Baldwin v. CitiMortgage, Inc. et al

Filing 6

ORDER granting 3 Motion to Dismiss. Signed by District Judge Victoria A. Roberts. (CPin)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
MARGARET BALDWIN,
Plaintiff,

CASE NUMBER: 12-14907
HONORABLE VICTORIA A. ROBERTS

v.
CITIMORTGAGE INC. and FEDERAL
HOME LOAN MORTGAGE
CORPORATION,
Defendants.
/
ORDER GRANTING DEFENDANTS’ MOTIONS TO DISMISS

I.

INTRODUCTION
CitiMortgage Inc. (“Citi”) foreclosed by advertisement on Margaret Baldwin’s

home after she defaulted on her mortgage. Baldwin challenges the validity of
foreclosure and asks the Court to declare the sale void and stay her eviction.
Baldwin asserts eleven claims:
(I)

State law breach of contract (Count One);

(II)

Breach of unilateral contract (Count Two);

(III)

Fraud in the inducement (Count Three);

(IV)

Reformation of mortgage (Count Four);

(V)

Equitable mortgage (Count Five);

(VI)

Equitable estoppel (Count Six);

(VII)

Promissory estoppel (Count Seven);

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(VIII) Breach of covenant of good faith and fair dealing (Count Eight);
(VIIII) Specific performance (Count Nine);
(X)

Relief from sheriff sale and/or set aside foreclosure (Count Ten); and

(XI)

Declaratory and injunctive relief (Count Eleven).

Defendants’ motion is GRANTED in its entirety. All claims are barred by the
doctrines of Rooker-Feldman and res judicata.
II.

BACKGROUND
Margaret Baldwin obtained a loan from ABN AMRO Mortgage Group, Inc.

(“ABN”) to purchase a home. In exchange for the loan, Baldwin signed a note and
mortgage. CitiMortgage, Inc. (“Citi”) obtained Baldwin’s mortgage by merger with ABN.
Baldwin defaulted on her mortgage loan; to cure the default, she applied for a
loan modification with Citi. Baldwin was approved for a loan modification trial plan
period (“TPP”) but denied a permanent loan modification even though she completed all
payments timely and provided all requested documents.
Citi instituted foreclosure proceedings. On March 4, 2011, Federal Home Loan
Mortgage Corporation (“Freddie Mac”) purchased the home at the sale. Baldwin says
that on September 16, 2011, she received notice from Citi that she was approved for a
second TPP; but, Citi refused to accept her payments.
After Baldwin’s redemption period expired, Freddie Mac initiated summary
proceedings in state district court to evict her. In opposing her eviction Baldwin argued
Citi was not a holder and she was entitled to a loan modification. Baldwin lost and the
state district court ordered Baldwin to vacate the home. On appeal, Baldwin conceded

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that she was not entitled to a loan modification. The state circuit court found Citi was a
holder and dismissed Baldwin’s appeal. Days before Baldwin’s scheduled date to
vacate and for the same reasons she raised in the eviction proceedings, Baldwin filed
an action in state court requesting that the eviction be stayed and sale set aside.
Defendants removed to this court and filed this motion to dismiss. Defendants argue
res judicata bars all of Baldwin’s claims.
III.

STANDARD OF REVIEW

A. Motion to Dismiss
Fed. R. Civ. P. 12(b)(6) dismissal is warranted “only if it appears beyond doubt
that the plaintiff can prove no set of facts in support of the claims that would entitle him
or her to relief.” Zaluski v. United Am. Healthcare Corp., 527 F.3d 564, 570 (6th Cir.
2008). The court treats all well-pleaded allegations in the complaint as true. Id.
However, to survive a motion to dismiss, “[f]actual allegations must be enough to raise a
right to relief above the speculative level.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555
(2007). A plaintiff must include in the complaint enough facts which allow the court to
“draw the reasonable inference that the defendant is liable for the misconduct alleged.”
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2010).
IV.

