Polidori v. Bank of America, N.A., Successors in Interest or Assigns
OPINION AND ORDER granting 5 Motion to Dismiss. Signed by District Judge Patrick J. Duggan. (MOre)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
DWAYNE E. POLIDORI,
Case No. 13-13074
Hon. Patrick J. Duggan
BANK OF AMERICA, N.A.,
Successors in Interest or Assigns,
OPINION AND ORDER GRANTING DEFENDANT’S
MOTION TO DISMISS
Plaintiff Dwayne Polidori commenced this action against Defendant Bank of
America, N.A. (“BANA”) in state court seeking to redress alleged improprieties in
the foreclosure of his home. After removing the action to this Court, Defendant
filed a motion seeking dismissal of Plaintiff’s Complaint pursuant to Federal Rule
of Civil Procedure 12(b)(6). Having determined that oral argument would not
significantly aid the decisional process, the Court dispensed with oral argument
pursuant to Eastern District of Michigan Local Rule 7.1(f)(2). For the reasons
stated herein, the Court grants Defendant’s Motion and dismisses this action with
FACTUAL AND PROCEDURAL BACKGROUND
The Note, Mortgage, and Eventual Foreclosure
On March 31, 2005, Plaintiff Dwayne Polidori accepted a $118,500 loan
from Quicken Loans, Inc. (“Quicken”), and, in exchange, executed a promissory
note secured by a mortgage on real property located at 721 Champaign, Lincoln
Park, Michigan (the “Property”). (Compl. ¶ 1; Note, Def.’s Mot. Ex. 1; Mortgage,
Def.’s Mot. Ex. 2.) The mortgage, executed in favor of Mortgage Electronic
Registration Systems, Inc. (“MERS”) “solely as nominee for [Quicken (the
Lender)] and [Quicken’s] successors and assigns[,]” (Mortgage, Def.’s Mot. Ex.
2), was recorded with the Wayne County Register of Deeds on April 11, 2005, at
Liber 41443, page 1201. On April 6, 2005, soon after completion of the mortgage
transaction, Quicken transferred the loan servicing rights to Countrywide Home
Loans, Inc. (Letter, Def.’s Mot. Ex. 3.) On September 21, 2011, MERS assigned
the mortgage to BANA, successor by merger to BAC Home Loans Servicing, LP,
formerly known as Countrywide Home Loans Services, LP. (Assignment, Def.’s
Mot. Ex. 4.) This assignment was recorded. (Id.)
Sometime after obtaining the loan and executing the mortgage, “Plaintiff
contacted [BANA] to advise that he was facing financial hardship” and to inquire
about the possibility of obtaining a loan modification. (Compl. ¶ 8.) BANA’s
representative informed Plaintiff that in order to modify the loan, he would have to
stop making his monthly mortgage payments. (Id. at ¶ 9.) The representative did
not, however, explain that failure to remit these monthly payments would cause
Plaintiff to default under the terms of the loan agreement. (Id. at ¶ 10.) While
“uneasy with the idea of not making his regularly scheduled payments, [Plaintiff]
acquiesced[ because h]e was led to believe that as long as he followed [BANA’s]
directions, he would be helped.” (Id. at ¶ 11.)
Once Plaintiff ceased making his payments, BANA mailed Plaintiff a loan
modification package. (Id. at ¶ 12.) Plaintiff submitted all paperwork requested by
BANA and even submitted some documents several times. (Id. at ¶ 13.) Despite
his compliance with and reliance on BANA’s instructions, BANA did not approve
Plaintiff for a loan modification. (Id. at ¶ 14.) Instead, BANA initiated foreclosure
by advertisement proceedings pursuant to Michigan law.
