Koch v. Home Network Mortgage, LLC et al

Filing 20

ORDER granting defendants' Motion to Dismiss 6 7 , striking amended complaint 15 denying Motion for injunctive relief 17 and denying 19 Motion for leave to file Amended Complaint. Plaintiff is ordered to show cause by 3/1/13 why remaining defendants should not be dismissed. Signed by District Judge George Caram Steeh (MBea)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION

ROSEMARY KOCH,
Plaintiff,
Case No. 12-CV-14760
vs.
HON. GEORGE CARAM STEEH
HOME NETWORK MORTGAGE, LLC,
Defendants.
________________________________/
ORDER GRANTING DEFENDANTS’ MOTIONS TO DISMISS
[DOCS. 6 AND 7], STRIKING AMENDED COMPLAINT
[DOC. 15] DENYING MOTION FOR INJUNCTIVE RELIEF AND
DENYING MOTION FOR LEAVE TO FILE AMENDED COMPLAINT [DOC. 19]
Plaintiff Rosemary Koch filed this action against defendants Home Network
Mortgage, LLC, U.S. Bank N.A., Trott & Trott, P.C., Capovista, LLC, and Does 1 through
100. Plaintiff’s complaint identifies Jeffrey Holt as a “third party interest intervenor” as well
as the person submitting the 35-page complaint, although there is no signature above his
name. Plaintiff’s federal claims allege violations of the Truth in Lending Act, Federal
Reserve Board Regulation Z, and National Currency Act arising out of the foreclosure of
the mortgage on her home.
Defendants Trott & Trott and Capovista both filed appearances and motions to
dismiss in lieu of an answer to the complaint. There has been no service upon the
remaining defendants. The matter is before the court on the two pending motions to
dismiss.

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First, the court notes that Mr. Holt is not an attorney licensed to practice law. Ms.
Koch acknowledges that fact in her response brief and explains that he has a Power of
Attorney to act on her behalf. Only a member of good standing of the bar of this court is
authorized to practice before this court. Local Rule 83.20(i)(1). As long as there are no
further violations of this court rule by Mr. Holt, the court will not pursue its authority to find
him in criminal contempt for the unauthorized practice of law.
Defendant Capovista was the purchaser of the real property at issue in this action.
Plaintiff Rosemary Koch is the former owner/mortgagor of the property. It appears that
Koch took out a loan which was secured by a mortgage on the property. Koch apparently
defaulted on the loan. The mortgagee, through its counsel, defendant Trott & Trott,
declared a default and foreclosed on the mortgage. A sheriff’s sale was held at the
Washtenaw County Courthouse, where Capovista purchased the property.
After expiration of the statutory redemption period, Capovista removed its Sheriff’s
Deed, duly conveying legal title to the real estate. Other than this, Capovista is not alleged
to have been involved in any way with Koch’s loan, mortgage, default, acceleration of the
debt, or foreclosure of the mortgage.
Koch has not attached any of the relevant documents referenced in her complaint.
Attached to the complaint are Affidavits from plaintiff herself and from Jeffrey LaVerne Holt.
Mr. Holt’s Affidavit includes a copy of a check which is claimed by Mr. Holt to be tendered
payment to the holder of Ms. Koch’s mortgage. Mr. Holt contends that such payment was
rejected.
Rule 12(b)(6) allows the Court to make an assessment as to whether the plaintiff has
stated a claim upon which relief may be granted. Under the Supreme Court’s articulation
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of the Rule 12(b)(6) standard in Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 554-56
(2007), the Court must construe the complaint in favor of the plaintiff, accept the allegations
of the complaint as true, and determine whether plaintiff’s factual allegations present
plausible claims.

