Cronin v. Bank of America
Filing
19
Memorandum and Order Granting Defendant's 4 Motion to Dismiss and Dismissing Case. Signed by District Judge Avern Cohn. (SCha)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
ANNEMARIE CRONIN,
Plaintiff,
vs.
Case No. 12-13249
BANK OF AMERICA,
HON. AVERN COHN
Defendant.
____________________________________/
MEMORANDUM AND ORDER GRANTING DEFENDANT’S MOTION TO DISMISS
(Doc. 4)1
AND DISMISSING CASE
I. Introduction
This is another of one of many cases pending in this district involving a mortgage
and subsequent foreclosure proceedings. Plaintiff Annemarie Cronin (Cronin) is suing
defendant Bank of America (BOA). The mortgage has been foreclosed on and the
redemption period has expired. Nevertheless, Cronin is claiming a right to the property
which was subject to the mortgage. The complaint asserts the following claims: (1)
quiet title, (2) fraud, (3) violation of Michigan Consumer Protection Act (MCPA), and (4)
injunctive relief.
Before the Court is BOA’s motion to dismiss. As will be explained, the motion
has been supplemented following the filing of an amended complaint and has been
pending while BOA reviewed plaintiff’s eligibility for a loan modification, the latter of
which was unsuccessful. For the reasons that follow, BOA’s motion will be granted and
this case will be dismissed.
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The Court deems this matter appropriate for decision without oral argument.
See Fed. R. Civ. P. 78(b); E.D. Mich. LR 7.1(f)(2).
II. Background
On or about September 7, 2001, Cronin and her husband, John J. Messana
obtained a $180,000.00 loan from American Mortgage Network, Inc. d/b/a American
Mortgage Network of Michigan (American Mortgage) and executed a promissory note
evidencing the loan. As security for the loan, Cronin and her husband granted a
mortgage to American Mortgage on real property commonly known as 4343
Brandywine, Troy, Michigan 48098 (the “Property”). The mortgage was recorded.
BOA has acted as the servicing agent for the mortgage. Cronin’s husband died in 2002,
at which point she became the sole mortgagor.
Cronin defaulted on her mortgage by failing to make her January 2011 monthly
payment. BOA then initiated foreclosure proceedings. A sheriff’s sale was held on
November 15, 2011 and the mortgage was foreclosed at that time. The sheriff’s deed
was recorded on November 22, 2011. BOA purchased the property at the sale for
$169,772.73. The Affidavit of Purchaser shows that the last day the Property could
have been redeemed was May 15, 2012. Cronin did not redeem. Thus, as of May 15,
2012, title to the property vested in BOA..
III. Procedural History
On or about June 19, 2012 – over a month after expiration of the redemption
period –Cronin filed a “Verified Complaint for Quiet Title, Injunction and Other Relief” in
Oakland County Circuit Court. BOA removed the case to this court. The complaint
asserts four causes of action: (1) Quiet Title; (2) Fraud; (3) Michigan Consumer
Protection Act (MCL 445.901 et seq.); and (4) Injunction. BOA then filed a motion to
dismiss the complaint (Doc. 4).
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On January 29, 2013, the Court held a status conference with the parties at
which BOA’s pending motion to dismiss (Doc. 4) was discussed. The Court then
entered a scheduling order (Doc 12) which directed in part2 the following:
1. Cronin shall file within ten (10) days a proposed amended complaint which
contains more particular allegations as to her claim for fraud, as to both
the events surrounding the mortgage life insurance policy and Cronin’s
attempt at a loan modification.
2. Ten (10) days after Cronin files the proposed amended complaint, BOA
shall supplement its motion to dismiss. The supplement shall be aimed at
the proposed amended complaint and address recent case law in this
area, particularly the Michigan Supreme Court’s decision in Kim v. JPMorgan
Chase, N.A., 2012 Mich. LEXIS 2220 (Mich. Dec. 21, 2012).
Cronin then filed a proposed amended complaint2 (Doc. 13) and BOA has filed a
supplemental brief to its motion to dismiss (Doc. 15). At the Court’s direction, (Doc. 16)
Cronin filed a response, (Doc. 17), and BOA filed a reply. (Doc. 18).
Meanwhile, the parties jointly advised the Court that Cronin delivered all
necessary documentation to determine her eligibility for a loan modification and BOA
determined that Cronin was not eligible for a loan modification. The parties also
advised that other settlement options were explored, but were not successful. (Doc.
14).
IV. Legal Standard
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The Court also asked to be advised as to the status of a loan modification. On
February 8, 2012, the parties jointly advised the Court that BOA has determined Cronin
is not eligible for a loan modification and other settlement options have not been
successful. The parties also jointly asked that the Court proceed on the motion to
dismiss. (Doc. 14).
