Zaher v. AMC Mortgage Services, Inc. et al

Filing 35

OPINION and ORDER Granting Defendant's 27 Motion to Dismiss Plaintiff's First Amended Complaint. Signed by District Judge Linda V. Parker. (RLou)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
HOUDA ALI ZAHER
Plaintiff,
Civil Case No. 14-11848
Honorable Linda V. Parker

v.

ARGENT MORTGAGE COMPANY, LLC,
AMC MORTGAGE SERVICES, INC.,
CITI RESIDENTIAL LENDING INC.,
AMERICAN HOME MORTGAGE SERVICING, INC.,
AH MORTGAGE ACQUISITION CO., INC.,
HOMEWARD RESIDENTIAL INC., and
OCWEN LOAN SERVICING, LLC,
Defendants.
________________________________________/
OPINION AND ORDER GRANTING DEFENDANTS’ MOTION TO
DISMISS PLAINTIFF’S FIRST AMENDED COMPLAINT [ECF NO. 27]
Plaintiff Houda Ali Zaher (“Plaintiff”), through counsel, initiated this action
against Defendants Argent Mortgage Company LLC (“Argent”), AMC Mortgage
Services, Inc. (“AMC”), Citi Residential Lending Inc. (“Citi”), American Home
Mortgage Servicing, Inc. (“AHMSI”), AH Mortgage Acquisition Co. Inc. (“AH
Mortgage”), Homeward Residential Inc. (“Homeward”), and Ocwen Loan
Servicing, LLC (“Ocwen”) in state court on or about March 7, 2014, alleging that
Defendants misapplied the payments she made toward her residential mortgage
loan and wrongfully claimed she was in default on the loan. Plaintiff filed a First
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Amended Complaint on May 1, 2014. Defendants timely removed the action to
this Court on May 8, 2014 on the basis of diversity jurisdiction, 28 U.S.C. § 1332.
Presently before the Court is Defendants’ motion to dismiss Plaintiff’s First
Amended Complaint, filed pursuant to Federal Rule of Civil Procedure 12(b)(6).
(ECF No. 27.) Finding the facts and legal arguments sufficiently presented in the
parties’ briefs, the Court dispensed with oral argument pursuant to Eastern District
of Michigan Local Rule 7.1(f). For the reasons that follow, the Court grants
Defendants’ motion and dismisses the action with prejudice.
I.

Standard for Motion to Dismiss
A motion to dismiss pursuant to Rule 12(b)(6) tests the legal sufficiency of

the complaint. RMI Titanium Co. v. Westinghouse Elec. Corp., 78 F.3d 1125, 1134
(6th Cir. 1996). Under Federal Rule of Civil Procedure 8(a)(2), a pleading must
contain a “short and plain statement of the claim showing that the pleader is
entitled to relief.” To survive a motion to dismiss, a complaint need not contain
“detailed factual allegations,” but it must contain more than “labels and
conclusions” or “a formulaic recitation of the elements of a cause of action . . ..”
Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007). A complaint does not
“suffice if it tenders ‘naked assertions’ devoid of ‘further factual enhancement.’ ”
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at 557).

2

As the Supreme Court provided in Iqbal and Twombly, “[t]o survive a
motion to dismiss, a complaint must contain sufficient factual matter, accepted as
true, to ‘state a claim to relief that is plausible on its face.’ ” Id. (quoting Twombly,
550 U.S. at 570). “A claim has facial plausibility when the plaintiff pleads factual
content that allows the court to draw the reasonable inference that the defendant is
liable for the misconduct alleged.” Id. (citing Twombly, 550 U.S. at 556). The
plausibility standard “does not impose a probability requirement at the pleading
stage; it simply calls for enough facts to raise a reasonable expectation that
discovery will reveal evidence of illegal [conduct].” Twombly, 550 U.S. at 556.
In deciding whether the plaintiff has set forth a “plausible” claim, the court
must accept the factual allegations in the complaint as true. Erickson v. Pardus,
551 U.S. 89, 94 (2007). This presumption is not applicable to legal conclusions,
however. Iqbal, 556 U.S. at 668. Therefore, “[t]hreadbare recitals of the elements
of a cause of action, supported by mere conclusory statements, do not suffice.” Id.
(citing Twombly, 550 U.S. at 555).
Ordinarily, the court may not consider matters outside the pleadings when
deciding a Rule 12(b)(6) motion to dismiss. Weiner v. Klais & Co., Inc., 108 F.3d
86, 88 (6th Cir. 1997) (citing Hammond v. Baldwin, 866 F.2d 172, 175 (6th Cir.
1989)). A court that considers such matters must first convert the motion to
dismiss to one for summary judgment. See Fed. R. Civ. P 12(d). However,
3