BANA, acting through its agent, the law firm of Trott & Trott, published a
notice of foreclosure in the Detroit Legal News for four consecutive weeks on
October 19, October 26, November 2, and November 9 and posted notice of the
foreclosure sale on Plaintiff’s door on October 20, 2012. (Aff. of Publication
attach. Sheriff’s Deed, Def.’s Mot. Ex. 5.) A sheriff’s sale took place on
December 20, 2012 and BANA purchased the Property for $150,501.83.1
(Sheriff’s Deed, Def.’s Mot. Ex. 5.) The statutory redemption period expired on
June 20, 2013, with Plaintiff failing to redeem.
BANA transferred the Property to Federal National Mortgage Association
(“Fannie Mae”) by way of a quitclaim deed on January 9, 2013. (Quitclaim Deed,
Def.’s Mot. Ex. 6.)
On June 18, 2013, two days prior to the expiration of the statutory
redemption period, Plaintiff initiated this action by filing a complaint in the Circuit
Court for Wayne County in Wayne County, Michigan.2 (Compl. attach. Notice of
Removal, Ex. 1 (hereinafter “Compl.”).) BANA timely removed the action to this
Court on the basis of federal question and diversity jurisdiction on July 17, 2013.
On July 23, 2013, the parties stipulated to extend BANA’s time to file an answer or
otherwise respond to Plaintiff’s Complaint until August 16, 2013 and on that date,
BANA filed “Defendant’s Motion to Dismiss Complaint” pursuant to Federal Rule
of Civil Procedure 12(b)(6). Defendant’s Motion, which is presently before the
Court, seeks dismissal of each of the following counts contained in Plaintiff’s
Complaint: (1) Count I – Fraudulent Misrepresentation; (2) Count II – Estoppel;
(3) Count III – Negligence; (4) Count IV – “Violation of the Fair Debt Collection
Practices Act (State)”; and (5) Count V – “Violation of the Fair Debt Collection
Practices Act (Federal).”
STANDARD OF REVIEW
A motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6)
allows the Court to make an assessment as to whether a plaintiff’s pleadings have
stated a claim upon which relief may be granted. Fed. R. Civ. P. 12(b)(6). Under
Case No. 13-007975-CH.
the Supreme Court's articulation of the Rule 12(b)(6) standard in Bell Atlantic
Corporation v. Twombly, 550 U.S. 544, 555-56, 570, 127 S. Ct. 1955, 1964-65,
1974 (2007), the Court must construe the complaint in favor of the plaintiff and
determine whether plaintiff's factual allegations present claims plausible on their
face. This standard requires a claimant to put forth “enough fact[s] to raise a
reasonable expectation that discovery will reveal evidence of” the requisite
elements of their claims. Id. at 557, 127 S. Ct. at 1965. 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.” Ass'n of Cleveland
Fire Fighters v. City of Cleveland, 502 F.3d 545, 548 (6th Cir. 2007) (citing
Twombly, 550 U.S. at 555, 127 S. Ct. at 1965) (internal citations omitted); see also
Fed. R. Civ. P. 8(a)(2) (“A pleading that states a claim for relief must contain . . . a
short and plain statement of the claim showing that the pleader is entitled to
In determining whether a plaintiff has set forth a “claim to relief that is
plausible on its face,” Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S. Ct. 1937, 1949
(2009) (quoting Twombly, 550 U.S. at 570, 127 S. Ct. at 1974), courts must accept
the factual allegations in the complaint as true, Twombly, 550 U.S. at 556, 127 S.
Ct. at 1965. This presumption, however, does not apply to legal conclusions.
Iqbal, 556 U.S. at 678, 129 S. Ct. at 1949. Therefore, to survive a motion to
dismiss, a 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.” Ass'n of Cleveland Fire Fighters, 502 F.3d at 548 (quoting Twombly, 550
U.S. at 555, 127 S. Ct. at 1964-65) (internal citations and quotations omitted).
