Elezaj et al v. U.S. Bank, National Association, Successor Trustee to Bank of America, N.A., As Successor Trustee To Lasalle Bank National Association, As Trustee For First Franklin Mortgage Loan Trust Mortgage Loan

Filing 17

OPINION AND ORDER Granting Defendant's 9 Motion for Judgment on the Pleadings. Signed by District Judge Matthew F. Leitman. (Monda, H)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
MARIA ELEZAJ, et al.,
Plaintiffs,

Case No. 14-cv-10485
Hon. Matthew F. Leitman

v.
U.S. BANK, NATIONAL ASSOCIATION,
SUCCESSOR TRUSTEE TO BANK OF
AMERICA, N.A., AS SUCCESSOR
TRUSTEE TO LASALLE BANK NATIONAL
ASSOCIATION, AS TRUSTEE FOR FIRST
FRANKLIN MORTGAGE LOAN TRUST
MORTGAGE LOAN ASSET-BACKED
CERTIFICATES, SERIES 2007-FF1,
Defendant.
_________________________________/
OPINION AND ORDER GRANTING DEFENDANT’S MOTION FOR
JUDGMENT ON THE PLEADINGS (ECF #9)
In this action, Plaintiffs Maria and Mario Elezaj (the “Elezajs”) contest the
foreclosure of their real property in Leonard, Michigan. Defendant U.S. Bank,
National Association, Successor Trustee to Bank of America, N.A., as Successor
Trustee to LaSalle Bank, National Association, as Trustee for First Franklin
Mortgage Loan Trust Mortgage Loan Asset-Backed Certificates, Series 2007-FF1
(“U.S. Bank”), has now moved for judgment on the pleadings. (See ECF #9.) For
the reasons explained below, the Court GRANTS U.S. Bank’s Motion.

FACTUAL BACKGROUND
On or about November 10, 2006, the Elezajs obtained a $410,000 loan from
First Franklin, a Division of National City Bank (“First Franklin”), to purchase real
property located at 120 Howard Lake Road in Leonard, Michigan (the “Property”).
(See the “Note,” ECF #1-2 at 15-19, Pg. ID 25-29.) As security for the loan, the
Elezajs granted a mortgage against the Property to Mortgage Electronic
Registration Systems, Inc. (“MERS”), as nominee for First Franklin. (See the
“Mortgage,” ECF #1-2 at 21-36, Pg. ID 356-46.) The Mortgage was recorded with
the Oakland County Register of Deeds (the “Register of Deeds”) on January 11,
2007. (See the “Recorded Mortgage,” ECF #9-3 at 2, Pg. ID 356.)
On or about December 12, 2008, MERS assigned the Mortgage to LaSalle
Bank, National Association (“LaSalle”). (See the “Assignment,” ECF #9-4 at 2,
Pg. ID 376.)1 The Assignment was recorded with the Register of Deeds on January
5, 2009. (Id.)
The Elezajs allege that they contacted Bank of America, N.A. (“Bank of
America”), the successor trustee to LaSalle, in January 2011 regarding a possible
modification to the Mortgage. (See Compl. at ¶21.) Bank of America informed
the Elezajs that “they would not be eligible for a loan modification if they were

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Specifically, MERS assigned the Mortgage to LaSalle “as Trustee for First
Franklin Mortgage Loan Trust, Mortgage Loan Asset-Backed Certificates, Series
2007-FF1.” (Id.)

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current” on the Mortgage. (Id.) The Elezajs ultimately defaulted on the Mortgage,
and Bank of America initiated foreclosure by advertisement proceedings. (Id. at
¶22.)

