Keyes v. Deutsche Bank Nat'l Trust Co.

• Decision Date: 05 February 2013
• Docket Number: Case No. 12–11619.
• Citation: 921 F.Supp.2d 749
• Parties: Christopher R. KEYES and Rose Keyes, Plaintiffs, v. DEUTSCHE BANK NATIONAL TRUST COMPANY, as Trustee for HSI Asset Securitization Corporation Trust 2007–NCI, and Bank of America, N.A., Defendants.
• Court: U.S. District Court — Eastern District of Michigan

921 F.Supp.2d 749

Christopher R. KEYES and Rose Keyes, Plaintiffs,

v.DEUTSCHE BANK NATIONAL TRUST COMPANY, as Trustee for HSI Asset Securitization Corporation Trust 2007–NCI, and Bank of America, N.A., Defendants.

Case No. 12–11619.

United States District Court,

E.D. Michigan,

Southern Division.

Feb. 5, 2013.

Brian P. Parker, Charles N. DeGryse, CollectionStopper.Com Law Offices, Bingham Farms, MI, for Plaintiffs.

David G. Michael, Maddin Hauser Wartell Roth & Heller PC, Southfield, MI, for Defendants.

OPINION AND ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS' MOTION FOR JUDGMENT ON THE PLEADINGS

DAVID M. LAWSON, District Judge.

Before the Court is the defendants' motion for judgment on the pleadings in this mortgage foreclosure case. The plaintiffs ceased making mortgage payments in July 2009, and foreclosure was initiated in early 2010. The foreclosure sale apparently has not yet occurred. The plaintiffs brought suit in state court on March 20, 2012, and the defendants removed the case to this Court and thereafter filed their motion. The Court heard oral argument on the motion on January 10, 2013.

The plaintiffs' complaint is in large part based on their contention that the assignment of the mortgage to defendant Deutsche Bank was invalid. The plaintiffs also allege that defendant Bank of America has been acting as servicer of the mortgage loan without authorization and that the commencement of foreclosure proceedings was wrongful. For the reasons discussed below, the Court finds that the plaintiff has not stated viable claims in any of the counts of their complaint except count III—conversion—against defendant Bank of America. The Court will grant the defendants' motion in part, dismiss all claims against defendant Deutsche Bank, and dismiss all claims against defendant Bank of America except count III.

I.

The following facts are taken from the plaintiffs' complaint and the documents referenced therein. The plaintiffs live at the subject property, 8444 Jack Pine Drive, Ypsilanti, Michigan. When they purchased the property on December 15, 2006, they signed a promissory note with New Century Mortgage Corporation and a mortgage naming Mortgage Electronic Registration System (MERS) as the mortgagee in a nominee capacity for the lender. New Century then sold the note to a “special purpose vehicle” (SPV) designated as a Real Estate Mortgage Investment Conduit (REMIC) trust, which was named the HIS Asset Securitization Corporation Trust 2007–NCI (the Trust), of which defendant Deutsche Bank is the trustee. The plaintiffs were not notified of that transfer.

In July 2009, the plaintiffs requested that defendant Bank of America prove that it had the right to collect payments on the plaintiffs' note. Not receiving a response, the plaintiffs stopped making payments. On November 18, 2010, MERS assigned the mortgage to defendant Deutsche Bank. Trott & Trott began foreclosure proceedings at some point in early 2010. Trott & Trott identified defendant Bank of America as the loan servicer in a letter to the plaintiffs dated January 23, 2012, although it is not clear how that came to be. The complaint does not allege that a foreclosure sale actually has occurred, and the prayer for relief requests that the defendants be enjoined from seeking foreclosure.

The plaintiffs filed their complaint in state court on March 20, 2012. The complaint contains claims for wrongful foreclosure, breach of contract, conversion, slander of title, quiet title, civil conspiracy, and a count entitled “mortgage is unenforceable; Deutsche is not the true party in interest and may not foreclose.” The plaintiffs allege that Trott & Trott was acting on behalf of the servicer, Bank of America, and that because Bank of America never acquired the mortgage it violated Michigan Compiled Laws § 600.3204(3). The plaintiffs allege that the assignment to the Trust violated Michigan Compiled Laws § 555.5 and is invalid as a matter of law and also that the assignment was invalid because the Trust is prohibited from taking assets beyond its closing date. The plaintiffs also allege that the note and mortgage must be sold together; otherwise, notice to the borrower is required. The plaintiffs allege that Bank of America had no right to receive payments from the plaintiffs because it did not have a servicing agreement with the Trust.

The defendants removed the case to this Court on April 10, 2012. On June 11, 2012, the Court entered a stipulated order dismissing the complaint without prejudice as to defendant Trott & Trott. Thereafter, the remaining defendants, Deutsche Bank and Bank of America, filed a motion for judgment on the pleadings. The plaintiffs responded and the defendants replied. The Court heard oral argument on January 10, 2013.

II.

