Hewitt v. Bank of America NA et al

Filing 21

OPINION ; signed by Judge Robert Holmes Bell (Judge Robert Holmes Bell, kcb)

UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
LUCAS J. HEWITT,
Plaintiff,
File No. 1:13-CV-310
v.
HON. ROBERT HOLMES BELL
BANK OF AMERICA NA, et al.,
Defendants.
/
OPINION
On February 27, 2013, Plaintiff Lucas J. Hewitt sued Defendants in Kent County
Circuit Court alleging improprieties in the foreclosure of his property. (Dkt. No. 1, Ex. 1.)
The case was removed to federal court on March 21, 2013. (Dkt. No. 1.) Presently before
the Court is Defendant Bank of America, N.A.’s motion to dismiss.1 (Dkt. No. 7.) For the
reasons that follow, this motion will be granted.
I.
On November 16, 2009, Plaintiff executed a promissory note in favor of First Place
Bank for $131,572, secured by a mortgage on the property located at 4784 Crestline Ct. SW,
Wyoming, Michigan 49519. (Dkt. No. 1, Attach. 1, Compl. Ex. A; Dkt. No. 8, Exs. A-B.)
On December 15, 2009, First Place Bank assigned its interest in the mortgage to Mortgage

1

Also before the Court is a proposed stipulation and order which provided that Plaintiff
could file his response to the motion to dismiss on or before June 3, 2013. (Dkt. No. 14.) This
stipulation and order will be granted.

Electronic Registration Systems (“MERS”). (Dkt. No. 8, Ex. C.) On November 30, 2011,
MERS assigned its interest in the mortgage to Bank of America. (Dkt. No. 8, Ex. D.)
Plaintiff subsequently defaulted on his payments, and Bank of America initiated foreclosure
proceedings. On September 26, 2012, Bank of America purchased the property at a sheriff’s
sale and received a sheriff’s deed. (Dkt. No. 8, Ex. E.) The present suit was subsequently
filed against Bank of America, Unknown Trust, and Unknown Holders. The latter two
defendants have never been identified and have not been served.
II.
Federal Rule of Civil Procedure 12(b)(6) provides that a party may assert “failure to
state a claim upon which relief can be granted” as an affirmative defense. “[T]o survive a
motion to dismiss [under 12(b)(6)], the complaint must contain either direct or inferential
allegations respecting all material elements to sustain a recovery under some viable legal
theory.” In re Travel Agent Comm’n Antitrust Litig., 583 F.3d 896, 903 (6th Cir. 2009)
(internal quotation marks omitted). In reviewing such a motion, the Court must “accept all
of plaintiff’s factual allegations as true and determine whether any set of facts consistent with
the allegations would entitle the plaintiff to relief.” G.M. Eng’rs & Assoc., Inc. v. W.
Bloomfield Twp., 922 F.2d 328, 330 (6th Cir. 1990). As a general rule, however, the Court
“need not accept as true legal conclusions or unwarranted factual inferences, and conclusory
allegations or legal conclusions masquerading as factual allegations will not suffice.” In re
Travel Agent, 583 F.3d at 903.

2

According to the Supreme Court, “a plaintiff’s obligation to provide the grounds of
his entitle[ment] to relief requires more than labels and conclusions, and a formulaic
recitation of a cause of action’s elements will not do.” Bell Atl. Corp. v. Twombly, 550 U.S.
544, 555 (2007) (internal quotations omitted). While detailed factual allegations are not
required,

the

pleading

standard

“dem ands

m ore

than

an

unadorn ed ,

the-defendant-unlawfully-harmed-me accusation.” Ashcroft v. Iqbal, 556 U.S. 662, 678
(2009). “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.’” Id. (quoting
Twombly, 550 U.S. at 570).
III.
Plaintiff’s complaint contains thirteen counts: (1) fraudulent assignment of a mortgage
in violation of Mich. Comp. Laws § 600.3204(1) and (3); (2) failure to comply with the loan
modification requirements of Mich. Comp. Laws §§ 600.3204(4) and 3205(c); (3) failure to
comply with federal regulations requiring a face-to-face meeting to resolve a default before
the borrower falls three months behind in his mortgage payments; (4) intentional fraud; (5)
constructive fraud; (6) tortious interference with contractual relations; (7) civil conspiracy;
(8) violation of the Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C. §1692, et seq.;
(9) violation of Michigan’s Regulation of Collection Practices Act (“MCPA”), Mich. Comp.
Laws § 445.2521, et seq.; (10) violation of Michigan’s Occupational Code (“MOC”), Mich.
Comp. Laws § 339.901, et seq.; (11) accounting; (12) unclean hands; and (13) breach of the

3

implied duty of good faith and fair dealing.
A. Property Right Claims
Bank of America argues that the complaint must be dismissed in its entirety because
Plaintiff no longer has an interest in the property due to the expiration of the statutory
redemption period on March 26, 2013. See Mich. Comp. Laws § 600.3240 (noting that the
redemption period expires six months after the date of the sale).
The Michigan courts have determined that, after the expiration of the redemption
period, a mortgagor does not have standing to bring an action to quiet title or challenge the
foreclosure proceedings. See Overton v. Mortg. Elec. Registration Sys., No. 284950, 2009
WL 1507342, at *1 (Mich. Ct. App. May 28, 2009) (per curiam); Sagmani v. Lending Assocs.
LLC, No. 302865, 2012 WL 3193940, at *2 (Mich. Ct. App. Aug. 7, 2012) (per curiam);
Awad v. Gen. Motors Acceptance Corp., No. 302692, 2012 WL 1415166, at *4 (Mich. Ct.
App. Apr. 24, 2012). The Sixth Circuit has since clarified that this line of cases “does not
turn on standing doctrine” but instead depends on Michigan’s statutory right to redeem,
which courts have no power to enlarge or abridge. Houston v. U.S. Bank Home Mortg. Wisc.
Servicing, 505 F. App’x 543, 548-49 (6th Cir. 2012); see also El-Seblani v. IndyMac Mortg.
Servs., No. 12–1046, 2013 WL 69226 (6th Cir. Jan. 7, 2013).2 Once the statutory right to

