Burnham et al v. Wells Fargo Home Mortgage, Inc. et al

Filing 9

OPINION AND ORDER granting 2 Motion to Dismiss. Signed by District Judge Paul D. Borman. (DTof)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
JULIA BURNHAM and BRUCE
BURNHAM,
Case No. 17-13652
Plaintiffs,
Paul D. Borman
United States District Judge

v.
WELLS FARGO HOME
MORTGAGE, INC. and FEDERAL
HOME LOAN MORTGAGE
CORPORATION,

Elizabeth A. Stafford
United States Magistrate Judge

Defendants.
______________________________/
OPINION AND ORDER GRANTING DEFENDANTS’ MOTION TO
DISMISS
In this action, Plaintiffs Julia and Bruce Burnham have sued Defendant Wells
Fargo Home Mortgage, Inc. (“Wells Fargo”), which owned and ultimately
foreclosed on a mortgage on their home, and Defendant Federal Home Loan
Mortgage Corporation (“Freddie Mac”), which purchased their home at the
foreclosure sale. Plaintiffs assert claims of illegal foreclosure, breach of contract,
and fraud. They also argue that their Complaint alleges a claim under the Real Estate
Settlement Procedures Act (“RESPA”), 12 U.S.C. § 2605.
Before the Court is Defendants’ Motion to Dismiss. For the reasons set forth
below, each of Plaintiffs’ asserted claims is both untimely and insufficient to state a
claim for relief. Accordingly, the Court will grant Defendants’ Motion to Dismiss.

BACKGROUND
Factual Allegations
Plaintiffs filed this action on October 5, 2017 in the 6th Circuit Court for the
County of Oakland. (ECF No. 1, Notice of Removal Ex. A, Summons and Complaint
at Pg ID 19-183 (“Compl.”).) The following is a summary of the factual allegations
pled in the Complaint.
This lawsuit concerns real property at 927 Hillsborough Drive in Rochester
Hills, Michigan. (Id. ¶ 4.) Plaintiffs obtained fee simple ownership of the subject
property in the summer of 1999. (Id. ¶ 8; Ex. 1, Warranty Deed.) Three and a half
years later, Plaintiffs refinanced the property by borrowing $259,000 from
Defendant Wells Fargo. The loan was represented by a promissory note dated
January 27, 2003 (Compl. ¶ 9), and secured by a mortgage on the subject property
dated January 27, 2003 and recorded on March 5, 2004. (Id. ¶ 11; Ex. 2, Mortgage.)
After Plaintiff Julia Burnham lost her job in July 2008, she contacted Wells
Fargo to explain her concern that she and her husband would fall behind in their
payments, and was directed to “write a letter to Wells Fargo explaining her situation
so that she may qualify for a moratorium.” (Compl. ¶¶ 14-15.) She faxed a letter to
Wells Fargo on July 26, 2008, and then a follow-up letter three days later. (Id. ¶ 16;
Ex. 4, July 26, 2008 Fax; Ex. 5, July 29, 2008 Fax.) From July 29, 2008 until January
29, 2009, Ms. Burnham worked with Wells Fargo on an application for a loan
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modification. (Compl. ¶ 17.)
The Complaint alleges, however, that during this time, and “[u]nbeknownst
to Plaintiffs, Defendant [Wells Fargo] was beginning foreclosure proceeding[s]
against them, evidenced by the publication of a foreclosure notice in the Oakland
County Legal News on January 15, 2009.” (Id. ¶ 18; Ex. 6, Foreclosure Notice.) The
foreclosure notice stated that there would be a sheriff’s sale of the subject property
on February 17, 2009. (Foreclosure Notice at 1, Pg ID 69.)
Meanwhile, Wells Fargo informed Ms. Burnham that she might qualify for a
“debt-to-income” program, and she faxed certain requested documents to Wells
Fargo on January 29, 2009. Her fax included an explanation of the union grievance
proceedings regarding her termination that were then underway, documents
evidencing unemployment assistance, and a letter from Plaintiffs’ niece representing
that she would loan Plaintiffs between $1000 and $1200 per month to assist with
their mortgage payments. (Compl. ¶ 20; Ex. 7, January 29, 2009 Fax.)
Plaintiffs allege that they did not hear from Wells Fargo until Ms. Burnham
contacted them again in June 2009, at which time an agent of Wells Fargo told her
that to qualify for a loan modification, she would have to pay $8,900. (Compl. ¶¶
21-22.) On June 30, 2009, she sent two money orders to Wells Fargo totaling $8,900.
(Compl. Ex. 8, Western Union Receipts.) Plaintiffs allege that Ms. Burnham “was
led to believe that the $8,900 would bring her current on her loan.” (Compl. ¶ 24.)
3

Between June 30, 2009 and July 30, 2009, Plaintiffs then allege, Ms. Burnham
faxed various documents to Wells Fargo at its request, including tax returns and
other financial information. (Id. ¶ 25; Ex. 9, Loan Modification Documents.)
In July 2009, Wells Fargo presented Plaintiffs with a Home Affordable
Modification Program Loan Trial Period plan (“Trial Period Plan” or “TPP”).
(Compl. ¶ 26.) The TPP provided that if Plaintiffs made certain representations, and
those representations “continue[d] to be true in all material respects,” then Wells
Fargo would “provide [Plaintiffs] with a Loan Modification Agreement . . . that
would amend and supplement (1) the Mortgage on the Property, and (2) the Note
secured by the Mortgage.” (Compl. Ex. 10, Trial Period Plan at 1, Pg ID 102.) In
signing the TPP, Plaintiffs agreed to certain representations, including the following:
A. I am unable to afford my mortgage payments for the reasons
indicated in my Hardship Affidavit and as a result, (i) I am either in
default or believe I will be in default under the Loan Documents in the
near future, and (ii) I do not have access to sufficient liquid assets to
make the monthly mortgage payments now or in the near future;
B. I live in the Property as my principal residence, and the Property has
not been condemned;
C. There has been no change in the ownership of the Property since I
signed the Loan Documents;
D. I am providing or already have provided documentation for all
income that I receive . . . ;
E. Under penalty of perjury, all documents and information I have
provided to Lender pursuant to this Plan, including the documents and
information regarding my eligibility for the program, are true and
correct; and
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F. If Lender requires me to obtain credit counseling, I will do so.
(Id. at 1-2, Pg ID 102-03.)
In the TPP, Plaintiffs agreed to pay Wells Fargo three “Trial Period Payments”
of $1,301.33 each. (Id. at 2, Pg ID 103.) The TPP provided that Wells Fargo would
“suspend any scheduled foreclosure sale” as long as Plaintiffs continued to meet
their obligations under the TPP, but that “any pending foreclosure action will not be
dismissed and may be immediately resumed from the point at which it was
suspended if this Plan terminates, and no new notice of default, notice of intent to
accelerate, notice of acceleration, or similar notice will be necessary” to continue the
foreclosure action, with “all rights to such notices being hereby waived to the extent
permitted by applicable law.” (Id.) The TPP further provided that “the Loan
Documents will not be modified and this Plan will terminate” if one of three events
occurred: “(i) the Lender does not provide me a fully executed copy of this Plan and
the Modification Agreement; (ii) I have not made the Trial Period payments required
under . . . this Plan; or (iii) the Lender determines that my representations . . . are no
longer true and correct.” (Id.) Finally, the TPP provided that after Wells Fargo was
able to determine the “final amounts of unpaid interest and any other delinquent
amounts (except late charges)” to be added to the loan balance (and after Wells Fargo
deducted amounts paid under the TPP from that balance), Wells Fargo would
“determine a new payment amount” and would thereafter “send [Plaintiffs] a
5

