Coleman v. Ditech Financial LLC
Filing
6
MEMORANDUM OPINION and ORDER Granting Defendant's 3 MOTION to Dismiss - Signed by District Judge Judith E. Levy. (FMos)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
Raymond Coleman,
Case No. 16-cv-11124
Plaintiff,
v.
Judith E. Levy
United States District Judge
Ditech Financial, f/k/a Green
Tree Servicing LLC,
Mag. Judge Stephanie Dawkins Davis
Defendant.
____________________________________/
MEMORANDUM AND ORDER GRANTING DEFENDANT’S
MOTION TO DISMISS [3]
On March 8, 2016, plaintiff Raymond Coleman initiated this
lawsuit in the Circuit Court for Oakland County, Michigan challenging
the foreclosure sale of his property in November of 2015 by defendant
Ditech Financial, LLC, formerly known as Green Tree Servicing, LLC,
the lender on the mortgage. (Dkt. 1 at 8-17.) On March 29, 2016,
defendant removed the matter to this Court pursuant to 28 U.S.C. §§
1332, 1441, and 1446. (Id. at 1-2.) Before the Court is defendant’s
unopposed motion to dismiss this matter pursuant to Federal Rule of
Civil Procedure 12(b)(6).
(Dkt. 3.)
For the reasons provided below,
defendant’s motion is granted and this matter is dismissed with
prejudice.
I.
Background
According to the facts alleged in the complaint, plaintiff resides at
8601 Pepper Road, Holly, Michigan, which is a property to which he
held title and for which he possessed, at the time this lawsuit was filed,
the right to redeem as the result of a foreclosure sale. (Dkt. 1 at 9-10.)
He admits that by January 1, 2015, he was in arrears on his mortgage
payments for the Holly property, and that in early January 2015,
defendant offered him a trial loan modification. (Id. at 10.) Plaintiff
complied with the payment terms of the trial modification, and on April
4, 2015, he received notification that defendant had approved him for a
permanent modification of his mortgage loan. (Id. at 10, 24.) Plaintiff
acknowledges that he was required to sign and return the Loan
Modification Agreement he received, and he alleges that he did so;
however, the version of this document attached to his complaint is not
executed by either party.
(Id. at 11, 26-30.)
Plaintiff states that
“during the period of this modification” monthly payments were made
through electronic transfers from plaintiff’s checking account, but that
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on September 25, 2015, defendant returned the last two of these
payments. (Id. at 11.) Attached to the complaint is a notice dated
September 25, 2015, from the attorney for defendant indicating that a
mortgage sale on the Holly property would take place on October 25,
2015.
(Id. at 32.)
Plaintiff alleges that he “immediately contacted
Defendant” upon receipt of this notice on his door, and communicated
with defendant “several times during the period between September 29,
2015 and November 10, 2015.” (Id. at 11.) Plaintiff learned through
these communications that defendant “did not have his modification
paperwork but that the foreclosure sale was ‘put on hold’ and would not
be held so Plaintiff could send it to Defendant again.” (Id.)
Plaintiff alleges that he complied with defendant’s every request,
and that on November 16, 2015, defendant advised him that it “at last
had everything it needed.” (Id. at 11-12.) He alleges that the mortgage
foreclosure sale took place on November 12, 2015 (id. at 12); however,
the sheriff’s deed attached by defendant to the removal filing indicates
that the sale took place on November 10, 2015. (Dkt. 1-1 at 2.) Finally,
plaintiff alleges that defendant mistook issues of missing paperwork
regarding another property owned by plaintiff in Highland Park for the
3
Holly
property—presumably
resulting
in
the
alleged
improper
foreclosure. (Dkt. 1 at 12.) However, the correspondence addressed to
Coleman and attached to the complaint is dated November 13, 2015,
which is after the foreclosure sale on the Holly property, and references
missing documentation on a property at 2730 Wardlow in Highland
Township, Michigan. (Id. at 34.) This letter is addressed to plaintiff
and sent to plaintiff at an address for a property he claims to own also
through financing from defendant, but it does not mention the Holly,
Michigan property or the loan modification agreement on the Holly
property.
