Poindexter v. NationStar Mortgage et al

Filing 8

AMENDED OPINION and ORDER DENYING PLAINTIFF'S 5 MOTION for Ex Parte MOTION for Temporary Restraining Order , ( Plaintiff must serve Defendants with SEVEN DAYS of this order; Defendants Response due by 7/21/2017) Signed by District Judge Gershwin A. Drain. (TMcg)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
KAREN POINDEXTER,
Plaintiff,

Case No. 17-cv-11937

v.

UNITED STATES DISTRICT COURT JUDGE
GERSHWIN A. DRAIN

NATIONSTAR MORTGAGE and
PETRU PUSTA,

UNITED STATES MAGISTRATE JUDGE
STEPHANIE DAWKINS DAVIS

Defendants.
__________________________/
AMENDED OPINION AND ORDER DENYING PLAINTIFF’S MOTION FOR EX PARTE
TEMPORARY RESTRAINING ORDER [5]
I. Introduction
This is mortgage foreclosure case. Plaintiff, who is a disabled, wheelchairbound individual, requests the Court to temporarily restrain the Defendants from
evicting her and her family from their current home. For the reasons that will
follow, the Court will DENY Plaintiff’s Motion for Ex Parte Temporary
Restraining Order [5].
II. Factual Background
Many of the facts in this case remain unknown. Plaintiff, Karen Poindexter,
is physically disabled. She has been diagnosed with Sarcoidosis and Ataxia.
According to her doctor, these conditions make her unable to move from her home.
Her condition is not likely to improve. Dkt. No. 4, p. 26 (Pg. ID 40). Ms.
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Poindexter has resided at 13041 Oak Park Blvd. in Oak Park, Michigan since at
least 2001. Id., p. 7 (Pg. ID 21). It seems that Ms. Poindexter defaulted on her
mortgage and her home was sold via sheriff’s deed, on July 26, 2016. Id., p. 16
(Pg. ID 30). On November 11, 2016, Ms. Poindexter requested an occupied
conveyance from the U.S. Department of Housing and Urban Development
(hereinafter “HUD”). Id., p. 24 (Pg. ID 38).
There are two defendants in this case: NationStar Mortgage, LLC
(hereinafter “NationStar”), the residential mortgage servicer, and Petru Pusta. Dkt.
No. 1, pp. 2–3 (Pg. ID 2–3). Petru Pusta purchased the property from NationStar.
Id. p. 2 (Pg. ID 2). According to a judgment entered in Michigan’s 45th District
Court on June 19, 2017, Petru Pusta “can apply for an order evicting [Ms.
Poindexter] if [Ms. Poindexter] does not move out on or before 6/29/17.” On June
19, 2017, Plaintiff filed her Complaint. On June 29, 2017 at 3:50 p.m., Plaintiff
filed an Ex Parte Motion for Temporary Restraining Order.
III. Legal Standard for Temporary Restraining Order
A district court must assess four factors in deciding whether to issue a
preliminary injunction or temporary restraining order: “(1) whether the plaintiff
has established a substantial likelihood or probability of success on the merits; (2)
whether there is a threat of irreparable harm to the plaintiff; (3) whether issuance
of the injunction would cause substantial harm to others; and (4) whether the

