Griffor et al v. BSI Financial Services Ventrues Trust 2013-I-H-R By MCM Capital Partners LLC et al

Filing 23

ORDER granting Defendant BANA's 9 Motion to Dismiss and Granting Defendants BSI, Trust, and MCM's Joint 13 Motion to Dismiss.Signed by District Judge Denise Page Hood. (JOwe)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
EDWARD GRIFFOR,
MARIELA GRIFFOR,
Plaintiffs,

CASE NO. 16-12552
HON. DENISE PAGE HOOD

v.
BSI FINANCIAL SERVICES
VENTURES TRUST 2013-I-H-R By
MCM CAPITAL PARTNERS LLC,
BANK OF AMERICA N.A.,
Defendants.
/
ORDER GRANTING DEFENDANT BANA’S MOTION TO DISMISS [#9]
AND GRANTING DEFENDANTS BSI, TRUST, AND MCM’S
JOINT MOTION TO DISMISS [#13]
I.

BACKGROUND
On June 7, 2016, Plaintiffs Edward Griffor and Mariela Griffor (“the

Griffors”) filed a Complaint against Defendants Service One, Inc., d/b/a BSI
Financial (“BSI”); Ventures Trust 2012-I-H-R (“Trust”); MCM Capital Partners,
LLLP (“MCM”); and Bank of America, N.A. (“BANA”) in the Wayne County
Circuit Court. The Complaint alleges Breach of Contract (Count I); Violation of
the Michigan Mortgage Brokers, Lenders, and Servicers Licensing Act (Count II);
Defamation (Count III); Negligence (Count IV); and Breach of Oral Contract

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(Count V). (Doc # 1-2, Pg ID 12-20) BANA filed a Notice of Removal based
upon diversity jurisdiction on July 7, 2016. (Doc # 1) On August 2, 2016, BANA
filed a Motion to Dismiss. (Doc # 9) On August 12, 2016, BSI, Trust, and MCM
filed a Joint Motion to Dismiss. (Doc # 13)

Responses and Replies have been

filed. (Doc # 17; Doc # 18; Doc # 20; Doc # 22)
The Griffors are husband and wife who own the property at 1342 Three Mile
Drive in the City of Grosse Pointe Park (“Property”). (Doc # 1-2; Pg ID 13) On
November 7, 2007, Edward Griffor signed a Note to borrow $417,000.00 from
LaSalle Bank. (Doc # 9-3) To secure payment, the Griffors granted a Mortgage
on the Property to LaSalle Bank. (Doc # 9-2) The Griffors declared bankruptcy in
2010. (Doc # 1-2, Pg ID 14) The loan was assigned to BANA in 2011, and the
Complaint alleges that payments were made to BANA. Id.
According to the Griffors, on or around January 2013, monthly statements
from BANA showed that payments were not being credited to the Griffors’
account.

Id.

information.

The Griffors contacted BANA and supplied the requested
Id.

They began experiencing economic hardship in 2014 and

contacted BANA to request a loan modification. Id.
In late 2014, BANA transferred servicing of the Mortgage to BSI. Id. The
Griffors allege that BANA assured them that the loan modification was in process
and would be transferred to BSI. Id. The Griffors claim that they tried to contact
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BSI to no avail, and that from February 2015 to present, BSI and/or Trust has
transmitted false information about the Griffors to various credit reporting
agencies, causing their credit to be impaired. Id. In December 2015, the Griffors
wrote to BSI “detailing the disputed misappropriation of payments” and requesting
documentation of all payments made to date. Id. On February 2, 2016, BSI wrote
to the Griffors indicating that no payments had been received since June 2011. Id.
at 15.

On February 25, 2016, BSI issued a Notice of Default and Intent to

Accelerate on behalf of Trust. Id. In March 2016, the Griffors requested detailed
accounting from BSI of all payments made on the loan to date. Id. BSI responded
that the request for information was overbroad and unduly burdensome.

Id.

Plaintiffs replied “disputing the accounting practices” and indicating that funds
were missing. Id. In early 2016, a Notice of Foreclosure for the Mortgage was
published setting a Sheriff’s sale date of June 6, 2016 for the Property. Id. On
June 15, 2016, a Circuit Court Judge granted the Griffors a Temporary Restraining
Order staying the foreclosure sale. (Doc 1-2, Pg ID 23-25)
II.

