Bowden v. American Home Mortg. Servicing, Inc.

• Decision Date: 27 February 2012
• Docket Number: Case No. 10-12972
• Parties: MILDRED BOWDEN, Plaintiff, v. AMERICAN HOME MORTGAGE SERVICING, INC. and DEUTSCHE BANK NATIONAL TRUST COMPANY Defendants.
• Court: U.S. District Court — Eastern District of Michigan

MILDRED BOWDEN, Plaintiff, v. AMERICAN HOME MORTGAGE SERVICING, INC. and DEUTSCHE BANK NATIONAL TRUST COMPANY Defendants.

Case No. 10-12972

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF MICHIGAN SOUTHERN DIVISION

Date: February 27, 2012

Honorable Julian Abele Cook, Jr.

ORDER

This case involves an accusation by the Plaintiff, Mildred Bowden, who contends that the Defendants, American Home Mortgage Servicing, Inc. ("American Home") and Deutsche Bank,¹ violated several federal and state statutes in connection with a mortgage transaction and subsequent foreclosure proceedings relating to her home. Currently before the Court are the Defendants' motions to dismiss Bowden's second amended complaint.

I.

In her complaint, Bowden alleges that she has been the owner of a parcel of real estate on Ilene Street in Detroit, Michigan since April 2005. On January 10, 2007, she executed an adjustable rate promissory note in the amount of $123,700 that was secured by a mortgage which encumberedthe property.² The mortgage lists a non-party, American Brokers Conduit, as the lender, and another non-party, Mortgage Electronic Registration Systems, Inc. ("MERS"), as the mortgagee and nominee of the lender and its successors and assigns. She asserts that Deutsche Bank subsequently became the owner of the mortgage, and that American Home became the mortgage servicer. Bowden ceased making mortgage payments in March 2009, apparently because she could not afford the higher payment that resulted from an automatic interest rate adjustment. In January of the following year, MERS assigned the mortgage to Deutsche Bank. A non-judicial foreclosure was initiated by the publication of a notice of default on May 20, 2010.³ Although the sheriff's safe was scheduled for May 27th, the proceedings were adjourned by American Home to July 29th to permit Bowden to submit a loan modification proposal.

Bowden, through her counsel, submitted a loan modification proposal to American Home on May 24th. However, Bowden alleges that she did not receive a timely response to her loan modification proposal, and therefore she initiated this lawsuit on July 28, 2010 - the day before the rescheduled sheriff's sale. Her complaint was followed by the filing of a first amended complainton January 19, 2011, and a second amended complaint on March 21, 2011.⁴ The second amended complaint sets forth four counts. In Count I, Bowden seeks the entry of a temporary restraining order⁵ and a preliminary and/or permanent injunction that would enjoin the Defendants from conducting the sheriff's sale due to alleged violations of federal and state law. In Count II, she seeks the entry of an order that would direct American Home to respond to her request for a loan modification. Count III is a purported class action against Deutsche Bank in which she seeks declaratory and injunctive relief based upon a claim of racial discrimination and violations of the Fair Housing Act, 42 U.S.C. § 3601 et seq., as well as the Equal Credit Opportunity Act, 15 U.S.C. § 1691 et seq. Finally, Count IV is a purported class action in which she seeks an order that would compel American Home to implement state and federal loan modification laws.

II.

When considering a motion to dismiss under Rule 12(b)(6) of the Federal Rules of Civil Procedure, a district court must accept the plaintiff's well-pleaded allegations as true and construe each of them in a light that is most favorable to it. Bennett v. MIS Corp., 607 F.3d 1076, 1091 (6th Cir. 2010). However, this assumption of truth does not extend to the plaintiff's legal conclusions because "[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice." Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949-50 (2009). The complaint"must contain either direct or inferential allegations respecting all material elements to sustain a recovery under some viable legal theory." Bishop v. Lucent Techs., Inc., 520 F.3d 516, 519 (6th Cir. 2008) (citation and internal quotation marks omitted).

In order to survive an application for dismissal, the complaint must allege "enough facts to state a claim to relief that is plausible on its face." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007). To meet this standard, the "plaintiff [must] plead[ ] factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Iqbal, 129 S. Ct. at 1949. In essence, "[a] pleading that states a claim for relief must contain . . . a short and plain statement of the claim showing that the pleader is entitled to relief." Fed. R. Civ. P. 8(a)(2).