“[N]aked assertions devoid of further factual enhancement” are

insufficient to “state a claim to relief that is plausible on its face.” Ashcroft v. Iqbal, 129 S.
Ct. 1937, 1949 (2009). To survive a Rule 12(b)(6) motion for dismiss, plaintiff’s pleading
for relief must provide “more than labels and conclusions, and a formulaic recitation of the
elements of a cause of action will not do.” Ass’n of Cleveland Fire Fighters v. City of
Cleveland, 502 F.3d 545, 548 (6th Cir. 2007) (quoting Bell Atlantic, 550 U.S. at 555)
(citations and quotations omitted). Even though the complaint need not contain “detailed”
factual allegations, its “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.”
Id. (citing Bell Atlantic, 550 U.S. at 555).
I. Capovista’s Motion to Dismiss
Defendant Capovista, as a mere purchaser of the real estate, could not have
committed any of the breaches alleged by plaintiff. Plaintiff has not alleged a defect in the
foreclosure process itself, so she has failed to state a claim upon which relief can be
granted against Capovista.
Plaintiff’s response to dismissing Capovista is that Capovista is an “active part of the
fraud.” Fraud claims must be pled with particularity, see Fed. R. Civ. P. 9(b), and, [a]t a
minimum, Plaintiff [] must allege the time, place, and contents of the misrepresentations
upon which [she] relied.” Frank v. Dana Corp., 547 F.3d 564, 570 (6th Cir. 2008). Plaintiff
must also allege facts from which it could be concluded that her reliance was reasonable.
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See Novak v. Nationwide Mutual Ins. Co., 235 Mich. App. 675 (1999). In this case,
plaintiff’s fraud allegations are generally pled against all defendants. Count 2, fraud in the
concealment, alleges that defendants concealed the fact that the loans were securitized
as well as the Securitization Agreements. As the purchaser at foreclosure, Capovista had
no role to play in the securitization of plaintiff’s loans. Count 3 alleges that defendants
intentionally misrepresented to plaintiff that they were entitled to exercise the power of sale
provision contained in the Deed of Trust. Again, Capovista is not alleged to have exercised
a power of sale provision in any document, since it was the purchaser at the sheriff’s sale.
Plaintiff has failed to make any specific allegations in her complaint against
defendant Capovista that state a claim upon which relief could be granted. Defendant
Capovista’s motion to dismiss is GRANTED.
II. Trott & Trott’s Motion to Dismiss
The “check” submitted and referred to by Mr. Holt is in the amount of $225,000.00,
from Mr. Holt’s account at TCF Bank, and dated April 15, 2012. It was allegedly mailed to
U.S. Bank on April 16, 2012 in order to pay off Ms. Koch’s mortgage. On April 21, 2012,
Mr. Holt received a letter from Trott & Trott, refusing the check as being insufficient funds
to pay off the mortgage. The check was rejected by Trott & Trott as an effort to redeem the
property because it was marked on the front: “EFT ONLY FOR DISCHARGE OF DEBT”
and on the back: “NOT FOR DEPOSIT / EFT ONLY / FOR DISCHARGE OF DEBT.” The
payee, U.S. Bank, could not have cashed the check because of the markings on it, and an
electronic funds transfer can only be initiated by the payor, not by the recipient. Since the
monetary instrument was returned to Mr. Holt, and he attached said returned instrument
to his Affidavit, plaintiff had knowledge that it had been returned. There was no valid tender
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of payment in this case, since the check was marked up, including the words “NOT FOR
DEPOSIT” and it did not suffice as an electronic funds transfer. Therefore, there was no
actual payment by the plaintiff in this case, toward the discharge of the mortgage debt, to
support her claims in Count 10, violations of Truth in Lending Act, Federal Reserve Board
Regulation Z, and National Currency Act of 1863. (Compl. ¶ 132) Count 10, the only
federal claim made, is DISMISSED.
Trott & Trott does not claim to own the mortgage at issue. Rather, Trott & Trott
acted in this case on behalf of its client, the mortgagee of record, U.S. Bank. (See,
Assignment of Mortgage, Ex. C to Motion to Dismiss) The law in this state is that the holder
of the mortgage of record is entitled to foreclose. Residential Funding Co., LLC v.
Saurman, 490 Mich. 909 (2011). Trott & Trott was entitled to pursue foreclosure on behalf
of its client, U.S. Bank. Count I, lack of standing to foreclose, is DISMISSED.
There are no specific allegations of fraud made against Trott & Trott, Fed. R. Civ.
P. 9(b), therefore Counts 2 and 3 are DISMISSED.
Counts 4 through 9, intentional infliction of emotional distress, slander of title, quiet
title, declaratory relief, violation of MCLA 125.1449a, and violation of Michigan Consumer
Protection Act, MCLA 445.903, are all state claims for which the court declines to exercise
its supplemental jurisdiction. Counts 4 through 9 are therefore DISMISSED without
prejudice, for lack of subject matter jurisdiction.
III. Second Amended Complaint
On January 18, 2013, Rosemary Koch and Jeffrey Holt filed a pleading titled
“Amended Complaint”. This pleading is STRICKEN due to the fact that it is untimely under
Federal Rule of Civil Procedure 15(a)(1), and for failing to comply with the procedures set
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forth in Federal Rule of Civil Procedure 15(a)(2). As it relates to defendants Trott & Trott
PC and Capovista LLC, the court will construe the amended complaint as a motion for
temporary injunctive relief and DENY such motion for failure to state a claim upon which
relief can be granted, for the same reasons given in granting the motions to dismiss.
IV. Motion for Leave to Amend
On January 28, 2013, plaintiffs filed a motion for leave to file the Amended
Complaint which was originally filed by plaintiff Rosemary Koch on January 2, 2013 and
stricken by the court on January 16, 2013 for failing to comply with Fed. R. Civ. P. 15(a)(1)
and (2). The January 2 Amended Complaint is in an entirely different format than the
original complaint. The original complaint contains numbered paragraphs making factual
allegations while the Amended Complaint does not. The original complaint is divided into
ten causes of action while the Amended Complaint is not divided into separate counts, and
contains numerous citations to cases and other legal resources, more in lines with a brief
than a complaint.
Fed. R. Civ. P. 15(a)(2) directs the court to grant leave to file an amended when
justice so requires. In this case, justice does not require that leave be granted where
plaintiff’s proposed amendment makes her claims far less clear to the defendants as well
as to the court. For that reason, plaintiff’s motion for leave to file the January 2, 2013
Amended Complaint is DENIED.

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CONCLUSION
For the reasons stated herein, defendants’ motions to dismiss are GRANTED,
plaintiff’s January 18, 2013 Amended Complaint is STRICKEN, plaintiff’s request for
injunctive relief as to the two served defendants is DENIED, and plaintiff’s motion for leave
to file her January 2, 2013 Amended Complaint is DENIED.
In light of the fact that the summons issued for the remaining defendants is due to
expire February 27, 2013, plaintiff IS ORDERED to show cause, if any, in writing, on or
before March 1, 2013, why the remaining defendants should not be dismissed from this
case.
s/George Caram Steeh
GEORGE CARAM STEEH
UNITED STATES DISTRICT JUDGE
Dated: January 31, 2013

CERTIFICATE OF SERVICE
Copies of this Order were served upon attorneys of record on
January 31, 2013, by electronic and/or ordinary mail and on
Rosemary Koch, 1950 Baker Road, Dexter, MI 48130.
s/Barbara Radke
Deputy Clerk

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