Modification Agreement for [their] signature which will modify [their] Loan
Documents as necessary to reflect this new payment amount and waive any unpaid
late charges accrued to date.” (Id. at 3, Pg ID 104.) Plaintiffs signed the TPP on July
28, 2009, and faxed it to Wells Fargo two days later. (Id. at Pg ID 104-05.)
Plaintiffs made the three payments required of them under the TPP. (Compl.
¶ 28; Ex. 11, TPP Payments.) In a September 30, 2009 letter, Wells Fargo
acknowledged this, but stated that Plaintiffs still had yet to submit certain required
documents: a “[c]opy of the two most recent pay stubs,” a “Hardship Affidavit for
Co-Borrower,” and a “[c]opy of the most recent bank statement.” (Compl. ¶ 29; Ex.
12, September 30, 2009 Letter at Pg ID 126.) Wells Fargo stated in the letter that the
trial period would be extended by two months to permit Plaintiffs to submit these
documents, during which time two more trial period payments of $1,301.33 would
be required. (Compl. ¶ 30; September 30, 2009 Letter at Pg ID 126.) Plaintiffs allege
that they made both payments. (Compl. ¶ 31; Ex. 13, December 2009 Payment.)
Plaintiffs received another letter from Wells Fargo on or around December
22, 2009. (Compl. ¶ 32; Ex. 14, December 22, 2009 Letter.) In it, Wells Fargo
reminded Plaintiffs that they were “still in the Trial Period Plan of this program,
which requires you to make three timely trial period payments and provide specific
documentation to complete your qualification for this program.” (December 22,
2009 Letter at 2, Pg ID 134.) Specifically, Wells Fargo requested copies of the most
6

recent federal tax return as well as a profit or loss statement of each self-employed
borrower, and the most recent federal tax return as well as benefits documentation
for “each borrower who has income such as social security, disability or death
benefits, pension, public assistance, or unemployment.” (Id.) The letter contained
the following statement in capitalized letters: “We are in the process of trying to
move your modification to the next stage and find that we are either missing
information or need clarification.” (Id.) Wells Fargo requested that Plaintiffs fax the
documents no later than December 27, 2009, and also that they call Wells Fargo
within 24 hours of sending the fax to confirm receipt. (Id.)
Plaintiffs allege that they continued to make payments under the TPP, and an
exhibit attached to the Complaint reflects that they made payments of $1,301.33 in
February, March, and April of 2010. (Compl. ¶ 33; Ex. 15, 2010 Payments.)
According to the Complaint, on or about May 2, 2010, Plaintiffs became
aware of a pending sheriff’s sale of the subject property that was scheduled for May
4, 2010. (Compl. ¶ 34.) “Unsure of why there would be a sale on their home when
they were brought current by the $8,900 payment in June of 2009, and had been
making payments to Wells Fargo since July of 2009,” Plaintiffs allege that they
contacted Wells Fargo “and were told that Wells Fargo hadn’t received some of
Plaintiffs’ information.” (Id. ¶ 35.) Plaintiffs allege that Wells Fargo never told them
that more information was needed. (Id. ¶ 36.) Plaintiffs further allege that they
7

immediately sent the requested information to Wells Fargo, and that they “faxed
Wells Fargo additional information on May 4, 2010.” (Id. ¶¶ 37-38; Ex. 16, May 2,
2010 Fax; Ex. 17, May 4, 2010 Fax.)
Plaintiffs allege on information and belief that a foreclosure sale was held on
May 4, 2010, at which Defendant Freddie Mac “bid the total amounts due on the
loan, making the amount required to redeem the property from the sale
$250,867.36.” A Sheriff’s Deed was issued to Freddie Mac on May 4, 2010, and
recorded on May 18, 2010. (Compl. ¶¶ 12, 39; Ex. 3, Sheriff’s Deed.)
On May 13, 2010, Plaintiffs faxed Wells Fargo a request to rescind the
foreclosure sale because Plaintiffs were in a TPP and had been making payments
since the previous July. (Compl. ¶ 40; Ex. 18, May 13 Fax.) In a letter dated May
24, 2010, Wells Fargo denied the request, providing the following explanation:
On April 19, 2010 your loan was removed from the Home Affordable
Modification Program (HAMP) because the documents we had
requested from you had not been received. We had last spoken with you
on March 12, 2010. At that time you said you would be sending the
requested documents. Documents were finally received on May 03,
2010 but receiving documents 1 day prior to the foreclosure sale does
not permit Loss Mitigation with enough time [sic] to review the
documents and make a decision.
As of today’s date, the loan is 15 payments past due and is due for the
March 01, 2009 payment. The terms of the Note and Mortgage/Deed of
Trust outline the conditions under which we can accelerate the
collection of the debt. As these conditions were met, our foreclosure
action is valid.
8

(Compl. Ex. 19, May 24, 2010 Letter; Compl. ¶¶ 41-42.)
Plaintiffs allege that “[b]etween June 30, 2009, and May of 2010, Plaintiffs
paid Wells Fargo no less than $20,611.97 - $8,900 plus nine payments of $1,301.33.”
(Compl. ¶ 43 (citing Exs. 8, 11, 13, 15).) Plaintiffs further allege that “[i]t is not
possible that Plaintiffs were 15 payments behind on their mortgage.” (Id. ¶ 44.)
On December 21, 2010, Freddie Mac filed an eviction action in Michigan’s
52nd District Court. (Compl. ¶ 45; Ex. 20, District Court Summons and Complaint.)
An eviction order was issued on May 10, 2011, and posted on May 12. (Compl. Ex.
21, Register of Actions at 2, Pg ID 182.) The eviction order was issued pursuant to
a consent judgment of possession that had been signed by Plaintiffs and entered on
February 17, 2011. (Id.; ECF No. 2, Defs.’ Mot. Ex. 3, District Court Judgment.)
Plaintiffs allege that they “always provided [Wells Fargo] with all information
and documents requested of them in a prompt and timely manner,” while Wells
Fargo “routinely lost documents, misrepresented payment figures and account
information, and illegally charged Plaintiffs with excessive fees and interest.”
(Compl. ¶¶ 47-48.) Plaintiffs allege that through the entire loan modification review
process, Wells Fargo represented that their application was complete and they should
“be patient and . . . wait for a decision,” but that no such decision was ever relayed
to Plaintiffs. (Id. ¶¶ 49-50.) Plaintiffs allege that they relied to their detriment on
Wells Fargo’s assurances that Plaintiffs would receive a permanent loan
9

modification in exchange for making payments and taking other actions, and Wells
Fargo never delivered on those assurances. (Id. ¶¶ 51-53.) Plaintiffs further allege
that they were qualified at all times for “outside” and “in-house” loan modifications,
and that they “at all times were, and still are, able to afford a reasonable monthly
mortgage payment were [Wells Fargo] to work with them in good faith to modify
the loan.” (Id. ¶¶ 54-56.) Lastly, Plaintiffs allege that Wells Fargo never advised
Plaintiffs that they had been denied for any loan modification options, thereby
depriving them of the right to appeal any such adverse decision. (Id. ¶ 57.)
Plaintiffs seek various forms of compensatory damages, damages for
emotional distress, and redress for the “personal and economic harm” caused to them
by the negative credit reporting that they allege Wells Fargo engaged in. (Id. ¶¶ 5860.) Plaintiffs also seek an accounting of all sums paid. (Id. ¶ 61.)
Procedural History
Plaintiffs first filed suit against Wells Fargo in the 6th Circuit Court for
Oakland County on April 21, 2017. (ECF No. 7, Pls.’ Resp. Ex. 22, April 2017
Complaint.) That case was dismissed without prejudice on July 27, 2017.
On October 5, 2017, Plaintiffs filed suit again in the 6th Circuit Court for
Oakland County, represented by a new attorney and with Freddie Mac added as a
defendant. (See Compl. at Pg ID 19-30.) In Count I of the Complaint, Plaintiffs assert
a claim for illegal foreclosure, alleging that Defendants adjourned the foreclosure
10