(Id.)
It refers to plaintiff’s loss-mitigation-assistance
application on the Highland Township property and the need for
missing documents to be submitted by December 13, 2015. (Id.)
Plaintiff
asserts
the
following
claims
arising
from
these
allegations:
1. breach of contract from defendant’s refusal to accept
plaintiff’s mortgage payments and refusal to recognize
plaintiff’s compliance with the with the terms of the Loan
Modification Agreement (Dkt. 1 at 12-13);
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2. slander of title and encumbering of title through the
publication of a foreclosure notice and the subsequent
foreclosure sale of plaintiff’s Holly property (Id. at 13-14);
3. promissory estoppel for enticing plaintiff into a loan
modification agreement that caused plaintiff to rely on the
promises of that agreement to the detriment of losing title to
his home;
4. equitable estoppel for defendant’s acts and omissions that
caused plaintiff to believe that he had entered into a loan
modification that cancelled the potential foreclosure action;
5. unjust enrichment on account of defendant’s having acquired
title to the Holly property without proper consideration; and
6. intentional or negligent infliction of emotional distress
arising from the adverse actions taken against plaintiff.
II.
Defendant’s Motion
On April 8, 2016, defendant filed the present motion to dismiss
plaintiff’s lawsuit pursuant to Rule 12(b)(6) for failing to allege any
claims on which relief can be granted. (Dkt. 3.) Defendant attaches to
its motions documentation of the agreements, notifications, and
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transactions between the parties, including the original mortgage (Dkt.
3-1), the assignment of the mortgage to defendant in 2012 (Dkt. 3-2), a
June 2, 2015 letter to plaintiff (Dkt. 3-3), a September 25, 2015 notice
sent to “Mason Factor Inc” at the Holly, Michigan address (Dkt. 3-4),
the sheriff’s deed from the mortgage sale of the Holly, Michigan
property (Dkt. 3-5), letters dated October 23, 2015 and October 30, 2015
to plaintiff (Dkt. 3-6), and an October 28, 2015 letter to plaintiff. (Dkt.
3-7.)
Defendant’s recounting of the facts in this matter differs from
plaintiff’s allegations in several key ways. First, defendant asserts that
plaintiff never signed and returned the Loan Modification Agreement
sent to him on April 4, 2015, and on June 2, 2015, defendant sent
plaintiff a letter notifying him that his request for a loan modification
had been denied because he failed to execute and return the document
in the time required. (Dkt. 3 at 8-9; Dkt. 3-3.) Defendant confirms
plaintiff’s allegations that on September 25, 2016, it returned payments
he made, but additionally attaches the notice sent along with the
returned payments with two explanations: “[f]unds must be certified,”
and “[t]he payments are not sufficient to bring the account current.”
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(Id. at 9; Dkt. 3-4.) Defendant asserts that the foreclosure proceedings
were commenced in accordance with state law, with the notice of
foreclosure posted on the property on September 29, 2015, and
published in the legal news for four consecutive weeks beginning
September 25, 2015. (Id.) Defendant acknowledges that it adjourned
the foreclosure sale date to allow plaintiff an opportunity to provide the
missing documents, and informed plaintiff in a letter dated October 28,
2015, that the foreclosure sale had been rescheduled for November 10,
2015. (Id. at 9; Dkt. 3-6; Dkt. 3-7.) The sheriff’s deed indicates that the
mortgage sale took place on November 10, 2015, and was recorded on
November 17, 2015. (Id.; Dkt. 3-5.) Defendant also claims that the
redemption period on the mortgage sale lasted six months and expired
on May 10, 2016, while this motion was pending. (Id.; Dkt. 3-5.)
Defendant argues that dismissal is warranted because its
foreclosure action was lawful and plaintiff has failed to allege “fraud or
irregularity in the foreclosure procedure, resulting prejudice, and a
causal link between the procedural irregularity and prejudice,” as
required under Michigan law to set aside a completed foreclosure. (Id.
at 11-13 (citing, inter alia, Conlin v. Mortg. Elec. Registration Sys., Inc.,
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714 F.3d 355, 359 (6th Cir. 2013); M.C.L. § 660.2304).)