Thereafter, the Elezajs again contacted Bank of America regarding a

potential loan modification, and Bank of America adjourned the foreclosure sale
“so that [the Elezajs] could compile the financial information necessary” to apply
for a loan modification (the “Adjournment”). (Id. at ¶23.)
The Elezajs assert that in September 2012 Bank of America “verbally
informed [them] in a phone call” that they had been approved for a loan
modification. (Id. at ¶25.) However, Bank of America later informed the Elezajs
that it could not modify the Mortgage because the Elezajs “had not disclosed the
tax returns for the family automotive collision business.” (Id. at ¶26.) Thus, Bank
of America proceeded with a foreclosure-by-advertisement.
U.S. Bank later succeeded to Bank of America’s interest as trustee for the
Mortgage. (See the “Sheriff’s Deed,” ECF #1-2 at 42, Pg. ID 52.) U.S. Bank
ultimately purchased the Property at a sheriff’s sale on January 15, 2013 (the
“Sheriff’s Sale”). (See id.)
PROCEDURAL HISTORY AND THE ELEZAJS’ CAUSES OF ACTION
On January 8, 2014 – approximately one week before the expiration of the
Elezajs’ right to redeem the Property pursuant to M.C.L. § 600.3240 – the Elezajs
filed a “Verified Complaint for Conversion of Non-Judicial Foreclosure to Judicial

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Foreclosure Before th[e] Expiration of the Redemption Period Pursuant to M.C.L.
§ 600.3205c(8), Injunctive, Declaratory and Other Relief and Jury Demand” (the
“Complaint”) against U.S. Bank in Oakland County Circuit Court. (See Compl.,
ECF #1-2 at 2, Pg. ID 12.) The Complaint contains four causes of action:
 In Count I (“Injunctive Relief”), the Elezajs “seek to convert the nonjudicial foreclosure to a judicial foreclosure before expiration of their
redemption period on January 15, 2014, pursuant to M.C.L. §
600.3205c(8).” (Compl. at ¶48.)
 In Count II (“Declaratory Relief”), the Elezajs request that the Court (1)
“declare and adjudge” that the Sheriff’s Sale was voidable, and (2) set
aside the Sheriff’s Sale. (Compl. at 10, Pg. ID 20.)
 In Count III (“Promissory Estoppel”), the Elezajs seek relief, including
(1) an order compelling U.S. Bank to modify the Mortgage or setting
aside the Sheriff’s Sale, and/or (2) monetary damages “for the breach of
the promise of [Bank of America] to modify” the Mortgage. (Id.)
 In Count IV (“Fraud”), the Elezajs ask the Court to find that Bank of
America’s alleged representations regarding the Elezajs’ eligibility
and/or qualification for a loan modification were “materially false” and
constitute “a clear showing of fraud in the foreclosure process.” The
Elezajs again seek an order setting aside the Sheriff’s Sale and/or
monetary damages. (Id. at 11-12; Pg. ID 21-22.)
U.S. Bank removed the action to this Court (see Notice of Removal, ECF #1
at 1, Pg. ID 1), and on June 13, 2014, it filed the instant Motion for Judgment on
the Pleadings pursuant to Federal Rule of Civil Procedure 12(c) (see the “Motion,”
ECF #9). The Court heard oral argument on the Motion on September 18, 2014.

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GOVERNING LEGAL STANDARD
Motions for judgment on the pleadings pursuant to Federal Rule of Civil
Procedure 12(c) are analyzed under the same standard as motions to dismiss
brought pursuant to Rule 12(b)(6). See Sensations, Inc. v. City of Grand Rapids,
526 F.3d 291, 295 (6th Cir. 2008). Rule 12(b)(6) provides for dismissal of a
complaint when a plaintiff fails to state a claim upon which relief can be granted.
Fed. R. Civ. P. 12(b)(6). “To 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.’” Ashcroft v. Iqbal, 556 U.S. 662, 678, (2009) (quoting Bell
Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)). A claim is facially plausible
when a plaintiff pleads factual content that permits a court to reasonably infer that
the defendant is liable for the alleged misconduct. Id. (citing Twombly, 550 U.S. at
556). When assessing the sufficiency of a plaintiff’s claim, a district court must
accept all of a complaint's factual allegations as true. See Ziegler v. IBP Hog Mkt.,
Inc., 249 F.3d 509, 512 (6th Cir. 2001). “Mere conclusions,” however, “are not
entitled to the assumption of truth.

