Britton v. Nationstar Mortgage LLC

Filing 9

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

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
Richard Britton,
Plaintiff,
v.

Case No. 14-cv-14098
Hon. Judith E. Levy
Mag. Judge David R. Grand

Nationstar Mortgage, LLC,
Defendant.
________________________________/
OPINION AND ORDER GRANTING
DEFENDANT’S MOTION TO DISMISS [2]
This is a mortgage foreclosure case.

Pending is defendant

Nationstar Mortgage’s motion to dismiss. (Dkt. 2.)

Pursuant to E.D.

Mich. Local R. 7.1(f)(2), the Court will determine the motion without
oral argument.
I.

Background
On December 13, 2006, plaintiff took out a $440,000 mortgage

loan secured by real property located in Haslett, Michigan (the
“Property”).

The original lender and servicer was Bank of America,

N.A.

Defendant took over servicing on November 1, 2013; Bank of

America later assigned the mortgage to defendant on April 16, 2014.
In 2013, plaintiff experienced financial difficulties and was unable
to make his monthly mortgage payments.

On January 7, 2014,

defendant notified plaintiff that he was in default.

On January 15,

plaintiff’s counsel requested a loan modification meeting. On January
27, 2014, defendant sent another letter to plaintiff informing him the
mortgage was past due.
On March 12, 2014, plaintiff received a letter from defendant’s
counsel informing him of foreclosure proceedings. On April 11, 2014,
plaintiff requested verification of the mortgage debt. Defendant sent
the verification on May 30, 2014. On June 11, 2014, plaintiff submitted
a loan modification application to defendant, of which defendant
acknowledged receipt on June 21, 2014. On June 22, 2014, defendant
published and posted a notice of sheriff’s sale to be held on July 16,
2014.
Over the next few weeks, plaintiff’s counsel contacted defendant’s
representatives concerning the loan modification. Defendant contends
that plaintiff failed to provide necessary paperwork to complete the
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modification, specifically his Schedule 1065 forms for 2012 and 2013.
Plaintiff contends that he eventually provided the necessary forms.
During this time, the foreclosure sale was rescheduled from July 16,
2014 to July 23, 2014, and then to August 20, 2014.

The sale was not

held on August 20th, however.
On September 4, 2014, defendant rejected plaintiff’s loan
modification application, due to it being incomplete. Plaintiff cites a
missing “second mortgage statement” as the reason proffered by
defendant.

Defendant rescheduled the foreclosure sale again to

September 24, 2014. Plaintiff’s counsel contends that he at some point
contacted defendant’s counsel, and discovered the foreclosure sale had
been pushed back another week, to October 1, 2014.
Plaintiff sued defendant in Michigan state court on September 23,
2014, and on September 30, 2014 he obtained a temporary restraining
order preventing the foreclosure sale. Defendant timely removed the
action to this Court on October 24, 2014, and filed a motion to dismiss
on October 31, 2014.
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

Plaintiff’s complaint asserts two claims: breach of contract by
defendant for violating the contract between it and the federal
government under the Troubled Asset Relief Program (“TARP”), and
violation of M.C.L. § 600.3220 by virtue of defendant’s failure to
properly publish its adjournments of the foreclosure to August 20, 2014
and September 24, 2014. As each adjournment was longer than a week
from the previous date, plaintiff contends that section 3220 required a
particular form of publication that the defendant did not make.
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A. Breach of Contract (TARP)
Defendant argues, correctly, that there is no private right of action
under TARP.

See, e.g., Hart v. Countrywide Home Loans, Inc., 735

F.Supp.2d 741, 748 (E.D. Mich. 2010); Yunanova v. BAC Home Loans
Servicing, LP, Case No. 10-CV-14156, 2012 WL 441161, at *6 (E.D.
Mich. Feb. 10, 2012). Plaintiff does not address this argument in his
response to the motion. Instead, he attempts to convert this claim into
something he refers to as “breach of contract under statutory
foreclosure,” citing portions of Michigan state law related to loan
modification.
At the motion to dismiss stage, the Court’s task is to analyze the
sufficiency of the complaint as pleaded by the plaintiff, not the
plaintiff’s response brief. See Rush v. Fed. Home Loan Mortg. Corp., No.
13-11302, 2014 WL 1030842, at *1 (E.D. Mich. Mar. 17, 2014) (stating
that “[a] motion for judgment on the pleadings, however, analyzes the
sufficiency of the claims made in the complaint—not claims asserted in
a response brief”); Zemer v. American Home Mortg. Servicing, Inc., No.
11-15364, 2013 WL 766168, at *3 (E.D. Mich. Feb. 28, 2013) (finding
plaintiff’s allegation of breach of mortgage agreement “contradicts other
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allegations in [plaintiff’s] complaint and response brief” and dismissing
claim on that basis).
Parties are not permitted to amend their existing claims or add
new ones in the course of responding to a motion to dismiss.

Further,

plaintiff has not sought leave from the Court to amend his complaint if
the Court dismisses the breach of contract claim contained in his
complaint.

