Meyer v. CitiMortgage, Inc.
| Decision Date | 16 February 2012 |
| Docket Number | Case No. 11-13432 |
| Parties | KEVIN MEYER and JULIE MEYER, Plaintiffs, v. CITIMORTGAGE, INC., and FEDERAL HOME LOAN MORTGAGE CORPORATION, Defendants. |
| Court | U.S. District Court — Eastern District of Michigan |
HON. AVERN COHN
This is another of one of many cases pending in this district involving a default on a mortgage and the commencement of foreclosure proceedings. Plaintiffs Kevin Meyer and Julie Meyer are suing defendants Citimortgage, Inc. (CMI), and Federal Home Loan Mortgage Corporation (Freddie Mac) making several claims relating to the mortgage and foreclosure proceedings. The amended complaint alleges seventeen counts, phrased by plaintiffs as follows:
Before the Court is defendants' motion to dismiss under Fed. R. Civ. P. 12(b)(6). For the reasons that follow, the motion will be granted.
On September 16, 2002, plaintiffs received a residential mortgage loan from ABN AMRO Mortgage Group, Inc. (ABN AMRO) in the amount of $129,7000 to purchase realproperty in Westland, Michigan. Plaintiffs signed a note evidencing their obligation to pay ABN AMRO as the lender. As security for repayment of the loan, plaintiffs executed a mortgage in favor of ABN AMRO which encumbered the property. CMI is the successor by merger to ABN AMRO. Federal Home Loan Mortgage Corporation ("Freddie Mac") is a corporate instrumentality of the United States and is the investor in the loan.2 Plaintiffs failed to make the payments required by the note. Accordingly, CMI commenced foreclosure proceedings, including scheduling a Sheriff's sale for July 27, 2011. However, plaintiffs filed this case on July 26, 2011 in state court, and obtained an ex parte order enjoining the Sheriff's sale. CMI and Freddie Mac removed the case to this Court on August 8, 2011. On August 15, 2011, the Court, upon the stipulation of the parties, ordered that the Sheriff's sale not occur during the pendency of the case. (Doc. 4.)
On September 8, 2011, plaintiffs filed an Amended Complaint. (Doc. 8.) Defendants then filed the instant motion to dismiss the Amended Complaint under Fed.R. Civ. P. 12(b)(6). (Doc. 10).
A motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6) tests the sufficiency of a complaint. To survive a Rule 12(b)(6) motion to dismiss, the complaint's "factual allegations must be enough to raise a right to relief above the speculative level on the assumption that all of the allegations in the complaint are true." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 545 (2007). See also Ass'n of Cleveland Fire Fighters v. City of Cleveland, Ohio, 502 F.3d 545, 548 (6th Cir.2007). The court is "not bound to accept as true a legal conclusion couched as a factual allegation." Aschcroft v. Iqbal, _ U.S. _, 129 S.Ct. 1937, 1950 (internal quotation marks and citation omitted). Moreover, "[o]nly a complaint that states a plausible claim for relief survives a motion to dismiss." Id. Thus, Id. In sum, "[t]o survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to state a claim for relief that is plausible on its face." Id. at 1949 (internal quotation marks and citation omitted).
In ruling on a motion to dismiss, the Court may consider the complaint as well as (1) documents referenced in the pleadings and central to plaintiff's claims, (2) matters of which a court may properly take notice, (3) public documents, and (4) letter decisions of government agencies may be appended to a motion to dismiss. Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 127 S.Ct. 2499, 2509 (2007). Here, the Court has considered documents relating to the mortgage and the foreclosure which are referenced in the complaint and central to plaintiff's claims.
The counts in the complaint are addressed below.4
Defendants say that plaintiffs' claims challenging the foreclosure (Counts 1, 2, and 10) should be dismissed because plaintiffs have failed to identify any error surrounding the foreclosure, and because plaintiffs seek relief not contemplated by Michigan's foreclosure statutes. The Court agrees.
