Crehan et al v. Countrywide Bank, FSB et al

Filing 25

OPINION AND ORDER APPROVING AND ADOPTING REPORT AND RECOMMENDATION 19 ; Motion to Dismiss 10 is GRANTED, Plaintiffs' complaint is dismissed; Judgment to issue; signed by Judge Janet T. Neff (Judge Janet T. Neff, clb)

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION

MATTHEW CREHAN, et al.,
Plaintiffs,

Case No. 1:11-cv-613

v

HON. JANET T. NEFF

COUNTRYWIDE BANK, FSB, et al.,
Defendants.
_______________________________/

OPINION AND ORDER
Pending before the Court in this civil action is Defendants’ Motion to Dismiss (Dkt 10). The
Magistrate Judge filed a Report and Recommendation (R&R), recommending that this Court grant
the motion and dismiss this action (Dkt 19). The matter is presently before the Court on Plaintiffs’
objections to the Report and Recommendation (Dkt 23). In accordance with 28 U.S.C. § 636(b)(1)
and FED. R. CIV. P. 72(b)(3), the Court has performed de novo consideration of those portions of the
Report and Recommendation to which objections have been made. The Court denies Plaintiffs’
objections and approves and adopts the Report and Recommendation.
I. BACKGROUND
Plaintiffs filed their complaint on June 13, 2011, bringing numerous claims against
Defendants resulting from a home foreclosure (Dkt 1).1 On September 16, 2011, Defendants filed

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Plaintiffs’ claims are not in sequential order inasmuch as they wholly omitted to state either
a Count V or a Count VI and did not use roman numerals for their tenth and eleventh claims
(“Complaint to Quiet Title” and “Usury and Fraud”).

the instant Motion to Dismiss pursuant to FED. R. CIV. P. 12(b)(6), asserting that Plaintiffs’
complaint fails to state a claim upon which relief can be granted (Dkt 19 at 3). Plaintiffs responded
to the motion, opining that “[a]fter discovery is complete, which of these defendants did exactly what
will be brought into sharp focus” (Dkt 17 at 4). Plaintiffs also indicated that “[s]hould the Court
determine that the plaintiff’s pleadings need to be refined, then plaintiffs ask for leave to amend their
pleadings to rectify any deficiencies found by the court” (Dkt 17 at 38). Plaintiffs did not amend
their complaint. See FED. R. CIV. P. 15(a)(1)(B) (indicating, in pertinent part, that “[a] party may
amend its pleading once as a matter of course within ... 21 days after service of a motion under Rule
12(b)”).
On February 15, 2012, the Magistrate Judge issued her Report and Recommendation,
analyzing Defendant’s Motion to Dismiss in twelve separate sections. First, in section I, the
Magistrate Judge declined to recommend the dismissal of Plaintiffs’ complaint simply because it is
a “template complaint” (Dkt 19 at 4). In sections II through IV, the Magistrate Judge recommended
dismissing Plaintiffs’ claims under the Home Ownership Equity Protection Act (HOEPA), the Truth
in Lending Act, (TILA), and the Real Estate Settlement Procedures Act (RESPA), because the
relevant limitations periods for filing such claims had expired. The Magistrate Judge determined
that Plaintiffs had failed to allege, let alone establish, that Defendants engaged in any fraudulent
concealment that would have entitled Plaintiffs to claim the benefit of equitable tolling for their
untimely claims (id. at 6). Last, in sections V through XII, the Magistrate Judge recommended
dismissal of Plaintiffs’ claims relating to the Fair Credit Reporting Act (FCRA), fraudulent
misrepresentation, breach of fiduciary duty, unjust enrichment, the Racketeer Influenced and Corrupt

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Organizations Act (RICO), complaint to quiet title, usury, and civil conspiracy, thoroughly setting
forth how each count failed to state a claim on which relief may be granted.
Now, in their objections to the Report and Recommendation, Plaintiffs argue that this Court
should grant them leave to amend their complaint to include the findings of a “Mortgage Forensic
Securitization Analysis Report” (Dkt 23-1, as supplemented by Dkt 24), which they claim “explicitly
details the complete history of the entire [mortgage] transaction, giving a step-by-step breakdown
and analysis of what transpired, and more importantly, failed to transpire” (Dkt 23 at 8)2. Plaintiffs
opine that this “securitization audit,” which they allegedly requested in October 2011 and received
in April 2012, provides details that are “quite revealing” and are “indicative of major wrongdoing”
(id. at 8-9). Indeed, Plaintiffs assert that the audit “gives rise to new meritorious allegations” (id. at
8).
II. MOTION STANDARD
Under Rule 8(a)(2) of the Federal Rules of Civil Procedure, a complaint must contain a
“short and plain statement of the claim showing that the pleader is entitled to relief.” Rule 8 marks
“a notable and generous departure from the hyper-technical, code-pleading regime of a prior era, but