sale from February 17, 2009 to May 4, 2010 without proper notice. (Id. ¶¶ 63-66.)
In Count II, Plaintiffs assert claims for breach of contract and breach of the implied
covenant of good faith and fair dealing, based on allegations that Defendants
disingenuously negotiated loss mitigation assistance with Plaintiffs and misled them
about “approval and extension of loss mitigation as an alternative to foreclosure.”
(Id. ¶ 70; see generally id. ¶¶ 67-70.) In Count III, Plaintiffs assert a fraud claim,
alleging two specific misrepresentations: (1) that Defendants misrepresented that
they “were reviewing Plaintiffs for a loan modification and advised Plaintiffs to not
worry about the foreclosure or sheriff[’]s sale, omitting the fact that the sale was not
being delayed during these negotiations,” and (2) that Defendants misrepresented
“that the foreclosure and Sheriff[’]s Sale were performed lawfully and in accordance
with industry standards, and that Plaintiffs would not be able to get their house
back.” (Id. ¶ 73; see generally id. ¶¶ 71-81.)
Defendants removed the action to this Court on November 9, 2017. (ECF No.
1, Notice of Removal.) Defendants filed the instant Motion to Dismiss on the same
day. (ECF No. 2, Defs.’ Mot.) After this Court extended Plaintiffs’ response deadline
pursuant to a Stipulated Order (ECF No. 5), Plaintiffs filed a timely Response on
December 14, 2017. (ECF No. 7, Pls.’ Resp.) Defendants filed a timely Reply on
December 27, 2017. (ECF No. 8, Defs.’ Reply.)
The Court conducted a hearing on Defendants’ Motion to Dismiss on
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Wednesday, January 17, 2018, and now issues the following ruling.
LEGAL STANDARDS
Federal Rule of Civil Procedure 12(b)(6) allows for the dismissal of a case
where the complaint fails to state a claim upon which relief can be granted. 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.” Handy-Clay v. City of
Memphis, 695 F.3d 531, 538 (6th Cir. 2012).
To state a claim, a complaint must provide a “short and plain statement of the
claim showing that the pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2). “[T]he
complaint ‘does not need detailed factual allegations’ but should identify ‘more than
labels and conclusions.’” Casias v. Wal–Mart Stores, Inc., 695 F.3d 428, 435 (6th
Cir. 2012) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007)). The
court “need not accept as true a legal conclusion couched as a factual allegation, or
an unwarranted factual inference.” Handy-Clay, 695 F.3d at 539 (internal citations
and quotation marks omitted).
In other words, a plaintiff must provide more than “formulaic recitation of the
elements of a cause of action” and his or her “[f]actual allegations must be enough
to raise a right to relief above the speculative level.” Twombly, 550 U.S. at 555-56.
The Sixth Circuit has recently reiterated that “[t]o survive a motion to dismiss, a
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litigant must allege enough facts to make it plausible that the defendant bears legal
liability. The facts cannot make it merely possible that the defendant is liable; they
must make it plausible.” Agema v. City of Allegan, 826 F.3d 326, 331 (6th Cir.
2016) (citing Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)).
“If, on a motion under Rule 12(b)(6) or 12(c), matters outside the pleadings
are presented to and not excluded by the court, the motion must be treated as one for
summary judgment under Rule 56.” Fed. R. Civ. P. 12(d); see also Rondigo, L.L.C.
v. Twp. of Richmond, 641 F.3d 673, 680 (6th Cir. 2011) (“Assessment of the facial
sufficiency of the complaint must ordinarily be undertaken without resort to matters
outside the pleadings.”). Courts have carved out a narrow exception to this rule,
however: a district court ruling on a Rule 12(b)(6) motion “may consider the
Complaint and any exhibits attached thereto, public records, items appearing in the
record of the case and exhibits attached to defendant's motion to dismiss so long as
they are referred to in the Complaint and are central to the claims contained therein.”
Bassett v. Nat'l Collegiate Athletic Ass'n, 528 F.3d 426, 430 (6th Cir. 2008) (quoting
Amini v. Oberlin Coll., 259 F.3d 493, 502 (6th Cir. 2001)).
DISCUSSION
In their Motion to Dismiss, Defendants argue that all of Plaintiffs’ claims are
both time-barred and insufficiently pled under Rule 12(b)(6). For the reasons
discussed below, the Court finds that Defendants’ arguments are meritorious, and
13

will grant Defendants’ Motion to Dismiss accordingly.1
Illegal foreclosure (Count I)
The first count of the Complaint is a claim for illegal foreclosure, based
primarily on the allegation that Defendants improperly adjourned the foreclosure
sale without notice. That claim is time-barred. Even it were not, Plaintiffs have failed
to state a claim for wrongful foreclosure under Michigan law.
1.

Any illegal foreclosure claim is time-barred.

Defendants first contend that Plaintiffs’ illegal foreclosure claim is untimely.
The governing statute of limitations provides that for “any action for the recovery or
possession of any lands” to which the defendant claims title “through some deed
made upon the sale of the premises . . . by a sheriff upon a mortgage foreclosure
sale[,] the period of limitation is 5 years.” Mich. Comp. Laws § 600.5801(1). Under
Michigan law, for the purposes of measuring the limitations period, “[w]henever any
person is disseised, his . . . claim to recover land accrue[s] at the time of his
disseisin.” Mich. Comp. Laws § 600.5829(1). “Disseisin occurs when the true owner
is deprived of possession or displaced by someone exercising the powers and
privileges of ownership.” Canjar v. Cole, 283 Mich. App. 723, 731 (2009) (quoting

1

Defendants also argue as a threshold matter that the Complaint should be dismissed
in its entirety under the doctrine of res judicata, based on the December 2010
eviction proceeding conducted in the 52nd District Court. Because the Court will
grant Defendants’ Motion to Dismiss on timeliness and Rule 12(b)(6) grounds,
however, the Court need not reach this issue.
14

Kipka v. Fountain, 198 Mich. App. 435, 439 (1993)); see also Pine Bluffs Ass'n v.
DeWitt Landing Ass'n, 287 Mich. App. 690, 727 n.21 (2010).
Defendants argue that Plaintiffs were disseised, and that their claim therefore
accrued, when Freddie Mac exercised the powers and privileges of ownership of the
subject property by recording the sheriff’s deed on May 4, 2010, thus establishing
that the limitations period expired on May 4, 2015—well before Plaintiffs filed suit.
Plaintiffs counter that the limitations period should be equitably tolled, and that this
Court should find that the limitations period began when the eviction order was
issued in May 2011. That would bring this lawsuit within the limitations period,
Plaintiffs maintain, because they “filed their initial complaint against Defendants in
April 2017, within the six (6) year time period.” (Pls.’ Resp. at 35, Pg ID 291.) (Here,
Plaintiffs presumably refer to their first lawsuit filed in the Oakland County Circuit
Court; this lawsuit, their second, was filed in October 2017.) There is a colorable
argument to be made that the putative claim accrued on the date the eviction order
was entered on the theory that this, more than the recording of the deed, was what
caused Plaintiffs to be “deprived of possession or displaced by someone exercising
the powers and privileges of ownership.” Canjar, 283 Mich. App. at 731. But even
assuming that to be the case, and even if this Court were to merge the April 2017
lawsuit with this one for limitations purposes, the action would still be time-barred
because the applicable statute of limitations is five years, not six. Plaintiffs’ illegal
15

foreclosure claim is time-barred, and even equitably tolling the limitations period in
the way that Plaintiffs request would not change that fact.2
2.

