James v. Federal Home Loan Mortgage Corporation et al

Filing 21

Granting Defendants' Motion To Dismiss ( 15 And Dismissing Plaintiff's First Amended Complaint 14 With Prejudice. Signed by District Judge Mark A. Goldsmith. (JCur)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION

TINA JAMES,
Plaintiff,

No. 13-CV-13029
HON. MARK A. GOLDSMITH

vs.
FEDERAL HOME LOAN MORTGAGE
CORP., et al.
Defendants.
____________________________________/
OPINION AND ORDER GRANTING DEFENDANTS’ MOTION TO DISMISS (Dkt. 15)
and DISMISSING PLAINTIFF’S FIRST AMENDED COMPLAINT (Dkt. 14)
WITH PREJUDICE
I. INTRODUCTION
This foreclosure case is before the Court on Defendant Federal Home Loan Mortgage
Corporation’s (“Freddie Mac”) and Defendant Chase Bank’s motion to dismiss Plaintiff Tina
James’s First Amended Complaint (Dkt. 15). The First Amended Complaint centers on two
purported actions by Defendant Chase: (i) promising a short sale, but then denying the request;
and (ii) informing Plaintiff that the redemption period was shorter than statutorily required. First
Am. Compl. (Dkt. 14). Defendants argue that Plaintiff has failed to state a claim, and therefore
the Court should dismiss her complaint. Defs. Mot. to Dismiss (Dkt. 15). Plaintiff filed a
response (Dkt. 17), Defendants filed a reply (Dkt. 18), and the Court heard oral argument on
April 24, 2014.
For the reasons described below, the Court agrees that Plaintiff has failed to state a claim
on which relief may be granted. Therefore, the Court grants Defendants’ motion to dismiss, and
dismisses Plaintiff’s First Amended Complaint with prejudice.
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II. BACKGROUND
Plaintiff obtained a loan in 2007, secured by a mortgage on her home.

Mortgage

Electronic Registration Systems, Inc. (“MERS”) was designated as nominee of the lender, its
successors and assigns. See Mortgage (Dkt. 15-2). MERS subsequently assigned the mortgage
to Defendant Chase. See Assignment (Dkt. 15-3).
Plaintiff ultimately had difficulty making her mortgage payments. After being denied a
loan modification, Plaintiff retained a real estate agent in August 2012 in an attempt to complete
a short sale of the property. First Am. Compl. ¶¶ 8-9.
Plaintiff purportedly received numerous offers on the property, and, on November 26,
2012, Plaintiff was informed that Chase had approved the short sale and would send an approval
letter shortly thereafter. Id. ¶ 10. Nevertheless, Plaintiff alleges that, without her knowledge,
Chase auctioned the property at a sheriff’s sale on November 27, 2012, at which Chase
purchased the property. Id. ¶ 13-14.
Over the next few weeks, Plaintiff’s real estate agent asked Chase representatives why
Plaintiff had not yet received an approval letter for the short sale. Id. ¶¶ 11-12. Plaintiff alleges
that Chase’s representatives repeatedly informed her real estate agent that the letter was
forthcoming and that the paperwork had been submitted to Freddie Mac for approval. Id.
Plaintiff further claims that a Chase representative told her on November 30, 2012 that
her redemption period expired on January 31, 2013, and that the short sale had to close before
January 13, 2013. Id. ¶ 15. However, in her affidavit attached to the First Amended Complaint,
Plaintiff also alleges that she “had no knowledge that [she] had a redemption as [she] did not
even know there was a sheriff’s sale.” Pl. Aff. ¶ 10 (Dkt. 14-2). In any event, Plaintiff moved
out of the property in December 2012. First Am. Compl. ¶ 16.

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Chase subsequently quitclaimed the property to Freddie Mac on January 8, 2013. Id.
¶ 17. Nevertheless, Plaintiff received letters from Chase through April 2013 indicating that it
still was reviewing her short-sale request. Id. ¶ 19. Plaintiff’s real estate agent ultimately
contacted Freddie Mac directly in April 2013 to determine the problem with finalizing the short
sale; Plaintiff claims her agent discovered that the paperwork had never been submitted to
Freddie Mac for approval. Id. ¶ 21.
On May 17, 2013, Chase sent a letter to Plaintiff’s real estate agent regarding the shortsale request. 5/17/13 Correspondence at 8 of 11 (cm/ecf page) (Dkt. 1-2). In the letter, Chase
acknowledged that its representative spoke with Plaintiff on November 23, 2012, during which
the agent was advised that there was a short-sale offer on the house for $315,000, with
$290,171.95 being paid to Chase. Id. Chase requested that changes be made to the HUD-1
form. Id. Chase also wrote in the letter that a representative spoke with Plaintiff on November
30, 2012, at which time the representative stated that “the redemption file approval was good
through January 31, 2013.” Id.
In addition, Chase acknowledged in the May 2013 letter that its representatives had
spoken with Plaintiff numerous times throughout December 2012 regarding the sending of an
approval letter. Id. However, Chase claimed that it determined on December 26, 2012 that it
was “unable to issue the approval letter because [it] had not yet received investor or insurer
approval for the offer.” Id. at 9 of 11 (cm/ecf page). Chase claimed that it could not accept an
offer less than $355,000. Id. Chase also mentioned that it had tried obtaining an exception in
January and February so as to grant the request, but had been unsuccessful.

Id.

acknowledged its previous mistakes, but ultimately denied the short-sale request:
We apologize that incorrect information regarding an approval was
previously provided by one of our representatives. We take these matters
3

Chase

seriously and apologize that we did not provide the level of service you
expect from us. We do not tolerate unprofessional behavior from any of
our employees and are taking appropriate action.
Id.
The letter concluded by informing Plaintiff’s real estate agent that, “[a]t the time of the
foreclosure sale on November 27, 2012, the loan was due for the July 2011 monthly mortgage
payment and all subsequent payments, as well as any applicable fees. The state of Michigan
provides for a 6 month redemption period, which expires May 27, 2013.” Id.
Plaintiff did not attempt to redeem the property before May 27, 2013, although she
appears to have received a pre-approval for a $280,000 mortgage loan on August 15, 2013, after
the redemption period expired. See Approval Certificate (Dkt. 14-5).
Plaintiff filed a pro se complaint against Defendants on or around June 25, 2013. Compl.
(Dkt. 1-2). Defendants removed the action to this Court on July 16, 2013. Notice of Removal
(Dkt. 1). Plaintiff subsequently obtained an attorney. After the parties unsuccessfully attempted
to resolve the matter, Plaintiff filed the governing First Amended Complaint, which contains five
causes of action:

(i) violation of foreclosure redemption statute; (ii) fraudulent

misrepresentation; (iii) innocent misrepresentation; (iv) breach of contract; and (v) quiet title.
First Am. Compl. The first four claims are against Defendant Chase, while the last claim is
against Defendant Freddie Mac.
III. LEGAL STANDARD
Federal Rule of Civil Procedure 12(b)(6) allows a court to dismiss a complaint for
“failure to state a claim upon which relief can be granted.” In evaluating a motion to dismiss
pursuant to Rule 12(b)(6), “[c]ourts must construe the complaint in the light most favorable to
plaintiff, accept all well-pled factual allegations as true, and determine whether the complaint

4

states a plausible claim for relief.” Albrecht v. Treon, 617 F.3d 890, 893 (6th Cir. 2010)
(internal brackets, quotation marks, and citation omitted). To survive a motion to dismiss, a
complaint must plead specific factual allegations, and not just legal conclusions, in support of
each claim. Ashcroft v. Iqbal, 556 U.S. 662, 678-679 (2009). A complaint will be dismissed
unless, when all well-pled factual allegations are accepted as true, the complaint states a
“plausible claim for relief.” Id. at 679.
In ruling on a motion to dismiss, the Court may consider the entire complaint, documents
incorporated by reference in the complaint and central to the claims, exhibits attached to the
complaint, and matters on which a court may take judicial notice. Tellabs, Inc. v. Makor Issues
& Rights, Ltd., 551 U.S. 308, 322 (2007); Amini v. Oberlin College, 259 F.3d 493, 502-503 (6th
Cir. 2001). Therefore, the Court may consider the affidavits and other documents attached to
Plaintiff’s First Amended Complaint without converting Defendants’ motion to dismiss into one
for summary judgment. “[I]f a factual assertion in the pleadings is inconsistent with a document
attached for support, the Court is to accept the facts as stated in the attached document.”
Williams v. CitiMortgage, Inc., 498 F. App’x 532, 536 (6th Cir. 2012) (quotation marks and
citation omitted).1
IV. ANALYSIS
A. Violation of Foreclosure Redemption Statute
Plaintiff first alleges that Chase violated Michigan’s foreclosure redemption statute,
Mich. Comp. Laws § 600.3240(7), when its representative purportedly informed her that the

1

  Plaintiff does not dispute Defendants’ argument that it is proper for the Court to consider the
affidavits attached to the First Amended Complaint when ruling on the motion to dismiss. Nor
does Plaintiff dispute Defendants’ assertion that, if the Court finds a conflict between the
complaint and the affidavits, the affidavits should prevail. Rather, Plaintiff simply argues that no
inconsistency exists. Pl. Resp. at 6-9. Therefore, because the affidavits were attached to and
referenced in the First Amended Complaint, the Court will consider them.

