Fawcett et al v. Wells Fargo Bank, N.A. et al
Filing
14
ORDER granting 11 defendant's Motion for Judgment on the pleadings. Signed by District Judge George Caram Steeh. (MBea)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
GERALD FAWCETT and
JACKIE FAWCETT,
Plaintiffs,
CASE NO. 13-CV-10591
HONORABLE GEORGE CARAM STEEH
v.
WELLS FARGO BANK,
Defendant.
/
ORDER GRANTING DEFENDANT’S MOTION FOR
JUDGMENT ON THE PLEADINGS (Doc. 11)
This case stems from the foreclosure of plaintiffs’ home in Clinton Township,
Michigan. On September 20, 2012, plaintiffs, husband and wife Gerald and Jackie Fawcett,
filed a four-count complaint in Macomb County Circuit Court challenging the foreclosure
by advertisement of their home which took place on March 8, 2012. The Fawcetts allege
(1) wrongful foreclosure, (2) breach of contract, (3) fraud, and (4) quiet title, and they seek
a preliminary injunction or declaratory relief. Defendant Wells Fargo Bank (“Wells Fargo”)
removed the action to this court.1 Now before the court is Wells Fargo’s motion for
judgment on the pleadings, or in the alternative, for summary judgment. The Fawcetts
have not filed a response and the time period for doing so has expired. The deadline for
1
In their Complaint, plaintiffs named GMAC Mortgage (“GMAC”) as a defendant.
Defendant Wells Fargo removed on the basis of diversity jurisdiction and argued that
the court should not consider the citizenship of GMAC because it was fraudulently
joined. Plaintiffs did not object to the removal. Thus, the court deems GMAC to have
been dismissed from this lawsuit.
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the Fawcett’s response was November 5, 2013. On November 6, 2013, Wells Fargo filed
a notice of no response which has not prompted the Fawcetts to object to dismissal. Oral
argument had been scheduled for December 19, 2013, but given that the Fawcetts have
not responded to the motion, and based on the papers now before the court, the court finds
that oral argument would not significantly aid the decisional process and thus, pursuant to
Local Rule 7.1(e)(2), the matter shall be decided based on the papers now before the court.
This court is well aware of the Sixth Circuit’s admonition that a district court may not
grant a defendant’s motion for summary judgment or motion to dismiss on the sole basis
that a plaintiff has failed to respond. Carver v. Bunch, 946 F.2d 451, 455 (6th Cir. 1991).2
Even in the absence of a response, this court is required to examine the movant’s motion
to dismiss or for summary judgment to ensure that the movant has met its burden. Id. The
court shall undertake such an analysis here and for the reasons set forth below, Wells
Fargo’s motion for judgment on the pleadings shall be granted.
2
Moreover, a district court may only sua sponte dismiss a case for failure to
prosecute under Federal Rule of Civil Procedure 41(b) upon an analysis of four factors:
(1) whether the party’s failure is due to willfullness, bad faith, or fault; (2) whether the
adversary was prejudiced by the dismissed party’s conduct; (3) whether the dismissed
party was warned that failure to cooperate could lead to dismissal; or (4) whether less
drastic sanctions were imposed or considered before dismissal of the action. Schafer v.
City of Defiance Police Dep’t, 529 F.3d 731, 737 (6th Cir. 2008). Although no one factor
is dispositive, dismissal for failure to prosecute is warranted where there is a clear
record of delay or contumacious conduct on the part of the plaintiff. Bowles v. City of
Cleveland, 129 Fed. App’x 239, 242 (6th Cir. 2005). This court will not dismiss for the
Fawcett’s failure to prosecute but shall address Wells Fargo’s motion on the merits.
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I. Background
On August 10, 2003, the Fawcetts purchased their Clinton Township home subject
to a mortgage. At some point, the exact date is not stated in the Complaint, Gerald Fawcett
lost his job and requested a mortgage modification. The Fawcetts were unable to reach
a mortgage modification, and on March 8, 2012, the property was sold at a sheriff’s sale
for $72,000. Accordingly, the redemption period expired on September 8, 2012, but the
Fawcetts did not file their lawsuit until September 20, 2012. In their Complaint, the
Fawcetts allege the foreclosure was wrongful because Wells Fargo lacked a chain of title
with its predecessors sufficient to transfer rights under the mortgage, Wells Fargo delayed
the sale without adequate notice, and Wells Fargo misled them as to the actual date of the
sale.
