Karmol v. Ocwen Loan Servicing, LLC
Filing
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OPINION REGARDING MOTION TO DISMISS; signed by Judge Gordon J. Quist (Judge Gordon J. Quist, jmt)
UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
__________________________
MICHAEL KARMOL,
Plaintiff,
v.
Case No. 1:16-CV-1178
OCWEN LOAN SERVICING, LLC,
HON. GORDON J. QUIST
Defendant.
_____________________________/
OPINION REGARDING MOTION TO DISMISS
Plaintiff, Michael Karmol, proceeding pro se, sued Defendant, Ocwen Loan Servicing, LLC,
alleging claims for violation of the Michigan Consumer Protection Act (MCPA), M.C.L. §§
445.901, et seq.; the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. §§
1962 (c) and (c); the Fair Debt Collections Practices Act, 15 U.S.C. § 1692 et seq.; unjust
enrichment; fraud; and breach of contract. Karmol’s claims against Ocwen arise out of Ocwen’s
acts or conduct as the servicer of Karmol’s mortgage.
Ocwen has filed a motion to dismiss all of Karmol’s claims for failure to state a claim.
Karmol has failed to respond within the time allowed under Local Rule 7.2(c). For the following
reasons, the Court will grant Ocwen’s motion and dismiss Karmol’s claims in their entirety with
prejudice.
I. BACKGROUND
The following facts are based on the allegations in the complaint, matters of public record,
and exhibits attached to Ocwen’s motion that are referred to in the complaint.1
On April 22, 2004, Karmol obtained a mortgage loan from GMAC Mortgage Corporation
in the amount of $116,471.00. (ECF No. 1-2.) As security for repayment of the loan, Karmol
granted a mortgage (the Mortgage) to Mortgage Electronic Residential Systems (MERS), as
nominee for GMAC, on real property located at 4531 Don Street, Holt, Michigan 48842. (Id.) The
Mortgage was recorded in the Ingham County Register of Deeds on May 13, 2004. On December
24, 2015, MERS assigned the Mortgage to Ocwen pursuant to a Corporate Assignment of Mortgage.
(Id.) The Corporate Assignment of Mortgage was recorded in the Ingham County Register of
Deeds on January 15, 2016.2 (Id.)
Karmol filed his complaint in this case on September 26, 2016. It appears that Karmol used
a form complaint that he obtained from some source, possibly the internet. The complaint generally
alleges that Ocwen illegally charged late fees, misapplied unspecified payments, mishandled his
escrow account, and charged marked-up fees for default-related services.
(ECF No. 1 at
PageID.2–5.)
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Although a court is normally precluded from considering matters outside of the pleadings in addressing a
motion under Rule 12(b)(6), courts may consider various documents without converting the motion to a motion for
summary judgment. “When a court is presented with a Rule 12(b)(6) motion, it may consider the Complaint and any
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. NCAA, 528 F.3d 426, 430 (6th Cir. 2008) (citation omitted).
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Although not referenced in Karmol’s complaint, Ocwen submits exhibits showing that Karmol filed a
bankruptcy petition on November 8, 2011, and was granted a discharge on February 9, 2012. (ECF No. 6-4.) On April
15, 2016, Karmol filed a motion for sanctions in the bankruptcy court, arguing that Ocwen violated the discharge
injunction by attempting to foreclose on the Mortgage. The bankruptcy denied the motion on May 2, 2016 because the
mortgage lien survived the discharge. (ECF No. 6-5 at PageID.146.)
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II. MOTION STANDARD
Karmol has not responded to the instant motion within the time allowed under Western
District of Michigan Local Rule 7.2(c). Accordingly, the Court may treat Karmol’s failure as an
abandonment or waiver of all of his claims. See Fredericks v. Allquest Home Mortg. Corp., No. 1510429, 2015 WL 1966856, at *2 (E.D. Mich. Apr. 30, 2015) (“The Court first notes that Plaintiff
failed to file a timely response to Defendants’ motion. This alone may be sufficient grounds to grant
it.”); Burke v. Morgan, No. 06-CV-348-JMH, 2009 WL 514314, at *2 (E.D. Ky. Mar. 2, 2009)
(noting that when a plaintiff fails to respond to a motion to dismiss, a court may treat such failure
as a knowing abandonment of the claim). However, the Court has also reviewed Ocwen’s motion
on its merits under the applicable Rule 12(b)(6) motion to dismiss standard, see Abbas v. Bank of
Am. N.A., No. 1:12-CV-607, 2013 WL 1340309, at *2 (W.D. Mich. Mar. 29, 2013), and concludes
that all of Karmol’s claims fail as a matter of law.
III. DISCUSSION
A.
MCPA Claim
In Count I, Karmol alleges that Ocwen violated § 3(1) of the MCPA. This claim fails
because § 4(1)(a) of the MCPA exempts from its coverage “[a] transaction or conduct specifically
authorized under laws administered by a regulatory board or officer acting under statutory authority
of this state or the United States.” Michigan courts have specifically held that residential mortgage
loan transactions fall under this exemption. Newton v. West, 262 Mich. App. 434, 438–39, 686
N.W.2d 491, 193–94 (2004). Therefore, the MCPA claim will be dismissed.
B.
RICO Claims
In Counts II and III, Karmol alleges that Ocwen violated RICO, 18 U.S.C. §§ 1962(c) and
(d). Subsection (c) makes it
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unlawful for any person employed by or associated with any enterprise engaged in,
or the activities of which affect, interstate or foreign commerce, to conduct or
participate, directly or indirectly, in the conduct of such enterprise’s affairs through
a pattern of racketeering activity or collection of unlawful debt.