“[w]hen a court is presented with a Rule 12(b)(6) motion, it may consider the
[c]omplaint and any exhibits attached thereto, public records, items appearing in
the record of the case and exhibits attached to [the] defendant’s motion to dismiss,
so long as they are referred to in the [c]omplaint and are central to the claims
contained therein.” Bassett v. Nat’l Collegiate Athletic Ass’n, 528 F.3d 426, 430
(6th Cir. 2008). Thus, a court may take judicial notice of “other court
proceedings” without converting a motion to dismiss into a motion for summary
judgment. Buck v. Thomas M. Cooley Law Sch., 597 F.3d 812, 816 (6th Cir. 2010)
(citing Winget v. J.P. Morgan Chase Bank, N.A., 537 F.3d 565, 575 (6th Cir.
2008)).
II.

Factual and Procedural Background
On August 6, 2004, Plaintiff secured a residential mortgage loan from

Defendant Argent related to real property located at 756 Dover Street, Dearborn
Heights, Michigan (“Property”). (Amend. Compl. ¶ 19.) In connection with the
transaction, Plaintiff executed a Fixed Rate Note in favor of Argent in the amount
of $198,000.00. (ECF No. 27-2 at Pg ID 802.) To secure repayment of the loan,
Plaintiff granted a mortgage (“Mortgage”) on the Property to Argent, as
mortgagee. (ECF No. 1-4 at Pg ID 77.) The mortgage was recorded in the Wayne
County Register of Deeds on September 10, 2004. (Id.)

4

Argent transferred the servicing rights to Ameriquest Mortgage Company,
LLC on or about August 11, 2004.1 (ECF No. 27-4 at Pg ID 807.) Next, AMC
transferred its servicing rights to Defendant Citi on October 1, 2007. (ECF No. 275 at Pg ID 811.) The third transfer of service occurred on February 11, 2009, when
Citi transferred its servicing rights to Defendant American Home Mortgage
Servicing, Inc., which later changed its name to Homeward Residential, Inc.
(“Homeward”). (ECF No. 27-6 at Pg ID 813; see also Amend. Compl. ¶¶ 43-45.)
Both parties agree that no late fees or penalties were assessed by Defendants
Argent, AMC, or Citi. (See Amend. Compl. ¶¶ 22, 25, 29; ECF No. 27 at Pg ID
780.) Plaintiff alleges that she was first unjustly charged with late payment fees by
Defendant Homeward. (Amend. Compl. ¶ ¶ 35, 44.) Plaintiff reached out to
Defendant Homeward, advising them to correct their accounting and requesting an
accounting history. (Id., ¶¶ 36, 37.) Plaintiff did not receive a response. (Id., ¶
38.) Plaintiff continued to receive late fee charges along with letters stating that
her payments were late until July 2012. (Id., ¶ 44.)
In a letter dated February 22, 2013, Plaintiff was notified that Defendant
Homeward would transfer the servicing rights to the mortgage loan to Defendant
Ocwen Loan Servicing, LLC (“Ocwen”) effective on March 11, 2013. (ECF No.
27-7 at Pg ID 816.) Plaintiff alleges that she received letters from Defendant
1

