Naumovski et al v. Bank of America, N.A. et al

Filing 13

ORDER granting 7 Motion to Dismiss. Signed by District Judge Arthur J. Tarnow. (MLan)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION

STOJADIN BLAGOJA NAUMOVSKI, ET.
AL.,

Case No. 15-11466
SENIOR UNITED STATES DISTRICT
JUDGE ARTHUR J. TARNOW

Plaintiffs,
v.

MAGISTRATE JUDGE DAVID R.
GRAND

FEDERAL NATIONAL MORTGAGE
ASSOCIATION, ET. AL.,
Defendants.
/

ORDER GRANTING DEFENDANTS’ MOTION TO DISMISS [7]
Plaintiffs filed this foreclosure challenge in state court on February 27, 2015.
Defendants removed the action from the Macomb County Circuit Court on April
22, 2015 [1]. On July 2, 2015, Defendants filed a Motion to Dismiss [7]. Plaintiffs
responded on August 19, 2015 [9], and Defendants replied on September 10, 2015
[11]. The Court finds the motion suitable for determination without a hearing, in
accord with Local Rule 7.1(f)(2), with respect to all of Plaintiff’s claims.
For the reasons stated below, Defendants’ Motion to Dismiss is
GRANTED.
1

FACTUAL BACKGROUND
On September 22, 2003, Plaintiff Sladjana Naumovska obtained a loan
secured by a mortgage on Plaintiffs’ home in Sterling Heights, Michigan.1 The
mortgage was assigned to Bank of America, N.A. (BANA) on April 3, 2013.
Plaintiff defaulted on her mortgage loan and foreclosure proceedings began by
advertisement, starting with notice published in the newspaper on November 29,
2013. The foreclosure notice was posted on the Property on December 3, 2013 [7-5
at 6]. The Property was purchased at the Sheriff’s sale on February 28, 2014.
In 2013, prior to the default and foreclosure, Plaintiffs attempted to avoid
foreclosure by endeavoring to partition their property and to sell approximately one
acre of the property to a developer. Bank of America expressed a willingness to
cooperate, but eventually refused to allow Plaintiffs to partition and sell the
property. Additionally, on June 19, 2014, the real property suffered hail damage
and a contractor was hired to fix the damage. Plaintiff and Defendant Bank of
America subsequently engaged in a dispute over the hazard insurance payment,
which Bank of America had received from Plaintiffs’ homeowners insurance
provider. Once the contractor was paid, Defendant Bank of America continued to
refuse to allow Plaintiffs to partition and sell their property.
1

While only Plaintiff Sladjana Naumovski signed the note, both Plaintiffs signed
the Mortgage.
2

The redemption period expired one year after the Sheriff’s sale on February
28, 2015. Plaintiffs filed this lawsuit in state court on February 27, 2015, and
obtained an ex parte temporary restraining order which stayed enforcement of the
Sheriff’s Deed and the tolling of Plaintiff’s time to redeem the property pending an
opinion or final judgment in the case. Per Plaintiff’s request, the redemption period
was extended to March 23, 2015 and against to June 19, 2015. Plaintiffs failed to
redeem the property.
ANALYSIS
Defendants move to dismiss Plaintiffs’ claims pursuant to Federal Rule of
Civil Procedure 12(b)(6). On a Rule 12(b)(6) motion to dismiss, the Court must
“assume the veracity of [the plaintiff’s] well-pleaded factual allegations and
determine whether the plaintiff is entitled to legal relief as a matter of law.”
McCormick v. Miami Univ., 693 F.3d 654, 658 (6th Cir. 2012) (citing Ashcroft v.
Iqbal, 556 U.S. 662, 679 (2009); Mayer v. Mylod, 988 F.2d 635, 638 (6th Cir.
1993)).
When a Plaintiff’s claims sound in fraud, “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.”
Fed. R. Civ. P. 9(b). In the Sixth Circuit, to meet the requirements that Rule 9(b) of
3

