Scott v. Bank of America et al

Filing 109

ORDER Adopting Report and Recommendation, Overruling Objections, Granting in Part Bank of America's Motion to Dismiss, Granting Trott & Trott's Motion for Summary, Dismissing Amended Complaint in Part, and Returning Case to Magistrate Judge. Signed by District Judge David M. Lawson. (PMil)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
KEVIN SCOTT,
Plaintiff,
v.

Case Number 12-12864
Honorable David M. Lawson
Magistrate Judge Michael J. Hluchaniuk

BANK OF AMERICA, TROTT & TROTT,
and BAC HOME LOAN SERVICING,
Defendants.
______________________________________/
ORDER ADOPTING REPORT AND RECOMMENDATION, OVERRULING
OBJECTIONS, GRANTING IN PART BANK OF AMERICA’S MOTION TO
DISMISS, GRANTING TROTT & TROTT’S MOTION FOR SUMMARY
JUDGMENT, DISMISSING AMENDED COMPLAINT IN PART,
AND RETURNING CASE TO MAGISTRATE JUDGE
Plaintiff Kevin Scott filed a pro se complaint in this case against a bank and a law firm
arising from an aborted attempt by the defendants to foreclose the mortgage on the plaintiff’s
residence. The complaint was amended shortly after filing. The Court referred this case to
Magistrate Judge Michael J. Hluchaniuk for pretrial management. Thereafter, defendant Bank of
America, N.A., successor by merger to BAC Home Loans Servicing, LP (identified in the amended
complaint as Bank of America and BAC Home Loan Serving, LP) filed a motion to dismiss, and the
law firm of Trott & Trott filed a motion for summary judgment. Judge Hluchaniuk filed a report on
May 30, 2013 recommending that the motion to dismiss be granted in part and the motion for
summary judgment be granted. The plaintiff filed timely objections, and the matters are before the
Court for de novo review.
According to the complaint, the dispute in this case emerged when Bank of America
apparently did not credit certain monthly payments to the plaintiff’s mortgage account and turned
the matter over to Trott & Trott to begin foreclosure proceedings. Since plaintiff filed his amended

complaint, the defendants reinstated his mortgage, and the sale of the property was stopped. The
plaintiff alleges that he made payments totaling approximately $20,000 to Bank of America that
were not credited properly.
The amended complaint lists a single count entitled “Breach of Contract,” but the pleading
also includes allegations that the defendants violated 42 U.S.C. § 1981 because their actions were
racially motivated, and that the defendants gave the state court false information about the plaintiff’s
payment history when starting foreclosure proceedings.

The motions and the report and

recommendation treat the amended complaint as attempting to state claims of breach of contract,
discrimination, and fraud.
Bank of America argues in its motion to dismiss that the plaintiff has not pleaded facts
sufficient to sustain his claims of breach of contract, fraud, or a violation of 42 U.S.C. § 1981. Trott
& Trott argues in its motion for summary judgment that the plaintiff has not offered any facts to
sustain those claims against that defendant. The magistrate judge concluded that the amended
complaint adequately pleaded the elements of a breach of contract claim against Bank of America
and recommended denial of that part of the Bank’s motion. Bank of America has not objected to
the recommendation. The magistrate judge also concluded that the amended complaint did not
contain facts from which the elements of fraud could be inferred, and that the plaintiff did not satisfy
the heightened pleading requirement for allegations of fraud required by Federal Rule of Civil
Procedure 9(b). He recommended that to the extent the plaintiff attempted to state a fraud claim,
the motion to dismiss be granted. The magistrate judge also determined that the section 1981 claim
fails for the same reason the plaintiff’s fraud claim fails: the plaintiff merely stated in conclusory
fashion that the foreclosure was wrongful and based on his race.

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The magistrate judge found that the plaintiff had no actionable claims against Trott & Trott
and recommended that the complaint be dismissed as to that defendant. He reasoned that because
the plaintiff acknowledged that he had no contract with Trott & Trott, there could be no claim
against it for breach of contract. He also determined that the fraud and section 1981 claims were
not stated adequately and should be dismissed for the same reasons he gave as to Bank of America’s
arguments.
The plaintiff filed timely objections to the report and recommendation and both defendants
filed replies. When a party files objections to a magistrate judge’s report, the Court gives fresh
review to the challenged part of that report. “A judge of the court shall make a de novo
determination of those portions of the report or specified proposed findings or recommendations to
which objection is made. A judge of the court may accept, reject, or modify, in whole or in part, the
findings or recommendations to which objection is made.” 28 U.S.C. § 636(b)(1). The Sixth Circuit
has stated that “[o]verly general objections do not satisfy the objection requirement.” Spencer v.
Bouchard, 449 F.3d 721, 725 (6th Cir. 2006). “The objections must be clear enough to enable the
district court to discern those issues that are dispositive and contentious.” Miller v. Currie, 50 F.3d
373, 380 (6th Cir. 1995).

