Deming-Anderson v. PNC Mortgage, a divison of PNC Bank, National Association et al

Filing 15

ORDER Denying 11 Plaintiff's Emergency Motion to Stay Real Property Redemption Date. Signed by District Judge Denise Page Hood. (LSau)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION

TABITHA DEMING-ANDERSON,
Plaintiff,
Case No. 15-CV-11688
v.
Hon. Denise Page Hood
PNC MORTGAGE, a division of PNC BANK,
NATIONAL ASSOCIATION, and DEUTSCHE
BANK TRUST COMPANY AMERICAS AS
TRUSTEE RALI 2007-QS9,
Defendants.
_________________________________/
ORDER DENYING PLAINTIFF’S EMERGENCY MOTION TO STAY
REAL PROPERTY REDEMPTION DATE [#11]
I.

Background
This matter is before the Court on Plaintiff’s Emergency Motion to Stay

Real Property Redemption Date [Docket No. 11, filed July 29, 2015]. Plaintiff
Tabatha Deming-Anderson (“Plaintiff”) filed a Complaint in this matter on April 8,
2015, Oakland County Circuit Court. Defendants PNC Mortgage, a division of
PNC Bank, National Association, (hereinafter “PNC”) and Deutsche Bank Trust
Company Americas as Trustee RALI 2007-QS9 (hereinafter “Deutsche Bank”)
removed to this Court on May 12, 2015 [Docket No. 1].
Plaintiff obtained a mortgage in 2007 for a property located 2980 Steeple
Hill Rd., White Lake, Michigan (the “property”) (Pl.’s Compl., ¶ 1). The mortgage

was ultimately assigned to Defendant Deutsche Bank on August 2, 2011. PNC was
the loan servicer for dates relevant to this case. According to Defendants, Plaintiff
defaulted on her monthly Mortgage payment in September, 2010, which prompted
Plaintiff to enter into a Loan Modification Agreement with PNC in July, 2011
(Defs.’ Resp. at p. 4). In December, 2013, Plaintiff again defaulted on her monthly
payment obligation (Id.). After PNC sent Plaintiff notice of her default on January
6, 2014, Plaintiff allegedly failed to cure her default (Id.). Plaintiff acknowledges
in her Complaint that, in March of 2014, Plaintiff fell behind on her mortgage
payments (Pl.’s Compl., ¶ 10).
After Plaintiff’s default, PNC allegedly initiated the process for non-judicial
foreclosure under Michigan law: it published notice of the impending foreclosure
for four weeks, from July 2, 2014, to July 23, 2014, and posted notice of the
foreclosure on Plaintiff’s property on July 5, 2014 (Defs.’ Resp. at p. 4). The
foreclosure sale was originally scheduled for August 5, 2014 (Id.).
Plaintiff alleges that, upon falling behind on her payments, she promptly
supplied PNC with the materials necessary for PNC to process Plaintiff’s claim for
mortgage assistance (Pl.’s Compl., ¶¶ 11-12). In response, however, PNC
allegedly requested a number of additional documents as well as documents that
had already been sent to PNC, allegedly creating an “atmosphere of confusion.”

