenge the process at issue. Of course, having
standing to bring a claim does not mean you have a valid claim on the merits. That is a
different question. Overton is best viewed as a merits decision, not a standing case.” (Id.)
The Court agrees with the Langley court, but again, finds Overton persuasive in this case
as Plaintiff’s claim lacks merit. See also Nett v. Wells Fargo Home Mortg., Inc., No. 1015058, 2011 WL 1519166, at *3 (E.D.Mich. Apr. 20, 2011) (Battani, J.) (holding that a
plaintiff can challenge a foreclosure sale after redemption upon a showing of fraud or
irregularity.” (“[T]he mortgagor may hold over after foreclosure by advertisement and test
the validity of the sale in the summary proceeding.” Id. (citation omitted). Without such
an exception, “the typical mortgagor who faces an invalid foreclosure would be without
remedy, being without the financial means to pursue the alternate course of filing an
independent action to restrain or set aside the sale.” Id. (citation omitted). Courts in this
district have also found that “a very good reason may mandate setting aside a foreclosure
sale.” Id. (quotation marks and citations omitted). See also Saxton v. Wells Fargo, N.A.,
12-11670, 2012 WL 3568806, at *5 (E.D.Mich. Aug. 17, 2012) (Cohn, J.) (holding, in similar
circumstances, that after the statutory redemption period, the plaintiff cannot challenge
defects in the sale, absent a strong showing of fraud or irregularity.).
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Plaintiff failed to redeem the property. As a result, the foreclosure deed became
“operative” and “all the right, title, and interest,” in the property vested in Defendant. Mich.
Comp. Law § 600.3236. See Williams v. U.S. Bank Nat’l Ass’n, No. 10-14967, 2011 WL
2293260, at *1 (E.D. Mich. June 9, 2011) (O’Meara, J.) (citing Moses, Inc. v. Southeast
Mich. Council of Gov’ts, 716 N.W.2d 278, 286 (Mich.Ct.App. 2006)) (holding, “[o]nce the
redemption period following foreclosure of property has expired, the former owner’s rights
in and title to the property are extinguished.”). See also Nafso v. Wells Fargo Bank, NA,
No. 11-10478, 2011 WL 1575372, at *2 (E.D. Mich. Apr. 26, 2011) (Cohn, J.) (citation
omitted) (holding that, after the redemption period has expired, the right, title, and interest
in the property is then in the purchaser of the sheriff’s deed’s hands.).
Plaintiff therefore has the burden to plead a strong showing of fraud or irregularity.
He has failed to do so here. Plaintiff’s fraud claim fails because it does not meet the
particularity requirements Federal Rule of Civil Procedure 9(b) imposes on a fraud claim.
To meet the particularity requirements of Rule 9(b), Plaintiff must "(1) specify the
statements that [Plaintiff] contends were fraudulent, (2) identify the speaker, (3) state where
and when the statements were made, and (4) explain why the statements were fraudulent."
Frank v. Dana Corp., 547 F.3d 564, 569-70 (6th Cir. 2008) (internal quotation marks and
citation omitted). At a minimum, Plaintiff "must allege the time, place and contents of the
misrepresentations upon which [he] relied." Id. Plaintiff "also must allege facts from which
it could be concluded that [] reliance was reasonable." Issa v. Provident Funding Group,
Inc., No. 09-12595, 2010 WL 538298, at *5 (E.D. Mich. Feb. 10, 2010) (citing Novak v.
Nationwide Mut. Ins. Co., 599 N.W.2d 546, 553-54 (Mich. Ct. App. 1999)). “The threshold
test is whether the complaint places the defendant on sufficient notice of the
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misrepresentation, allowing the defendant[] to answer, addressing in an informed way the
[plaintiff’s] claim of fraud.” Kashat v. Paramount Bancorp, Inc., No. 09-10863, 2010 WL
538295, at *4 (E.D. Mich. Feb. 10, 2010) (citation omitted; alterations in original)
(dismissing the plaintiffs’ complaint because it did “not contain allegations concerning the
time and place of the alleged misrepresentations” and stating that “[the plaintiffs] cannot
merely recite a statute, claim it has been violated, and expect to survive a motion to
dismiss.”). See also Ass'n of Cleveland Fire Fighters v. Cleveland, 502 F.3d 545, 548 (6th
Cir. 2007) (citation omitted) (holding that a plaintiff’s pleadings must contain "more than
labels and conclusions, and a formulaic recitation of the elements of a cause of action will
not do.")
Plaintiff alleges fraudulent, or intentional, misrepresentation.3 Under Michigan law, the
elements of a claim for fraudulent misrepresentation are: (1) that the defendant made a
material misrepresentation; (2) that it was false; (3) that when he made it he knew that it
was false, or made it recklessly, without any knowledge of its truth, and as a positive
assertion; (4) that he made it with the intention that it should be acted upon by plaintiff; (5)
that the plaintiff acted in reliance upon it; and (6) that [s]he thereby suffered injury. Hi-Way
Motor Co. v. Int'l Harvester Co., 247 N.W.2d 813, 816 (Mich. 1976) (quoting Chandler v.
Heigho, 175 N.W. 141, 143 (Mich. 1919)). "[T]he absence of any one of [these elements]
is fatal to a recovery." Id.
Plaintiff’s allegations fail to meet the particularity requirements. He has not alleged
the time, place, speakers, or why the statements were fraudulent. He merely recites the

