Richardson et al v. Wells Fargo Bank, N.A.

Filing 19

OPINION and ORDER GRANTING/DENYING DEFENDANT'S MOTION FOR PRELIMINARY INJUCTION 13 . Signed by District Judge Gershwin A. Drain. (Bankston, T)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
MYRA RICHARDSON, et al.

Plaintiffs,
Case No.13-cv-10234
HON. GERSHWIN A. DRAIN

vs.

WELLS FARGO BANK, NA,
Defendant.
_____________________________/
OPINION AND ORDER GRANTING/DENYING DEFENDANT’S
MOTION FOR PRELIMINARY INJUNCTION [#13]
I. INTRODUCTION
This FED. R. CIV. P. 65 Preliminary Injunction Motion is presently before the Court
by Defendant Wells Fargo Bank, NA (“Wells Fargo”) seeking a temporary restraining order
or a preliminary injunction. On May 2, 2013, the Court denied the motion seeking a
temporary restraining order and set a hearing for the preliminary injunction motion. Plaintiff
was ordered to respond by May 8, 2013. The Court held oral argument on the Motion on
May 14, 2013. This Opinion and Order sets forth the Court’s ruling. For the reasons stated
below the Court will DENY Defendant’s Motion for a Preliminary Injunction.

II. FACTUAL BACKGROUND
Plaintiffs filed a motion to quiet title on property located at 5828 Oak Hill Rd.,
Ortonville, Michigan 48462 (“Property”). Plaintiffs purchased and obtained a mortgage on

the property from Coastal Capital Corporation on September 11, 2006. See Compl. Dkt.
No. 1-1, pg. 22. The mortgage was recorded on September 29, 2006, in Liber 38183, page
241, Oakland County Records. See generally, Def.’s Mot. to Dismiss, Dkt. No. 11-2. On
February 25, 2008, the mortgage was assigned to Option One Mortgage Corporation. The
assignment was recorded May 30, 2008, in Liber 40345, page 305, Oakland County
Records. See generally, Def.’s Mot. to Dismiss, Dkt. No. 11-3. The mortgage was lastly
assigned to Wells Fargo on or about February 26, 2009, and recorded on March 13, 2009,
in Liber 40974, page 450, Oakland County Records. See generally, Def.’s Mot. to Dismiss,
Dkt. No. 11-4.
On or about November of 2008, Plaintiffs defaulted on the mortgage. The Property
was foreclosed on and a Sherriff’s sale was held on March 2, 2010. Defendant purchased
the property at the Sheriff’s sale, and the deed was recorded on March 22, 2010, in Liber
41918, page 304, Oakland County Records. See Compl., Dkt. No. 1-1, pg. 16. Plaintiffs
failed to redeem the property by the one-year statutory redemption date of March 2, 2011.
On March 10, 2011, in an attempt to retain the Property, Plaintiffs filed an action in
Oakland County Circuit Court that was eventually dismissed on June 24, 2011, for failure
to prosecute. See Def.’s Mot. to Dismiss, Dkt. No. 11-6. Defendant obtained a judgment
of possession; of which, Plaintiffs appealed to the District Court and the Circuit Court and
both were dismissed in favor of Defendant. See Def.’s Mot. to Dismiss, Dkt. No. 11-7, 11-8,
11-9.
After the dismissal from Circuit Court, Defendant obtained an order of eviction that
Plaintiffs appealed to the Circuit Court, and on February 28, 2013, this second claim of
appeal was dismissed. See Def.’s Mot. to Dismiss, Dkt. No. 11-10. Defendant took
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possession of the Property in February of 2013. Subsequent to Defendant taking
possession, Plaintiffs have posted no trespassing signs and erected a steel cable
preventing access to the property. See Emergency Mot., Dkt. No. 13-3. Defendant states
that Plaintiffs have harassed and threatened Defendant and its agents and thwarted its
attempts to market the Property. Defendant asks this Court to order Plaintiffs to cease their
continued trespass and alleged diminution of the Property.

III. ANALYSIS
A. Standard of Review
Whether a preliminary injunction should issue lies within the sound discretion of
the district court. Golden v Kelsey-Hayes Co., 73 F.3d 648, 653 (6th Cir. 1996). To
determine whether to grant Defendant’s Motion for Preliminary Injunction, the Court
must consider four factors: (1) Defendant’s likelihood of success on the merits, (2)
whether the Defendant will suffer irreparable harm without the injunction, (3) whether
granting the injunction will cause substantial harm to others, and (4) the impact of the
injunction on the public interest. Id. at 653. The Court must balance all four factors and
“[n]one of these factors, standing alone, is a prerequisite to relief. . . .” Id.