II. Standard of Review
Wells Fargo seeks judgment on the pleadings pursuant to Federal Rule of Civil
Procedure 12(c). The Court of Appeals for the Sixth Circuit has stated that a district court
must consider a Rule 12(c) motion using the same standard of review as a Rule 12(b)(6)
motion. Roger Miller Music, Inc. v. Sony/ATV Publ’g, 477 F.3d 383, 389 (6th Cir. 2007).
In deciding a motion to dismiss under Rule 12(b)(6), the court must construe the complaint
in favor of the plaintiff, accept the factual allegations as true, and determine whether the
allegations present plausible claims. Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555-56
(2007). The pleading must provide "more than labels and conclusions, and a formulaic
recitation of the elements of a cause of action will not do." Id. at 555. Although the
complaint need not contain detailed factual allegations, its "factual allegations must be
enough to raise a right to relief above the speculative level[.]" Ass’n of Cleveland Fire
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Fighters v. City of Cleveland, 502 F.3d 545, 548 (6th Cir. 2007) (citing Twombly, 550 U.S.
at 555). The court should first identify any conclusory allegations and bare assertions that
are not entitled to an assumption of truth, then consider the factual allegations that are
entitled to a presumption of truth and determine if they plausibly suggest entitlement to
relief. Ashcroft v. Iqbal, 556 U.S. 662, 681 (2009). The well-pleaded facts must permit an
inference of more than a mere possibility of misconduct. Id. at 679.
Under Rule 12(d), if “matters outside the pleadings are presented to and not
excluded by the court, the motion must be treated as one for summary judgment.”
However, when a document is referred to in the pleadings and is integral to the claims, it
may be considered without converting a motion to dismiss into one for summary judgment.”
Commercial Money Center, Inc. v. Illinois Union Ins. Co., 508 F.3d 327, 335-36 (6th Cir.
2007). In addition, “[a] court may consider matters of public record in deciding a motion to
dismiss without converting the motion to one for summary judgment.” Id. at 336. In this
case, the court’s consideration of the Note, Mortgage, Assignment of Mortgage, and
Sherriff’s Deed, which were attached as exhibits to Wells Fargo’s motion for judgment on
the pleadings, does not convert the motion to a motion for summary judgment as these
documents are referred to in the Complaint and are integral to the Fawcetts’ claims.
Accordingly, the court shall consider Wells Fargo’s motion for judgment on the pleadings
pursuant to Rule 12(c) and shall not convert the motion into one for summary judgment.
III. Analysis
In its motion, Wells Fargo first argues the Fawcetts lack standing to assert an
interest in the property. In Michigan, once the redemption period following foreclosure of
property has expired, the former owner’s rights in and title to the property are extinguished.
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Piotrowski v. State Land Office Bd., 302 Mich. 179, 187 (1942). The former owner
therefore lacks standing to assert claims with respect to the property. Awad v. GMAC, No.
302692, 2012 WL 1415166, at *4 (Mich. App. April 24, 2012); Overton v. Mortgage Elect.
Reg. Sys., No. 284950, 2009 WL 1507342, at *1 (Mich. App. May 28, 2009).
Michigan law grants a mortgagor of residential property a statutory redemption
period of six months. M.C.L. § 600.3240(8). When the redemption period expires, the
purchaser of the sheriff’s deed is vested with “all the right, title, and interest” in the property.
M.C.L. § 600.3236. In this case, the sheriff’s sale occurred on March 8, 2012 and the
redemption period expired on September 8, 2012. At that time, the Fawcetts’ rights in the
property were extinguished. Once the redemption period has lapsed, in order to avoid
dismissal, plaintiffs must come forward with a “clear showing of fraud, or irregularity” in the
foreclosure proceedings. Conlin v. Mortgage Electronic Reg. Sys., Inc., 714 F.3d 355, 360
(6th Cir. 2013) (quoting Overton, 2009 WL 1507342, at *1).
The Fawcetts have failed to do so here. They allege that the foreclosure sale was
wrongful because Wells Fargo allegedly was not the note-holder or mortgage-holder under
MCL § 600.3204(1)(d) and that Wells Fargo allegedly failed to publically post notice of the
sale’s adjournment and told them that the sale would occur on one date when it actually
occurred on another date. The Michigan Supreme Court recently reiterated the rule that
the failure to comply with conditions set forth in Michigan’s foreclosure by advertisement
statute does not render foreclosures void, but merely voidable where actual prejudice is
shown. Kim v. JPMorgan Chase Bank, 493 Mich. 98, 115 (2012). To prove foreclosuredefect claims, “plaintiffs must show that they were prejudiced by defendant’s failure to
comply with MCL 600.3204. To demonstrate such prejudice, they must show that they
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would have been in a better position to preserve their interest in the property absent
defendant’s noncompliance with the statute.” Id. at 115-16.