2

Plaintiff challenges the applicability of Overton and its progeny because of a footnote in
a 2011 Western District of Michigan decision indicating that Overton does not stand for the
proposition that Article III standing is extinguished after the expiration of the redemption period.
See Langley v. Chase Home Fin., LLC, No. 1:10–cv–604, 2011 WL 1130926, at *2 n.2 (W.D.
Mich. Mar. 28, 2011) (Jonker, J.). As these recent Sixth Circuit opinions illustrate, Plaintiff’s
Article III standing is not the issue, it is the extinguishment of his rights under Michigan law.
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redeem expires, Michigan’s statutes explicitly provide that all of the borrower’s rights in the
property are extinguished as a matter of law. See Mich. Comp. Laws § 600.3236; Piotrowski
v. State Land Office Bd., 4 N.W.2d 514, 517 (Mich. 1942). That includes any rights arising
under equity. See Senters v. Ottawa Sav. Banks, FSB, 503 N.W.2d 639, 644 (Mich. 1993)
(“Where, as in the present case, a statute is applicable to the circumstances and dictates the
requirements for relief by one party, equity will not interfere.”).
There is one limited exception, which allows borrowers to retain their rights after the
expiration of the redemption period. If a borrower can make “a clear showing of fraud or
irregularity,” the divestment of the property may still be undone. Houston, 505 F. App’x at
549; see also Schulthies v. Barron, 167 N.W.2d 784, 785 (Mich. Ct. App. 1969). However,
in order to qualify for this fraud exception and extend the redemption period, the fraud or
irregularity must be in “conducting the legal measures.” Heimerdinger v. Heimerdinger, 299
N.W. 844, 846 (Mich. 1941). This requires that the fraud or irregularity be present in the
foreclosure procedure itself. Sagmani, 2012 WL 3193940 at *1 (“A party can challenge the
foreclosure after the redemption period only if there is clear evidence of fraud or irregularity
in the foreclosure proceedings.”); see also Houston, 505 F. App’x at 549.
Counts 1-7, 9, and 12-13 are all implicated by the Overton line of cases because they
seek to vacate the sheriff’s sale and to return the property to Plaintiff. Some of these counts
do allege fraud that is arguably related to the foreclosure proceedings. However, as
demonstrated below, these counts alleging fraud are deficient and do not constitute a clear

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showing of fraud. Consequently, Plaintiff lacks rights in the property, and Counts 1-7, 9, and
12-13 must all be dismissed pursuant to Overton and Houston.
1. Property Rights Claims Alleging Fraud
Counts 1, 4-5, 7, 9, and 12 contain allegations of fraud that arguably concern the
foreclosure process. However, because Plaintiff fails to state a claim in any of these counts,
these allegations of fraud are insufficient to constitute the “clear showing of fraud” required
to extend the redemption period. Thus, these counts will be dismissed, and Plaintiff is
foreclosed from suing to enforce his rights in the property, which have been extinguished.
i) Count 1: Authority to Foreclose
Plaintiff makes numerous arguments in support of his contention that Bank of
America lacked the authority to foreclose on the property. None of these arguments, ranging
from destroyed documents to a conspiracy to defraud Plaintiff, state a plausible claim to
relief.
First, Plaintiff argues that no one has the authority to foreclose on his home because
the mortgage and note were “destroyed” and “ownership and/or possession of the Mortgage
and Note have been severed.” (Compl. ¶¶ 96, 98.) This argument is contradicted by the copy
of the mortgage attached to Plaintiff’s complaint and the copies of the mortgage and note
provided by Bank of America. (Compl. Ex. A; Dkt. No. 8, Exs. A-B.)
Next, Plaintiff, citing Mich. Comp. Laws § 600.3204, alleges that Bank of America
could not foreclose because it was not the original mortgagee and there is no record chain of

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title evidencing the assignment of the mortgage to Bank of America. (Compl. ¶¶ 66-77.)
According to Plaintiff, the only assignment in the chain of title is the assignment from MERS
to Bank of America which is invalid because MERS lacked any interest whatsoever in the
property. (Compl. ¶ 75.) Plaintiff lacks standing to bring this argument. “[A] litigant who
is not a party to an assignment lacks standing to challenge that assignment.” Livonia Props.
Holdings, LLC v. 12840-12976 Farmington Road Holdings, LLC, 399 F. App’x 97, 102 (6th
Cir. 2010).3 Moreover, even if Plaintiff had standing, his argument is frivolous. A valid
record chain of title exists: First Place Bank’s assignment to MERS, and MERS subsequent
assignment to Bank of America were recorded with the Kent County Register of Deeds on
April 26, 2010, and December 5, 2011, respectively. (Dkt. No. 8, Exs. C-D.) Thus,
Plaintiff’s contention that MERS lacked any interest whatsoever in the property is defeated
by the plain terms of the first assignment. (Dkt. No. 8, Ex. C.)
Plaintiff also argues that the signatory to the second assignment, Christopher Herrera,
is not a real person and is instead a robo-signer. Plaintiff’s sole support for this argument is
two “vastly different” signatures for Herrera on two different documents. (See Compl. Exs.