Ameriquest Mortgage Company changed their name to AMC Mortgage Services,
Inc. (“AMC”), effective March 31, 2005. (ECF No. 27-4 at Pg ID 809.)
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Ocwen “stating payments were allegedly not being made timely, threatening to
foreclose on the mortgage and added late fee charges” until December 2013.
(Amend. Compl. ¶ 52.)
Plaintiff filed a First Amended Complaint (“Amended Complaint”) on May
1, 2014, in which she asserts the following claims: (I) “Negligent Accounting and
Assessment of Late Fees” against Defendants American Home Mortgage
Servicing, Inc.; AH Mortgage Acquisition Company, Inc.; and Homeward
Residential, Inc; (II) “Negligent Accounting and Assessment of Late Fees” against
Defendant Ocwen Loan Servicing, LLC; (III) “Breach of Contract” for wrongful
foreclosure against all Defendants; (IV) fraud and misrepresentation against all
Defendants; (V) violation of the Michigan Consumer Protection Act, Mich. Comp.
Laws §445.901; (VI) violations of the Michigan Collection Practices Act, Mich.
Comp. Laws §§ 339.918 and 339.915(e); (VII) negligence against Defendant
Argent; (VIII) civil conspiracy; and (IX)2 quiet title. Defendants filed a motion to
dismiss the First Amended Complaint on April 5, 2016, requesting that this Court
dismiss Plaintiff’s amended complaint with prejudice and award Defendants their
costs and attorneys’ fees. (ECF No. 27 at Pg ID 798.)
Defendants present seven arguments in favor of dismissal. First, Defendants
argue that “negligent accounting” is not a cause of action. Alternatively, if

2

Plaintiff mislabels this as Count X in her First Amended Complaint.
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Plaintiff is requesting an accounting, Plaintiff fails to state a claim for accounting
and Plaintiff’s claims regarding an alleged violation of the Michigan Mortgage
Brokers, Lenders, and Servicers Licensing Act fail. (Id. at Pg ID 783.) Second,
Defendants argue that Plaintiff fails to state a claim for either breach of contract or
for wrongful foreclosure. (Id. at Pg ID 785-87.) Third, Defendants allege that
Plaintiff has failed to allege fraud with the particularity required under the Federal
Rules of Civil Procedure. (Id. at Pg ID 787.) Fourth, Defendants state that they
did not violate the Michigan Consumer Protection Act or the Michigan Collection
Practices Act. (Id. at Pg ID 788-90.) Fifth, Defendants argue they do not owe a
separate duty to Plaintiff outside of the mortgage loan agreement. (Id. at Pg ID
792.) Sixth, Defendants contend that Plaintiff fails to properly allege a civil
conspiracy. (Id. at Pg ID 794.) Seventh, Defendants claim that Plaintiff has failed
to allege a prima facie case to quiet title. (Id. at Pg ID 795.)
III.

Applicable Law and Analysis
A.

Negligent Accounting

Plaintiff alleges that Defendants Homeward and Ocwen were negligent in
failing to adhere to “ethical and legal guidelines of accounting standards….”
(Amend. Compl. ¶¶ 58, 68.) In particular, Plaintiff argues that Defendants violated
their duty to provide Plaintiff with accurate accounting statements. (ECF No. 32 at
Pg ID 923.) Plaintiff requests an accounting between Plaintiff and Defendants
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from 2004 until the present date and an award in damages exceeding $25,000,
because “the precise sum of the mortgage is unknown to Plaintiff.” (ECF No. 32 at
Pg ID 924.) Defendants contend that there is no cause of action for “negligent
accounting” and in the alternative, Plaintiff cannot state a claim for accounting.
(ECF No. 27 at Pg ID 783.)
An accounting is “an extraordinary remedy, and like other equitable
remedies, is available only when legal remedies are inadequate.” Bradshaw v.
Thompson, 454 F.2d 75, 79 (6th Cir. 1972); see also Alshaibani v. Litton Loan
Servicing, L.P., No. 2:12-CV-063, 2012 WL 3239088, at *4 (S.D. Ohio Aug. 7,
2012), aff’d, 528 F. App’x 462 (6th Cir. 2013). The burden of proof rests with
Plaintiff to demonstrate that legal remedies are inadequate. Sower v. Chase Home
Finance, L.L.C., No. 13-15274, 2016 WL 4446589 at *6 (E.D. Mich. Aug. 24,
2016). An accounting is deemed unnecessary “where discovery is sufficient to
determine the amounts at issue.” Barkho v. Homecomings Fin., LLC, 657
F.Supp.2d 857, 865 (E.D. Mich. 2009) (quoting Cyril J. Burke, Inc. v. Eddy & Co.,
Inc., 51 N.W.2d 238, 239 (Mich. 1952)).
Here, Plaintiff’s accounting claim is based on the amount due under the
mortgage note. Plaintiff fails to indicate why discovery would be inadequate to
determine the precise sum of the mortgage. Because Plaintiff has failed to show