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(Pl.’s Compl., ¶ 13). PNC alleges that it received a complete application package
for Loan modification on July 21, 2014.
Plaintiff alleges that PNC failed to evaluate Plaintiff’s application within
thirty days of receiving it and did not provide Plaintiff written notice of the loan
modification options PNC would offer (Pl.’s Compl., ¶ 28), PNC alleges that it did,
in fact, evaluate Plaintiff’s application, adjourning the August 5, 2014, foreclosure
sale to do so, and sent Plaintiff a denial letter on August 18, 2014 (Defs.’ Resp. at
p. 5). PNC argues that because PNC received Plaintiff’s completed application on
July 21, 2014, fifteen days before the scheduled foreclosure sale on August 5,
2014, PNC was “under no obligation to review the package” despite the fact that it
ultimately did so (Id.).
In September, 2014, Plaintiff applied for another loan modification. (Defs.’
Resp. at p. 6). She did so with the assistance of attorney Steven Ruza (Pl.’s
Compl., ¶ 14). Plaintiff alleges that Ruza’s frequent attempts to establish contact
with PNC went unacknowledged and unanswered (Pl.’s Compl., ¶ 16). In
September, 2014, Ruza ultimately spoke to a PNC representative, Dianne D., who
informed Ruza that Plaintiff’s application for mortgage assistance had been
received, was complete, and would be reviewed (Pl.’s Compl., ¶ 17). Plaintiff
alleges that despite this assurance, Plaintiff’s counsel was met with chronic
unresponsiveness from PNC from September, 2014, until approximately February,
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2015 (Pl.’s Compl., ¶ 19). PNC, however, alleges that on October 16, 2014, it sent
Plaintiff a denial letter in connection with Plaintiff’s September, 2014, application
for a loan modification (Defs.’ Resp. at p. 6).
PNC alleges that Plaintiff applied again for a loan modification in
November, 2014, and was denied on January 5, 2015. On January 30, 2015, Ruza
contacted PNC representatives, who informed him that Plaintiff’s loan
modification application had “expired” and that she would have to submit another
application (Pl.’s Compl., ¶ 20). PNC representatives also allegedly communicated
that there would not be sufficient time to review a new application, because of an
impending sheriff’s sale on February 10, 2015 (Id.). Plaintiff allegedly submitted
an application for a loan modification on January 30, 2015, although PNC makes
no mention of having received this application.
On February 10, 2015, the sheriff’s sale took place, triggering the statutory
six-month redemption period. The redemption period is set to expire on August
10, 2015.
Plaintiff filed the instant motion to request a stay of the redemption period.
Plaintiff argues that, under Michigan law, courts may grant equitable relief to
extend the redemption period “in order to keep a plaintiff’s suit viable, provided
[plaintiff] makes ‘a clear showing of fraud, or irregularity’ by the defendant.” (Pl.’s
Mot. at p. 4). In her motion, Plaintiff restates allegations of fraud and irregularity
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from her Complaint. Plaintiff also notes that her first attorney, Steven Ruza, was
charged with thirty felony counts in May, 2015, and was forced to withdraw from
this case. Ruza’s fraudulent activity and eventual withdrawal has hampered
Plaintiff’s case and provides another reason for this Court to provide Plaintiff the
equitable relief she seeks.
Defendants in their response to Plaintiff’s motion first note that Plaintiff’s
motion must be evaluated against the standard for preliminary injunction. They
then argue that Plaintiff has failed to demonstrate likelihood of success on the
merits, which is fatal to Plaintiff’s request for injunctive relief. Defendants argue
that Plaintiff’s allegations as presented in her Complaint fail as a matter of law or
are barred for other reasons. Defendants also argue that Plaintiff has failed to
establish the other elements necessary for injunctive relief, namely, that Plaintiff
will suffer irreparable harm without the injunction that harm will occur to others
without the injunction, and that granting the relief requested is in the public
interest.
Plaintiff, in her reply to Defendants’ brief, clarifies that she seeks a stay, or
tolling, of the redemption period, not a preliminary injunction. Plaintiff concedes
that she has not carried her burden to receive injunctive relief but argues that the
standard governing whether this Court may grant equitable relief in the form of a
stay is different from that of an injunction.
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II.

Analysis
“Michigan courts allow an ‘equitable extension’ of the redemption period in

