Simpkins-Ways v. Fidelity Bank
Filing
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OPINION AND ORDER granting 3 Motion to Dismiss. Signed by District Judge Patrick J. Duggan. (MOre)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
WENDI SIMPKINS-WAYS,
Plaintiff,
v.
Case No. 12-15061
Honorable Patrick J. Duggan
FIDELITY BANK,
Defendant.
______________________________/
OPINION AND ORDER GRANTING DEFENDANT’S MOTION TO DISMISS
PURSUANT TO FEDERAL RULE OF CIVIL PROCEDURE 12(b)(6)
This is an action arising from the foreclosure of Plaintiff Wendi Simpkins-Ways’
residential property. Presently before the Court is Defendant Fidelity Bank’s motion to
dismiss, filed pursuant to Federal Rule of Civil Procedure 12(b)(6) on November 21,
2012. Plaintiff filed a response to the motion on December 17, 2012. The Court
concludes that oral argument will not aid in its disposition of the motion and therefore
dispenses with oral argument pursuant to Eastern District of Michigan Local Rule 7.1(f).
For the reasons that follow, the Court grants Defendant’s motion to dismiss.
I.
Factual and Procedural Background
On December 12, 2003, Plaintiff obtained a mortgage loan from Pioneer Mortgage
(“Pioneer”) in the amount of $231,200.00. (Compl. Ex. A; see also Def.’s Mot. Ex. A.)
As security for the loan, Plaintiff executed a promissory note in the amount of the loan
and granted a mortgage on the Property to Mortgage Electronic Registration Systems, Inc.
(“MERS”), as nominee for Pioneer and Pioneer’s successors and assigns. (Id.) The
mortgage was recorded with the Wayne County Register of Deeds on January 5, 2004.
(Id.) Plaintiff alleges that her mortgage note was securitized. (See Compl. ¶ 15.) On
January 14, 2008, MERS assigned the mortgage to Fidelity. (Def.’s Mot. Ex. B.) The
assignment to Fidelity was recorded with the Wayne County Register of Deeds on
February 8, 2008. (Id.)
Plaintiff defaulted on the loan and Fidelity thereafter initiated foreclosure by
advertisement proceedings with respect to the Property. (Compl. ¶ 31, Ex. B.) A
foreclosure/housing counselor notice was published in the Detroit Legal News on January
15, 2010. (Id. Ex. B.) On June 14, 21, and 28 and July 5, 2010, notice of the foreclosure
sale also was published in the Detroit Legal News. (Id.) The notice of foreclosure sale
was posted at the Property on June 18, 2010. (Id.) A sheriff’s sale occurred on July 14,
2010, with Fidelity successfully bidding on the Property. (Id.)
The redemption period with respect to the Property expired on January 14, 2011,
with Plaintiff failing to redeem. (Id.; see also Def.’s Mot. Ex. C at 9.) Fidelity then
initiated summary proceedings in Michigan’s 28th District Court to obtain possession of
the Property. The state district judge entered a judgment of possession on February 23,
2011. (Def.’s Mot. Ex. D.)
Plaintiff thereafter filed an appeal to the circuit court in which she challenged the
foreclosure based on the Michigan Court of Appeals’ decision in Residential Funding
Co., LLC v. Saurman, 292 Mich. App. 321, 807 N.W.2d 412 (2011). (Compl. ¶¶ 35, 36.)
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After the Michigan Supreme Court reversed the court of appeals’ decision in Saurman,
490 Mich. 877, 803 N.W.2d 693 (2011), the circuit court affirmed the lower court’s
judgment of possession with respect to the Property. (Def.’s Mot. Ex. E.) Plaintiff filed a
motion for reconsideration, which the circuit court denied on November 9, 2012. (Id. Ex.
F.) As indicated earlier, on November 13, 2012, Plaintiff filed the current action in which
she alleges a single claim to quiet title to the Property.
On November 25, 2012, Plaintiff filed an emergency motion for a preliminary
injunction to stay the state court eviction proceedings. Finding that Plaintiff is not likely
to succeed on the merits of her quiet title claim, this Court issued an opinion and order
denying the motion on November 30, 2012. As indicated above, in the interim,
Defendant had filed the pending motion to dismiss.
II.
Rule 12(b)(6) Standard
A motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6) tests the
legal sufficiency of the complaint. RMI Titanium Co. v. Westinghouse Elec. Corp., 78
F.3d 1125, 1134 (6th Cir. 1996). Under Federal Rule of Civil Procedure 8(a)(2), a
pleading must contain a “short and plain statement of the claim showing that the pleader
is entitled to relief.” To survive a motion to dismiss, a complaint need not contain
“detailed factual allegations,” but it must contain more than “labels and conclusions” or
“a formulaic recitation of the elements of a cause of action . . .” Bell Atlantic Corp. v.
