Garrow v. Jpmorgan Chase Bank, N.A.
| Decision Date | 27 April 2016 |
| Docket Number | Civil Action No. 15-14058 |
| Parties | TARA GARROW, f/k/a TARA CLEMENS, Plaintiff, v. JPMORGAN CHASE BANK, N.A., Defendant. |
| Court | U.S. District Court — Eastern District of Michigan |
Honorable Sean F. Cox
Plaintiff Tara Garrow ("Garrow") commenced this action against JPMorgan Chase Bank, N.A. ("JPM") seeking to invalidate the sheriff's sale of her property, to compel JPM to negotiate a loan modification, and money damages. [1]. Before the Court is JPM's motion to dismiss the complaint. [5]. Garrow filed a response, to which JPM filed a reply. [7, 8]. The motion has been referred to this Court for a Report and Recommendation pursuant to 28 U.S.C. § 636(b)(1)(B). [6]. The Court conducted a hearing on this matter on April 4, 2016. For the following reasons, the Court RECOMMENDS that JPM's motion [5] be GRANTED.
On November 30, 2009, Garrow and her then husband, Richard Clemens ("Clemens"), executed a warranty deed for their property located at 413 Holland in Flushing, Michigan (the "property"). [1, Ex. A at Pg ID 37].1 On October 22, 2010, Garrow and Clemens executed a mortgage loan with Cason Home Loans ("Cason") for $104,000. [5, Ex. A at Pg ID 150]. This mortgage was secured by the same property. [Id. at Pg ID 149]. The mortgage listed Mortgage Electronic Registration Systems, Inc. ("MERS") as Cason's nominee and indicated that MERS would act as the mortgagee on behalf of Cason and its successors and assigns. [Id.]. The mortgage was duly recorded in the Genesee County Register of Deeds and provided that the mortgagee could sell the property in the event of a default on the mortgage. [Id. at Pg ID 164]. MERS assigned the mortgage to JPM on November 19, 2014. [Id., Ex. B]. The assignment was duly recorded in the Genesee County Register of Deeds on November 25, 2014. [Id.].2
After scheduled loan payments were not made, JPM mailed a notice of default datedJanuary 8, 2015, to the property.3 [1 at ¶ 16; 5, Ex. D at Pg IDS 178-83]. The default was not cured, and JPM commenced foreclosure proceedings by advertisement. [5, Ex. C at Pg IDs 172-73]. On April 22, 2015, JPM purchased the property at a sheriff's sale in the amount of $82,500. [Id. at Pg IDs 170-71]. The sheriff's deed was duly recorded in the Genesee County Register of Deeds on May 7, 2015. [Id. at Pg ID 170]. Garrow failed to redeem the property within the six-month statutory redemption period, which expired on October 23, 2015. [Id. at Pg ID 174].
Garrow filed the instant complaint on October 28, 2015, in Genesee County Circuit Court asserting causes of action for: (I) wrongful foreclosure under Michigan law, the Real Estate Settlement Procedures Act ("RESPA"), and the Truth in Lending Act ("TILA"); (II) breach of contract; (III) fraudulent representation; (IV) slander of title; (V) "declaratory relief/foreclosure barred by unclean hands"; (VI) injunctive relief; and (VII) "request for equitable mortgage and/or for conversion to judicial foreclosure under MCL 600.3101, et seq." [1, Ex. A]. She later obtained a temporary restraining order ("TRO") on November 2, 2015 "staying the expiration of the redemption period . . ." . The state court set the TRO for a show cause hearing on November 23, 2015.4 [1, Ex. C at Pg ID 88]. In the interim, JPM timelyremoved the matter to the United States District Court for the Eastern District of Michigan on November 19, 2015. [1].
In its motion to dismiss the complaint, JPM argues that: (1) Garrow does not allege sufficient fraud or irregularities in the foreclosure process to invalidate the sheriff's sale; (2) Garrow fails to adequately allege that she was prejudiced by the asserted fraud or irregularities; (3) Garrow cannot invalidate the sheriff's sale under RESPA because the statute does not provide for equitable remedies; (4) Garrow is not entitled to any relief under RESPA because she did not allege that she suffered actual damages resulting from JPM's purported statutory violation; (5) the breach of contract claim lacks merit because JPM complied with the mortgage terms by sending Garrow the January 8, 2015 notice of default prior to commencing foreclosure proceedings; (6) to the extent Garrow alleges that JPM breached the implied covenant of good faith and fair dealing, her claim lacks merit because Michigan law does not recognize this cause of action; (7) Garrow fails to plead her fraud claim with the requisite particularity under Fed. R. Civ. P. 9(b); (8) the slander of title claim should be dismissed because there are no allegations in the complaint supporting the elements of falsity or malice; (9) Garrow may not rely on the unclean-hands doctrine to obtain a declaratory judgment; (10) Garrow is not entitled to injunctive relief because she failed to demonstrate a likelihood of success on the merits and irreparable harm; and (11) Garrow's request for an equitable mortgage is futile because a properly executed mortgage already exists.
