Yangouyian v. Capital One, NA

Filing 7

Opinion and ORDER Granting Motion to Dismiss and Cancelling Hearing 4 . Signed by District Judge Gershwin A. Drain. (Bankston, T)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
ANTHONY YANGOUYIAN,
Plaintiff,
Case No. 13-cv-10112
HON. GERSHWIN A. DRAIN

vs.

CHEVY CHASE BANK, FSB, et al.
Defendants.
_____________________________/
OPINION AND ORDER GRANTING DEFENDANT’S MOTION TO DISMISS[#4] AND
CANCELLING HEARING
I.

Introduction

On January 11, 2013, Plaintiff, Anthony Yangouyian, filed this suit against Defendants,
Chevy Chase Bank, FSB (“CCB”) and Capital One, N.A. (“Capital One”)1, challenging the
foreclosure of a mortgage that encumbered property located at 8481 Trenton, White Lake, Michigan
48386 (the “Property”). Plaintiff raises five claims: Quiet Title, Count I; Assignment of the
Mortgage without the Note, Count II; Unjust Enrichment, Count III; Breach of Implied
Agreement/Specific Performance, Count IV, and Breach of MICH. COMP. LAWS § 600.3205c, Count
V.
Presently before the Court is Defendant’s Motion to Dismiss. The Plaintiff did not respond
to Defendant’s Motion to Dismiss. Accordingly, pursuant to E.D. Mich. L.R. 7.1(f)(2), Defendant’s
Motion to Dismiss will be resolved on the briefs. For the reasons that follow, Defendants’ Motion
1

Chevy Chase Bank, FSB converted to a national bank and merged with Capital One, N.A., effective July
30, 2009. See Certificate of Merger, Dkt. No. 4, pg.8. Thus Capital One is the only proper party in this action, and
the Court will henceforth address the Defendant in singular form.

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to Dismiss and/or for Summary Judgment is granted.
II.

Factual Background

On December 4, 2002, Plaintiff obtained a $373,000.00 loan from CCB. As security for
repayment of the loan, plaintiff executed a mortgage on the Property. The mortgage identifies
Mortgage Electronic Registration Systems, Inc. (MERS) as the “nominee for Lender.” On October
7, 2011, MERS, as nominee for the Lender, assigned the mortgage to Capital One. The assignment
was recorded with the Oakland County Register of Deeds on October 25, 2011.
Plaintiff apparently defaulted on the loan by failing to make his payments when they came
due. Consequently, as provided in the mortgage, Defendant initiated foreclosure proceedings by
advertisement. On June 12, 2012, the Property was sold at a Sheriff’s sale. Defendant purchased
the Property. Accordingly, the redemption period expired on December 12, 2012. See MICH. COMP.
LAWS § 600.3240(8).
III.

Law & Analysis

A.

Standard of Review

Federal Rule of Civil Procedure12(b)(6) allows the court to make an assessment as to
whether the plaintiff has stated a claim upon which relief may be granted. See Fed. R. Civ. P.
12(b)(6). “Federal Rule of Civil Procedure 8(a)(2) requires only ‘a short and plain statement of the
claim showing that the pleader is entitled to relief,’ in order to ‘give the defendant fair notice of what
the ... claim is and the grounds upon which it rests.’” Bell Atlantic Corp. v. Twombly, 550 U.S. 544,
555 (2007) (citing Conley v. Gibson, 355 U.S. 41, 47 (1957). 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.”

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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).
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. To
survive a Rule 12(b)(6) motion to 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.”
Id. (citations and quotations omitted). “[T]he tenet that a court must accept as true all of the
allegations contained in a complaint is inapplicable to legal conclusions.” Ashcroft v. Iqbal, 129 S.
Ct. 1937, 1949 (2009). “Nor does a complaint suffice if it tenders ‘naked assertion[s]’ devoid of
‘further factual enhancement.’” Id. “[A] complaint must contain sufficient factual matter, accepted
as true, to ‘state a claim to relief that is plausible on its face.’” Id. The plausibility standard requires
“more than a sheer possibility that a defendant has acted unlawfully.” Id. “[W]here the wellpleaded facts do not permit the court to infer more than the mere possibility of misconduct, the
complaint has alleged–but it has not ‘show[n]’– ‘that the pleader is entitled to relief.’” Id. at 1950.