While legal conclusions can provide the

complaint's framework, they must be supported by factual allegations.” Iqbal, 556
U.S. at 664. A plaintiff must therefore provide “more than labels and conclusions,”
or “a formulaic recitation of the elements of a cause of action” to survive a motion

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to dismiss. Twombly, 550 U.S. at 556. “Threadbare recitals of the elements of a
cause of action, supported by mere conclusory statements, do not suffice.” Id.2
ANALYSIS
The relief the Elezajs’ seek simply is not available to them on the facts they
pleaded. Indeed, as discussed below, each of the theories under which the Elezajs’
seek relief have been rejected – resoundingly – by the United States Court of
Appeals for the Sixth Circuit or by other courts in this District on facts similar to
those present here. In fact, in the week preceding this Opinion and Order, the
Sixth Circuit has issued at least three opinions affirming the dismissal of actions
similar to the Elezajs’. See Jarbo v. The Bank of N.Y. Mellon, No.14-1023 (6th
Cir. Oct. 3, 2014); Bernard v. Fed. Nat. Mortg. Ass’n, No. 13-1477, (6th Cir. Sept.
29, 2014); Rubin v. Fannie Mae, No. 13-1010 (6th Cir. Sept. 29, 2014).
A. The Elezajs Are Not Entitled to Convert a Non-Judicial Foreclosure to a
Judicial Foreclosure After Expiration of the Statutory Redemption
Period (Count I)
Michigan law provides that prior to initiating foreclosure proceedings, a
lender must take certain steps including, upon a borrower’s request, “work[ing]

2

“In ruling on a motion to dismiss, the Court may consider the complaint as well
as (1) documents that are referenced in the plaintiff's complaint or that are central
to plaintiff's claims, (2) matters of which a court may take judicial notice, and (3)
documents that are a matter of public record.” Holliday v. Wells Fargo Bank, NA,
No. 13-cv-11062, 2013 WL 3880211, at *2 (E.D. Mich. July 26, 2013) (citing
Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 322 (2007)).

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with the borrower to determine whether the borrower qualifies for a loan
modification.”

M.C.L. § 600.3205c (the “Loan Modification Statute”).3

The

Elezajs allege that U.S. Bank (through its predecessors in interest) violated the
Loan Modification Statute by refusing to modify the Mortgage. (See Compl. at
¶45.) Accordingly, the Elezajs seek to take advantage of the sole remedy available
for violations of the Loan Modification Statute: “the borrower may file an action
… to convert the foreclosure proceeding to a judicial foreclosure.” M.C.L. §
600.3205c(8).
However, it is well-established that the relief provided for in the Loan
Modification Statute – conversion of a foreclosure-by-advertisement to a judicial
foreclosure – is not available after the foreclosure sale and/or after the expiration
of the statutory redemption period. See Thompson v. JPMorgan Chase Bank, N.A.,
563 Fed. App’x 440, 444 (6th Cir. 2014) (“[E]ven if it were possible to convert an
already-completed foreclosure by advertisement into a judicial foreclosure,
plaintiff lost the ability to challenge that foreclosure … when the statutory
redemption period expired without his having redeemed the property”); Smith v.
Bank of America Corp., 485 Fed. App’x 749, 756 (6th Cir. 2012) (“[Plaintiffs]
appear to have missed the boat regarding the applicability of [the Loan

3

Although the Loan Modification Statute has been repealed, see P.A. 2012, No.
521 (eff. June 30, 2013), it was in effect at all times prior to the Sheriff’s Sale.

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Modification Statute] which, when triggered allows plaintiffs to enjoin a
foreclosure by advertisement and convert it to a judicial foreclosure: they brought
this action after the foreclosure sale occurred, and so there is no foreclosure to
enjoin or convert”); see also Holliday v. Wells Fargo Bank, N.A., --- Fed.
App’x ---, 2014 WL 2724082, at *4 (6th Cir. 2014); Olson v. Merrill Lynch Credit
Corp., --- Fed. App’x ---, 2014 WL 3930459, at *3 (6th Cir. 2014). In this case,
the foreclosure-by-advertisement sale occurred on January 15, 2013, and the
statutory redemption period expired on January 15, 2014.4 Accordingly, the relief
the Elezajs seek in Count I of the Complaint is no longer available.
The Elezajs’ reliance on Bobel v. Met Life Home Loans, No. 11-cv-10574,
2012 WL 5823759 (E.D. Mich. Mar. 21, 2012), is misplaced. The court in Bobel
did not find a right to convert a foreclosure-by-advertisement into a judicial
foreclosure where, as here, the statutory redemption period had expired. In fact,
the Bobel court expressly noted that the redemption period in that case had been
stayed, and the court did “not opine whether the conversion right could be