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redemption period would expire on January 31, 2013, approximately four months before the
period actually expired. First. Am. Compl. ¶¶ 23-28.2 Plaintiff alleges that she and her children
“moved out of the property in December of 2012, fearing that she would be evicted in one month
and lose her opportunity to take advantage of the short sale because of the incorrect information
she had received from Defendant Chase.” Id. ¶ 28.
1. Parties’ Arguments
Chase raises a number of arguments in support of dismissal of Plaintiff’s claim for
violation of the foreclosure redemption statute. First, Chase argues that Plaintiff lacks standing
to raise these claims because her redemption period has expired. Defs. Br. at 9-11. Second,
Chase maintains that, even if Plaintiff has standing, she has not alleged fraud or irregularity
related to the foreclosure process sufficient to support this claim. Id. at 11-12.
Third, Chase claims that Plaintiff has not alleged a violation of Mich. Comp. Laws
§ 600.3240 because, (i) “Chase did not and cannot unilaterally reduce a statutorily required
redemption deadline”; (ii) “Plaintiff was given a six month redemption period”; (iii) a
misstatement about the redemption period, even if made, is not a violation of the statute; and (iv)
Chase did inform Plaintiff of the correct end date both in the foreclosure notices, which correctly
stated the applicable six-month redemption period, and in its May 2013 letter, which was sent a
little over one week before the end of the period. Id. at 13-17 (emphasis in original).
Fourth, Chase argues that dismissal is required because Plaintiff’s First Amended
Complaint is inconsistent with her attached affidavit. In particular, Chase highlights Plaintiff’s

2

Plaintiff claims the January 31, 2013 date was “approximately five months” before the actual
end of the redemption period. First Am. Compl. ¶ 27. However, the parties do not dispute that
the property was sold at a sheriff’s sale on November 27, 2012, and that the appropriate
redemption period was six months, i.e., ending May 27, 2013. Therefore, Plaintiff was allegedly
informed that her redemption period expired four months before the actual end of the period, not
five months.
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statements in her affidavit that she “had no knowledge that [she] had a redemption as [she] did
not even know there was a sheriff’s sale.” Id. at 6.
Finally, Chase claims that Plaintiff has not sufficiently alleged prejudice resulting from
the alleged defect. Id. at 5-7, 11-14, 17. Chase argues that the First Amended Complaint and
Plaintiff’s affidavit are inconsistent regarding whether Plaintiff relied on the purported
misrepresentation about the redemption period in moving out of her home. Chase highlights that
Plaintiff alleges in the complaint that she moved out of the property because the redemption
period was to expire in one month if the short sale was not completed, but that Plaintiff states in
her affidavit that she moved “to make sure the short sale was completed in a timely manner, . . .
[and] to make sure [she] was in compliance with the requests of Chase for the closing of the
short sale.” Id. at 5-8. Chase argues that this inconsistency undermines Plaintiff’s claim that she
was prejudiced by the alleged misrepresentation about the redemption period because she moved
out of the home early for “fear[] that she would be evicted in one month.” First Am. Compl.
¶ 28; see also Defs. Br. at 5, 8 (“Because the affidavit makes clear that Plaintiff did not rely upon
any purportedly inaccurate statement by Chase regarding the redemption period when she
vacated the Property, Plaintiff has failed to state a claim.”).
Plaintiff responds that she has standing because she has alleged fraud and irregularity
related to the underlying foreclosure proceedings. Pl. Resp. at 11-14. Plaintiff also claims that
she has sufficiently alleged prejudice, i.e., that she “was placed in a position whereby the
Defendants frustrated Plaintiff’s statutory right to redemption, and caused a forced move-out of
the property based upon [a] misrepresentation.” Id. at 17.
With respect to Chase’s arguments about the alleged inconsistencies between Plaintiff’s
affidavit and the governing complaint, Plaintiff argues that these two documents do not conflict.

7

Without any substantive explanation other than simply quoting the affidavit, Plaintiff claims that,
when read in context, the documents are consistent. Id. at 7-8.3
2. Analysis
As described below, the Court finds that dismissal of Plaintiff’s claim for violation of the
foreclosure redemption statute is appropriate. In reaching this decision, the Court rejects some of
Chase’s arguments, but ultimately concludes that Plaintiff has not sufficiently made the
allegations necessary to support such a cause of action.
With regard to the standing argument, Chase claims that because the redemption period
has expired, the purchaser at the sheriff’s sale (i.e., Chase) is vested with “all the right, title, and
interest” in the property. Therefore, Chase claims that Plaintiff does not have “standing” to bring
her claims. Defs. Br. at 10-11. To the extent Chase is raising an Article III argument, the Court
has rejected this argument in the past as meritless, and does so again here. See Etts v. Deutsche
Bank Nat’l Trust Co., No. 13-11588, 2014 WL 645358, at *4 (E.D. Mich. Feb. 19, 2014).
The Court also rejects Chase’s argument to the extent it challenges Plaintiff’s “standing”
under Michigan law. See Price v. Fed. Home Loan Mortg. Corp., No. 12-12012, 2013 WL
980278, at *3 (E.D. Mich. Mar. 13, 2013); Etts, 2014 WL 645358, at *4-5. As explained in Etts,
the question is not one of standing, but whether Plaintiff has alleged facts sufficient to meet the
high bar required to obtain an equitable extension of the redemption period and set aside the
foreclosure sale under Michigan’s foreclosure statutes.

Etts, 2014 WL 645358, at *4-5

(“[E]xpiration of the redemption period does not necessarily bar standing. Rather, as the Sixth

3

  Plaintiff also raises an argument that she did not waive her statutory right to redemption. See
Pl. Resp. at 20-21. This argument is irrelevant, however, because Defendants do not dispute that
Plaintiff did not waive her right to redemption. Defs. Reply at 6. Rather, Defendants claim
Plaintiff is not entitled to relief because she received her full statutory redemption period, and
failed to redeem.

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Circuit has explained, ‘It is more accurate to say that the “fraud or irregularity claims” . . .
lacked sufficient merit to meet the high standard imposed by Michigan law on claims to set aside
a foreclosure sale.’” (quoting El-Seblani v. IndyMac Mortg. Servs., 510 F. App’x 425, 429 (6th
Cir. 2013)).
It is well established that “[t]he law in Michigan does not allow an equitable extension of
the period to redeem from a statutory foreclosure sale in connection with a mortgage foreclosed
by advertisement and posting of notice in the absence of a clear showing of fraud, or irregularity,
. . . [which] must relate to the foreclosure procedure itself.” Id. at *5 (quotation marks and
citations omitted). Here, Plaintiff alleges that Chase misrepresented when the redemption period
expired following the sheriff’s sale.

First Am. Compl. ¶¶ 23-28.

