Banks v. Wells Fargo Bank

Filing 28

OPINION and ORDER Granting Wells Fargo's Motion to Dismiss 16 and Denying Wells Fargo's Motion for Sanctions 19 . Signed by District Judge Laurie J. Michelson. (EPar)

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UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
DOSHIA BANKS,
Plaintiff,

Case No. 21-11778
Honorable Laurie J. Michelson

v.
WELLS FARGO BANK, N.A.,
Defendant.
OPINION AND ORDER
GRANTING WELLS FARGO’S MOTION TO DISMISS [16] AND
DENYING WELLS FARGO’S MOTION FOR SANCTIONS [19]
A house located on Huntington Road in Detroit is at the center of this, and
many other, disputes—some of which have already been resolved. In 2020, a
Michigan state court judge ordered that the house’s title be quieted in favor of Wells
Fargo Bank, N.A., and voided other interests in the property, including a UCC
Financing Statement. So this case will be dismissed on claim preclusion because the
claims and legal theories have already been decided by a state court.

According to Doshia Banks, she purchased the Huntington Road home from
the Williams Family Trust in February 2017. In April 2017, Wells Fargo Bank, N.A.
told her that it was the true owner of the property. Banks and Wells Fargo seemingly
worked it out, though, and Banks agreed to pay Wells Fargo for the home. But in the
meantime, Banks looked into Wells Fargo’s assertion of ownership, and found what
she believes to be a current commercial lien on the property held by Otis Williams

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III. So she brings this lawsuit pro se against Wells Fargo, alleging that the bank has
fraudulently induced her to pay it for the home. By paying Wells Fargo instead of the
Williams Family Trust, says Banks, she risks a lawsuit from Williams and the Trust.
Banks further explains the basis of her claim against Wells Fargo in her brief
opposing Wells Fargo’s motion to dismiss. She writes that Wells Fargo told her that
Williams does not have any enforceable legal claim over the house. (ECF No. 18,
PageID.473.) Banks says she relied on this representation in agreeing to purchase
the property from Wells Fargo because she believed “that purchase would result in a
clear title with no incumbrances other than defendant.” (Id. at PageID.474.) But
when Banks searched Michigan UCC filings, she saw that Williams had a commercial
lien over the house that is “still very much in place, active and enforceable against
me” and that the lien makes it so Wells Fargo’s interest in the property is subordinate
to Williams’ interest in the property. (Id.) So according to Banks, Wells Fargo lied to
her so she would pay it, and not the Trust, for the home.
Wells Fargo has a different view of the situation. It says that it foreclosed on
the home after Ernest Cornelius defaulted on his mortgage. Then, Wells Fargo
purchased the home via a sheriff’s sale in March 2016. According to Wells Fargo, the
Trust never held proper title to the home because Cornelius, who conveyed the house
to the Trust, lost title to the property once the sheriff’s sale was finalized. And because
the Trust never held proper title to the home, it could not have sold the property to
Banks.

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Since Banks purportedly purchased the home from the Trust, there have been
several lawsuits, many of which were brought by Banks, in state court, federal
bankruptcy court, and this Court. All either directly or tangentially involve the
question of who holds title to the Huntington Road house. A state court has issued a
default judgment against the Trust and Williams and quieted title in favor of Wells
Fargo. Yet, says Wells Fargo, Banks keeps bringing lawsuits, refusing to accept that
Wells Fargo owned the house.
So in response to Banks’ latest complaint, Wells Fargo has filed a motion to
dismiss and a motion for sanctions under Federal Rule of Civil Procedure 11. For the
reasons provided below, the motion to dismiss is GRANTED because Banks’ claims
are barred by claim preclusion, but the motion for sanctions is DENIED.

