Radisavljevich et al v. Comerica Bank

Filing 9

OPINION AND ORDER granting 3 Defendant's Motion to Dismiss. Signed by District Judge Robert H. Cleland. (LWag)

UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION

GARY RADISAVLJEVICH,
and LOTTIE M. RADISAVLJEVICH,
Plaintiff,
Case No. 14-14777
v.
COMERICA BANK,
Defendant.
/
OPINION AND ORDER GRANTING DEFENDANT’S MOTION TO
DISMISS

Pending before the court is a Motion to Dismiss, filed by Defendant Comerica
Bank (“Comerica”) on January 8, 2015. (Dkt. # 3.) In response,1 Plaintiffs seek leave to
amend their complaint. (Dkt. # 7, Pg. ID 275.) This matter is fully briefed, and no
hearing is needed. See E.D. Mich. LR 7.1(f)(2). For the reasons stated below, the
court will grant Defendant’s motion and deny Plaintiffs’ motion.
I. BACKGROUND
Lottie Radisavljevich, Gary Radisavljevich’s mother, entered into a mortgage with
Comerica “on or about on October 2, 2005,” (Dkt. # 1-2, Pg. ID 10), on 7789 Ritz Ave. in
Westland, Michigan, (Dkt. # 3-3, Pg. ID 70). “[Lottie] was 75 years [old] at the time the
loan was entered into.” (Dkt. # 1-2, Pg. ID 11.) “The mortgage was recorded on
1

When Plaintiffs did not file a timely response to Defendant’s Motion to Dismiss,
the court issued an Order to Show Cause, ordering Plaintiffs to explain why the court
should not dismiss their claim pursuant to E.D. Mich. LR 41.2. (Dkt. # 5.) Plaintiffs filed
their response to the order and Comerica’s motion on March 30, 2015. (Dkt. # 6, Pg. ID
265; Dkt. # 7, Pg. ID 295).

October 24, 2005, in Wayne County, in Liber 43635, on Page 1346.” (Id.) Lottie
“allegedly defaulted in repayment of the Note and [Comerica] foreclosed on the
Mortgage by advertisement . . . , resulting in the issuance of a sheriff’s deed on June
12, 2014.” (Id.) “[Comerica] commenced the Foreclosure on May 9, 2014 and last
published [advertisement for] the sale on May 30, 2014.” (Id.) The balance on the
mortgage “according to the lender” is $102,172.62. (Id.) “[Gary] is the legal
[representative] to [Lottie’s] Estate” as well as the current resident of 7789 Ritz Ave. (Id.
at 10.)
On November 17, 2014, Plaintiffs initiated the instant action in state court against
Comerica alleging wrongful foreclosure and fraud. (Dkt. # 1-2, Pg. ID 11-12. Comerica
removed the case to this court, invoking diversity jurisdiction. (Dkt. # 1, Pg. ID 1.)
II. STANDARD
Federal Rule of Civil Procedure 8(a)(2) requires that a complaint contain “a short
and plain statement of the claim showing that the pleader is entitled to relief.” To
survive a motion to dismiss, the complaint’s “[f]actual allegations must be enough to
raise a right to relief above the speculative level . . . on the assumption that all the
allegations in the complaint are true.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555
(2007). The court views the complaint in the light most favorable to the Plaintiff and
accepts all well-pleaded factual allegations as true. Tackett v. M&G Polymers, USA,
LLC, 561 F.3d 478, 488 (6th Cir. 2009). The court, however, “need not accept as true
legal conclusions or unwarranted factual inferences.” Directv, Inc. v. Treesh, 487 F.3d
471, 476 (6th Cir. 2007).