The redemption period

certainly relates to the foreclosure procedure; indeed, it is set forth in the portion of the Michigan
Compiled Laws dealing with “Foreclosure of Mortgages by Advertisement.” See Mich. Compl.
Laws § 600.3240; see also Mitchell v. PHH Mortg. Corp., No. 306633, 2013 WL 331567, at *3
(Mich. Ct. App. Jan. 29, 2013) (“Once a mortgagee elects to foreclose a mortgage by
advertisement, MCL 600.3201 et seq. governs the prerequisites of the sale, notice of foreclosure
and publication, mechanisms of the sale, and redemption.” (quotation marks and citation
omitted)). The Court thus finds that a misrepresentation about the redemption period may
qualify as fraud or irregularity relating to the foreclosure procedure itself.4

4

In her claim for violation of the foreclosure redemption statute, Plaintiff focuses on the
allegation that Chase’s “representative informed Plaintiff that the redemption period expired on
January 31, 2013, approximately five months before it was set to expire.” First Am. Compl.
¶ 27. However, in her response to the motion to dismiss, Plaintiff also suggests that this claim is
based on Chase’s “express misrepresentations of an approved short sale.” Pl. Resp. at 17; see
also id. at 21 (“Defendant Chase Bank, NA lied to the Plaintiff about a short sale approval, her
redemption rights in violation of the law, resulting in Plaintiff losing her right to redeem.”). To
the extent Plaintiff’s claim for violation of the redemption statute is based on the short-sale
issues, rather than Chase’s purported statement about the length of the redemption period, the
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Nor is the Court persuaded by Chase’s arguments that it cannot be liable for a purported
misrepresentation regarding when the redemption period expires because (i) this time period is
set by statute and cannot be changed unilaterally by the creditor, and (ii) Plaintiff was given the
full six-month period. See Defs. Br. at 15-16. Even if the misstatement does not change the
redemption period in fact, it undermines the purpose of the foreclosure statute. The statutes
governing a foreclosure by advertisement generally are intended to protect the mortgagor. See
Nat’l Airport Corp. v. Wayne Bank, 252 N.W.2d 519, 521-522 (Mich. Ct. App. 1977); cf. Gaber
v. Otsego Cnty. Register of Deeds, No. 211624, 2000 WL 33519539, at *2 (Mich. Ct. App.
2000) (noting that equitable considerations are important in reviewing redemption issues).
Indeed, one clear purpose of the redemption statute is to “enable a debtor-mortgagor an
opportunity to acquire the funds to reobtain his property.” Chabut v. Chabut, 239 N.W.2d 401,
405 (Mich. Ct. App. 1976).

But if a mortgagee intentionally misstates the length of the

redemption period, a mortgagor may believe his or her time to acquire the necessary funds is
shorter or longer than provided by statute. One can easily imagine how this could cause the
mortgagor to lose the opportunity to timely acquire funding — by causing a mortgagor to
abandon efforts if he erroneously believed he did not have sufficient time to refinance, or delay
efforts beyond the redemption period if he erroneously believed that he had more time to arrange
refinancing than was, in fact, the case. To allow such conduct without any consequence would
effectively undermine the statute’s objective.

Court finds that Plaintiff has not sufficiently alleged this in her complaint. See Fed. R. Civ. P. 8.
Furthermore, to the extent Plaintiff claims that the January 13, 2013 closing deadline was tied to
the January 31, 2013 purported end of the redemption period, Plaintiff fails to explain how this
was a violation of Michigan’s foreclosure statute. In other words, Plaintiff fails to explain why
Chase could not condition its approval of the short sale on a closing deadline of January 13,
2013, regardless of when it said the applicable redemption period expired.
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The Court also rejects Chase’s argument that it cannot be liable for a violation of Mich.
Comp. Laws § 600.3240 because the correct redemption period was set forth both in the notices
of foreclosure and in the May 2013 letter sent to Plaintiff’s real estate agent approximately one
week before the redemption period expired. Defs. Br. at 14, 16. Michigan’s foreclosure statutes
describe what information must be contained within the foreclosure notices, including “the
length of the redemption period as determined under section 3240.”

Mich. Comp. Laws

§600.3212. However, if a lender subsequently provides false information about the redemption
period that is contrary to the notices, then the purpose of providing the information in the notices
in the first instance is substantially undermined. Similarly, a mortgagee cannot avoid legal
consequences by providing false information at the beginning of the redemption period, and then
correct that information with only one week remaining until the period’s expiration. To hold
otherwise would seriously undermine the statute’s goal of providing sufficient time to “enable a
debtor-mortgagor an opportunity to acquire the funds to reobtain his property.” Chabut, 239
N.W.2d at 405.
Nevertheless, the Court concludes that dismissal of this claim is appropriate based on an
irreconcilable conflict between the allegations in the governing complaint and Plaintiff’s
affidavit attached to the complaint. With respect to Chase’s purported statements about the
redemption period, Plaintiff alleges in the complaint that, “On November 30, 2012, a Defendant
Chase representative told Plaintiff that her redemption period expired January 31, 2013, and the
short sale had to close before January 13, 2013.” First Am. Compl. ¶ 15. However, Plaintiff
claims in her affidavit that, “I had no knowledge that I had a redemption as I did not even know
there was a sheriff’s sale.” Pl. Aff. ¶ 10. Plaintiff fails to explain in her complaint or in her
response to the motion to dismiss how she could have “no knowledge that [she] had a

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redemption,” but yet also be informed that the “redemption period expired January 31, 2013.”5
Nor does the Court see how these statements can be interpreted consistently.
Furthermore, even if these statements were not in conflict, the Court still would conclude
that dismissal is appropriate because Plaintiff has not sufficiently alleged prejudice. Under
Michigan law, “defects or irregularities in a foreclosure proceeding result in a foreclosure that is
voidable, not void ab initio.” Kim v. JPMorgan Chase Bank, N.A., 825 N.W.2d 329, 337 (Mich.
2012). The Michigan Supreme Court further held in Kim that, “to set aside the foreclosure sale,
plaintiffs must show that they were prejudiced by defendant’s failure to comply with [the
foreclosure statutes]. 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.” Id.
In her First Amended Complaint, Plaintiff’s sole allegation of prejudice or harm resulting
from the alleged misinformation about the redemption period is that she “moved out of the
property in December of 2012, fearing that she would be evicted in one month and lose her
opportunity to take advantage of the short sale because of the incorrect information she had
received from Defendant Chase.” First. Am. Compl. ¶ 28. But Plaintiff also states in her
affidavit that she moved “to make sure the short sale was completed in a timely manner” and “to
make sure [she] was in compliance with the requests of Chase for the closing of the short sale.”
Pl. Aff. ¶ 7. Therefore, taken in the light most favorable to Plaintiff, there were two reasons for
her decision to leave the home: (i) her concern about eviction in light of the purportedly

5

The May 2013 letter from Chase to Plaintiff’s real estate agent does acknowledge that a “Chase
representative spoke with [her] on November 30, 2012, and advised that the redemption file
approval was good through January 31, 2013.” 5/17/13 Correspondence. As Defendants
highlight, however, when read in context, the letter is referring to the short-sale process, not the
length of the redemption period. See id. (“On December 20, 2012, the file was escalated to
determine why the approval letter had not been sent.” (emphasis added)).
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shortened redemption period, and (ii) to ensure the approved short sale was completed. Plaintiff
does not allege that she would not have moved had she known that she had a longer redemption
period; to the contrary, Plaintiff’s allegations suggest that, even without the purported statement
about the redemption period, she still would have vacated the home to assist with the short-sale
process. Therefore, Plaintiff has failed to allege how she was prejudiced by the purported
misstatement.
Further, Plaintiff fails to explain how Chase’s purported statement about a shortened
redemption period hurt her ability to preserve her interest in the home, as opposed to simply
accelerating her alleged fear of eviction by a few months. First Am. Compl. ¶ 28 (noting that
Plaintiff moved out of the property in December 2012, “fearing that she would be evicted in one
month”). Plaintiff does not explain how her decision to leave the property early affected her
ability to explore redemption options. Instead, Plaintiff argues that she was prejudiced because
“she had the means to redeem the property but for Defendant Chases [sic] blatant
misrepresentations regarding the short sale.” Pl. Resp. at 17. In other words, Plaintiff suggests
that she could have redeemed the property via other means if Chase had not purportedly
continued to suggest that the short-sale would be approved. But this does not address how
Plaintiff would have been in a better position to preserve her interest in the property had the
alleged statement about a shortened redemption period — rather than the promises regarding the
short sale — not been made. And it is the November 30, 2012 statement about the redemption
period that forms the basis for count one. See First Am. Compl. ¶ 27.
The Court thus finds that Plaintiff has not sufficiently explained how Chase’s alleged
statement about a shortened redemption period affected her ability to preserve her interest in the
property.

