Williams v. Ocwen Loan Servicing, LLC et al
Filing
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OPINION and ORDER (1) Granting Defendant's 13 Motion to Dismiss; and (2) Denying as Moot Defendant's 19 Motion for Sanctions. Signed by District Judge Linda V. Parker. (RLou)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
KELLY WILLIAMS,
Plaintiff,
v.
Civil Case No. 15-13840
Honorable Linda V. Parker
OCWEN LOAN SERVICING,
LLC et al.,
Defendants.
__________________________/
OPINION AND ORDER (1) GRANTING DEFENDANT’S MOTION TO
DISMISS [ECF NO. 13] AND (2) DENYING AS MOOT DEFENDANT’S
MOTION FOR SANCTIONS [ECF NO. 19.]
I.
INTRODUCTION
Plaintiff Kelly Williams (“Plaintiff”) filed this lawsuit against Defendant
Selene Finance LP (“Defendant”) out of a dispute arising from a mortgage
foreclosure.1 Plaintiff filed the First Amended Complaint on January 27, 2016,
alleging that Defendant violated his rights under the Michigan Anti-Lockout
Statute, common law conversion, statutory conversion, and unjust enrichment.
(ECF No. 10.) Defendant filed a motion to dismiss the amended complaint
pursuant to Federal Rules of Civil Procedure 12(b)(6) and 12(b)(7) on February 10,
2016. (ECF No. 13.) Approximately one month later, Defendant also filed a
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Plaintiff also filed the complaint against Ocwen Loan Serving, LLC. This
claim was dismissed on December 8, 2015. (ECF No. 6.)
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motion for sanctions pursuant to Federal Rule of Civil Procedure 11(b) and (c).
(ECF No. 19.)
Presently before the Court is the Defendant’s motion to dismiss Plaintiff’s
Complaint pursuant to Federal Rule of Civil Procedure 12(b)(6) (ECF No. 9) and
Defendant’s motion to sanction Plaintiff’s counsel (ECF No. 19). The motions
have been fully briefed. 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) on September 17, 2016. For the
reasons that follow, the Court is granting Defendant’s motion to dismiss for failure
to state a claim and denying Defendant’s motion for sanctions as moot.
II.
STANDARD OF REVIEW
A. Federal Rule of Civil Procedure 12(b)(6)
A motion to dismiss pursuant to Federal Rule of Civil Procedure 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,
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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).
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, however, is not applicable to legal
conclusions. 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
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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, “[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)).
B. Federal Rule of Civil Procedure 12(b)(7)
Federal Rule of Civil Procedure 12(b)(7) authorizes a court to dismiss a
complaint if the pleading fails to join an obligatory party pursuant to Rule 19.
Thus, the question of joinder and dismissal under Rule 19 requires a court to
initially determine if the absent parties are required under the law, and, thereafter,
inquire as to “whether, in their absence, equity and good conscience require the
case to be dismissed. If the answer to either question is no, then Rule 19 does not
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foreclose this litigation.” School Dist. of City of Pontiac v. Sec’y of U.S. Dept. Of
Educ., 584 F.3d 253, 265 (6th Cir. 2009) (en banc).
C. Federal Rule of Civil Procedure 11(b) and (c)
Federal Rule of Civil Procedure 11 permits sanctions if “a reasonable
inquiry discloses the pleading, motion, or paper is (1) not well grounded in fact, (2)
not warranted by existing or a good faith argument for the extension, modification
or reversal of existing law, or (3) interposed for any improper purpose such as
harassment or delay.” Merritt v. Int'l Ass'n of Machinists and Aerospace Workers,
613 F.3d 609, 626 (6th Cir. 2010) (quoting Herron v. Jupiter Transp. Co., 858
F.2d 332, 335 (6th Cir. 1988)).
III.
BACKGROUND
Plaintiff filed a complaint against Defendant on October 30, 2015 (ECF No.
1) and submitted the First Amended Complaint on January 27, 2016 (ECF No. 10).