3

Plaintiff raises this claim in his response to Defendant’s motion to dismiss. (Pl.’s Resp.
at 5.) He also hints at fraud in his complaint.
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general elements of a fraud claim. The Court agrees with the line of cases that hold that
someone in Plaintiff’s position cannot sustain a cause of action after a redemption period
expires absent fraud or irregularity.

Plaintiff’s claims fails.

The Court nonetheless

addresses Plaintiff’s specific claims.
1. Plaintiff fails to state a claim for quiet title
Plaintiff makes three statements in his quiet title claim. He first states that the actions
that Defendant took were “intentionally designed to preclude [] Plaintiff from entering into
a [l]oan [m]odification or a negotiated settlement to keep possession of his home.” (Compl.
¶ 15.) Plaintiff then states that Defendant proceeded to foreclose upon the property. (Id.
¶ 16.) And Plaintiff finally states that Defendant’s conduct resulted in Defendant currently
taking title to the property by way of a Sheriff’s Deed. (Id. ¶ 17.)
Michigan law provides that “[a]ny person . . . who claims any right in, title to, equitable
title to, interest in, or right to possession of land, may bring an action . . . against any other
person who claims . . . [an inconsistent interest.]” Mich. Comp. Law § 600.2932(1). Under
Michigan law, the plaintiff has the burden of proof in an action to quiet title and must make
out a prima facie case of title. Stinebaugh v. Bristol, 347 N.W.2d 219, 221 (Mich.Ct.App.
1984). If the plaintiff makes out such a case, then the defendant has the burden or proving
a superior right or title in itself. Beulah Hoagland Appleton Qualified Pers. Residence Trust.
v. Emmet Cnty. Rd. Comm’r, 600 N.W.2d 698, 700 (Mich. Ct. App. 1999). To establish a
prima facie case of title courts have found that plaintiffs that “describe[] the chain of title
through which they claim ownership of the disputed [property]” or “provide[] . . . a copy of
a mortgage” satisfy the prima facie elements. Id. at 700-01, Johns v. Dover, No. 291028,
2010 WL 2696656, at *1 (Mich. Ct. App. July 8, 2010).
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Plaintiff has not met his burden. He has failed to establish a prima facie case of title,
and indeed, admits that the redemption period has expired and that Defendant has title.
(Compl. at 2.) This claim fails.
2. Plaintiff fails to state a claim for unjust enrichment
To support his unjust enrichment claim, Plaintiff states that, if the Sheriff’s Deed were
to stand, then Defendant would be unjustly enriched in excess of $25,000.00 and Plaintiff
would suffer a loss in that same amount, in addition to the loss of his home. (Compl. ¶ 21.)
For Plaintiff to succeed on his unjust enrichment claim, he must prove: “(1) receipt of
a benefit by [Defendant] from [Plaintiffs] and (2) an inequity resulting to [Plaintiffs] because
of the retention of the benefit by [Defendant].” J&J Plumbing & Heating, LLC v. Tate, Nos.
277824, 279838, 2008 WL 4891807, at *4 (Mich. Ct. App. Nov. 13, 2008) (citation omitted).
Plaintiff has made no allegations in support of his claim; the claim therefore fails.
3. Plaintiff fails to state a claim for breach of implied agreement/specific
performance
In this claim, Plaintiff realleges that Defendant failed to enter into a loan modification
for the property. Plaintiff claims superior title to the property because of: “Fee Simple
Absolute and Unjust Enrichment, Breach of Implied Agreement, Misrepresentation, Fraud
and Constructive Trust on the part of the Defendant[.]” (Compl. ¶ 26.)
“To properly state a claim for breach of an implied contract, the plaintiff has to provide
specific facts which indicate a mutual agreement.” Smith v. Fannie Mae, 11-15560, 2012
WL 3758087, at *5 (E.D.Mich. Aug. 30, 2012) (Roberts, J.) (citations omitted). Plaintiff
additionally has to comply with the Michigan Statute of Frauds, which “prohibits any action
against a financial institution . . . to enforce a promise or commitment to modify a loan
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agreement unless it is in writing.” Saxton v. Wells Fargo, N.A., 12-11670, 2012 WL
3568806, at *5 (E.D.Mich. Aug. 17, 2012) (Cohn, J.) The statute provides, in relevant part:
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 financial institution:
(a) A promise or commitment to lend money, grant or extend credit, or make
any other financial accommodation.
(b) A promise or commitment to renew, extend, modify, or permit a delay in
repayment or performance of a loan, extension of credit, or other financial
accommodation.
Mich. Comp. Law § 566.132(2). “Michigan courts have applied section 566.132(2) in
holding that any agreement to modify a loan, waive a loan provision, or to provide any other
financial accommodation must be in writing and signed by the bank.” Saxton, 2012 WL
3568806, at *6 (citation omitted) (dismissing the plaintiff’s complaint because the plaintiff
did not allege any writing signed by the defendant financial institution confirming a loan
modification.).
Here, Plaintiff has not pleaded a specific agreement to modify the loan, nor has
Plaintiff, as in Saxton, alleged any writing that would satisfy the statute of frauds. The
Court therefore dismisses Plaintiff’s breach of implied agreement/specific performance
claim.
4. Plaintiff fails to state a claim under Michigan Compiled Law § 600.3205c
Plaintiff alleges that Defendant has violated Michigan law regarding loan modification
proceedings. Plaintiff specifically alleges that Defendant violated Michigan Compiled Law
§ 600.3205c when it failed to modify his loan. (Compl. ¶ 30.) That allegation is the only
one that Plaintiff makes in connection with his § 600.3205c claim.
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The statute provides the following relief:
(8) If a mortgage holder or mortgage servicer begins foreclosure proceedings
under this chapter in violation of this section, the borrower may file an action
in the circuit court for the county where the mortgaged property is situated to
convert the foreclosure proceeding to a judicial foreclosure. If a borrower
files an action under this section and the court determines that the borrower
participated in the process under section 3205b, a modification agreement
was not reached, and the borrower is eligible for modification under
subsection (1) and subsection (7) does not apply, the court shall enjoin
foreclosure of the mortgage by advertisement and order that the foreclosure
proceed under chapter 31.
Mich. Comp. Laws § 600.3205c.
Courts in this district have held that a violation of § 600.3205c is “insufficient to set
aside a completed foreclosure sale.” Block v. BAC Home Loans Servicing, LP, 11-11181,
2012 WL 2031640, at *5 (E.D.Mich. June 6, 2012) (Duggan, J.) (And holding, “even if
Defendants violated the loan modification statute, the relief available was to file an action
to convert the foreclosure by advertisement to a judicial proceeding.”). See also Adams
v. Wells Fargo Bank, N.A., 11-10150, 2011 WL 3500990, at *4 (E.D.Mich. Aug. 10, 2011)
(Battani, J.) (Holding that, “[e]ven if Plaintiff is correct about Defendant’s failure to agree to
a modification, he failed to show that he is entitled to the requested relief. The plain
language of § 600.3205c(8) limits his relief. [The statute] does not authorize the Court to
set aside the foreclosure. . . . The governing provision allows specified borrowers to convert
a foreclosure by advertisement to a judicial foreclosure; it does not allow those borrowers
to avoid foreclosure altogether or set aside a completed foreclosure.”).
Here, then, the Court cannot provide the relief that Plaintiff requests from Defendants’
alleged § 600.3205c violation. The Court therefore dismisses Plaintiff’s § 600.3205c claim.
5. Plaintiff fails to state a claim under Michigan Compiled Law § 600.3205a
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In his response, Plaintiff mentions Michigan Compiled Law § 600.3205a, Michigan’s
foreclosure by advertisement law. Even if Plaintiff had alleged this claim in his complaint,
the claim fails. Plaintiff fails to support his claim with any allegations that would support a
violation of this law.
IV.

Conclusion
For the above-stated reasons, the Court GRANTS Defendant’s motion to dismiss with

prejudice.
So ordered.
s/Nancy G. Edmunds
Nancy G. Edmunds
United States District Judge
Dated: September 13, 2012
I hereby certify that a copy of the foregoing document was served upon counsel of record
on September 13, 2012, by electronic and/or ordinary mail.
s/Carol A. Hemeyer
Case Manager

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