Dawood v. JP Morgan Chase Bank, et al

Filing 46

OPINION AND ORDER GRANTING JPMORGAN CHASE BANK, N.A.S MOTION FOR JUDGMENT ON THE PLEADINGS [#30. Signed by District Judge Gershwin A. Drain. (Bankston, T)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
RAFAH DAWOOD,
Plaintiff/Counter-Defendant,

v.

FIFTH THIRD BANK,

Case No. 14-cv-12442
Honorable Gershwin A. Drain

Defendant,
and
JPMORGAN CHASE BANK,
Defendant/Counter-Plaintiff.
/
OPINION AND ORDER GRANTING JPMORGAN CHASE BANK,
N.A.’S MOTION FOR JUDGMENT ON THE PLEADINGS [#30]
I. INTRODUCTION
Defendant/Counter-Plaintiff JPMorgan Chase Bank, N.A. (“Chase”) removed this action
on June 23, 2014. See Dkt. No. 1. On August 1, 2014 Chase filed a Motion to Dismiss
Plaintiff/Counter-Defendant Rafah Dawood’s (“Dawood”) First Amended Complaint. See Dkt.
No. 10. The Court denied Chase’s Motion to Dismiss because the Court found it was not
presented with sufficient facts to determine whether Chase was a proper party in interest. See
Dawood v. Fifth Third Bank, No. 14-cv-12442, 2014 WL 5307172 (E.D. Mich. Oct. 16, 2014).
Chase subsequently filed an Answer to Dawood’s First Amended Complaint, provided
information to prove Chase was a proper party in interest, and filed a counterclaim seeking a

-1-

declaratory judgment that Chase is entitled to recover the entire amount of the Two-Party Check
issued by Farmers Insurance (“Farmers”). See Dkt. No. 22.
Presently before the Court is Chase’s Motion for Judgment on the Pleadings pursuant to
Rule 12(c) of the Federal Rules of Civil Procedure. See Dkt. No. 30. This matter is now fully
briefed and the Court concludes that oral argument will not aid in the resolution of this matter.
Accordingly, the Court will resolve the Motion on the briefs as submitted, and cancel the March
31, 2015 hearing scheduled for 10:00 a.m. See E.D. Mich. L.R. 7.1(f)(2). For the reasons
discussed herein, the Court will GRANT Chase’s Motion for Judgment on the Pleadings [#30].
II. FACTUAL BACKGROUND
Rafah Dawood, and her husband, Weeam Dawood, were the owners of a home located at
6306 Branford Drive in West Bloomfield, Michigan. On December 30, 2010 a fire occurred at
the residence resulting in the home’s destruction. The home was insured against loss due to fire
pursuant to a Farmers insurance policy (“the Policy”), which named Chase as the payee. At the
time of the fire, the home was encumbered by two mortgages and a junior lien. The first
mortgage on the home was held with Washington Mutual Bank (“WaMu”), and was refinanced
on October 4, 2004 in the amount of $715,000.00. Chase issued a second mortgage on March 4,
2005, which was used to secure a home equity line of credit in the amount of $359,650.
Additionally, IndyMac Bank (“IndyMac”) held a junior lien, issued on February 16, 2005 in the
amount of $176,400, which was also used to secure an equity line of credit.
Chase became the successor in interest to the mortgage held by WaMu, and on March 30,
2009 Chase assigned the $715,000 mortgage on the home to Deutsche Bank National Trust
Company (“Deutsche Bank”). On January 14, 2013 the Federal Deposit Insurance Corporation
(“FDIC”) filed an assignment of the mortgage to Chase to correct a break in the chain of title.