Moreover,
defendant asserts that the loan modification process is not governed by
Michigan’s foreclosure-by-advertisement law, M.C.L. § 600.3204;
meaning that plaintiff’s allegations regarding defendant’s improper
conduct on the loan modification “cannot amount to an actionable fraud
or irregularity in the foreclosure procedure.” (Id. at 14 (citing, inter
alia, Campbell v. Nationstar Mortg., 611 F. App’s 288, 294 (6th Cir.
2015), cert. denied, 136 S. Ct. 272 (2015)).)
Defendant’s motion further asserts that the claims of contract
breach, promissory estoppel, equitable estoppel, and implied contract
are barred by the Michigan Statute of Frauds, M.C.L. § 566.132, which
precludes the enforcement of any promises or commitments by financial
institutions unless they are signed by an authorized representative of
the financial institution.
(Id. at 14-16.)
As for unjust enrichment,
defendant argues that such claims do not apply to issues governed by
an express contract, and here there is a valid mortgage giving
defendant the right to initiate foreclosure.
(Id. at 16.)
Defendant
argues that the slander-of-title claim is also insufficiently pleaded
because there is no allegation that defendant acted knowingly and
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maliciously, as the caselaw requires. (Id. at 17-18 (citing, inter alia,
GKC Mich Theaters, Inc. v. Grand Mall, 222 Mich. App. 294, 301
(1997)).) Finally, defendant argues that the claim for intentional or
negligent infliction of emotional distress are unavailing because
damages for emotional distress are not available on breach-of-contract
claims, and the complaint does not allege actions that would qualify as
“extreme” or “outrageous.” (Id. at 18-19.)
III.
Legal Standards
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). On a
Rule 12(b)(6) motion, courts may “consider the Complaint and any
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exhibits attached thereto, public records, items appearing in the record
of the case and exhibits attached to defendant's motion to dismiss so
long as they are referred to in the Complaint and are central to the
claims contained therein.”
Bassett v. Nat’l Collegiate Athletic Ass’n,
528 F.3d 426, 430 (6th Cir. 2008) (citing Amini v. Oberlin Coll., 259
F.3d 493, 502 (6th Cir. 2001)).
IV.
Analysis
Plaintiff seeks an order voiding the foreclosure sale and
reinstating his loan with defendant under the terms of the loan
modification agreement. (Dkt. 1 at 13-17.) The mortgage agreement,
which is properly attached to defendant’s motion, see Bassett, 528 F.3d
at 430, specifies that acceleration or foreclosure is a remedy available to
defendant provided that plaintiff receives notice at least thirty days
prior to defendant’s invocation of its power to sell the property. (“22.
Acceleration.” Dkt. 3-1 at 11.)
The foreclosure-by-advertisement statute, M.C.L. § 600.3204,
specifies that a default in a condition of the mortgage can trigger the
lender’s power to sell. M.C.L. § 600.3204(1)(a). See also Conlin, 714
F.3d at 359 (citing cases). The statute controls both parties’ rights once
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the sale in completed, which is the status of the sale in this matter.
Conlin, 714 F.3d at 359. As the Conlin Court explained, “Michigan’s
foreclosure-by-advertisement scheme was meant to . . . impose order on
the foreclosure process while still giving security and finality to
purchasers of foreclosed properties.” Id. (citing Mills v. Jirasek, 267
Mich. 609 (1934)).
The statute serves the policy goal of having
“drastically circumscribed” a court’s power to set aside a sheriff’s sale.
Id. (citing, inter alia, Senters v. Ottawa Sav. Bank, FSB, 443 Mich. 45,
49 (1993)). Plaintiff faces the “high standard” of “a clear showing of
fraud, or irregularity” in order to win a court order to set aside a
sheriff’s sale.
Id. at 359-60 (quoting El-Seblani v. IndyMac Mortg.
Servs., 510 F. App’x 425, 429-30 (6th Cir. 2013); Schulthies v. Barron,
16 Mich. App. 246, 248 (1969)).
The caselaw also specifies that only
fraud “relate[d] to the foreclosure procedure itself” is sufficient for relief.