Wells Fargo argues that Banks’ claims should be dismissed because they are
barred by claim preclusion.
Under the Federal Rules of Civil Procedure, res judicata (which includes both
claim and issue preclusion) is an affirmative defense. Fed. R. Civ. P. 8(c). At the
motion to dismiss stage, a case will be dismissed based on an affirmative defense “if
the face of the complaint demonstrates that relief is barred by an affirmative
defense.” Bon-Ing, Inc. v. Hodges, 700 F. App’x 461, 464 (6th Cir. 2017) (quoting
Riverview Health Inst., LLC v. Med. Mut. of Ohio, 601 F.3d 505, 512 (6th Cir. 2010)).
In evaluating Wells Fargo’s defense of claim preclusion, the Court may look at prior
court orders, as these orders are public records or “are otherwise appropriate for the

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taking of judicial notice.” Hancock v. Miller, 852 F. App’x 914, 919–20 (6th Cir. 2021)
(“Because a . . . court order is appropriate for judicial notice, the district court could
consider it to demonstrate the adjudicative fact that the order was issued and what
it said . . . without converting the 12(b)(6) into a summary judgment motion.”).
So the Court starts by looking at Banks’ complaint. Though it provides few
details, Banks does state that “The 3rd circuit court of Wayne county issued a default
judgment against Cornelius and Williams because neither one appeared for a
hearing.” (ECF No. 1, PageID.5.)
Though the Court is typically limited to considering only the plaintiff’s
allegations when determining a motion to dismiss, when a plaintiff references an
external document in their complaint and relies on it in their claims, the Court may
also consider that document. Bassett v. Nat’l Collegiate Athletic Ass’n, 528 F.3d 426,
430 (6th Cir. 2008) (“When a court is presented with a 12(b)(6) motion, it may
consider . . . 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.”). This
is especially true when, as mentioned, the referenced document is a public court
order.
It appears that the default judgment Banks refers to in her complaint was
entered in a state court case between Wells Fargo, Banks, Cornelius, the Trust, and
Williams. (ECF No. 16-18, PageID.276.) That case involved the same Huntington
Road home that is the subject of this lawsuit. And there, the judge granted Wells
Fargo’s motion for default judgment against Cornelius, the Trust, and Williams and

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ordered that the “October 4, 2016 UCC Financing Statement . . . is void and expunged
from the record” and that the “October 24, 2016 Claim of Lien . . . is void and expunged
from the record.” (Id. at PageID.277.) Further, the Court ordered that “the October
28, 2016 quitclaim deed purporting to transfer title to the Williams Family Trust . . .
is void and expunged from the record.” (Id.)
On the face of Banks’ allegations, it appears that there is, at the very least,
confusion regarding Williams’ remaining interest in the home. Banks does not
dispute that a default judgment was entered against Cornelius and Williams. That
default judgment clearly “voids” the UCC Financing Statement, the claim of lien, and
the conveyance of the house to the Trust. (ECF No. 16-18, PageID.277.) Yet Banks
says that not only does Williams still have a valid interest against the home she is
purchasing from Wells Fargo, but that he has a superior interest. Apparently, Banks
believes that the default judgment merely modified county records about Williams’
interest as opposed to actually voiding his interest. Banks states, “the default
judgment was artfully crafted to mislead plaintiff into believing that Mr. Williams’
interest is no longer enforceable. Defendant’s default judgment merely expunges the
RECORDATION of his interest in the County records but does not terminate his legal
interest. Therefore, the default judgment against Mr. Williams and his Trust has no
lawful effect on the enforceability or legality on Mr. Williams lien interest in the
subject property.” (ECF No. 18, PageID.474.)
Banks is mistaken. The default judgment was entered by a state court judge.
So it was not “artfully crafted” by Wells Fargo to “mislead” Banks. And it does not