ANALYSIS
A. Standard of Review
Rule 12(b)(6) of the Federal Rules of Civil Procedures provides for a motion

to dismiss for failure to state a claim upon which relief can be granted. Fed. R.
Civ. P. 12(b)(6). This type of motion tests the legal sufficiency of the plaintiff's
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complaint. Davey v. Tomlinson, 627 F. Supp. 1458, 1463 (E.D. Mich. 1986).
When reviewing a motion to dismiss under Rule 12(b)(6), a court must “construe
the complaint in the light most favorable to the plaintiff, accept its allegations as
true, and draw all reasonable inferences in favor of the plaintiff.” Directv Inc. v.
Treesh, 487 F.3d 471, 476 (6th Cir. 2007). A court, however, need not accept as
true legal conclusions or unwarranted factual inferences.” Id. (quoting Gregory v.
Shelby Cnty., 220 F.3d 443, 446 (6th Cir. 2000)).

“[L]egal conclusions

masquerading as factual allegations will not suffice.” Edison v. State of Tenn.
Dep’t of Children’s Servs., 510 F.3d 631, 634 (6th Cir. 2007).
As the Supreme Court has explained, “a plaintiff’s obligation to provide the
‘grounds’ of his ‘entitle[ment] to relief’ requires more than labels and conclusions,
and a formulaic recitation of the elements of a cause of action will not do. Factual
allegations must be enough to raise a right to relief above the speculative level… .”
Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007) (citations omitted); see
LULAC v. Bresdesen, 500 F.3d 523, 527 (6th Cir. 2007). To survive dismissal, the
plaintiff must offer sufficient factual allegations to make the asserted claim
plausible on its face. Ashcroft v. Iqbal, 556 U.S. 662, 663 (2009). “A claim has
facial plausibility when the pleaded factual content allows the court to draw the
reasonable inference that the defendant is liable for the misconduct alleged.” Id.

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B. Claims Against MCM
MCM argues that it has no connection to the present litigation because it has
acted only as a Trustee and is not the owner of or party to the Mortgage or Note.
In their Response, the Griffors concede that all counts should be dismissed as to
MCM with prejudice because MCM is merely acting as Trustee for the Mortgage
holder. (Doc # 17, Pg ID 215) The Complaint itself describes MCM as “a trustee
for mortgage-backed securitized trusts.”

(Doc # 1-2, Pg ID 13)

The Court

dismisses all claims against MCM with prejudice.
C. Breach of Contract Claim
The Griffors claim that “Defendants” breached the Note and Mortgage that
the Griffors signed in 2007 “by failing to apply payments made by Plaintiffs to
Plaintiffs’ loan,” as required by the terms of the Note. (Doc # 1-2) The Complaint
alleges that this “led to the Defendants filing foreclosure action on the Property,”
and the Griffors have suffered compensatory damages.
BSI and Trust argue that the Griffors have failed to allege that BSI or Trust
breached the Mortgage contract or what part of the Mortgage contract was
breached. BSI and Trust further argue that the Griffors have failed to allege that
they made all the payments that were due, that the payments were made timely, or
who the payments were made to. BSI and Trust note that the Griffors have not
alleged that they ever made payments after January 2013.
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To state a claim for breach of contract in Michigan, a plaintiff must allege:
(1) the existence of a valid contract, (2) the terms of the contract, (3) breach of the
contract, and (4) an injury caused by the breach. See Webster v. Edward D. Jones
& Co., L.P., 197 F.3d 815, 819 (6th Cir. 1999).
The Court finds that the Breach of Contract claim fails as to BSI and Trust
because the Griffors have not alleged that they ever made payments after January
2013, or that they ever made payments to BSI and/or Trust. The Complaint merely
alleges that “payments were made” to BANA (Doc # 1-2, Pg ID 14), and the
Response states that “Plaintiffs made payments directly through the Bankruptcy
Court until January 2013” (Doc # 17, Pg ID 212). The Griffors cannot meet the
third element of a breach of contract claim because they cannot establish that BSI
or trust breached the contract by failing to apply any payments. Plaintiffs claim in
their Response that “the facts in this case are so numerous and cumbersome that
not all of the payments and account information could be included in one factual
statement in the Complaint.” The Griffors’ factual allegations must nevertheless
“be enough to raise a right to relief above the speculative level … .” Twombly, 550
U.S. at 555.
BANA argues that the Griffors have failed to allege any specific facts that
show that BANA breached the terms of the Note and Mortgage. BANA argues
that even if they “failed to apply” payments, that does not establish the existence of
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a breach under the terms of the Note and Mortgage. The Griffors respond with a
new allegation that a contract existed with BANA, other than the original Note and
Mortgage.