a statutory foreclosure case…” Powers v. Bank of Am., N.A., 63 F. Supp. 3d 747,
752 (E.D. Mich. 2014) (citing El-Seblani v. IndyMac Mortgage Services, 510
Fed.Appx. 425, 428 (6th Cir. 2013)). To obtain this extension, the plaintiff must
clearly show “fraud or irregularities in the foreclosure process that actually
prejudiced the mortgagor in preserving his or her interest in the property.” Jarbo
v. Bank of New York Mellon, 587 F. App'x 287, 289 (6th Cir. 2014) cert. denied,
135 S. Ct. 1863 (2015) (citation omitted); see also Powers, 63 F. Supp. 3d at 752
(holding that “the ‘misconduct’ that results in the fraud or irregularity ‘must relate
to the foreclosure procedure itself.’” (emphasis added) (quoting El–Seblani, 510
Fed.Appx. at 429). According to the Sixth Circuit, the standards for obtaining this
exception are “stringent.” El-Seblani, 510 Fed.Appx. at 429; see also United
States v. Garno, 974 F.Supp. 628, 633 (“The Michigan Supreme Court has held
that it would require a strong case of fraud or irregularity, or some peculiar
exigency, to warrant setting a foreclosure sale aside.”) (emphasis added) (citing
Detroit Trust Co. v. Agozzinio, 280 Mich. 402, 405–406 (1937) and Calaveras
Timber Co. v. Michigan Trust Co., 278 Mich. 445, 450 (1936)).
Michigan courts have not “‘defined what constitutes an irregularity’
sufficient to set aside a foreclosure.” Powers, 63 F. Supp. 3d at 752 (quoting PHH