2

“To survive a motion to dismiss, a complaint must contain sufficient factual
matter, accepted as true, to ‘state a claim for relief that is plausible on its face.’” Ashcroft
v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at 570). “[W]here the
well-pleaded facts do not permit the court to infer more than the mere possibility of
misconduct, the complaint has alleged—but it has not shown—that the pleader is
entitled to relief.” Id. at 679.
“In determining whether to grant a Rule 12(b)(6) motion, the court primarily
considers the allegations in the complaint, although matters of public record, orders,
items appearing in the record of the case, and exhibits attached to the complaint, also
may be taken into account.” Amini v. Oberlin College, 259 F.3d 493, 502 (6th Cir. 2001)
(quoting Nieman v. NLO, Inc., 108 F.3d 1546, 1554 (6th Cir.1997)). Furthermore,
“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 Ctr. v. Ill. Union Ins. Co., 508 F.3d 327, 335-36 (6th Cir. 2007).
Federal Rule of Civil Procedure 9(b) states that “[i]n alleging fraud or mistake, a
party must state with particularity the circumstances constituting fraud or mistake.
Malice, intent, knowledge, and other conditions of a person’s mind may be alleged
generally.” The Sixth Circuit has “further interpreted Rule 9(b) to require that a plaintiff
allege the time, place, and content of the alleged misrepresentations on which he or she
relied; the fraudulent scheme; the fraudulent intent of the defendants; and the injury
resulting from the fraud.” Sanderson v. HCA-The Healthcare Co., 447 F.3d 873, 877
(6th Cir. 2006) (internal quotations omitted). A state claim of fraud, once removed to
federal court, is “required to comply with Rule 9(b),” but is also judged “[u]nder [state]
3

law.” See, e.g., Bennett v. MIS Corp., 607 F.3d 1076, 1100 (6th Cir. 2010).
III. DISCUSSION
Plaintiffs effectively allege three theories of liability under two counts in his
complaint: wrongful foreclosure, fraud, and breach of the implied covenant of good faith
and fair dealing. (Dkt. # 1-2, Pg. ID 11-12.) In their response brief, they allege new
facts for the first time to support their claims. The court will begin by analyzing Plaintiffs’
complaint according to Federal Rule of Civil Procedure 12(b)(6) and will then consider
Plaintiffs’ motion to amend their complaint.
A. Wrongful Foreclosure
Mich. Comp. Laws § 600.3240(8) states that, in this case, “the redemption period
is 6 months [starting on the date of the sale].” It is undisputed that a Sheriff’s Deed for
Plaintiff’s property was issued on June 12th, 2014. (Dkt. # 1-2, Pg. ID 11; Dkt. # 3, Pg.
ID 44.) The date six months from that sale, and therefore the final date of the
redemption period, was December 12th, 2014. (Dkt. # 3, Pg. ID 44.) Although Plaintiffs
filed their state court complaint on November 17, 2014, (Dkt. # 1-2, Pg. ID 9), the filing
did not toll the redemption period. Consequently the redemption period expired on
December 12th, 2014. See Bryan v. JPMorgan Chase Bank, 304 Mich. App. 708, 714
(Mich. Ct. App. 2014) (“It does not matter that plaintiffs actually filed this action one
week before the redemption period ended. The filing of this action was insufficient to
toll the redemption period.”).
According to the Michigan Supreme Court, a foreclosure may be set aside after
the redemption period has expired only with a showing of “a strong case of fraud or
irregularity, or some peculiar exigency.” Sweet Air Inv., Inc. v. Kenney, 275 Mich. App.
4

492, 497 (Mich. Ct. App. 2007) (quoting United States v. Garno, 974 F. Supp. 628, 633
(E.D. Mich. 1997). Furthermore, such invalidity must appear “in the procedure” of the
sale. Reid v. Rylander, 270 Mich. 263, 267 (1935). Plaintiffs allege that Comerica “did
not advertise fo[]r 4 weeks” and “fail[ed] to properly calculate the amount claimed to be
due on the date of the sale.” (Dkt. # 1-2, Pg. ID 11.) Both of these claims are nothing
more than conclusory statements devoid of facts to support them. Plaintiffs do not
identify the supposed calculation error. The court “need not accept as true legal
conclusions or unwarranted factual inferences.” Treesh, 487 F.3d at 476. Plaintiffs
allege that Comerica’s violations of Mich. Comp. Laws § 600.3201 et seq. are “not
limited to” these two allegations, (Dkt. # 1-2, Pg. ID 11), but Plaintiffs fail to name any
further specific claims against Comerica. This general allegation, therefore, fails to
provide “sufficient factual matter, accepted as true, to ‘state a claim for relief that is
plausible on its face.’” Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 570).
Because Plaintiff failed to show a peculiar exigency in the foreclosure process, the court
will dismiss Count I. Plaintiffs must therefore show fraud in the foreclosure process to
set aside the sale.