2
The proposed amended complaint does not contain a claim under the Michigan
Consumer Protection Act. Thus, this claim is deemed dismissed and will not be
addressed.
3
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, 556 U.S. 662, 678 (2009)
The court is “not bound to accept as true a legal conclusion couched as a factual
allegation.” Id. at 679 (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 contextspecific 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). 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.”
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Id. at 678 (internal quotation marks and citation omitted).
In ruling on a motion to dismiss, the Court may consider the complaint as well as
(1) documents referenced in the pleadings and central to plaintiff's claims, (2) matters of
which a court may properly take notice, (3) public documents, and (4) letter decisions of
government agencies may be appended to a motion to dismiss. Tellabs, Inc. v. Makor
Issues & Rights, Ltd., 551 U.S. 308, 127 S.Ct. 2499, 2509 (2007). Here, the Court has
considered documents relating to the mortgage and the foreclosure which are
referenced in the complaint and central to plaintiffs’ claims.
V. Analysis
A. Expiration of the Redemption Period
Before addressing Cronin’s claims, it is undisputed that Cronin failed to exercise
her statutory right to redeem the foreclosed property before the six-month statutory
redemption period expired. As the Court of Appeals for the Sixth Circuit and Michigan
Supreme Court recently observed, this fact has significant consequences.
“[U]nder Michigan's foreclosure statute, ‘all the right, title and interest which the
mortgagor had at the time of the execution of the mortgage' vests in the entity that
purchased the foreclosed property in the sheriff's sale after the expiration of the
redemption period.” El-Seblani v. IndyMac Mortg. Servs., No. 12-1046, 2013 WL
69226, *3 (6th Cir. Jan. 7, 2013) (quoting M.C.L.§ 600.3236 and citing Piotrowski v.
State Land Office Bd., 302 Mich. 179 (1942), as support). “A strict reading of the statute
suggests that once the redemption period expires, the homeowner has no legal interest
in the property that litigation might vindicate.” Id.
Michigan courts do, however, “allow ‘an equitable extension of the period to
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redeem from a statutory foreclosure sale in connection with a mortgage foreclosed by
advertisement and posting of notice’ in order to keep a plaintiff’s suit viable, provided he
makes 'a clear showing of fraud, or irregularity' by the defendant.” Id. (quoting
Schulthies v. Barron, 16 Mich. App. 246 (1969)). “The misconduct must relate to the
foreclosure procedure itself.” Id. “Moreover, because the foreclosure statutes are
intended to create finality and certainty in property rights, an action challenging
foreclosure must be brought ‘promptly and without delay.’” Id. (quoting Richard v.
Schneiderman & Sherman, PC, 294 Mich. App. 37 ( 2011), rev'd on other grounds, 490
Mich. 1001 (2012)). Thus, Cronin can bring an action to challenge the foreclosure
proceedings after the expiration of the redemption period. The scope of relief, however,
is circumscribed, as explained below.
B. Setting Aside the Foreclosure
To the extent Cronin argues that because of the statutory violations that she
alleges Wells Fargo committed, the foreclosure sale of the property should be declared
void ab initio, it is not well-taken. A recent Michigan Supreme Court decision held,
contrary to an earlier Sixth Circuit decision, that under Michigan law a failure to comply
with the requirements of Michigan's foreclosure by advertisement statute renders the
foreclosure voidable, not void ab initio. See Kim v. JPMorgan Chase Bank, N.A., ___
N.W.2d ___, 2012 WL 6858059, *5-6 (Mich. Dec. 21, 2012) (reviewing Davenport v.
HSBC Bank USA, 739 N.W.2d 383, 384 (Mich. Ct. App. 2007), the decision the Sixth
Circuit relied upon for its contrary holding in Mitan v. Fed. Home Loan Mortg. Corp., ___
F.3d ___, 2012 WL 6200257 (6th Cir. Dec. 12, 2012), and holding that "Davenport's
holding was contrary to the established precedent of [the Michigan Supreme] Court.").
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Thus, under controlling Michigan law, the foreclosure sale cannot be declared void ab
initio. See Savedoff v. Access Group, Inc., 524 F.3d 754, 762 (6th Cir. 2008) (observing
that federal courts must follow the decisions of the state’s highest court when applying
state law). So, the issue this Court must now address is whether, under Michigan law,
the foreclosure sale on the property is voidable, or could be set aside, on the facts
alleged.
