Kloss v. RBS Citizens, N.A.

• Decision Date: 06 February 2014
• Docket Number: Case No. 13–12833.
• Citation: 996 F.Supp.2d 574
• Parties: Alfred R. KLOSS Diana C. Kloss, Plaintiffs, v. RBS CITIZENS, N.A., Successor in Interest to CCO Mortgage Corp., Defendant.
• Court: U.S. District Court — Eastern District of Michigan

996 F.Supp.2d 574

Alfred R. KLOSS Diana C. Kloss, Plaintiffs,

v.RBS CITIZENS, N.A., Successor in Interest to CCO Mortgage Corp., Defendant.

Case No. 13–12833.

United States District Court,

E.D. Michigan,

Northern Division.

Feb. 6, 2014.

Alfred R. Kloss, Birch Run Township, MI, pro se.

Diana C. Kloss, Birch Run Township, MI, pro se.

Jeffrey E. Ammons, Salina M. Hamilton, Scott A. Petz, Dickinson Wright, Detroit, MI, for Defendant.

Alfred R. Kloss, Birch Run Township, MI, pro se.

Diana C. Kloss, Birch Run Township, MI, pro se.

Jeffrey E. Ammons, Salina M. Hamilton, Scott A. Petz, Dickinson Wright, Detroit, MI, for Defendant.

OPINION AND ORDER OVERRULING PLAINTIFFS' OBJECTIONS, ADOPTING MAGISTRATE'S REPORT AND RECOMMENDATION, GRANTING DEFENDANT'S MOTION TO DISMISS THE COMPLAINT, DENYING PLAINTIFFS' MOTION FOR A PRELIMINARY INJUNCTION, AND DENYING PLAINTIFFS' MOTION FOR RECONSIDERATION

THOMAS L. LUDINGTON, District Judge.

Plaintiffs Alfred R. Kloss and Diana C. Kloss commenced this case against Defendant RBS Citizens N.A., successor in interest to CCO Mortgage Corp. They allege that Defendant has improperly foreclosed upon and taken title to their home.

Plaintiffs filed their complaint on June 28, 2013, followed by a motion for a preliminary injunction on July 11. On July 15, the Court referred the case to United States Magistrate Judge Charles Binder for general case management. Four days later, Defendant filed a motion to dismiss. Plaintiffs responded to the motion on August 16, and Defendant replied on September 6.

On September 18, 2013, Judge Binder issued a report recommending that the Court grant Defendant's motion to dismiss Plaintiffs' complaint and deny Plaintiffs' motion for a preliminary injunction. See Report & Rec., ECF No. 15. Plaintiffs were given fourteen days to file any objections to the report, which they did. In addition to their objections, Plaintiffs assert that their right to due process and their right to a jury trial have been violated by this Court. Furthermore, Plaintiffs request that the “final judgment of this Court should be vacated under [Federal Rules of Civil Procedure] Rule 60(B).” Pls.' Objs. Report & Rec. 15, ECF No. 17.

The Court reviews Judge Binder's report and recommendation de novo. SeeFed.R.Civ.P. 72(b)(3). Upon review, Judge Binder correctly determined that because the statutory redemption period has expired, Plaintiffs no longer have any interest in the property and may not make any claims related to the property. Judge Binder was also correct in that Plaintiffs have failed to meet the high bar set by state law for extending the statutory redemption period, and that even if Plaintiffs could make any claims against Defendant, they have failed to state any claims upon which the Court could grant relief. In addition, Judge Binder's other conclusions—that the Court should grant Defendant's motion to dismiss and that the Court should deny Plaintiffs' motion for a preliminary injunction—are sound. Accordingly, the Court will overrule Plaintiffs' objections, adopt Judge Binder's report and recommendation, grant Defendant's motion to dismiss, and deny Plaintiffs' motion for a preliminary injunction. Furthermore, the Court finds that Plaintiffs' right to due process and right to a jury trial were not violated. Finally, because Plaintiffs' motion for reconsideration comes before there is a final judgment, the motion is premature and will be denied.

I

Plaintiffs' property is located at 7273 Birch Run Road in Birch Run Township, Michigan. Pls.' Compl. Ex. B at 4, ECF No. 1. On October 21, 2005, Plaintiffs entered into a mortgage and executed a promissory note with CCO Mortgage Corp. for $825,000. Def.'s Mot. Dismiss Exs. 1, 2, ECF No. 9. On September 1, 2007, Defendant became the successor to CCO Mortgage Corp. through a merger of various banking institutions. Def.'s Mot. Dismiss Ex. 3.

Plaintiffs defaulted, foreclosure by advertisement proceedings were commenced, and Defendant purchased the subject property on January 27, 2012. Def.'s Mot. Dismiss at 12, Ex. 4 at 1. The one-year statutory redemption period expired on January 27, 2013, without Plaintiffs' having redeemed the property.