In their Response, the Griffors allege that BANA breached a

modification agreement by failing to communicate the assignment of interest to
Trust, by losing documents, by repeatedly requesting documents it had already
received, by giving conflicting and confusing instructions to the Griffors, by not
responding to inquiries, and by making mistakes in processing documents.
The new allegations against BANA are not in the Complaint, and the
Griffors also attach new documents to their Response that were not attached to the
Complaint. The Court will not consider these. Even if the Court were to consider
these, the Griffors would still fail to state a Breach of Contract Claim against
BANA because they fail to attach or allege a written modification contract as
required under Michigan’s Statute of Frauds, which provides as follows.
An action shall not be brought against a financial institution to enforce
any of the following promises or commitments of the financial
institution unless the promise or commitment is in writing and signed
with an authorized signature by the financial institution: . . . A
promise or commitment to renew, extend, modify, or permit a delay in
repayment or performance of a loan, extension of credit, or other
financial accommodation.
Mich. Comp. Laws § 566.132. BANA is a “financial institution” under Mich.
Comp. Laws § 566.132(3) which covers a national chartered bank. The letter from
BANA that the Griffors attach to their Response states that BANA was still

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evaluating the request for loan assistance, and that BANA was “unable to provide
you with a decision at this time . . . .” (Doc # 18-6, Pg ID 296) The Court finds
that the Griffors have failed to allege the existence of a valid modification contract.
The Court concludes that the Griffors have failed to state a Breach of
Contract claim as to all Defendants.
D. Violation of the Michigan Mortgage Brokers, Lenders, and Servicers
Licensing Act Claim
The Griffors claim that “Defendants” violated the Michigan Mortgage
Brokers, Lenders, and Services Licensing Act (“MMBLSLA”) by “knowingly
distribut[ing] and/or caus[ing] or permit[ing] to be distributed false, misleading, or
deceptive statements or representations with regard to the terms or conditions for a
mortgage loan, and ma[king] false promises and/or misrepresentations as to an
essential or material fact in the course of business.” (Doc # 1-2, Pg ID 16)
BANA argues that the MMBLSLA does not apply to BANA because, as a
nationally chartered bank, it is a “depository financial institution” under Mich.
Comp. Laws § 445.1672. Plaintiffs agree that BANA is exempt from this claim
and maintain that this claim is against BSI and Trust only. In their Response, the
Griffors concede that the MMBLSLA does not apply to BANA. (Doc # 18, Pg ID
262) The Complaint itself describes BANA as “national banking association.”
(Doc # 1-2, Pg ID 13) The Court dismisses this claim against BANA.

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BSI and Trust first argue that the Griffors do not have a private right to a
cause of action under the MMBLSLA because they fail to allege that they ever
filed a complaint with the commissioner.

The Griffors respond that the

MMBLSLA does provide a private right to a cause of action.
The MMBLSLA imposes licensing requirements on mortgage brokers,
lenders, and services. Mich. Comp. Laws § 445.1651 et seq. The MMBLSLA
also prohibits a licensee or registrant from “[e]ngag[ing] in fraud, deceit, or
material misrepresentation in connection with any transaction governed by this
act.” Id. at § 445.1672(b). Pursuant to Section 445.1681(1),
[w]hether or not a person seeks damages or has an adequate remedy at
law, any person . . . may bring an action . . . to do any of the
following: (a) Obtain a declaratory judgment that a method, act, or
practice is a violation of this act. (b) Obtain an injunction against a
person who is engaging in or is about to engage in a method, act, or
practice that violates this act. (c) . . . recover
actual
damages
resulting from a violation of this act, or $250.00, whichever is greater,
together with reasonable attorney fees and the costs of bringing the
action.
BSI and Trust cite Section 445.1663; however, the language related to filing a
complaint with the commissioner is permissive, not mandatory: “The attorney
general, the commissioner, or any other person may file a complaint with the
commissioner alleging that a person has violated this act . . . . Upon receipt of a
complaint, the commissioner may begin an investigation pursuant to the provisions
of this act.” The Court concludes that the Griffors have a private right to a cause
9

of action. See Yaldu v. Bank of America Corp., 700 F. Supp. 2d 832, 846 (E.D.
Mich. 2010) (citing § 445.1681(1) and finding that the MMBLSLA provides an
individual cause of action).
BSI and Trust next argue that the Griffors fail to allege a violation of the
MMBLSLA in that they fail to allege facts that constitute “fraud, deceit, or
material misrepresentation.”