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Accordingly, the Court dismisses Plaintiff’s claim for violation of Michigan’s foreclosure
redemption statute.
B. Breach of Contract

Plaintiff also raises a claim for breach of contract. In support of this claim, Plaintiff

alleges that Chase “agreed to allow Plaintiff to short-sell the property to avoid a Sheriff’s sale,”
that Plaintiff “listed the property for sale and had several buyers that were ready, willing, and
able to purchase the property,” and that Chase “agreed to sell the property to this ready, willing,
and able . . . purchaser.” First Am. Compl. ¶¶ 43-45. However, Plaintiff claims that Chase
“failed to send the proper document to the title company to close the short sale.” Id. ¶ 46.
Plaintiff maintains that she was damaged by this purported breach because she could have
“avoided the Sheriff’s sale, or at minimum, had an opportunity to redeem her property.” Id. ¶ 47.
1. Parties’ Arguments
Defendants highlight that Plaintiff’s claim is based on an allegation that she was told that
Chase had approved the short sale, but that she was never sent an approval letter and Chase
subsequently denied the request. Defs. Br. at 17. Defendants argue that the breach-of-contract
claim is barred for two reasons: (i) Chase had no legal or statutory duty to approve the short sale,
and (ii) the statute of frauds bars Plaintiff’s claim because it is premised on an oral agreement.
Id. at 18-20.
Plaintiff responds that Defendants had a “duty to comply with the well-established
principles of contract law,” and that Defendants “breached the short sale contract by failing to
perform after informing [her] of the short sale approval and rushing her to move so the new
buyer could move in.” Pl. Resp. at 23. Plaintiff does not expressly respond to Defendants’
arguments regarding the statute of frauds in her response brief. See id.

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2. Analysis
To sustain a cause of action for breach of contract, a party must prove: “(1) that there was
a contract, (2) that the other party breached the contract and, (3) that the party asserting breach of
contract suffered damages as a result of the breach.” Shore Fin. Servs., Inc. v. Lakeside Title
and Escrow Agency, Inc., No. 301143, 2013 WL 2223781, at *3 (Mich. Ct. App. May 21, 2013)
(quotation marks and citation omitted). “To prove a breach of contract, the plaintiff must first
prove the existence of a contract between the parties.” Id. (citation omitted).
Plaintiff alleges a contract was formed between herself and Chase for approval of the
short sale when Chase’s representative — identified by Plaintiff only as “Glenn” — purportedly
approved the short sale on November 26, 2012. First Am. Compl. ¶¶ 10, 45; see also Calhoun
Aff. ¶ 6 (Dkt. 14-3). Plaintiff claims this agreement was breached when Chase ultimately
refused to finalize the short sale. First Am. Compl. ¶ 46.
The Court rejects Defendants’ first argument — that Chase had no statutory or legal
obligation to grant a short-sale approval — as meritless. Plaintiff does not dispute that there is
no statute or provision in the mortgage document that requires Chase to grant her a short sale.
But neither a statutory duty, nor a contractual requirement in the mortgage, forms the basis for
Plaintiff’s claim. Instead, Plaintiff alleges that Chase agreed to, i.e., approved, her short-sale
request, and that Chase breached the agreement when it ultimately refused to take steps
necessary to finalize the sale. In other words, Chase’s purported obligation arose from its
purported independent agreement to approve the short sale, not from any statutory or mortgagebased requirement. And it is this independent contract that Plaintiff alleges Defendant breached.
See First. Am. Compl. ¶¶ 45-46 (“Defendant Chase agreed to sell the property to [the] ready,

15

willing, and able . . . purchaser. . . . However, Defendant Chase failed to send the proper
document to the title company to close the short sale.”).
However, Defendants also raise an argument based on the statute of frauds. Defs. Br. at
18-20. As applicable to this case, Michigan’s statute of frauds precludes actions against financial
institutions for certain agreements, unless the agreement is in writing and 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:
* 

* 

* 

(b) 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.
(c) A promise or commitment to waive a provision of a loan,
extension of credit, or other financial accommodation.
Mich. Comp. Laws § 566.132(2). This rule applies to agreements for a short sale, which allow
the mortgagor to sell the property and have the mortgage discharged for an amount less than
owed to the lender, and possible avoidance of any residual deficiency liability. See Barber v.
Bank of Am., N.A., No. 11-15449, 2013 WL 364011, at *8 (E.D. Mich. Jan. 30, 2013)
(dismissing claims that were based on a purported oral agreement to approve short sale given
statute of frauds); see also Michael T. Madison, et al., 2 Law of Real Estate Financing § 12:10
(Aug. 2014) (“Under the short-sale procedure, the mortgagor secures the agreement of the
mortgagee to release the mortgage upon a bona fide sale to a third party for an agreed upon price
below the mortgage loan balance. If all goes according to plan, a buyer is located, and the
mortgage loan is satisfied.”). The statute of frauds also applies to any “claim — no matter its
label — against a financial institution to enforce the terms of an oral promise to waive a loan
16

provision.” Crown Tech. Park v. D&N Bank, FSB, 619 N.W.2d 66, 72 (Mich. Ct. App. 2000);
see also Maltbie v. Bank of Am., No. 12-1002, 2013 WL 6078945, at *6 (W.D. Mich. Nov. 19,
2013).
As Defendants correctly recognize in their reply, Defs. Reply at 1, Plaintiff failed to
address Defendants’ dispositive argument regarding the statute of frauds in her briefing. Plaintiff
has provided no authority or argument suggesting that the statute of frauds would not bar her
claim for breach of contract. Moreover, although Plaintiff’s counsel asserted at oral argument
that the statute of frauds does not bar Plaintiff’s misrepresentation claims — an argument
discussed infra — counsel failed to articulate any argument as to why it should not bar Plaintiff’s
claim for breach of contract. Hr’g Tr. at 7-8, attached hereto as Exhibit A. Nor does Plaintiff
allege in her pleadings or in her response to Defendants’ motion that any signed, written
agreement exists between the parties approving the short sale.
The Court thus dismisses Plaintiff’s claim for breach of contract.

See Gomery v.

Continental Cas. Co., No. 13-947, 2014 WL 4209648, at *4 (W.D. Mich. Aug. 25, 2014)
(collecting cases from the Sixth Circuit holding that a failure to respond to an argument deems
any argument on that issue waived); Notredan, L.L.C. v. Old Republic Exch. Facilitator Co., 531
F. App’x 567, 569 (6th Cir. 2013) (plaintiff’s failure to address defendant’s argument that
plaintiff had failed to state a claim for breach of fiduciary duties “amounts to a forfeiture of the
fiduciary-duty claim”); Wargelin v. Bank of Am., N.A., No. 12-15003, 2013 WL 5587817, at
*7-8 (E.D. Mich. Oct. 10, 2013) (dismissing claims for which the plaintiff failed to respond to
the defendant’s dispositive arguments); Pientack v. JPMorgan Chase Bank, N.A., No. 12-12435,
2013 WL 5372880, at *6 (E.D. Mich. Sept. 25, 2013) (same).