3

Plaintiff baldly asserts that he fears “double recovery” from “Bank of America; from the
unknown trustee, (the ‘Trustee’), as the trustee on behalf of the unknown holders (the ‘Holders’),
the currently unknown holders of the asset-backed security at issue; and from the Government
National Mortgage Association (‘Ginnie Mae’) or the Federal Housing Administration
(‘FHFA’).” (Dkt. No. 15, at 10.) While a “genuine claim” that a plaintiff might be subject to
double recovery can provide that plaintiff with standing to challenge an assignment between two
third-parties, Livonia, 399 F. App’x at 102, this bald assertion by Plaintiff is not such a genuine
claim; Plaintiff has not put forth a plausible argument that a party other than Bank of America
also claims rightful ownership of the mortgage.
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C-D.) In the Court’s estimation, the two “vastly different” signatures for Herrera are, in fact,
substantially similar. (See id.) Given that Plaintiff has provided no other factual support for
this claim that Herrara’s signature has been robo-signed, the slight differences in the two
signatures do not constitute sufficient factual matter to state a plausible claim of fraudulent
assignment. See Iqbal, 556 U.S. at 678; see also Assasepa v. JP Morgan Chase Bank, No.
11–156, 2012 WL 88162, at *8 (S.D. Ohio Jan. 11, 2012) (“Twombly require[s] plaintiffs to
set forth more than bare allegations of robo-signing without any other factual support.”);
Block v. BAC Home Loans Servicing LP, No. 11–11181, 2012 WL 2031640, at *4 (E.D.
Mich. June 6, 2–12) (“[V]ague and speculative assertions of what has been labeled as
‘robo-signing’ are insufficient to state a plausible claim of fraud or irregularity.”).
Plaintiff further contends that the signature of the notary public, Norma Rojas, on the
second assignment is a forgery because the format for the date on that assignment (“May 20,
2011”) differs from the format of the date on an unrelated assignment Plaintiff attaches (“1130-2011”). (See Compl. Exs. C-D.) Plaintiff further points out that Rojas filled in blanks
in cursive handwriting on the second assignment but wrote in print on the unrelated
assignment. (See id.) This argument is farcical. Plaintiff focuses on trivial differences while
ignoring the fact that Rojas’ signature on the two allegedly forged assignments is identical.
(See id.)
Next, Plaintiff contends that the mortgage and note were bundled and sold off to the
Holders, where they were pooled together with other loans as an asset-backed security.

8

(Compl. ¶¶ 13-14.) According to Plaintiff, this asset-backed security is subject to an
unknown and unproduced pooling and servicing agreement (“PSA”), which requires that the
assignment of a mortgage be done in a specific way and within a specific time frame.
(Compl. ¶¶ 15, 94.) Because those conditions were not complied with, Plaintiff concludes
that the assignment of the mortgage was invalid. This argument is frivolous. Even if there
is a pooling and servicing agreement, Plaintiff is not a party to it and has no standing to
challenge its terms:
Plaintiff also raises several arguments relating to whether the Court was misled
about certain transfers of the Loan Documents [including whether a PSA was
complied with]. . . . [T]he parties to any assignments appear to have ratified or
otherwise acquiesced to the transfers and are not challenging them here or
attempting to assert any rights in the Loan Documents. Moreover, as discussed
below, by virtue of the fact that Defendant is the holder of the Note, it also
holds the Mortgage by operation of law. Finally, regardless of what
contracts exist between which entities, Plaintiff was not and is not a party
to any of those contracts (including the assignments), and lacks standing
to challenge their validity or the parties’ compliance with those contracts
here.
Livonia, 717 F. Supp. 2d at 746-47 (emphasis added).
The rest of Plaintiff’s arguments of fraud and conspiracy are conclusory, unsupported,
and bordering on the absurd. Plaintiff alleges that MERS has no employees, no board of
directors, and is not located in Bank of America’s offices in California, where Plaintiff
claims the second assignment was signed. (Compl. ¶ 38.) The Court fails to see the
relevance of MERS’s corporate structure, especially when attested to in such a conclusory
fashion. Next, shortly after declaring without support that Herrera “may not even be a real

9

person” and that “numerous third parties employed by Bank of America have been running
around signing documents fraudulently holding themselves out as ‘Christopher Herrera’”
(Dkt. No. 15, at 8-9), Plaintiff proceeds to state that not only is Herrera a real person, but that
he was present at the signing of the assignment in question and acting as an agent for Bank
of America instead of MERS (Id. at 9; Compl. ¶ 39). Thus, Plaintiff entreats the Court to
accept as true the allegation that Bank of America, through its agent, Herrera, was trying to
fraudulently assign the mortgage to itself. As with Plaintiff’s contention that Herrera is not
a real person, Plaintiff offers no support whatsoever for the argument that Herrera did not
sign the assignment on behalf of MERS.
Plaintiff’s threadbare arguments and outlandish allegations in this count are
insufficient to survive a motion to dismiss. Accordingly, Count 1 will be dismissed and the
allegations of fraud contained therein will not be considered sufficient to constitute the clear
showing of fraud or irregularity necessary for Plaintiff to challenge the foreclosure process.
ii) Counts 4, 5, 7: Intentional or Constructive Fraud, and Conspiracy to
Commit Fraud
Plaintiff argues that Bank of America committed either intentional or constructive
fraud.

