Shamon v. Bank of America, N.A.

• Decision Date: 29 February 2012
• Docket Number: Case No. 11-15344
• Parties: VIVIAN S. SHAMON, Plaintiff, v. BANK OF AMERICA, N.A. successor by merger to BAC HOME LOAN SERVICING, LP, and FEDERAL NATIONAL MORTGAGE CORP., Defendants.
• Court: U.S. District Court — Eastern District of Michigan

VIVIAN S. SHAMON, Plaintiff,

v. BANK OF AMERICA, N.A. successor by merger to BAC HOME LOAN SERVICING, LP,and FEDERAL NATIONAL MORTGAGE CORP., Defendants.

Case No. 11-15344

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF MICHIGAN SOUTHERN DIVISION

Dated: February 29, 2012

Honorable Denise Page Hood

ORDER GRANTING DEFENDANTS' MOTION TO DISMISS

AND DISMISSING CASE

I. INTRODUCTION

Plaintiff is attempting to set aside a foreclosure sale. Now before the Court is Defendants' motion to dismiss [Docket No. 5, filed December 13, 2011]. The Court heard oral arguments on February 29, 2012. The matter has been fully briefed and is now appropriate for determination. For the reasons stated below, the Court should GRANT Defendants' motion to dismiss.

II. BACKGROUND

On November 14, 2011, Plaintiff filed the present action in state court alleging the following: wrongful foreclosure under M.C.L. § 600.3204 (Count I); quiet title (Count II); and negligence (Count III). Defendants removed the action on the basis of diversity jurisdiction on December 6, 2011 [Docket No. 1].

On June 28, 2007, Plaintiff Vivian Shamon's husband, Ray Shamon, executed a note in the amount of $170,300.00 for the property commonly known as 48574 Jefferson Drive,Macomb Township, Michigan 48044. Def.'s Mot. Dismiss, Ex. A. Mr. Shamon also signed a mortgage on the home with Mortgage Electronic Registration Systems, Inc. ("MERS"). Compl. ¶ 6; Def.'s Mot. Dismiss, Ex. A. The mortgage was recorded with the Macomb County Register of Deeds on September 25, 2007. Def.'s Mot. Dismiss, Ex. A. Mr. Shamon was married when the documents were executed but only his name appears on the mortgage and note. Def.'s Mot. Dismiss, Ex. A; Compl. ¶ 7. The note indicates that Mr. Shamon was signing as a married man. Def.'s Mot. Dismiss, Ex. A; Compl. ¶7-9.

MERS assigned the mortgage to Bank of America Home Loans Servicing ("BAC") and the assignment was recorded on July 26, 2010. Def.'s Mot. Dismiss, Ex. B. The home was sold to BAC at a Sheriff's sale on October 1, 2010 and the deed recorded on October 13, 2010. Def.'s Mot. Dismiss, Ex. C. The redemption period expired on April 13, 2010.

On April 29, 2011, BAC sold the property to Fannie Mae by quitclaim. Compl. ¶ 13; Def.'s Mot. Dismiss, Ex. D.¹ Fannie Mae initiated eviction proceedings in 41st District Court against Mr. Shamon and the property occupants, including Plaintiff. The 41st District Court determined that Fannie Mae was entitled to possession on January 4, 2011. Def.'s Mot. Dismiss, Ex. E; Compl. ¶ 14.

III. ANALYSIS

A. Standard of Review

In a 12(b)(1) motion to dismiss for lack of subject matter jurisdiction, the plaintiff has the burden of proving that jurisdiction is proper. Moir v. Greater Cleveland Reg'l Transit Auth., 895 F.2d 266, 269 (6th Cir. 1990). To survive a motion to dismiss for lack of subject matter jurisdiction, the plaintiff must show that she alleges a claim under federal law and that the claimis "substantial." Musson Theatrical, Inc. v. Fed. Exp. Corp., 89 F.3d 1244, 1248 (6th Cir. 1996). A claim is substantial unless "prior decisions inescapably render [it] frivolous." Id. (quoting Transcontinental Leasing, Inc. v. Michigan Nat'l Bank of Detroit, 738 F.2d 163, 165 (6th Cir. 1984). If the Court finds that it lacks subject matter jurisdiction, it must dismiss the case. Fed.R.Civ.P. 12(h)(3).

A Federal Rule of Civil Procedure 12(b)(6) motion to dismiss tests the legal sufficiency of the plaintiff's complaint. The Court will accept all the factual allegations as true and review the complaint in the light most favorable to the plaintiff. Eidson v. Tennessee Dep't of Children's Servs, 510 F.3d 631, 634 (6th Cir. 2007). To survive a motion to dismiss, the complaint must state sufficient "facts to state a claim to relief that is plausible on its face." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007). A motion to dismiss is appropriate when the plaintiff is unable to prove any set of facts to support his claim that he is entitled to relief. Varljen v. Cleveland Gear Co., Inc., 250 F.3d 426, 429 (6th Cir. 2001). The complaint must demonstrate more than a sheer possibility that the defendant's conduct was unlawful. Bell Atlantic, 550 U.S. at 556. Claims comprised of "labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Id. at 555. Furthermore, "[a] claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the Defendants is liable for the misconduct alleged." Ashcroft v. Iqbal, 556 U.S. 662, 129 S. Ct. 1937, 1949 (2009).