Plaintiffs have failed to state an illegal foreclosure claim.

Apart from the timeliness issue, Plaintiffs have failed to state a claim for
illegal foreclosure. “Non-judicial foreclosures, or foreclosures by advertisement, are
governed by statute under Michigan law.” Conlin v. Mortgage Electronic
Registration Sys., Inc., 714 F.3d 355, 359 (6th Cir. 2013) (citing Munaco v. Bank of
America, 513 F. App’x 508, 511 (6th Cir. 2013)). In addition to setting forth “certain
steps that the mortgagee must go through in order to validly foreclose,” these statutes
“provide the mortgagor six months after the sheriff's sale in which to redeem the
property.” Id. (citing Mich. Comp. Laws § 600.3240(8) and Mitan v. Fed. Home
Loan Mortg. Corp., 703 F.3d 949, 951 (6th Cir. 2012)). “Once this statutory
redemption period lapses, however, the mortgagor's ‘right, title, and interest in and
to the property’ are extinguished.” Id. (quoting Piotrowski v. State Land Office

2

At the January 17, 2018 hearing, Plaintiffs’ counsel cited Adams v. Adams, 276
Mich. App. 704 (2007), in arguing that the limitations period applicable in this case
is actually 15 years. But the limitations period applied in Adams was drawn from
Mich. Comp. Laws § 600.5801(4), which creates a residual 15-year limitations
period for actions for the recovery or possession of land that are not covered by one
of the other sub-provisions of § 600.5801. As noted above, this case does fall within
one of those other sub-provisions: § 600.5801(1), which imposes a five-year
limitations period on actions involving foreclosure sales. The claim at issue in
Adams did not involve a foreclosure sale, or otherwise fall within one of the specified
categories in §§ 600.5801(1)-(3), so Adams is inapposite.
16

Bd., 302 Mich. 179, 187-88 (1942) and citing Mich. Comp. Laws § 600.3236).
At that point, the mortgagor must clear a high bar to have the foreclosure and
sale reversed. The Sixth Circuit has held that to further the statutes’ interest in
affording finality to the buyers of foreclosed properties, “the ability for a court to set
aside a sheriff's sale has been drastically circumscribed.” Conlin, 714 F.3d at 359.
Specifically, “Michigan courts have held that once the statutory redemption period
lapses, they can only entertain the setting aside of a foreclosure sale where the
mortgagor has made ‘a clear showing of fraud, or irregularity.’” Id. (quoting
Schulthies v. Barron, 16 Mich. App. 246, 247-48 (1969)). In addition, plaintiffs
seeking to set aside a foreclosure sale “must show that they were prejudiced by
defendant's failure to comply with [the foreclosure-by-advertisement statute].
To demonstrate such prejudice, they must show that they 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, 115–16 (2012).
On top of that, “not just any type of fraud will suffice. Rather, ‘[t]he
misconduct must relate to the foreclosure procedure itself.’” Conlin, 714 F.3d at 361
(quoting El–Seblani v. IndyMac Mortg. Servs., 510 F. App’x 425, 429–30 (6th Cir.
2013)). Courts in this District have consistently held that the practice of “dual
tracking”—i.e., “a common tactic by banks [of] institut[ing] foreclosure proceedings
at the same time that a borrower in default seeks a loan modification”—“relate[s] to
17

the loan modification process rather than the foreclosure process,” and is therefore
not a valid basis for setting aside a foreclosure sale for fraud or irregularity. Kloss v.
RBS Citizens, N.A., 996 F. Supp. 2d 574, 585 (E.D. Mich. 2014); see also Buttermore
v. Nationstar Mortg. LLC, No. 16-14267, 2017 WL 2306446, at *7 (E.D. Mich. May
26, 2017) (Borman, J.) (“Courts in this District have repeatedly held . . . that dualtracking allegations do not constitute allegations of irregularities in the foreclosure
process, as required to set aside a foreclosure by advertisement.”); Trudell v.
Carrington Mortg. Servs., L.L.C., No. 16-10441, 2016 WL 6080822, at *4 (E.D.
Mich. Sept. 27, 2016) (“Despite Plaintiff's attempt to blend the loan modification
process and foreclosure process, case law in this district holds each process separate.
. . . Plaintiff's allegation of dual tracking cannot demonstrate a “fraud or irregularity”
necessary to toll the redemption period.”), report and recommendation adopted sub
nom. Trudell v. Carrington Mortg. Servs., LLC, No. 16-10441, 2016 WL 6070124
(E.D. Mich. Oct. 17, 2016); Bey v. LVN Corp., No. 14-13723, 2015 WL 4546752, at
*11 (E.D. Mich. July 28, 2015) (“Alleged dual tracking violations relate to the loan
modification process rather than the foreclosure process . . . .”) (internal quotation
marks omitted) (quoting Boluch v. J.P. Morgan Chase, No. 14–14705, 2015 WL
1952285, at *2 (E.D. Mich. Apr. 29, 2015)).
In this case, it is undisputed that Plaintiffs did not redeem the property within
the statutory redemption period. They must therefore make “a clear showing of
18

fraud, or irregularity” in the foreclosure process in order to have the sheriff’s sale set
aside. Conlin, 714 F.3d at 359. Cognizant of this, Plaintiffs argue that “setting aside
the foreclosure sale remains a viable remedy since Plaintiffs challenge the validity
of the sale for fraud.” (Pls.’ Resp. at 25, Pg ID 281.) But Plaintiffs’ fraud allegations
concern Wells Fargo’s alleged misrepresentations concerning the loan modification
review process—the alleged “dual tracking,” in other words—and as the decisions
discussed above clearly indicate, fraud or irregularity pertaining to loan modification
review does not constitute fraud or irregularity concerning the foreclosure process
itself, and only the latter will justify setting aside a foreclosure sale. See Kloss, 996
F. Supp. 2d at 585; Buttermore, 2017 WL 2306446, at *7; Trudell, 2016 WL
6080822, at *4; Bey, 2015 WL 4546752, at *11. Plaintiffs’ only other fraud
allegation is that Defendants misrepresented “that the foreclosure and Sheriff[’]s
Sale were performed lawfully and in accordance with industry standards, and that
Plaintiffs would not be able to get their house back.” (Compl. ¶ 73(b).) But even if
this were a false statement, it cannot amount to an act of fraud within the foreclosure
process, since the allegation is that Defendants made this representation to Plaintiffs
after the foreclosure sale took place. Plaintiffs have failed to make the clear showing
of fraud in the foreclosure process that is required to set aside the sheriff’s sale.
The Complaint does arguably allege an irregularity: that Wells Fargo
“adjourned the foreclosure sale from February 17, 2009, to May 4, 2010, without
19

proper notice” and also “failed to publish a notice of adjournment in the newspaper
that published the notice of sale.” (Compl. ¶¶ 64-65.) Michigan law provides that a
foreclosure sale may be adjourned
by posting a notice of such adjournment before or at the time of and at
the place where said sale is to be made, and if any adjournment be for
more than 1 week at one time, the notice thereof, appended to the
original notice of sale, shall also be published in the newspaper in which
the original notice was published, the first publication to be within 10
days of the date from which the sale was adjourned and thereafter once
in each full secular week during the time for which such sale shall be
adjourned.
Mich. Comp. Laws § 600.3220.
Plaintiffs’ allegations regarding the adjournment of the sheriff’s sale are
sparse, but even assuming they are enough to allege a violation of § 600.3220,
Plaintiffs have failed to allege prejudice resulting from any such violation. A
foreclosure sale will generally be set aside for fraud or irregularity in the foreclosure
process only if the plaintiff demonstrates that he or she suffered prejudice resulting
from that fraud or irregularity, see Kim, 493 Mich. at 115–16, and courts have
applied this principle to sale adjournment notice defects under § 600.3220. See, e.g.,
Spadafore v. Aurora Loan Servs., LLC, 564 F. App'x 168, 172 (6th Cir. 2014)
(holding that a foreclosure sale could not be set aside based on allegations that the
defendant “adjourned the foreclosure sale for more than one week without
republishing notice of the sale” in violation of § 600.3220 because the plaintiffs
20