the Federal Rules of Civil Procedure imposes on fraud claims, a Plaintiff 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). These heightened pleading requirements apply both to frauds committed
by misrepresentation and/or by omission. Gilmore v. First Am. Title Ins. Co., 2009
WL 2960703, at *3 (E.D. Mich. Sept. 11, 2009). Misrepresentation claims founded
in the same fraudulent course of conduct are also held to the heightened pleading
standards of Fed. R. Civ. P. 9(b). Smith v. Bank of America Corp., 485 F. App'x
749, 752 (6th Cir.2012)
1. TEMPORARY RESTRAINING ORDER TOLLS TO STATUTORY REDEMPTION
PERIOD
Defendants argue that the redemption period has expired, and thus Plaintiffs’
claims of fraud, promissory estoppel and breach of contract should be dismissed
for failing to allege fraud or irregularity that relates to the foreclosure procedure as
required by Michigan law for cases that are brought after the expiration of the
redemption period. See e.g. Conlin v. Mortgage Elec. Registration Sys. Inc., 714
F.3d 355, 359-60 (6th Cir. 2013). Plaintiffs contest that Michigan law relating to a
tolled redemption period does not preclude their claims, because the time is tolled
4

by the temporary restraining order issued in state court, which is active pending
further order of the court or final judgment.
Ex parte temporary restraining orders issued in Michigan Courts expire in
fourteen days unless, inter alia, good cause is shown. MI R SPEC P MCR 3.310.
The order issued by the Circuit Court on February 27, 2015 provided that Plaintiffs
had shown that an “immediate and irreparable harm” would result if the order was
not issued, and explicitly stated that the order would stay the tolling of the
redemption period until the Court issued an order or final judgment in the case. [94]. Therefore, the redemption period has not tolled and Plaintiffs’ claims are not
precluded.
Additionally, the entry of this Order will dissolve the temporary restraining
order granted by the State Court on February 27, 2015. 28 U.S.C.A. § 1450.
2. VIOLATION OF MORTGAGE BY FORECLOSURE STATUTE ACTION
In Count 1 of their Complaint, Plaintiffs allege that they never received
notice of the foreclosure sale by either mail or posting as required by MCL
600.3208. Defendants argue that the facts alleged in the complaint are not
sufficient to create a question of fact, and as such Plaintiffs’ claim should be
dismissed for failure to state a claim per Defendants’ affidavit which states that
Defendants did post notice of the foreclosure on the property [7-5 at 6].
5

In order to create a genuine issue of material fact, an affidavit, or facts set
forth in a complaint as verified, “must be made on personal knowledge” rather than
upon information and belief and be “signed under penalty of perjury pursuant to 28
U.S.C. § 1746.” See Totman v. Louisville Jefferson Cty. Metro Gov't, 391 F. App'x
454, 464 (6th Cir. 2010); El Bey v. Roop, 530 F.3d 407, 414 (6th Cir. 2008).
Plaintiffs have not produced an affidavit to support their factual allegation
contained in the complaint that the foreclosure notice was never posted. The facts
contained in Plaintiffs’ complaint were verified as being true based on
“knowledge, information and belief” and were not signed under penalty of perjury.
Defendant has submitted into evidence affidavits attached to the recorded
Sheriff’s Deed, attesting that the statutory requirements of the foreclosure
procedures were followed, including the requirement of posting notice on the
property. This evidence is not refuted by any evidence other than the complaint,
which, as explained above, does not create a genuine issue of fact surrounding the
issue of posting foreclosure notice. Therefore, this claim is dismissed for failure to
state a claim.
3. FRAUDULENT MISREPRESENTATIONS
Plaintiff allegations of fraud center on Plaintiffs’ plan to partition and sell a
portion of the Property to a third party and a claim surrounding a hazard insurance
6

