Lossia v. JPMORGAN CHASE BANK, NATIONAL ASSOCIATION,

Filing 9

ORDER granting 5 Motion to Dismiss. Signed by District Judge Marianne O. Battani. (KDoa)

UNTIED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION

SABRIA LOSSIA,
Plaintiff,
CASE NO. 2:14-cv-11361
v.
HON. MARIANNE O. BATTANI
JPMORGAN CHASE BANK, NATIONAL
ASSOCIATION, successor by merger to
Chase Home Financial, LLC,
Defendant.
_______________________ __________/

OPINION AND ORDER GRANTING DEFENDANT’S MOTION TO DISMISS

I.

INTRODUCTION
This matter is before the Court on Defendant’s Motion to Dismiss pursuant to

FED. R. CIV. P. 12(b)(6). (Doc. 5.) Plaintiff has brought a Complaint seeking to quiet
title and alleging breach of foreclosure procedures set forth in MICH. COMP. LAWS §
600.3205 et seq. (Doc. 1, Ex. 1.) The Complaint also seeks conversion of foreclosure
by advertisement to a judicial foreclosure, injunctive relief, a stay and tolling of the
redemption period, and a constructive trust over the property.

(Id.)

Additionally,

Plaintiff’s response requests a stay on ruling of the present motion, pending discovery.
(Doc. 7.) Defendant argues that because Plaintiff cannot show that any foreclosure
procedures were violated, her claim must be dismissed. For the following reasons, the
Court GRANTS Defendant’s Motion to Dismiss.

II.

STATEMENT OF FACTS

On August 8, 2007, Plaintiff entered into a mortgage and loan agreement with
Defendant in the amount of $530,000, secured by a home located at 1788 Cass Lake
Front Road, Keego Harbor, Michigan (“the Property”). (Doc. 5, Ex. 1.) In 2009, Plaintiff
defaulted on her mortgage payments, and Defendant initiated foreclosure by
advertisement proceedings. Defendant sent Plaintiff notices on February 22, 2010, and
March 9, 2010, stating that Plaintiff had the right to request a meeting with Defendant’s
agent in order to discuss modification of the mortgage loan. (Doc. 5, Ex. 3.) The
notices stated that Plaintiff must request such a meeting within fourteen days of the
dates the notices were sent. On March 10, 2010, Defendant published a notice to the
same effect in the Oakland County Legal News. (Doc. 5, Ex. 4.)
On November 9, November 16, November 23, and November 30, 2010,
Defendant published in the Oakland County Legal News a notice stating that Plaintiff’s
mortgage would be foreclosed by a sheriff’s sale of the Property on December 7, 2010.
(Id.) Defendant also affixed this notice to the front door at the Property. The sheriff’s
sale was adjourned until September 17, 2013, Defendant claims, because Chase and
Plaintiff were working to find other loss mitigation options. At the sheriff’s sale,
Defendant purchased the Property for $409,872.00 and took title per a Sheriff’s Deed
on Mortgage Sale, subject to Plaintiff’s six-month statutory right to redeem. Defendant
asserts, and Plaintiff does not contest, that she made no effort to redeem the Property
before her right to do so expired on March 17, 2014.
On March 12, 2014, five days before the expiration of the redemption period,
Plaintiff filed the present action in Oakland County Circuit Court. She alleges four
causes of action: (1) quiet title, (2) breach of MICH. COMP. LAWS § 600.3205 et seq., (3)

2

conversion of foreclosure by advertisement to judicial foreclosure, and (4) injunctive
relief. Plaintiff seeks entry of an order setting aside the foreclosure sale because
Defendant failed comply with the foreclosure procedures set forth in MICH. COMP. LAWS
§§ 600.3205a-d.
Defendant removed the action to this Court (Doc. 1), and on May 30, 2014, filed
the instant motion to dismiss (Doc. 5.) On June 13, 2014, the Court notified the parties
that it would decide Defendant’s motion without oral argument.
III.