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that legal remedies are inadequate, Plaintiff’s claim for negligent accounting under
Counts I and II are dismissed for failure to state a claim pursuant to Rule 12(b)(6).
B.

Michigan Mortgage Brokers, Lenders, and Servicers Licensing
Act

The remaining violation discussed in Counts I and II is an alleged breach in
violation of the Michigan Mortgage Brokers, Lenders, and Servicers Licensing Act
(“MBLSLA”), Mich. Comp. Laws § 445.1651, et seq. Plaintiff argues that
Defendants Homeward and Ocwen were negligent and violated MBLSLA by
allegedly breaching their duty to adhere to “ethical and legal guidelines of
accounting standards….” (Amend. Compl. ¶¶ 58, 68.) Defendants have two
arguments: first, Defendants contend that Plaintiff failed to allege any fraud in the
mortgage loan transaction and second, Defendant Ocwen has not engaged in any
prohibited activity under the MBLSLA. (ECF No. 27 at Pg ID 785.)
MBLSLA was enacted to regulate mortgage brokers, mortgage lenders, and
mortgage servicers. Michigan Compiled Laws §445.1672 lists 14 separate
violations of the act. Plaintiff fails to state what provision of § 445.1672
Defendants allegedly violated. Plaintiff also fails to state sufficient factual content
for the Court to determine what violations of the act Plaintiff is alleging occurred.
To state a claim, Plaintiff must plead more than “labels and conclusions” or “a
formulaic recitation of the elements of a cause of action . . ..” Bell Atlantic Corp.
9

v. Twombly, 550 U.S. 544, 555 (2007). Therefore, Plaintiff’s claim regarding an
alleged violation of the MBLSLA fail and Counts I and II are dismissed for failure
to state a claim pursuant to Federal Rule of Procedure 12(b)(6).
C.

Breach of Contract

Defendants move to dismiss Count III of Plaintiff’s complaint, which alleges
a breach of contract due to wrongful foreclosure. (Amend. Compl. ¶¶ 75-92.)
Plaintiff argues that Defendants were in material breach of the mortgage and loan
contract when Defendants “failed to properly credit and did not include a proper
accounting of and credits for payment to the loan balance” on Plaintiff’s mortgage
account. (Id., ¶ 83.) Because of this failure, Plaintiff states she suffered late fees
and her credit rating was damaged. (Id., ¶ 92.)
To establish a breach of contract in Michigan, Plaintiff must allege: (1) the
existence of a valid contract, (2) establish the contract’s terms, (3) present evidence
of a breach of those terms, and (4) show an injury causally related to that breach.
Webster v. Edward D. Jones & Co., 197 F.3d 815, 819 (6th Cir. 1999). Plaintiff
alleges in her Amended Complaint that Defendants breached the terms of the
mortgage by not applying Plaintiff’s payments toward reducing the loan principal.
(ECF No. 32 at Pg ID 928.) However, Plaintiff fails to establish the contract’s
terms and does not point to any provision in a contract that Defendants have
breached.
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Moreover, while Plaintiff alleges that all Defendants have breached the
terms of the mortgage, Plaintiff also admits that the issue of misapplied payments
did not arise until Defendant Homeward obtained servicing rights to the loan. (See
Amend. Compl. ¶¶ 22, 25, 29, 35.) Plaintiff fails to explain how Defendants
Argent, AMC, or Citi have injured her through a breach of contract. Plaintiff does
not state more than “naked assertions” and therefore, Plaintiff’s claim for breach of
contract is dismissed pursuant to Rule 12(b)(6). See Iqbal, 556 U.S.at 678
(quoting Twombly, 550 U.S. at 557).
D.