Plaintiff resided at 2440 Paramenter Boulevard, Unit 112 in Royal Oak, Michigan
during the relevant time period. (ECF No. 10 at Pg ID 92.) Plaintiff’s home was
subject to foreclosure and on January 20, 2015, his home was sold. (Id.; see also
ECF No. 13 at Pg ID 159.)
On March 20, 2015, a representative of Re/Max Metropolitan (“Re/Max”),
who is not a party to this suit, changed the locks at Plaintiff’s property. (ECF No.
10 at Pg ID 92-93.) The representative left Plaintiff a note, stating “[p]er bank’s
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instructions, we rekeyed the condo so that we could verify occupancy. Please
contact me to get access.” (Id. at Pg ID 94.)
Upon arriving at his home, Plaintiff called the representative over 20 times
in a two-hour period to gain access to his home. (Id. at Pg ID 94-95.) The
representative arrived and allowed the Plaintiff to enter his home. (Id. at Pg ID
95.) In total, Plaintiff was locked out of his home for two hours. (Id.)
Shortly after entering his home, Plaintiff states that some of his personal
property had been removed during the process of changing the locks. (ECF No. 18
at Pg ID 221.) Plaintiff alleges that Defendant is responsible for the loss of
property through its relationship with Re/Max. Plaintiff alleges that Re/Max is an
agent of Defendant and was following Defendant’s instructions when the
representative arrived at Plaintiff’s home. (ECF No. 10 at Pg ID 92-93.)
Because Re/Max is allegedly an agent of Defendant and was acting on
Defendant’s instructions, Plaintiff alleges that Defendant is liable for both
preventing him from entering his home for two hours and for the loss of personal
items valued at $4,250. (ECF No. 10 at Pg ID 95.) Defendant, however, argues
that Plaintiff fails to state a claim under the Michigan Anti-Lockout Statute,
common law conversion, statutory conversion, and unjust enrichment. (ECF No.
13.) Further, Defendant argues that Plaintiff failed to include the necessary parties
in the First Amended Complaint. Defendant argues that both Re/Max and
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Lakeside Building Services, Inc. (“Lakeside”) are necessary parties because both
were involved in the rekeying of Plaintiff’s home. (Id. at Pg ID 161.)
IV.
ANALYSIS
A. Motion To Dismiss Under Rule 12(b)(6)
1. Anti-Lockout Claim
Defendant argues that Plaintiff has filed to state a claim upon which relief
can be granted pursuant to Federal Rule of Civil Procedure 12(b)(6).
Plaintiff’s First Amended Complaint states that Defendant violated Section 1
of Michigan’s Anti-Lockout Statute by allowing its agent Re/Max to change the
locks at Plaintiff’s property. M.C.L. § 600.2918(1). Plaintiff alleges Defendant
violated the Michigan Anti-Lockout Statute by authorizing Re/Max to lock
Plaintiff out of his home for two hours. (ECF No. 10 at Pg ID 93-94.) Plaintiff
further alleges that Re/Max removed his personal property in violation of the
statute. (Id.)
Section 600.2918(1) provides:
(1) Any person who is ejected or put out of any lands or tenements in
a forcible and unlawful manner, or being out is afterwards held and
kept out, by force, is entitled to recover 3 times the amount of his or
her actual damages or $200.00, whichever is greater, in addition to
recovering possession.
The case law in this area establishes that to sustain a claim under § 600.2918(1):
the entry or the detainer must be riotous, or personal violence must be
used or in some way threatened, or the conduct of the parties guilty of
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the entry or detainer must be such as in some way to inspire terror or
alarm in the persons evicted or kept out-in other words, the force
contemplated by the statute is not merely the force used against, or
upon, the property, but force used or threatened against persons, as a
means, or for the purpose, of expelling or keeping out the prior
possessor.
Martorana v. Fed. Nat’l Mortg Ass’n, No. 11-10312, 2012 WL 124930 at *6 (E.D.
Mich. Jan. 17, 2012) (quoting Patterson v. Dombrowski, 60 N.W.2d 456, 458-59
(Mich. 1953)).