17

Furthermore, even when considering the merits of Defendants’ statute-of-frauds
argument, Defendants’ motion should be granted.    Although not raised by Plaintiff, there is
disagreement within Michigan courts over what type of writing suffices to satisfy the statute of
frauds under Mich. Comp. Laws § 566.132(2). Under the statute of frauds for claims against
non-financial institutions, Mich. Comp. Laws § 566.132(1), a note or memorandum evidencing
the agreement and its material terms can suffice, even if it is not the actual agreement itself. See
Kelly-Stehney & Assocs., Inc. v. MacDonald’s Indus. Prods., Inc., 693 N.W.2d 394, 397-398
(Mich. 2005). However, Michigan courts have diverged over whether the same type of note or
memorandum can suffice under section 566.132(2) — for claims against financial institutions —
or whether that provision more strictly requires that the actual agreement itself have been
reduced to writing and signed. Compare Huntington Nat. Bank v. Daniel J. Aronoff Living
Trust, -- N.W.2d --, 2014 WL 1267287, at *7-8 (Mich. Ct. App. Mar. 27, 2014) with Barclae v.
Zarb, 834 N.W.2d 100, 112 (Mich. Ct. App. 2013).
As mentioned, Plaintiff did not expressly respond to Defendants’ argument regarding the
statute of frauds, nor has she identified a signed, written agreement between the parties regarding
the short sale. However, in other portions of her briefing not addressing the statute of frauds,
Plaintiff generally argues that Chase should be bound by the statements in its May 2013 letter.
See Pl. Resp. at 8, 22. Even assuming section 566.132(2) generally would permit this type of
letter in place of an actual signed, written agreement — a question the Court need not decide —
the Court finds that the May 2013 letter is not sufficient to overcome the statute of frauds in this
case. One factor courts consider when determining whether a written document satisfies the
statute of frauds under the more-lenient standard is if the document “states with reasonable
certainty the essential terms of the unperformed promises.” See Barclae, 834 N.W.2d at 112-

18

113. Here, the letter’s vague language leaves uncertain precisely what the purported agreement
entailed, including the approval’s scope, the parties’ obligations, and what conditions might have
been included. For example, Plaintiff alleges that she was told that the short sale needed to close
by January 13, 2013, see First Am. Compl. ¶ 15, but that condition is not set forth in the letter.
Therefore, drawing all inferences in favor of Plaintiff, the Court finds that the May 2013 letter
does not satisfy the statute of frauds, even if this type of document could otherwise suffice.
C. Fraudulent and Innocent Misrepresentation
Plaintiff also raises claims against Defendant Chase for fraudulent and innocent
misrepresentation. The factual allegations underlying these two claims are the same: Chase’s
agents made false representations to Plaintiff about (1) the end of the redemption period and (2)
the approval of her short-sale request. First Am. Compl. ¶¶ 29-41. Under both causes of action,
Plaintiff alleges that she relied upon these misrepresentations because she “and her family moved
out of the property five months before the redemption period was to expire.” Id. ¶¶ 33, 40.
Plaintiff claims she suffered damages from the misrepresentations because she “could have
remained in the property five additional months and she could have sold the property during the
redemption period.” Id. ¶¶ 36, 41.6
1. Parties’ Arguments
As with the claim for violation of the foreclosure redemption statute, Defendants first
argue that Plaintiff’s misrepresentation claims cannot stand because her allegations conflict with

6

In her response to the motion to dismiss, Plaintiff further claims that she was harmed by
Defendants’ actions because, if the misrepresentations had not been made, Plaintiff “would have
her home via the statutory redemption process.” Pl. Resp. at 17. But if Plaintiff had been
granted the short sale as allegedly promised, the home would have been sold to a third-party
purchaser for less than the amount of the debt. See Michael T. Madison, et al., 2 Law of Real
Estate Financing § 12:10 (Aug. 2014); see also Defs. Br. at 3. Therefore, if the short sale had
been completed, as Plaintiff says should have occurred, Plaintiff would not “have her home.”
19

her affidavit attached to the First Amended Complaint. Defs. Br. at 5-8. Defendants highlight
that Plaintiff’s allegations regarding the reason for her move are inconsistent — i.e., the
purportedly shortened redemption period versus the purportedly approved short sale — and thus
her fraudulent and innocent misrepresentation claims should be dismissed.
Defendants next argue that, with respect to the short sale, Plaintiff’s misrepresentation
claims are simply her claim for breach of contract repackaged. Therefore, Defendants assert that
the Court also should dismiss her misrepresentation claims under the statute of frauds. Id. at 1720. Defendants maintain that “any claim against a financial institution based upon an alleged
promise to make a financial accommodation is precluded by the statute of frauds, no matter what
plaintiff elects to title his or her claim.” Id. at 19.
Plaintiff responds by arguing that her complaint and her affidavit are not inconsistent. Pl.
Resp. at 6-8. Plaintiff also argues that her misrepresentation claims are valid because she “was
induced into believing that she was approved for a short sale and needed to move immediately.
Plaintiff was further told by Defendant Chase representatives that her redemption period was
over in January 2013, and she needed to move before the expiration of the redemption.” Id. at
22.
2. Analysis
To sustain a cause of action for fraudulent misrepresentation, Plaintiff must prove the
following elements: (i) Chase made a material misrepresentation; (ii) that was false; (iii) that,
when made, Chase knew was false, or it was made recklessly, without any knowledge of its truth
and as a positive assertion; (iv) that Chase made the misrepresentation with the intention that it
should be acted upon by Plaintiff; (v) that Plaintiff did act upon it; and (vi) that Plaintiff suffered
injury as a result. See Hi-Way Motor Co. v. Int’l Harvester Co., 247 N.W.2d 813, 816 (Mich.

20

1976). Furthermore, Plaintiff’s alleged reliance on the misrepresentation must be reasonable.
See Novak v. Nationwide Mut. Ins. Co., 599 N.W.2d 546, 554 (Mich. Ct. App. 1999).
A claim for innocent misrepresentation differs from a claim for fraudulent
misrepresentation, eliminating some of the above requirements, and adding others:
On the one hand, the innocent misrepresentation rule differs in
eliminating scienter and proof of the intention that the
misrepresentation be acted upon. However, on the other hand, the
innocent misrepresentation rule adds the requirements that the
misrepresentation be made in connection with making a contract
and the injury suffered by the victim must inure to the benefit of
the misrepresenter. . . . [I]t is unnecessary to prove separately that
the representer intended that the victim rely on the
misrepresentation, because the representation must be made in a
transaction between them, where the misrepresenter should realize
that the misrepresentation would be relied upon.
U.S. Fidelity & Guaranty Co. v. Black, 313 N.W.2d 77, 85 (Mich. 1981). Claims for both
fraudulent and innocent misrepresentation are governed by Federal Rule of Civil Procedure 9(b),
Smith v. Bank of Am. Corp., 485 F. App’x 749, 752 (6th Cir. 2012), which requires a party to
“state with particularity the circumstances constituting fraud or mistake.” The Sixth Circuit has
interpreted this rule as requiring the complaint to “(1) specify the statements that the plaintiff
contends were fraudulent, (2) identify the speaker, (3) state where and when the statements were
made, and (4) explain why the statements were fraudulent.” Frank v. Dana Corp., 547 F.3d 564,
570 (6th Cir. 2008) (quotation marks and citation omitted).
Plaintiff’s First Amended Complaint identifies two statements that form the basis for her
fraudulent and innocent misrepresentation claims.

First, Plaintiff alleges that Chase’s

representative wrongfully informed her that the redemption period for a sheriff’s sale that
occurred on November 27, 2012 expired on January 31, 2013. See First Am. Compl. ¶ 30.

21

Second, Plaintiff claims that Chase’s representatives approved her short-sale request in
November 2012, and stated that the paperwork had been sent to Freddie Mac. Id. ¶ 31.
With respect to Plaintiff’s claims surrounding the statement concerning the shortened
redemption period, the Court concludes that these claims are subject to dismissal because they
are contradicted by the affidavit attached to the complaint, as described above. Moreover, even
if not directly contradictory, the Court would dismiss these claims because Plaintiff has not
sufficiently alleged how she reasonably relied on the alleged statement to her detriment. See
Zaremba Equipment, Inc. v. Harco Nat’l Ins. Co., 761 N.W.2d 151, 165 (Mich. Ct. App. 2008)
(reliance

must

be

reasonable

for

both

fraudulent

misrepresentation

and

innocent

misrepresentation claims). While Plaintiff maintains that she was told her redemption period
expired at the end of January, see First. Am. Compl. ¶ 30, and that she could have redeemed the
property by obtaining a new mortgage loan, id. ¶ 33 (citing an August 2013 pre-approval
certificate, exhibit 4 to the First Am. Compl. (Dkt. 14-5)), she does not allege that she would
have redeemed the property via a new mortgage loan if she had not been told the incorrect
expiration date. In other words, Plaintiff does not allege that she was actually deterred from
seeking new financing because of the purported statement about a shortened redemption period.
Furthermore, there is no indication that Plaintiff made any effort to redeem via a new mortgage
loan after receiving the May 2013 letter, but before the redemption period actually expired. For
example, Plaintiff does not allege that she asked Defendants to extend the redemption period, or
that she even sought to obtain financing before this case was filed in June 2013.
To the contrary, as described above, Plaintiff’s allegations regarding Chase’s interference
with her redemption rights focus primarily on Chase’s purported statements about the short-sale
approval and how those statements convinced her not to seek other redemption options; they do