-2-

On January 22, 2013, Chase discharged Dawood’s mortgage for the home equity line of credit.
Deutsche Bank sold the home as a foreclosure on May 14, 2013.
The crux of this dispute is centered on the insurance proceeds from the fire that destroyed
Dawood’s residence in December 2010. Following the fire, there was an insurance dispute
between Dawood and Farmers, which resulted in settlement discussions in November of 2011.
Following the settlement discussions, Dawood filed suit on November 8, 2012 against Farmers
in Oakland County Circuit Court. Farmers filed a counter-claim on December 7, 2012.
On October 1, 2013, Dawood and Farmers entered into a Joint Stipulation (“2013 Joint
Stipulation”) in which Farmers agreed, amongst other terms, to immediately pay $175,000 for all
of the contents claims involving the December 2010 fire in exchange for Dawood’s release and
discharge of Farmers of any and all future liability claims and demands. Farmers also indicated
that it would pay either a negotiated settlement amount, or up to the full amount, of the lien on
the property held by both Chase and IndyMac.
On February 14, 2014, Farmers issued a Two-Party Check to both Chase and Dawood in
the amount of $596,775.49. Dawood asserts that she obtained an appropriate endorsement of the
Two-Party Check by a representative of Chase. Dawood then deposited the check into a Fifth
Third Bank account. Dawood and Chase dispute each other’s entitlement to the funds from the
Two-Party Check issued by Farmers. That dispute resulted in this lawsuit, which was initiated
by Dawood in Wayne County Circuit Court on May 23, 2014.

-3-

III. LAW & ANALYSIS
A. Legal Standard
Federal courts review motions for judgment on the pleadings brought pursuant to Federal
Rule of Civil Procedure 12(c) using the standards applicable to motions filed under Rule
12(b)(6). See Wee Care Child Ctr., Inc. v. Lumpkin, 680 F.3d 841, 846 (6th Cir. 2012). Though
litigants employ these procedural mechanisms at different stages of the proceedings, the purpose
of both motions is to test the legal sufficiency of a plaintiff's pleadings. Thus, as with Rule
12(b)(6) motions, a Rule 12(c) motion allows a court to make an assessment as to whether a
plaintiff has stated a claim upon which relief can be granted. Fed. R. Civ. P. 12(b)(6).
As articulated by the Supreme Court of the United States, “[t]o 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, 129 S.Ct. 1937, 1949,
173 L.Ed.2d 868 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 554, 570, 127 S.Ct. 1955,
1974, 167 L.Ed.2d 929 (2007)). This facial plausibility standard requires claimants to put forth
“enough fact[s] to raise a reasonable expectation that discovery will reveal evidence of” the
requisite elements of their claims. Twombly, 550 U.S. at 557, 127 S.Ct. at 1965. Even though a
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).
While courts are required to accept the factual allegations in a complaint as true,
Twombly, 550 U.S. at 556, 127 S.Ct. at 1965, the presumption of truth does not apply to a
claimant’s legal conclusions, Iqbal, 556 U.S. at 678, 129 S.Ct. at 1949. Therefore, to survive a

-4-

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).
In addition to evaluating the sufficiency of the factual allegations within the four corners
of a complaint, courts may consider any exhibits attached to the complaint, matters of public
record, and exhibits attached to a defendant's 12(b)(6) motion, provided that the latter are
referred to in the complaint and are central to the claims 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
present case, the Court has considered documents attached to Defendant’s Motion, as they have
been referred to in Plaintiff's First Amended Complaint and are central to the claims asserted
therein.
B. Legal Analysis
In Chase’s Answer to Dawood’s First Amended Complaint, Chase referenced, and
attached as an exhibit, a Limited Power of Attorney (“LPOA”) between itself and Deutsche
Bank. See Dkt. No. 22-2. In the LPOA, the current holder of the subject mortgage, Deutsche
Bank, authorizes Chase to act on Deutsche Bank’s behalf for “[t]he full enforcement of and
preservation of [Deutsche Bank’s] interests in the Mortgage Notes . . . and in the proceeds
thereof, by way of . . . pursuit of . . . hazard insurance[.]” Id.
Dawood concedes that “[t]he LPOA shows that Chase has standing in this case.” Dkt.
No. 39 at 5. Nonetheless, Dawood contends that Chase’s Motion should not be granted because
the LPOA “does not address or demonstrate why Chase can collect all the proceeds from the two
party check.” Dkt. No. 39 at 5. Dawood’s contention ignores the fact that this Court’s previous

