Sylvester v. Fannie Mae

Filing 8

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

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION

VERONICA SYLVESTER,
Case No. 12-13186
Plaintiff,
Honorable Nancy G. Edmunds
v.
FANNIE MAE,
Defendant.
/

OPINION AND ORDER GRANTING DEFENDANT’S MOTION TO DISMISS [2] AND
CANCELLING HEARING SCHEDULED FOR OCTOBER 17, 2012

This matter comes before the Court on Defendant Federal National Mortgage
Association ("Fannie Mae")’s motion to dismiss [2]. It is undisputed that the Mortgaged
Property at issue here was foreclosed, sold to Defendant, and the redemption period
expired without Plaintiff availing herself of the right to redemption in the foreclosure
proceedings. Plaintiff's complaint seeks to have this Court quiet title to the Mortgaged
Property in her favor. She also seeks money damages in connection with her claims of
unjust enrichment, breach of an implied agreement, and violation of Mich. Comp. Laws §
600.3205(c). (Pl.'s Compl.)
The Court finds that the facts and legal arguments are adequately presented in the
parties’ pleadings and that the decision process would not be significantly aided by oral
argument. Therefore, pursuant to Eastern District of Michigan Local Rule 7.1(f)(2), it is
hereby ORDERED that Defendant’s motion to dismiss [2] be resolved as submitted, and

the hearing previously scheduled for Defendant’s motion on October 17, 2012 is hereby
CANCELLED.
Because Plaintiff's complaint fails to state a plausible claim for relief, Defendant’s
motion to dismiss is GRANTED.
I.

Facts
Plaintiff’s suit arises out of foreclosure proceedings on residential property located at

1782 Kenmore Drive, Grosse Pointe Woods, Michigan (the “Mortgaged Property”). On
March 20, 2008, Plaintiff received a mortgage ("Mortgage") from GMAC Mortgage, LLC
f/k/a GMAC Mortgage Corporation ("Lender GMAC") in the amount of $136,200 and
executed a promissory note agreeing to repay Lender GMAC that amount. (Def.'s Mot.,
Ex. A, 3/20/08 Mortgage.)

Subsequently, in late 2011 and early 2012, foreclosure by

advertisement proceedings were commenced on the Mortgaged Property pursuant to the
Mortgage and Michigan law. This culminated in a sale of the Mortgaged Property to
Defendant Fannie Mae at a sheriff's sale on January 12, 2012. (Def.'s Mot., Ex. B, Sheriff's
Deed on Mortgage Sale.) Under Michigan law, Plaintiff's statutory right to redeem, or buy
back the Mortgaged Property, expired on July 12, 2012. (Id. at 3.)

Plaintiff did not

exercise her statutory right to redeem before that right expired. Rather, Plaintiff filed this
lawsuit against Defendant on June 22, 2012 alleging claims of quiet title, unjust enrichment,
breach of an implied agreement/specific performance, and violation of Mich. Comp. Laws
§ 600.3205(c). (Pl.’s Compl.)1
II.

Motion to Dismiss Standard
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Plaintiff’s lawsuit was filed in the Wayne County Circuit Court, and Defendant timely
removed it here and filed the motion to dismiss now pending before the Court.
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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
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
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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).
Moreover, "documents attached to the pleadings become part of the pleadings and
may be considered on a motion to dismiss." Commercial Money Ctr., Inc. v. Ill. Union Ins.
Co., 508 F.3d 327, 335 (6th Cir. 2007) (citing Fed. R. Civ. P. 10(c)). "A court may also
consider matters of public record in deciding a motion to dismiss without converting the
motion to one for summary judgment." Id. at 336. In addition, documents not attached to
the pleadings may still be considered part of the pleadings when the "document is referred
to in the complaint and is central to the plaintiff's claim." Greenberg v. Life Ins. Co. of Va.,
177 F.3d 507, 514 (6th Cir. 1999) (internal quotation marks and citations omitted).
III.

Analysis
It is well established in Michigan law that, once the six-month redemption period has

expired, the former owner’s rights in and title to the property are extinguished.
If the mortgagor does not redeem the property within the requisite period, the
purchaser of the sheriff’s deed is vested with all the right, title, and interest in the
property. In other words, where a plaintiff does not avail herself of the right of
redemption in the foreclosure proceedings before the expiration of such right, all
of the plaintiff’s rights in and to the property are extinguished.
Awad v. Gen. Mtrs. Acceptance Corp., No. 302692, 2012 WL 1415166, at *2 (Mich. Ct.
App. Apr. 24, 2012) (internal footnotes, quotation marks and citations omitted). Moreover,
Michigan law “does not allow an equitable extension of the period to redeem from a
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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. (internal
quotation marks, citations, and footnote omitted).
Here, the Mortgaged Property was sold to Defendant at a sheriff’s sale held on
January 12, 2012. (Pl.’s Compl., Ex. C, 1/12/12 Sheriff’s Deed on Mortgage Sale.) Thus,
Plaintiff had until July 12, 2012 to redeem the Mortgaged Property, and she failed to do so.
Instead, Plaintiff filed this lawsuit against Defendant on June 22, 2012 alleging claims
related to title to the Mortgaged Property, i.e., quiet title, and others related to her allegation
that Defendant failed to enter into a loan modification agreement for the Mortgaged
Property, i.e., unjust enrichment, breach of an implied agreement/specific performance, and
violation of Mich. Comp. Laws § 600.3205(c).