STANDARD OF REVIEW
In order to survive a motion to dismiss pursuant to Rule 12(b), 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, 570 (2007)). A claim that is plausible “pleads factual
content that allows the court to draw the reasonable inference” and demonstrates “more
than a sheer possibility” that the plaintiff’s claim has merit. Id. A complaint that offers
“‘labels and conclusions’ or a ‘formulaic recitation of the elements of a cause of action
will not do.’” Id. While a court must accept as true all factual allegations set forth in a
plaintiff’s complaint, it is not bound to accept as true a legal conclusion or a legal
conclusion couched as a factual allegation. Id. All legal conclusions must be supported
by the factual allegations. Id. at 679.
In deciding a motion to dismiss, “courts must consider the complaint in its entirety,
as well as other sources courts ordinarily examine when ruling on Rule 12(b)(6) motions
to dismiss, in particular, documents incorporated into the complaint by reference, and
matters of which a court may take judicial notice.” Tellabs, Inc. v. Makor Issues &

3

Rights, Ltd., 551 U.S. 308, 322 (2007). Further, the Sixth Circuit has found that courts
may consider documents not formally incorporated by reference but that are referred to
in the complaint and are central to the plaintiff’s claim. See Greenberg v. Life Ins. Co.,
177 F.3d 507, 514 (6th Cir. 1999).
IV.

DISCUSSION
The statute at issue in the present case has been repealed, effective June 30, 2013,

see MICH. COMP. LAWS § 600.3205e (2012), and was later superseded by § 600.3204
(2014). Defendant notes that the Michigan Court of Appeals has declined to apply §§
600.3205a-d since the repeal, even when the foreclosure proceedings took place before
the repeal. See Hardwick v. HSBC Bank United States, No. 310191, 2013 Mich. App.
LEXIS 1278 at *4-5 (Mich. Ct. App. July 23, 2013) (“the Michigan Legislature has
repealed the mortgage-modification statutes relied on by plaintiffs in this case, effective
June 30, 2013. Thus, even if plaintiffs had possessed standing to pursue this action, the
issues presented in this case are now moot because neither the circuit court nor this
Court can fashion the relief that plaintiffs seek on appeal” (citations omitted)).
In arriving at this conclusion, the court relied on Conlin v. Scio Twp., which involved
a land developer’s constitutional challenge of a zoning ordinance. See 262 Mich App.
379, 384 (Mich. Ct. App. 2004). The Conlin court noted in dicta that because the
ordinance had already been repealed, the plaintiffs’ challenges to it could be considered
moot. Id. Hardwick’s reliance on Conlin with respect to this issue seems misplaced.
Whereas Conlin concerned a constitutional challenge to a law that had been repealed,
Hardwick involved a statute’s applicability to and effect on events that had taken place
when it was still in effect.

4

Other courts, both at the state and federal levels, have applied §§ 600.3205a-d in
cases involving foreclosures that took place when it remained in effect. See, e.g.,
Selakowski v. Fed. Home Loan Mortg. Corp., No. 13-12335, 2014 U.S. Dist. LEXIS
37966 at *31 (E.D. Mich. March 24, 2014) (“[t]o be sure, the Michigan loan modification
statute in place at the time at issue here imposed a duty upon lenders to engage in a
loan modification process”); Attisha v. Cent. Mortg. Co., No. 314762, 2014 Mich. App.
LEXIS 1349 at * 4 (Mich. Ct. App. July 22, 2014) (“[a]t the time of plaintiff's foreclosure
pursuant to MCL 600.3205a, a foreclosing party was required to provide a borrower with
notice regarding the opportunity to negotiate loan modification”). The foreclosure
proceedings in the present case were initiated in 2010, when § 600.3205 et seq. was
still in effect. Therefore, those provisions are applicable here.
In accordance with these provisions, after a sheriff’s sale, a mortgagor has a
statutory right to redeem the property by paying a requisite amount within six months of
the sale. MICH. COMP. LAWS § 600.3240. If the mortgaged property is not redeemed
within six months, the mortgagor’s rights in the property are extinguished, and the
sheriff’s deed vests with the purchaser all rights, title, and interest. Yono v. Deutsche
Bank Nat’l Trust Co., No. 13-13218, 2014 U.S. Dist. LEXIS 25826 at *6 (E.D. Mich.
February 28, 2014).
Filing a lawsuit prior to the expiration of the redemption period does not toll the
redemption period. Id. Once the statutory deadline for redeeming a foreclosed property
has expired – as it has in this case – the redemption period may be equitably extended
only by a clear showing of fraud or irregularity in the foreclosure proceedings. See
Overton v. Mortg. Elec. Registration Sys., No. 284950, 2009 Mich. App. LEXIS 1209 at