The Fawcetts have failed to meet their burden here. First, as to their claim that
Wells Fargo was not the note-holder or mortgage-holder, those claims are belied by the
Note dated July 25, 2003, which was specially endorsed by the Loan Originator in favor of
Wells Fargo immediately after origination, Doc. 11, Ex. 1 at 3, and by the Assignment of
Mortgage executed on the same date. Id. at Ex. 3. Having failed to show that there was
any deficiency in the recording of Wells Fargo’s interest in the Note and Mortgage, the
Fawcetts’ claim that Wells Fargo failed to meet the requirements for foreclosure by
advertisement on this basis lacks merit and the question of actual prejudice is not even
implicated. Because Wells Fargo was properly identified in the chain of title, the Fawcetts
have not shown that Wells Fargo failed to meet the requirements of MCL § 600.3204(1)(d).3
Second, the court considers the Fawcett’s claim that the foreclosure was wrongful
because Wells Fargo allegedly failed to give them proper notice of the sheriff’s sale.
Specifically, the Fawcetts allege that Wells Fargo adjourned the foreclosure sale for more
than a week without posting the notice of adjournment in a public place as required by MCL
§ 600.3220, and that Wells Fargo allegedly misled them by stating the foreclosure sale
3
The Fawcetts also contend that the foreclosure must be set aside on the
grounds that Wells Fargo was not a holder in due course. Michigan’s foreclosure-byadvertisement statute, MCLA § 600.3204, does not require that a mortgagee be a
holder in due course of the note. E.g. Schare v. Mortgage Elect. Reg. Sys., Inc., No.
11-CV-11889, 2012 WL 2031958, *2 (E.D. Mich. June 6, 2012) (Rosen, J.)(collecting
cases). In any event, it appears that Wells Fargo is a holder in due course of the Note
as the Note was specially endorsed in favor of Wells Fargo, Doc. 11, Ex. 1 at 3.
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would take place on March 22, 2012, when it actually took place on March 8, 2012.
Complaint, ¶¶ 13, 18, 54. Wells Fargo does not dispute that it committed these errors in
contravention of the foreclosure statute, but argues that the Fawcetts have not alleged any
actual prejudice from these shortcomings which would require that the foreclosure be set
aside.
The Sixth Circuit has ruled that under Michigan law, a notice defect is only
actionable upon a showing of actual prejudice. Lessl v. CitiMortgage, Inc., 515 Fed. App’x
467, 469 (6th Cir. 2013). In Lessl, the Sixth Circuit found no actual prejudice arising from
defendant’s failure to post notice of the sheriff’s sale on plaintiff’s property as required
under MCLA § 600.3208, where the plaintiff had actual notice of the foreclosure in the form
of a letter. Id. at 469-70. The Sixth Circuit explained that no prejudice from inadequate
notice can be found and courts will uphold a completed foreclosure sale when “the
mortgagor would have been in no better position had notice been fully proper and the
mortgagor lost no potential opportunity to preserve some or any portion of his interest in
the property.” Id. at 469 (quoting Jackson Inv. Corp. v. Pittsfield Prods., Inc., 162 Mich.
App. 750, 413 N.W.2d 99, 101 (1987)). In this case, the Fawcett’s Complaint does not
allege that they were unaware of foreclosure proceedings. In fact, they admit they initiated
conversations to modify the mortgage. Complaint, ¶ 10. The Fawcetts’ Complaint does
not allege that they would have been in any better position to keep the property if Wells
Fargo had complied with the strict notice requirements of the foreclosure statute when it
adjourned the sheriff’s sale. Accordingly, the redemption period cannot be equitably tolled
based on their claim of defective notice, and the Fawcetts lack standing to challenge the
foreclosure proceedings.
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In sum, as the statutory redemption period has lapsed, and the Fawcetts have not
shown that there was not a proper assignment of the Note and Mortgage to Wells Fargo,
or shown any discernible prejudice with respect to the deficient notice alleged, Wells Fargo
is entitled to judgment on the pleadings.
IV. Conclusion
For the reasons stated above, Wells Fargo’s motion for judgment on the pleadings,
Doc. 11, hereby is GRANTED.
IT IS SO ORDERED.
Dated: November 26, 2013
s/George Caram Steeh
GEORGE CARAM STEEH
UNITED STATES DISTRICT JUDGE
CERTIFICATE OF SERVICE
Copies of this Order were served upon attorneys of record on
November 26, 2013, by electronic and/or ordinary mail.
s/Marcia Beauchemin
Deputy Clerk
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