Wrongful Foreclosure

In Count III of the Complaint, Plaintiff also argues that Defendants did not
have “the right to declare default, cause notices of default to be issued or recorded,
or foreclose on Plaintiff’s interest in the Subject Property” and therefore violated
MBLSLA. (Amend. Compl. ¶ 91.) In her opposition brief, Plaintiff explains that
Defendants wrongfully initiated foreclosure proceedings by sending letters
demanding “substantial sums of money from Plaintiff.” (ECF No. 32 at Pg ID
929.) Defendants argue that the issue of wrongful foreclosure is not ripe because
no foreclosure proceedings have commenced. (ECF No. 27 at Pg ID 787.)
Plaintiff does not dispute that foreclosure proceedings have not commenced;
rather, Plaintiff makes the claim for wrongful foreclosure based solely on “letters
constituting an intent to foreclose.” (ECF No. 32 at Pg ID 929.)
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Plaintiff fails to cite to a provision of MBLSLA that Defendants could have
violated by sending Plaintiff letters threatening foreclosure. Further, this Court
agrees that this issue is not ripe where foreclosure proceedings have not
commenced. See McLaughlin v. Chase Home Fin., LLC, No. 2:11-CV-11012,
2012 WL 995284, at *5 (E.D. Mich. Mar. 23, 2012), aff'd 519 Fed.Appx. 904 (6th
Cir. 2013) (“Plaintiffs have also failed to establish whether a claim for ‘wrongful
foreclosure’ may be brought in this case, in light of the fact that nothing in the
record appears to indicate that a foreclosure sale has actually taken place.”). In
Mowett v. JPMorgan Chase Bank, No. 15-12612, 2016 WL 1259091 (E.D. Mich.
Mar. 31, 2016), the court concluded that the plaintiff's wrongful foreclosure claim
was not ripe because no foreclosure sale had occurred, thus precluding the plaintiff
from “demonstrat[ing] any fraud resulting in prejudice relating to a foreclosure
proceeding.” Id. at *5. Therefore, Count III is dismissed pursuant to Rule
12(b)(6).
E.