BSI and Trust assert that the Complaint merely

recites the statute. The Griffors respond that the Complaint sufficiently alleges that
BSI and Trust engaged in fraud in the inducement by failing to provide material
information and payment disclosures to the Griffors.
“Fraud in the inducement occurs where a party materially misrepresents
future conduct under circumstances in which the assertions may reasonably be
expected to be relied upon and are relied upon.” Samuel D. Begola Servs., Inc. v.
Wild Bros., 210 Mich. App. 636, 639 (1995). To state a claim for fraud-in-theinducement in Michigan, a plaintiff must allege 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 and 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.
Belle Isle Grill Corp. v. City of Detroit, 256 Mich. App. 463, 477 (2003).

10

The Complaint alleges that in December 2015, the Griffors wrote to BSI
“detailing

the

disputed

misappropriation

of

payments”

and

requesting

documentation of all payments made to date. (Doc # 1-2, Pg ID 14) On February
2, 2016, BSI wrote to the Griffors indicating that no payments had been received
since June 2011. Id. at 15. On February 25, 2016, BSI issued a Notice of Default
and Intent to Accelerate on behalf of Trust. Id. In March 2016, the Griffors
requested detailed accounting from BSI of all payments made on the loan to date.
Id. BSI responded that the request for information was overbroad and unduly
burdensome. Id. The Griffors replied “disputing the accounting practices” and
indicating that funds were missing. Id. As noted above, the Griffors have failed to
allege that they ever made payments after January 2013 or that they ever made
payments to BSI or Trust.
The Court finds that these allegations are insufficient to state a claim of
fraud in the inducement against BSI and Trust. Plaintiffs fail to allege how the
alleged misrepresentation—refusing to provide payment disclosures—was
material, how it was false, or even how the Griffors relied upon it. The Griffors
allege in their Response (not in the Complaint) that BSI and Trust intended for the
Griffors to “[forego] their option to explore other means of loan modification or
forbearance,” but the Complaint is devoid of facts that support that.

11

The Court concludes that the Griffors have failed to state a Violation of the
MMBLSLA claim as to all Defendants.
E. Defamation Claim
The Griffors claim that, as a proximate result of the negligent or reckless
conduct of BSI and Trust, their credit has been impaired. (Doc # 1-2, Pg ID 17)
BANA asserts that some of the allegations in the Complaint are vague and do not
identify the parties they are alleged against. In their Response, the Griffors clarify
that their defamation claim applies to BSI and Trust only, and not to BANA. (Doc
# 18, Pg ID 262) The Court dismisses this claim against BANA.
BSI and Trust argue that the defamation claim is preempted by the Fair
Credit Reporting Act (“FCRA”). 15 U.S.C. § 1681 et seq. The Griffors respond
that their defamation claim is not preempted because they allege that BSI and Trust
had a willful intent to injure Mariela Griffor.
Under Section 1681t(b)(1)(F) of the FCRA, “[n]o requirement or prohibition
may be imposed under the laws of any State . . . with respect to any subject matter
regulated under . . . section 1681s-2 of this title, relating to the responsibilities of
persons who furnish information to consumer reporting agencies.” Section 1681s2 of the FCRA explains the duties of furnishers of information to provide accurate
information, as well as the obligations of furnishers once they are notified of a
dispute.