Defendants have attached several exhibits to their motion to dismiss. The Court may consider these exhibits without converting Defendants' motion to dismiss to a motion for summary judgment if the matters are referenced in the Complaint and central to the plaintiff's claims. Bassett v. Nat'l Collegiate Ass'n, 528 F.3d 426, 430 (6th Cir. 2006). The Court mayconsider items that "verify the complaint" and do "not rebut, challenge, or contradict anything in the plaintiffs' complaint." Song v. City of Elyria, 985 F.2d 840, 842 (6th Cir. 1993); see also Armengau v. Cline, 7 Fed.Appx. 336, *5 (6th Cir. 2001) ("extrinsic materials [that] merely 'fill in the contours and details' of a complaint, .. .add nothing new and may be considered without converting the motion to one for summary judgment") (quoting Yeary v. Goodwill Indus.-Knoxville, Inc., 107 F.3d 443, 445 (6th Cir. 1997)). The Court may also take note of matters to which it could take judicial notice. Armengau, 7 Fed.Appx. at *5. Accordingly, the Court will consider Defendants' exhibits under Rule 12(b)(6) analysis because they are central to Plaintiff's Complaint and fill in the contours of the Complaint.

B. Plaintiff does not have standing to challenge the foreclosure or assignment

Defendants argue that Plaintiff does not have standing to challenge the foreclosure because Plaintiff no longer has an interest in the property. Defendants further argue that Plaintiff cannot contest the assignment because she was not a party to it. Plaintiff argues that the foreclosure was improper so the redemption period has not yet run. Specifically, in Plaintiff's Complaint, she alleges that MERS did not have the right to assign the mortgage to Fannie Mae. However, in Plaintiff's response, she argues that there was a defect in the chain of title because the assignment was not recorded prior to the Sheriff's sale.

The Court must first determine if there is standing before considering any substantive issues. Planned Parenthood Assoc. v. Cincinnati, 822 F.2d 1390, 1394 (6th Cir. 1987). Article III of the Constitution limits the federal courts to "cases and controversies." Standing is present when three elements are established: (1) plaintiff suffered an "injury in fact, which is both concrete and particularized, and actual or imminent;" (2) there is a casual connection between the injury and complained of activity such that it is fairly traceable to the defendant's actions;and (3) it is likely, not speculative, that the injury will be redressed by a favorable decision. Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-561 (1992). The plaintiff has the burden of proving with specificity injury in fact, causation, and redressability. Coyne ex rel. Ohio v. American Tobacco Co., 183 F.3d 488, 494 (6th Cir. 1999).

In Michigan, all rights and title are vested in the purchaser once the foreclosure is complete. See MICH. COMP. LAWS § 600.3236. A former owner losses "all [his/her] right, title, and interest in and to the property at the expiration of [his/her] right of redemption" and can no longer assert the rights of those with an interest. Piotrowski v. State Land Office Bd., 188, 4 N.W.2d 514, 517 (Mich. 1942); see also Matthews v. Mortgage Electronic Registration Systesms, Inc., 2011 WL 2560329 (E.D. Mich. Apr. 5, 2011); Overton v. Mortgage Electronic Registration Systems, Inc., 2009 WL 1507342 (Mich. Ct. App. May 28, 2009). "[I]t would require a strong case of fraud or irregularity, or some peculiar exigency, to warrant setting a foreclosure sale aside." United States v. Garno, 974 F.Supp. 628, 633 (E.D. Mich. 1997).

Plaintiff no longer has standing to assert an interest in the property. The redemption period has elapsed and Plaintiff has not alleged any irregularities in the foreclosure sale to warrant setting it aside.² As an initial matter, in Residential Funding Co., LLC v. Saurman, 805 N.W.2d 183 (2011), the Michigan Supreme Court held that MERS does have a right to foreclose by advertisement. Saurman overruled the Michigan Court of Appeals holding that that MERS could not foreclose by advertisement pursuant to M.C.L. § 600.3204(1)(d) because it did not have legal or equitable ownership rights in the indebtedness. See Residential Funding Co., LLC v. Saurman, 292 Mich. App. 321 (2011). MERS has a legitimate interest that it may assign.

Plaintiff lacks standing to contest the assignment because she was not a party to it. SeeLivonia Prop. Holdings, L.L.C. v. 12840-12976 Farmington Rd. Holdings, L.L.C., 717 F. Supp. 2d 724, 735-737 (E.D. Mich. 2010) ("hold[ing] that Borrower may not challenge the validity of assignments to which it was not a party or third-party beneficiary, where it has not been prejudiced, and the parties to the assignments do not dispute (and in fact affirm) their validity.") Plaintiff's request to set aside the mortgage because MERS lacked an interest to assign to BAC fails to state a claim.

Additionally, Plaintiff cites this Court's decision in Dungan v. Chase Homes Fin. LLC, 2011 U.S. Dist. LEXIS 86088 (E.D. Mich. August 4, 2011), to support her argument that the foreclosure should be set aside because the assignment to BAC was not recorded in accordance with Michigan law. The Court should note that attached as Exhibit B to Defendants' motion to dismiss is the assignment of the mortgage to BAC on July 15, 2010 that...