“‘[O]bjections disput[ing] the correctness of the magistrate’s

recommendation but fail[ing] to specify the findings . . . believed [to be] in error’ are too general.”
Spencer, 449 F.3d at 725 (quoting Miller, 50 F.3d at 380). “[T]he failure to file specific objections
to a magistrate’s report constitutes a waiver of those objections.” Cowherd v. Million, 380 F.3d 909,
912 (6th Cir. 2004).
First Objection

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The plaintiff first objects to the magistrate judge’s determination that the plaintiff did not
allege sufficient facts to sustain a section 1981 discrimination claim against Bank of America. He
takes no issue with the part of the report concluding that his amended complaint is wanting. Instead,
the plaintiff offers additional facts: that he previously filed a complaint with Bank of America in
person, so the employees of the bank knew his race and the price of his home; and that Bank of
America did not respond to his communications like the bank normally would with other
homeowners because he was African American.
The plaintiff also contends that he made an oral agreement with a Bank of America
employee, whom he identifies as “manager Michael,” who allegedly told the plaintiff that no escrow
account would be attached to the plaintiff’s mortgage. The plaintiff contends that the agreement was
arranged in order for the plaintiff to repay the property taxes Bank of America advanced. He says
that Bank of America has a recording of this oral agreement and contends that it refused to honor
it, which denied the plaintiff the benefit and privileges of the contractual relationship.
This objection fails to address the pleading defects found by the magistrate judge. In order
to state a viable claim, the plaintiff must state facts in the complaint that include all the elements of
his cause of action. The complaint is viewed in the light most favorable to plaintiffs, the allegations
in the complaint are accepted as true, and all reasonable inferences are drawn in favor of plaintiffs.
Bassett v. Nat’l Collegiate Athletic Ass’n, 528 F.3d 426, 430 (6th Cir. 2008). But as the Sixth
Circuit explained,
[t]o survive a motion to dismiss, [a plaintiff] must plead “enough factual matter” that,
when taken as true, “state[s] a claim to relief that is plausible on its face.” Bell Atl.
Corp. v. Twombly, 550 U.S. 544, 556, 570 (2007). Plausibility requires showing
more than the “sheer possibility” of relief but less than a “probab[le]” entitlement to
relief. Ashcroft v. Iqbal, [556 U.S. 662, 678] (2009).

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Fabian v. Fulmer Helmets, Inc., 628 F.3d 278, 280 (6th Cir. 2010). Stated differently, under the
new regime ushered in by Twombly and Iqbal, pleaded facts must be accepted by the reviewing
court, but conclusions ought not be accepted unless they are plausibly supported by the pleaded
facts. “[B]are assertions,” such as those that “amount to nothing more than a ‘formulaic recitation
of the elements’” of a claim, can provide context to the factual allegations, but are insufficient to
state a claim for relief and must be disregarded. Iqbal, 556 U.S. at 681 (quoting Twombly, 550 U.S.
at 555).
The elements of a claim under 42 U.S.C. § 1981 are that (1) the plaintiff was a member of
a protected class; (2) he sought to make or enforce a contract for goods or services that the defendant
usually provides; and (3) he “was denied the right to enter into or enjoy the benefits or privileges
of the contractual relationship in that (a) plaintiff was deprived of services while similarly situated
persons outside the protected class were not and/or (b) plaintiff received services in a markedly
hostile manner and in a manner which a reasonable person would find objectively discriminatory.”
Christian v. Wal-Mart Stores, Inc., 252 F.3d 862, 872 (6th Cir. 2001). As the magistrate judge
observed, the plaintiff alleged in the amended complaint only that Bank of America discriminated
against him because he is an African American. He adds little in his objections that enlarges on that
conclusion. “[B]are assertions,” such as those that “amount to nothing more than a ‘formulaic
recitation of the elements’” of a claim, can provide context to the factual allegations, but are
insufficient to state a claim for relief and must be disregarded. Iqbal, 556 U.S. at 681 (quoting
Twombly, 550 U.S. at 555). The plaintiff’s assertions are conclusory; he objects to the magistrate
judge’s finding that he failed to establish a claim under section 1981, but fails to specify why. The

