Coyer v. HSBC Mortg. Servs., Inc.

Citation701 F.3d 1104
Decision Date13 November 2012
Docket NumberNo. 11–2378.,11–2378.
PartiesJoseph J. COYER; Janet M. Coyer, Plaintiffs–Appellants, v. HSBC MORTGAGE SERVICES, INC., Defendant–Appellee.
CourtUnited States Courts of Appeals. United States Court of Appeals (6th Circuit)

OPINION TEXT STARTS HERE

ON BRIEF:Francis R. Ortiz, Jennifer L. Newby, Dickinson Wright PLLC, Detroit, MI, for Appellee. Joseph J. Coyer, Janet M. Coyer, Pinconning, MI, pro se.

Before: MERRITT, MARTIN, and GILMAN, Circuit Judges.

OPINION

PER CURIAM.

Joseph and Janet Coyer, pro se Michigan residents, appeal a district court order dismissing their civil complaint.

In 2005, the Coyers entered into a mortgage agreement with Option One Mortgage Corporation (Option One) for the purchase of property located in Linwood, Michigan. Later that year, Option One assigned the mortgage to Mortgage Electronic Registration Systems, Inc. (MERS). Subsequently, HSBC Mortgage Services, Inc. (HSBC) purchased the mortgage from MERS. After the Coyers allegedly stopped making payment to HSBC in 2010, HSBC began foreclosure proceedings pursuant to the mortgage contract's “power of sale” clause. The sale was originally scheduled to occur in December 2010.

In October 2010, the Coyers filed a complaint asserting numerous allegations concerning alleged illegal conduct routinely practiced in the mortgage industry. With respect to HSBC, the Coyers argue that HSBC conspired to induce them into a predatory loan agreement. Specifically, the Coyers asserted the following claims: (1) breach of fiduciary duty; (2) negligence/negligence per se; (3) common law fraud; (4) breach of the implied covenant of good faith and fair dealing; (5) violation of the Truth in Lending Act (TILA), 15 U.S.C. § 1601 et seq.; and (6) intentional infliction of emotional distress. The Coyers also filed a motion for preliminary injunction and a motion for a temporary restraining order, seeking to enjoin the sale of their home. HSBC responded. Following a hearing on the motions, a magistrate judge filed a report, recommending that the district court deny the Coyers a temporary restraining order. The district court rejected the Coyers' objections, adopted the magistrate judge's report, and denied their motions. The Coyers filed a motion for reconsideration, arguing, inter alia, that Magistrate Judge Charles Binder should be disqualified from serving as a magistrate judge, pursuant to 28 U.S.C. § 631(c), because he was employed as a faculty member of the United States Air Force Academy's Department of Law. The district court denied their motion for reconsideration as untimely.

HSBC filed a motion to dismiss the complaint. The Coyers filed a response and HSBC filed a reply. The Coyers also filed a motion to amend their complaint. HSBC moved for an order removing the Coyers' common law lien on the property and to enjoin the Coyers from filing any further liens or encumbrances on the property.

The district court construed HSBC's motion to dismiss as a motion for judgment on the pleadings and granted judgment in favor of HSBC. The district court concluded that HSBC was entitled to judgment because: (1) a fiduciary duty does not generally arise within the context of a borrower-lender relationship, and the Coyers failed to allege special circumstances to override the general rule; (2) the Coyers' negligence claim is barred by the applicable three-year statute of limitations and, even if the claim were not barred, HSBC was not involved in any alleged lack of disclosures between the Coyers and Option One; (3) the Coyers' fraud claim also relates to an alleged lack of disclosures made at the time they entered into their mortgage agreement with Option One, and HSBC had no involvement with that transaction; (4) Michigan law does not recognize a claim for breach of the implied covenant of good faith and fair dealing; (5) the Coyers' TILA claim is barred by the applicable one-year statute of limitation, and even if the claim is not barred, HSBC had no involvement with the inception of the Coyers' mortgage with Option One; and (6) the Coyers failed to sufficiently allege a claim for intentional infliction of emotional distress because they did not present evidence that HSBC's actions with respect to the planned foreclosure were so outrageous and extreme as to go beyond all possible bounds of decency. The district court also granted HSBC's motion to remove the Coyers' common law lien, denied the motion to prohibit the Coyers from placing further liens on the property, and denied the Coyers' motion to amend their complaint. After filing their notice of appeal, the Coyers filed a Federal Rule of Civil Procedure 60(b) motion, which the district court denied. The Coyers then filed an amended notice of appeal to include that order.