Ultimately, “[d]etermining whether a complaint states a plausible claim for
relief will . . . be a context-specific task that requires the reviewing court to draw
on its judicial experience and common sense. But where the well-pleaded facts do
not permit the court to infer more than the mere possibility of [a legal
transgression], the complaint has alleged – but it has not ‘show[n]’ – ‘that the
pleader is entitled to relief.’” Iqbal, 556 U.S. at 679, 129 S. Ct. at 1950 (quoting
Fed. R. Civ. P. 8(a)(2)) (internal citations omitted). In conducting its analysis, the
Court may consider the complaint and any exhibits attached thereto, public
records, items appearing in the record of the case, and exhibits attached to
defendant’s motion to dismiss so long as they are referred to in the complaint and
are central to the claims contained therein. Bassett v. NCAA, 528 F.3d 426, 430
(6th Cir. 2008) (citing Amini v. Oberlin Coll., 259 F.3d 493, 502 (6th Cir. 2001)).
In the case at bar, the Court has considered documents, all of which are
public, relating to the mortgage, the loan modification process, and the foreclosure.
General Principles Pertaining to Michigan’s Foreclosure by
Foreclosures by advertisement, such as the foreclosure at issue in this case,
as well as the rights of both the mortgagor and mortgagee after a foreclosure sale
has occurred, are governed by Michigan statutory law. See, e.g., Senters v. Ottawa
Sav. Bank, F.S.B., 443 Mich. 45, 50, 503 N.W.2d 639, 641 (1993); Conlin v.
Mortgage Elec. Registration Sys., Inc., 714 F.3d 355, 359 (6th Cir. 2013) (applying
Michigan law) (citation omitted).
Pursuant to Michigan law, a mortgagor has six months from the date of the
sheriff’s sale to redeem foreclosed property. Mich. Comp. Laws § 600.3240(8).
Significant consequences flow from a mortgagor’s failure to redeem prior to the
expiration of the statutory redemption period: the mortgagor’s “right, title, and
interest in and to the property” are extinguished, Piotrowski v. State Land Office
Board, 302 Mich. 179, 4 N.W.2d 514, 517 (1942), and the deed issued at the
sheriff’s sale “become[s] operative, and  vest[s] in the grantee named therein . . .
all the right, title, and interest  the mortgagor had[,]” Michigan Compiled Laws §
600.3236. This rule of law – holding that absolute title vests in the purchaser at the
foreclosure sale upon expiration of the redemption period – has been applied
consistently by state and federal courts alike to bar former owners from making
any claims with respect to a foreclosed property after the statutory redemption
period has lapsed.
There is, however, one 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 a plaintiff-mortgagor
makes “a clear showing of fraud, or irregularity[.]” 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. 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). If a
plaintiff seeking to set aside the sheriff’s sale demonstrates fraud or irregularity in
connection with the statutory foreclosure procedure, the result is “a foreclosure that
is voidable, not void ab initio.” Kim v. JPMorgan Chase Bank, N.A., 493 Mich.
98, 115, 825 N.W.2d 329, 337 (2012). In order “to set aside the foreclosure sale,
plaintiffs must show that they were prejudiced by defendant’s failure to comply”
with Michigan’s foreclosure by advertisement statute. Id. “To demonstrate such
prejudice, [plaintiffs] must show that they 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, 825 N.W.2d at 337 (footnote omitted).
Although the redemption period has expired in the instant case, Plaintiff asks
the Court to rescind the sheriff’s sale. The posture of this case therefore requires
that the Court assess whether Plaintiff’s Complaint states a claim upon which relief
may be granted within the fraud or irregularity framework outlined above. In other
words, the Court must determine whether, under Michigan law, the foreclosure
sale is voidable, or could be set aside, on the facts alleged. See Savedoff v. Access
Group, Inc., 524 F.3d 754, 762 (6th Cir. 2008) (observing that the Erie doctrine
requires federal courts hearing state law claims to apply the decisions of the state’s
Setting Aside the Foreclosure Sale
Although Plaintiff’s Complaint does not specify the relief sought for each
cause of action, the Court construes the first three counts of Plaintiff’s Complaint
as seeking rescission of the sheriff’s sale. The Court analyzes each count seriatim.