Section 1681s-2 of the FCRA specifically prohibits furnishers of
12

information from furnishing “any information relating to a consumer reporting
agency if the person knows or has reasonable cause to believe that the information
is inaccurate.” Id. at § 1681s-2(a)(1)(A). Courts have therefore interpreted Section
1681t(b)(1)(F) of the FCRA as preempting state law defamation claims predicated
on the furnisher of credit information furnishing inaccurate information after the
furnisher received notice of, or had reason to know about the dispute, since that is
subject matter regulated under Section 1681s-2. See Stafford v. Cross Country
Bank, 262 F. Supp. 2d 776, 787-88 (W.D. Ky. 2003).
The FCRA also includes another provision, Section 1681h(e), which the
Griffors rely on to support their argument that their defamation claim is not
preempted by the FCRA. Section 1681h(e) provides that “no consumer may bring
any action or proceeding in the nature of defamation . . . with respect to the
reporting of information against . . . any person who furnishes information to a
consumer reporting agency . . . except as to false information furnished with
malice or willful intent to injure such consumer. Under this provision, a state law
defamation claim that is not covered by Section 1681s-2 would be permitted but
would require a higher standard of proof. See Stafford, 262 F. Supp. 2d at 785.
To the extent that the Griffors allege that BSI or Trust furnished any
inaccurate information after receiving notice from the Griffors of a dispute, such
conduct of BSI or Trust “falls squarely within 1681s-2.”
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See id. at 787-88.

Section 1681t(b)(1)(F) preempts such a defamation claim. To the extent that the
Griffors allege that BSI or Trust furnished any inaccurate information before
knowing or having reason to know about the Griffors’ dispute, the Griffors must be
able to establish that BSI or Trust acted maliciously or with a willful intent to
injure the Griffors to proceed under Section 1681h(e). Assuming that the Griffors
could establish that BSI or Trust acted maliciously or with a willful intent in
furnishing inaccurate information before having reason to know about the dispute,
such a defamation claim would be preempted by Section 1681t(b)(1)(F) because
Section 1681s-2 regulates the furnishing of information if done knowingly or if the
furnisher has reasonable cause to believe that the information is inaccurate. See id.
at 788.
The last remaining question is whether the Griffors have stated a defamation
claim for a subject matter not regulated under Section 1681s-2, and at the same
time, are able to meet the higher standard of proof required under Section
1681h(e). The Complaint alleges that BSI and/or Trust “has transmitted to various
credit reporting agencies, including Equifax, false information about the Plaintiffs,
causing their credit to be impaired.” (Doc # 1-2, Pg ID 14) The Griffors argue that
BSI and Trust had no right to defame Mariela Griffor because she only signed the
Mortgage, not the Note. As a result, she is not personally liable for the debt, as
specified in the Mortgage.

The Griffors assert that BSI and Trust willfully
14

intended to injure her by reporting her negatively to the credit agency for failure to
pay a debt she was not responsible for. The Griffors also argue that BSI and Trust
had no right to report their credit information while they were actively pursuing a
loan modification. The Court finds that, at bottom, all of the Griffors’ defamation
allegations involve conduct on the part of BSI and Trust specifically related to their
function as furnishers of credit information. That is precisely the subject matter
regulated by Section 1681-s2.

Section 1681t(b)(1)(F) preempts the Griffors’

defamation claim.
The Court concludes that the Griffors have failed to state a Defamation
claim as to all Defendants.
F. Negligence Claim
The Griffors claim that “Defendants” breached their duty of care and skill to
the Griffors in servicing their loan by failing to properly and accurately credit
payments made by the Griffors toward the loan. (Doc # 1-2, Pg ID 17) The
Complaint alleges that Defendants had a duty to maintain proper and accurate loan
records and to discharge and fulfill the other incidents attendant to the
maintenance, accounting, and servicing of loan records including accurate
crediting of payments made by the Griffors.
BANA, BSI, and Trust argue that dismissal of this claim is proper because
the Griffors have not alleged that BANA, BSI, or Trust owed them a duty that is
15

separate and distinct from their contractual obligations under the Note and
Mortgage. The Griffors respond, without citing any legal authority, that BANA
owed them a duty that is distinct from the lender-borrower relationship—the duty
to deal fairly and honestly with them, handle their loan modification application
properly, provide basic information regarding their loan, and maintain accurate
servicing records of their loan.