B. Fraud
In Michigan, common law fraud requires proof that:
(1) the defendant made a material representation; (2) the representation
was false; (3) when the defendant made the representation, the defendant
knew that it was false, or made it recklessly, without knowledge of its truth
as a positive assertion; (4) the defendant made the representation with the
intention that the plaintiff would act upon it; (5) the plaintiff acted in
reliance upon it; and (6) the plaintiff suffered damage.
5

Bennett, 607 F.3d at 1100-01 (quoting Cummins v. Robinson Twp., 770 N.W. 2d 421,
435 (Mich. Ct. App. 2009)).
Count II alleges that Comerica committed fraud when it “breached the implied
covenant of good faith and fair dealing in the contract with [Lottie] by . . . allowing a 75
year old person in ill health to sign a loan.” (Dkt. # 1-2, Pg. ID 12.) Plaintiffs further
allege that Comerica “knew Mother was in ill health, age 75 and mentally unstable to
make such a financial decision when she entered into the mortgage.” (Id.) Without
alleging anything further, Plaintiffs fail to allege any of the requirements of common law
fraud and falls well short of the particularity required by Federal Rule of Civil Procedure
9(b). Indeed, Plaintiffs’ allegation does not even contain a representation by
Comerica—a core component of fraud. See Bennett, 607 F.3d at 1100-01 (referring to
defendant’s representation in five of the six elements of Michigan common law fraud).
Plaintiffs fail to properly allege the time, place, content, scheme, or intent of Comerica’s
alleged fraud and thus fail to meet Federal Rule of Civil Procedure 9(b)’s heightened
pleading requirements as well. See Sanderson, 447 F.3d at 877. Plaintiffs do not
allege that the loan would have been brought current had the alleged representations
not been made, thus staving off foreclosure. As such, even assuming some fraudulent
representation had been made, Plaintiffs did not act on it and suffered no injury.
Because the Complaint falls well short of state and federal standards for pleading a
fraud cause of action, Plaintiffs have failed to state a claim for fraud.
Plaintiffs also recast the fraud claim as a breach of the implied covenant of good
faith and fair dealing. “An implied covenant of good faith and fair dealing in the
performance of contracts is recognized by Michigan law only where one party to the
6

contract makes its performance a matter of its own discretion.” Stephenson v. Allstate
Ins. Co., 328 F.3d 822, 826 (2003). As Plaintiffs allege no discretionary terms in any
contract between Comerica and Lottie or between Comerica and Gary in their
complaint, Michigan law precludes this court from finding a claim here. As Plaintiffs
have failed to state a claim for any peculiar exigencies or for any fraud, the court cannot
set aside the foreclosure. See Kenney, 275 Mich. App. at 497. The court will therefore
grant Comerica’s motion to dismiss.
C. New Allegations in Plaintiff’s Response Brief
Throughout their response brief, Plaintiffs rely on facts not pleaded in the
Complaint:
At all times, Plaintiffs attempted to avoid foreclosure . . . by requesting loss
mitigation alternatives from Defendant prior to the commencement of the
foreclosure . . . . Defendant led Plaintiffs to believe that loss mitigation
alternatives were available to Plaintiffs by statements made by Defendant .
. . to Plaintiffs that it would cooperate with Plaintiffs’ requests for loan
modification and/or mortgage financial assistance to avoid the foreclosure of
Plaintiffs’ home. Nevertheless, Defendant contradicted its representations
and proceeded with initiating foreclosure proceedings on Plaintiffs’ home.
(Dkt. # 7, Pg. ID 283.)
Plaintiffs also seek leave to amend their complaint, (Id. at 275), presumably to
supplement it with these new facts. Although Plaintiffs did not attach a proposed amended
complaint to this request, contrary to the mandate of E.D. Mich. LR 15.1, “[f]ailure to comply
. . . is not grounds for denial.” E.D. Mich. LR 15.1. Nevertheless the court will deny the
request because the additional facts supplied do not state a claim.
Plaintiffs argue that their new allegations find support in Jarchow v. CitiMortgage,
Inc. Jarchow v. CitiMortgage, No. 13-11925, 2014 WL 1759074, at *4 (E.D. Mich. 2014).
7