The Michigan Supreme Court’s recent decision in Kim instructs on this issue as
well. “[T]o set aside the foreclosure sale, plaintiffs must show that they were prejudiced
by defendant’s failure to comply with [Michigan's foreclosure by advertisement statute].”
Id. at *6. “To demonstrate such prejudice, they must show that they would have been in
a better position to preserve their interest in the property absent defendant’s
noncompliance with the statute.” Id. The concurring opinion by Justice Markman
provides further guidance "concerning the nature of the ‘prejudice’ that plaintiffs must
demonstrate in order to set aside the foreclosure;” and, in that regard, provides a
nonexhaustive list of factors to be considered. Id. at *9. These include: (1) “whether
plaintiffs were misled into believing that no sale had been had;” (2) “whether plaintiffs
act[ed] promptly after [becoming] aware of the facts on which they based their
complaint;” (3) “whether plaintiffs made an effort to redeem the property during the
redemption period;” (4) “whether plaintiffs were represented by counsel throughout the
foreclosure process;” and (5) “whether defendant relied on the apparent validity of the
sale by taking steps to protect its interest in the subject property.” Id. (Markman, J.
concurring) (internal quotation marks and citations omitted).
Applying Kim, Cronin cannot establish the prejudice required to set aside the
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foreclosure sale. This is so because none of her claims relating to her mortgage and
the foreclosure proceedings are viable, as explained below.
C. Plaintiff’s Claims
1. Count I - Quiet Title
In count I, Cronin seeks to quiet title based on alleged irregularities in the loan
modification process. In order to properly allege a quiet title claim, plaintiff must meet
the requirements set forth in M.C.R. § 3.411, or, for a federal cause of action, 28 U.S.C.
§ 2409a(d). These rules require that plaintiff properly allege his or her ownership
interest in the property. M.C.R. § 3.411(B) states, “(2) The complaint must allege, (a)
the interest the plaintiff claims in the premises; (b) the interest the defendant claims in
the premises; and (c) the facts establishing the superiority of the plaintiff's claim.” 28
U.S.C. § 2409a(d) states,”[t]he complaint shall set forth with particularity the nature of
the right, title, or interest which the plaintiff claims in the real property, the
circumstances under which it was acquired, and the right, title, or interest claimed by the
United States.” Moreover, plaintiff must show that he has title to the property superior to
claims by others with an interest in the property. Beaulah Hoagland Appelton Qualified
Pers. Residence Trust v. Emmet County Road Comm’n, 236 Mich. App. 546, 550
(1999) (“In an action to quiet title, the plaintiff have the burden of proof and must make
out a prima facie case of title”)
Here, Cronin has not made a showing of fraud or irregularity sufficient to unwind
the foreclosure sale. Indeed, there “must be a clear showing of fraud or irregularity as
to the foreclosure proceeding itself, and not simply as to any conduct by a defendant.”
Houston, 2012 WL 5869918, at *5. That is not the case here. Cronin has not alleged,
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nor has she proffered any evidence, that there was fraud or an irregularity that occurred
during the foreclosure process. Rather, Cronin alleges that she was solicited by her
lender in February 2011 to participate in Making Homes Affordable Program, that she
was denied a modification in September 2011 for failing to provide certain documents,
and she was never informed that she did not qualify for the program r that her
application was closed. She goes on to allege that BOA “unduly interfered with the
[loan modification] process by causing confusion and delay.” These unsupported
allegations are insufficient to sustain a viable quiet title claim. Moreover, as explained in
BOA’s papers, the record shows BOA conducted foreclosure proceedings properly and
in accordance with Michigan foreclosure by advertisement law.
Moreover, any claim sounding in fraud is subject to the heightened pleading
requirements under Fed. R. Civ. P. 9(b). Fed. R. Civ. P. 9(b) provides that “[iln alleging
fraud or mistake, a party must state with particularity the circumstances constituting
fraud or mistake. Fed. R. Civ. P. 9(b); see also Bender v. Southland Corp., 749 F.2d
1205, 1216 (6th Cir. 1984). The complaint fails to meet this pleading requirement.
Cronin has not alleged that BOA, or its agents, made any material misrepresentations,
or that she reasonably relied on any such statements to her detriment.3
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In order to state a claim of fraud, Cronin must plead:
(1) That 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 Plaintiffs; (5) that Plaintiffs acted in
reliance upon it; and (6) that he thereby suffered injury.
Hi-Way Motor Co. v. Int’l Harvester Co., 398 Mich. 330, 336 (Mich. 1976) (internal
quotations omitted). The absence of any one of these elements is fatal to recovery. Id.
at 336.
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Plaintiffs’ quiet title claim fails for an additional reason. The Sixth Circuit has
recently held that a quiet title claim is a remedy, and not a separate cause of action.
