Miles v. Ocwen Loan Servicing, LLC
Filing
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OPINION and ORDER Granting Defendant's 18 Motion for Summary Judgment. Signed by District Judge Linda V. Parker. (Loury, R)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
AUDREY MILES,
Plaintiff,
Civil Case No. 12-12674
Honorable Linda V. Parker
v.
OCWEN LOAN SERVICING, LLC,
Defendant.
__________________________________/
OPINION AND ORDER GRANTING DEFENDANT’S MOTION FOR
SUMMARY JUDGMENT (ECF NO. 18.)
I.
This is a mortgage foreclosure case. Plaintiff Audrey F. Miles (“Plaintiff”)
commenced this action in Oakland County Circuit Court against Defendant Ocwen
Loan Servicing, LLC (“Defendant”) on May 21, 2012. (Pl.’s Compl., ECF No. 4 at
1.) Plaintiff brought the following four counts against Defendant: Conversion to
Judicial Foreclosure and/ or to Enjoin Foreclosure (Count 1); Breach of Contract
(Count 2); Violation of the Truth in Lending Act (Count 3); and Wrongful
Foreclosure (Count 4). (Id. at 3–7.) Defendant filed notice of removal on June 19,
2012 and removed this case from state court pursuant to 28 U.S.C. §§ 1332 and
1441. (ECF No. 1.) Subsequently, Defendant filed its “motion for summary
judgment” pursuant to Federal Rules of Civil Procedure 12(b)(6) and 56. (Def.’s
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Mot., ECF No. 18 at 1.) In its response to Defendant’s motion, Plaintiff withdrew
Counts 1, 3, and 4 against Defendant, leaving only her breach of contract claim
remaining. (Pl.’s Resp. Br., ECF No. 37-1 at 8.) (“As the real issue two years after
the lawsuit has been filed is whether or not there is a contract and a breach by
Ocwen, Plaintiff’s focus is only on Count II of the Complaint arguing for Breach
of Contract by Ocwen. The foreclosure issues have been resolved by the Oakland
County Circuit Court that granted Plaintiff a Preliminary Injunction against any
further foreclosure sale.”). For the following reasons, the Court GRANTS
Defendant’s motion for summary judgment, pursuant to Rule 56.
II.
Defendant brings its “[m]otion for [s]ummary [j]udgment pursuant to Rule
12(b)(6)” and “pursuant to Rule 56….” (Def.’s Mot., ECF No. 18 at 11.) However,
a motion for summary judgment cannot be brought pursuant to Rule 12(b)(6); only
a motion to dismiss can be brought pursuant to Rule 12(b)(6). See Fed. R. Civ. P.
12(b)(6). Further, a 12(b)(6) motion must be made before an answer is filed, which
has not occurred here. Id. A court could construe a motion to dismiss under
12(b)(6) filed after an answer as a motion for judgment on the pleadings under
Rule 12(c), which may be filed after an answer. Dunn-Mason v. JP Morgan Chase
Bank Nat. Ass'n, No. 11-CV-13419, 2013 WL 4084676, at *3 (E.D. Mich. Aug. 13,
2013); Williams v. State Farm Ins. Co., 781 F.Supp.2d 519, 522 (E.D.Mich.2011)
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(further citations omitted). The standard of review for a motion under Rule 12(c) is
the same as for a motion under Rule 12(b)(6). Kottmyer v. Maas, 436 F.3d 684,
689 (6th Cir. 2006). However, Defendant fails to articulate an argument that
Plaintiff’s breach of contract claim lacks requisite facial plausibility. See Ashcroft v.
Iqbal, 556 U.S. 662, 678 (2009). When explaining the summary judgment standard,
Defendant states that Rule 12(b)(6) “authorizes a Court to dismiss a complaint if it
fails to state a claim upon which relief can be granted.” (Def.’s Mot., ECF No. 18
at 11, quotations omitted.) Defendant fails to further articulate or support dismissal
under 12(b)(6) in the remainder of its motion. Therefore, having reviewed
Defendant’s motion, it is the Court’s reading of the motion that Defendant is solely
making a summary judgment argument. Thus, the Court finds it unnecessary to
construe Defendant’s motion as a Rule 12(c) motion. For this reason, the Court
will treat Defendant’s motion exclusively as one brought under Rule 56.
