Shaya v. Countrywide Home Loans, Inc., 052412 FED6, 11-1484

Docket Nº:11-1484
Opinion Judge:QUIST, District Judge.
Party Name:KARMON R. SHAYA, et al., Plaintiffs-Appellants, v. COUNTRYWIDE HOME LOANS, INC., Defendant-Appellee.
Judge Panel:BEFORE: BATCHELDER, Chief Judge; McKEAGUE, Circuit Judge and QUIST, Senior District Judge.
Case Date:May 24, 2012
Court:United States Courts of Appeals, Court of Appeals for the Sixth Circuit

KARMON R. SHAYA, et al., Plaintiffs-Appellants,



No. 11-1484

United States Court of Appeals, Sixth Circuit

May 24, 2012



BEFORE: BATCHELDER, Chief Judge; McKEAGUE, Circuit Judge and QUIST, Senior District Judge.[*]


QUIST, District Judge.


On April 12, 2004, Plaintiff Samira Mansor obtained a mortgage from Defendant, Countrywide Home Loans, Inc. (Countrywide) to purchase a house. Plaintiff Karmon Shaya was added to the title of the house in 2007 and became personally liable for the note as a co-borrower after executing an assumption agreement. Plaintiffs stopped making payments on their loan in 2009. On August 25, 2010, Plaintiffs filed a complaint against only Countrywide, but alleged the following seven counts against Countrywide and non-parties: fraudulent misrepresentation (Defendant Countrywide) (Count I); fraudulent misrepresentation (Defendant Lehman) (Count II); violation of Michigan's Mortgage Broker Act (Count III); breach of contract (Count IV); quiet title (Count V); violation of Michigan's foreclosure statute, M.C.L.A. § 600.3204, et seq. (Count VI); and, injunctive relief (Count VII). Subsequently, Countrywide foreclosed upon Plaintiffs' house and eventually a Sheriff's sale took place on September 24, 2010.

The district court dismissed Plaintiffs' seven-count complaint for failure to state a claim. See Fed. R. Civ. P. 12(b)(6). Plaintiffs timely appealed some of the district court's findings. For the reasons set forth below, we affirm the district court and award Countrywide sanctions against Plaintiffs' counsel.


This Court conducts a de novo review of a district court's order granting a motion to dismiss under Federal Rule of Civil Procedure 12(b). Miller v. Currie, 50 F.3d 373, 377 (6th Cir. 1991). While a complaint need not contain detailed factual allegations, a plaintiff's allegations must include more than labels and conclusions. Bell A. Corp. v. Twombly, 550 U.S. 544, 555 (2007); Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 1949 (2009) ("Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice."). A complaint must contain "enough facts to state a claim to relief that is plausible on its face." Twombly, 550 U.S. at 570.

I. Failure to permit leave to amend

On August 25, 2010, Plaintiffs filed their complaint in Macomb County Circuit Court. On September 29, 2010, Countrywide removed the case to Eastern District of Michigan based on diversity jurisdiction. On October 6, 2010, Countywide filed its motion to dismiss. In the motion to dismiss, Countrywide notified Plaintiffs of numerous egregious errors in the complaint. For example, the complaint referenced "Defendant Lehman" and "Defendant Federal"–two non-parties to the lawsuit. In addition, the complaint cited authority that does not exist. Plaintiffs did not initially respond to the motion to dismiss. In turn, on December 30, 2010, the district court ordered the Plaintiffs to show cause why Countrywide's motion should not be granted. Plaintiffs finally responded on January 7, 2011. Plaintiffs did not address many of the "typographical" errors in the complaint. The district court filed its opinion and order dismissing the complaint on March 22, 2011. Plaintiffs never moved to amend their complaint at any point.

Now, Plaintiffs state that they "never had the opportunity to amend their pleadings to comply with the United State[s] Court Rules before responding to the motion." (Pl.'s Br. at 1.) Had Plaintiffs had the opportunity, they allege, "they would have amended their pleadings to reflect that MERS [Mortgage Electronic Registration Systems, Inc.] had no standing to bring foreclosure by advertisement under Michigan's Foreclosure by Advertisement statute." (Id. at 1-2.) Moreover, Plaintiffs contend that even if their pleadings were insufficient, the district court was bound by law to permit amendment. (Id. at 2-3.)

A party may amend its pleading once as a matter of course within 21 days after serving it, or 21 days after service of a motion under Federal Rule of Civil Procedure 12(b). Fed.R.Civ.P. 15(a)(1). Plaintiffs failed to amend their complaint as a matter of course.

Despite Plaintiffs' failure to amend as a matter of course, under Federal Rule of Civil Procedure 15(a)(2), "a party may amend its pleading only with the opposing party's written consent or the court's leave." Fed.R.Civ.P. 15(a)(2) (emphasis added). Plaintiffs never sought Countrywide's consent to amend nor did Plaintiffs ever move the district court for leave to amend their complaint. So, even though Plaintiffs allege that they "would have amended their pleadings, " they did not. Moreover, even though leave must be freely given, a motion must first be made to the district court. See Fed. R. Civ. P. 15(a)(2). We have noted in the past that "the party requesting leave to amend must act with due diligence if it wants to take advantage of [Rule 38's] liberality." Parry v. Mohawk Motors of Mich., Inc., 236 F.3d 299, 306 (6th Cir. 2000) (internal quotation marks omitted). Never filing a request for leave to amend at all, despite a plethora of chances to do so, is the very antitheses of due diligence.

Therefore, Plaintiffs' allegation that they did not have the opportunity to amend their complaint and that they should have been entitled to amend it as a matter of law is disingenuous and is thus rejected.

II. New claim against MERS

Plaintiffs argue that "MERS did not have standing to bring foreclosure by advertisement." First, MERS is not a party to this lawsuit. Second, Plaintiffs did not make this argument to the district court. Since Plaintiffs did not raise the issue before the district court, they "have waived their right to argue the point on appeal." United States v. Universal Mgmt. Servs., Inc., 191 F.3d 750, 758 (6th Cir. 1999); White v. Anchor Motor Freight, Inc., 899 F.2d 555, 559 (6th Cir. 1990) ("This court will not decide issues or claims not litigated before the district court."). Therefore, Plaintiffs' new claim against MERS is dismissed.

III. Violation of M.C.L.A. § 600.3204, et seq. (Count VI)

Plaintiffs contend that the district court erred by dismissing Count VI of their complaint, which alleges violations of Michigan's foreclosure statute, M.C.L.A. § 600.3204, et seq. Plaintiffs argue that no offer was made to them to enter into a loan modification as required by M.C.L.A. § 600.3205a. Plaintiffs state that they were in the process of modification discussions when the Sheriff's sale was held. (Compl. ¶ 45.) Plaintiffs also allege that the foreclosure notice failed to comply with M.C.L.A. § 600.3205a. (Compl. ¶ 46.)

Count VI only makes allegations against "Defendant Lehman." Countrywide, however, is the only defendant in...

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