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Mortg. Corp. v. O’Neal, No. 311233, 2013 WL 3025566, at *5 (Mich. Ct. App.
June 18, 2013). In other contexts, courts have defined an irregularity as a
“proceeding that is taken without any foundation for it or that is essentially
defective,” Jenness v. St. Clair Circuit Judge, 42 Mich. 469, 471 (1880) or as the
“want of adherence to some prescribed rule or mode of proceeding,” Turrill v.
Walker, 4 Mich. 177, 183 (1856). “‘[T]he simple existence of an irregularity is
insufficient; it must rise to a particular level before a foreclosure sale will be set
aside.’” Powers, 63 F. Supp. 3d at 752 (quoting PHH Mortg. Corp. v. O’Neal, No.
311233, 2013 WL 3025566, at *5 (Mich. Ct. App. June 18, 2013). In Powers, for
example, the court extended the redemption period when there were “serious
questions” about whether the plaintiffs had even defaulted on their mortgage. 63 F.
Supp. 3d at 753.
A plaintiff must be able to show that she was prejudiced by the alleged fraud
or irregularities in the foreclosure process. The test for prejudice is whether
plaintiffs “would have been in a better position to preserve their interest in the
property absent defendant’s noncompliance with the statute.” Kim v. JPMorgan
Chase Bank, N.A., 493 Mich. 98, 115 (2012). In Powers, the court held that
“plaintiffs can easily establish prejudice if they did not default on their loans but
were made to endure foreclosure proceedings with the potential loss of their
residence.” 63 F. Supp. 3d at 753. In Kim, the majority cited a Michigan Appeals
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Court case in which that court did not find sufficient prejudice to justify setting
aside a foreclosure sale when occurred five days earlier than it was scheduled,
observing that the mortgagor had not attempted to redeem the property at any point
during the redemption period. Kim, 493 Mich. 98, 115-116 (citing Jackson Inv.
Corp. v. Pittsfield Products, Inc., 162 Mich. App. 750, 756 (1987)).
A. RESPA
Plaintiff has made allegations of fraud and irregularity, but Plaintiff has
failed to produce any evidence supporting any of her allegations for fraud or
irregularity. Plaintiff admits as much in her Motion. (“Plaintiff has plead
fraud…Plaintiff has also alleged many irregularities in the foreclosure process for
the Anderson Home.) (Pl.’s Mot. at 4-5).
Plaintiff alleges that Defendants violated 12 C.F.R. 1024.38(b)(2) by failing
to maintain policies and procedures in accordance with the Home Affordable
Modification Program (“HAMP”) guidelines. This Court need not address
Plaintiff’s substantive claim because Plaintiff has no right of action under 12
C.F.R. § 1024.38. As the Consumer Financial Protection Bureau noted in its final
rule adopting this regulation,
“Ultimately, the Bureau agrees with the commenters that allowing a private
right of action for the provisions that set forth general servicing policies,
procedures, and requirements would create significant litigation risk…The
Bureau believes that supervision and enforcement by the Bureau and other
Federal regulators for compliance with and violations of § 1024.38
respectively, would provide robust consumer protection without subjecting
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servicers to the same litigation risk and concomitant compliance costs as
civil liability for asserted violations of § 1024.38.”
78 Fed. Reg. 10778-10779.
The Sixth Circuit has recently confirmed that “HAMP and its enabling
statute do not contain a federal right of action.” Olson v. Merrill Lynch Credit
Corp., 576 F. App'x 506, 511 (6th Cir. 2014) (citation omitted), cert. denied, 135
S. Ct. 1549 (2015).
Plaintiff alleges that Defendants violated 12 C.F.R. § 1024.41(c) by failing
to evaluate Plaintiff within thirty days for all potential loss mitigation options and
provide Plaintiff with written notice within thirty days of which loan modification
option it would offer.
12 C.F.R. § 1024.41(c)(1)(i) provides that “[i]f a servicer receives a
complete loss mitigation application more than 37 days before a foreclosure sale,
then, within 30 days of receiving a borrower's complete loss mitigation application,
a servicer shall…[e]valuate the borrower for all loss mitigation options available to
the borrower.” 12 C.F.R. § 1024.41. The regulation states clearly that “[n]othing
in § 1024.41 imposes a duty on a servicer to provide any borrower with any
specific loss mitigation option.” Id.
Here, PNC provided denial letters within thirty days of each of Plaintiff’s
applications for loan modifications that were ultimately denied (Defs.’ Resp.,
Exhibits G, I, J). With regards to Plaintiff’s July, 2014, application, PNC received
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it fewer than thirty-seven days before the scheduled foreclosure sale on August 5,
2015, and was therefore under no obligation to review Plaintiff’s applications.
Plaintiff failed to make a clear showing of irregularity.
Plaintiff alleges that Defendants violated 12 C.F.R. § 1024.41(d) by “at
least implicitly denying Plaintiff a loan modification without providing in writing
the specific reason or reasons for the denial, and for which loss mitigation options
she was evaluated for” (Pl.’s Compl., ¶ 29). In relevant part, 12 C.F.R. §
1024.41(d) states, “[i]f a borrower's complete loss mitigation application is denied
for any trial or permanent loan modification option available to the borrower
pursuant to paragraph (c) of this section, a servicer shall state in the notice sent to
the borrower pursuant to paragraph (c)(1)(ii) of this section the specific reason or
reasons for the servicer's determination for each such trial or permanent loan
modification option and, if applicable, that the borrower was not evaluated on other
criteria.” 12 C.F.R. § 1024.41 (d).
In the October 16, 2014, letter from PNC to Plaintiff, PNC states that
Plaintiff’s hardship application was received but cannot be reviewed because the
complete application was not received with the required timeframe before the
foreclosure sale date or Plaintiff is otherwise ineligible for review (Defs.’ Resp.,
Ex. I). In the January 8, 2015, letter from PNC to Plaintiff, PNC states that PNC
cannot offer Plaintiff a Home Affordable Modification, because she did not
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provide all the requested documents. PNC provided sufficient reasons for why
Plaintiff was being denied.
Plaintiff alleges that Defendants violated 12 C.F.R. § 1024.41(f)(2) “by
noticing Plaintiff’s home for a foreclosure sale on 8/05/2014, 12/30/2014, and
2/10/2015, despite the fact that Plaintiff had submitted multiple complete loss
mitigation packages, prior to the foreclosure notice being posted, where Plaintiff
was never sent a proper written notice in response to these modification requests
stating that she was ineligible for a loan modification, and where Plaintiff never
rejected nor failed to perform under a loss mitigation option.” (Pl.’s Compl., ¶ 30).
12 C.F.R. § 1024.41(f)(1) defines the “pre-foreclosure review period” and
states in relevant part that “[a] servicer shall not make the first notice or filing
required by applicable law for any judicial or non-judicial foreclosure process
unless a borrower's mortgage loan obligation is more than 120 days delinquent.”
12 C.F.R. § 1024.41. If a borrower submits a complete loss mitigation application
during this “pre-foreclosure review period,” “a servicer shall not make the first
notice or filing required by applicable law for any judicial or non-judicial
foreclosure process unless (i) The servicer has sent the borrower a notice…that the
borrower is not eligible for any loss mitigation option…(ii) The borrower rejects
all loss mitigation options offered by the servicer, or (iii) The borrower fails to

