Dickerson et al v. Cenlar, FSB et al

Filing 10

OPINION and ORDER Granting Defendants' 2 MOTION to Dismiss - Signed by District Judge Judith E. Levy. (FMos)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
David Dickerson and Pamela
Jones,
Case No. 4:14-cv-11359
Hon. Judith E. Levy
Mag. Judge David R. Grand

Plaintiffs,
v.
Cenlar FSB and the Federal Home
Loan Mortgage Corporation,
Defendants.
_______________________________/

OPINION AND ORDER GRANTING DEFENDANTS’
MOTION TO DISMISS [2]
This is a foreclosure-related case. Pending is defendants Cenlar
FSB and the Federal Home Loan Mortgage Corporation’s motion to
dismiss under Fed. R. Civ. P. 12(b)(6). The Court grants the motion.
I.

BACKGROUND
On December 14, 2002, Plaintiffs closed on a mortgage with

Citizens First Mortgage, LLC. That mortgage was later assigned to
Cenlar FSB on April 13, 2012.

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In March 2009, plaintiffs encountered difficulty making their
mortgage payments. Plaintiffs contend that they applied for a loan
modification with Cenlar FSB or its predecessor at least three times
between March 2009 and October 2011, and were denied each time. A
foreclosure sale was set for January 17, 2013, and plaintiffs indicate
that they tried to obtain another loan modification, which Cenlar FSB
again refused.
Defendant Federal Home Loan Mortgage Corporation (“Freddie
Mac”) now holds the deed to the property. The twelve-month statutory
redemption period afforded to the plaintiffs expired on January 17,
2014.
Plaintiffs filed suit in the Circuit Court for the County of St. Clair,
a Michigan state court on February 26, 2014, which defendants
removed to this Court on April 2, 2014. The suit seeks to set aside the
foreclosure sale and brings claims for intentional infliction of emotional
distress and violation of M.C.L. § 600.3205c, which governed mortgage
loan modifications.
II.

STANDARD OF REVIEW

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When deciding a motion to dismiss under Fed. R. Civ. P. 12(b)(6),
the Court must “construe the complaint in the light most favorable to
the plaintiff and accept all allegations as true.” Keys v. Humana, Inc.,
684 F.3d 605, 608 (6th Cir.2012). “To 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.” Ashcroft v. Iqbal,
556 U.S. 662, 678 (2009). A plausible claim 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 Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007).
III.

ANALYSIS

Defendants argue that each of plaintiffs’ original claims fail on the
merits. In their reply to the motion to dismiss, plaintiffs argue for the
first time that their foreclosure and statutory claims are in fact
premised on an alleged violation of M.C.L. § 600.3205a(1), in that
Cenlar FSB failed to provide proper notice of the foreclosure to
plaintiffs. The violation of M.C.L. § 600.3205a(1), plaintiffs argue,
should trigger a set-aside of the foreclosure sale, which would then
allow them to modify the loan under § 600.3205c.

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Plaintiffs do not argue that their intentional infliction of
emotional distress claim should survive the motion to dismiss.
Accordingly, the Court dismisses that claim.
A. The Court Will Not Permit Plaintiffs to Refashion Their Claims
The first and third counts of plaintiffs’ original complaint are
effectively the same: that defendants violated M.C.L. § 600.3205c by
failing to modify their mortgage, and so the foreclosure should be set
aside. In their reply, plaintiffs premise their claims on a different
section of the statute, M.C.L. 600.3205a, which requires that notice of a
foreclosure be given to the mortgagor prior to instituting foreclosure
proceedings. However, plaintiffs did not allege they were not notified of
the foreclosure, and indeed, they engaged in lengthy – although
unsuccessful – efforts to obtain a loan modification to avoid foreclosure.
Moreover, plaintiffs did not challenge the procedural validity of the
foreclosure proceedings until after the redemption period had expired.
See Steinberg v. Fed. Home Loan Mortg. Corp., 901 F.Supp.2d 945, 949
(E.D. Mich. 2012) (holding that “[w]ith the expiration of the redemption
period, a former owner can no longer assert a claim with respect to the
property.”).
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Plaintiffs did not request leave to file an amended complaint
containing their new claims. However, the Court may “freely give leave
[to amend] when justice so requires.” Fed. R. Civ. P. 15(a)(2). The
Court declines to do so here, where the proposed amendment is not
supported by facts that could plausibly lead to the relief plaintiffs are
seeking.
B. Plaintiffs Have Failed To State Any Claim on Which Relief May
Be Granted
Plaintiffs have two remaining claims: a setting aside of the
foreclosure sale and violation of M.C.L. § 600.3205c via Cenlar FSB’s
failure to modify the loan. Although styled as two claims, plaintiffs in
actuality have one claim (violation of section 3205c) and the relief
desired for that claim (setting aside the foreclosure sale).
M.C.L. § 600.3205c established a mechanism through which a
mortgagor could apply for a loan modification in the event of a potential
foreclosure, and provided certain protections to mortgagors during the
process. Chief among them was a provision stating:
If a mortgage holder or mortgage servicer begins foreclosure
proceedings under this chapter in violation of this section,
the borrower may file an action in the circuit court for the
county where the mortgaged property is situated to convert
the foreclosure proceeding to a judicial foreclosure.
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M.C.L. § 600.3205c(8).1
Michigan courts have established that this statute did not “create
an independent cause of action to nullify a foreclosure sale after the
expiration of the redemption period.” Tipton v. Flagstar Bank, FSB,
No. 305911, 2012 WL 4800169, at *1 (Mich. Ct. App. Oct. 9, 2012).
Plaintiffs’ remedy under 3205c would have been to convert the
foreclosure proceeding to a judicial foreclosure, not to nullify the
foreclosure altogether. Plaintiffs lost all “right, title, and interest in
and to the property” at the expiration of the statutory redemption
period. Piotrowski v. State Land Office Bd., 302 Mich. 179, 187 (1942).
Plaintiffs have no cause of action to set aside the foreclosure
claim. Accordingly, the Court dismisses the section 3205c claim.
IV.

CONCLUSION

Plaintiffs have failed to state a claim on which relief can be
granted. Accordingly,
Defendants’ motion to dismiss is GRANTED; and

M.C.L. § 600.3205a – 600.3205d were repealed by Mich. Pub. Act 2012
No. 521, effective June 30, 2013. Michigan courts have yet to provide
guidance on whether claims accruing before repeal survive if brought
after repeal. Because the plaintiffs’ claim fails on the merits, the Court
need not reach whether section 3205c’s repeal moots this claim.

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Plaintiffs’ complaint is DISMISSED.
IT IS SO ORDERED.
Dated: June 26, 2014
Ann Arbor, Michigan

s/Judith E. Levy
Hon. JUDITH E. LEVY
United States District Judge

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 June 26, 2014.

s/Felicia M. Moses
FELICIA M. MOSES
Case Manager

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