ANALYSIS
“Michigan law defines res judicata broadly to bar litigation in the second action

not only of those claims actually litigated in the first action, but also claims arising out of
the same transaction that the parties, exercising reasonable diligence, could have
litigated but did not.” Peterson Novelties, Inc. v. City of Berkley, 259 Mich. App. 1, 11;

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672 N.W.2d 351 (2003) (citations omitted). A second action is barred by res judicata if:
"(1) the prior action was decided on the merits, (2) both actions involve the same parties
or their privies, and (3) the matter in the second case was, or could have been, resolved
in the first." Adair v. State, 470 Mich. 105, 680 N.W.2d 386, 396 (Mich. 2004).
Baldwin does not deny that each count in her complaint is based on her claim to
a loan modification. But, she says the state courts did not decide whether she was
entitled to a loan modification. To the extent they did, Baldwin says the decision is not
binding because the state courts did not have jurisdiction to grant the equitable relief
she requests: setting aside the sale.
The Court disagrees with Baldwin; her right to a loan modification was properly
adjudicated. The eviction proceedings show that in opposition to Freddie Mac’s motion
for possession, Baldwin argued that the foreclosure was invalid because she was
entitled to a loan modification. Baldwin appealed the judgment of possession in favor of
Freddie Mac, but conceded that she was not entitled to a loan modification saying,
“Defendant/Appellant would dearly love to obtain relief for the numerous, and bogus,
offers to modify this loan. After extensive research, there simply does not appear to be
any relief for these unusually cruel offers to “help” distressed homeowners.” Baldwin
may not recover in a later proceeding on grounds that she conceded in an earlier one.
The state courts could have granted Baldwin the equitable relief she requests if
she had prevailed. Under Michigan law, state district courts have exclusive jurisdiction
to hear “summary proceedings to recover possession of premises.” M.C.L. 600.5701.
Michigan courts interpret this to include equitable claims. Manufacturers Hanover
Mortg. Corp. v. Snell, 142 Mich. App. 548, 554; 370 N.W.2d 401 (1985)(“The district
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court has jurisdiction to hear and determine equitable claims and defenses involving the
mortgagor’s interest in the property.”).
Alternatively, Baldwin says res judicata is not applicable because Citi was not a
party to the eviction proceedings. Baldwin is incorrect.
Citi’s interest was represented by Freddie Mac, its “privie.” Citi need not be a
party to a prior action if represented by its privie. Adair, 680 N.W.2d at 396 (An action is
res judicata if “both actions involve the same parties or their privies.”):
To be in privity is to be so identified in interest with another party that the first
litigant represents the same legal right that the later litigant is trying to assert.
The outer limit of the doctrine traditionally requires both a “substantial identity
of interests” and a “working functional relationship” in which the interests of
the nonparty are presented and protected by the party in the litigation.
Adair v. State, 470 Mich. 105, 122; 680 N.W.2d 386 2004) (citations omitted) (quoting
Baraga County v. State Tax Comm’, 466 Mich. 264, 269;645 N.W.2d 13 (2002)).
Freddie Mac presented the reasons why Citi did not modify Baldwin’s loan in
state court. There was no loan modification, Baldwin defaulted, Citi foreclosed and
Freddie Mac purchased. Freddie Mac and Citi clearly had a working functional
relationship and shared the same interest.
Even though Citi was not a party to any state court proceeding, its interests was
adequately represented by Freddy Mac. See Richards v. Jefferson County, Ala., 517
U.S. 793 (1996). Citi’s and Freddie Mac’s interest were intertwined in the soundness of
the foreclosure.
Finally, the Court sua sponte finds the Rooker-Feldman doctrine applies here.
Baldwin’s primary request is that this Court reject the state courts’ orders and grant her
possession of the property. But, the Rooker-Feldman doctrine deprives federal courts of
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subject matter jurisdiction when a plaintiff attempts to set aside an earlier state
judgment. See Givens v. Homecomings Financial, 278 Fed. Appx. 607 (6th Cir. 2008).
Baldwin’s complaint is dismissed; each count is based on Baldwin’s right to a
loan modification-- an issue that is barred by the doctrines of Rooker-Feldman and res
judicata.
IV.

CONCLUSION
Defendants’ motion is GRANTED. Plaintiff’s claims are DISMISSED.
IT IS ORDERED.

S/Victoria A. Roberts
Victoria A. Roberts
United States District Judge
Dated: March 20, 2013
The undersigned certifies that a copy of
this document was served on the
attorneys of record by electronic means or
U.S. Mail on March 20, 2013.
S/Carol A. Pinegar
Deputy Clerk

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