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public interest would be served by granting injunctive relief.” Nightclubs, Inc. v.
City of Paducah, 202 F.3d 884, 888 (6th Cir. 2000). “The four considerations
applicable to preliminary injunction decisions are factors to be balanced, not
prerequisites that must be met.” Hamad v. Woodcrest Condo. Ass’n, 328 F.3d 224,
230 (6th Cir. 2003).
IV. Analysis
The Complaint asserts two counts against the Defendants: (1) violation of
the Real Estate Settlement Procedures Act (“RESPA”); and (2) breach of contract.
1. Success on the Merits
Plaintiff has not established a substantial likelihood or probability of success
on the merits of her claims.
A. RESPA and 12 C.F.R. § 1024.41
Plaintiff alleges that the Defendants violated RESPA by failing to engage in
loss mitigation efforts to avoid the foreclosure of a HUD-insured single family
residence. Dkt. No. 1, p. 3 (Pg. ID 3). Ms. Poindexter bases this claim on 12 C.F.R.
§ 1024.41, “a regulation promulgated by the Consumer Financial Protection
Bureau under the Real Estate Settlement Procedures Act, 12 U.S.C. § 2605.”
Brimm v. Wells Fargo Bank, N.A., No. 16-2070, 2017 WL 1628996, at *2 (6th Cir.
May 2, 2017). Section 1024.41 states the following:
A borrower may enforce the provisions of this section pursuant to
section 6(f) of RESPA (12 U.S.C. 2605(f)). Nothing in § 1024.41
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imposes a duty on a servicer to provide any borrower with any
specific loss mitigation option. Nothing in § 1024.41 should be
construed to create a right for a borrower to enforce the terms of any
agreement between a servicer and the owner or assignee of a
mortgage loan, including with respect to the evaluation for, or offer
of, any loss mitigation option or to eliminate any such right that may
exist pursuant to applicable law.
12 C.F.R. § 1024.41(a).
Section 1024.41 goes on to describe a loan servicer’s obligations: upon
receipt of a loss mitigation application, while evaluating a loss mitigation
application, and after denial of a loan modification options. Id. For example, §
1024.41 “requires mortgage servicers to make decisions on loan modification
requests in a timely manner and prohibits servicers from foreclosing if a mortgagor
submits a complete modification application more than 37 days before a scheduled
sale.” Brimm, 2017 WL 1628996, at *2.
In this case, the Complaint states that, “Defendant repeatedly moved the loan
to ‘foreclosure status’ without fully addressing and reviewing all documents
supplied by the Plaintiff.” Dkt. No. 1, p. 5 (Pg. ID 5). Even accepting the
Plaintiff’s allegations as true, the Plaintiff fails to demonstrate a likelihood of
success on her claim that the Defendants violated § 1024.41. The loss mitigation
procedures articulated in § 1024.41 require a borrower to submit a loss mitigation
application to the loan servicer. Receipt of a loss mitigation application triggers the
servicer’s responsibilities.

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Here, Plaintiff fails to allege (in the Complaint or the motion) that she ever
submitted a loss mitigation application. Indeed, the Plaintiff attached copies of the
deed, mortgage, doctor’s notes, and a copy of federal regulations to her motion and
complaint. However, missing from Plaintiff’s materials is any loss mitigation
application. Accordingly, without proof or even an allegation that the Plaintiff
submitted a loss mitigation application, the Defendants cannot be liable for a
violation of loss mitigation procedures.
B. Breach of Contract
Count II of the Complaint alleges that “NationStar failed to adhere to the
clear contractual language in the mortgage[,] which placed a clear duty to comply
with the applicable federal statutes and regulations.” Dkt. No. 1, p. 6 (Pg. ID 6).
“Under Michigan law, the elements of a breach of contract claim are the
following: (1) a contract existed between the parties, (2) the terms of the contract
required performance of certain actions, (3) a party breached the contract, and (4)
the breach caused the other party injury.” Green Leaf Nursery, Inc. v. Kmart Corp.,
485 F. Supp. 2d 815, 818 (E.D. Mich. 2007).
In this case, a mortgage contract existed between the Plaintiff and Mortgage
Electronic Registration Systems, Inc. as a nominee for Countrywide Home Loans,
Inc. See Dkt. No. 4, p. 7 (Pg. ID 21). The mortgage was eventually assigned to
Defendant NationStar. Id., p. 13 (Pg. ID 27). Therefore the first element for breach

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of contract is met. The mortgage incorporates federal housing regulations. Id., p.
10 (Pg. ID 24). Therefore, the second element is met.
Plaintiff argues that NationStar breached federal regulations and therefore
the mortgage because she was denied an “occupied conveyance.” Dkt. No. 5, p. 4
(Pg. ID 58).
HUD offers single-family mortgage insurance programs to incentivize
private mortgage lenders to provide mortgage loans to borrowers who might not
otherwise qualify for mortgages in the private market. See 12 U.S.C. § 1709 (“The
Secretary is authorized, upon application by the mortgagee, to insure as hereinafter
provided any mortgage offered to him which is eligible for insurance as hereinafter
provided, and, upon such terms as the Secretary may prescribe, to make
commitments for the insuring of such mortgages prior to the date of their execution
or disbursement thereon.”). In the event of foreclosure, a mortgagee may try to
collect on the mortgage’s insurance by conveying the property to HUD. See 12
U.S.C. § 1710. In order to collect on the insurance benefits, a mortgagee must
comply with HUD policies. Id.
“HUD usually requires that any property conveyed to it be conveyed vacant
unless the occupant makes a timely request for permission to continue to occupy
the property.” Estep v. Manley Deas Kochalski, LLC, 942 F. Supp. 2d 758, 763–64
(S.D. Ohio 2013), aff’d, 552 F. App’x 502 (6th Cir. 2014) (citing 24 C.F.R. §