Id. (citing, inter alia, Freeman v. Wozniak, 241 Mich. App. 633, 637-38
(2000)).
Plaintiff acknowledges that he had fallen into arrears on his
mortgage in January of 2015, and he provides documentation that he
received notice of the impending foreclosure sale on September 25,
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2015, including that the sale would take place on October 27, 2015.
This time period satisfies the thirty-day requirement of the mortgage
agreement. Plaintiff acknowledges that defendant put the sale on hold
so that he could submit the missing paperwork, and alleges that “on
November 16, 2015 Plaintiff was advised by Defendant’s representative
that Defendant at last had everything it needed.” (Dkt. 1 at 11-12.)
But the foreclosure sale had taken place on November 10, 2015. (Dkt.
3-5.)
Plaintiff makes no allegation that defendant engaged in any fraud
related to the foreclosure sale, and the facts provided by plaintiff are
consistent with the notice and foreclosure process required by the
mortgage agreement. Moreover, the facts alleged are not inconsistent
with the requirements of M.C.L. § 600.3204.
In other words, the
complaint alleges that plaintiff defaulted on a condition of the mortgage
and that defendant initiated foreclosure proceedings in compliance with
the terms of the mortgage and state law; therefore, it does not allege
fraud or misconduct pertaining to the foreclosure sale. Therefore, an
order to void the foreclosure sale cannot be issued.
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Plaintiff’s claims related to the “contract” and promises between
the parties through the loan modification agreement are also
unavailing.
Under
Michigan’s
Statute
of
Frauds,
M.C.L.
§
566.132(2)(3), a promise by financial institutions—including a loan
modification—is “void unless it is (1) in writing and (2) signed with an
authorized signature by the party to be charged with the promise.” May
v. Citimortgage, Inc., -- F. App’x --, 2016 WL 2801167, at *3 (May 12,
2016) (citing Trombley v. Seterus, Inc., 614 F. App’x 829, 832 (6th Cir.
2015); M.C.L. § 566.132(2)(c)). When a loan modification agreement is
not signed by the lender or the borrower, contract-based doctrines are
inapplicable. Id. (citing Thabata v. Bank of America, N.A., 620 F. App’x
467, 470 (6th Cir. 2015).
Even accepting as true plaintiff’s assertion that he signed and
returned the Loan Modification Agreement, plaintiff does not allege
that defendant signed that agreement;1 therefore Michigan’s Statute of
According to the terms of the mortgage on plaintiff’s Holly, Michigan
property, “[a]ny notice in connection with this Security instrument shall not be
deemed to have been given to Lender until actually received by Lender.” (“15.
Notices.” Dkt. 3-1 at 9.) Plaintiff alleges that he signed and returned the Loan
Modification Agreement sent to him on April 4, 2015, even though the version he
attached to his complaint is not signed. He does not allege that defendant received
the signed document. Nor does he allege, even on information and belief, that
defendant signed the document.
1
13
Frauds dictates that the Loan Modification Agreement does not govern
any promises between these two parties.
It follows that plaintiff’s
breach-of-contract claim based on the Loan Modification Agreement is
unavailing, as are his claims based on promissory estoppel, equitable
estoppel, and implied contract. See Blackward Properties, LLC v. Bank
of America, 476 F. App’x 639, at *3 (6th Cir. 2012) (citing Crown Tech.
Park v. D&N Bank, FSB, 242 Mich. App. 538, 550 (2000) (holding that
M.C.L. § 566.132(2) is meant “to preclude all actions” against financial
institutions)).
Plaintiff’s claim of unjust enrichment is also unavailing. Unjust
enrichment involves “(1) the receipt of a benefit by defendant from
plaintiff, and (2) an inequity resulting to plaintiff because of the
retention of the benefit by defendant.” Collins v. Wickersham, 862 F.
Supp. 2d 649, 657 (E.D. Mich. 2012) (quoting Belle Isle Grill Corp. v.
City of Detroit, 256 Mich. App. 463, 478 (Mich. 2003)).
A claim for
unjust enrichment cannot succeed when there is an express contract
governing the subject matter.
Id. at 657-58.