3.

Defendant’s Motion to Dismiss

Defendant argues that Plaintiff’s quiet title claim must be dismissed because the statutory
redemption period has expired, Plaintiff does not have superior title, and Plaintiff lacks the requisite
standing to bring the claim. The statute 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 in the circuit courts
against any other person who claims or might claim any interest inconsistent with the interest claimed

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by the plaintiff . . . .” MICH. COMP. LAWS § 600.2932. Plaintiff has the burden of proof and must
make out a prima facie case of title. See Beulah Hoagland Appleton Qualified Personal Residence
Trust v. Emmet County Rd. Comm’n, 236 Mich. App. 546, 549, 600 N.W.2d 698 (Mich. Ct. App.
1999).
In the Complaint, Plaintiff maintains that the Defendant acted intentionally “to preclude the
Plaintiff from entering into a loan modification or a negotiated settlement” and that Defendant “did
undertake to foreclose on the subject property without allowing the Plaintiff to Modify the Loan.”
Compl., ¶¶12, 14. As an initial matter, Defendant is not required to modify Plaintiff’s loan, rather
Defendant was required to offer Plaintiff an opportunity to discuss possible loan modification as a
condition precedent to foreclosure by advertisement. As evidenced by the affidavit included as part
of the Sheriff’s deed, the parties did meet, pursuant to M.C.L. § 600.3205b to discuss a loan
modification; however, an agreement was not reached. The affidavit states in relevant part:
That I have reviewed the business records of Trott & Trott, P.C. and based on my
review of those records, a written notice dated October 19, 2011 was served in the
manner necessary according to M.C.L. 600.3205a(3);
That said notice includes: (a) the reason for default and the amount due and owing;
(b) the contact information for the mortgage holder, the mortgage servicer, or any
agent designated by the mortgage holder or mortgage servicer; and (c) a statement of
the borrowers’ rights, all according to M.C.L. 600.3205a(1);
That said notice includes a list of housing counselors as required by M.C.L.
600.3205a(2); and
That the borrower(s) responded and requested a meeting pursuant to M.C.L.
600.3205b, no agreement could be reached, they are not eligible for a loan
modification, and 90 days from the date of the aforementioned notice has passed.
See Def.’s Mot., at 49. Thus, Plaintiff’s allegation that Defendant prevented Plaintiff from securing
a loan modification is belied by the affidavit attached to the Sheriff’s deed.
In Overton v. Mortgage Electronic Registration Systems, Case No. 07-725429, 2009 WL
1507342 (Mich. App. May 28, 2009), the court held that once the redemption period following a