issue [1-2 at ¶21-44]. Defendants argue, inter alia, that Plaintiffs have not pled
their fraudulent misrepresentation claim with sufficient particularity. The Sixth
Circuit has interpreted Federal Rule of Civil Procedure 9(b) to require a plaintiff
raising a common law fraud claim to allege “the time, place, and content of the
alleged misrepresentation on which he or she relied; the fraudulent scheme; the
fraudulent intent of the defendants; and the injury resulting from the fraud.”
Bennett v. MIS Corp., 607 F.3d 1076, 1100 (6th Cir. 2010) (quoting Yuhasz v.
Brush Wellman, Inc., 341 F.3d 559, 563 (6th Cir. 2010)).
Plaintiffs’ claims do not meet the heightened pleading requirements under
Federal Rule of Civil Procedure 9(b). These allegations “do not identify the content
of the allegedly fraudulent statements, when they occurred, who made them, or
where they were made.” Wheeler, 2015 WL 1637619, at *5. Plaintiffs have
therefore failed to state a fraudulent misrepresentation claim upon which relief can
be granted. The claim is dismissed.
4. PROMISSORY ESTOPPEL
Plaintiffs allege that Defendants made an unspecified assertion to them that
induced Plaintiffs to take action that prevented them from taking other forms of
action that would have cancelled the Sheriff Sale date. Defendants respond, inter

7

alia, that Plaintiffs’ promissory estoppel claim is barred by the statute of frauds
and should be dismissed.
To sustain a promissory estoppel claim, Plaintiffs must show the following:
(1) a promise (2) that the promisor should reasonably have expected
to induce action of a definite and substantial character on the part of
the promisee and (3) that, in fact, produced reliance or forbearance of
that nature (4) in circumstances requiring enforcement of the promise
if injustice is to be avoided
Zaremba Equip., Inc. v. Harco Nat'l Ins. Co., 280 Mich. App. 16, 41 (2008). “[N]o
action for promissory estoppel may lie when an oral promise expressly contradicts
the language of a binding contract” Id. The statute of frauds expressly applies to a
promissory estoppel claim under Michigan law when being brought against
financial institutions:
MCL 566.132(2); MSA 26.922(2) expressly states that “[a]n 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” (emphasis supplied).
Crown Tech. Park v. D&N Bank, FSB, 242 Mich. App. 538, 550 (2000).
While Plaintiffs supply written documentation to support their claim that
they expected Defendants to allow them to partition and sell the Property, this
documentation was only signed by Plaintiffs; Defendants did not sign this
agreement [9-3]. Because this agreement is not “signed with an authorized
8

signature by the financial institution,” Plaintiffs have not met the requirements of
the statute of frauds and their promissory estoppel claim is dismissed. See Id; MCL
566.132(2).
5. BREACH OF IMPLIED CONTRACT/SPECIFIC PERFORMANCE
Plaintiffs allege a breach of implied contract as related to the conflict
over the payment to the contractor concerning property damage and the
subsequent inability of Plaintiffs to sell the property. Defendants argue that the
statute of frauds mandates dismissal of this claim as well.
MCL 566.132(2) addresses agreements, contracts, or promises for
which signed writing is required. The promise alleged in the implied
contract/specific performance claim is covered by this statute, and as with the
claim of promissory estoppel, would require a signed written document to state
a claim against Defendants. In this case, Plaintiffs do not present any evidence
of an agreement that was written and instead refer to an “offer” made to
Plaintiffs to allow them to hire a contractor to repair the property, use that
money to pay the contractor, and then sell the property [9-1 at 18]. Absent any
signed and written agreement, this claim must be dismissed.
Accordingly,

9

IT IS ORDERED that Defendants’ Motion to Dismiss [7] is
GRANTED.
IT IS FURTHER ORDERED that the Exparte Temporary Restraining
Order granted by the state court on February 27, 2015 is dissolved.

SO ORDERED.

Dated: March 14, 2016

s/Arthur J. Tarnow
Arthur J. Tarnow
Senior United States District Judge

10