“have not alleged any prejudice as a result of [the defendant]'s alleged failure to
republish”); Drew v. Kemp-Brooks, 802 F. Supp. 2d 889, 896 (E.D. Mich. 2011)
(“Even assuming the foreclosure sale adjournments were defective, invalidation of
the sale is not warranted because Plaintiff fails to allege any prejudice from the
alleged defects.”) (citing Jackson Inv. Corp. v. Pittsfield Prods., Inc., 162 Mich.
App. 750, 755–57 (1987)). Indeed, courts in this District that have analyzed
allegations of such defects under Michigan law have found the necessary prejudice
lacking in circumstances very much like those presented here:
Plaintiff admits that she received a notice of default and that she was
aware that she had fallen behind on her mortgage payments. Plaintiff
has not pled facts nor has she presented any evidence that the alleged
defect in notice (1) prevented her from making a bid at the sale; (2) that
she had the funds to outbid the highest bidder at the sale, let alone pay
the entire unpaid balance owing on the loan; or (3) that she attempted
to redeem the property during the redemption period. Indeed, Plaintiff
does not indicate how the alleged defects in the mortgage process
prejudiced her.
Elson v. Deutsche Bank Nat. Tr. Co., No. 11-14100, 2012 WL 1902916, at *6 (E.D.
Mich. May 25, 2012); see also Caillouette v. Wells Fargo Bank N.A., No. 11-10204,
2012 WL 1033598, at *8 (E.D. Mich. Mar. 27, 2012) (reaching the same conclusion
based on the same considerations); Piccirilli v. Wells Fargo Bank, N.A., No. 1110264, 2012 WL 1094333, at *8 (E.D. Mich. Mar. 30, 2012) (same). The same is
true of Plaintiffs’ allegations in this case. Plaintiffs have failed to allege prejudice
resulting from a notice defect, as would be required to set aside the foreclosure sale.
21

Finally, Plaintiffs contend that they have plausibly alleged a “quiet title” claim
under Mich. Comp. Laws § 600.2932(1), which provides that “[a]ny person . . . who
claims any right in, title to, equitable title to, interest in, or right to possession of
land, may bring an action in the circuit courts against any other person who claims
or might claim any interest inconsistent with the interest claimed by the plaintiff,”
irrespective of who is in possession of the land. Because Plaintiffs have failed to
assert a basis for setting aside the foreclosure sale, however, there is also no basis
for a “quiet title” claim. “[Q]uiet title is a remedy, not a freestanding claim. Like a
request for an injunction or disgorgement, a request for quiet title is only cognizable
when paired with some recognized cause of action.” Jarbo v. Bank of N.Y. Mellon,
587 F. App’x 287, 290 (6th Cir. 2014) (“Because the [plaintiffs] assert
their quiet title claim as a discrete count, the district court was correct to dismiss
it.”); see also Shaya v. Countrywide Home Loans, Inc., 489 F. App’x 815, 819 (6th
Cir. 2012) (“[S]ince the district court did not err by dismissing all of Plaintiffs'
claims for failing to state a claim, the district court is affirmed for dismissing
Plaintiffs' request to quiet title in their favor.”), as amended (May 24, 2012).
On both timeliness and Rule 12(b)(6) grounds, the Court will grant
Defendants’ Motion to Dismiss as to Plaintiffs’ claim for illegal foreclosure.

22

Breach of contract (Count II)
In the second count of their Complaint, Plaintiffs assert that Defendants
breached the mortgage contract and Michigan’s implied covenant of good faith and
fair dealing by, “among other things, . . . [d]isingenuously negotiating loss mitigation
assistance with the Plaintiffs [and] [m]isleading Plaintiff[s] about approval and
extension of loss mitigation assistance as an alternative to foreclosure.” (Compl. ¶
70.) Plaintiffs also argue that the Complaint plausibly and sufficiently alleges a
breach of the Trial Period Plan (“TPP”). Under any theory, however, Plaintiffs’
asserted breach of contract claim is both untimely and deficiently alleged.
1.

Any breach of contract claim is time-barred.

Mich. Comp. Laws § 600.5807(8) establishes a six-year limitations period for
claims for breach of contract generally, and any breach of contract within Plaintiffs’
allegations could only have occurred before the sheriff’s sale on May 4, 2010.
Plaintiffs did not file suit against either Defendant until 2017. Plaintiffs have also
failed to identify any basis for tolling the statute of limitations. Any breach of
contract claim is therefore time-barred.3

3

Mich. Comp. Laws § 600.5807(8)’s six-year period is a residual limitations period
applicable to breach of contract actions that do not fall within the categories set forth
in Mich. Comp. Laws §§ 600.5807(1)-(7). Of those, the only sub-provision that has
any arguable relevance to this case is § 600.5807(4), which imposes a limitations
period of 10 years on “actions founded upon covenants in deeds and mortgages of
real estate.” As discussed infra, however, Plaintiffs have failed to allege that
Defendants breached any specific term of the mortgage, let alone any “covenant.”
23

2.

Plaintiffs have failed to state a claim for breach of contract.

Even putting aside the limitations issue, Plaintiffs’ putative breach of contract
claim is deficient under every theory that Plaintiffs advance in support of it.
a)

Breach of express contract – mortgage and note

Plaintiffs have not alleged the breach of any specific provision of the mortgage
or note in the Complaint or in their Response to Defendants’ Motion. They have also
failed to plead facts from which the Court could infer an allegation that Defendants
breached any particular term of the mortgage or note. These omissions undercut the
viability of any breach of contract claim premised on the mortgage or the note. See
Thill v. Ocwen Loan Servicing, LLC, 8 F. Supp. 3d 950, 955 (E.D. Mich. 2014)
(finding that the plaintiff had failed to state a breach of contract claim because his
“allegations do not identify the specific terms of the contract allegedly breached—
such as identifying ‘what payments were made, when or how they were supposed to
be credited, what mistakes were made, why they are considered mistakes under the
contract, etc.’”) (collecting cases) (quoting Anderson v. Bank of America, No. 1312834, 2013 WL 5770507, at *4 (E.D. Mich. Oct. 24, 2013)); Alshaibani v. Litton
Loan Servicing, LP, 528 F. App'x 462, 465 (6th Cir. 2013) (“As a practical matter,
Plaintiffs’ factually unadorned allegation that [the defendant] misapplied their
payments does no more to render their claim plausible than would a simple legal
conclusion that [the defendant] breached the mortgage.”) (citing Iqbal, 556 U.S. at
24

679); Mowett v. JPMorgan Chase Bank, No. 15-12612, 2016 WL 1259091, at *3
(E.D. Mich. Mar. 31, 2016) (“In addition to alleging the elements of a breach of
contract claim, a plaintiff must also identify the specific provisions of the contract
that was allegedly breached.”) (citing Thill, 8 F. Supp. 3d at 955).
Plaintiffs have thus failed to state a claim for breach of the mortgage or note.
b)