The Griffors assert that BANA negligently

frustrated the loan modification negotiation process by not processing documents
or communicating in a timely manner until the loan could be assigned to BSI and
Trust. The Griffors also respond, without citing any legal authority, that BSI and
Trust owed them a duty that is distinct from the lender-borrower relationship—the
duty to exercise reasonable care in processing, reviewing, and responding to the
Griffors’ requests for information.
“The requisite elements of a negligence cause of action are that the
defendant owed a legal duty to the plaintiff, that the defendant breached or violated
the legal duty, that the plaintiff suffered damages, and that the breach was a
proximate cause of the damages suffered.” Schultz v. Consumers Power Co., 443
Mich. 445, 449 (1993). “The Michigan Supreme Court has held that in ‘tort
actions based on a contract,’ courts should use a ‘separate and distinct mode of
analysis.’ . . . [T]he threshold question is whether the defendant owed a duty to the
plaintiff that is separate and distinct from the defendant's contractual obligations.
16

If no independent duty exists, no tort action based on a contract will lie.” Galati v.
Wells Fargo Bank, No. 11-11487, 2011 WL 5178276, at *8 (E.D. Mich. Nov. 1,
2011) (citing Fultz v. Union–Commerce Assoc., 470 Mich. 460, 467 (2004); Hart
v. Ludwig, 347 Mich. 559, 565–66 (1956)).
The Griffors have alleged that BANA, BSI, and Trust owed them a duty to
accurately credit payments, a duty to handle the loan modification application
properly, and a duty to provide information about the loan. These duties all arise,
if at all, from the Note and the Mortgage.

For example, Paragraph Three of the

Note states that “[e]ach monthly payment will be applied as of its scheduled due
date and will be applied to interest before Principal.” (Doc # 9-3, Pg ID 87)
Paragraph Two of the Mortgage specifies how payments by the Borrower will be
applied by the Lender. (Doc # 9-2, Pg ID 80) Paragraph Twelve of the Mortgage
specifies that “extension of the time for payment or modification of amortization of
the sums secured by this Security Instrument granted by Lender. . . shall not
operate to release the liability of Borrower . . . . Any forbearance by Lender in
exercising any right or remedy . . . shall not be a waiver of or preclude the exercise
of any right or remedy.” Id. at 83. Paragraph Fifteen of the Mortgage specifies
how Notices from the Borrower to the Lender as well as Notices from the Lender
to the Borrower regarding the Mortgage will be given. Id. at 84.

17

The Court finds that the Griffors’ negligence claim fails because they have
not alleged that BANA, BSI, or Trust owed them a duty that is separate and
distinct from their contractual obligations. See, e.g., Galati, 2011 WL 5178276, at
*8 (holding that lending institutions did not owe borrower a duty to comply with
relevant industry standards for the lending industry or a duty to comply with local,
state, and federal regulations); Ulrich v. Fed. Land Bank of St. Paul, 192 Mich.
App. 194, 198-200 (1991) (holding that lending institution did not owe borrower a
duty of care with respect to determining borrower’s eligibility for the loan);
Polidori v. Bank of Am., N.A., 977 F. Supp. 2d 754, 763-64 (E.D. Mich. 2013)
(holding that lending institution did not owe borrower a duty to conduct a
reasonable inquiry as to whether he would be able to qualify for a loan
modification). In each of the aforementioned cases, the alleged duty did not exist
under Michigan law, as is the case here. Rather, the plaintiffs’ allegations relating
to the duties of lending institutions arose, if at all, from the notes and the
mortgages.

The same reasoning applies to the Griffors’ allegations; no

independent duty exists here, and a negligence action based on the contract will not
lie.
The Court concludes that the Griffors have failed to state a Negligence claim
as to all Defendants.

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G. Breach of Oral Contract Claim
The Griffors claim that BANA, BSI, and Trust breached an oral contract
because they assured the Griffors that they were approved for a loan modification
and that the modification would be transferred when the loan was assigned from
BANA to BSI in 2014. The Griffors assert that BSI and Trust did not honor the
loan modification as their representatives had assured the Griffors they would.
BANA argues that the Griffors claims are barred by Michigan’s Statute of
Frauds. In their Response, the Griffors concede that there was no guarantee that
the loan modification would be granted, but they assert that BANA’s mishandling
of the documents deprived the Griffors of the possibility of obtaining the loan
modification. The Griffors argue that an oral contract was formed when a BANA
representative told them that their junior lien would be discharged and that they
would receive a loan modification if all documents were returned. The Griffors
also argue that the doctrine of equitable estoppel and partial performance remove
their claim from the Statute of Frauds.
As discussed above, even if the Court were to consider new documents
attached to the Griffors’ Response, the Griffors would fail to state a claim against
BANA because they fail to attach or allege a written modification contract as
required under Michigan’s Statute of Frauds, which provides as follows.
An action shall not be brought against a financial institution to enforce
any of the following promises or commitments of the financial
19