Accordingly, the Court finds that the breach of contract

claim actually contained in plaintiff’s complaint is not viable as a
matter of law, and dismisses it.1
B. Violation of M.C.L. § 600.3220
Plaintiff also contends that defendant violated M.C.L. § 600.3220,
which states that:
[I]f any adjournment [of a foreclosure] be for more than 1
week at one time, the notice thereof, appended to the
original notice of sale, shall also be published in the
newspaper in which the original notice was published, the
first publication to be within 10 days of the date from which
the sale was adjourned and thereafter once in each full
secular week during the time for which such sale shall be
adjourned.

The Court dismisses the fraud claim raised for the first time in
plaintiff’s response on these same grounds, as well.
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1

Plaintiff asserts in his complaint that “[t]he foreclosure statutes must
be strictly adhered to” and that “[f]ailure to follow the statute prohibits
Defendant from proceeding with the foreclosure.” (Dkt. 1-2 at ¶ 44.)
This is not an accurate statement of the law. The requirements of
Michigan’s foreclosure statutes “must be substantially complied with.”
Kim v. JPMorgan Chase Bank, N.A., 493 Mich. 98, 109 (2012).

As

plaintiff points out in his response, “a defect in notice renders a
foreclosure sale voidable, not void.” Sweet Air Inv., Inc. v. Kenney, 275
Mich. App. 492, 502 (2007).

To void a mortgage, the plaintiff must

make a “showing of actual prejudice.” Fawcett v. Wells Fargo
Bank, Case No. 13–cv–10591, 2013 WL 6181719, at *3 (E.D.Mich.
Nov.26, 2013) (citing Lessl v. CitiMortgage, Inc., 515 Fed. App'x 467,
469 (6th Cir.2013).

“[N]o prejudice from inadequate notice can be

found . . . when the mortgagor would have been in no better position
had notice been fully proper and the mortgagor lost no potential
opportunity to preserve some or any portion of his interest in the
property.” Id. (citing Lessl, 515 Fed. App'x at 469) (internal punctuation
omitted).

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In terms of a violation of section 3220, prejudice can be found
where, for instance, failure to comply would result in a plaintiff having
no advance knowledge that the foreclosure was set to take place. See,
e.g., Jones v. Nationstar Mortg. LLC, Case No. 14-11642, 2014 WL
5307168, at *5 (E.D. Mich. Oct. 16, 2014). In this case, plaintiff’s does
not contend that he was not on notice of the rescheduled foreclosure
dates.
Plaintiff’s complaint explicitly states that he was aware of the
August 20, 2014 date on July 17, 2014, and aware of the September 24,
2014 on September 10, 2014. (Dkt. 1-2 at ¶¶ 24, 30.) In his response to
this motion, plaintiff does not address the notice he received and how
any defect in that notice prejudiced him. Instead, plaintiff argues that
he “is prejudiced by not receiving a loan modification opportunity
entitled under statutory foreclosure.”

(Dkt. 6 at 12-13.)

Plaintiff

conflates Michigan’s statutory notice requirement with Michigan’s
statutory loan modification process requirements, and states that
violation of the former somehow also constitutes violation of the latter.2

The statutory basis for plaintiff’s new loan modification argument is
M.C.L. § 600.3205, which was repealed by Mich. Pub. Act 2014 No. 521,
effective June 30, 2013. Although the Court need not reach the issue of
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2

However, plaintiff may not convert a claim regarding a failure to
provide notice of the date of foreclosure under M.C.L. § 600.3220 into a
claim to comply with separate loan modification statutes in his response
to defendant’s motion. Even were the Court to construe plaintiff to be
arguing that defendant’s alleged failure to provide proper notice
somehow led to the rejection of the loan modification application,
plaintiff has failed to plead a connection between the two. Viewed in
the light most favorable to the plaintiff, the timing of the adjournments
of the foreclosure as described in his complaint and response gave him a
greater opportunity to preserve his interest in the property, as he was
afforded nearly two extra months to attempt to modify his loan, even if
the modification was ultimately unsuccessful.
Based on the claim presented in plaintiff’s complaint, plaintiff has
not made any plausible claim that defendant’s failure to comply with
section 3220 prejudiced him in any way, or could have prejudiced him in
any way.

Accordingly, the Court dismisses plaintiff’s section 3220

claim.
whether plaintiff can state a valid claim under this statute for a loan
modification process that arose from a default that occurred after the
statute’s repeal, it is an issue that bears flagging for future foreclosure
cases in Michigan.
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IV.

Conclusion

For the reasons stated above, it is hereby ordered that:
Defendant’s motion to dismiss (Dkt. 2) is GRANTED; and
Plaintiff’s complaint is DISMISSED with prejudice.
IT IS SO ORDERED.

Dated: January 13, 2015
Ann Arbor, Michigan

s/Judith E. Levy
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 January 13, 2015.
s/Felicia M. Moses
FELICIA M. MOSES
Case Manager

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