On February 19, 2013, Defendant filed an action in the 70th District Court for the State of Michigan to gain possession of the subject property. Def.'s Mot. Dismiss Ex. 5. After a hearing, the 70th District Court entered a judgment of possession in favor of Defendant. Def.'s Mot. Dismiss Ex. 6. On March 5, Plaintiffs appealed to the 10th Circuit Court for the State of Michigan, i.e., the Saginaw County Circuit Court, and on that same day, the court stayed the judgment of possession. Def.'s Mot. Dismiss at 13, Exs. 7–9.

On March 6, 2013, Plaintiffs filed a complaint in this Court. E.D. Mich. Case No. 1:13–cv–11025. The following month, Plaintiffs filed a similar action in the Saginaw County Circuit Court, which Defendant removed to this Court. E.D. Mich. Case No. 1:13–cv–11903. The actions were consolidated on May 13, 2013, by stipulation and later dismissed without prejudice. Def.'s Mot. Dismiss 14. Therefore, this action is the only action between the parties regarding this subject property.

II

The standard of review applicable to a magistrate judge's report and recommendation depends on whether a party files objections. The Court need not review portions of a report to which a party does not object. Thomas v. Arn, 474 U.S. 140, 150, 106 S.Ct. 466, 88 L.Ed.2d 435 (1985). The Court, however, “must determine de novo any part of the magistrate judge's disposition that has been properly objected to. The district judge may accept, reject, or modify the recommended disposition; receive further evidence; or return the matter to the magistrate judge with instructions.” Fed.R.Civ.P. 72(b)(3). De novo review requires at least a review of the evidence before the magistrate judge; the Court may not act solely on the basis of a magistrate judge's report and recommendation. See Hill v. Duriron Co., 656 F.2d 1208, 1215 (6th Cir.1981). If the Court accepts a report and recommendation, the Court is not required to state with specificity what it reviewed; it is sufficient for the Court to state that it engaged in a de novo review of the record. Lardie v. Birkett, 221 F.Supp.2d 806, 807 (E.D.Mich.2002).

Overly broad objections do not satisfy the objections requirement. Spencer v. Bouchard, 449 F.3d 721, 725 (6th Cir.2006), abrogated on other grounds by Jones v. Bock, 549 U.S. 199, 127 S.Ct. 910, 166 L.Ed.2d 798 (2007). The objections must be clear enough that the Court can “discern those issues that are dispositive and contentious.” Id. Objections that merely challenge the correctness of the magistrate's recommendation but fail to specify what findings were erroneous are insufficient. Id.

In addition, parties may not add new claims in an objection to a report and recommendation: “[W]hile the Magistrate Judge Act, 28 U.S.C. § 631 et seq., permits de novo review by the district court if timely objections are filed, ... it does not allow parties to raise at the district court stage new arguments or issues that were not presented to the magistrate.” Murr v. United States, 200 F.3d 895, 902 n. 1 (6th Cir.2000).

Federal Rule of Civil Procedure 12(b)(6) requires the Court to dismiss a complaint if it “fail[s] to state a claim upon which relief can be granted....” In deciding such a motion to dismiss, the Court must treat all well-pleaded allegations in the complaint as true and draw all reasonable inferences from those allegations in favor of the nonmoving party. Lambert v. Hartman, 517 F.3d 433, 439 (6th Cir.2008). “Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (citing Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)). “A claim survives this motion where its factual allegations are enough to raise a right to relief above the speculative level on the assumption that all of the complaint's allegations are true.” Zaluski v. United Am. Healthcare Corp., 527 F.3d 564, 570 (6th Cir.2008) (citing Twombly, 550 U.S. at 555, 127 S.Ct. 1955) (internal quotation marks omitted) (alterations omitted). Although it must accept well-pleaded facts as true, the Court is not required to accept a plaintiff's legal conclusions. Iqbal, 556 U.S. at 678, 129 S.Ct. 1937 (noting “the tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions”).

If parties present matters outside of the pleadings to the Court in a Rule 12(b)(6) motion, under Rule 12(d), the motion must be treated as a Rule 56 motion for summary judgment. However, documents attached to a motion to dismiss that are referred to in the complaint and central to the claims are deemed to form part of the pleadings. Greenberg v. Life Ins. Co. of Va., 177 F.3d 507, 514 (6th Cir.1999); Armengau v. Cline, 7 Fed.Appx. 336, 344 (6th Cir.2001). Furthermore, 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. v. Ill. Union Ins. Co., 508 F.3d 327, 336 (6th Cir.2007).

III

After reviewing Plaintiffs' objections, it appears Plaintiffs have not formally objected to Judge Binder's determination that the statutory redemption period has expired, and thus their interest in the property has been extinguished. However, Plaintiffs challenge the foreclosure on the merits, and so the Court will review their argument that the statutory redemption period should be extended.

Plaintiffs objected to Judge Binder's finding that Defendant is entitled to dismissal of the following claims: those related to the laws against fraud and “dual tracking,” the home affordable mortgage program (HAMP), the law governing real estate mortgage investment conduit (RE...