In considering a 12(b)(6) motion, "documents attached to the pleadings become part of the pleading and may be considered." Commercial Money Ctr., Inc. v. Ill. Union Ins. Co., 508 F.3d 327, 335 (6th Cir. 2007) (citing Fed. R. Civ. P. 10(c)); see also Amini v. Oberlin Coll., 259 F.3d 493, 502 (6th Cir. 2001) ("In determining whether to grant a Rule 12(b)(6) motion, the court primarily considers the allegations in the complaint, although matters of public record, orders, items appearing in the record of the case, and exhibits attached to the complaint, also may be taken into account." (emphasis omitted)). Moreover, "documents that a defendant attaches to a motion to dismiss are considered part of the pleadings if they are referred to in the plaintiff's complaint and are central to [the plaintiff's] claim." Weiner, D.P.M. v. Klais & Co., 108 F.3d 86, 88 n.3 (6th Cir. 1997); see also Bassett v. NCAA, 528 F.3d 426, 430 (6th Cir. 2008). Supplemental documents attached to the motion to dismiss do not convert the pleading into one for summary judgment where the documents do not "rebut, challenge, or contradict anything in the plaintiff's complaint." Song v. City of Elyria, 985 F.2d 840, 842 (6th Cir. 1993) (citing Watters v. Pelican Int'l, Inc., 706 F.Supp. 1452, 1457 n.1 (D. Colo. 1989)).

III.

A. American Home's Motion to Dismiss

American Home responded to the second amended complaint with the filing of a motion to dismiss in which it described in detail why - in its opinion - each count of the complaint failed to state a claim upon which relief can be granted. In her response to American Home's dispositive motion, Bowden - with one minor exception - did not respond to the movant's positions, but instead advanced an entirely new theory for recovery. Pointing to Residential Funding, LLC v. Saurman, Nos. 290248, 291443, 2011 WL 1516819 (Mich. Ct. App. Apr. 21, 2011), rev'd, 805 N.W.2d 183 (Mich. 2011), Bowden submits that MERS was without legal authority to commence non-judicial foreclosure proceedings against her because it was not the owner of the mortgage.

In Saurman, the Michigan Court of Appeals had held that MERS did not fall within the categories of entities that could commence a non-judicial foreclosure under Mich. Comp. Laws § 600.3204(1)(d) ("The party foreclosing the mortgage [must be] either the owner of the indebtedness or of an interest in the indebtedness secured by the mortgage or the servicing agent of the mortgage."). Unfortunately for Bowden, even if MERS had initiated the foreclosure while it was still the nominal mortgagee, but see supra n.3, Saurman would nevertheless be unavailing because it was recently reversed by the Michigan Supreme Court, which held that MERS is "the owner . . . of an interest in the indebtedness secured by the mortgage at issue . . . because [its] contractual obligations as mortgagee were dependent upon whether the mortgagor met the obligation to pay the indebtedness which the mortgage secured." 805 N.W.2d at 183 (citation and internal quotation marks omitted).

In any event, the record plainly demonstrates that MERS did not initiate the foreclosure. Either American Home, as the servicer, or Deutsche Bank, as the holder of the note and the mortgagee by assignment from MERS, were clearly permitted, under § 3204(1)(d), to initiate non-judicial foreclosure proceedings.

Bowden makes what can only be described as a half-hearted attempt to respond to American Home's argument that she has failed to state a claim for a violation of Mich. Comp. Laws §§ 600.3204(1) and 600.3205c. The former section provides, in relevant part, that a non-judicial foreclosure may not be commenced if the "mortgagor has requested a meeting under section 3205b with the [foreclosing party's designee for the purposes of loan modification negotiations], the mortgagor has provided documents if requested under section 3205b(2), and the [designee] has not met or negotiated with the mortgagor under this chapter." § 3204(4)(d). Section 3205b(1), in turn, provides that "[a] borrower who wishes to participate in negotiations to attempt to work out a modification of a mortgage loan shall contact a housing counselor from the list provided under section 3205a within 14 days after the list is mailed to the borrower."⁶ Finally, § 600.3205c(8) provides that, if a non-judicial foreclosure is commenced in violation of these (and other) requirements, the borrower may file an action to convert the proceeding into a judicial foreclosure.

American Home acknowledges that § 600.3205c imposes several specific requirements on mortgage servicers. However, it notes that these requirements are only triggered "[i]f a borrower has contacted a housing counselor under section 3205b but the process has not resulted in an agreement to modify the mortgage loan." § 3205c(1). Thus, it argues that, because a necessarytriggering condition in § 3205b - to wit, that the borrower "shall contact a housing counselor" -never occurred, the protections and rights afforded by the statute were not implicated. See Smith v. Bank of Am. Corp., No. 10-14161, 2011 WL 653642, at *7 (E.D. Mich. Feb. 14, 2011) ("[Plaintiffs] have not stated that they contacted a housing counselor and gone through 'the process.' They also have not alleged that they met with a person designated under § 3205a(1)(c...