22

not focus on the purported statement about a shortened redemption period. See Pl. Resp. at 1011 (“Plaintiff had a right to redeem her property, and could have redeemed her property if
Defendant Chase had not lied, and continued to perpetuate the lied [sic] through letters from
January 2013, through April 2013, regarding the short sale, while never informing the Plaintiff of
the lie and her redemption period was running.”); 17 (arguing that Plaintiff “had the means to
redeem the property but for Defendant Chases [sic] blatant misrepresentations regarding the
short sale”); see also Hr’g Tr. at 3-7 (arguing that Plaintiff relied on the short-sale approval,
thereby reducing the time she could have sought other redemption options). Therefore, Plaintiff
has not sufficiently alleged how she reasonably relied on the purported statement about the
shortened redemption period — as opposed to the short-sale approval — with respect to her postsheriff’s sale redemption rights.
Plaintiff does claim that she relied on the statement about the redemption period to her
detriment by moving out of the home early, but her affidavit and the allegations in her complaint
undermine such a claim. See First Am. Compl. ¶¶ 28, 36. These documents reveal that Plaintiff
actually moved in December 2012 either (i) to assist the short sale, or, (ii) at a minimum, both
because of the shortened redemption period and in furtherance of the short sale. See id. ¶ 28; Pl.
Aff. ¶ 7 (“The buyer also wanted to move into the property. I wanted to make sure the short sale
was completed in a timely manner, and I would not have to endure a foreclosure on my credit
report.

I moved myself and children out on December 23, 2012, to make sure I was in

compliance with the requests of Chase for the closing of the short sale.”); Calhoun Aff. ¶ 9 (Dkt.
14-3) (“Based on this information [about the short sale] and the buyer’s need for occupancy as
soon as possible, Ms. Tina James relocated in December of 2012.”); see also Hr’g Tr. at 7
(stating that Plaintiff “moved her whole family out on the basis of the short sale approval”).

23

Therefore, Plaintiff has not sufficiently pled reasonable reliance because, even if the statement
regarding the redemption period had not been made, the First Amended Complaint and exhibits
attached thereto suggest she still would have moved in December 2012 to complete the short
sale.
Regarding Plaintiff’s claims for fraudulent and innocent misrepresentation arising out of
the purported statements approving the short sale, the Court concludes that these claims are
subject to dismissal as well. Like Plaintiff’s claim for breach of contract, Defendants argue that
Plaintiff’s misrepresentation claims are barred by the statute of frauds. Plaintiff did not directly
respond to this argument in her briefing on the motion to dismiss. However, at oral argument
Plaintiff’s counsel asserted that, “[e]ven if [the statute of frauds] precluded a claim, that would
only go to the breach of contract, not the other claims of misrepresentation, innocent
misrepresentation, fraudulent misrepresentation or the other claims set forth.” Hr’g Tr. at 7-8.
As discussed earlier, Mich. Comp. Laws § 566.132(2) precludes any action against a
financial institution regarding certain agreements and promises, unless in writing and signed with
an authorized signature by the financial institution. In Crown Technology Park, 619 N.W.2d at
72, the Michigan Court of Appeals analyzed the scope of this statute, noting that it bars “an
action,” and that, “[b]y not specifying what sort of ‘action[,]’ . . . [the statute] preclude[s] all
actions for the enumerated promises and commitments,” not just actions for breach of contract.
Id. (emphasis in original). The court ultimately concluded that section 566.132(2) “plainly
states that a party is precluded from bringing a claim — no matter its label — against a financial
institution to enforce the terms of an oral promise to waive a loan provision.” Id.
Numerous courts subsequently analyzing this issue have concluded that Mich. Comp.
Laws § 566.132(2) bars actions for fraudulent and innocent misrepresentation based on the same

24

types of promises alleged here. See, e.g., Republic Bank v. Britton Estates, L.L.C., No. 258616,
2006 WL 445916, at *3-4 (Mich. Ct. App. Feb. 23, 2006) (statute of frauds barred
misrepresentation claims based on alleged promises); Whitfield v. Bank of Am., No. 12-14585,
2013 WL 1506588, at *4 (E.D. Mich. Apr. 12, 2013) (dismissing fraud claim, among others,
based on statute of frauds); Altomonte v. Wells Fargo Bank, N.A., No. 11-12878, 2011 WL
4695824, at *3 (E.D. Mich. Oct. 5, 2011) (same); Maltbie, 2013 WL 6078945, at *6 (dismissing
“misrepresentation claims — all of which are based on BOA’s alleged promise to modify [the
plaintiffs’] loan,” because these claims “fall squarely within the scope of the statute of frauds”).
Here, Plaintiff’s misrepresentation claims based on the short-sale approval are, in essence,
actions to enforce an alleged promise or commitment to modify or waive the terms of the
mortgage loan. See Mich. Comp. Laws § 566.132(2). Plaintiff offers no explanation for why the
statute of frauds would not bar these misrepresentation claims; indeed, she failed to respond to
the statute-of-frauds argument at all in her briefing.7 Therefore, the Court rejects Plaintiff’s
conclusory assertion — raised at oral argument — that the statute of frauds could not bar her
misrepresentation claims.
Accordingly, the Court dismisses Plaintiff’s claims for fraudulent and innocent
misrepresentation.
D. Quiet Title
Plaintiff’s last claim, for quiet title, is asserted solely against Defendant Freddie Mac.
Plaintiff claims that both she and Freddie Mac assert an ownership interest in the property, but

7

  As described earlier, Plaintiff did assert in her briefing that “Defendant Chase has admitted
there were misrepresentations in the short sale transaction and even apologized, but has not made
any effort to make Plaintiff whole.” See Pl. Resp. at 22 (referring to the May 2013 letter).
However, Plaintiff does not expressly argue that the May 2013 letter satisfies the statute of
frauds, nor does the Court find that it does, as explained supra. 

25

that her interest is superior. First Am. Compl. ¶¶ 50-51. Plaintiff asserts that she is “seeking a
determination from this court as to title, interest rights and obligations of all parties claiming
ownership to this property.” Id. ¶ 52.
1. Parties’ Arguments
Defendants argue that this equitable claim should be dismissed because Plaintiff has
unclean hands. Defs. Br. at 8-9. The basis for Defendants’ argument is that Plaintiff defaulted
on her mortgage loan and failed to pay it back, thereby precluding her from seeking equitable
relief. Id. Defendants also argue that Plaintiff has not made a prima facie showing entitling her
to relief. Id. at 20-22.
Plaintiff responds that it was Defendant Chase that acted with unclean hands by lying,
and continuing to lie, regarding the short sale. Pl. Resp. at 10-11. Plaintiff also argues that she
“was prejudiced by Defendant’s illegal foreclosure,” and, “as such Plaintiff is entitled to have
title quieted back into her name, and to have the rights in the property properly determined based
upon the conduct of the Defendants in the matter.” Id. at 24.
2. Analysis
Under Michigan law, the plaintiff has the initial burden of proof in an action seeking
quiet title relief; if the plaintiff meets his or her burden, the burden then shifts to the defendant to
prove that it has superior title in the property at issue. Beulah Hoagland Appleton Qualified
Personal Residence Trust v. Emmet Cnty. Road Comm’n, 600 N.W.2d 698, 700 (Mich. Ct. App.
1999). A complaint alleging quiet title must set forth (a) the interest the plaintiff claims in the
premises; (b) the interest the defendant claims in the premises; and (c) the facts establishing the
superiority of the plaintiff’s claim. MCR 3.411(B)(2).

26

The Court first rejects Defendants’ argument that Plaintiff cannot support a claim for
quiet title — or any other claim — due to her failure to pay the mortgage loan.