Fraud and Misrepresentation

In Count IV of her Amended Complaint, Plaintiff asserts fraud and
misrepresentation against all Defendants based on allegations that Defendant
Argent was “never a legally authorized registered FDIC mortgage lender.”
(Amend. Compl. ¶ 94.) Plaintiff argues the remaining Defendants were engaged in
fraud by breaching their duty to “periodically verify the accuracy and completeness
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of transactions processed on plaintiffs [sic] account.” (Id., ¶ 102.) Plaintiff also
contends that Defendants had an “affirmative duty not to intentionally conceal or
misrepresent to plaintiff the true nature of the status of plaintiff’s mortgage
balance, the reasons for assessing late charges, or the fact that such payments
which were being actually received, were not being received in order to justify
additional and further assessments of late fees.” (Id., ¶ 104.)
Under Michigan law, a prima facie claim of fraud requires proof that:
(1) the defendant made a material representation; (2) the
representation was false; (3) when the representation was made, the
defendant knew that it was false, or made it recklessly, without
knowledge of its truth, and as a positive assertion; (4) the defendant
made [the representation] with the intention that the plaintiff should
act upon it; (5) the plaintiff acted in reliance upon the representation;
and (6) the plaintiff thereby suffered injury.
Roberts v. Saffell, 760 N.W.2d 715, 719 (Mich. App. 2008). Under the Federal
Rules of Civil Procedure, claims of fraud must be pled with particularity. Fed. R.
Civ. P. 9(b). In order to satisfy the particularity requirement, a plaintiff must: (1)
specify the alleged fraudulent statements; (2) identify the speaker; (3) state when
and where the statements were made; and (4) explain why the statements were
fraudulent. Frank v. Dana Corp., 547 F.3d 564, 570 (6th Cir. 2008).
In her Amended Complaint, Plaintiff fails to particularly identify the specific
fraudulent statements, who made the statements, and when and where the
statements were made. In Plaintiff’s opposition brief, she alleges that Defendant
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Ocwen has committed fraud by “repeatedly communicat[ing] to Plaintiff that her
loan was in default, despite Plaintiff’s consistent payments” and for failing to
properly account the receipt of Plaintiff’s money. (ECF No. 32 at Pg ID 930.)
However, Plaintiff still fails to satisfy the requisite pleading standards for fraud by
not identifying when and where the statements were made and why the statements
were fraudulent. Plaintiff’s opposition brief also does not state how the remaining
Defendants engaged in fraud.3 Therefore, Plaintiff fails to plead fraud or
misrepresentation with the level of particularity required by Rule 9(b).
F.

Michigan Consumer Protection Act

In Count V of her Amended Complaint, Plaintiff alleges that Defendants
Homeward and Ocwen violated the Michigan Consumer Protection Act
(“MCPA”), Mich. Comp. Laws § 445.901 et seq., by assessing late fees and
sending letters demanding mortgage payments when Plaintiff had made those
payments on a timely basis. (Amend. Compl. ¶¶ 108-115.) Defendants contend
that Plaintiff’s MCPA claims fail because the MCPA does not apply to the
mortgage business.

3

As previously mentioned, Plaintiff states in her Amended Complaint that there
were no issues regarding late payments with Defendants Argent, AMC, or Citi.
(Amend. Compl. ¶¶ 22, 25, 29.) It is unclear how they could be liable for failure to
properly account receipt of Plaintiff’s money if Plaintiff states that the accounting
issues did not occur until servicing rights were transferred to Defendant
Homeward. (Id., ¶ 35.)
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This Court agrees with the Defendants. Under the MCPA, “[a] transaction
or conduct specifically authorized under laws administered by a regulatory board
or officer acting under statutory authority of this state or the United States” is
exempt from the MCPA. Mich. Comp. Laws. § 445.904(1)(a); see also Newton v.
Bank West, 686 N.W.2d 491 (Mich. App. 2004). In Newton, the Michigan Court
of Appeals stated that in determining whether transactions or conduct are
“specifically authorized” by law, courts should determine “whether the general
transaction is specifically authorized by law, regardless of whether the specific
misconduct is prohibited.” Id. at 491 (quoting Smith v. Globe Life Ins. Co., 597
N.W.2d 28, 38 (Mich. 1999)).
Courts have repeatedly concluded that residential mortgage loan transactions
qualify for the exemption.4 See Newton, 686 N.W.2d at 493 (“[W]e conclude that
the residential mortgage loan transactions fit squarely within the exemption.”); see
also Perino v. Wells Fargo Bank, N.A., No. 12-cv-15182, 2013 WL 5340800 at
*10 (E.D. Mich. Sept. 23, 2013) (“The Michigan Consumer Protection Act does
not apply to residential mortgage transactions.”); Berry v. Bank of America, N.A.,
No. 09-14081, 2009 WL 4950463 at *6 (E.D. Mich. Dec. 16, 2009) (“[T]he MCPA
does not apply to residential loan transactions.”); Hanning v. Homecomings Fin.
Networks, Inc., 436 F.Supp.2d 865, 869 (W.D. Mich. 2006). This Court agrees
4

In her Amended Complaint, Plaintiff states that both Defendants Homeward and
Ocwen are mortgage services companies. (Amend. Compl. ¶¶ 12, 15.)
15

with Defendants and holds that the MCPA does not apply to the mortgage for the
Property.
G.