-5-

ruling explained how and why Chase could collect the proceeds from the Two-Party Check if
Chase was an appropriate party in interest. See Dawood v. Fifth Third Bank, No. 14-cv-12442,
2014 WL 5307172, at *3-5 (E.D. Mich. Oct. 16, 2014). Thus, by admitting Chase has standing,
Dawood has resolved the only remaining issue in this case.
When the Court denied Chase’s Motion to Dismiss, the Court found that Chase was an
intended beneficiary of the 2013 Joint Stipulation between Dawood and Farmers. See Dawood,
2014 WL 5307172, at *3 (“It is undisputed that at the time of the 2013 Joint Stipulation,
Defendant Chase possessed a lien on Plaintiff's property; and that Plaintiff and Farmers
Insurance agreed that Farmers Insurance would pay a negotiated settlement amount to Defendant
Chase for Chase’s lien held against Plaintiff's property.”) (citations omitted).
The Court noted that Chase assigned the Mortgage to Deutsche Bank in March of 2009,
and discharged its lien on Dawood’s property in January of 2013. Id. at *4. The Court further
noted that Chase presented an argument in which it could “retain a right to the insurance
proceeds because Deutsche Bank, as the Trustee, could merely be acting as the agent for
Defendant Chase.” Id. (citing Ford Motor Credit Co. v. Odom, No. 266770, 2007 WL 2214444,
at *4 (Mich. Ct. App. Aug. 2, 2007) (citing Greer v. O’Dell, 305 F.3d 1297, 1299 (11th Cir.
2002)); CWCapital Asset Mgmt., LLC v. Chicago Properties, LLC, 610 F.3d 497 501-502 (7th
Cir. 2010)).
Nevertheless, the Court ultimately denied Chase’s Motion to Dismiss because the Court
found it did not have adequate facts to completely analyze the relationship between Chase and
Deutsche Bank. Dawood, 2014 WL 5307172, at *5; see also id. at *4 (“[I]f Defendant Chase
transferred all of its rights to Deutsche Bank, Plaintiff would be correct in her assertion that

-6-

Defendant Chase is unable to be a party in interest, as Deutsche Bank would be the proper party
in interest in such a situation.”).
Now, in light of Chase’s submission of the LPOA, Dawood no longer disputes that Chase
has standing. Accordingly, Dawood has conceded the only disputed issue remaining in the case.
The Court has found that Chase was an intended beneficiary to the 2013 Joint Stipulation
Agreement, and that, if Chase has standing, Chase could retain a right to the insurance proceeds.
Dawood, 2014 WL 5307172, at *4-5. Now that it is undisputed Chase has standing in this case,
the Court will GRANT Chase’s Motion.
To be clear, in resolving Chase’s Motion to Dismiss, the Court found that either two
entities had rights to the insurance proceeds at issue: Chase or Deutshce Bank. If Chase didn’t
have rights to the proceeds, Deutsche Bank would have had rights to the proceeds. In either
scenario, Rafah Dawood would not have a claim to the insurance proceeds at issue. This is the
case because Rafah Dawood’s claim to the disputed funds is barred by the 2013 Joint Stipulation
Agreement. See Dkt. No. 10-11.
When Plaintiff secured her mortgage, Plaintiff agreed as the borrower to “absolutely and
irrevocably” assign to her lender all of her rights to “any and all judgments and settlements
(whether through litigation, mediation, arbitration or otherwise),” and “any and all funds
received or receivable in connection with any damage to such property, resulting from any cause
or cause whatsoever.” Dkt. No. 12-4 at 6.