Under

Defendants’ interpretation, a mortgagor who defaults on his or her mortgage obligations cannot
seek to undo a foreclosure sale that was conducted unlawfully — even if there is significant
fraud or irregularity in the foreclosure proceeding and prejudice resulting from the sale — so
long as it is undisputed that the mortgagor defaulted. This would effectively eliminate any
private enforcement of Michigan’s statutory foreclosure scheme, and would make the weight of
authority interpreting that scheme — including cases such as Kim — essentially meaningless.8
Nor is Defendants’ reliance on Yuille v. Am. Home Mortg. Servs., Inc., 483 F. App’x
132 (6th Cir. 2012), persuasive. In that case, after defaulting on his loan, the plaintiff sought a
judicial determination that the mortgage was unenforceable and that he had no further
contractual obligations. Id. at 134-135. The Sixth Circuit found that the district court “properly
applied the unclean-hands doctrine, since [the plaintiff] received $3.6 million in exchange for the
note and mortgage, failed to pay that debt as he agreed, and then sought judicial assistance in
avoiding his contractual obligations.” Id. at 135.
Here, Plaintiff does not appear to seek to avoid her contractual obligation to repay the
debt. Rather, in her claims for fraudulent and innocent misrepresentation, Plaintiff asks the
Court to grant her “an extended five months redemption period together with such other
damages, court cost[s], and fees, as this Court deems appropriate.” First Am. Compl. ¶ 41. In
other words, Plaintiff does not deny her contractual obligations to make repayment, nor does she
request that the Court extinguish the mortgage altogether without any payment to Defendants;

8

  Defendants also argue that Plaintiff’s request for an equitable extension of the redemption
period should be denied on this same basis. Defs. Br. at 9. The Court rejects this argument for
the same reason. 

27

rather, she asks that the Court grant her additional time to redeem in light of the purported
misrepresentations about the approved short sale.

The Court, therefore, finds Yuille

inapplicable. Cf. Chrzanowski v. U.S. Bank, Nat’l Ass’n, No. 14-11365, 2014 WL 2895442, at
*2 (E.D. Mich. June 26, 2014) (applying Yuille where the plaintiffs “request[ed] that the court
rescind the Mortgage and declare it invalid,” but had “not repaid or offered to repay the Loan”).
Nevertheless, the Court concludes that dismissal of Plaintiff’s claim for quiet title is
required. This claim of superior title is based on Plaintiff’s claims arising out of the alleged
statements concerning the short-sale approval and the redemption period’s expiration. See First
Am. Compl. ¶ 48 (incorporating all prior allegations); Pl. Resp. at 24 (“Plaintiff is entitled to
have title quieted back into her name, and to have the rights in the property properly determined
based upon the conduct of the Defendants in the matter as outlined” in her response brief.).
However, the Court dismissed those claims for the reasons described above. Plaintiff does not
allege any other fraud, irregularity, or defect in the foreclosure proceedings — or any other basis
for claiming superior title. Therefore, Plaintiff has not pleaded a plausible claim of quiet title.
The Court thus dismisses this claim. See Vuljaj v. Chase Home Fin., No. 12-13932, 2013 WL
5450278, at *4 (E.D. Mich. Sept. 30, 2013) (“As the Plaintiffs cannot establish a defect in the
foreclosure proceeding, their quiet title claim must also fail.”).9
V. CONCLUSION
For the foregoing reasons, the Court grants Defendants’ motion to dismiss (Dkt. 15) and
dismisses Plaintiff’s First Amended Complaint (Dkt. 14) with prejudice.10

9

  Because the Court dismisses this claim, it need not address Defendants’ alternative argument
that quiet title is a remedy, and not a cause of action. See Defs. Reply at 6.

10

In her response, Plaintiff also offhandedly requests leave to amend “to include Defendants
[sic] clear violation of 12 CFR 1024.41 and 12 USC 2605(f).” Pl. Resp. at 25. The Court denies
this request as improper. See Mulholland v. Pharmacia & Upjohn, Inc., No. 99-98, 2001 WL
28

SO ORDERED.
s:\Mark A. Goldsmith
MARK A. GOLDSMITH
UNITED STATES DISTRICT JUDGE

Dated: September 24, 2014
Detroit, Michigan

CERTIFICATE OF SERVICE
The undersigned certifies that the foregoing document was served upon counsel of record and
any unrepresented parties via the Court’s ECF System to their respective email or First Class
U.S. mail addresses disclosed on the Notice of Electronic Filing on September 24, 2014.
s/Johnetta M. Curry-Williams
JOHNETTA M. CURRY-WILLIAMS
CASE MANAGER

311241, at *9 (W.D. Mich. Feb. 15, 2001) (rejecting claim raised in response brief because
“[f]iling a motion is the proper method to request leave to amend a complaint”); see also Fed. R.
Civ. P. 7(b)(1).
29

EXHIBIT A

30

1
1

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION

2
3
4

TINA JAMES,
Plaintiff,

5
6
7
8
9
10
11
12
13
14

-v-

Case No. 13-cv-13029

FEDERAL HOME LOAN
MORTGAGE CORPORATION,
And CHASE BANK,
Defendants,
_____________________/
EXCERPTS OF DEFENDANTS' MOTION TO DISMISS
BEFORE HONORABLE MARK A. GOLDSMITH
Flint, Michigan, Thursday, April 24th, 2014.

15
16

APPEARANCES:

17

FOR THE PLAINTIFF:

VANESSA G. FLUKER (P64870)
2921 E. Jefferson Avenue
Suite 200
Detroit, MI 48207

FOR THE DEFENDANT:

LAURA C. BAUCUS (P56932)
400 Renaissance Center
Detroit, MI 48243

18
19
20
21
22
23
24
25

David B. Yarbrough, CSR, RPR, FCRR
Official Court Reporter
[phone]

2
1

TABLE OF CONTENTS

2

PAGE

3

WITNESSES:

4

NONE

5
6
7
8
9
10
11
12
13
14
15

EXHIBITS

16
17
18
19
20
21
22
23
24
25

NONE

3
1

Flint, Michigan.

2

Thursday, April 24th, 2014.

3

At or about 1:49 p.m.

4

*

5
6

THE COURT:

*

*

Well, I'm a little bit confused about

exactly what is your theory of misrepresentation here.

7

MS. FLUKER:

The theory of misrepresentation is that

8

they represented and e-mails and things of that nature are

9

attached to the Complaint cited to in the docket, they said in

10

their e-mails that the short sale was approved, that it needed

11

to be consummated by January of 2013.

12

to make sure that could be done left the home in December of

13

2012.

14
15
16

THE COURT:

All right.

Therefore, the borrower

So the misrepresentation only

has to do with the issue of short sale, not with redemption?
MS. FLUKER:

With both because after the short sale

17

was said it was approved, you don't have to worry about a

18

redemption.

19

done, her credit's going to be okay, this situation has been

20

taken care of and if in fact she had known that all this time a

21

redemption period was ticking, she would have had the

22

opportunity to redeem her home and the --

23

She's under the impression the short sale was

THE COURT:

But I thought she says in her affidavit

24

that she thought this property had to be or the transaction had

25

to be completed by January because of the redemption period

4
1

being over in January.

2

MS. FLUKER:

Right, exactly and she's thinking the

3

deal is done so there's no deal left, there's no redemption

4

left, there's no anything left because everything's over and

5

completed only to find out that in fact there was no short sale

6

and when she thinks everything's completed, her redemption is

7

steadily ticking away and I think the position that when she

8

got the letter in May, well, she had a month to redeem her

9

property somehow justifies this, I don't think that that is

10

acceptable when by statute you're entitled to six months and I

11

think it's even more egregious because this woman would have

12

had the ability to redeem that property.

13

THE COURT:

Well, let's break these two ideas apart

14

though.

15

short sale.

16

reliance that has to do with redemption?

17

One has to do with redemption; one has to do with
With respect to redemption, what exactly is the

MS. FLUKER:

The reliance isn't, I know you're trying

18

to break them apart, but in the short sale scenario, they kind

19

of go together because when an individual does a short sale,

20

once the short sale is consummated, the whole deal is done,

21

there is no redemption because the property has been sold, done

22

on a short sale and that precludes the reporting of the

23

foreclosure on the credit report and the adverse credit

24

reporting and it also allows the borrower the opportunity to

25

waive the underlying deficiency which is the benefit of the

5
1

short sale which is a part of the HAMP program, the federal

2

program under the HAFA, and that is why it's kind of hard to

3

separate them.