Count I – Fraudulent Misrepresentation
In Count I, Plaintiff asserts a claim of fraudulent misrepresentation based on
BANA’s representation that Plaintiff was eligible for a loan modification. (Compl.
¶ 17; Pl.’s Resp. 6.) Defendant argues that this claim is subject to dismissal for
three reasons: (1) the allegations in the Complaint lack the requisite specificity to
withstand a motion to dismiss; (2) a future promise cannot support a claim for
fraudulent misrepresentation under Michigan law; and (3) the claim is barred by
Michigan’s statute of frauds. (Def.’s Br. 10.) Because the Court agrees with
Defendant’s first argument, an argument which is dispositive, the Court does not
address Defendant’s remaining contentions.
In order to state a prima facie claim of fraud under Michigan law, “a
plaintiff must establish that: (1) the defendant made a material representation; (2)
the representation was false; (3) when the representation was made, the defendant
knew that it was false, or made it recklessly, without knowledge of its truth, and as
a positive assertion; (4) the defendant made it with the intention that the plaintiff
should act upon it; (5) the plaintiff acted in reliance upon the representation; and
(6) the plaintiff thereby suffered injury.” Roberts v. Saffell, 280 Mich. App. 397,
403, 760 N.W.2d 715, 719 (2008).
Beyond containing each of the aforementioned elements, claims of
fraudulent conduct must adhere to the heightened pleading requirements of Federal
Rule of Civil Procedure 9(b), which provides that “[i]n alleging fraud or mistake, a
party must state with particularity the circumstances constituting fraud or mistake.”
To satisfy Rule 9(b)’s particularity requirement, a complaint must “(1) specify the
statements that the plaintiff contends were fraudulent, (2) identify the speaker, (3)
state where and when the statements were made, and (4) explain why the
statements were fraudulent.” Frank v. Dana Corp., 547 F.3d 564, 569-70 (6th Cir.
2008) (internal quotation marks and citation omitted); see also Sanderson v. HCAThe Healthcare Co., 447 F.3d 873, 877 (6th Cir. 2006) (“As a sister circuit has
phrased it,” Rule 9(b) requires a plaintiff to “specify the ‘who, what, when, where,
and how’ of the alleged fraud.”) (quoting United States ex rel. Thompson v.
Columbia/HCA Healthcare Corp., 125 F.3d 899, 903 (5th Cir. 1997)).
Although Plaintiff’s Complaint does contain language referencing each
element of a prima facie claim of fraud, it is otherwise threadbare. The Complaint
contains little more than conclusory allegations virtually unsupported by the
factual enhancement necessary to put BANA on notice of the claims asserted
against it. For example, paragraph 17 provides: “The Bank made a representation
to Plaintiff that he was eligible for a loan modification. This was a false
representation.” (Compl. ¶ 17; see also id. at ¶ 20 (“The representation was made
with the intention that Plaintiff would act on it.”).) Perhaps more fatal to his ability
to withstand Defendant’s Motion is that Plaintiff’s allegations of fraud do not
pertain to the foreclosure procedure; rather, the allegations apply only to the loan
modification process. See, e.g., Reid, 270 Mich. at 267, 258 N.W. at 631. Even if
fraudulent conduct in the loan modification process sufficed, Plaintiff’s Complaint
still fails to state a claim as Plaintiff has not alleged actionable prejudice as
required by Kim. The Complaint alleges that “Plaintiff . . . suffered damages as a
result” of defaulting on his loan obligations but the Complaint does not “show
that [he] would have been in a better position to preserve [his] interest in the
[P]roperty.” (Compl. ¶¶ 23, 22); Kim, 493 Mich. at 115-16, 825 N.W.2d at 337.