Goryoka v. Quicken Loan, Inc., 2013 WL 1104991, at *3 (6th Cir. March 18, 2013).
2. Count II - Fraud
In Count II, Cronin alleges fraud in both the loan modification process and in her
efforts to obtain a mortgage life insurance policy. As discussed above, Cronin has not
alleged a viable claim regarding her loan modification.
Regarding the mortgage life insurance policy, BOA contends that the amended
complaint fails to plead allegations of fraud with particularity and, in any event, any such
claim is barred by the statute of limitations. The Court agrees.
First of all, Cronin’s allegations of fraud relating to the mortgage life insurance
policy are directed against her lender, a non-party. Moreover, she has not alleged with
the requisite particularity the nature of the misrepresentations regarding the policy, who
made the misrepresentations. At best, Cronin alleges that she and her husband met
with someone from the lender in 1994 or 2001 when they refinanced their mortgage.
She does not allege who assured her and her husband that the mortgage life insurance
policy would be rolled over into the new mortgage.
Secondly, even if her claim was sufficiently plead, it is clearly time barred. Under
Michigan law, fraud claims are subject to a six-year statute of limitations. M.C.L. §
600.5813; Future Now Enterprises, Inc. v. Foster, 860 F. Supp. 2d 420, 428 (E.D. Mich.
2012). The limitation period begins to run from the date the fraud is done. See Shaya
v. Countrywide Home Loans, Inc., 489 F. App’x 815 (6th Cir. 2012), as amended (May
24, 2012); Foster, 860 F. Supp. 2d at 428 (“A claim for fraud accrues when the
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fraudulent misrepresentation is made.”); Boyle v. Gen. Motors Corp., 468 Mich. 226,
232, 661 N.W.2d 557, 560 (2003) (holding that the six-year statute of limitations period
begins when the fraud is done).
Here, Cronin’s allegations of fraud pertain to the lender’s alleged failure to
rollover the mortgage life insurance policy at or after the 2001 refinancing. Cronin
further alleges that she discovered this lapse in the policy sometime in October or
November 2002, following her husband’s death. However, Cronin did not file her
complaint against BOA until June 18, 2012. Her fraud claim is nearly a decade old, and
thus clearly is barred by the six-year statute of limitations. While Cronin asks for
discovery in order to further develop this claim, discovery is not warranted on a claim
that is time barred.
3. Count III - Injunctive Relief
In Count III, Cronin requests injunctive relief. This claim must be dismissed
because injunctive relief is a remedy, not a cause of action. See Terlecki v. Stewart,
278 Mich. App. 644, 663 (2008); Tann v. Chase Home Fin., L.L.C., Case No.10–14696,
2011 WL 3799841, *10 (E.D. Mich. Aug.26, 2011) (“[P]laintiff cannot seek an injunction
as a stand-alone cause of action; it is only available as an equitable remedy.”)
Even if Cronin’s claim for injunctive relief was brought as a proper claim, it still
fails. Injunctive relief is an extraordinary remedy that is granted only when “(1) justice
requires it, (2) there is no adequate remedy at law, and (3) there exists a real and
imminent danger of irreparable injury.” Head v. Phillips Camper Sales & Rental, Inc.,
234 Mich. App. 94, 110 (1999). Injunctive relief requires the Court to consider:
(1) whether the movant has show a strong likelihood of success on the merits;
(2) whether the movant will suffer irreparable harm if the injunction is not issued;
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(3) whether the issuance of the injunction would cause substantial harm to
others; and
(4) whether the public interest would be served by issuing the injunction.
Overstreet v. Lexington–Fayette Urban County Gov’t, 305 F.3d 566, 573 (6th Cir.2002).
Here, Cronin has not shown a likelihood of success on the merits because she has not
set forth a plausible challenge to the foreclosure proceedings. While Cronin may allege
irreparable harm in having to leave the property, it is equally arguable that BOA would
suffer substantial harm because it owns the property. Overall, Cronin is not entitled to
injunctive relief. Count III must therefore be dismissed.
VI. Conclusion
As explained above, Cronin has failed to allege a plausible claim for relief arising
out of her mortgage and subsequent foreclosure. Accordingly, BOA’s motion to dismiss
is GRANTED. This case is DISMISSED.
SO ORDERED.
S/Avern Cohn
AVERN COHN
UNITED STATES DISTRICT JUDGE
Dated: June 11, 2013
I hereby certify that a copy of the foregoing document was mailed to the attorneys of
record on this date, June 11, 2013, by electronic and/or ordinary mail.
S/Sakne Chami
Case Manager, (313) 234-5160
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