The entry of summary judgment is proper “if the movant shows that there is
no genuine dispute as to any material fact and the movant is entitled to judgment as
a matter of law.” Fed.R.Civ.P. 56(a). “When assessing a request for a summary
judgment, the Court must view the facts and all inferences to be drawn therefrom
in the light most favorable to the non-moving party.” Williams, 781 F.Supp.2d. at
522 (internal quotations and citations omitted). In order for a dispute to be genuine,
it must contain evidence upon which a jury could find in favor of the nonmoving
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party. Id. (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)
(further citations omitted). “Thus, the moving party has the initial obligation of
identifying the portions of the record that demonstrate the absence of any genuine
issue of a material fact.” Id. (citing Celotex Corp. v. Catrett, 477 U.S. 317, 323
(1986). The nonmoving party must then “come forward with some probative
evidence to support its claim and make it necessary to resolve the differences at
trial.” Id. (citing Boyd v. Ford Motor Co., 948 F.2d 283, 285 (6th Cir.1991)
(further citations omitted)). The entry of a summary judgment is appropriate if the
nonmoving party fails to present evidence which is sufficient to establish the
existence of an element essential to its case, and on which it will bear the burden of
proof at trial. Id. (internal quotations and citation omitted).
III.
Plaintiff is a mortgagor in connection with a mortgage executed on the
subject property – a residence – which is located at 2290 Addis Road, Holly,
Oakland County, Michigan 48442. (Pl.’s Compl., ECF No. 4 at 1.) The mortgage
was executed on November 10, 2006, in favor of Mortgage Electronic Registration
Systems, Inc. (MERS). (Mortg., ECF No. 4 at. 12.) Plaintiff signed for the loan,
but her son and daughter-in-law, Tim and Tamara Miles, live in the home. (Tamara
Miles Aff., ECF No. 4 at 54.) Plaintiff defaulted on the terms of the mortgage
beginning on January 1, 2010 for failure to make monthly payments. (Def.’s Resp.
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to Pl.’s Interrog. No. 6, Ex. 1, ECF No. 37-2 at 4.) Plaintiff’s mortgage was
subsequently assigned from MERS to Defendant on January 20, 2010.
(Assignment of Mortg., ECF No. 4 at. 30.) Thereafter, because of Plaintiff’s
default, Defendant referred the matter to the law firm of Trott & Trott, P.C. for
statutory foreclosure on August 12, 2010. (Def.’s Mot., ECF No. 18 at 2.) Plaintiff
elected to participate in state mediation in an effort to resolve the matter and a
formal mediation meeting was held. (Id.) As a result of mediation, a decision was
made by Defendant to offer Plaintiff a proposed loan modification agreement. (Id.)
The proposed loan modification agreement (the “agreement” or “proposed
modification agreement”) was mailed to Plaintiff on August 16, 2011. (Proposed
Modification Agreement, ECF No. 4 at 34.) The agreement stated that in order to
accept the modification of the loan, among other things, Plaintiff was to make an
initial down payment in the amount of $1,136.69 by October 1, 2011 and to make
subsequent payments in the amount of $1031.39 per month until the loan was paid
in full. (Id. at 36.) Plaintiff made (and Defendant accepted) payments in full from
October 2011 until January 2012, but Defendant did not accept Plaintiff’s February
payment. (Cashier’s Checks, ECF No. 4 at 41–50; Audrey F. Miles Aff., ECF No.
4 at 52.) The agreement also required Plaintiff to sign the bottom of the agreement,
and mail two (2) fully executed copies to Defendant. (Proposed Modification
Agreement, ECF No. 4 at 34.) Plaintiff asserts that she complied with the terms of
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the agreement and that her daughter-in-law mailed and faxed the agreement to
Defendant. (Pl.’s Resp. Br., ECF No. 37-1 at 2.)
Plaintiff called Defendant regarding the returned payment and was informed
by its representative that Defendant was not in receipt of the signed modification
agreement, and that Plaintiff would have to again apply for modification under the
Home Affordable Modification Program (HAMP). (Pl.’s Compl., ECF No. 4 at 2.)
Plaintiff applied for HAMP modification and sent the requested information. (Id.)
Plaintiff received a letter dated May 4, 2012, stating she had been turned down for
HAMP modification, because the residence at issue is not her primary home.
(HAMP Letter, ECF No. 4 at 89.)
Defendant asserts that Plaintiff did not mail two signed copies of the
agreement to Defendant, and that rather, Plaintiff only faxed a copy of the
agreement to Defendant. (Def.’s Mot., ECF No. 18 at 16.) Defendant asserts that
consequently, Plaintiff did not properly accept the proposed modification
agreement and that for this reason Defendant sent a new foreclosure referral to
Trott & Trott, P.C. on February 16, 2012. (Id. at 10.) Defendant further asserts that
on March 14, 2012 a MCL 600.3205 mediation notice was sent to Plaintiff and that
Plaintiff did not respond to participate in state mediation pursuant to the statute.
(Id.) As a result, Defendant commenced with foreclosure. (Id.)
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IV.