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foreclosure of a parcel of real property has expired, the former owner’s rights in and title to the
property are extinguished. See Overton, 2009 WL 1507342, at *1. “The law in Michigan does not
allow an equitable extension of the period to redeem from a 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. (emphasis added) (citing Schulthies v. Barron, 16 Mich.App 246,
247-248; 167 NW2d 784 (1969)).
Here, Plaintiff argues that the “[Defendant] made false and misleading representations of
material facts in connection with the loan modification process and statue,” and that the “[Plaintiff]
relied on their material representations, that the loan modification would prevent foreclosure on said
property.” See Def.’s Notice of Removal, Ex. B., ¶¶ 13-14. In order to establish a claim for fraudulent
misrepresentation, Plaintiff must demonstrate: (1) that the Defendant made a material representation,
(2) that was false, (3) that Defendant knew was false, or that was made recklessly, without any
knowledge of its truth, (4) that Defendant made it with the intention that Plaintiff would act upon
it, and (5) the Plaintiff acted in reliance upon it, and (6) suffered damages. See Hi-Way Motor Co.
v. Internat'l Harvester Co., 398 Mich. 330, 336; 247 N.W. 2d 813 (1976).
Contrary to Plaintiff’s assertions, Defendant stating that a loan modification – if
successful–would prevent foreclosure on the property, is generally a foregone conclusion. This
assertion does not rise to the particularity needed to sustain a claim of a false or misleading
representation. See Fed. R. Civ. P. 9. The parties were in discussion regarding a modification and
it is conceivable, had the parties reached an agreement, that the foreclosure process would indeed
have been halted.
Moreover, Plaintiff fails to allege the specific false representations made by Defendant. Nor
does his pleading contain any factual allegations concerning the who, when, or any specific detail
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surrounding the allegedly fraudulent or misleading statement. See Fed. R. Civ. P. 9(b) (“[i]n
allegations of fraud or mistake, a party must state with particularity the circumstances constituting
fraud or mistake.”) In any event, the affidavit included with the Sheriff’s deed belies Plaintiff’s
assertion. Under Michigan law, the Sheriff’s deed trumps any claim the Plaintiff may have to the
property. MICH. COMP. LAWS §§ 600.3236, 600.3240. Plaintiff’s claim for quiet title fails as a matter
of law.
As to Plaintiff’s claim for assignment of the mortgage without the note, Michigan law does
not require that the note be provided to the borrower as a condition of foreclosure. See M.C.L. §
600.3204. Furthermore, this cause of action lacks requisite supporting factual allegations and fails
to state any claim upon which relief may be granted. Therefore, this claim must also fail.
As to Plaintiff’s claim for unjust enrichment, such a claim is non-cognizable under Michigan
law because an express contract governs the subject matter at issue herein. See Fodale v. Waste
Mgmt. of Michigan, Inc., 271 Mich. App. 11, 36, 718 N.W.2d 827 (2006) (“In this case, an express
contract, the 2002 loan agreements, governs the parties’ loan. This alone would foreclose plaintiff’s
unjust enrichment claim.”). Similar to the facts in Fodale, this action is governed by an express
written agreement, specifically the mortgage. Defendant’s argument is correct in that Plaintiff’s
unjust enrichment claim fails because the mortgage agreement governs the parties’ relationship. See
Belle Isle Grill Corp. v. Detroit, 256 Mich. App. 463, 478, 666 N.W.2d 271 (2003) (“[A] contract
will be implied only if there is no express contract covering the same subject matter.”) Thus,
Plaintiff’s unjust enrichment claim fails as a matter of law.

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In Count IV, Plaintiff alleges that he “has attempted in good faith to continue with the Loan
Modification process and negotiate a settlement to no avail[,] Defendant must be ordered to continue
the processing of the Loan Modification or negotiate in good faith a settlement of the subject property
so that Plaintiff can keep possession of his home.” Compl., ¶¶ 33, 36. To the extent Plaintiff’s claim
relies on the theory that he is entitled to a loan modification, Michigan law requires that certain types
of agreements be reduced to a writing. See Crown Tech. Park v. D&N Bank, F.S.B., 242 Mich. App.
538, 548; 619 N.W.2d 66 (2000); see also MICH. COMP. LAWS § 566.132(2). Michigan Compiled
Laws § 566.132(2) states:
(2) An action shall not be brought against a financial institution to enforce any of the
following promises or commitments of the financial institution unless the promise or
commitment is in writing and signed with an authorized signature by the financial
institution:
(a) A promise or commitment to lend money, grant or extend credit, or make any
other financial accommodation.
MICH. COMP. LAWS § 566.132(2)(a).

Here, Plaintiff’s claim fails because he has presented no

evidence that an authorized representative of Defendant made promises to modify his loan and
reduced such promises to a written agreement. In any event, the affidavit included in the Sheriff’s
deed contradicts Plaintiff’s contention that he was promised a loan modification, in fact, it states that
an agreement was never reached. Here, even if Plaintiff alleged that he was promised a loan
modification, this Court could not enforce an oral promise in contravention of MICH. COMP. LAWS
§ 566.132(2).
To the extent Count IV raises a claim for fraudulent misrepresentation, this claim likewise
fails as a matter of law. As discussed earlier, Plaintiff again has not met the high pleading
requirement to sustain a claim for fraudulent misrepresentation. Here, Plaintiff fails to allege the
specific false representations made by Defendant. Nor does his pleading contain any factual