Having determined that Plaintiff’s Complaint falls short of the notice
pleading requirements embodied in Rule 8, the Court agrees with Defendant that
“[i]t necessarily follows that the allegations . . . fail to satisfy Rule 9(b)’s
heightened pleading requirements.” (Def.’s Br. 12.) The Complaint fails provide
the “who, what, when, where, and how” of the alleged fraud and Plaintiff’s
protestations to the contrary lack merit. By way of illustration, Plaintiff contends
that BANA “knew or should have known” that Plaintiff was not eligible for a loan
modification despite informing him otherwise. (Compl. ¶ 17.) Plaintiff suggests
that BANA should have known because “[a] layperson could have made this
determination at the outset without making Plaintiff endure months of financial and
emotional turmoil[.]” (Id.) What Plaintiff fails to explain, however, is how
BANA’s representative could have made the eligibility determination without the
benefit of reviewing Plaintiff’s finances. Additionally, Plaintiff fails to provide
when the representation regarding his eligibility was made or who made it.
Count I of Plaintiff’s Complaint falls woefully short of stating his fraud
claims with particularity. The Complaint merely contains a formulaic recitation of
the elements of fraud under Michigan law, without further facts to substantiate the
claims. As such, the Court dismisses Count I with prejudice.
Count II – Promissory Estoppel
In Count II, Plaintiff seeks to state a claim for promissory estoppel. (Resp. 8
(clarifying that Count II is for promissory, not equitable, estoppel).) While not
entirely clear, it appears as though Plaintiff seeks to invoke the doctrine of
promissory estoppel, a doctrine sounding in contract law as a means of
compensating a party who has partly performed his or her end of the bargain, as a
means of rescinding the sheriff’s sale. Defendant argues that the Michigan statute
of frauds bars this count as Michigan law applies this statute to “preclude all
actions for . . . promises and commitments, including actions for promissory
estoppel.” Crown Tech. Park v. D&N Bank, F.S.B., 242 Mich. App. 538, 550, 619
N.W.2d 66, 72 (2000) (emphasis in original).
In order to prevail under a promissory estoppel theory under Michigan law, a
plaintiff must establish: (1) a promise; (2) that the promisor reasonably should
have expected to induce action of a definite and substantial character on the part of
the promisee; (3) that the promise produced an actual reliance or forbearance; and
(4) that the claimed reliance or forbearance occurred under circumstances requiring
an enforcement of the promise in order to avoid an injustice. Zaremba Equip., Inc.
v. Harco Nat'l Ins. Co., 280 Mich. App. 16, 41, 761 N.W.2d 151, 166 (2008). The
gravamen of Plaintiff’s promissory estoppel count is that BANA promised Plaintiff
that his loan would be modified if he ceased making his mortgage payments and
that Plaintiff relied on this assurance to his detriment. (Compl. ¶¶ 25-26
(“[BANA], by its representations, admissions and silence, intentionally or
negligently induced Plaintiff to believe that a loan modification was available[ and
a]s a result[,] . . . Plaintiff was induced to believe that he could save his Home.”).)
These assurances, instructions, and promises were verbal.
As Defendant argues, Michigan’s statute of frauds precludes Plaintiff’s
promissory estoppel claim. (Def.’s Resp. 15.) Hornbook contract law teaches that
certain agreements must be in writing to be enforceable and that a state’s statute of
frauds supplies the types of agreements that fall within this category. Michigan’s
statute of frauds expressly provides that “an action shall not be brought against a
financial institution to enforce [a promise or commitment to waive a provision of a
loan] unless the promise or commitment is in writing and signed with an
authorized signature by the financial institution[.]” Mich. Comp. Laws §
566.132(2). Courts interpreting this statute have deemed its language
unambiguous, holding that individuals are “precluded from bringing a claim--no
matter its label--against a financial institution to enforce the terms of an oral
promise to waive a loan provision.” Crown Tech., 242 Mich. App. at 550, 619
N.W.2d at 72 (noting that the statute “specifically bars ‘an action[,]’ and
interpreting the legislature’s failure to specify what type of “‘action’ . . . as an
unqualified and broad ban”). This ban applies to claims of promissory estoppel.