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plaintiff’s conclusory allegations do not furnish enough factual material for the Court to validate any
inference the plaintiff seeks to draw. The first objection will be overruled.
Second and Fourth Objections
In his second objection, the plaintiff challenges the magistrate judge’s finding that the
plaintiff did not state a claim for fraud against Trott & Trott with sufficient particularity. In his
fourth objection, he mounts the same challenge to the finding on his claim against Bank of America.
The plaintiff contends that he identified several fraudulent actions by Trott & Trott, including
allegations of false statements, missing money and a lack of response to phone calls. Citing Trepel
v. Pontiac Osteopathic Hospital, 135 Mich. App. 361, 354 N.W.2d 341 (1984), the plaintiff argues
that attorneys are not immune from allegations that they were personally involved in wrongful and
intentional conduct forming the basis for a cause of action. He contends that he relied on the
misleading correspondence with Trott & Trott and their fraud in those letters led to the plaintiff’s
harm. He also alleges that Bank of America fraudulently stated that the plaintiff did not make six
mortgage payments in 2010, and contends he has proof that this was fraudulent.
To plead a case of fraud, however, the plaintiff must be specific. Fed. R. Civ. P. 9(b). see
also Bennett v. MIS Corp., 607 F.3d 1076, 1100 (6th Cir. 2010). The complaint must “(1) specify
the statements that the 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.” Indiana
State Dist. Council of Laborers and Hod Carriers Pension and Welfare Fund v. Omnicare, Inc., 583
F.3d 935, 942-43 (6th Cir. 2009) (internal quotations and citation omitted). In addition, a party must
“allege the time, place, and content of the alleged misrepresentation on which he or she relied; the
fraudulent scheme; the fraudulent intent of [the other party]; and the injury resulting from the fraud.”

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Coffey v. Foamex L.P., 2 F.3d 157, 161-62 (6th Cir. 1993) (internal quotations and citations
omitted). Where there are multiple defendants, a claim must identify which of the defendants made
the alleged misrepresentations. Hoover v. Langston Equip. Assocs., Inc., 958 F.2d 742, 745 (6th Cir.
1992).
The essence of the plaintiff’s fraud allegations is that the Bank did not credit him with all
the payments he said he made, and they turned the account over to the foreclosure attorneys.
Digging a little deeper into the factual discussion in the motion papers, it appears that the dispute
might arise over whether the plaintiff owed the Bank a sum for a property tax payment that may
have been late, and whether the Bank properly set up an escrow account and deducted money for
the monthly share of tax payments anticipated. The Court understands the plaintiff’s expression of
frustration over the Bank’s failure to communicate clearly and its possible bureaucratic
incompetence. However, the plaintiff has not alleged facts in the amended complaint from which
one could infer that the actions of the defendants were fraudulent. The magistrate judge correctly
observed that the fraud claim is merely a restatement of the breach of contract claim against Bank
of America.
Third Objection
The plaintiff also objects to the magistrate judge’s finding that the plaintiff did not have a
contract with Trott & Trott, and therefore the plaintiff’s breach of contract claim against that
defendant must fail. The plaintiff admits that he did not have a written contract with Trott & Trott,
but contends that the firm still should be held liable because Bank of America hired Trott & Trott
and directed the plaintiff to conduct business solely with Trott & Trott in relation to the foreclosure
proceedings.

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Perhaps the plaintiff is arguing that Trott & Trott was Bank of America’s agent, and the law
firm’s conduct violated the contract the plaintiff had with the Bank. Even if that were true, however,
the fact remains that it was the Bank, not the law firm, that is the contracting party. If Trott & Trott
caused a breach of the mortgage contract, it is still the Bank that would be accountable as the
contracting party. The magistrate judge was correct in his conclusion that the law firm cannot be
found liable for a breach of contract claim under the facts pleaded in the amended complaint.
The magistrate judge also recommended that Trott & Trott’s motion for summary judgment
be granted with respect to the plaintiff’s section 1981 claim. The plaintiff did not object to the
magistrate judge’s finding on that claim; “the failure to file specific objections to a magistrate’s
report constitutes a waiver of those objections.” Cowherd, 380 F.3d at 912.
***********
The magistrate judge correctly concluded that defendants’ motions should be granted. It
appears that a defendant remains in the case on the breach of contract theory. Therefore, the case
will be returned to the magistrate judge.
Accordingly, it is ORDERED that the magistrate judge’s report and recommendation [dkt.
#87] is ADOPTED, and the plaintiff’s objections [dkt. #93] are OVERRULED.
It is further ORDERED that the defendant Bank of America’s motion to dismiss [dkt. #40]
are GRANTED IN PART AND DENIED IN PART.
It is further ORDERED that defendant Trott & Trott’s motion for summary judgment [dkt.
#58] is GRANTED.

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It is further ORDERED that the claims in the amended complaint based on fraud and a
violation of 42 U.S.C. § 1981 are DISMISSED as to defendant Bank of America, and the amended
complaint is DISMISSED in its entirety as to defendant Trott & Trott.
It is further ORDERED that the matter is referred to Magistrate Judge Michael J.
Hluchaniuk under the previous reference order [dkt. #3] to ready the matter for trial, and to conduct
a trial if the parties consent under 28 U.S.C. § 626(b)(1)(c).
s/David M. Lawson
DAVID M. LAWSON
United States District Judge
Dated: September 23, 2013

PROOF OF SERVICE
The undersigned certifies that a copy of the foregoing order was served
upon each attorney or party of record herein by electronic means or first
class U.S. mail on September 23, 2013.
s/Shawntel Jackson
SHAWNTEL JACKSON

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