A motion for judgment on the pleadings under Federal Rule of Civil Procedure 12(c) requires application of the same standards that govern motions to dismiss under Rule 12(b)(6). SeeFed.R.Civ.P. 12(c); Vickers v. Fairfield Med. Ctr., 453 F.3d 757, 761 (6th Cir.2006); Ziegler v. IBP Hog Mkt., Inc., 249 F.3d 509, 511–12 (6th Cir.2001). Rule 12(b)(6) authorizes dismissal for “failure to state a claim upon which relief can be granted.” Fed.R.Civ.P. 12(b)(6). When deciding a motion under that Rule, “[t]he court must construe the complaint in the light most favorable to the plaintiff, accept all factual allegations as true, and determine whether the plaintiff undoubtedly can prove no set of facts in support of his claims that would entitle him to relief.” Cline v. Rogers, 87 F.3d 176, 179 (6th Cir.1996). “[A] judge may not grant a Rule 12(b)(6) motion based on a disbelief of a complaint's factual allegations.” Columbia Nat'l Res., Inc. v. Tatum, 58 F.3d 1101, 1109 (6th Cir.1995). “However, while liberal, this standard of review does require more than the bare assertion of legal conclusions.” Ibid. “To survive a motion to dismiss, [a plaintiff] must plead ‘enough factual matter’ that, when taken as true, ‘state[s] a claim to relief that is plausible on its face.’ Bell Atl. Corp. v. Twombly, 550 U.S. 544, 556, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). Plausibility requires showing more than the ‘sheer possibility’ of relief but less than a ‘probab[le]’ entitlement to relief. Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009).” Fabian v. Fulmer Helmets, Inc., 628 F.3d 278, 280 (6th Cir.2010).

Consideration of a motion to dismiss under Rule 12(b)(6) is confined to the pleadings. Jones v. City of Cincinnati, 521 F.3d 555, 562 (6th Cir.2008). Assessment of the facial sufficiency of the complaint ordinarily must be undertaken without resort to matters outside the pleadings. Wysocki v. Int'l Bus. Mach. Corp., 607 F.3d 1102, 1104 (6th Cir.2010). However, “documents attached to the pleadings become part of the pleadings and may be considered on a motion to dismiss.” Commercial Money Ctr., Inc. v. Illinois Union Ins. Co., 508 F.3d 327, 335 (6th Cir.2007) (citing Fed.R.Civ.P. 10(c)); see also Koubriti v. Convertino, 593 F.3d 459, 463 n. 1 (6th Cir.2010). Even if a document is not attached to a complaint or answer, “when a document is referred to in the pleadings and is integral to the claims, it may be considered without converting a motion to dismiss into one for summary judgment.” Commercial Money Ctr., 508 F.3d at 335–36. Further, where the plaintiff does not refer directly to given documents in the pleadings, if those documents govern the plaintiff's rights and are necessarily incorporated by reference then the motion need not be converted to one for summary judgment. Weiner v. Klais & Co., Inc., 108 F.3d 86, 89 (6th Cir.1997) (holding that plan documents could be incorporated without converting the motion to one for summary judgment even though the complaint referred only to the “plan” and not the accompanying documents). In addition, “[a] court may consider matters of public record in deciding a motion to dismiss without converting the motion to one for summary judgment.” Commercial Money Ctr., Inc., 508 F.3d at 336.

The plaintiffs attached the mortgage, the assignment of mortgage, a notice of foreclosure sale, a letter from Trott & Trott dated January 23, 2012, and a copy of their payment history to the complaint. The defendants attached a copy of the pooling and servicing agreement to their answer. Because these documents were attached to the pleadings, the Court may consider them in deciding the defendants' motion. In addition, the defendants attached the note to their motion for judgment on the pleadings. Because the plaintiffs refer to this document in the complaint and it is integral to the plaintiffs' claims, the Court may also consider it in deciding the defendants' motion.

A. Wrongful Foreclosure

1. Bank of America's alleged violation of the Michigan foreclosure statute

In the first count of the plaintiffs' complaint, the plaintiffs allege that the defendants have violated Michigan Compiled Laws § 600.3204(3). The plaintiffs state that if defendant Bank of America is determined to be the foreclosing party, it never acquired the mortgage. If defendant Deutsche Bank is determined to be the foreclosing party, the assignment of the mortgage was invalid for a number of reasons. Because neither of the defendants can demonstrate that it properly owned the mortgage, the plaintiffs argue, the defendants should be enjoined from foreclosing on the property. Although the plaintiffs' complaint mentions only section 600.3204(3), in their response the plaintiffs also argue that defendant Bank of America violated section 600.3204(1)(d), which is not a theory set out in the pleadings. The plaintiffs also allege that the assignment to the Trust violates Michigan's Statute of Uses, Michigan Compiled Laws § 555.5.

The defendants argue that Michigan law rejects the plaintiffs' note-splitting theory, and they insist that the assignment is valid in all other respects.

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