Id. (“[I]t would make absolutely no sense to conclude that the Legislature enacted
a new section of the statute of frauds specifically addressing oral agreements by
financial institutions but, nevertheless, the Legislature still intended to allow
promissory estoppel to exist as a cause of action for those same oral agreements.”).
Noticeably absent from Plaintiff’s Complaint is any reference to a signed
writing evidencing the purported promise to modify Plaintiff’s loan. This is fatal
to his claim as Michigan Compiled Laws § 566.132(2) clearly and unambiguously
imposes an evidentiary burden for any claims brought to enforce a promise or
agreement by a financial institution. While Count II may be a “creative attempt
at skirting [this] evidentiary burden[,] . . . Plaintiff may not circumvent the statute
of frauds by framing his claim in an inventive way.” Vittands v. Bank of Am., N.A.,
No. 11-cv-15241, 2012 U.S. Dist. LEXIS 67651, at *11-12 (E.D. Mich. May 15,
2012) (Rosen, C.J.) (internal citations omitted); Saad v. Wayne Cnty. Register of
Deeds, No. 11-15590, 2013 U.S. Dist. LEXIS 95218, at *20-21 (E.D. Mich. July 9,
2013) (Cohn, J.) (granting motion to dismiss claims based on an alleged promise of
a loan modification as barred by the statute of frauds and collecting cases).
Having failed to plead facts or present evidence tending to show that BANA
signed a loan modification document embodying the oral promise alleged,
Plaintiff’s promissory estoppel count necessarily fails.
Count III – Negligence
Count III is related to Counts I and II insofar as it rests on the oral
representations BANA made to Plaintiff with regard to his eligibility for a loan
modification. Plaintiff asserts that BANA was negligent because it breached the
duty it owed to Plaintiff “to conduct a reasonable inquiry as to whether he would
be able to qualify for a loan modification.” (Compl. ¶ 32.) Defendant argues that
this claim is subject to dismissal and the Court agrees.
To state a prima facie case of negligence in Michigan, a plaintiff must allege
four elements: duty, breach, causation, and damages. Lelito v. Monroe, 273 Mich.
App. 416, 418-19, 729 N.W.2d 564, 566 (2006). Plaintiff cannot establish that
BANA owed him a duty. See Fultz v. Union-Commerce Assoc., 470 Mich. 460,
463, 683 N.W.2d 587, 590 (2004) (whether a duty exists is a question of law).
Michigan Supreme Court precedent holds that in “tort actions based on a
contract,” such as the case here, “courts should use a ‘separate and distinct’ mode
of analysis.” Id. at 467, 683 N.W.2d at 592. In this analysis, “the threshold
question is whether the defendant owed a duty to the plaintiff that is separate and
distinct from the defendant’s contractual obligations. If no independent duty
exists, no tort action based on a contract will lie.” Id.; see also Ulrich v. Fed’l
Land Bank of St. Paul, 192 Mich. App. 194, 198, 480 N.W.2d 910, 912 (1991) (per
curiam) (“It has often been stated that the sometimes hazy distinction between
contract and tort actions is made by applying the following rule: if a relation exists
that would give rise to a legal duty without enforcing the contract promise itself,
the tort action will lie, otherwise it will not.”) (citations omitted).
Here, Plaintiff has not alleged that Defendant owed him a duty separate and
distinct from the contractual obligations. While Plaintiff does allege that BANA
owed him a duty “to conduct a reasonable inquiry as to whether he would be able
to qualify for a loan modification[,]” (Compl. ¶ 32), no such duty exists under
Michigan law. Ulrich, 192 Mich. App. at 199-200, 480 N.W.2d at 912 (holding
that, under the circumstances presented,3 a lending institution did not owe a
In Ulrich, the Court explained that the defendant-lender did not owe the
plaintiff-borrowers a duty of care with respect to determining loan eligibility
because it had “already determined that no fiduciary duties existed between the
parties on the facts alleged by plaintiffs.” Ulrich v. Fed’l Land Bank of St. Paul,
192 Mich. App. 194, 199, 480 N.W.2d 910, 913 (1991). Having found no
fiduciary duties, the Court “decline[d] to create what is essentially a backdoor
defense to the enforcement of plaintiffs’ obligations by allowing plaintiffs to later
claim that [defendant] acted negligently[.]” Id.