Plaintiff later entered into a settlement agreement

with Farmers, in connection with damage to the property resulting from a fire. See Dkt. No. 1011 (2013 Joint Stipulation Between Plaintiff and Farmers Insurance); Dkt. No. 10-12 (State
Court Dismissal as a Result of the 2013 Joint Stipulation).

-7-

A review of the 2013 Joint Stipulation from the Wayne County Circuit Court indicates
that the Joint Stipulation bars Dawood’s claims to the disputed proceeds. “In ascertaining the
meaning of a contract, . . . the words used in the contract [are given] their plain and ordinary
meaning that would be apparent to a reader of the instrument.” Macomb Interceptor Drain
Drainage Dist. v. Kilpatrick, No. 11-13101, 2013 WL 5954426, at *4 (E.D. Mich. Nov. 7, 2013)
(quoting Rory v. Cont'l Ins. Co., 473 Mich. 457, 703 N.W.2d 23, at 28 (Mich. 2005)).
Looking at the plain language of the stipulated agreement, on October 13, 2013, Dawood
and Farmers entered into an agreement whereupon Farmers agreed that it would “immediately,
not later than seven (7) days of the date hereof, issue payment to Rafah Dawood and her
attorney, Yaldo Law, PLLC, in the amount of One Hundred Seventy-Five Thousand Dollars
($175,000.00) as payment in full for all contents claims.” Dkt. No. 10-11 at ¶ 1 (emphasis
added).
The parties also agreed that Farmers Insurance would pay a negotiated settlement amount
or up to the full amount of the lien held against the property by Chase. See Dkt. No. 10-11 at ¶ 2;
see also id. at ¶ 4 (“Plaintiff, Rafah Dawood, agrees to allow Farmers Insurance Exchange to join
the identified holders on the insurance contract, Chase Home Finance, LLC . . . (or their
appropriate successors in interest), as additional parties necessary for resolution of this case in
the pending action.”) (emphasis added). Finally, and notably, the agreement indicated:
Rafah and Weamm Dawood (“Dawoods”) release and discharge Farmers
Insurance Exchange of and from any and all liability, claims, demands,
controversies, damages, actions, and causes of action, whether at law or in equity,
which the Dawoods, individually or in any other capacity, their heirs, executors,
administrators, insurers, successors, and assigns can, shall or may have by reason
of or in any way resulting from a fire loss which occurred on or about December
30, 2010.
Id. at ¶ 7 (emphases added).

-8-

Chase asserts that the plain language of this agreement bars Dawood’s claim for the
money issued by Farmers on February 14, 2014, because the 2013 Joint Stipulation expressly
limits Dawood’s right to recovery to the $175,000 settlement check that was agreed upon in the
2013 Joint Stipulation. See Dkt. No. 10 at 10. Dawood disagrees and argues that “she did not
waive her rights to the check at issue as a result of the Joint Stipulation because [she] only agreed
to take $175,000 for the contents and did not waive her rights to any structural proceeds that may
remain after the claim of Chase as mortgagee.” Dkt. No. 12 at 11.
After reading Dawood’s interpretation of the stipulated agreement, the Court finds
nothing in the agreement that supports Dawood’s position that there is a distinction between the
“structural proceeds” and “contents claims.”

Dawood argues that in Paragraph 7 of the

stipulated agreement she only agreed to release Farmers Insurance “from any other claims
against it as a result of the fire and not the distribution of the structural proceeds to its proper
owner.” Dkt. No. 12 at 11. This interpretation cannot be squared with unambiguous language of
the agreement, where Dawood agrees to release Farmers “from any and all liability . . . by reason
of or in any way resulting from a fire loss which occurred on or about December 30, 2010.” Dkt.
No. 10-11 at ¶ 7 (emphases added).
Furthermore, when Dawood secured her mortgage, Dawood agreed as the borrower to
“absolutely and irrevocably” assign to her lender all of her rights to funds, such as the insurance
proceeds, “in connection with any damage to such property, resulting from any cause or cause
whatsoever.” Dkt. No. 12-4 at 6.

