Gillis v. Wells Fargo Bank, N.A.

• Decision Date: 25 June 2012
• Docket Number: Case No. 12–10734.
• Parties: Maureen GILLIS, Plaintiff, v. WELLS FARGO BANK, N.A., Defendant.
• Court: U.S. District Court — Eastern District of Michigan

875 F.Supp.2d 728

Maureen GILLIS, Plaintiff,

v.WELLS FARGO BANK, N.A., Defendant.

Case No. 12–10734.

United States District Court,

E.D. Michigan,

Southern Division.

June 25, 2012.

Dean D. Elliott, Royal Oak, MI, Kevin S. Ernst, Ernst Law Firm, Detroit, MI, for Plaintiff.

Michael J. Blalock, Dykema Gossett, Bloomfield Hills, MI, Brandon M. Blazo, Dykema Gossett, Detroit, MI, for Defendant.

OPINION AND ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT'S MOTION TO DISMISS

PATRICK J. DUGGAN, District Judge.

On January 25, 2012, Plaintiff Maureen Gillis (“Ms. Gillis”) initiated this action against Defendant Wells Fargo Bank, N.A. (“Wells Fargo”) in the Circuit Court for Wayne County, Michigan. In her Complaint, Ms. Gillis alleges the following state law claims against Wells Fargo: (1) conversion; (2) fraud; (3) negligent misrepresentation; (4) innocent misrepresentation; and (5) breach of contract. Wells Fargo removed the Complaint to federal court based on diversity jurisdiction on February 17, 2012. Presently before the Court is Wells Fargo's motion to dismiss filed pursuant to Federal Rules of Civil Procedure 12(b)(1), 12(b)(6), and 9(b) on February 24, 2012. Both parties received extensions of time to file subsequent pleadings in response to and in support of the motion. The motion now is fully briefed and the Court held a motion hearing on June 21, 2012.

I. Applicable Standards¹

As an initial matter, both parties submit documents in support of their pleadings that were not attached to Plaintiff's Complaint. Nevertheless, the Court is not converting Wells Fargo's motion to dismiss as one for summary judgment. The Sixth Circuit has held:

Rule 12(b) of the Federal Rules of Civil Procedure provides that if “matters outside the pleadings are presented to and not excluded by the court, the motion shall be treated as one for summary judgment and disposed of as provided in Rule 56, and all parties shall be given reasonable opportunity to present all material made pertinent to such a motion by Rule 56.” Under certain circumstances, however, a document that is not formally incorporated by reference or attached to a complaint may still be considered part of the pleadings. This occurs when “a document is referred to in the complaint and is central to the plaintiff's claim....” In such event, “the defendant may submit an authentic copy to the court to be considered on a motion to dismiss, and the court's consideration of the document does not require conversion of the motion to one for summary judgment.”

Greenberg v. Life Ins. Co. of Virginia, 177 F.3d 507, 514 (6th Cir.1999) (internal citations omitted). The documents submitted in support of and in response to Wells Fargo's motion are documents Ms. Gillis refers to in her Complaint and that are central to her claims.

A motion to dismiss pursuant Rule 12(b)(6) tests the legal sufficiency of the complaint. RMI Titanium Co. v. Westinghouse Elec. Corp., 78 F.3d 1125, 1134 (6th Cir.1996). Under Federal Rule of Civil Procedure 8(a)(2), a pleading must contain a “short and plain statement of the claim showing that the pleader is entitled to relief.” To survive a motion to dismiss, a complaint need not contain “detailed factual allegations,” but it must contain more than “labels and conclusions” or “a formulaic recitation of the elements of a cause of action ...” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555, 570, 127 S.Ct. 1955, 1964–65, 1974, 167 L.Ed.2d 929 (2007). A complaint does not “suffice if it tenders ‘naked assertions' devoid of ‘further factual enhancement.’ ” Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009) (quoting Twombly, 550 U.S. at 557, 127 S.Ct. at 1966).

As the Supreme Court provided in Iqbal and Twombly, “[t]o 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.’ ” Id. (quoting Twombly, 550 U.S. at 570, 127 S.Ct. at 1974). “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, 127 S.Ct. at 1965). 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, 127 S.Ct. at 1965.

In deciding whether the plaintiff has set forth a “plausible” claim, the court must accept the factual allegations in the complaint as true. Id.; see also Erickson v. Pardus, 551 U.S. 89, 127 S.Ct. 2197, 2200, 167 L.Ed.2d 1081 (2007). This presumption, however, is not applicable to legal conclusions. Iqbal, 129 S.Ct. at 1949. Therefore, “[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Id. (citing Twombly, 550 U.S. at 555, 127 S.Ct. at 1965–65).