The alleged inequity
would arise from defendant’s having improperly acquired title to
plaintiff’s property; however, as discussed above, the complaint does not
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allege any misconduct or impropriety in the foreclosure proceeding,
which is the proceeding through which defendant acquired title. And
the mortgage agreement, which is not alleged to be invalid, granted
defendant the right to exercise the power of sale.
For these two
reasons, the unjust-enrichment claim is dismissed.
Plaintiff also fails to allege properly his claim for slander of title.
To establish slander of title under Michigan law, the plaintiff must
allege “that defendant ‘maliciously published false matter disparaging
[plaintiff’s] title, causing [her] special damages.’” Hurst v. Fed. Nat.
Mortgage Ass'n, -- F. App’x --, 2016 WL 700351, at *6 (6th Cir. Feb. 23,
2016) (quoting Sullivan v. Thomas Org., P.C., 88 Mich. App. 77, 82
(1979)).
Other than a conclusory statement that defendant’s
publication of the foreclosure notice was knowingly false, plaintiff fails
to allege any facts to support his assertion that defendant’s foreclosure
notice was animated by malice or knowingly false. Rather, he alleges
that he was in arrears, does not sufficiently allege that defendant had
absolved that default by signing the Loan Modification Agreement, and
describes foreclosure proceedings that complied with the terms of the
mortgage and the governing law.
Therefore, his pleadings are
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insufficient to bring a slander-of-title claim and defendant’s motion to
dismiss this claim is to be granted.
Finally, plaintiff’s claim for damages arising from either the
intentional or negligent infliction of emotional distress is not valid.
Intentional infliction of emotional distress requires four elements under
Michigan law: “(1) extreme and outrageous conduct; (2) intent or
recklessness; (3) causation; and (4) severe emotional distress.” RuffinSteinback v. dePasse, 267 F.3d 457, 464 (6th Cir. 2001) (citing Andrews
v. Prudential Secs., Inc., 160 F.3d 304, 309 (6th Cir.1998)). “Liability
for such a claim has been found only where the conduct complained of
has been so outrageous in character, and so extreme in degree, as to go
beyond all possible bounds of decency and to be regarded as atrocious
and utterly intolerable in a civilized community.” Dotson v. Norfolk S.
R.R. Co., 52 F. App'x 655, 660 (6th Cir. 2002) (quoting Teadt v. St.
John’s Evangelical Church, 237 Mich. App. 567, 582 (1999) (internal
citation omitted)).2
As for negligent infliction of emotional distress,
Michigan does not apply this tort doctrine “beyond the situation where
The Michigan case cited by the Dotson Court is listed as Teadt v. Lutheran
Church Missouri Synod, 237 Mich. App. 567, 582 (1999), in the recorder.
2
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a plaintiff witnesses negligent injury to a third person and suffers
mental disturbance as a result.” Samberg v. Detroit Water & Sewer Co.,
No. 14-CV-13851, 2015 WL 2084682, at *3 (E.D. Mich. May 5, 2015)
(quoting Duran v. The Detroit News, 200 Mich. App. 622, 629, (1993)).
Here, other than labeling defendant’s conduct as “extreme” and
“outrageous,” there is no allegation regarding defendant’s conduct that
comes close to being so “outrageous” that it would satisfy the pleading
standards for intentional infliction of emotional distress. And since this
is a mortgage foreclosure and not a situation in which plaintiff alleges
having witnessed an injury to a third party, negligent infliction of
emotional distress is also not sufficiently pleaded. See, e.g., Doering v.
JPMorgan Chase Bank, N.A., No. 14-CV-12413, 2015 WL 5460702, at
*5 (E.D. Mich. Sept. 16, 2015). Therefore, plaintiff’s claim for damages
due to emotional distress is dismissed.
V.
Conclusion
For the reasons provided above, defendant’s unopposed motion to
dismiss is GRANTED and plaintiff’s complaint is DISMISSED with
prejudice for failing to state claims on which relief can be granted.
IT IS SO ORDERED.
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Dated: June 24, 2016
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 June 24, 2016.
s/Felicia M. Moses
FELICIA M. MOSES
Case Manager
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