I. Defendant’s Likelihood of Success on the Merits
The degree to which a movant must establish a likelihood of success on the merits
often depends upon the strength of the other three factors. See In re DeLorean Motor Co.,
755 F.2d 1223, 1227-1228 (6th Cir. 1985). Defendant contends that it is likely to succeed
on the merits of its summary judgment motion for several reasons. For purposes of this
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preliminary injunction analysis, the Court will address Defendant’s argument that it will likely
succeed on the merits pursuant to the doctrine of res judicata.
Defendant argues that Plaintiffs’ claim is barred by the doctrine of res judicata, or
claim preclusion. Res judicata refers broadly to the concept that a final judgment on the
merits of an action precludes relitigation of issues that were or could have been raised in
that action. See Federated Dep't Stores, Inc., v. Moitie, 452 U.S. 394, 398 (1981). Said
another way, res judicata prevents parties from filing multiple lawsuits litigating the same
cause of action.
Res judicata applies where the following elements are present: (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 action.
Sewell v. Clean Cut Mgmt., Inc. 463, Mich. 569, 575 (2001). Michigan’s Supreme Court
“has taken a broad approach to the doctrine of res judicata, holding that it bars not only
claims already litigated, but also every claim arising from the same transaction that the
parties, exercising reasonable diligence, could have raised but did not.” Adair v. State, 470
Mich. 105, 121 (2004).
In this case, the first element of res judicata – final judgment on the merits – was met
on June 30, 2011, in the 52-2nd District Court, where the court ruled in a motion for
summary disposition that Defendant had a right to possession of the Property and issued
an order evicting Plaintiffs. See Mot. Dkt. No. 11-8. “A federal court must give a state court
judgment the same preclusive effect as would be given that judgment under the law of the
state in which the judgment was rendered.” Walker v. Gen. Motors Corp., Case No. 913096, 940 F.2d 664, [published in full-text format at 1991 U.S. App. LEXIS 18960] at *2 (6th
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Cir. Aug. 8, 1991) (citing Migra v. Warren City School Dist. Bd. of Educ., 465 U.S. 75. 81
(1984)).
The second and third elements are also met because the prior action in the 52-2nd
District Court involved the exact same parties currently before the Court in this action, and
the claims asserted in this action all arise out of the Property at issue. As such, the first
element of the res judicata test is satisfied.
In order to satisfy the “same parties or their privies” element, “a perfect identity of
the parties is not required, only a substantial identity of the interests that are adequately
presented and protected by the first litigant.” Adair, 470 Mich. at 122. It is unequivocal that
the parties in the case at bar, Myra and Robert Richardson and Wells Fargo, are identical
to the parties in the prior case. See Mot. Dkt. No. 11-8. Thus, Defendant has satisfied the
second element of the res judicata test.
The third res judicata element is satisfied, as the claims asserted in this case could
have been adjudicated in the original case. “Res judicata bars every claim arising from the
same transaction that the parties, exercising reasonable diligence, could have raised but
did not.” Adair, 470 Mich. at 123. This case is analogous to Smith v. Chase Manhattan
Mortg. Corp., Case No. 08-14308, 2009 U.S. Dist. LEXIS 45290 at *3 (E.D. Mich. May 29,
2009), where the court found plaintiff’s claims were subject to the doctrine of res judicata
because the original and subsequent claims “arise from the very same mortgage
transaction . . . any claim relating to the [p]laintiff’s grant of a mortgage on his real estate
to MERS, as nominee for Aegis Funding Corporation, was necessarily ripe for adjudication
at the time of the foreclosure of the mortgage obligations.”
Here, the two actions arise from the same loan and foreclosure transactions. There
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is nothing about the character of the claims brought in the subsequent complaint that leads
this Court to conclude that the claims could not have been brought at the time of the initial
action. Because the Plaintiffs could have brought all of the claims in this action at the time
the action was filed in the 52-2nd District Court in 2011, the third element of the res judicata
test is satisfied.
Thus, the doctrine of res judicata would apply to the present case at bar. The
Defendant has shown that it is likely to succeed on the merits, and meets the first prong of
the Golden preliminary injunction test.