Plaintiff further contends that Bank of America, along with the unidentified

defendants, conspired to commit intentional or constructive fraud.4 Counts 4, 5, and 7 all
depend on the same two allegations of fraud.
4

Count 7 alleges conspiracy in relation to the allegations of fraud made in Counts 4 and 5
and in relation to the allegations that Bank of America violated the FDCPA and MOC in Counts
8 and 10. Only conspiracy to commit fraud is considered in this section.
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First, Plaintiff contends that agents of Bank of America misrepresented to Plaintiff
that if he agreed to stop making payments on his mortgage loan and instead applied for a
modification, a loan modification would be granted and foreclosure proceedings would not
be conducted. (Compl. ¶¶ 139, 155.) Second, Plaintiff contends that Bank of America
created a fraudulent assignment in order to justify a foreclosure that was not in accordance
with Mich. Comp. Laws § 600.3204. (Compl. ¶¶ 147, 155.) This second allegation is
dependent on the assignment from MERS to Bank of America being fraudulent, a claim this
Court has already deemed to be frivolous. See supra Part 3(A)(1)(i). Thus, only the first
allegation of fraud will be considered.
“In alleging fraud or mistake, a party must state with particularity the circumstances
constituting fraud or mistake.” Fed. R. Civ. P. 9(b). To make out a fraud claim, a plaintiff
“must at a minimum allege the time, place and contents of the misrepresentation(s) upon
which he relied.” Bender v. Southland Corp., 749 F.2d 1205, 1216 (6th Cir. 1984).
Additionally, the pleading must “allege with specificity who had made the particular
misrepresentations and when they were made.” Hoover v. Langston Equip. Assoc., Inc., 958
F.2d 742, 745 (6th Cir. 1992).
In Counts 4, 5, and 7’s first fraud allegation, Plaintiff does not allege who made the
particular representations or when they were made. In his response brief, Plaintiff insists that
he has pleaded this claim with particularity because he provided this information in the
general allegations section of the complaint, notably in paragraph 54. (Dkt. No. 15, at 19).

11

This argument is unconvincing. Plaintiff did provide a date and a name in pleading that
around September 10, 2012, David Moore “absolutely promised him, in no uncertain terms
that the sale would be postponed, as his loan was still under review for a modification.”
(Compl. ¶ 54.) However, Count 4 (and Counts 5 and 7 which depend on the allegations in
Count 4) refers to “agents” of the servicer committing the fraud, not a single agent. (Compl.
¶ 139.) Moreover, paragraph 54 is inconsistent with the allegations made in Count 4. First,
paragraphs 54 and 139 regard different time periods. According to paragraph 54, Plaintiff’s
“loan was still under review for a modification” at the time of the representation by Moore,
while according to paragraph 139, the bad faith promise by the “agents” was contingent on
Plaintiff first “apply[ing] for a modification.” Additionally, paragraph 54 only regards a onesided promise to postpone the sale of the property, while paragraph 139 does not regard the
postponement of the sale but instead regards a promise to grant a loan modification with a
lower payment and to not institute foreclosure proceedings if Plaintiff stopped making
payments on his loan and applied for a modification. Thus, Plaintiff cannot save Counts 4,
5, and 7 by pointing to his pleading in paragraph 54, which regards a separate incident.5
In fact, it appears that the pleadings in the general allegations section of the complaint
which actually refer to the same incident discussed in paragraph 139 are instead paragraphs
25 and 26, which mirror paragraph 139 in vaguely referring to unnamed servicer
5

Moreover, Plaintiff could not show injury if Count 4 regarded Moore’s representation.
Plaintiff’s sole allegation of injury in Count 4 is “but for those representations, Plaintiff never
would have allowed himself to go into default, which ultimately led to the foreclosure.” (Compl.
¶ 140.) Plaintiff was already in default in September 2012.
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“representatives” telling Plaintiff that if he stopped paying on his mortgage he would be
granted a loan modification. (Compl. ¶¶ 25-26.) These alleged representations occurred
sometime in 2011 before the alleged fraudulent assignment, and are distinct from the alleged
representation made by Moore in September 2012. (See Compl. ¶¶ 27-28, 55.) Thus,
because paragraph 139 and Counts 4, 5, and 7 refer to alleged misrepresentations made by
unnamed agents sometime in 2011, and the general allegations concerning these
misrepresentations suffer from the same particularity deficiencies, Counts 4, 5, and 7 have
not been pleaded with particularity and must be dismissed.6
iii) Count 9: Violation of the MCPA
Rule 9(b), which provides that “[i]n alleging fraud or mistake, a party must state with
particularity the circumstances constituting fraud or mistake,” is applicable to all allegations
of fraud, including allegations of fraud under the MCPA. See Zanger v. Gulf Stream Coach,
Inc., No. 05-72300, 2005 WL 3416466, at *10 (E.D. Mich. Dec. 13, 2005). Plaintiff alleges
seven violations of the MCPA, four of which allege fraud: (1) communicating with Plaintiff
in a misleading or deceptive manner; (2) making a deceptive statement in a communication
to collect a debt; (3) misrepresenting in a communication with Plaintiff the legal status of a

6

Even if these fraud claims were pleaded with particularity, the Court would dismiss
them. The Michigan Statute of Frauds expressly states that “[a]n action shall not be brought
against a financial institution to enforce [a promise or commitment to waive a provision of a loan
or make any other financial accommodation] unless the promise or commitment is in writing and
signed.” Mich. Comp. Laws § 566.132(2). The language of this statute is unambiguous and
should be read as an “unqualified and broad ban” of any claim – “no matter its label” – against a
financial institution to enforce the terms of an oral promise waiving a loan provision. Crown
Tech. Park v. D&N Bank, FSB, 619 N.W.2d 66, 72 (Mich. Ct. App. 2000).
13

legal action being taken and the legal rights of Plaintiff; and (4) communicating with Plaintiff
without accurately disclosing the caller’s identity. (Compl. ¶ 179(a)-(d).) Plaintiff provides
no details in these incredibly vague allegations. Plaintiff does not provide the time or
contents of the misrepresentations, nor does Plaintiff provide who made the
misrepresentation or when. Indeed, beyond the recitation of general behavior the MCPA
prohibits, Count 9 is devoid of details.
Viewing Plaintiff’s complaint as a whole, only one particular instance of fraud is
pleaded at any point. In the general allegations section of the complaint, Plaintiff alleges that
around September 10, 2012, David Moore “absolutely promised him, in no uncertain terms
that the sale would be postponed, as [Plaintiff’s] loan was still under review for a
modification.”