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203.678(a)). However, there are certain exceptions to general rule that property
must be vacant when conveyed.
(a) Occupancy because of temporary, permanent, or long-term illness
or injury of an individual residing in the property will be limited to a
reasonable time, to be determined by the Secretary on a case-by-case
basis, and will be permitted only if all the conditions in this paragraph
(a) are met:
(1) A timely request is made in accordance with § 203.676,
including the submittal of documents required in §
203.675(b)(4).
(2) The occupant agrees to execute a month-to-month lease, at
the time of acquisition of the property by the Secretary and on
a form prescribed by HUD, and to pay a fair market rent as
determined by the Secretary. The rental rate shall be
established on the basis of rents charged for other properties in
comparable condition after completion of repairs (if any).
(3) The occupant’s total housing cost (rent plus utility costs to
be paid by the occupant) will not exceed 38 percent of the
occupant's net effective income (gross income less Federal
income taxes). However, a higher percentage may be
permitted if the occupant has been paying at least the required
rental amount for the dwelling, or if there are other
compensating factors (e.g., where the occupant is able to rely
on cash savings or on contributions from family members to
cover total housing costs).
(4) The occupant agrees to allow access to the property
(during normal business hours and upon a minimum of two
days advance notice) by HUD Field Office staff or by a HUD
representative, so that the property may be inspected and any
necessary repairs accomplished, or by a sales broker.
(5) The occupant discloses and verifies Social Security
Numbers, as provided by part 200, subpart T, of this chapter.
24 C.F.R. § 203.674.
Here, Plaintiff argues that she is entitled to an occupied conveyance pursuant
to 24 C.F.R. § 203.674, but “due to an error, the property was not returned to
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HUD, but sold to a third party.” Dtk. No. 5, p. (Pg. ID 56). To bolster her
argument, Plaintiff submitted a signed “Request for Occupied Conveyance” form,
signed on November 10, 2016. Dkt No. 5-1, p. 14 (Pg. ID 78).
There is a fatal flaw in the Plaintiff’s argument—requesting an occupied
conveyance does not require a mortgagee to convey the property to HUD, rather
Plaintiff’s entitlement to an occupied conveyance is not triggered unless the
mortgagee conveys the property to HUD.
The Secretary may pay insurance benefits if the mortgagee has
acquired title to the mortgaged property through foreclosure or has
otherwise acquired such property from the mortgagor after a default
upon-(i) the prompt conveyance to the Secretary of title to the property
which meets the standards of the Secretary in force at the time the
mortgage was insured and which is evidenced in the manner provided
by such standards; and
(ii) the assignment to the Secretary of all claims of the mortgagee
against the mortgagor or others, arising out of mortgage transaction or
foreclosure proceedings, except such claims as may have been
released with the consent of the Secretary.
The Secretary may permit the mortgagee to tender to the Secretary a
satisfactory conveyance of title and transfer of possession directly
from the mortgagor or other appropriate grantor, and may pay to the
mortgagee the insurance benefits to which it would otherwise be
entitled if such conveyance had been made to the mortgagee and from
the mortgagee to the Secretary.
12 U.S.C. § 1710 (a)(1)(B) (emphasis added).
Because federal law and regulations offer but do not require an insured
property to be conveyed back to HUD, Plaintiff has not demonstrated that she was