institution unless the promise or commitment is in writing and signed
with an authorized signature by the financial institution: . . . A
promise or commitment to renew, extend, modify, or permit a delay in
repayment or performance of a loan, extension of credit, or other
financial accommodation.
Mich. Comp. Laws § 566.132. BANA is a “financial institution” under Mich.
Comp. Laws § 566.132(3), which covers a national chartered bank. The letter
from BANA that the Griffors attach to their Response states that BANA was still
evaluating the request for loan assistance, and that BANA was “unable to provide
you with a decision at this time . . . .” (Doc # 18-6, Pg ID 296) The Court finds
that the Griffors have failed to allege the existence of a valid modification contract.
The unambiguous language of the Statute of Frauds plainly states that the
Griffors are precluded from bringing this claim “no matter its label” against
BANA, a financial institution, to enforce the terms of an oral promise to waive a
loan provision. See Crown Tech. Park v. D&N Bank, FSB, 242 Mich. App. 538,
550 (2000) (finding that promissory estoppel claim based on reliance on a loan
modification agreement was barred by the Statute of Frauds without evidence of a
written modification agreement). The Court finds that the doctrine of equitable
estoppel does not remove the claim from the Statue of Frauds. See Vittands v. Bank
of Am., NA, No. 11-CV-15241, 2012 WL 1696708, at *4 (E.D. Mich. May 15,
2012) (finding that estoppel claim was merely a creative attempt at skirting the
evidentiary burden established by the Statute of Frauds, which Michigan courts
20

have made clear “effectuates a broad ban on claims against financial institutions to
enforce promises regarding loan modifications”). Likewise, the Court finds that
partial performance does not remove the claim from the Statute of Frauds. See
Saad v. Wayne Cnty. Register of Deeds, No. 11-15590, 2013 WL 3455628, at *6
(E.D. Mich. July 9, 2013) (“[P]art performance is not sufficient to remove a claim
from the statute of frauds applicable to financial institutions.”)

The Court

dismisses this claim against BANA.
BSI and Trust argue that the Griffors have failed to allege the elements of a
breach of oral contract claim. In their Response, the Griffors allege that they
applied and were approved for a new loan modification with BSI, but that BSI and
Trust failed to honor the terms of the modification agreement as BANA had
assured the Griffors that BSI and Trust would do.
To state a claim for breach of oral contract in Michigan, a plaintiff must first
allege “the essential contractual elements:

competent parties, proper subject

matter, legal consideration, mutuality of agreement, and mutuality of obligation.”
Downriver Maint. Corp. v. Decker, No. 232875, 2002 WL 31012608, at *3 (Mich.
Ct. App. Aug. 30, 2002) (unpublished).

The Griffors fail to allege legal

consideration, mutuality of agreement, or mutuality of obligation. In short, an oral
contract did not even exist between the Griffors and BSI and/or Trust.

The

Griffors’ concede in their Response that it was BANA representatives who
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allegedly made promises regarding the loan modification and how it would be
honored following the assignment. (Doc #17, Pg ID 225) The Complaint at
paragraph 14 also alleges that it was BANA who assured the Griffors that the loan
modification would be transferred to BSI. The Court dismisses this claim against
BSI and Trust.
The Court concludes that the Griffors have failed to state a Breach of Oral
Contract claim as to all Defendants.
The Griffors have failed to state any claim against any Defendant, and
accordingly, the Court will dismiss this action.
III.

CONCLUSION:
For the reasons set forth above,
IT IS HEREBY ORDERED that Defendant BANA’s Motion to Dismiss

(Doc # 9) is GRANTED.
IT IS FURTHER ORDERED that Defendants BSI, Trust, and MCM’s Joint
Motion to Dismiss (Doc # 13) is GRANTED.
IT IS FURTHER ORDERED that this action is DISMISSED with prejudice.
Dated: March 31, 2017

s/Denise Page Hood
Chief, U.S. District Court

I hereby certify that a copy of the foregoing document was served upon counsel of
record on March 31, 2017, by electronic and/or ordinary mail.
s/LaShawn R. Saulsberry
Case Manager
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