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The Elezajs acknowledged at oral argument that the filing of this action did not
toll or otherwise extend the redemption period, and that the redemption for the
Property therefore expired on January 15, 2014. See Rubin, No. 13-1010, slip op.
at 5 (“[t]he filing of a lawsuit – even one filed before the expiration of the
redemption period – will not toll the redemption period”) (citing Bryan v.
JPMorgan Chase Bank, 848 N.W.2d 482, 485 (Mich. Ct. App. 2014)); see also
Connolly v. Deutsche Bank Bat. Trust Co., --- Fed. App’x ---, 2014 WL 4435962,
at *2 (6th Cir. 2014) (citing Conlin v. Mortg. Elec. Registration Sys., 714 F.3d 355,
360 (6th Cir. 2013)).

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exercised if the redemption period had expired.” Id. at *2, n.3. Accordingly,
Bobel does not apply here.
B. The Elezajs Are Not Entitled to Declaratory Relief or an Order Setting
Aside the Foreclosure and Sheriff’s Sale Because They Have Not
Demonstrated Fraud Or Irregularity in the Foreclosure Process That
Prejudiced Them (Count II)
Once the statutory deadline for redeeming a foreclosed property has expired,
“all of [the] plaintiff’s rights in and title to the property are extinguished.”
Bernard, No. 13-1477, slip op. at 4 (quoting Bryan, 848 N.W.2d at 485).

Thus,

once the redemption period lapses, a mortgagor may invalidate or set aside the
foreclosure and sheriff’s sale – as the Elezajs seek to do in Count II of their
Complaint – “only by demonstrating fraud or irregularity in the foreclosure
proceedings.” Kopko v. Bank of N.Y. Mellon, No. 12–13941, 2012 WL 5265758,
at *8 (E.D. Mich. Oct. 23, 2012) (collecting authority); see also Rubin, No. 131010, slip op. at 5 (noting the “high standard” a plaintiff must meet “in order to
have a foreclosure sale set aside after the lapse of the statutory redemption period”)
(citing Conlin, 714 F.3d at 359). The fraud or irregularity “must relate to the
foreclosure proceeding itself.” Conlin, 714 F.3d at 359. In this case, the Elezajs
have asserted four theories of fraud or irregularity, but none of the theories entitles
them to relief.
First, the Elezajs argue that the Court should set aside the Sheriff’s Sale
because the Adjournment did not comply with M.C.L. § 600.3220, which

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establishes notice requirements for the adjournment of foreclosure sales. (See
Compl. at ¶55.) A defect in notice “is only actionable upon a showing of actual
prejudice” to the mortgagor. Fawcett v. Wells Fargo Bank, No. 13-cv-10591, 2013
WL 6181719, at *3 (E.D. Mich. Nov. 26, 2013) (citing Lessl v. CitiMortgage, Inc.,
515 Fed. App’x 467, 469 (6th Cir. 2013)). “[N]o prejudice from inadequate notice
can be found … 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. (citing Lessl, 515
Fed. App’x at 469) (internal punctuation omitted). In this case, the Elezajs have
not alleged that they were unaware of the foreclosure proceedings; they have not
alleged that they lost an opportunity to preserve their interest in the Property due to
the allegedly defective notice; nor have they alleged any other way in which they
were prejudiced by the allegedly defective notice.  Accordingly, the Elezajs are not
entitled to relief under this theory.
Second, the Elezajs argue that the Court should set aside the Sheriff’s Sale
because “the [A]ssignment was a nullity rendering chain of title invalid pursuant to
M.C.L. § 600.3204(3)” (the “Foreclosure-by-Advertisement Statute”). (Compl. at
¶56.)5 The Elezajs argue that the Assignment was invalid because MERS assigned

5

The Foreclosure-by-Advertisement Statute provides, in relevant part, that “[i]f
the party foreclosing a mortgage by advertisement is not the original mortgagee, a