A motion to dismiss pursuant to Fed. R. Civ. P. 12(b)(6) tests a complaint's legal sufficiency. "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.'" Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. (citing Twombly, 550 U.S. at 556). The plausibility standard "does not impose a probability requirement at the pleading stage; it simply calls for enough facts to raise a reasonable expectation that discovery will reveal evidence of illegal [conduct]." Twombly, 550 U.S. at 556. Put another way, the complaint's allegations "must do more than create speculation or suspicion of a legally cognizable cause of action; they must show entitlement to relief." League of United Latin Am. Citizens v. Bredesen, 500 F.3d 523, 527 (6th Cir. 2007) (emphasis in original) (citing Twombly, 550 U.S. at 555-56).
In deciding whether a plaintiff has set forth a "plausible" claim, a reviewing court must accept the factual allegations in the complaint as true. Id.; see also Erickson v. Pardus, 551 U.S. 89, 94 (2007). This tenet, however, to prevent a complaint from being dismissed on grounds that it fails to sufficiently comport with basic pleading requirements. Iqbal, 556 U.S. at 678; see also Twombly, 550 U.S. at 555; Howard v. City of Girard, Ohio, 346 F. App'x 49, 51 (6th Cir. 2009). Furthermore, a court is not required to "create a claim which [a plaintiff] has not spelled out in his pleading." Clark v. Nat'l Travelers Life Ins. Co., 518 F.2d 1167, 1169 (6th Cir. 1975). Ultimately, "[d]etermining whether a complaint states a plausible claim for relief will . . . be a context-specific task that requires the reviewing court to draw on its judicial experience and common sense." Iqbal, 556 U.S. at 679. B. Analysis
Although Garrow broadly denominates her first cause of action as a claim for "wrongful foreclosure," she actually alleges that JPM violated several state and federal laws - Mich. Comp. Laws § 600.3201, et seq., RESPA, and TILA. According to Garrow, JPM ran afoul of these statutes by: (1) failing to provide her with a notice of default; (2) initiating foreclosure proceedings while Garrow was allegedly being considered for foreclosure alternatives; (3) failing to inform Garrow of all of the foreclosure alternatives available to her; (4) declining to provide Garrow with access to loan servicing personnel; (5) failing to properly calculate the amount claimed to be due on the date of the notice of foreclosure; (6) failing to notify Garrow that Cason had assigned her mortgage to JPM; and (7) failing to inform Garrow that loan servicer had been changed. [1, Ex. A at ¶¶ 47-80].
In Michigan, non-judicial foreclosures, or foreclosures by advertisement, are governed by statute. See Mich. Comp. Laws § 600.3204; Senters v. Ottawa Sav. Bank, FSB, 443 Mich. 45, 50 (1993). Statutory authority not only governs the process for foreclosure, but also the parties' rights subsequent to the sale of the property. See Dingman v. OneWest Bank, FSB, No. 11-15706, 2012 U.S. Dist. LEXIS 34668, at *9 (E.D. Mich. Mar. 14, 2012); see also Conlin v. Mortgage Elec. Registration Sys., 714 F.3d 355, 359 (6th Cir. 2013) (citation omitted) ("While the statutory scheme provides certain steps that the mortgagee must go through in order to validly foreclose . . . it also controls the rights of both the mortgagee and the mortgagor once the sale is completed."). A mortgagor generally has six months after the date of the sheriff's sale to redeem his property. Mich. Comp. Laws § 600.3240(8). After that point (or whatever redemptionperiod applies), the mortgagor's "right, title, and interest in and to the property" are extinguished. Piotrowski v. State Land Office Bd., 302 Mich. 179, 187 (1942); see also Conlin, 714 F.3d at 359; Mich. Comp. Laws § 600.3236. Michigan courts have held that once the redemption period has expired, a property owner may challenge a foreclosure sale only by making "a clear showing of fraud, or irregularity." Schulthies v. Barron, 16 Mich. App. 246, 248 (1969). Furthermore, such fraud or irregularity "must relate to the foreclosure procedure itself." El-Seblani v. Indymac Mortg. Servs., No. 12-1046, 2013 U.S. App. LEXIS 635, *10 (6th Cir. Jan. 7, 2013). This standard is a high one. Conlin, 714 F.3d at 360. "The Michigan Supreme Court has held that it...
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