(Compl. ¶ 54.)

Plaintiff contends in his response brief that this

communication violated § 445.252(a) and (e) of the MCPA. Subsection (a) prohibits
“[c]ommunicating with a debtor in a misleading or deceptive manner . . . .” Subsection (e)
prohibits a regulated person from making “an inaccurate, misleading, untrue, or deceptive
statement or claim in a communication to collect a debt or concealing or not revealing the
purpose of a communication when it is made in connection with collecting a debt.”
However, even though the allegation in paragraph 54 of the complaint provides details
not present elsewhere in the complaint and liberally could be construed to be one of the
misrepresentations vaguely alluded to in Count 9, Plaintiff still must adequately plead a
causal link between the misrepresentation and the alleged harm. See Bolone v. Wells Fargo

14

Home Mortg., Inc., 858 F. Supp. 2d 825, 837 (E.D. Mich. 2012) (dismissing an MCPA claim
because “[n]o causal relationship exists between the representative’s statements and Wells
Fargo’s decision to not offer a permanent loan modification”). Plaintiff does not identify his
injury in Count 9, pleading only that he “has suffered an injury, loss, or damage from a
person for whom money was collected by Defendants’ use of methods, acts, or practices in
violation of the Michigan Act.” (Compl. ¶ 180.) Moreover, even if the Court assumes that
the loss of Plaintiff’s property is the injury for the alleged violation of the MCPA, there is
no connection between the alleged misrepresentation and the foreclosure of the property.
Plaintiff’s property was foreclosed because he was in default on his loan. At the time of the
alleged communication from Moore, Plaintiff was already in default. Plaintiff has not
alleged that he could have cured his default absent Moore’s communication, and, even
accepting as true that Plaintiff took no further action after Moore’s alleged communication,
there is absolutely nothing in the pleadings suggesting that there was any viable action
Plaintiff could have taken to prevent the sale in the two weeks between the communication
and the foreclosure.
As for the alleged violations of the MCPA which do not involve fraud – (1)
communicating with Plaintiff when Plaintiff was actively represented by an attorney; (2)
using a harassing, oppressive, or abusive method to collect a debt, including causing a
telephone to ring or engaging a person in telephone conversations repeatedly and at unusual
times; and (3) failing to implement a procedure designed to prevent a violation by an

15

employee – Plaintiff merely quotes the statute. See Mich. Comp. Laws § 445.252(h), (n), (q).
Beyond quoting subsections (h), (n), and (q) from the statute, Plaintiff makes no allegations
regarding Bank of America’s conduct. Even under the lower pleading standard for non-fraud
claims, this pleading is woefully inadequate. A plaintiff must provide more than “a
formulaic recitation of a cause of action’s elements” to survive a motion to dismiss.
Twombly, 550 U.S. at 555; see also Brady v. Chase Home Fin., LLC, No. 1:11–CV–838,
2012 WL 1900606, at *10 (W.D. Mich. May 24, 2012) (Quist, J.) (dismissing a plaintiff’s
MCPA claim because the allegations “merely parrot certain provisions of the statute” and
“fail to provide any factual ‘meat’ for her bare-bones claim”).
Accordingly, Count 9 will be dismissed.
iv) Count 12: Unclean Hands
In Count 12, Plaintiff argues that Defendants may not seek the equitable relief of
foreclosure because of their “unclean hands.” (Compl. ¶¶ 194-197.) “The [unclean hands]
doctrine is not a cause of action; rather, it is a defense . . . .” Meyer v. Citimortgage, Inc.,
No. 11–13432, 2012 WL 511995, at *6 (E.D. Mich. Feb. 16, 2012); see also Soto v. Wells
Fargo Bank, N.A., No. 11–1406, 2012 WL 113534, at *5 (E.D. Mich. Jan. 13, 2012) (“[T]he
‘unclean hands’ doctrine does not state a cause of action.”). Accordingly, Count 12 must be
dismissed. Moreover, Count 12, while it refers to the allegations of fraud made elsewhere
in the complaint, does not contain any new allegations of fraud which might affect Plaintiff’s
statutory right to redeem. Consequently, it also fails to comply with Rule 9(b)’s heightened

16

pleading requirement.
In conclusion, Counts 1, 4-5, 7, 9, and 12 will all be dismissed for failure to state a
claim. Because Plaintiff has not shown clear fraud or irregularity in the foreclosure
proceedings, Plaintiff does not have a statutory right to challenge the foreclosure process.
Accordingly, Counts 2, 3, 6, and 13, which do not allege fraud in the foreclosure proceedings
but still seek to vacate the sheriff’s sale, must also be dismissed.
2. Non-Fraud Property Rights Claims
As just stated, Counts 2, 3, 6, and 13 must be dismissed because Plaintiff has no rights
in the property under Michigan law. However, even if Plaintiff was statutorily able to bring
such claims, the Court would still dismiss them because Plaintiff has not stated plausible
claims to relief.
i) Count 2: Failure to Comply with Loan Modification Requirements
Plaintiff’s second claim alleges that Bank of America violated Mich. Comp. Laws
§ 600.3205c when it determined that Plaintiff did not qualify for a loan modification.
According to Plaintiff, he contacted the foreclosing law firm in a timely manner and
informed them that he wished to participate in the loan modification process, but was
ignored. (Compl. ¶ 107.) Additionally, Bank of America allegedly never provided Plaintiff
with a copy of the program, process, or guidelines that were being used to determine whether
Plaintiff qualified for modification, never provided him with the calculations made to
determine his eligibility for a modification, and engaged in meetings to determine whether