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the “Mortgage without the Note.” (Id. at ¶56.) However, this argument is directly
contrary to Michigan law. Indeed, “it is lawful for the holder of the mortgage to be
different from the holder of the debt.” Hargrow v. Wells Fargo Bank, N.A., 491
Fed. App’x 534, 538 (6th Cir. 2012) (citing Residential Funding Co. v. Saurman,
805 N.W.2d 183, 184 (Mich. 2011)). Moreover, the assignment of a mortgage
without a corresponding assignment of the interest in the underlying debt does not
render chain of title invalid. See, e.g., Hargrow, 491 Fed. App’x at 537-38 (6th
Cir. 2012); Bakri v. Mortg. Elec. Registration Sys., 2011 WL 3476818, at *4
(Mich. Ct. App. Aug. 9, 2011). For these reasons, at least one court in this District
has found (in a case brought by the Elezajs’ counsel on behalf of a different
plaintiff) that the “invalid-assignment” argument is “frivolous.” Washington v.
BAC Home Loans Servicing, L.P., No. 12-cv-12940, 2013 WL 5476023 at *5
(E.D. Mich. Oct. 2, 2013). Accordingly, the Elezajs have not demonstrated that
the record chain of title in this case is invalid, and they therefore are not entitled to
relief on this ground.6

record chain of title must exist before the date of sale … evidencing the assignment
of the mortgage to the party foreclosing the mortgage.” M.C.L.§ 600.3204(3).
6

Furthermore, even if the Elezajs had identified a flaw in the chain of title, their
claim would nonetheless fail because they have not pleaded that they suffered any
prejudice as a result of the alleged flaw. See Kim v. JPMorgan Chase Bank, N.A.,
825 N.W.2d 329 (Mich. 2012) (requiring a showing of prejudice in an action under
the Foreclosure-by-Advertisement Statute).

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Third, the Elezajs contend that the Court should set aside the Sheriff’s Sale
because U.S. Bank “wrongfully refused to modify” the Mortgage. (Compl. at
¶¶57-58.)

However, the Elezajs’ requested relief is barred by M.C.L. §

600.3205(c)(8), which as discussed above, provides that the sole remedy for
violations of the Loan Modification Statute is conversion of the sheriff’s sale to a
judicial foreclosure. See, e.g., Kopko, 2012 WL 5265758, at *14-15 (collecting
authority).
Finally, at oral argument, the Elezajs argued that the Court should set aside
the Sheriff’s Sale because U.S. Bank engaged in “dual tracking.” “Dual tracking
refers to a common tactic by banks that institute foreclosure proceedings at the
same time that a borrower in default seeks a loan modification.” Kloss v. RBS
Citizens, N.A., 996 F.Supp.2d 574, 585 (E.D. Mich. 2014) (internal citation
omitted).

However, “dual tracking violations relate to the loan modification

process rather than the foreclosure process.” Id. Thus, even if U.S. Bank engaged
in dual tracking, as the Elezajs allege, this practice does not constitute a fraud or
irregularity in “the foreclosure proceeding itself,” Conlin, 714 F.3d at 359, and the
Elezajs therefore are not entitled to relief on this ground.
For these reasons, the Elezajs’ claims in Count II of their Complaint are
wholly without merit.

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C. The Elezajs’ Claims Based on Alleged Promises by U.S. Bank or its
Predecessors are Barred By the Statute of Frauds (Counts III and IV)
The Elezajs are unable to prevail on their claims of promissory estoppel and
fraud because they have not alleged that U.S. Bank or its predecessors made an
enforceable, written promise to modify the Mortgage.

Michigan’s Statute of

Frauds precludes a borrower from bringing a claim against a financial institution to
enforce the terms of an oral promise or unsigned writing to modify the terms of a
loan. See M.C.L. § 566.132(2). In this case, the Elezajs have not pleaded that U.S.
Bank or its predecessors made a promise to modify the Mortgage in a signed
writing.