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merely expunge the “recordation of [Williams’] interest in the County records.” It
“void[ed]” Williams’ legal interest in the property in so far as that interest in based
on the UCC Financing Statement or the lien. And it is not true, as Banks asserts,
that “no one can address or has addressed the UCC financing statement filed with
the state of Michigan by Mr. Otis Williams.” (ECF No. 18, PageID.475.) The state
court has addressed this exact issue already and has entered judgment against
Williams because he missed the opportunity to assert his claim for the property.
Beyond the confusion in Banks’ argument, however, the Court finds that her
claims should be dismissed because of claim preclusion. In the same state court case
where the default judgment against Williams and others was entered, the judge
entered a final order quieting title on November 12, 2020. (ECF No. 16-21.) That order
was the result of a stipulation between Banks and Wells Fargo. (Id. at PageID.291.)
The order stated that title to the Huntington Road property “is quieted in the name
of Wells Fargo Bank, N.A. as Indenture Trustee[.]” (Id. at PageID.292.) The order
also dismissed the matter “with prejudice.” (Id.) In other words, this issue has already
been finally decided by a state court.
“Federal courts must give the same preclusive effect to a state-court judgment
as that judgment receives in the rendering state.” Buck v. Thomas M. Cooley Law
School, 597 F.3d 812, 816–17 (6th Cir. 2010) (quoting Abbott v. Michigan, 474 F.3d
324, 330 (6th Cir. 2007)); see also 28 U.S.C. § 1738. Since the prior order comes from
a Michigan state court, the Court will look to Michigan law to determine what effect
the prior order will have in this litigation.

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Michigan courts have a “broad view of res judicata.” Buck, 597 F.3d at 817
(quoting In re MCI Telecommunications Compl., 596 N.W.2d 164, 183 (Mich. 1999)).
“The purposes of res judicata are to relieve parties of the cost and vexation of multiple
lawsuits, conserve judicial resources, and encourage reliance on adjudication.”
Richards v. Tibaldi, 726 N.W.2d 770, 776 (Mich. Ct. App. 2006). The burden of
showing res judicata applies is on the party asserting the doctrine. Richards, 726
N.W.2d at 776.
Under Michigan law, “res judicata requires that (1) the prior action was
decided on the merits, (2) the decree in the prior action was a final decision, (3) the
matter contested in the second case was or could have been resolved in the first, and
(4) both actions involved the same parties or their privies.” Richards, 726 N.W.2d at
776.
For the first two elements, the order quieting title states that it is a final
judgment, the case was dismissed with prejudice, and both parties stipulated to it.
(ECF No. 16-21, PageID.292.) So for purposes of claim preclusion, it is a final
judgment on the merits. McCoy v. Michigan, 369 F. App’x 646, 649–50 (6th Cir. 2010)
(citing Brownridge v. Mich. Mut. Ins. Co., 321 N.W.2d 798, 799 (Mich. Ct. App. 1982)
(“A voluntary dismissal with prejudice is a final judgment on the merits for res
judicata purposes.”)).
The fourth element is also easily satisfied because the state court case involved
Banks and Wells Fargo. (ECF No. 16-21.)

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And the Court finds that the third element—whether the matter contested
before this Court was or could have been resolved in the first matter—is also met.
Banks’ general claim, which she describes as being, “Not sure if Mr. Williams had the
legal right to give her a land contract or that Wells Fargo has the legal right to remove
Mr. Williams interest and provide plaintiff an agreement to purchase the property
from Wells Fargo,” was resolved in the state court litigation. (See ECF No. 18,
PageID.475.; see also ECF No. 1, PageID.6 (asking the court to declare and prioritize
the interest of the parties).) As described above, the state court quieted title in favor
of Wells Fargo, which means that Wells Fargo owned the home. So, regardless of
Banks’ skepticism, a court has already declared and prioritized the interests of the
parties.
Here, however, Banks also asserts that Wells Fargo committed fraud, and this
exact claim was not decided by the state court. But the prior state court order bars
“not only claims already litigated, but also every claim arising from the
same transaction that the parties, exercising reasonable diligence, could have raised
but did not.” Buck, 597 F.3d at 817 (quoting Adair v. State, 680 N.W.2d 386, 396
(Mich. 2004)). And Banks’ fraud claims against Wells Fargo arose from the same
transaction that was litigated in state court. Banks specifically alleges that in April
2017, Wells Fargo falsely claimed sole ownership in the property when it knew its
interests were subordinate to Williams’ interest. That claim depends on the same set
of facts that support quieting title in Wells Fargo’s name, i.e. the history of the
ownership of the home. And the order was entered in 2020, so Banks certainly could