II. Whether Defendant Will Suffer Irreparable Harm
Defendant argues that it has suffered and will continue to suffer irreparable harm
because Plaintiffs and their agents continuously harass and prevent contractors from
entering or repairing the Property. Thus, Defendant contends that the Property is being
diminished and compromised and Defendant is not able to market the property as a result.
Defendant also states that the delay of selling the Property, carrying costs for the Property,
and additional court and attorney’s fees, all support its contention that the harm it will suffer
is irreparable. See Mot., Dkt. No. 13, pg. 12.
Plaintiffs argue that they have not damaged the Property, and that Defendant’s
references to a broken lock box and a cable wire do not rise to the level of damage to the
Property that would constitute irreparable harm. See Resp. Dkt. No. 16, pg.16.
A party’s harm is “irreparable” when it cannot be adequately compensated by money
damages. See Merrill Lynch, Pierce, Fenner & Smith, Inc. V. E.F. Hutton & Co., 403
F.Supp. 336, 343 (E.D. Mich. 1975). “A finding of irreparable harm is the single most
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important prerequisite that the Court must examine when ruling upon a motion for a
preliminary injunction.” Wells Fargo & Co. v. WhenU.com, Inc., 293 F. Supp. 2d 734, 771
(E.D. Mich. 2003). To determine the harm facing the Defendant, the Court must assess
three factors: “(1) the substantiality of the injury alleged, (2) the likelihood of its occurrence,
and (3) the adequacy of the proof provided.” Ohio ex rel. Celebrezze v. Nuclear Regulatory
Comm’n, 812 F.2d 288, 290 (6th Cir. 1987). In establishing the harm, Defendant must
provide the Court with record evidence, such as facts and affidavits, from which the Court
can make findings. Id. at 290-91. “[A movant’s] harm is not irreparable if it is fully
compensable by money damages.” Basiccomputer Corp. v. Scott, 973 F.2d 507, 511 (6th
Cir. 1992).
Here, the substantiality of the injury alleged, Defendant’s reduced marketability of
the Property, is minimal at best. Other than general claims that the marketability of their
property will be lowered in the eyes of prospective purchasers, and that the Property was
being diminished and compromised, Plaintiffs presented no evidence that they will “suffer
any specific, let alone irreparable harm to their property.” Kernen v. Homestead, 232 Mic.
App. 503, 515 (1988). The loss of a source of income. . . does not constitute irreparable
harm.” See Kia Motors Am., Inc. v. Glassman Oldsmobile Saab Hyundai, Inc., Case No.
11-12090, 2012 U.S. Dist. LEXIS 65170, at *6 (E.D. Mich. May 9, 2012) (citing Overstreet
v. Lexington-Fayette Urban Cty. Gov't, 305 F.3d 566, 578-79 (6th Cir. 2002)). The Property
at issue is commercial real estate, and Defendant can recoup its losses through money
damages.
Defendant has not presented the Court with adequate proof demonstrating that the
harm it alleges it will suffer if the injunction is not issued will occur or that the harm is
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irreparable. Therefore, Defendant has not presented facts that it will suffer irreparable harm
if the injunction is not issued, pursuant to the second prong of the Golden preliminary
injunction test.

III. Whether Granting the Injunction Will Cause Substantial Harm to Others
In considering this factor the Court must look at who will be harmed if an injunction
is granted, and to what extent. Defendant argues that the Plaintiffs would not be harmed
if the injunction is issued because Plaintiffs have benefitted from residing in the Property
“mortgage, rent, tax [,] and insurance free for nearly four (4) years. See Mot. Dkt. No. 13,
pg. 12. Furthermore, Defendant maintains that Plaintiffs have no legal or equitable interest
in the Property. Id.
In this case, no facts have been presented to the Court that indicate the granting of
the injunction will cause harm to others. The Plaintiffs no longer reside on the Property, and
it appears that Defendant lawfully obtained possession of the premises. Therefore, the
Court concludes that the third prong of the Golden preliminary injunction test resides in
favor of the Defendant.

IV. The Impact of the Injunction on the Public Interest
Finally, the Court turns to the fourth prong of the Golden preliminary injunction test
– the public interest. Defendant argues that the injunction would put the public on notice
that they are accountable for the contracts that they enter into. The Court is not convinced
that the public would be best served if an injunction was granted. Therefore, the Court finds
that this prong does not weigh in favor of Defendant because facts have not been
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presented indicating that the injunction is in the best interest of the public at large.

V. Conclusion
In summary, after evaluating and applying the four factors considered in making a
determination on the merits of a preliminary injunction, the Court finds that the balancing
of the factors weigh in favor of denying the preliminary injunction. Although Defendant has
demonstrated a likelihood of success on the merits of its motion to dismiss and that issuing
the injunction would not likely cause harm to others, Defendant has not demonstrated that
it will suffer irreparable harm or that issuing the preliminary injunction is in the best interest
of the public. Therefore, Defendant’s Emergency Motion for Preliminary Injunction is
DENIED.
Accordingly, Defendant’s Emergency Motion for Preliminary Injunction [#13] is
DENIED.
SO ORDERED.
Dated: May 30, 2013

/s/Gershwin A Drain____
GERSHWIN A. DRAIN
United States District Court Judge

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