17

Plaintiff was eligible for a modification without the presence of a person authorized to grant
a loan modification. (Compl. ¶¶ 109-110, 119.)
Bank of America has provided the Court with a “Proof of Service & Affidavit of
Mailed Notice,” which was attached to the sheriff’s deed. (Dkt. No. 9, Ex. E.) This affidavit
provides that Plaintiff was provided with proper notice and that “neither a housing counselor
nor the borrower requested a meeting with the designee to negotiate a possible loan
modification within the time period specified in MCL 600.3205b(1).” (Id.) This affidavit
is “presumptive evidence of the facts therein contained.” Mich. Comp. Laws § 600.3264.
Plaintiff’s pleadings are insufficient to overcome this presumption that a loan
modification was not requested in time. Plaintiff’s complaint does not provide the date the
alleged communication was made, what form the alleged communication took, or who
Plaintiff communicated with. (See Compl. ¶ 107.) Instead, Plaintiff pleads only that he
communicated with “a representative” from “the foreclosing law firm” “prior to the
deadline.” (Id.) Even after Bank of America raised the presumptiveness of the facts
contained in the affidavit in its motion to dismiss, Plaintiff failed to provide any more details
in his response brief to remedy the vagueness of this pleading.
Moreover, Plaintiff’s complaint does not quote the correct deadline for requesting a
loan modification. Plaintiff selectively quotes the foreclosure statutes to imply that he had
90 days to contact the designated entity to request a loan modification. Plaintiff cites Mich.
Comp. Laws § 3205c(5), which discusses a 90-day time limit after notice, right before

18

asserting that he contacted the foreclosing law firm “prior to the deadline.” (Compl. ¶¶ 105,
107.) However, Plaintiff fails to cite § 3205c(1) which explains that § 3205c(5) provides 90
days not for contacting the designated entity but instead for the delivery of materials to the
borrower (including calculations and a copy of the program, process, or guidelines used), and
only comes into effect “[i]f a borrower has, either directly or through a housing counselor,
contacted a person designated under section 3205a(1)(c) under section 3205b but the
process has not resulted in an agreement to modify the mortgage loan.” Mich. Comp. Laws
§ 3205c(1) (emphasis added). Section 3205b provides the relevant deadline for requesting
a loan modification:
If a borrower wishes to participate in negotiations to attempt to work out a
modification of a mortgage loan, within 30 days after the notice under
section 3205a1 is mailed to the borrower, the borrower shall either contact
the person designated under section 3205a(1)(c) directly or contact a
housing counselor from the list provided under section 3205a.
Mich. Comp. Laws § 600.3205b(1) (emphasis added).
In light of the confusion evidenced in Plaintiff’s pleadings as to the correct deadline
for contacting the designated law firm, and in light of the vagueness and conclusory nature
of the sole sentence alleging that proper communication was made, the Court finds that the
§ 600.3264 presumption that the facts in the affidavit are true has not been overcome.
Consequently, the complaint does not contain sufficient factual matter to state a
plausible claim that Plaintiff contacted the foreclosing law firm to request a loan
modification in the time required. Because Bank of America has no obligation to provide

19

a borrower with a copy of the calculations undergone or the program, process, or guidelines
used for loan modification absent such timely contact, § 3205c(1), Plaintiff has failed to state
a claim upon which relief may be granted.
ii) Count 3: Failure to Comply with Federal Regulations
Plaintiff argues that Bank of America failed to comply with 24 C.F.R. 203.604, a
regulation of the Department of Housing and Urban Development (“HUD”) which requires
a face-to-face meeting with a borrower to resolve a default before the borrower falls three
monthly payments behind. (Compl. ¶ 127.) Accepting the truth of Plaintiff’s factual
allegations, there is no private cause of action under 24 C.F.R. 203.604. As the Sixth Circuit
has explained, “no express or implied right of action in favor of the mortgagor exists for
violation of HUD mortgage servicing policies.” Fed. Nat’l Mortg. Ass’n v. LeCrone, 868
F.2d 190, 193 (6th Cir. 1989); see also Talton v. BAC Home Loans Servicing LP, 839 F.
Supp. 2d 896, 910 (E.D. Mich. 2012) (“The complaint alleges that the defendant failed to
‘provide the borrower with a face-to-face meeting to resolve any default before the borrower
falls three monthly payments behind in their mortgage.’ . . . However, federal regulations by
themselves do not create private causes of action, at least in the present case.”). State courts
have similarly recognized that no private right of action exists for the violation of HUD
regulations:
The federal courts have determined that the HUD lenders handbook, the
foundation of the defense, is merely a statement of HUD policy, which does
not have the force of law and which does not establish procedural prerequisites
to foreclosure. Brown I, supra, p. 998. The handbook and regulations “deal
20

only with the relations between the mortgagee and the government, and give
the mortgagor no claim to duty owed nor remedy for failure to follow”.
Roberts v. Cameron-Brown Co., 556 F.2d 356, 360 (C.A.5, 1977).
Mfrs. Hanover Mortg. Corp. v. Snell, 370 N.W.2d 401, 404 (Mich. Ct. App. 1985);7 see also
In re Estate of Olson, No. 283818, 2009 WL 3103841, at *4 (Mich. Ct. App. Sept. 29, 2009)
(affirming trial court’s citation of Snell “for the proposition that a violation of HUD
guidelines does not give a mortgagor an independent cause of action to void the mortgage”);
Baker v. Northland Mortg. Co., 344 F. Supp. 1385, 1386 (N.D. Ill. 1972) (“Plaintiff argues
that her claim arises under the National Housing Act, 12 U.S.C. § 1701 et seq. and the
regulations of the Federal Housing Administration, 24 C.F.R. 203 et seq., and its
Mortgagees’ Guide. . . . The statute and regulations relied upon deal only with relations
between the mortgagee and the government, and give mortgagors no claim to a duty owed
nor a remedy.”); Wells Fargo Home Mortg., Inc. v. Neal, 922 A.2d 538, 546 (Md. Ct. App.
2007) (“[T]he regulations do not control directly the relationship between the mortgagor and
mortgagee and may not be invoked by the mortgagor as a sword in an offensive cause of
action against the mortgagee.”).8