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entitled to an occupied conveyance. Thus, Plaintiff has not established a likelihood
of success on her breach of contract claim.
2. Irreparable Injury
The second factor in determining whether to issue a temporary restraining
order requires the Court to assess whether Ms. Poindexter will suffer irreparable
injury in the absence of an injunction. “In evaluating the harm that will occur
depending upon whether or not the stay is granted, we generally look to three
factors: (1) the substantiality of the injury alleged; (2) the likelihood of its
occurrence; and (3) the adequacy of the proof provided.” Michigan Coal. of
Radioactive Material Users, Inc. v. Griepentrog, 945 F.2d 150, 154 (6th Cir.
1991). “In addition, the harm alleged must be both certain and immediate, rather
than speculative or theoretical. In order to substantiate a claim that irreparable
injury is likely to occur, a movant must provide some evidence that the harm has
occurred in the past and is likely to occur again.” Id.
Plaintiff argues that she will be irreparably harmed if she is forced to leave
her home. Dkt. No. 5, p. 9 (Pg. ID 63). Ms. Poindexter attaches two doctor’s notes,
which state that she “is unable to move from her home” and that it is “not
recommended for [Ms. Poindexter] to move or use stairs.” Dkt. No. 5-1, pp. 10–11
(Pg. ID 74–75).

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Considering the evidence and the harm alleged, the Court determines that
this factor does not weigh in favor of issuing the temporary restraining order.
Although Ms. Poindexter’s conditions are not likely to improve, see Dkt. No. 5-1,
p. 10 (Pg. ID 74), Plaintiff admits that her condition continues to deteriorate even
while she remains in the home. Dkt. No. 5, p. 2 (Pg. ID 56). Moreover, despite
doctor’s recommendations, there is no allegation or evidence of what additional
injury will be caused. Instead the Court is left to speculate that Ms. Poindexter’s
injury will somehow be exacerbated apart from the normal course of her condition.
However, such theorizing is not permitted. See Griepentrog, 945 F.2d at 154.
3. Harm to Others
In the third factor, the Court must consider whether issuing the injunction
would result in substantial harm to others. See Certified Restoration Dry Cleaning,
511 F.3d at 550–51. Plaintiff argues that there is no harm to others because
Plaintiff paid and is will to continue paying escrow. Dkt. No. 5, p. 9 (Pg. ID 63).
Plaintiff’s argument is unpersuasive. In this case, Petru Pusta obtained counsel to
seek a judgment against the Plaintiff. Dkt. No. 5-1, p. 4 (Pg. ID 68). The judgment
allows Pusta to apply for an order of eviction. Id. It further orders that escrow be
released to the Plaintiff. Id. From the state court judgment, it is clear that Pusta
sought and obtained a right to possess the property—not escrow. Accordingly,

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Pusta’s harm is not assuaged by Plaintiff’s willingness to pay escrow. This factor
does not weigh in favor of issuing the temporary restraining order.
4. Public Interest
The final factor for the Court to consider is “whether the public interest
would be served by the issuance of the injunction.” Certified Restoration Dry
Cleaning, 511 F.3d at 551. Plaintiff argues that the public interest is served by
“following HUD regulations.” Dkt. No. 5, p. 9 (Pg. ID 63). This argument is
unpersuasive. Based on the HUD regulations and the limited evidence before the
Court, it does not appear that any HUD regulations were violated. Despite
Plaintiff’s arguments to the contrary, there is a general public interest in the
enforcement of voluntarily assumed contract obligations. Certified Restoration Dry
Cleaning, 511 F.3d at 551. Here, the property was voluntarily sold to a third party.
Therefore it is in the public interest to respect that sale. Thus this factor weighs
against a temporary restraining order.
V. Conclusion
The Court sympathizes with Ms. Poindexter’s situation. However, “a
temporary restraining order is an extraordinary remedy that generally is reserved
for emergen[y] situations in which a party may suffer irreparable harm during the
time required to give notice to the opposite party or where notice itself may
precipitate the harm.” Hacker v. Fed. Bureau of Prisons, 450 F. Supp. 2d 705, 710

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(E.D. Mich. 2006). The Plaintiff may be entitled to equitable relief. However, on
the present record, the Court finds that the drastic remedy of granting a temporary
restraining order without notice is not justified. Plaintiff’s Motion for Ex Parte
Temporary Restraining Order is DENIED.
It is further ORDERED that Plaintiff MUST serve Defendants with process
and a copy of this order within seven days. Proof of service MUST be filed via
CM/ECF forthwith. Defendants MUST file a response with the Court no later than
July 21, 2017.
SO ORDERED.
Dated: July 7, 2017
Detroit, MI

s/Gershwin A. Drain
HON. GERSHWIN A. DRAIN
United States District Court Judge

I hereby certify that a copy of the foregoing document was mailed to the attorneys
of record on this date, July 7, 2017, by electronic and/or ordinary mail.

/s/Tanya Bankston
Case Manager, [phone]

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