The Court finds Ulrich instructive as Plaintiff has not alleged facts or
provided legal authority to overcome the general rule in Michigan that “there is
generally no fiduciary relationship between a mortgagor and a mortgagee.” Coyer
v. HSBC Mortgage Servs., Inc., No. 11-2378, slip op. at *4 (6th Cir. Nov. 13,
2012) (per curiam) (applying Michigan law) (citing Sallee v. Fort Knox Nat'l Bank,
N.A. (In re Sallee), 286 F.3d 878, 893 (6th Cir. 2002)).
borrower a duty of care with respect to determining the borrower’s eligibility for a
loan). Because no such duty exists, it follows that any purported duty must arise
pursuant to the note and mortgage. Without any “independent duty[,]” that is a
duty divorced from the governing contract, Plaintiff has not stated a claim for
negligence. Fultz, 470 Mich. at 467, 683 N.W.2d at 592; see also id. at 463, 683
N.W.2d at 590 (“It is axiomatic that there can be no tort liability unless defendants
owed a duty to plaintiff.”) (citation omitted).
Plaintiff’s Claims under the Michigan Occupational Code and the
Federal Fair Debt Collection Practices Act (“FDCPA”)
The Court addresses Plaintiff’s remaining claims together as they rely on the
same facts and both involve debt collection practices. In Count IV, Plaintiff
alleges that BANA violated the Michigan Occupational Code, specifically
Michigan Compiled Laws § 445.252(e), by mailing a statement (a “debt validation
letter”) to Plaintiff regarding the validity of his debt while Plaintiff was attempting
to obtain a loan modification. (Pl.’s Resp. 12; see also Compl. ¶ 40 (“Defendant
intentionally mailed to Plaintiff a statement specifying that unless  Plaintiff,
within 30 days after receipt . . . , disputes the validity of the debt, or a portion of
the debt, the debt will be assumed to be valid.”).) In Count V, Plaintiff alleges that
the timing of the aforementioned letter violated the FDCPA, 15 U.S.C. § 1692e,
which prohibits debt collectors from employing “false, deceptive, or misleading
representation[s] or means in connection with the collection of any debt.” While
not phrased as such, the Court believes that Plaintiff is endeavoring to argue that
the portion of the debt caused by his reliance on BANA’s instruction to cease
remitting his mortgage payments in order to obtain a loan modification is invalid
but that Plaintiff would not contest the validity of that debt while simultaneously
seeking to modify his loan. (See Pl.’s Resp. 12.) According to this theory, BANA,
knowing that Plaintiff would not challenge the debt caused by the default,
intentionally and deceptively sent the letter when it did so that the debt would be
deemed valid. (Id.)
Defendant contends that Count IV must be dismissed because BANA is not
a “collection agency” as defined in the Michigan Occupational Code. (Def.’s Br.
19.) Michigan Compiled Laws § 339.901(b) defines a collection agency as “a
person directly or indirectly engaged in soliciting a claim for collection or
collecting or attempting to collect a claim owed or due or asserted to be owed or
due another . . . .” Specifically excluded from this definition are those “whose
collection activities are confined and are directly related to the operation of a
business other than that of a collection agency such as . . . [a] state or nationally
chartered bank when collecting its own claims.” Mich. Comp. Laws §
At the time BANA sent Plaintiff the debt validation letter, the underlying
debt was owed to BANA. BANA received the mortgage by way of an assignment
from MERS on September 21, 2011. (Assignment, Def.’s Mot. Ex. 4.)