On appeal, the Coyers reassert their claims that: HSBC breached its fiduciary duty; HSBC is liable for negligence and negligence per se; HSBC committed common law fraud; HSBC breached the implied covenant of good faith and fair dealing; and HSBC violated TILA. The Coyers also argue that the district court erred by failing to: deny HSBC's motion to withdraw the Coyers' common law lien on their property; report that Magistrate Judge Charles Binder was not qualified to serve as a magistrate judge in light of his employment with the USAFA; properly scrutinize HSBC's arguments; grant their motion to amend their complaint by falsely stating that the Coyers did not submit a copy of the proposed amended complaint; and properly review their Rule 60(b) motion.

The Coyers present no arguments on appeal challenging the district court's dismissal of their claim for intentional infliction of emotional distress. Therefore, they have abandoned this claim and we will not review it. See Post v. Bradshaw, 621 F.3d 406, 413–14 (6th Cir.2010), cert. denied,––– U.S. ––––, 131 S.Ct. 2902, 179 L.Ed.2d 1249 (2011); Grace Cmty. Church v. Lenox Twp., 544 F.3d 609, 618 n. 1 (6th Cir.2008).

We review de novo a district court's entry of judgment on the pleadings under Rule 12(c). See Sensations, Inc. v. City of Grand Rapids, 526 F.3d 291, 295 (6th Cir.2008). “For purposes of a motion for judgment on the pleadings, all well-pleaded material allegations of the pleadings of the opposing party must be taken as true, and the motion may be granted only if the moving party is nevertheless clearly entitled to judgment.” Tucker v. Middleburg–Legacy Place, 539 F.3d 545, 549 (6th Cir.2008) (internal quotation marks omitted). “A motion brought pursuant to Rule 12(c) is appropriately granted when no material issue of fact exists and the party making the motion is entitled to judgment as a matter of law.” Id. (citation and internal quotation marks omitted).

The district court properly dismissed the Coyers' claim for breach of fiduciary duty. Under Michigan law, “a fiduciary relationship arises from the reposing of faith, confidence, and trust and the reliance of one on the judgment and advice of another.” See Teadt v. Lutheran Church Mo. Synod, 237 Mich.App. 567, 603 N.W.2d 816, 823 (1999). However, there is generally no fiduciary relationship between a mortgagor and a mortgagee. In re Sallee, 286 F.3d 878, 893 (6th Cir.2002). Here, HSBC purchased the Coyers' mortgage and serviced the mortgage, but the Coyers have not shown that any special circumstances exist to avoid the general rule that such a relationship does not involve fiduciary duties.

The district court also properly dismissed the Coyers' claim for breach of an implied covenant of good faith and fair dealing because “Michigan does not recognize a claim for breach of an implied covenant of good faith and fair dealing....” See Belle Isle Grill Corp. v. City of Detroit, 256 Mich.App. 463, 666 N.W.2d 271, 279 (2003).

The district court properly dismissed the Coyers' negligence and fraud claims. “Under Michigan law, a plaintiff alleging a claim of negligence must demonstrate the following four elements: 1) a duty owed to the plaintiff by the defendant, 2) breach of that duty, 3) causation, and 4) damages.” Brown v. United States, 583 F.3d 916, 920 (6th Cir.2009) (citing Case v. Consumers Power Co., 463 Mich. 1, 6, 615 N.W.2d 17 (2000)). In order to establish a fraud claim, a plaintiff must demonstrate that: (1) the defendant made a material misrepresentation; (2) the representation was false; (3) when the defendant made the representation, the defendant knew that it was false, or made it recklessly, without any knowledge of its truth as a positive assertion; (4) the defendant made the representation with the intention that the plaintiff would act upon it; (5) the plaintiff acted in reliance upon it; and (6) the plaintiff suffered damage.” Bennett v. MIS Corp., 607 F.3d 1076, 1100–01 (6th Cir.2010) (citing Cummins v. Robinson Twp., 283 Mich.App. 677, 770 N.W.2d 421, 435 (2009)).

The Coyers' allegations concerning negligence and fraud relate to statements and misrepresentations made at the time that they entered their mortgage with Option One. However, it is undisputed that HSBC was not a party to that transaction, and that HSBC purchased the mortgage on the secondary market. Therefore, HSBC was not involved in any alleged lack of disclosures between the Coyers and Option One. Although the Coyers now argue that HSBC is...

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