5

*3 (Mich. Ct. App. May 28, 2009). In order to show fraud or irregularity, plaintiffs must
plead that they were prejudiced by a defendant’s failure to comply with foreclosure
regulations. Yono, 2014 U.S. Dist. LEXIS 25826 at *9.
Plaintiff alleges several irregularities in the foreclosure process. First, she
contends that Defendant failed to send her notice of her right to participate in
modification negotiations. Defendant, however, has provided copies of the notices
mailed to Plaintiff (Doc. 5, Ex. 3), as well as a notarized affidavit attesting that such
notice was published in the Oakland County Legal News (Doc. 5, Ex. 4). These notices
comply with all requirements set forth in MICH. COMP. LAWS § 600.3205a. The Court
may consider these documents, as they are referenced in the Complaint and are central
to Plaintiff’s claim.
Next, Plaintiff alleges that Defendant either failed to determine or incorrectly
determined her eligibility for a loan modification and that Defendant failed to provide her
the requisite calculations used to determine eligibility. However, Plaintiff has not alleged
that she contacted Defendant to initiate the loan modification process. Moreover, she
has “failed to plead any specific facts as to how [she] made the purported request [for a
modification meeting] (i.e., in writing, verbally); when [she] made it; or to whom it was
directed.” West v. Wells Fargo Bank, N.A., No. 2:12-cv-13572, 2013 U.S. Dist. LEXIS
89577 at *9 (E.D. Mich. June 26, 2013). In spite of her assertions that she was eligible
for a loan modification, Plaintiff does not offer any further factual allegations in support.
Such conclusory statements and meager facts have been found to be insufficient “to
raise a right to relief above the speculative level" or to make Plaintiff’s claim "plausible
on its face.” See Powell v. Bank of N.Y. Mellon, No. 12-cv-14411, 2014 U.S. Dist.

6

LEXIS 95121 at *7 n. 5 (E.D. Mich. July 14, 2014); Id. (quoting Twombly, 550 U.S. at
555). Plaintiff has not pleaded facts adequately demonstrating that Defendant was
obligated to determine her eligibility for a loan modification or to provide her with
associated calculations.
Even if Defendants had violated the loan modification regulations, the statute
provides only the following remedy: “the borrower may file an action in the circuit court
for the county where the mortgaged property is situated to convert the foreclosure
proceeding to a judicial foreclosure.” MICH. COMP. LAWS § 600.3205e(8); Powell, 214
U.S. Dist. LEXIS 95121 at *9. Plaintiff failed to pursue this remedy before the
foreclosure sale occurred but now seeks such relief. However, the Sixth Circuit has
found that the right to convert a foreclosure by advertisement to a judicial foreclosure
must be exercised before the foreclosure sale occurs. Smith v. Bank of Am. Corp., 485
F. App’x 749, 756 (6th Cir. 2012) (“[Plaintiffs] brought this action after the foreclosure
sale occurred, and so there is no foreclosure to enjoin or convert”).
Accordingly, Plaintiff has failed to plead facts that, taken as true, would
demonstrate fraud or irregularity in the foreclosure process. Therefore, the Court may
not toll the expiration of the redemption period. Because the redemption period has
expired without Plaintiff redeeming the Property, title has vested in the purchaser
pursuant to the Sheriff’s Deed on Mortgage Sale. See Yono, 2014 U.S. Dist. LEXIS
25826 at *6. None of Plaintiff’s substantive counts in the Complaint successfully state a
claim on which relief may be granted.
Plaintiff also requests a stay of the present motion, pending discovery. When
determining a motion to dismiss, the Court is confined to consider only the Complaint,

7

documents referenced in the Complaint, and facts of which the Court may take judicial
notice. Therefore, no amount of discovery can affect whether a complaint states a claim
for purposes of Rule 12(b)(6). See Mitchell v. McNeil, 487 F.3d 374, 379 (6th Cir. 2007)
(because plaintiffs' complaint failed to state a claim for relief, "it follows that the district
court did not err in granting defendants' Rule 12(b)(6) motion before permitting
discovery by plaintiffs"). Therefore, the existence of an opportunity for discovery is
irrelevant, and the Court denies Plaintiff’s request for a stay.
V.

CONCLUSION
For the reasons discussed above, the Court GRANTS Defendant’s Motion to

Dismiss and DISMISSES the present case.
IT IS SO ORDERED.

Date: August 18, 2014

s/Marianne O. Battani
MARIANNE O. BATTANI
United States District Judge

8