Foreclosure by advertisement proceedings began in October 2012, the sheriff’s sale
occurred on December 20, 2012, (Sheriff’s Deed, Def.’s Mot. Ex. 5), and BANA
quitclaimed the Property to Fannie Mae on January 9, 2013, (Quitclaim Deed,
Def.’s Mot. Ex. 6). As these facts demonstrate, BANA cannot be deemed a
collection agency subject to regulation under the Michigan Occupational Code as it
owned the debt and was therefore not attempting to collect debt owed to another.
This leaves Plaintiff’s FDCPA claim. BANA argues that Count V fails on
the merits because BANA was not acting as a “debt collector” as defined by the
FDCPA, but rather in the course of its business as the entity to which the debt was
owed.4 Earlier this year, the United States Court of Appeals for the Sixth Circuit
held that a mortgage foreclosure is “debt collection” subject to the FDCPA.
Glazer v. Chase Home Finance LLC, 704 F.3d 453, 455 (6th Cir. 2013). This does
not, however, mean that any entity involved in a mortgage foreclosure is a debt
collector. As defined in the FDCPA, “[t]he term ‘debt collector’ means any person
BANA also argues that it does not qualify as a debt collector because it
falls within the provision of 15 U.S.C. § 1692a(6)(F)(iii), which exempts “any
person collecting or attempting to collect any debt owed or due or asserted to be
owed or due to another to the extent such activity . . . concerns a debt which was
not in default at the time it was obtained by such person.” This argument appears
to relate to the servicing of the loan. The Sixth Circuit has held that this exception
applies to mortgage servicers, regardless of whether they own the debt obligation
they service. Glazer v. Chase Home Finance LLC, 704 F.3d 453, 457 (6th Cir.
2013). However, having determined that BANA was a creditor and therefore not
subject to the FDCPA, the Court need not address this argument.
. . . in any business the principal purpose of which is the collection of any debts, or
who regularly collects or attempts to collect, directly or indirectly, debts owed or
due or asserted to be owed or due another.” 15 U.S.C. § 1692a(6). A bank that
owns the debt to be collected is “a creditor[,] . . . not a debt collector for the
purposes of the FDCPA[,] and creditors are not subject to the FDCPA when
collecting their accounts.” Montgomery v. Huntington Bank, 346 F.3d 693, 699
(6th Cir. 2003) (quotation and additional citations omitted).
Plaintiff’s own allegations support a finding that BANA was the owner of
the mortgage at the time the allegedly deceptive letter was sent (for example,
Plaintiff alleges that BANA sent the letter while Plaintiff was attempting to modify
his loan with BANA). Such allegations plainly defeat any attempt to hold BANA
liable for violating the FDCPA. Accordingly, the Court dismisses Counts IV and
V with prejudice.
In his prayer for relief, Plaintiff seeks to set aside the sheriff’s sale, an order
staying any and all proceedings related to the Property until the matter has been
resolved, an order rescinding the mortgage loan or, alternatively, an order granting
reformation of the loan, money damages, and costs and attorney’s fees. Plaintiff
has alleged neither facts nor a legal basis supporting application of any of these
remedies. Because Plaintiff has failed to state a claim on any of the five counts
contained in his Complaint, Plaintiff is not entitled to any relief. 5
CONCLUSION AND ORDER
For the reasons set forth above, the Court concludes that Plaintiff’s
Complaint fails to state a claim for relief on any of the counts included therein.
IT IS ORDERED THAT, Defendants’ Motion to Dismiss is GRANTED
and Plaintiff’s Complaint is DISMISSED WITH PREJUDICE.
Date: October 15, 2013
s/PATRICK J. DUGGAN
UNITED STATES DISTRICT JUDGE
Renette Jackson, Esq.
Joshua C. Castmore, Esq.
Jong-Ju Chang, Esq.
T. L. Summerville, Esq.
This conclusion precludes the necessity of addressing BANA’s argument
that the doctrine of unclean hands bars Plaintiff from obtaining equitable relief.
(Def.’s Br. 24-25.)
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