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allegations concerning the who, when, or any specific detail surrounding the allegedly fraudulent
statement. See Fed. R. Civ. P. 9(b) (“[i]n allegations of fraud or mistake, a party must state with
particularity the circumstances constituting fraud or mistake.”)
Lastly, Plaintiff asserts that Defendant violated MICH. COMP. LAWS § 600.3205c because
Defendant “failed to modify Plaintiff’s mortgage.” Compl. ¶ 28. Sections 600.3204 and 600.3205
have been amended since the events that form the basis of this Complaint occurred. The amendments
do not affect the resolution of this matter, and the Court will address the version of the statute in
effect at the time of the Sheriff’s sale. Pursuant to MICH. COMP. LAWS § 600.3204(4), a party may
not initiate foreclosure by advertisement if one of the following circumstances exist:
(a)
(b)

(c)

(d)

(e)

(f)
(g)

Notice has not been mailed to the mortgagor as required by section 3205a.
After a notice is mailed to the mortgagor under section 3205a, the time for the
mortgagor to request, either directly or through a housing counselor, a
meeting with the person designated under section 3205a(1)(c) under section
3205b has not expired.
Within 30 days after a notice is mailed to the mortgagor under section 3205a,
the mortgagor has requested a meeting under section 3205b with the person
designated under section 3205a(1)(c) and 90 days have not passed after the
notice was mailed. This subdivision does not apply if the mortgagor has
failed to provide documents as required under section 3205b(2).
Documents have been requested under 3205b(2), and the person designated
under section 3205a(1)(c) has not met or negotiated with the mortgagor under
this chapter.
The mortgagor has requested a meeting under section 3205b with the person
designated under section 3205a(1)(c) has not met or negotiated with the
mortgagor under this chapter.
The mortgagor and mortgagee have agreed to modify the mortgage loan and
the mortgagor is not in default under the modified agreement.
Calculations under section 3205c(1) show that the mortgagor is eligible for a
loan modification and foreclosure under chapter is not allowed under section
3205c(7).

MICH. COMP. LAWS § 600.3204(4). “A borrower who wishes to participate in negotiations to attempt
to work out a modification of a mortgage loan shall contact a housing counselor from the list
provided under section 3205a within 14 days after the list is mailed to the borrower.” MICH. COMP.
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LAWS § 600.320b(1). If a housing counselor is contacted by the borrower, the counselor “shall
schedule a meeting with the borrower to attempt to work out a modification of the mortgage loan.”
MICH. COMP. LAWS § 600.320b(3).
Section 3205c(1) states: “If a borrower has, either directly or through a housing counselor,
contacted a person designated under section 3205a(1)(c) under section 3205b but the process has not
resulted in an agreement to modify the mortgage loan, the person designated under section
3205a(1)(c) shall work with the borrower to determine whether the borrower qualifies for a loan
modification.” MICH. COMP. LAWS § 600.3205c(1).
Here, Plaintiff alleges that “the action of the Defendant[] was intentionally designed to
preclude the Plaintiffs (sic) from entering into a Loan Modification or a negotiated settlement. . . .”
Compl., ¶ 12. However, as previously noted, the Sheriff’s deed contains an affidavit stating that the
parties were in discussion regarding a loan modification, yet, for various reasons, the parties did not
reach an agreement. Plaintiff did not file a response. Thus, Plaintiff has offered no evidence to
contradict this affidavit. In any event, even if Defendant violated MICH. COMP. LAWS § 600.3205c,
the remedy Plaintiff seeks, setting aside the foreclosure sale, is unavailable. If the mortgage holder
violates MICH. COMP. LAWS § 600.3205c, a mortgagor may file an action to convert a foreclosure by
advertisement into a judicial foreclosure. See Stein v. U.S. Bancorp, No. 10-14026, 2011 U.S. Dist.
LEXIS 18357, *29 (E.D. Mich. Feb. 24, 2011). In Stein, the court noted that even if the plaintiff
could establish that the defendant violated Michigan’s foreclosure by advertisement statute, the
plaintiff had to seek relief prior to consummation of the foreclosure process. Id. “The provision
allows certain borrowers to determine the type of foreclosure proceeding, not to avoid foreclosure
altogether or set aside an already-completed foreclosure.” Id. (emphasis in original)
IV.

Conclusion
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For the reasons stated above, Defendant’s Motion to Dismiss [#4] is GRANTED.
SO ORDERED.
Dated: March 29, 2013

/s/ Gershwin A Drain
GERSHWIN A. DRAIN
UNITED STATES DISTRICT JUDGE

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