Twombly, 550 U.S. 555, 570, 127 S. Ct. 1955, 1964-65, 1974 (2007). A complaint does
not “suffice if it tenders ‘naked assertions’ devoid of ‘further factual enhancement.’”
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Ashcroft v. Iqbal, 556 U.S. 662, 678 , 129 S. Ct. 1937, 1949 (2009) (quoting Twombly,
550 U.S. at 557, 127 S. Ct at 1966).
As the Supreme Court provided in Iqbal and Twombly, “[t]o survive a motion to
dismiss, a complaint must contain sufficient factual matter, accepted as true, to ‘state a
claim to relief that is plausible on its face.’” Id. (quoting Twombly, 550 U.S. at 570, 127
S. Ct. at 1974). “A claim has facial plausibility when the plaintiff pleads factual content
that allows the court to draw the reasonable inference that the defendant is liable for the
misconduct alleged.” Id. (citing Twombly, 550 U.S. at 556, 127 S. Ct. at 1965). The
plausibility standard “does not impose a probability requirement at the pleading stage; it
simply calls for enough facts to raise a reasonable expectation that discovery will reveal
evidence of illegal [conduct].” Twombly, 550 U.S. at 556, 127 S. Ct. at 1965.
In deciding whether the plaintiff has set forth a “plausible” claim, the court must
accept the factual allegations in the complaint as true. Id.; see also Erickson v. Pardus,
551 U.S. 89, 94, 127 S. Ct. 2197, 2200 (2007). This presumption, however, is not
applicable to legal conclusions. Iqbal, 556 U.S. at 668, 129 S. Ct. at 1949. Therefore,
“[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory
statements, do not suffice.” Id. (citing Twombly, 550 U.S. at 555, 127 S. Ct. at 1965-66).
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III.
Applicable Law and Analysis
Again, Plaintiff asserts only a quiet title claim in her Complaint. In Michigan,
quiet title actions are statutory in nature. The law provides that “[a]ny person
. . . who claims any right in, title to, equitable title to, interest in, or right to possession of
land, may bring an action . . . against any other person who claims . . . [an inconsistent
interest.]” Mich. Comp. Laws § 600.2932(1). To properly allege a quiet title claim, a
plaintiff must meet the requirements set forth in Michigan Court Rule § 3.411. This rule
provides that a plaintiff 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. M.C.R. § 3.411(B)(2). These requirements place the
burden of proving a prima facie case of title on the plaintiff. Stinebaugh v. Bristol, 132
Mich. App. 311, 316, 347 N.W.2d 219, 221 (1984) (citation omitted). “Establishing a
prima facie case of title requires a description of the chain of title through which
ownership is claimed.” Sembly v. U.S. Bank, N.A., No. 11-12322, 2012 U.S. Dist. LEXIS
1440, at *9 (E.D. Mich. Jan. 6, 2012) (Rosen, C.J.).
The allegations in Plaintiff’s Complaint, taken with the public records attached
thereto and to the parties’ pleadings,1 establish that Fidelity acquired title to the Property
through the July 14, 2010 sheriff’s sale. Plaintiff essentially claims that her prior title to
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“[C]ourts may ... consider public records, matters of which a court may take judicial
notice, and letter decisions of governmental agencies” without converting a motion to dismiss to
one for summary judgment. Jackson v. City of Columbus, 194 F.3d 737, 745 (6th Cir.1999).
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the Property was never extinguished and is superior because Fidelity lacked an interest in
the mortgage necessary to give it standing to bring the foreclosure proceedings that led to
this sale. She identifies three reasons for why she believes Fidelity’s interest in the
mortgage was rendered invalid: (1) the securitization process which severed the
ownership interest in the promissory note from the mortgage; (2) violations of the Pooling
and Servicing Agreement; and (3) violations of Michigan’s Uniform Commercial Code
(“UCC”). For the reasons that follow, none of Plaintiff’s arguments are sufficient to set
aside the foreclosure and thus Fidelity’s title to the Property which it acquired through the
foreclosure process.
In Michigan, statutory law governs foreclosure sales by advertisement. Senters v.