4

well you know that your home's ticking through the foreclosure

5

process and you have a redemption, but if you believe there's a

6

completed or a soon to be completed short sale, then you're

7

under the impression there's no redemption anyway because as

8

counsel stated, the short sale is done pursuant to the HAMP

9

guidelines and contract.

Obviously if you know there's no short sale,

Just by way of brief background,

10

short sale component of HAMP just like the borrower's signed on

11

board to do the modifications and made an agreement with the

12

government to do that, one of the components of that program is

13

the short sale component.

14

sale, what you're actually doing is saying hey, instead of

15

moving forward with this regular foreclosure, we're going to

16

permit this short sale where your real estate agent goes out

17

and finds a purchaser for the property in an amount that's

18

agreed upon by both the bank and whoever the purchaser is.

19

That purchase occurs.

20

property is now owned by someone else and the benefit that the

21

borrower receives is that they get to sell the property for

22

less than the full mortgage value, the deficiency is waived and

23

they don't have a foreclosure on their credit and that's one of

24

the steps in the HAMP process if modification is not an option.

25

So it's kind of hard to say well what about the short sale and

Therefore when they do the short

There's no redemption because the

6
1

the redemption because it there had not been a short sale

2

scenario, we would not have the redemption problem and the

3

misrepresentation --

4

THE COURT:

Well, that's what I'm trying to find out.

5

What's the redemption problem?

6

MS. FLUKER:

The redemption problem is because once

7

they misrepresented and told her the short sale was approved,

8

everything stops at that point.

9

impression --

10

THE COURT:

11

MS. FLUKER:

The borrow's under the

What is it that's stopped?
Foreclosure proceedings, everything.

12

Ones there's a short sale, no foreclosure occurs after that

13

because the new purchaser on the short sale now owns the home.

14

The bank takes the money for that and there is no redemption.

15

THE COURT:

Right, I understand your point that your

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client thought that the bank had agreed to a short sale?

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that right?

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MS. FLUKER:

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THE COURT:

Is

That is correct and -Okay.

So your client thought there would

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be no need to worry about redemption because there wasn't going

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to be a foreclosure sale, right?

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MS. FLUKER:

Right, the foreclosure would be cut off,

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there would be no redemption and the new purchaser would take

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over and that's --

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THE COURT:

Okay.

So what kind of harm ended up

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being inflicted on your client when it turned out there wasn't

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going to be a short sale?

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of harm was there that your client thought for some period of

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time that she didn't have to worry about a redemption and then

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suddenly she finds out that she has to worry about a

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redemption?

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understand it.

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I'm trying to understand what kind

What's the harm at that point?

MS. FLUKER:

I'm trying to

The harm is because it frustrated the

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buyer's ability to, one, redeem that property, not to mention

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she moved her whole family out on the basis of the short sale

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approval and in the May 17th letter which I think is very

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telling, that is why Chase is apologizing and basically

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threatening to take discipline with the employee that, you

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know, engaged in the communications because in fact they were

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told there was an approval.

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THE COURT:

Are you saying your client could have

redeemed the property?
MS. FLUKER:

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Yes, and still can redeem the property.
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THE COURT:

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MS. FLUKER:

Okay.

*

*

Go ahead.

I just want to hit a couple other

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points, your Honor, from the reply brief that I think are

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significant.

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THE COURT:

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MS. FLUKER:

All right.
First and foremost, counsel represented

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that basically the Statute of Frauds and, umm, precluded the

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plaintiff's claims and that is not true.

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a claim, that would only go to the breach of contract, not the

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other claims of misrepresentation, innocent misrepresentation,

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fraudulent misrepresentation or the other claims set forth.

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Even if it precluded

Additionally in their reply brief, they relied on the

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unclean hand doctrine in both and they rely on the

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Yuille v. American Home Mortgage case that's their Exhibit G1

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to docket 15.

In that particular case, I think it's important

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to make the distinction.

In that case, the Yuille case,

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Mr. Yuille brought claims saying that his warranty deed give

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him full title to the property because MERS was the foreclosing

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entity which is nothing like this case.

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quiet title is based upon the right to have a determination of

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the interest in the property pursuant to MCL 600.2932.

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specifically, this case is cited in my brief so I won't go into

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it in detail, but the Adams v. Adams case which relies on the

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Statute, it talks about the quiet title action being the

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fundamental essence of an action to determine interest in the

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land and in this case we're talking about a frustration of

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redemption.

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case retains equitable title and the foreclosing entity retains

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legal title.

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was divested and frustrated with the redemption rights so I

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just wanted to make that aspect clear.

In this case, our

And

During the redemption period, the borrower in the

She was divested of that equitable title as she

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One final point I would like to bring out is the

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aspect of the irregularity in establishing prejudice.

Now the

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defendants rely on the Conclin case and Kim and that is fine,

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those are controlling cases in the circuit and in the state,

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but the issue is is that if you look at those cases, for

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instance in Conclin it doesn't say that a borrower can never

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challenge a foreclosure.

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fraud or irregularity is what we have argued here.

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in Kim, Kim goes through the same standard and in their

It says that you must demonstrate
Just like

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analysis, the only analysis that changed in Kim is that they

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changed the void ab initio analysis in Davenport to a voidable

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analysis based upon the borrower's showing of prejudice and

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they define prejudice if the borrower would have been in a

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better position but for the irregularity of fraud in the

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transaction.

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that the borrower would have been in a better position if they

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had not frustrated her redemption rights and as I was going

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through my brief, I do see that the proof of funding is

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attached in the docket of the Complaint as Exhibit 4.

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would have the ability to redeem that property but for the

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misrepresentations and the inability to exercise her redemption

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rights.

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In this particular instance, it's quite evident

She

So the bottom line is is that they're saying that

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this doesn't go to the foreclosure process, it does go to the

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foreclosure process.

In fact, if you look at MCL 600.3204

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(1)(d) -- I mean (d)(1), it specifically talks about, the very

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first thing it talks about there has to be a validity fault.

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You have to have an ownership interest in the loan.

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through a whole list of things that must be done and in essence

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by them failing to give her accurate information and literally

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misrepresenting information, they did not even have the ability

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to comply with the mandatory statute for foreclosure and we

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won't even start discussing the whole aspect of, you know, the

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violations under HAMP and things of that nature which have been

It goes

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recently addressed in a recent Sixth Circuit case, Mick v.

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Federal Home Loan Mortgage Corporation; i.e., Freddie Mac where

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the Sixth Circuit actually states in that particular ruling

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that a borrower can raise HAMP allegations offensively to

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substantiate a state claim and in this particular instance we

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have a situation where there was a violation by improperly

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executing the short sale aspect of HAMP, the HAFA, which

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provides for the short sale; thus, you know, catalyzing her to

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is lose her redemption period through misrepresentation which

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is not something that's just being arbitrarily asserted, but is

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actually supported and substantiated to a letter from Chase and

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to Freddie Mac and to the real estate agent that there were

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misrepresentations and errors made in this transaction.

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think at this early stage in the proceedings, this is a

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12(b)(6), there are definitely factual issues that can be

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developed and definitely claims that the plaintiff could

I

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prevail on, I think it is premature to grant their motion to

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dismiss in light of the evidence that's been submitted along

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with the plaintiff's Complaint and the law as applied in

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Michigan.

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denied.

So I would request that the motion for dismissal be
You have any other questions for me, your Honor?

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THE COURT:

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(Excerpt concluded).

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No, thank you.

*

*

*

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C E R T I F I C A T E

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I, David B. Yarbrough, Official Court

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Reporter, do hereby certify that the foregoing pages

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comprise a true and accurate Excerpt transcript of the

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proceedings taken by me in this matter on Thursday,

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April 24th, 2014.

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9/23/2014

/s/ David B. Yarbrough

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Date

David B. Yarbrough, CSR, FCRR
231 W. Lafayette Street
Detroit, MI 48226

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