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perform under an agreement on a loss mitigation option.” 12 C.F.R. §
1024.41(f)(2)(i-iii).
Here, Defendants argue that Defendants first noticed the Property for
foreclosure on July 2, 2014, far more than 120 days after Plaintiff allegedly
defaulted on her mortgage payment in December 2013 and before PNC received
Plaintiff’s complete loss mitigation package on July 21, 2014. Despite the fact that
PNC was under no obligation to review this application, given that it was
submitted fewer than thirty-seven days before the scheduled foreclosure sale, PNC
did so anyway and found that Plaintiff was not eligible for loan modification.
Plaintiff has not made a strong case for irregularity based on the
requirements set forth in 12 C.F.R. § 1024.41.
B. Negligence
Plaintiff alleges that, under 12 C.F.R. §§ 1024.38 and 1024.41, Defendants “had
a duty to exercise reasonable care in performing the evaluation of Plaintiff for a
loan modification” (Pl.’s Compl., ¶ 37). 12 C.F.R. § 1024.41 makes only two
references to “reasonable diligence.” First, it states that “[a] servicer shall exercise
reasonable diligence in obtaining documents and information to complete a loss
mitigation application.” 12 C.F.R. § 1024.41(b)(1). Second, it states that “if a
servicer has exercised reasonable diligence in obtaining documents and
information to complete a loss mitigation application, but a loss mitigation
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application remains incomplete for a significant period of time under the
circumstances without further progress by a borrower to make the loss mitigation
application complete, a servicer may, in its discretion, evaluate an incomplete loss
mitigation application and offer a borrower a loss mitigation option.” 12 C.F.R. §
1024.41(c)(2)(ii). Neither of these statements appears to impose on the servicer a
duty to exercise “reasonable care in performing the evaluation of Plaintiff for a
loan modification.” As this Court has previously held, “Michigan law does not
impose a legal duty between a lender and a borrower, so there can be no breach of
a duty for purposes of stating a negligence claim.” Nat'l City Bank v. Syatt Realty
Grp., Inc., No. 07-CV-12438, 2011 WL 8144, at *7 (E.D. Mich. Jan. 3, 2011) rev'd
on other grounds, 497 F. App'x 465 (6th Cir. Aug. 29, 2012).
Here, Plaintiff has cited no authority for the proposition that Defendants
owed Plaintiff a duty of care. Plaintiff has also provided no evidence supporting
her allegations of negligence, one of which is that Defendants “carelessly” let
Plaintiff’s documents expire.
C. Wrongful Foreclosure
Plaintiff alleges that Defendants failed to comply with MCL 600.3201 by
failing to notify Plaintiff in writing of pending foreclosure proceedings; to post
notice of the foreclosure sale four times in the newspaper; and “calculate the

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amount due and owing with all costs and fees as of the date of the Sheriff sale held
on 2/10/2015” (Pl.’s Compl., ¶ 43).
With respect to notice, MCL 600.3208 provides that notice of foreclosure “shall
be given by publishing the same for 4 successive weeks at least once in each week,
in a newspaper published in the county where the premises included in the
mortgage…or some part of them, are situated.” Mich. Comp. Laws § 600.3208.
Within fifteen days of the first publication of the notice, a copy of such notice
“shall be posted in a conspicuous place upon any part of the premises described in
the notice.” Id. This section makes no reference to an independent requirement to
notify mortgagees in writing of pending foreclosure proceedings.
Here, the Defendants have furnished evidence that notice of the foreclosure was
published for four consecutive weeks, from July 2, 2014 to July 23, 2014, and that
notice was attached to the Property itself (Defs.’ Resp., Ex. F). Plaintiff has failed
to make a strong showing of irregularity.
With respect to the calculation of the amount due and other fees as of the
Sheriff’s sale, it is unclear to this Court as to which section within MCL 600.3201
this allegation pertains. Even if PNC failed to properly “calculate the amount due
and owing with all costs and fees as of the date of the Sheriff sale held on
2/10/2015,” it is unclear that this failure prejudiced Plaintiff. Plaintiff has