Michigan Occupational Code

In Count VI of her Amended Complaint, Plaintiff alleges that a defendant
violated the Michigan Occupational Code (“MOC”), Mich. Comp. Laws § 339.918
and § 339.915(e).5 (Amend. Compl. ¶¶ 118-120.) Plaintiff fails to state which
defendant she contends violated the MOC, but argues that “[n]one of the
Defendants assessed Plaintiff’s financial situation correctly.” (Id., ¶ 119(d).)
Defendants contend that as mortgage servicers, they are not subject to the MOC.
(ECF No. 27 at Pg ID 790.)
The MOC prohibits licensed collection agencies from “[m]aking an
inaccurate, misleading, untrue, or deceptive statement or claim in a
communication” with a debtor. Mich. Comp. Laws. § 339.915(e). The MOC does
not apply to “a person whose collection activities are confined and are directly
related to the operation of a business other than that of a collection agency….”
Mich. Comp. Laws § 339.901(1)(b). Defendants are not collection agencies;
rather, they are mortgage services companies. (Amend. Compl. ¶¶ 3-16.) Plaintiff
has failed to plead any facts that show how this act could apply to Defendants since
they are “operat[e] [] a business other than that of a collection agency….” Mich.
5

Plaintiff titled Count VI “Violations of Michigan Collection Practices Act” but
references the Michigan Occupational Code. (Amend. Compl. ¶ 119.)
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Comp. Laws § 339.901(1)(b). Moreover, Plaintiff fails to show how Defendants
violated the MOC, and instead merely recites parts of the statute. (Amend. Compl.
¶ 119.) Plaintiff’s allegation only states “ ‘naked assertions’ devoid of ‘factual
further enhancement.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting
Twombly, 550 U.S. at 557). Therefore, Count VI is dismissed.
H.

Negligence

In Count VII, Plaintiff alleges that Defendant Argent was negligent in
transferring the servicing rights of the mortgage. (Amend. Compl. ¶¶ 122-24.)
Plaintiff argues that Defendant Argent breached their duty as a mortgage loan
provider by allegedly failing to periodically verify the accuracy of the financial
transactions being processed by each company with servicing rights subsequent to
Argent; failing to verify the accounting of Plaintiff’s mortgage account; concealing
material misrepresentations regarding Defendants’ debt collection practices; and
for providing Defendant Ocwen the servicing rights to the mortgage loan with
knowledge of its “prior history of fraudulent activities.” (Id., ¶ 126.)
To state a prima facie case of negligence in Michigan, a plaintiff asserting a
negligence claim must prove: “(1) ‘that the defendant owed a legal duty to the
plaintiff,’ (2) ‘that the defendant breached or violated the legal duty,’ (3) ‘that the
plaintiff suffered damages,’ and (4) ‘that the breach was a proximate cause of the
damages suffered.’ ” Demo v. Red Roof Inns, Inc., 274 F. App’x 477, 478 (6th Cir.
17

2008) (quoting Schultz v. Consumers Power Co., 506 N.W.2d 175, 177 (Mich.
1993)).
Under Michigan law, a negligence claim arises only where the plaintiff
alleges a duty that is “separate and distinct” from a contractual duty. Fultz v.
Union Commerce Assoc., 683 N.W.2d 587, 592 (Mich. 2004); see also Polidori v.
Bank of America, N.A., 977 F.Supp.2d 754, 763 (E.D. Mich. 2013). “[T]he
threshold question is whether the defendant owed a duty to the plaintiff that is
separate and distinct from the defendant’s contractual obligations. If no
independent duty exists, no tort action based on a contract will lie.” Fultz, 683
N.W.2d at 592.
Here, Plaintiff has not alleged that Defendant Argent owed him a duty
separate and distinct from the contractual obligations. Plaintiff does not provide
any case law or evidence in support of a breach arising outside of the parties’
contract. Because there is no “separate and distinct” duty, Plaintiff has not stated a
claim for negligence.
I.