7

Plaintiff contends in his response brief that Snell only rejected a private cause of action
for violation of HUD regulations because the mortgage contract at issue did not incorporate HUD
regulations. Even if Snell, in dicta, suggests that a party might be able to state a breach of
contract defense to summary eviction proceedings based on violation of HUD regulations when
those regulations are incorporated into a mortgage contract, 370 N.W.2d at 403-04, Count 3
seeks affirmative redress under 24 C.F.R. 203.604, and does not seek redress for breach of
contract. (See Compl. ¶¶ 125-136.)
8

Some courts have allowed the assertion of HUD regulations as an affirmative defense.
(continued...)
21

Consequently, Count 3 must be dismissed.
iii) Count 6: Tortious Interference with Contractual Relations
This count continues the frivolous argument that the only parties to the mortgage
contract are Plaintiff and First Place Bank, and adds that the unnamed defendants Trustee and
Holders caused Bank of America to breach Plaintiff’s contract with First Place Bank.
(Compl. ¶¶ 163-164.)
These allegations are nonsensical. The count is entirely unclear as to whether it is
directed at the unnamed parties or Bank of America. Moreover, to the extent the count
pertains to Bank of America, Bank of America cannot be held liable for tortious interference
with the mortgage contract. Under Michigan law, “tortious interference with contract
requires proof . . . that the defendant was a ‘third-party’ to the contractual relationship.”
Servo Kinetics, Inc. v. Tokyo Precision Instruments Co. Ltd., 475 F.3d 783, 800 (6th Cir.
2007) (quoting Willis v. New World Van Lines, Inc., 123 F. Supp. 2d 380, 396 (E.D. Mich.
2000)). As thoroughly discussed, Bank of America is a party to the contract because First
Place Bank assigned its interest to MERS, which then validly assigned its interest to Bank
of America. Accordingly, Count 6 must be dismissed.
iv) Count 13: Breach of Implied Duty of Good Faith and Fair Dealing

8

(...continued)
See, e.g., Lacy-McKinney v. Taylor Bean & Whitaker Mortg. Corp., 937 N.E.2d 853 (Ind. Ct.
App. 2010). However, these courts distinguish themselves from cases holding that no cause of
action exists to sue on a HUD regulation because those cases “deal[] with the implication of a
private cause of action and not with the assertion of an affirmative defense.” Id. at 862 (quoting
Bankers Life Co. v. Denton, 458 N.E.2d 203, 206 (Ill. Ct. App. 1983)).
22

Plaintiff alleges that Defendants breached the implied duty of good faith and fair
dealing by failing to provide Plaintiff with a loan modification. (Compl. ¶¶ 199-200.) Bank
of America contends that Michigan law does not recognize a cause of action for breach of
the implied covenant of good faith and fair dealing. (Dkt. No. 8, at 24.) This statement of
the law is imprecise. It is true that “Michigan does not recognize a separate cause of action
for breach of an implied covenant of good faith and fair dealing apart from a claim for breach
of the contract itself.” McLiechey v. Bristol West Ins. Co., 408 F. Supp. 2d 516, 522 (W.D.
Mich. 2006) (Bell, J.) (quoting Liggett Restaurant Group, Inc. v. City of Pontiac, No.
256571, 2005 WL 3179679 at *1 (Mich. App. Nov. 29, 2005) (emphasis added)). However,
if a contract explicitly leaves the manner of a party’s performance to its discretion, a breach
of contract claim asserting violation of the implied duty of good faith and fair duty is
permissible. Id. (“Breach of contract actions based upon the breach of an implied covenant
of good faith and fair dealing are limited to contracts where a contractual term leaves the
manner of performance to one party’s discretion.”); see also Stephenson v. Allstate Ins. Co.,
328 F.3d 822, 826 (6th Cir. 2003) (“An implied covenant of good faith and fair dealing in
the performance of contracts is recognized by Michigan law only where one party to the
contract makes its performance a matter of its own discretion.”).
Count 13 is framed, however inartfully, as a breach of contract claim: “BREACH OF
CONTRACT OF THE IMPLIED DUTY OF GOOD FAITH AND FAIR DEALING.”
However, Plaintiff has not pointed to any contractual provision where Bank of America’s

23

predecessor in interest, First Place Bank, promised to exercise discretion in the loan
modification determination. In fact, the discretion Plaintiff alleges Defendants possessed
was expressly non-contractual: “Defendants had the discretion to modify Plaintiff’s loan in
accordance with the Home Affordable Modification Program and/or other loss
mitigation programs.” (Compl. ¶ 200 (emphasis added).) Neither the mortgage nor the
note contains a reference to the Home Affordable Modification Program or any other type
of loan modification program.9 Accordingly, Plaintiff has not stated a claim for breach of
contract based upon the implied duty of good faith and fair dealing.
In conclusion, Counts 2, 3, 6, and 13 will be dismissed.
B. Claims not Dependent on Plaintiff Possessing Property Rights
Plaintiff’s remaining claims – part of Count 7 and Counts 8, and 10-11 – do not
depend on the assertion of rights in the property and are therefore not extinguished based on
the expiration of the redemption period. However, these claims must also be dismissed for
failure to state a claim.
1. Count 7, 8, 10: Violation of the FDCPA and the MOC; Conspiracy to Violate
the FDCPA and the MOC
The FDCPA only applies to “debt collectors.” See 15 U.S.C. § 1692. According to