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produced no evidence indicating that, had the amounts calculated been differently
from what they were, she had any intention to or was able to redeem the property.
D. Breach of Contract and Promissory Estoppel
Plaintiff alleges that PNC is subject to the implied covenant of good faith
and fair dealings in every contract, and breached its implied covenant of good faith
and fair dealings by failing to mitigate damages by failing to offer home retention
options to Plaintiff, failing to properly evaluate Plaintiff for assistance, and
misleading Plaintiff about her prequalification for loss mitigation options (Pl.’s
Compl., ¶ 47).
“Michigan does not recognize a cause of action for breach of the implied
covenant of good faith and fair dealing.” Fodale v. Waste Mgmt. of Michigan, Inc.,
271 Mich. App. 11, 35, 718 N.W.2d 827, 841 (2006) (citing Belle Isle Grill Corp.
v. Detroit, 256 Mich.App. 463, 476, 666 N.W.2d 271 (2003)). The Sixth Circuit
has recognized an exception to that rule when parties agree to defer decision on a
particular term of the contract to one party. Stephenson v. Allstate Ins. Co., 328
F.3d 822, 826 (6th Cir. 2003). Loan modification does not fall within this
exception, and therefore, this claim fails. See Talton v. BAC Home Loans
Servicing LP, 839 F. Supp. 2d 896, 911 (E.D. Mich. 2012) (Court rejects argument
that defendant had duty to exercise its discretion in good faith with regards to loan
modification).
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E. Fraud
Plaintiff does no more in her Complaint or Motion than allege the elements
of fraudulent misrepresentation. She alleges:
That the representations made by Defendant to Plaintiff were false
statements of facts. That Defendant knew that the representations, when
made, were false. That Defendant intended to induce Plaintiff to refrain from
defending the foreclosure in reliance on the representations made by
Defendant. That Plaintiff’s reliance on the representations made by
Defendant was justifiable in her refraining from challenging the foreclosure.
That irreparable damage will accrue to Plaintiff…unless the Sheriff’s deed is
rescinded.
(Pl.’s Compl., ¶¶ 49-53).
As this Circuit has held, fraudulent misrepresentation claims “must meet the
particularity requirements of Federal Rule of Civil Procedure 9(b).” Olson, 576
Fed. Appx. at 510-511; see also Smith v. Bank of Am. Corp., 485 Fed. Appx. 749,
752-753 (6th Cir. 2012) (holding that the plaintiff must plead the time, place, and
content of the misrepresentation). Rule 9(b) states, in pertinent part, “[i]n alleging
fraud or mistake, a party must state with particularity the circumstances
constituting fraud or mistake.” FED. R. CIV P. 9(b).
Plaintiff has failed to plead her fraud claim with the requisite particularity.
As such, Plaintiff has failed to make strong case establishing fraud for the purpose
of arguing for an equitable stay of the redemption period.
I.

Conclusion
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Accordingly,
IT IS ORDERED that Plaintiff’s Emergency Motion to Stay Real Property
Redemption Date [Docket No. 11, filed July 29, 2015] is DENIED.
IT IS SO ORDERED.

S/Denise Page Hood
Denise Page Hood
United States District Judge
Dated: August 10, 2015
I hereby certify that a copy of the foregoing document was served upon
counsel of record on August 10, 2015, by electronic and/or ordinary mail.
S/LaShawn R. Saulsberry
Case Manager

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