Civil Conspiracy

In Count VIII of her Amended Complaint, Plaintiff alleges that Defendants
engaged in a civil conspiracy by “misrepresenting and concealing material
information regarding the servicing of loans.” (Amend. Compl. ¶ 131.)

18

Defendants contend that the civil conspiracy claim fails because Plaintiff has failed
to allege a tort for either fraud or negligence. (ECF No. 34 at Pg ID 947.)
To prove a civil conspiracy, a plaintiff must show the following:
“[A]n agreement between two or more persons to injure another by
unlawful action. Express agreement among all the conspirators is not
necessary to find the existence of a civil conspiracy. Each conspirator
need not have known all of the details of the illegal plan or all of the
participants involved. All that must be shown is that there was a single
plan, that the alleged coconspirator shared in the general
conspiratorial objective, and that an overt act was committed in
furtherance of the conspiracy that caused injury to the complainant.”
Hooks v. Hooks, 771 F.2d 935, 943-44 (6th Cir. 1985). “[A] claim for civil
conspiracy may not exist in the air; rather, it is necessary to prove a separate,
actionable tort.” Advocacy Org. for Patients & Providers v. Auto Club Ins. Ass'n,
670 N.W.2d 569, 580 (Mich. App. 2003) (internal citation omitted); see also Thill
v. Ocwen Loan Servicing, LLC, 8 F. Supp. 3d 950, 957 (E.D. Mich. 2014).
Because Plaintiff has not sufficiently pled a separate, actionable tort, her civil
conspiracy claim must be dismissed.
J.

Quiet Title

In Count X of her Amended Complaint, Plaintiff seeks to quiet title to the
Property pursuant to Michigan Compiled Laws § 600.2932. (Amend. Compl. ¶¶
136-149.) Plaintiff requests that this Court hold a hearing to determine the validity
and priority of Plaintiff’s claim for title. (Id. ¶ 149.)

19

The Michigan Court Rules set forth the requirements for “actions to
determine interests in land under [Michigan Compiled Laws §] 600.2932.” Mich.
Ct. R. 3.411(A). Pursuant to Rule 3.411(B)(2), to state a claim for quiet title, the
plaintiff must allege: “(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.” Mich. Ct. R. 3.411(B)(2). The plaintiff “‘has
the burden of proof and must make out a prima facie case of title. If the plaintiff
makes out a prima facie case, the defendant then has the burden of proving
superior right or title in themselves.’ ” Khadher v. PNC Bank, NA, 577 F. App’x
470, 478 (6th Cir. 2014) (brackets removed) (quoting Beulah Hoagland Appleton
Qualified Pers. Residence Trust v. Emmet Cnty. Rd. Comm’n, 600 N.W.2d 698,
700 (Mich. Ct. 1999)).
Plaintiff has failed to state a claim to quiet title. Plaintiff does not provide
any facts that, if taken as true, would establish superiority over Defendant Ocwen’s
right to the Property. As Defendants correctly point out, Plaintiff does not allege
she paid off her debt. (ECF No. 27 at Pg ID 796-97.) Because Plaintiff failed to
state the interest she had in the premise and any facts demonstrating superiority,
Plaintiff’s claim to quiet title must be dismissed.
IV.

Conclusion
For the above reasons, Plaintiff’s claims are dismissed.
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Accordingly,
IT IS ORDERED that Defendants’ motion to dismiss (ECF No. 27) is
GRANTED.
s/ Linda V. Parker
LINDA V. PARKER
U.S. DISTRICT JUDGE
Dated: January 18, 2017
I hereby certify that a copy of the foregoing document was mailed to counsel of
record and/or pro se parties on this date, January 18, 2017, by electronic and/or
U.S. First Class mail.
s/ Richard Loury
Case Manager

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