Breach of express contract – Trial Period Plan

Plaintiffs suggest another theory for their breach of contract claim in their
Response to Defendants’ Motion to Dismiss: that Defendants actionably breached
the TPP itself. In their Reply, Defendants address this theory in several respects.
First, they argue that any claim for breach of TPP is time-barred under Mich. Comp.
Laws § 600.5807(8). This argument is meritorious for the reasons discussed above.
Any claim for breach of the TPP fails on timeliness grounds alone.
Defendants also contend that any claim for breach of the TPP must be
dismissed because Plaintiffs did not expressly assert such a claim in the Complaint.
Federal Rule of Civil Procedure 8(f) provides that “[a]ll pleadings shall be so
construed as to do justice,” and the Sixth Circuit has “interpreted Rule 8(f) to
‘require that we not rely solely on labels in a complaint, but that we probe deeper
and examine the substance of the complaint.” Mead Corp. v. ABB Power
Generation, Inc., 319 F.3d 790, 795 (6th Cir. 2003) (quoting Minger v. Green, 239
F.3d 793, 799 (6th Cir. 2001). “[T]he label which a plaintiff applies to his pleading
25

does not determine the nature of the cause of action.” Id. (alteration in original)
(internal quotation marks omitted) (quoting United States v. Louisville & Nashville
RR Co., 221 F.2d 698, 701 (6th Cir. 1955)). Instead, “the complaint must contain
either direct or inferential allegations respecting all material elements to sustain a
recovery under some viable legal theory.” Terry v. Tyson Farms, Inc., 604 F.3d 272,
275–76 (6th Cir. 2010) (internal quotation marks omitted) (quoting Tam Travel, Inc.
v. Delta Airlines, Inc., 583 F.3d 896, 903 (6th Cir. 2009)). If the Complaint sets forth
plausible factual allegations supporting a claim for breach of the TPP, the Court need
not dismiss such a claim solely because Plaintiffs did not expressly assert this as a
theory in the Complaint.
However, this Complaint does not set forth plausible allegations supporting a
claim for breach of the TPP, because it does not allege conduct that violated any
provision of the TPP. Wells Fargo’s obligations to Plaintiffs under the TPP were
conditioned on the performance of certain actions by Plaintiffs—for example, that
Plaintiffs would make timely payments under the TPP, that the representations they
made under the TPP would remain accurate, and (most relevantly here) that they
would provide timely documentation of their income. The Complaint alleges in a
conclusory fashion that “Plaintiffs always provided Wells Fargo Home Mortgage
with all information and documents requested of them in a prompt and timely
manner.” (Compl. ¶ 47.) At the same time, though, the exhibits attached to the
26

Complaint make clear that around the time of the foreclosure sale, Wells Fargo
informed Plaintiffs that they had been disqualified from the loan modification
program in which they were enrolled because they had failed to submit documents
that Wells Fargo had requested. Wells Fargo explained its position in a May 24, 2010
letter, written in response to Plaintiffs’ request that Wells Fargo rescind the
foreclosure sale after it had been conducted:
On April 19, 2010 your loan was removed from the Home Affordable
Modification Program (HAMP) because the documents we had
requested from you had not been received. We had last spoken with you
on March 12, 2010. At that time you said you would be sending the
requested documents. Documents were finally received on May 03,
2010 but receiving documents l day prior to the foreclosure sale does
not permit Loss Mitigation with enough time to review the documents
and make a decision.
(Compl. Ex. 19, May 24, 2010 Letter at 1, Pg ID 170.) A different exhibit to the
Complaint reflects that five months earlier, Wells Fargo had sent a letter to Plaintiffs
stating that as of December 22, 2009, “we still need the documents that are listed
below. We want to help you, but we must receive these documents from you before
we can move forward with the mortgage payment relief under the Home Affordable
Modification Program.” (Compl. Ex. 14, December 22, 2009 Letter at at 2, Pg ID
134.) The requested documents included profit or loss statements from each
borrower who was self-employed; benefits statements for each borrower who
received “income such as social security, disability or death benefits, pension, public
27

assistance, or unemployment”; and recent federal tax returns for each borrower who
fell into either of those two categories. (Id.) The letter instructed Plaintiffs to send
the documents by December 27, 2009. (See id.)
The Complaint does not indicate whether the income documents identified in
the December 22, 2009 letter were the same documents that Wells Fargo referred to
as not provided several months later in the May 24, 2010 letter. Regardless, these
two exhibits are “part of the pleading for all purposes.” Fed. R. Civ. P. 10(c). On the
one hand, Plaintiffs make a generalized allegation that they sent Wells Fargo “all
information and documents requested of them in a prompt and timely manner.”
(Compl. ¶ 47.) On the other hand, according to the December 22, 2009 and May 24,
2010 letters, Wells Fargo specifically advised Plaintiffs that certain documents were
still outstanding and that this was ultimately the reason Plaintiffs were removed from
the loan modification program. Plaintiffs have not made any specific allegation that
these statements were inaccurate, or that Plaintiffs did in fact comply with the
requests in the letters. Even if the Court interprets these competing allegations as
consistent with each other, they imply that however prompt and timely Plaintiffs
were in sending the documents, they still did not meet Wells Fargo’s deadlines.
Further, if the Court interprets the competing allegations as mutually contradictory,
then the more specific facts contained in the letters outweigh Plaintiffs’ generic
allegation of promptness and timeliness. See Cates v. Crystal Clear Techs., LLC,
28

874 F.3d 530, 536 (6th Cir. 2017) (“[W]hen a written instrument contradicts
allegations in the complaint to which it is attached, the exhibit trumps the
allegations.”) (internal quotation marks omitted) (quoting Williams v. CitiMortgage,
Inc., 498 F. App’x 532, 536 (6th Cir. 2012) (per curiam)); see also Van Loo v. Cajun
Operating Co., 64 F. Supp. 3d 1007, 1020 n.3 (E.D. Mich. 2014) (stating the same
proposition) (quoting Creelgroup, Inc. v. NGS Am., Inc., 518 F. App’x 343, 347 (6th
Cir. 2013)). Either way, even if Plaintiffs had alleged that Wells Fargo failed to meet
some specific obligation imposed by the TPP—and it is far from clear that they
have—they have not alleged that any such failure was not caused by Plaintiffs’ own
failure to perform under the TPP.4
Apart from this, Plaintiffs’ failure to produce or allege the existence of an
agreement signed by Wells Fargo is a separate basis for finding that they have not
stated a claim for breach of the TPP. The TPP provided, in relevant part, as follows:
F. If prior to the Modification Effective Date, . . . the Lender does not
provide me a fully executed copy of this Plan and the Modification
Agreement[,] . . . the Loan Documents will not be modified and this
Plan will terminate. . . .