In this case, Plaintiff has failed to allege any force against persons, but only
force against the property itself. The pleadings also suggest that Plaintiff was not
present when Re/Max changed the locks. In Martorana, this court granted
dismissal of a § 600.2918(1) claim because “there is no claim of actual or
threatened force or violence towards Plaintiff when his possessions were removed
from the…property or during the time he and his adult children lived at that
property.” Martorana, 2012 WL 124930 at *6; see also Montgomery v. Freddie
Mac, No. 10-11729, 2012 WL 6049085, at *3 (E.D. Mich. Aug. 31, 2012),
adopted sub. nom. Montgomery v. CitiMortgage, Inc., 2012 WL 6047236 (E.D.
Mich. Dec. 5, 2012) (finding that a lock-out performed on property when no one
was home did not violate § 600.2918(1)). Therefore, Plaintiff cannot state a claim
under § 600.2918(1).
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2. Conversion
In the amended complaint, Plaintiff asserts common law and statutory
conversion claims. The first is established by showing “any distinct act of domain
wrongfully exerted over another’s personal property in denial of or inconsistent
with the rights therein.” Foremost Ins. Co. v. Allstate Ins. Co., 486 N.W.2d 600,
606 (Mich. 1992). “Conversion may occur when a party properly in possession of
property uses it in an improper way, for an improper purpose, or by delivering it
without authorization to a third party.” Dep’t of Agric. v. Appletree Mktg. LLC,
779 N.W.2d 237, 244-45 (Mich. 2010).
Michigan’s conversion statute provides:
(1) A person damaged as a result of either or both of the following
may recover 3 times the amount of actual damages sustained, plus
costs and reasonable attorneys’ fees:
(a) Another person’s stealing or embezzling property or converting
property to the other person’s own use.
(b) Another person’s buying, receiving, possessing, concealing, or
aiding in the concealment of stolen, embezzled, or converted property
when the person buying, receiving, possessing, concealing, or aiding
in the concealment of stolen, embezzled, or converted property knew
that the property was stolen, embezzled or converted.
Mich. Comp. Laws § 600.2919a. In order to prevail on a claim for statutory
conversion, a plaintiff must satisfy the elements of a common law conversion
claim, as well as demonstrate that the defendant had “actual knowledge” of the
converting activity. See Echelon Homes, LLC v. Carter Lumber Co., 694 N.W.2d
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544, 547-49 (Mich. 2005) (holding that under Michigan’s conversion statute,
“constructive knowledge is not sufficient; a defendant must know that the property
was stolen, embezzled, or converted.”).
Plaintiff alleges that Defendant converted Plaintiff’s “real $95,000 property
to their own use by changing the locks on the premises, thereby locking Plaintiff
out of the premises.” (ECF No. 10 at Pg ID 96.) As Defendants stated in their
motion for sanctions, real property cannot be converted. Collins v. Wickersham,
862 F. Supp. 2d 649, 656 (E.D. Mich. 2012); see also Head v. Phillips Camper
Sales & Rentals, Inc., 234 Mich. App. 94, 111 (1999); Foremost Ins. Co. v. Allstate
Ins. Co., 486 N.W.2d at 606. Therefore, the claim for common law conversion
and statutory conversion fail as a matter of law with respect to Plaintiff’s real
property.
Plaintiff also alleges that Defendant unlawfully converted Plaintiff’s
personal property amounting to $4,250. (ECF No. 10 at Pg ID 96-97.) Defendant
argues that Plaintiff’s allegations do not indicate that representatives of Defendant
entered the property, touched, or removed Plaintiff’s personal property. (ECF No.
13 at Pg ID 170-71.)
Plaintiff has failed to plead a claim for common law conversion and
statutory conversion for his personal property. To succeed on a common law
conversion claim, Plaintiff was required to state that Defendant used his personal
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items “in an improper way, for an improper purpose, or by delivering it without
authorization to a third party.” Dep’t of Agric., 779 N.W.2d at 244-45. Plaintiff’s
allegations fail to mention any improper use of his personal items by Defendant.
Rather, Plaintiff’s allegations regarding the loss of his personal property merely
state that “Plaintiff suffered actual damages in the amount of $4,250 for the
conversion of his personal property.” (ECF No. 10 at Pg ID 97.) Plaintiff has not
alleged any improper use by Defendant of his personal items.