9

In any case, Plaintiff would be ineligible for the Home Affordable Modification
Program. Plaintiff obtained his mortgage on November 16, 2009, and one of the eligibility
critera for the program is that the mortgagor obtained his mortgage “on or before January 1,
2009.” Home Affordable Modification Program: Eligibility, Making Home Affordable.gov (last
updated May 28, 2013),
http://www.makinghomeaffordable.gov/programs/lower-payments/Pages/hamp.aspx.
24

the statute, a “debt collector” is “any person who uses any instrumentality of interstate
commerce or the mails in any business the principal purpose of which is the collection of any
debts, or who regularly collects or attempts to collect, directly or indirectly, debts owed or
due or asserted to be owed or due another.” § 1692a(6). Notably, “creditors are not subject
to the FDCPA when collecting their accounts.” Montgomery v. Huntington Bank, 346 F.3d
693, 699 (6th Cir. 2003); see also Partlow v. Aurora Loan Servs., L.L.C., No. 11-12940,
2012 WL 12766, at *5 (E.D. Mich. Jan. 4, 2012) (“It is well settled that the provisions of the
FDCPA apply only to professional debt collectors, not creditors or mortgagors.”).
While Plaintiff alleges that Bank of America is a “debt collector” (Compl. ¶ 172), this
allegation is patently untrue according to the statutory definition. First Place Bank, the owner
of Plaintiff’s debt, assigned its interest in the debt to MERS who then assigned the interest
to Bank of America. As previously discussed, Plaintiff’s argument that these assignments
were fraudulent is frivolous. Accordingly, Plaintiff’s debt was owed directly to Bank of
America, and Bank of America is a creditor/mortgagor not subject to the FDCPA.10
The MOC similarly applies only to a “collection agency,” which is defined as “a
person directly or indirectly engaged in soliciting a claim for collection or collecting or
attempting to collect a claim owed or due or asserted to be owed or due another[.]” Mich.

10

There is an exception for creditors who use names other than their own to collect on
their debts. See § 1692a(6). There is no allegation that Bank of America did this. The Sixth
Circuit has also held that the term “debt collector” includes “any non-originating debt holder that
either acquired a debt in default or has treated the debt as if it were in default at the time of
acquisition.” Bridge v. Ocwen Fed. Bank, FSB, 681 F.3d 355, 362 (6th Cir. 2012). Plaintiff has
not alleged that Bank of America acquired its interest after Plaintiff was in default.
25

Comp. Laws § 339.901(b). Importantly, “[c]ollection agency does not include a person
whose collection activities are confined and are directly related to the operation of a business
other than that of a collection agency such as . . . [a] state or nationally chartered bank when
collecting its own claims.” § 339.901(b)(ii). Because Bank of America’s actions here were
as owner of the indebtedness and confined to the operation of its business as a loan servicer,
the MOC is inapplicable.
Accordingly, Counts 7, 8, and 10 will be dismissed.
2. Count 11: Accounting
Plaintiff seeks an accounting because Defendants have “fraudulently inflated the
amount required to be paid by Plaintiff each month, have failed and/or refused to properly
credit payments to his account, and have fraudulently inserted phantom charges to his
account.” (Compl. ¶ 190.) Plaintiff cannot bring such an accounting claim. An accounting
“is an extraordinary remedy, and like other equitable remedies, is available only when legal
remedies are inadequate.” Bradshaw v. Thompson, 454 F.2d 75, 79 (6th Cir. 1972). “The
burden of proof is on plaintiff to show the inadequacy of the legal remedy” and “Michigan
courts have long held that an accounting in equity is unnecessary where discovery is
sufficient to determine the amounts at issue.” Wilson v. Cont’l Dev. Co., 112 F. Supp. 2d
648, 663 (W.D. Mich. 1999) (Bell, J.). “The law is clear that an ‘accounting may not be had
where the action is for a specific sum due under a contract.’” Barkho v. Homecomings Fin.,
LLC, 657 F. Supp. 2d 857, 865 (E.D. Mich. 2009) (quoting Brown v. Brodsky, 81 N.W.2d

26

363, 366 (Mich. 1957)). In Barkho, the court dismissed a claim for an accounting similar to
Plaintiff’s claim:
Here, the Plaintiff’s claims are based entirely on the amount due under the
mortgage note which, in essence, is a contract between the parties. In addition,
the Plaintiff’s complaint does not support an inference that the transaction at
issue is so complex that ordinary discovery procedures would be inadequate
to discern the amount in controversy. Without a showing of the necessity of
invoking the equitable jurisdiction of the Court to order an accounting, this
claim must be dismissed.
Id.; see also Yaldu v. Bank of Am. Corp., 700 F. Supp. 2d 832, 847 (E.D. Mich. 2010) (“An
accounting is not available where the action is for specific amount due under the contract.”);
West v. Wells Fargo Bank, N.A., No. 2:12–cv–13572, 2013 WL 3213269, at *6 (E.D. Mich.
June 26, 2013) (“[A]n accounting is an extraordinary, equitable remedy that is not permitted
when a remedy at law is available and, moreover, is inappropriate in cases regarding amounts
due under a contract, such as a note or mortgage.”); Colbert v. Fed. Nat’l Mortg, Ass’n, No.
12–13844, 2013 WL 1629305, at *13 (E.D. Mich. Apr. 16, 2013) (“Because the sums due
under a mortgage and note can be determined by the parties’ contractual agreement, an
accounting is unavailable.”).
Because Plaintiff’s claim for an accounting seeks a determination of the amount owed
under his mortgage loan, he has adequate legal remedies and the claim must be dismissed.

27

IV.
For the reasons stated above, Bank of America’s motion to dismiss will be granted,
and Plaintiff’s complaint will be dismissed in its entirety.

Dated: July 11, 2013

/s/ Robert Holmes Bell
ROBERT HOLMES BELL
UNITED STATES DISTRICT JUDGE

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