Ottawa Sav. Bank, FSB, 443 Mich. 45, 50, 503 N.W.2d 639, 641 (1993). Thus, “[o]nce
the mortgagee elects to foreclose a mortgage by this method, the statute governs the”
entire process. Id. (citing Mich. Comp. Laws § 600.3201 et seq.). Mortgagors may
redeem the foreclosed property within six months of a sheriff’s sale. Mich. Comp. Laws
§ 600.3240(8). If no redemption is made, the sheriff’s deed “become[s] operative, and []
vest[s] in the grantee named therein . . . all the right, title, and interest [] the mortgagor
had[.]” Id. § 600.3236.
In Piotrowski v. State Land Office Board, the Michigan Supreme Court held that
mortgagors lose “all their right, title, and interest in and to the property at the expiration
of their right of redemption.” 302 Mich. 179, 186, 4 N.W.2d 514, 516 (1942). This rule
of law– holding that absolute title vests in the purchaser at the foreclosure sale upon
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expiration of the redemption period– has been applied consistently “to bar former owners
from making any claims with respect to the foreclosed property after the end of the
redemption period.” Hall v. Green Tree Servicing, L.L.C., No. 12-11811, 2012 U.S. Dist.
LEXIS 85955, at *8-9 (E.D. Mich. June 21, 2012) (Edmunds, J.) (collecting cases).
There is, however, one important caveat to the general rule described above. Once
a foreclosure sale has taken place and the redemption period has run, a court may allow
“an equitable extension of the period to redeem” if the plaintiff makes “a clear showing of
fraud, or irregularity” by the defendant. Schulthies v. Barron, 16 Mich. App. 246,
247-48, 167 N.W.2d 784, 785 (1969); see also Freeman v. Wozniak, 241 Mich. App. 633,
637, 617 N.W.2d 46, 49 (2000) (“[I]n the absence of fraud, accident or mistake, the
possibility of injustice is not enough to tamper with the strict statutory requirements.”)
(citing Senters, 443 Mich. at 55, 503 N.W.2d at 643). Notably, the purported fraud or
irregularity must relate to the foreclosure procedure itself. Reid v. Rylander, 270 Mich.
263, 267, 258 N.W. 630, 631 (1935) (holding that only the foreclosure procedure may be
challenged after a sale); Freeman, 241 Mich. App. at 636-38, 617 N.W.2d at 49 (reversal
of sheriff’s sale improper without fraud, accident, or mistake in foreclosure procedure).
Because the redemption period has expired in this case, Plaintiff must make a plausible
showing of fraud or irregularity to state a claim for the relief sought.
Plaintiff’s argument that Fidelity lacked standing to initiate foreclosure
proceedings because its interest in the mortgage was invalidated by the securitization
process which split the note from the mortgage lacks merit and therefore does not show
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fraud or an irregularity with respect to those proceedings. As indicated in this Court’s
decision denying Plaintiff’s motion for a preliminary injunction, because Plaintiff raised
this challenge in the state courts and it was rejected by the circuit court, she is barred from
re-litigating the issue here. In any event, the Michigan Supreme Court and courts in this
District have found no merit to such claims. See, e.g., Saurman, 490 Mich. at 910, 805
N.W.2d at 185 (“It has never been necessary that the mortgage should be given directly to
the beneficiaries. The security is always made in trust to secure obligations, and the trust
and the beneficial interest need not be in the same hands.”); Jones v. Bank of Am., N.A.,
No. 12-11608, 2012 WL 5412236, at *3-4 (E.D. Mich. Nov. 6, 2012) (citing cases);
Skrine v. Wells Fargo Bank, N.A., No. 12-12916, 2012 WL 5265750, at *3 (E.D. Mich.
Oct. 24, 2012) (citing Leone v. Citigroup, Inc., No. 12-10597, 2012 WL 1564698, at *3-4
(E.D. Mich. May 2, 2012)).
Plaintiff fails to articulate what specific violation(s) of the Pooling and Servicing
Agreement occurred and how those violations invalidated Defendant’s interest in the
mortgage. Her arguments regarding the UCC relate to the ability to split the note and the
mortgage. Again, under Michigan law, they can be split and the mortgagee can initiate
foreclosure proceedings under Michigan’s foreclosure statute even if it does not also hold
the note. See supra. In short, these arguments do not establish a fraud or irregularity
sufficient to set aside the foreclosure and thus to revoke Defendant’s title to the Property.
For these reasons, the Court concludes that Plaintiff fails to plead a viable quiet
title claim.
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Accordingly,
IT IS ORDERED, that Defendant’s motion to dismiss pursuant to Federal Rule of
Civil Procedure 12(b)(6) is GRANTED.
Dated: February 21, 2013
s/PATRICK J. DUGGAN
UNITED STATES DISTRICT JUDGE
Copies to:
Patrick J. Politano, Esq.
Courtney A. Krause, Esq.
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