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Like the template complaint filed in this case, it appears that this document may be a form
“audit,” with the facts of Plaintiffs’ mortgage transaction inserted among pages of observations and
opinions about the mortgage industry in general. See, e.g., Carter v. Bank of America, N.A., ___ F.
Supp. 2d ___, No. 11-01584, 2012 WL 3198354, at *2 n.8 (D. D.C. Aug. 8, 2012) (apparently
examining a similar “forensic audit”); Hewett v. Shapiro & Ingle, No. 1:11CV278, 2012 WL
1230740, at *4 n.4. (M.D. N.C. April 12, 2012) (discussing various forms of the audit in existence
and sharing its observation that “the documents make no more sense than anything else in the
Debtor’s papers and confirm the empty gimmickery of these types of claims.”).
Importantly, the Federal Trade Commission has issued a Consumer Alert on the topic,
cautioning homeowners to avoid the “Forensic Mortgage Loan Audit Scam.”
See
http://www.ftc.gov/bcp/edu/pubs/consumer/alerts/alt177.shtm (site last visited 9/20/2012).
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it does not unlock the doors of discovery for a plaintiff armed with nothing more than conclusions.”
Ashcroft v. Iqbal, 556 U.S. 662, 678-79 (2009). “A pleading that offers ‘labels and conclusions’ or
a ‘formulaic recitation of the elements of a cause of action will not do.’” Id. at 678 (quoting Bell Atl.
Corp. v. Twombly, 550 U.S. 544, 555 (2007)).
“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.’” Iqbal, 556 U.S. at 678 (quoting
Twombly, 550 U.S. at 570). The plausibility standard is not akin to a “probability requirement,” but
it asks for more than a sheer possibility that a defendant has acted unlawfully. Twombly, 550 U.S.
at 556. “Where the well-pleaded facts do not permit the court to infer more than the mere possibility
of misconduct, the complaint has alleged—but it has not ‘show[n]’—‘that the pleader is entitled to
relief.’” Iqbal, 556 U.S. at 679 (quoting FED. R. CIV. P. 8(a)(2)).
III. ANALYSIS
A.

Plaintiffs’ Current Complaint
As a threshold matter, by promising to present “evidence that the basis of plaintiffs’