(Pl.’s Compl.)

Plaintiff's claims are

dismissed for the following reasons.
First, that Plaintiff filed her suit before the redemption period expired does nothing to
advance her claims. See Awad, 2012 WL 1415166 at *3 (quoting Overton v. Mortg. Elec.
Registration Sys., No. 284950, 2009 WL 1507342 (Mich. Ct. App. May 28, 2009), and
observing that, under these same circumstances, the plaintiff’s suit would not toll the
redemption period because it was simply an attempt “to wage a collateral attack on the
foreclosure of the property”).
Second, as previously stated in this Court's opinion in Evans v. LNV Corp., No. 1212287 (E.D. Mich. Sept. 13, 2012), because Plaintiff failed to redeem the Mortgaged
Property before the statutory redemption period expired, "the foreclosure deed became
'operative' and 'all the right, title, and interest,' in the property vested in Defendant," and
Plaintiff's rights in and title to the property were extinguished. Id. at *4 (quoting Mich.
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Comp. Laws § 600.3236 and citing cases). Thus, Plaintiff cannot state a claim seeking to
quiet title in her name.
This Court rejects Plaintiff's argument that her complaint states a claim for fraud or
misrepresentation and that these claims would justify an equitable extension of Michigan's
six-month redemption period. Plaintiff's fraud-based claims do not satisfy the particularity
requirements of Federal Rule of Civil Procedure Rule 9(b). See id. at *5 (observing that the
plaintiff failed to satisfy the particularity requirements as to his fraud and intentional
misrepresentation claims because he failed to allege the time, place, or speaker of the
alleged fraudulent statements).
Similar to its decision in Powers v. Chase Bank USA, Inc., No. 12-10814, at *3, 2012
WL 1945474 (E.D. Mich. May 30, 2012) – a lawsuit filed by the same counsel as in this
case with remarkably similar allegations -- this Court concludes that Plaintiff’s factually
unsupported and vague fraud and misrepresentation claims asserted in her complaint
(Compl., ¶ 24) are insufficient to warrant an equitable extension of Michigan’s six-month
redemption period. As in Powers, Plaintiff’s complaint here asserts that “the actions of the
Defendants [sic] were intentionally designed to preclude the Plaintiff from entering into a
Loan Modification or negotiate in good faith a settlement in order to keep possession of his
[sic] home” (Compl., ¶ 17) and that “Defendants [sic] did undertake to foreclose on the
subject property without allowing Plaintiff to Modify the Loan for the subject property.”
(Compl., ¶ 18.) Similar to the complaint in Powers, Plaintiff’s complaint here mentions
“fraud” and "misrepresentation" only once, i.e., where she asserts that “Plaintiff has a
superior claim to the interest in the subject property because of their [sic] Fee Simple
Absolute and Unjust Enrichment, Breach of Implied Agreement, Misrepresentation, Fraud,
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and Constructive Trust on the part of the Defendants [sic].” (Compl., ¶ 24.) Accordingly,
just as in Powers, this Court again finds that “[t]his single mention of fraud in a laundry list
of allegations is not sufficient to satisfy Plaintiff’s burden of ‘a clear showing of fraud or
irregularity’ that is required to toll the redemption period.” Id.
Plaintiff likewise cannot state a claim for breach of an implied agreement, unjust
enrichment, or violation of Mich. Comp. Laws § 600.3205c against Defendant.
First, because Plaintiff's complaint fails to provide specific facts that a promise or
commitment to modify her Mortgage Loan exists in a writing signed by Defendant, Plaintiff
cannot satisfy Michigan's statute of frauds and thus cannot state a claim for breach of an
implied agreement to modify her loan. See Evans, 2012 WL 4048880 at *6 (citing cases
and Mich. Comp. Laws § 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 [lender].'" Id. (quoting
Saxton v. Wells Fargo, N.A., No. 12-11670, 2012 WL 3568806, at *6 (E.D. Mich. Aug. 17,
2012)).
Second, because Plaintiff's rights in and title to the Mortgaged Property were
extinguished when the statutory redemption period expired and she has not alleged that
a promise to modify her Mortgage Loan exists in writing, Plaintiff cannot state a claim for
unjust enrichment. See id. at *5.
Finally, Plaintiff cannot state a claim for relief for any alleged violation by Defendant
of Mich. Comp. Laws 600.3205c with regard to its offer of a loan modification "because the
statute does not permit the Court to set aside a completed foreclosure sale." Benford v.

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CitiMortgage, Inc., No. 11-12200, 2011 WL 5525942, at *5 (E.D. Mich. Nov. 14, 2011).
This statute provides, in pertinent part, that:
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(8). "The statute plainly requires the borrower to seek [her]
remedy prior to the completion of the foreclosure sale, as it merely converts a proceeding
into one of judicial foreclosure." Id. Plaintiff did not file her lawsuit until months after the
sheriff's sale on January 12, 2012, and "[a] borrower may not challenge a completed
foreclosure sale under this statute." Id. (citing cases).
IV.

Conclusion
For the above-stated reasons, Defendant's motion to dismiss is GRANTED, and

Plaintiff's case is DISMISSED WITH PREJUDICE.

s/Nancy G. Edmunds
Nancy G. Edmunds
United States District Judge
Dated: October 3, 2012

I hereby certify that a copy of the foregoing document was served upon counsel of record
on October 3, 2012, by electronic and/or ordinary mail.
s/Carol A. Hemeyer
Case Manager
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