18 U.S.C. § 1962(c). Subsection (d) makes it unlawful “for any person to conspire to violate any
of the provisions of subsection (a), (b), or (c) of this section.” 18 U.S.C. § 1962(d). To state a RICO
claim, a plaintiff must allege “(1) conduct (2) of an enterprise (3) through a pattern (4) of
racketeering activity.” Sedima, S.P.R.L. v. Imrex Co., Inc., 473 U.S. 479, 496, 105 S. Ct. 3275, 3285
(1985). In addition, a plaintiff must allege that “the RICO enterprise engaged in a ‘pattern of
racketeering activity’ consisting of at least two predicate acts of racketeering activity occurring
within a ten-year period.” Moon v. Harrison Piping Supply, 465 F.3d 719, 723 (6th Cir. 2006).
For his predicate acts, Karmol alleges that Ocwen committed mail and wire fraud, in
violation of 18 U.S.C. §§ 1341 and 1343. Predicate acts based on mail or wire fraud must satisfy
Rule 9(b)’s heightened pleading standard. Heinrich v. Waiting Angels Adoption Servs., Inc., 668
F.3d 393, 404 (6th Cir. 2012). “This rule requires a plaintiff: (1) to specify the allegedly fraudulent
statements; (2) to identify the speaker; (3) to plead when and where the statements were made; and
(4) to explain what made the statements fraudulent.” Republic Bank & Trust Co. v. Bear Stearns
& Co., 683 F.3d 239, 247 (6th Cir. 2012). Karmol’s allegations, which are nothing more than
conclusory statements of fraud, fall far short of meeting the Rule 9(b) standard. Therefore, Counts
II and III are subject to dismissal.
C.
FDCPA Claim
In Count IV, Karmol alleges that Ocwen violated 15 U.S.C. § 1692e, which prohibits debt
collectors from “us[ing] any false, deceptive, or misleading misrepresentation or means in
connection with the collection of any debt.” Karmol alleges that Ocwen “knowingly, affirmatively,
and actively concealed and suppressed material facts, namely that [Ocwen] assessed borrowers’
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accounts for marked-up default-related services. Contrary to Ocwen’s communications, they are
not legally authorized to assess and collect these marked-up fees.” (ECF No. 1 at PageID.50.) Such
conclusory allegations, without any supporting facts as to how Ocwen violated § 1692e—what
misrepresentations were made and when they were made—are insufficient to show “more than a
sheer possibility that [Ocwen] has acted unlawfully.” Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.
Ct. 1937, 1949 (2009). Thus, the FDCPA claim will be dismissed.
D.
Unjust Enrichment
In Count V, Karmol alleges that Ocwen was unjustly enriched by charging marked-up prices
for default-related services. Karmol admits that the mortgage permitted Ocwen to charge for such
services, but he claims that Ocwen was unjustly enriched by overcharging Karmol. (Id. at
PageID.51–52.) Karmol’s unjust enrichment claim fails because “courts will not imply a contract
where there is an express contract governing the same subject matter.” Bowlers’ Alley, Inc. v.
Cincinnati Ins. Co., 32 F. Supp. 2d 824, 833 (E.D. Mich. 2014) (citing Fodale v. Waste Mgmt. of
Mich., Inc., 271 Mich. App. 11, 36, 718 N.W.2d 827, 841 (2006)). Because the mortgage governs
parties’ rights and obligations with regard to the alleged default-related services, Karmol’s unjust
enrichment claim fails.
E.
Fraud
Karmol alleges a claim of fraud in Count VI, based on the same allegations that Ocwen
failed to disclose that it had marked up the fees it charged Karmol for default-related services.
Karmol’s fraud allegations suffer from the same defect as his RICO allegations—failure to comply
with Rule 9(b)’s particularity requirement. According, the fraud claim will be dismissed.
F.
Breach of Contract
To establish a claim for breach of contract, Karmol must allege: (1) the existence of a
contract; and (2) a breach of that contract by the defendant. See Stoken v. J.E.T. Elecs. & Tech.,
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Inc., 174 Mich. App. 457, 463, 436 N.W.2d 389, 392 (1998) (per curiam). Karmol alleges that the
mortgage was his contract with Ocwen, and that Ocwen breached the mortgage agreement “by
misapplying payments submitted by Plaintiff, placing such payments in suspense accounts without
authorization by the mortgage agreements [sic], and assessing late fees not authorized under the
mortgage agreement.” (Id. at PageID.56.) Karmol’s conclusory allegations, unsupported by any
specific facts, such as particular payments that Ocwen misapplied, fail to properly allege a breach
of contract by Ocwen. See Alshaibani v. Litton Loan Servicing, LP, 528 F. App’x 462, 465 (6th Cir.
2013) (“As a practical matter, Plaintiffs’ factually unadorned allegation that Litton misapplied their
payments does no more to render their claim plausible than would a simple legal conclusion that
Litton breached the mortgage.”); Rudley v. Bank of Am. Home Loans Servicing LP, No. 1:11-CV1374, 2013 WL 2407614, at *4 (W.D. Mich. May 31, 2013) (noting that the plaintiff failed to allege
facts showing how or where her payments were misapplied or what provision of the contract the
defendant breached by applying the plaintiff’s payments in the alleged manner). Thus, the breach
of contract claim must be dismissed.
IV. CONCLUSION
For the foregoing reasons, the Court will grant Ocwen’s motion to dismiss and dismiss
Karmol’s complaint.
An Order consistent with this Opinion will be entered.
Dated: December 11, 2016
/s/ Gordon J. Quist
GORDON J. QUIST
UNITED STATES DISTRICT JUDGE
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