complaint is correct” (Dkt 23 at 8), such as the purported evidence in the form of the “securitization
audit,” Plaintiffs miss the point of a 12(b)(6) challenge, which is to test the sufficiency of the
pleadings. This Court does not, in deciding a 12(b)(6) motion, look to matters outside the pleading.
See FED. R. CIV. P. 12(d).
Moreover, Plaintiffs’ objections perpetuate the erroneous assumption made in their response
to Defendants’ Motion to Dismiss, to wit: that Plaintiffs can perform a post hoc investigation and
continue to re-tool their complaint against Defendants in an effort to bring their claims into “sharper
focus.” It is no longer sufficient in the Twombly/Iqbal pleading context to merely promise that a set
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of facts exists in support of a claim. See New Albany Tractor, Inc. v. Louisville Tractor, Inc., 650
F.3d 1046, 1051 (6th Cir. 2011) (opining that “the combined effect of Twombly and Iqbal require
plaintiff to have greater knowledge now of factual details in order to draft a ‘plausible complaint’”).
A plaintiff may not use the discovery process to obtain these facts after filing suit. Id.; see also
Patterson v. Novartis Pharmaceuticals Corp., 451 F. App’x 495, 499 (6th Cir. 2011) (“Plaintiffs
[are] not entitled to an advisory opinion from the district court informing them of the deficiencies
of the complaint and then an opportunity to cure those deficiencies.”) (quoting Winget v. JP Morgan
Chase Bank, N.A., 537 F.3d 565, 573 (6th Cir. 2008)).
Plaintiffs contend that their pro se status compels a result in their case different from the
dismissal recommended by the Magistrate Judge. Plaintiffs emphasize that they are “pro se litigants
whose pleadings are held to a less stringent standard than those of practicing attorneys” (Dkt 23 at
6, citing Erickson v. Pardus, 551 U.S. 89, 94 (2007)).
Pro se complaints are liberally construed and held to a less stringent standard than the formal
pleadings prepared by attorneys. Erickson, 551 U.S. at 94 (citing Estelle v. Gamble, 429 U.S. 97,
106 (1976)); Bridge v. Ocwen Fed. Bank, FSB, 681 F.3d 355, 358 (6th Cir. 2012). Here, however,
the Magistrate Judge has not recommended dismissal of Plaintiffs’ complaint because of “inartful
pleading” or any lack of legal training or sophistication, but rather because Plaintiffs delineated
nearly a dozen claims that she found wholly lacking in both supportive factual and legal allegations.
Contrary to the position Plaintiffs seem to advocate in their objections, “pro se litigants are
not relieved of the duty to develop claims with an appropriate degree of specificity.” Kafele v.
Lerner, Sampson & Rothfuss, L.P.A., 161 F. App’x 487, 491, 2005 WL 3528921, at *3 (6th Cir.
2005) (affirming the district court’s decision to dismiss the plaintiffs-homeowners’ complaint and
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deny as moot their motion for leave to file an amended complaint); see, e.g., Bridge, 681 F.3d at 364
(examining the plaintiffs-mortgagors’ complaint to determine whether their pleading “properly
asserted those elements, supported by sufficient factual allegations”). The “less stringent standard
... does not mean that pro se plaintiffs are entitled to take every case to trial.” Hahn v. Star Bank,
190 F.3d 708, 715 (6th Cir. 1999) (affirming the district court’s decision to dismiss the plaintiffdebtor’s pro se complaint against the defendant-bank).3
Rather, in reviewing pleadings drafted by pro se litigants, courts “need not accept as true
legal conclusions or unwarranted factual inferences.” Montgomery v. Huntington Bank, 346 F.3d
693, 698 (6th Cir. 2003) (affirming the district court’s decision to dismiss the plaintiff-debtor’s pro
se complaint against the defendant-bank for failure to state a claim) (citation omitted). Rather, “a
pro se litigant ‘must conduct enough investigation to draft pleadings that meet the requirements of
the federal rules.’” West v. Adecco Employment Agency, 124 F. App’x 991, 992 (quoting Burnett v.
Grattan, 468 U.S. 42, 50 (1984)). In Burnett, 468 U.S. at 50 n.13, the United States Supreme Court
noted that “[a]lthough the pleading and amendment of pleadings rules in federal court are to be
liberally construed, the administration of justice is not well served by the filing of premature, hastily
drawn complaints.” The Court noted that the requirement of Federal Rule of Civil Procedure 11, to
certify that “reasonable inquiry” has been performed to ground a complaint in fact and existing law,
applies to both attorneys and pro se litigants. Id.

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Indeed, in Curtis v. BAC Home Loans Servicing LP, No. 5:10-CV-226, 2010 WL 4054129,
at *1, n.1 (M.D. Ga. Oct. 14, 2010), where the district judge court noted that he had no less than
seven cases currently on his docket related to residential mortgage loan transactions in which “the
exact same form complaint was used,” the court further opined that pro se claimants have “no license
to harass others, clog the judicial machinery with meritless litigation, and abuse already overloaded
court dockets.” Id. at *1 (quoting Patterson v. Aiken, 841 F.2d 386, 387 (11th Cir. 1988)).
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In sum, if Plaintiffs’ complaint could reasonably be read to state a plausible claim, then this
Court would do so, despite any failure to cite proper legal authority or excise irrelevant boilerplate.
The Court is not convinced, however, that Plaintiffs, by alluding to facts that they could have
alleged, or by suggesting violations that could still be pled, have revealed any error in the Magistrate
Judge’s conclusion that their claims fall short of the Twombly/Iqbal pleading standard. Plaintiffs’
pro se status, standing alone, does not alter this conclusion.
B.