First, to the extent plaintiffs challenge the validity of the Sheriff's sale, such a claim is not ripe because a sale that has not yet occurred. "Under the ripeness doctrine, a matter is considered premature for judicial review when the alleged injury is speculative or may never occur." Kallstrom v. City of Columbus, 136 F.3d 1055, 1068 (6th Cir. 1998). Plaintiffs cannot use this forum to invalidate a sale that has not occurred.
Ripeness aside, plaintiffs' contention that a sale would be improper because there is not a recorded assignment from ABN AMRO to CMI is misguided. Plaintiffs are mistaken as to the relationship between ABN AMRO and CMI. ABN AMRO did not assign its interest to CMI; instead, ABN AMRO merged into CMI and brought its interest in the loan along with it. As explained in defendants' papers and exhibits, ABN AMRO merged into CMI, a New York Corporation, on September 1, 2007. (See Defendants' Exhibit 3, Certification of Merger) Under New York Business Corporation law, after a merger, the surviving corporation - in this case CMI - obtains "all the rights, privileges, immunities, powers" of the merging entity, and "[a]ll the property, real and personal, including subscriptions to shares, causes of action and every other asset of each of the constituent entities, shall vest in such surviving or consolidated corporation without further act or deed." NY Business Corporations § 906(b)(1), (2) (2003); see also American Cement Corp v. Dunetz Bros, Inc., 47 Misc. 2d 747, 750-51, 263 N.Y.S.2d 119 (N.Y. Sup. Ct. 1965) () Thus, there is no need for a recorded assignment because the mortgage has not been assigned.
have considered the issue in the context of Michigan's foreclosure by advertisement statutes, and concluded that no assignment from the merging entity into the surviving entity is required for the purposes of compliance with M.C.L. 600.3204(3). See Winiemko v. GE Capital Mortgage Serv., Inc., No 177827, 1997 WL 33354482, at * 2 (Mich. Ct. App. Jan. 17, 1997); 2004 Mich. O.A.G. No. 7147; 2004 WL 79109 (Jan 9, 2004). Thus, CMI has the right to initiate a Sheriff's sale under M.C.L. § 600.3204(3).
Moreover, plaintiffs claim that defendants have violated Michigan's loan modification statutes, M.C.L. 600.3205a, et seq., also fails. First, these statutes merely require a lender to consider a borrower for a loan modification prior to commencing foreclosure by advertisement. See M.C.L. 600.3205c. These statutes do not require a lender to modify a loan, nor do they give a plaintiff a cause of action for damages. See also Adams v. Wells Fargo Bank, N.A., No. 11-10150, 2011 WL 3500990, at * 4 (E.D. Mich. Aug. 10, 2011) (unpublished). Second, a failure to comply with these statutes would not invalidate a pending Sheriff's sale. The statutes include a specific enforcement mechanism that provides the borrowers with an opportunity to request judicial foreclosure if the foreclosing party does not comply with the loan modification provisions. M.C.L. 600.3205c(8). However, plaintiffs have not requested a judicial foreclosure. Unless the borrower files a complaint seeking such relief, which plaintiffs have not done, nothing prevents the lender from foreclosing. Id.
Additionally, plaintiffs have not alleged facts showing that they qualified for a loan modification under M.C.L. 600.3205a, et seq. Instead, plaintiffs offer the conclusory statement that they qualified for a modification, without offering any facts showing why they believe they qualified, or how any decision to not modify the loan violated thestatutes. (Amended Complaint at ¶¶ 44-50.). This is insufficient to state a claim for relief. See Iqbal, 129 S. Ct. at 1949.
In response to the motion, plaintiffs argue that a servicing agent cannot be the mortgagee of record. (Doc. 12, Response p. 6-8.). This argument is not well taken. M.C.L. 600.3204(1)(d) expressly holds that the "party" foreclosing the mortgage may be the servicer. Michigan law has affirmed that the foreclosing mortgagee of record, in this case CMI, may be a different entity than one that possesses an ownership interest in the underlying debt. Residential Funding Co., LLC v. Saurman, 490 Mich. 909 (2011) ...
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