To the contrary, the Elezajs state that a predecessor of U.S. Bank

“verbally informed [them] in a phone call” that it had approved a modification to
the Mortgage. (Compl. at ¶25; emphasis added.)7 The Elezajs’ claims in Counts
III and IV of their Complaint are therefore barred by the Statute of Frauds. See,
e.g., Clark v. Bank of America, N.A., No. 12-cv-13034, 2013 WL 3069305 at *4
(E.D. Mich. June 18, 2013) (dismissing breach of contract claim based on alleged
promise to modify mortgage loan “[b]ecause Plaintiffs do not allege Defendant …
signed a writing approving their loan modification”); Ross v. Federal Nat. Mortg.

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The Elezajs also state that a predecessor of U.S. Bank made other representations
– for instance, a statement in September 2011 that the lender would modify the
Mortgage if the Elezajs satisfied certain criteria (see Compl. at ¶63) – but nowhere
in their Complaint do the Elezajs allege that any such representation was made in a
signed writing.

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Ass’n, No. 13-cv-12656, 2014 WL 3597633 at *5-7 (E.D. Mich. July 22, 2014)
(dismissing fraud claim based on alleged breach of promise to modify loan because
plaintiff “has neither referred to nor presented the Court with a written, signed
instrument outlining her loan modification”).
The Elezajs argue that “the existence or non-existence of a signed writing is
an issue of fact” and that they are therefore entitled to discovery on this issue.
(Resp. Br. at 14, Pg. ID 560.) This is simply not the case. Before they are entitled
to any discovery, the Elezajs must first “plead factual content that allows the court
to draw the reasonable inference” that U.S. Bank is liable for the alleged fraud.
Iqbal, 556 U.S. at 678 (citing Twombly, 550 U.S. at 556). Because the Elezajs
have not even alleged that a signed writing exists, they are not entitled to
discovery.
D. The Elezajs’ Informal Request to Amend Their Complaint
In their brief opposing U.S. Bank’s Motion and at oral argument, the Elezajs
informally sought leave to amend their Complaint to remedy any pleading
deficiencies. (See Resp. Br. at 17, Pg. ID 563.) “Although Federal Rule of Civil
Procedure 15(a) establishes a liberal policy toward granting leave to amend, a
‘request for leave to amend almost as an aside, to the district court in a
memorandum in opposition to the defendant’s motion to dismiss is … not a motion
to amend.’” Graves v. Dept. of Veterans Affairs, No. 13-cv-14140, 2014 WL

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4145403, at *10 (E.D. Mich. Aug. 20, 2014) (quoting Kuyat v. BioMimetic
Therapeutics, Inc., 747 F.3d 435, 444 (6th Cir. 2014)). The Elezajs’ informal
request for leave to amend consists of the sort of “throwaway language” that does
not constitute a motion to amend under Rule 15(a). See Kuyat, 747 F.3d at 444.
The Elezajs are “not entitled to an advisory opinion from the Court informing them
of the deficiencies of the [C]omplaint and then an opportunity to cure those
deficiencies.” Begala v. PNC Bank, Ohio, N.A., 214 F.3d 776, 784 (6th Cir. 2000).
Moreover, and in any event, the Elezajs did not identify any specific ways in
which they would amend their Complaint to state a viable claim, if granted leave to
amend. At oral argument, the Elezajs identified only one alleged irregularity that
they had not pleaded in their Complaint – “dual tracking” – but, as discussed
above, dual tracking is not an irregularity in the foreclosure process itself. Further,
the Elezajs did not identify any additional prejudice that they suffered as a result of
the alleged fraud or irregularities; nor did they state that an amended complaint
would allege the existence of a signed writing by U.S. Bank or its predecessors
promising to modify the Mortgage. Under these circumstances, the Court will not
grant the Elezajs’ informal request to amend their Complaint.

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CONCLUSION
For all of the reasons in stated in this Opinion and Order, IT IS HEREBY
ORDERED that U.S. Bank’s Motion for Judgment on the Pleadings (ECF #9) is
GRANTED.

s/Matthew F. Leitman
MATTHEW F. LEITMAN
UNITED STATES DISTRICT JUDGE

Dated: October 3, 2014
I hereby certify that a copy of the foregoing document was served upon the
parties and/or counsel of record on October 3, 2014, by electronic means and/or
ordinary mail.
s/Holly A. Monda
Case Manager
[phone]

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