Jarchow states that dismissing a plaintiff’s wrongful foreclosure claims as a matter of law
would establish “poor public policy” when the foreclosing party “repeatedly represented that
it was reviewing Plaintiff’s application for loan modification, . . . made regular requests to
Plaintiff for documentation, . . . told Plaintiff that her application was in order and in process,
and . . . never notified Plaintiff that her loan modification application had been denied.”
Jarchow v. CitiMortgage, No. 13-11925, 2014 WL 1759074, at *4 (E.D. Mich. 2014).
Jarchow is distinguishable in that the Plaintiff in that case, unlike Plaintiffs here, was
already involved in a loan modification process. Comerica’s alleged representations about
the availability of loan modification is not comparable with CitiMortgages statements
regarding a loan modification that was allegedly already in progress.
In addition, the foreclosure by advertisement in Jarchow began in June 2012. Id.
at *1. The statute on which Jarchow’s reasoning relies, Mich. Comp. Laws § 600.3205(a),
was repealed effective June 2013 by 2012 Mich. Pub. Acts 521. The foreclosure in the
instant case began in May 2014. (Dkt. # 1-2, Pg. ID 11.) Jarchow is therefore inapposite
because the statutory regime relied upon in that case created a markedly different set of
circumstances.
Nowhere in the mortgage contract is Comerica bound to offer a loan modification.
(Dkt. # 3-3.)

Indeed, the only mention of “modifications” comes when the contract

acknowledges that if Comerica allowed one, it would change the amount that Plaintiffs
owed on the mortgage. (Id. at 70.) In their complaint and even in their Response brief,
Plaintiffs offer no documentation of any promises or obligations to offer a loan modification.
(Dkt. # 1-2; Dkt. # 7.) Though Plaintiffs do allege generally that “Defendant led Plaintiffs
to believe that loss mitigation alternatives were available . . . by statements,” (Dkt. # 7, Pg.
8

ID 283), Mich. Comp. Laws § 566.132(2)(b) states that “[a]n action shall not be brought
against a financial institution to enforce [a promise to . . . modify . . . a loan] unless the
promise . . . is in writing.” Without evidence of such a promise or obligation, there is no
contractual term to breach. If there is a viable claim to be asserted in an amended
complaint, the court cannot discern it from Plaintiffs’ response, and Plaintiffs’ failure to
attach a proposed amended complaint in compliance with the Local Rules makes it
impossible for the court to do more than speculate what other facts might exist in support
of such a claim. Plaintiffs’ request to amend their complaint is denied.
IV. CONCLUSION
IT IS ORDERED that Defendant Comerica Bank’s Motion to Dismiss Plaintiffs’
Complaint (Dkt. # 3) is GRANTED.

S/Robert H. Cleland
ROBERT H. CLELAND
UNITED STATES DISTRICT JUDGE
Dated: August 13, 2015

I hereby certify that a copy of the foregoing document was mailed to counsel of record
on this date, August 13, 2015, by electronic and/or ordinary mail.

S/Lisa Wagner
Case Manager and Deputy Clerk
[phone]

S:\Cleland\JUDGE'S DESK\C2 ORDERS\14-14777.RADISAVLJEVICH.Dismiss.wpd

9