Defendant concedes that the competing contentions between itself and
Plaintiff, as to whether Plaintiff mailed two (2) signed copies of the agreement to
Defendant, suggest that there might be a genuine issue of material fact for a fact
finder to consider at trial. (Id. at 17.) However, Defendant asserts that Plaintiff
cannot produce a copy of the proposed modification agreement with Defendant’s
signature, and that because Defendant is a financial institution, per the Michigan
statute of frauds, Plaintiff cannot maintain this action. (Id.) Specifically, the statue
requires that in order for an agreement to be an enforceable writing, it must be
signed by a representative of the financial institution. (Id.) Plaintiff concedes that
there must be a signature from the financial institution on any modification
agreement to uphold the agreement pursuant to Michigan’s statute of frauds, but
that Defendant was not acting as a financial institution at the time of the January 1,
2010 default that prompted the loan modification agreement. (Pl.’s Resp. Br., ECF
No 37-1 at 5.)
V.
Essentially, Plaintiff is arguing that Defendant is not a financial institution as
that term would be understood in a discussion of creditors and debt collectors
under the Federal Debt Collectors Practicing Act (FDCPA), because at the time of
the January 1, 2010 default, Defendant was a debt collector and not a financial
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institution, given that the assignment of the mortgage to Defendant occurred
January 20, 2010 – nineteen (19) days after the January 1, 2010 default. (Pl.’s Resp.
Br., ECF No. 37-1 at 1–11; Def.’s Resp. to Pl.’s Interrog. No. 6, Ex. 1, ECF No.
37-2 at 4.) Defendant argues that Defendant’s status as a debt collector at the time
of Plaintiff’s default is irrelevant because Plaintiff can be both a financial
institution and a debt collector at the time it offered the proposed modification
agreement to Plaintiff.
Michigan's statute of frauds establishes that loan modifications are not
enforceable unless memorialized in a writing signed with an authorized signature
by the financial institution.
An action shall not be brought against a financial institution to enforce
any of the following promises or commitments of the financial
institution unless the promise or commitment is in writing and signed
with an authorized signature by the financial institution ... A promise
or commitment to renew, extend, modify, or permit a delay in
repayment or performance of a loan, extension of credit, or other
financial accommodation.
McCann v. U.S. Bank, N.A., 873 F. Supp. 2d 823, 833 (E.D. Mich. 2012) (citing
Mich. Comp. Laws § 566.132(2)(b)). Also, Michigan’s statute of frauds provides:
“financial institution” means a state or national chartered bank, a state
or federal chartered savings bank or savings and loan association, a
state or federal chartered credit union, a person licensed or registered
under the mortgage brokers, lenders, and servicers licensing act, Act
No. 173 of the Public Acts of 1987, being sections 445.1651 to
445.1683 of the Michigan Compiled Laws, or Act No. 125 of the
Public Acts of 1981, being sections 493.51 to 493.81 of the Michigan
Compiled Laws, or an affiliate or subsidiary thereof.
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Mich. Comp. Laws § 566.132(3) (emphasis added).
Whether Defendant was a debt collector when Plaintiff defaulted is not
controlling. At the time Defendant offered Plaintiff the proposed modification
agreement, Defendant was licensed as a mortgage broker, lender and servicer
under the mortgage brokers, lenders and servicers licensing act, Act No. 73 of the
Public Acts of 1987, and was thus a “financial institution” as defined by
Michigan’s statute of frauds. (DIFS Mortg. Licensee/ Registrant, Ex. A, ECF No.
39-2 at 2.) As Defendant was a financial institution under Michigan’s statute of
frauds at the time Defendant offered the proposed loan modification agreement to
Plaintiff, the agreement had to be signed by Defendant in order for it to be
enforceable. Plaintiff is unable to provide the Court with a copy of the agreement
signed by Defendant, thus her breach of contract claim is unenforceable under
Michigan’s statute of frauds.
Plaintiff lastly asserts that the agreement is enforceable because Plaintiff
made monthly payments in compliance with the agreement from October 2011 to
February 2012. (Pl.’s Compl., ECF No. 4 at 5; Pl.’s Resp. Br., ECF No. 37-1 at
11–13.) This argument fails because “part performance is not sufficient to remove
a claim from the statute of frauds applicable to financial institutions.” Saad v.
Wayne Cnty. Register of Deeds, No. 11-15590, 2013 WL 3455628, at *6 (E.D.
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Mich. July 9, 2013) (citing FEI Co v. Republic Bank, SE, No 268700, 2006 WL
2313612 *1 (Mich. Ct App, Aug 10, 2006)).
For the foregoing reasons, the Court concludes that Defendant has shown
that there is no genuine dispute as to any material fact and that Defendant is
entitled to judgment as a matter of law. Accordingly, Defendant’s motion for
summary judgment pursuant to Rule 56 is GRANTED.
SO ORDERED.
s/ Linda V. Parker
LINDA V. PARKER
U.S. DISTRICT JUDGE
Dated: December 18, 2014
I hereby certify that a copy of the foregoing document was mailed to counsel of
record and/or pro se parties on this date, December 18, 2014, by electronic and/or
U.S. First Class mail.
s/ Richard Loury
Case Manager
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