Accordingly, per both the plain language of the 2013

Stipulation Order and Dawood’s mortgage, Dawood is not entitled to the negotiated settlement
proceeds between Farmers and Chase. See Dkt. No. 10-11 at ¶ 2; Dkt. No. 12-4 at 6; see also
Cochran v. Ernst & Young, 758 F. Supp. 1548, 1555 (E.D. Mich. 1991) (“[A]ny consideration,

-9-

however slight, is legally sufficient to support a promise [and] in Michigan, a release from
liability requires only nominal consideration.”); Pittsburgh Tube Co. v. Tri-Blend, Inc., 185
Mich. App. 581, 586, 463 N.W.2d 161 (1990).
Dawood also attempts to argue that Chase was divested of its third party beneficiary
status because the Two-Party Check was issued by Farmers to both Dawood and Chase. See Dkt.
No. 39. This argument is unavailing. In Dawood’s Response, she “[a]ttache[s] as Exhibit B []
an email . . . between Farmers’ attorney . . . and Dawood’s former attorney . . . where they both
divested Chase of its right as a third party beneficiary to the monies.” Dkt. No. 39 at 6. After
reviewing the document, the Court finds that this is not the case.
The email provided by Dawood only indicates why Farmers issued a check to both
Dawood and Chase. Though all of the communications have not been disclosed, it appears that
Farmers issued the check to both Dawood and Chase in an attempt to absolve itself of any
potential liability in light of Dawood’s objection to Farmers issuing the check to Chase as a
result of the 2013 Joint Stipulation. See Dkt. No. 39-3 at 1(“Farmers has not issued payment to
Chase as a result of your apparent objection to the settlement of their claim [] based on your
client’s recent revelation the property was sold at sheriff’s sale.”).
While Dawood asserts that the email shows the “divesture of Chase of monies,” this
Court finds that the email only shows that Farmers issued the check to both Dawood and Chase
in order to allow this Court to determine the Parties’ relative rights to the funds. See id.
(“Because you are objecting to the Chase payment and now believe your client has a claim or
interest in the check to be issued to Chase, I have instructed Farmers not to issue the check. This
now appears to be a dispute between Ms. Dawood and Chase. If you file suit against Chase,

-10-

Farmers can deposit the money with the court (interplead), or Farmers can issue the payment as a
two party check naming both Chase and Ms. Dawood.”).
In sum, Chase maintains its interest in the Two-Party Check. The only party whose
interest has been severed is Rafah Dawood’s. Dawood’s interest was lost as a result of the 2013
Joint Stipulation in which Dawood relinquished her claim to the proceeds of the Two-Party
Check. Because Chase has standing in this case, Chase is entitled to judgment on the pleadings
in its favor.
IV. CONCLUSION
For the reasons discussed, the Court GRANTS Chase’s Motion for Judgment on the
Pleadings.
Rafah Dawood’s First Amended Complaint is HEREBY DISMISSED WITH
PREJUDICE.
Pursuant to 28 U.S.C. § 2201, and in resolution of Count VI of Chase’s Counterclaim,
this Court HEREBY DECLARES that (1) Defendant Chase has the right to collect all of the
disputed proceeds at issue, and (2) Rafah Dawood has no right to the disputed proceeds.
Accordingly, the Court HEREBY ORDERS Defendant Fifth-Third Bank to tender the
entirety of the disputed proceeds to Defendant Chase.
This Opinion and Order resolves all pending claims and counterclaims by and between
the Parties and closes the case.
SO ORDERED.
Dated: February 23, 2015
/s/Gershwin A Drain
Hon. Gershwin A. Drain
United States District Court Judge

-11-