4

Federal Rule of Civil Procedure 9(c) provides that “[i]n pleading conditions
precedent, it suffices to allege generally that all conditions precedent have occurred
or been performed.” The Complaint does not allege that Plaintiffs met all of their
obligations under the TPP, however, and absent some allegation that Wells Fargo’s
statements in the December 22, 2009 and May 24, 2010 letters were false or
inaccurate, the Complaint taken as a whole suggests that the opposite is true.
29

G. I understand that the Plan is not a modification of the Loan
Documents and that the Loan Documents will not be modified unless
and until (i) I meet all of the conditions required for modification, (ii) I
receive a fully executed copy of a Modification Agreement, and (iii)
the Modification Effective Date has passed. I further understand and
agree that the Lender will not be obligated or bound to make any
modification of the Loan Documents if I fail to meet any one of the
requirements under this Plan.
(Compl. Ex. 10, Trial Period Plan at 2-3, Pg ID 103-04.) Plaintiffs have not attached
a fully executed copy of the TPP or a “Modification Agreement” that was signed by
either Defendant as an exhibit to the Complaint, nor have they alleged in the
Complaint that any such document exists. Plaintiffs’ claim that Defendants violated
the TPP by refusing them a loan modification is thus deficient under the TPP itself.
It is also deficient under Michigan’s statute of frauds, which provides that “[a]n
action shall not be brought against a financial institution to enforce . . . [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” unless
“the promise or commitment is in writing and signed with an authorized signature
by the financial institution.” Mich. Comp. Laws § 566.132(2)(b). Finally, the same
statute fatally undermines any claim for breach of the TPP that Plaintiffs could make
based on their allegations of oral representations by Wells Fargo regarding
Plaintiffs’ loan modification prospects—for example, the allegation that Wells Fargo
represented “that they were reviewing Plaintiffs for a loan modification and advised
30

Plaintiffs to not worry about the foreclosure or sheriffs sale, omitting the fact that
the sale was not being delayed during these negotiations.” (Compl. ¶ 73(a).) In short,
the absence of an executed modification agreement or copy of the TPP—along with
the lack of any allegation that Plaintiffs ever received one—independently supports
the conclusion that Plaintiffs have failed to state a claim for breach of the TPP.
For all of these reasons, even if a claim for breach of the TPP were not timebarred, it would still be deficient based on the face of the Complaint and the exhibits
that the Complaint incorporates.
c)

Breach of covenant of good faith and fair dealing

Plaintiffs argue that they have stated a claim for violation of Michigan’s
implied covenant of good faith and fair dealing, but this argument also lacks merit.
“It has been said that the covenant of good faith and fair dealing is an implied
promise contained in every contract ‘that neither party shall do anything which will
have the effect of destroying or injuring the right of the other party to receive the
fruits of the contract.’” Hammond v. United of Oakland, Inc., 193 Mich. App. 146,
151–52 (1992) (quoting Fortune v. National Cash Register Co., 373 Mass. 96, 104
(1977) and collecting authorities). Defendants insist that Plaintiffs cannot maintain
a contract claim for breach of the covenant of good faith and fair dealing because
Michigan does not recognize an independent cause of action for such a breach. In
response, Plaintiffs quote a decision by another court in this District for the
31

proposition that “Michigan common law recognizes an implied covenant of good
faith and fair dealing that applies to the performance and enforcement of contracts.”
(Pls.’ Resp. at 36, Pg ID 292 (internal quotation marks omitted) (quoting Burton v
William Beaumont Hospital, 373 F. Supp. 2d 707, 718 (E.D. Mich. 2005)).) Yet
Plaintiffs omit the next sentence of the opinion: “Michigan does not, however,
recognize a claim for breach of an implied covenant of good faith and fair dealing
separate from an action on the underlying contract.” Burton, 373 F. Supp. 2d at 718
(emphasis added) (citing Belle Isle Grill Corp. v. City of Detroit, 256 Mich. App.
463, 476 (2003)). Indeed, this Court recently dismissed a claim for breach of the
covenant of good faith and fair dealing that included allegations materially identical
to those made by Plaintiffs in this case:
This Court has repeatedly rejected this same “implied covenant/breach
of contract” argument because Michigan does not recognize a claim for
such a breach. See, e.g., Upshaw v. Green Tree Servicing LLC, 2015
WL 9269136, at *4 (E.D. Mich. Dec. 21, 2015) (“Michigan does not
recognize a cause of action for breach of the implied covenant of good
faith and fair dealing”); Radske [v. Fed. Nat'l Mortg. Ass'n, No. 1514107, 2016 WL 3667957, at *5 (E.D. Mich. July 11, 2016)]
(“Plaintiff's claim that Defendants violated the implied covenant of
good faith and fair dealing must be dismissed as a matter of law”
because Michigan does not recognize that cause of action). [The
plaintiff] provides no basis for the Court to rule differently here.

32

Buttermore v. Nationstar Mortg. LLC, No. 16-14267, 2017 WL 2306446, at *9 (E.D.
Mich. May 26, 2017) (Borman, J.) (quoting Wypych v. Deutsche Bank Nat'l Trust
Co., No. 16-13836, 2017 WL 1315721, at *5 (E.D. Mich. Apr. 10, 2017).
Plaintiffs also argue that they have asserted a cause of action they call
“tortious breach of contract.” (Pls.’ Resp. at 31, Pg ID 287.) But the cases that
Plaintiffs cite in support of this argument—Hart v. Ludwig, 347 Mich. 559 (1956),
and two decisions that relied on it, Corl v. Huron Castings, Inc., 450 Mich 620
(1996), and Ferrett v. General Motors Corp., 438 Mich. 235 (1991)—all concern
the uncontroversial principle that a tort claim cannot be sustained based on a
breached promise alone, but must involve the violation of a separate legal duty owed
by the defendant to the plaintiff. See, e.g., Corl, 450 Mich. 620, 627 n.10 (1996)
(“This Court has distinguished between tort and contract actions as follows: ‘Where
the cause of action arises merely from a breach of promise, the action is in contract.
The action of tort has for its foundation the negligence of the defendant, and this
means more than a mere breach of a promise.’”) (internal quotation marks omitted)
(quoting Hart, 347 Mich. at 563); Ferrett, 438 Mich. at 240-41 (holding that under
Michigan Supreme Court precedent, “an employee may not maintain a tort action
for negligent evaluation . . . because he does not seek to recover for breach of a duty
separate and distinct from any breach of contract”) (citing Hart, 347 Mich. at 565).
Plaintiffs have not alleged the existence (let alone the breach) of any duty owed to
33

them independently of any putative contract, nor have they cited any authority
establishing or even suggesting that their cited decisions demonstrate the existence
of an independent cause of action called “tortious breach of contract.” See Schaefer
v. Potter, No. 06-12735, 2007 WL 1153013, at *16 (E.D. Mich. Apr. 17, 2007)
(“[T]he concept of a ‘tortious’ breach of contract is not well accepted. Certainly, no
Michigan court has ever recognized such a claim.”).
For all of the reasons stated above, Plaintiffs have not pled a cognizable claim
for breach of contract under any theory. The Court will therefore grant Defendants’
Motion to Dismiss as to Plaintiffs’ claims for breach of contract.
Fraud (Count III)
Plaintiffs’ fraud claim is premised mainly on the allegation that
Defendants repeatedly made representations and/or omissions to
Plaintiffs regarding the nature of the mortgage, and the status of the
loan modification, including but not limited to:
a) that they were reviewing Plaintiffs for a loan modification and
advised Plaintiffs to not worry about the foreclosure or sheriffs sale,
omitting the fact that the sale was not being delayed during these
negotiations.
b) that the foreclosure and Sheriffs Sale were performed lawfully and
in accordance with industry standards, and that Plaintiffs would not
be able to get their house back.
(Compl. ¶ 73.) This claim also fails both on statute of limitation grounds and on the
merits.

34

1.

Any fraud claim is time-barred.