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have brought her fraud claim based on representations made in 2017 in the same
case.
In her response, Banks also claims that Wells Fargo “pressured and coerced”
her into stipulating to the order. (ECF No. 18, PageID.476.) This claim is not
presented in Banks’ complaint, and she does not allege further facts as to how she
was pressured and coerced into agreeing to the stipulation. So it is not a matter
contested before this Court such that the Court must determine if it could have been
raised in the prior case.
But the Court also notes that it does not appear that Banks has any issue with
the stipulated order. In her complaint, she specifically asks that she be allowed to
“continue in the settlement in purchasing the subject proper from Defendant, if it is
found that they are the sole owners” and that “Plaintiff needs this court to act as
finder of fact to resolve this dispute [of who is the valid owner of her home].” (ECF
No. 1, PageID.5.) A court has already done the exact thing Banks is requesting via
the stipulated order to quiet title. So it is unclear what more needs to be done.
In sum, the Court finds that claim preclusion bars Banks from pursuing her
claims in this case. The same general question of who holds title to the Huntington
Road home has already been answered by a state court where Banks had full notice
and opportunity to present the arguments she presents to this Court. Further, the
theories Banks presents to this Court about Williams’ commercial lien have also been
addressed by the state court in its order for default judgment. As explained above,

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the default judgment against Williams has the same effect as any other court order
and expunges Williams’ lien.
So Banks’ claim will be dismissed.

Wells Fargo also filed a motion for Rule 11 sanctions, asking this Court to
declare Banks a “vexatious litigant” and awarding Wells Fargo attorney’s fees. (ECF
No. 19.)
The Court declines to award sanctions under Rule 11 at this time. Rule 11
sanctions “may be imposed if a reasonable inquiry discloses the pleading . . . is (1) not
well grounded in fact, (2) not warranted by existing law or a good faith argument for
the extension, modification or reversal of existing law, or (3) interposed for any
improper purpose such as harassment or delay.” Meritt v. Int’l Ass’n of Machinists &
Aerospace Workers, 613 F.3d 609, 626 (6th Cir. 2010). Banks is a pro se litigant. She
has explained that she was concerned that she was being defrauded when she found
Williams’ commercial lien on the Michigan Department of State UCC search. (ECF
No. 23, PageID.636.) And she was hesitant to trust Wells Fargo when it explained
that this interest is no longer valid because she had originally bought the home from
the Trust, only to be involved in a lawsuit because the Trust did not own the property.
(Id.) True, Banks has brought a number of suits (at least four) that concern the
validity of her (and Wells Fargo’s) interest in the house. But Banks correctly points
out that many of her cases have been dismissed on jurisdictional grounds without

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reaching the merits of her claims. So there is no evidence that Banks acted
vexatiously or for an improper purpose by bringing this suit.
The Court understands Wells Fargo’s frustration in having been engaged in
multiple lawsuits with Banks despite having received an unchallenged state court
judgment that quiets title in its favor. To defend its same position in multiple forums
takes considerable resources and makes it so neither party can move forward.
The Court hopes that this opinion will educate Banks that the default
judgment and state court order quieting title hold the same weight as any other court
order or judgment. This means that a court has already determined that only Wells
Fargo held proper title to the home. (ECF No. 16-21, PageID.291–292 (state court
order to quiet title).) And the fact that, to this Court’s knowledge, no one from the
Trust or the Williams family has yet asserted or threatened to assert interest in the
house indicates that Banks faces no imminent harm.
With that, the Court believes both parties can put this matter to rest. If,
however, Banks does not, she is on notice that sanctions could be warranted.

Wells Fargo’s motion to dismiss (ECF No. 16) is GRANTED and its motion for
sanctions (ECF No. 19) is DENIED. A separate judgment will follow.
SO ORDERED.
Dated: May 6, 2022
s/Laurie J. Michelson
LAURIE J. MICHELSON
UNITED STATES DISTRICT JUDGE
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