Plaintiff’s statutory conversion claim also fails because Plaintiff has made
no allegation that “show[s] that the defendant employed the converted property for
some purpose personal to the defendant’s interests.” Aroma Wines & Equip, Inc.
v. Columbian Distribution Servs, Inc., 871 N.W.2d 136, 148 (Mich. 2015); see also
Sutter v. Ocwen Loan Servicing, LLC, No. 320704, 2016 WL 3003346 at *4 (Mich.
App. May 24, 2016) (finding that plaintiffs failed to include sufficient allegations
in complaint for statutory conversion claim where “plaintiffs did not assert that
defendant employed [plaintiffs’ personal property] for some purpose personal to
defendant’s interests”).2
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An interview with a realtor for Re/Max included in the police report
provided as an exhibit by both parties indicates that Re/Max instructed Lakeside to
rekey Plaintiff’s residence. (ECF No. 19-2 at Pg ID 307.) Re/Max and Lakeside
also spoke while Lakeside was at Plaintiff’s residence. (Id.) There is no indication
in the pleadings that Defendant was involved in this conversation.
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Accordingly, Plaintiff has failed to state a legally cognizable claim for
common law conversion and statutory conversion pursuant to Federal Rule
12(b)(6).
3. Unjust Enrichment
An unjust enrichment claim under Michigan law requires proof of the
following: “(1) receipt of a benefit by the defendant from the plaintiff and (2) an
inequity resulting to [the] plaintiff because of the retention of the benefit by the
defendant.” Erickson’s Flooring & Supply Co. v. Tembec, USA, LLC, 212 F.
App’x 558, 564 (6th Cir. 2007) (quoting Barber v. SMH (US), Inc., 509 N.W.2d
791, 796 (Mich. Ct. App. 1993)).
Plaintiff alleges that Defendant was unjustly enriched by (1) instructing an
agent to rekey his home and (2) retaining Plaintiff’s personal items. (ECF No. 10
at Pg ID 98-99.) Both of these allegations are unsupported by facts in the
pleadings. Further, Plaintiff has failed to state what benefit Defendant could have
received by locking Plaintiff out of his home for two hours. (ECF No. 10 at 95.)
Plaintiff has failed to satisfy the first prong of this rule as discussed above.
Accordingly, Plaintiff fails to state a claim for unjust enrichment pursuant to Rule
12(b)(6).
B. Motion To Dismiss Under Rule 12(b0(7)
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In the alternative, Defendant requests that the court dismiss the claim
pursuant to Federal Rule of Civil Procedure 12(b)(7) because Defendant alleges
that Re/Max and Lakeside are necessary parties to this action. (ECF No. 13 at Pg
ID 167.) Further, Defendant argues that joinder is impossible because it would
eliminate complete diversity. (Id.) Because this Court has denied the First
Amended Complaint pursuant to Rule 12(b)(6), it need not evaluate the merits of
this claim.
C. Motion For Sanctions Under Rule 11(b) and (c)
The remaining pending motion is Defendant’s motion to sanction counsel
for the Plaintiff because Plaintiff’s claims “are not supported by existing law
and/or are the factual contentions lack evidentiary support. The First Amended
Complaint is also not legally supportable because it fails to name necessary
parties.” (ECF No. 19 at Pg ID 271.)
Because Defendant’s motion to dismiss has been granted, the motion for
sanctions is denied as moot.
V.
CONCLUSION
Accordingly,
IT IS ORDERED that Defendant’s Motion to Dismiss Plaintiff’s Complaint
(ECF No. 13) is GRANTED;
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IT IS FURTHER ORDERED that Defendant’s Motion for Sanctions (ECF
No. 19) is DENIED AS MOOT.
s/ Linda V. Parker
LINDA V. PARKER
U.S. DISTRICT JUDGE
Dated: September 27, 2016
I hereby certify that a copy of the foregoing document was mailed to counsel of
record and/or pro se parties on this date, September 27, 2016, by electronic and/or
U.S. First Class mail.
s/ Richard Loury
Case Manager
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