Plaintiffs’ Promised Complaint
As noted, Plaintiffs included within their objections to the Report and Recommendation a

request for leave to file an amended complaint. However, Plaintiffs have not shared what additional
claims they seek to allege against Defendants. Nor have Plaintiffs supplied any meaningful analysis
of the “securitization audit” from which this Court could ascertain how their references to the
conclusions therein would cure the deficiencies in their claims against Defendants.
While Rule 15(a) of the Federal Rules of Civil Procedure provides that leave to amend a
pleading should be “freely given when justice so requires,” the rule does not require amendment in
the face of “‘undue delay, bad faith or dilatory motive on the part of the movant, repeated failure to
cure deficiencies by amendments previously allowed, undue prejudice to the opposing party by virtue
of allowance of the amendment, [or] futility of amendment.’” Raiser v. Corp. of President of
Church of Jesus Christ of Latter-Day Saints, No. 11-3227, 2012 WL 3192197, at *2 (6th Cir. Aug.
7, 2012) (affirming the district court’s decision to deny the pro se plaintiff leave to amend his
complaint because “[a]ny amendment to the complaint would have been dilatory and caused undue
prejudice to the defendants”) (quoting Forman v. Davis, 371 U.S. 178, 182 (1962)). Given the
deficiencies of Plaintiffs’ current claims and the amorphous nature of Plaintiffs’ request to file an
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amended complaint, the Court determines that granting leave to amend would be futile, dilatory and
cause undue prejudice to Defendants.
The Court has not overlooked the two cases Plaintiffs cited in their objections where the
district courts, examining the allegations presented in apparently the same internet-obtained template
complaint that Plaintiffs utilized here, permitted the plaintiffs to amend their complaints (Dkt 23 at
10, citing Johnson v. Bank of America/Countrywide, No. 5:10cv06, 2010 WL 3476449 (N.D. Fla.
Sept. 2, 2010); and Straker v. Deutsche Bank Nat Trust, No. 3:CV-09-0338, 2010 WL 500412 (M.D.
Pa. Feb. 5, 2010)). However, neither of these decisions is binding on this Court. Moreover, the
Court observes that other courts also examining apparently the same internet-obtained template
complaint have reached the conclusion this Court reaches herein. See, e.g., Forbes v. Federal Nat’l
Mortgage Ass’n, No. 12-cv-210, 2012 WL 1957485, at *3 (S.D. Cal. May 30, 2012) (finding leave
to amend futile, “[g]iven the obvious deficiencies and frivolous nature” of the plaintiff’s claims);
McDonald v. JP Morgan Chase Bank N.A., No. 12cv860, 2012 WL 1714168, at *9 (S.D. Cal. May
15, 2012) (“Dismissal is with prejudice, as amendment would be futile as to any of Plaintiff’s claims
against Capital One”); Dorado v. Shea Homes Ltd. Partnership, No. 1:11-cv-01027, 2011 WL
3875626, at *20 (E.D. Cal. Aug. 31, 2011) (opining that when the court is faced with a “blizzard”
of purported violations under federal and state law—“a conglomeration of statutory quotations,
formulaic recitations and vague assertions of misconduct,” leave to amend need not be given “when
it is plain that the complaint is without merit for reasons that cannot be cured by amendment”);
McGregor v. Wells Fargo Bank, No. 2:10-CV-0136, 2011 WL 679435, at *4 (N.D. Ga. Jan. 26,
2011) (Report & Recommendation) (“[E]ven taking Plaintiff’s pro se status into account, Plaintiff’s

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complaint fails to state a claim upon which relief may be granted and should be dismissed”), adopted
2011 WL 679443 (N.D. Ga. Feb. 16, 2011).
IV. CONCLUSION
Defendants are entitled to dismissal of Plaintiffs’ complaint for the reasons stated by the
Magistrate Judge.

Accordingly, the Court denies Plaintiffs’ objections to the Report and

Recommendation and approves and adopts the Report and Recommendation as the Opinion of the
Court. Because this Opinion and Order resolves the last pending claim in this case, the Court will
also enter a Judgment. See FED. R. CIV. P. 58.
Accordingly:
IT IS HEREBY ORDERED that the Objections (Dkt 23) are DENIED and the Report and
Recommendation (Dkt 19) is APPROVED and ADOPTED as the Opinion of the Court.
IT IS FURTHER ORDERED that Defendants’ Motion to Dismiss (Dkt 10) is GRANTED,
and Plaintiffs’ Complaint is DISMISSED.

Date: September 20, 2012

/s/ Janet T. Neff
JANET T. NEFF
United States District Judge

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