A motion to dismiss pursuant to Rule 9(b) applies to a plaintiff's claim(s) for fraud or mistake. Rule 9(b) provides that “[i]n all averments of fraud or mistake, the circumstances constituting fraud or mistake shall be stated with particularity.” Fed.R.Civ.P. 9(b). To satisfy the requirements of Rule 9(b), the Sixth Circuit “requir[es] a plaintiff, at a minimum, ‘to allege the time, place, and content of the alleged misrepresentation on which he or she relied; the fraudulent scheme; the fraudulent intent of the defendants; and the injury resulting from the fraud.’ ” Coffey v. Foamex LP, 2 F.3d 157, 161–162 (6th Cir.1993) (quoting Ballan v. Upjohn Co., 814 F.Supp. 1375, 1385 (W.D.Mich.1992)). Reviewing the allegations in the plaintiff's complaint, the court must determine whether the plaintiff sufficiently alleges each particularity requirement with regard to each element of his or her fraud or mistake claim(s).

II. Factual Background

This case concerns real property located at 3424 Bishop in Detroit, Michigan (“Property”). On May 12, 2006, Ms. Gillis received a loan in the amount of $103,000 from Home Network Mortgage (“Home Network”) to secure the Property, as reflected in a Promissory Note (“Note”) signed on that date. (Def.'s Mot. Ex. 1.) In exchange for the loan, Ms. Gillis executed a Mortgage on May 12, 2006, which granted a mortgage on the Property to Mortgage Electronic Registration Systems, Inc. (“MERS”). ( Id. Ex. 2.)

The Mortgage provides that the lender may commence foreclosure proceedings against the Property if Ms. Gillis fails to make the monthly payments required under the Note. ( Id. at ¶ 22.) The Mortgage required Ms. Gillis to keep the Property insured against loss by, inter alia, fire. ( Id. ¶ 5.) In accordance with the Mortgage, Ms. Gillis obtained and maintained a homeowners insurance policy through Farm Bureau.

On or about December 13, 2008, the Property caught fire. Thereafter, Ms. Gillis stopped making the monthly payments required under the Note. On February 15, 2009, Wells Fargo (which was servicing the Note) sent a letter to Ms. Willis, notifying her that the loan was in default and that unless she paid $2,927.59 by March 17, 2009, the loan would be accelerated. (Def.'s Mot. Ex. 3.) On some date prior to March 2010, Farm Bureau sent a check to Ms. Gillis for $70,547.00 to cover the fire damage. The check was payable to Ms. Gillis and Wells Fargo.

At the time of the fire, Ms. Gillis owed approximately $100,000.00 on the Note. (Compl. ¶ 10.) Some time after the fire but before March 8, 2010, Ms. Gillis approached Wells Fargo to determine if it would accept the insurance proceeds as payment in full of the amount owed on the Note. ( Id. ¶ 11.)

Ms. Gillis alleges that “Wells Fargo, through its agents, represented to [her], verbally and in writing, that if she endorsed the insurance check and released it to [Wells Fargo], it would release its lien and mortgage against the subject property and release [Ms. Willis] from any further obligation thereunder.” (Compl. ¶ 12.) Ms. Gillis further alleges that Wells Fargo represented to her “that the short pay process had been approved by Fannie Mae, that it would take a few weeks to process the short pay and that thereafter [Wells Fargo]'s lien would be released, at which point, [Ms. Gillis] could obtain the release documents from the register of deeds, and would be free to use or dispose of the [P]roperty as she wanted.” ( Id. ¶ 16.) In response to Wells Fargo's motion, Ms. Gillis submits a letter to her from Lauren Copeland (“Ms. Copeland”), a Wells Fargo Loan Servicing Specialist, answering questions concerning this “short payoff process.” (Pl.'s Resp. Ex. 1; see also Ex. 2.) The letter is signed by Ms. Copeland. ( Id. Ex. 1.) Ms. Gillis further submits e-mails she received from Ms. Copeland, in which Ms. Copeland makes the statements alleged by Ms. Gillis in her Complaint ( Id. Ex. 2.)

In her letter, Ms. Copeland begins by answering Ms. Gillis' question as to what it means to short pay a loan: “The investor accepts funds as satisfaction of the debt. Basically they are accepting your insurance funds and they will call this satisfaction of the mortgage debt.” (Pl.'s Resp. Ex. 1.) In response to Ms. Gillis' question as to who owns the home after the transaction, Ms. Copeland writes: “The lien will be released and you will own the property. To obtain the lien papers you can go to the county and they can provide this.” ( Id.) Ms. Copeland also provides Ms. Gillis with information as to where Ms. Gillis should overnight the check from Farm Bureau. ( Id.)

Ms. Gillis alleges that, based on Wells Fargo's representations, she endorsed Farm Bureau's check and mailed it as instructed to Wells Fargo on or about March 10, 2010. (Compl. ¶ 17.) In e-mails, Ms. Copeland informs Ms. Gillis that once the check is received, she will start the short pay process. ( See Pl.'s Resp. Ex. 2 at 1 and 2 [3/10/10 email at 12:08 pm; 3/...