Defendants argue that Plaintiffs’ fraud claim is time-barred for the same
reason as Plaintiffs’ breach of contract claims are time-barred, and in this regard they
are correct. Plaintiffs’ fraud claim is subject to a “six-year statute of limitations,”
which begins on the date of the last alleged misrepresentation. Shaya v. Countrywide
Home Loans, Inc., 489 F. App'x 815, 818 (6th Cir. 2012), as amended (May 24,
2012) (citing Mich. Comp. Laws § 600.5813 and Boyle v. Gen. Motors Corp., 468
Mich. 226, 232 (2003)). As with the breach of contract claim, the limitations period
could not have started running any later than the date of the sheriff’s sale: May 4,
2010. As with the breach of contract claim discussed above, Plaintiffs have failed to
identify any specific factual basis for tolling the limitations period. Plaintiffs’ fraud
claim is time-barred.
2.

Plaintiffs have failed to state a claim for fraud.

Federal Rule of Civil Procedure 9(b) provides that “[i]n alleging fraud or
mistake, a party must state with particularity the circumstances constituting fraud or
mistake.” “At a minimum, Plaintiffs ‘must allege the time, place and contents of the
misrepresentations upon which they relied.’” Thielen v. GMAC Mortg. Corp., 671
F. Supp. 2d 947, 956 (E.D. Mich. 2009) (quoting Frank v. Dana Corp., 547 F.3d
564, 569–70 (6th Cir. 2008)

35

Defendants argue that Plaintiffs’ fraud claim is deficient because it lacks the
particularity required by Rule 9(b). Defendants also argue that any promises relating
to future loan modification that Plaintiffs allege were made are not actionable
misrepresentations or fraud under the well-established “rule that an action for
fraudulent misrepresentation must be predicated upon a statement relating to a past
or an existing fact. Future promises are contractual and do not constitute fraud.” HiWay Motor Co. v. Int'l Harvester Co., 398 Mich. 330, 336 (1976) (citing Boston
Piano and Music Co. v. Pontiac Clothing Co., 199 Mich. 141 (1917)).
Both of Defendants’ arguments are well taken. In response, Plaintiffs merely
state summarily that “[a]s Plaintiffs [have] plainly shown, Defendants acted
fraudulently when they told them that there would be no foreclosure sale while their
loan modification application was under review.” (Pls.’ Resp. at 33, Pg ID 289.) This
fails to answer either of Defendants’ arguments. It is also incorrect. There is no
allegation in the Complaint that Plaintiffs were told any such thing. The TPP
contained a provision stating that Wells Fargo would suspend foreclosure
proceedings pending Plaintiffs’ participation in the program, but it also reserved
Wells Fargo’s right to resume those proceedings if Plaintiffs did not meet their own
obligations under the TPP. Plaintiffs have not alleged that they met those obligations.
Plaintiffs also cite Jarchow v. CitiMortgage, Inc., No. 13-11925, 2014 WL
1759074 (E.D. Mich. May 2, 2014), to support an argument that it would be “poor
36

public policy” to dismiss their fraud claim given that Defendants pursued foreclosure
while leading Plaintiffs to believe that they were under review for a loan
modification. Id. at *3. Jarchow has been cited before other courts in this District
for the same reason, and those courts have rejected the argument. “First and
foremost, Jarchow did not involve a claim for fraudulent misrepresentation.”
Garrow v. JPMorgan Chase Bank, N.A., No. 15-14058, 2016 WL 2894066, at *8
(E.D. Mich. Apr. 27, 2016), report and recommendation adopted, No. 15-14058,
2016 WL 2866410 (E.D. Mich. May 17, 2016). Second, “the statute upon which
Jarchow relied, M.C.L. § 600.3205, has been repealed, and the case no longer
governs.” Winters v. Deutsche Bank Nat'l Tr. Co., No. 15-13456, 2016 WL 5944717,
at *4 (E.D. Mich. Sept. 14, 2016) (citing Radisavljevich v. Comerica Bank, No. 1414777, 2015 WL 4771427, at *5 (E.D. Mich. Aug. 13, 2015)), report and
recommendation adopted sub nom. Winters v. Ocwen Loan Servicing LLC, 2016 WL
5930528 (E.D. Mich. Oct. 12, 2016).
For these reasons, the Court finds that Plaintiffs’ fraud claim is both untimely
and inadequately pled, and will grant Defendants’ Motion as to that claim.
Real Estate Settlement Procedures Act Claim
Plaintiffs argue in their Response that they have stated a claim under the Real
Estate Settlement Procedures Act (“RESPA”), 12 U.S.C. § 2605. Defendants
counter that Plaintiffs did not plead a RESPA claim in their Complaint, and that such
37

a claim is untimely in any case. The first of these arguments does not provide a clear
basis to grant Defendants’ Motion, since (as discussed above) the Rule 12(b)(6)
analysis focuses on the factual allegations in the Complaint and not necessarily the
specific theories identified. The second argument has merit, however. A RESPA
claim must be brought “within 3 years” of its accrual. 12 U.S.C. § 2614. The
Complaint alleges no facts that could support a RESPA claim based on conduct that
occurred after the May 2010 sheriff’s sale. Plaintiffs filed suit approximately seven
years after the sale. Any RESPA claim that Plaintiffs could support with the
allegations in the Complaint is time-barred under 12 U.S.C. § 2614.
The factual allegations in the Complaint do not support a RESPA claim in any
event. In their Response, Plaintiffs cite two provisions of RESPA’s implementing
regulations that they allege Defendants violated. First, a loan servicer may not “make
the first notice or filing required by applicable law for any judicial or non-judicial
foreclosure process” if the borrower is not more than 120 days delinquent in his or
her payments. 12 C.F.R. § 1024.41(f)(1)(i). Second, if a borrower “submits a
complete loss mitigation application” after the servicer has initiated foreclosure
proceedings but more than 37 days before the scheduled foreclosure sale, the
servicer may not move forward with the sale unless (1) the servicer has advised that
the borrower is not eligible for any loss mitigation option (and the borrower has not
appealed this under the regulations, an appeal has been denied, or the appeal
38

procedure is not applicable); (2) the borrower rejects all mitigation options offered
by the servicer; or (3) the borrower fails to perform under an agreement on a loss
mitigation option. 12 C.F.R. § 1024.41(g).
The Complaint does not set forth factual allegations that implicate either of
these provisions. Plaintiffs have not alleged that Wells Fargo initiated foreclosure
proceedings before Plaintiffs were 120 days delinquent in their payments; in fact,
the Complaint suggests otherwise, as Plaintiffs’ allegations are that Ms. Burnham
first contacted Wells Fargo about loan modification in July 2008, and that Wells
Fargo published a foreclosure notice in January 2009. (Compl. ¶¶ 15-18.) In
addition, Plaintiffs have not alleged that they submitted a complete loss mitigation
application to Wells Fargo, or that they fully performed pursuant to the TPP, and
both allegations would be required to state a claim under 12 C.F.R. § 1024.41(g).
Plaintiffs’ putative RESPA claim is untimely, and it fails on the merits as well.
Fees and costs
On the final page of their Motion, Defendants state that they “should be
granted their costs and attorney fees incurred.” (Defs.’ Mot. at 24, Pg ID 217.) This
is the only reference Defendants make to fees and costs, and they have neither raised
arguments nor cited authority to support their request for this relief. The Court will
deny Defendants’ cursory request for costs and fees.

39

CONCLUSION
Each of Plaintiffs’ claims is both time-barred and insufficiently alleged under
Rule 12(b)(6). Accordingly, the Court hereby GRANTS Defendants’ Motion to
Dismiss in its entirety.
IT IS SO ORDERED.

s/Paul D. Borman
Paul D. Borman
United States District Judge
Dated: February 13, 2018
CERTIFICATE OF SERVICE
The undersigned certifies that a copy of the foregoing order was served upon
each attorney or party of record herein by electronic means or first class U.S. mail
on February 13, 2018.
s/D. Tofil
Deborah Tofil, Case Manager

40