Stein v. U.S. Bancorp., Case No. 10-14026
| Decision Date | 24 February 2011 |
| Docket Number | Case No. 10-14026 |
| Parties | PAUL STEIN and LYNN STEIN, Plaintiffs, v. U.S. BANCORP and WELLS FARGO BANK, N.A., Defendants. |
| Court | U.S. District Court — Eastern District of Michigan |
Honorable Julian Abele Cook, Jr.
The Plaintiffs in this action, Paul Stein and Lynn Stein (hereinafter referred to collectively as the "Steins"), allege that the two Defendants, U.S. Bancorp and Wells Fargo Bank, N.A., breached the parties' contract and improperly foreclosed their mortgage. This action was filed in the Wayne County Circuit Court of Michigan and subsequently removed by the Defendants to this Court on the basis of its diversity jurisdiction. 28 U.S.C. §§ 1332; 1441. Currently before the Court is the Defendants' motion for dismissal and/or the entry of a summary judgment.
Prior to a foreclosure sale and the expiration of the period of redemption, the Steins owned a parcel of real property known as 17386 Palmer Street in Melvindale, Michigan. In the course of acquiring their home, they had executed a mortgage loan which encumbered the property in favor of Plymouth Exchange Mortgage Corporation. The mortgage was subsequently assigned to a third party, and eventually to Bancorp, the mortgagee at the time ofthe disputed issues herein. Wells Fargo was the servicer of this loan for a portion of the relevant time, including the period up to and including when the Melvindale property was the subject of the foreclosure sale. The Steins state that the underlying mortgage loan was a Federal Housing Administration ("FHA") loan.
At some unspecified point in time, the Steins fell behind in their mortgage payments. In July 2009, they executed a special forbearance agreement ("Agreement 1") with Wells Fargo which allowed them to pay a reduced amount of $622.27 for six consecutive months-a payment schedule that was followed by a commitment to make a lump sum payment of the remaining deficiency (to wit, $11,780.72) at the end of the earlier time period. The Steins complain that, although they complied with every provision of Agreement 1, Wells Fargo falsely claimed that it did not receive the first of the six scheduled payments. At that point, Wells Fargo referred the mortgage to its foreclosure counsel, Trott & Trott P.C. ("Trott"), for appropriate legal action.
In August 2009, Trott transmitted a "fourteen day letter" to the Steins, both of whom were advised that they had a period of fourteen days in which to request a meeting with Wells Fargo for the purpose of discussing a modification of their loan agreement. See Mich. Comp. Law. § 600.3205a(1)(d). Such a meeting was requested by the Steins, who met with a Wells Fargo representative in October 2009. During the following month, they received a proposal from Wells Fargo to adopt a second special forbearance agreement ("Agreement 2"), which would require them to make payments in the amount of $1,244.54 for each of the following three months, with the first payment due on December 1, 2009. The Steins state that-despite their acceptance of, and compliance with, the terms of Agreement 2-they were advised by Trott in a letter on January 28, 2010, that their efforts to obtain a modification of their fiscal obligations had been rejected by Wells Fargo because they did not satisfy "one or more guidelines established by the investor." Trott also advised them that, under these circumstances, foreclosure proceedings against their home would follow.
The Defendants caused notice of the foreclosure sale-scheduled for March 2010-to be published in the Detroit Legal News. Prior to the foreclosure sale being conducted, the Steins filed a petition for Chapter 7 Bankruptcy in the United States Bankruptcy Court for the Eastern District of Michigan. Thereafter, the Defendants arranged for the publication of notices of the adjournment of the foreclosure sale each week in the Detroit Legal News. The foreclosure sale was eventually consummated on May 5, 2010. There is no evidence that the Steins made any effort to stay or challenge the foreclosure sale.
In this pending lawsuit, the Steins claim that Agreement 2, to which reference has been made hereinabove, is a valid and binding contract, which was breached by the Defendants who refused to accept their payments and proceeded to foreclose on their property. Moreover, they maintain that the foreclosure procedure was improperly conducted in violation of (1) the Defendants' obligation under Mich. Comp. Law §§ 600.3205a and 600.3205c to offer them a loan modification according to the relevant statutory guidelines; (2) the terms of Agreement 2; and (3) the bankruptcy stay order. Thus, it is the Steins' belief that the Court should (1) enter a judgment in their favor in an amount greater than $25,000.00; (2) set aside the foreclosure sale; (3) direct the Defendants to specifically perform their obligations as set forth under Agreement 2; (4) compel the Defendants to offer them a loan modification in compliance with Mich. Comp. Law § 600.3205c; and (5) award them all of the attorney fees and costs that wereincurred by them in this action.
The Defendants have responded to the Steins' arguments with a motion to dismiss the complaint pursuant to Federal Rules of Civil Procedure 12(b)(6) or 56. In doing so, they submit that the Steins lack standing to sue because all of their rights in and title to the property in Melvindale were extinguished upon the expiration of the statutory redemption period. The Steins dispute this characterization of the law, and argue that-even if it were an accurate statement of the law-the circumstances of their situation qualify for an exception to its application. In their response, the Steins have raised an additional reason as to why, in their opinion, the challenged foreclosure procedure was invalid; to wit, they submit that, due to irregularities in the chain of title, the Defendants lacked the legal right to foreclose on the property.
The purpose of the summary judgment rule, Federal Rule of Civil Procedure 56, "is to isolate and dispose of factually unsupportable claims or defenses... Celotex Corp. v. Catrett, 477 U.S. 317, 323-24 (1986). Therefore, the entry of a summary judgment is proper "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). When assessing a request for the entry of a summary judgment, the Court "must view the facts and all inferences to be drawn therefrom in the light most favorable to the non-moving party." 60 Ivy Street Corp. v. Alexander, 822 F.2d 1432, 1435 (6th Cir. 1987).
In order for a dispute to be genuine, it must contain evidence upon which a jury could find in favor of the nonmoving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986); Singfield v. Akron Metro. Hous. Auth., 389 F.3d 555, 560 (6th Cir. 2004). Thus, a court must recognize that the moving party has the initial obligation of identifying those portions of the record which demonstrate the absence of any genuine issue of a material fact. Celotex, 477 U.S. at 323. Thereafter, the nonmoving party must "come forward with some probative evidence to support its claim and make it necessary to resolve the differences at trial." Boyd v. Ford Motor Co., 948 F.2d 283, 285 (6th Cir. 1991); see also Fed. R. Civ. P. 56(e)(2); Anderson, 477 U.S. at 256. The entry of a summary judgment is appropriate if the nonmoving party fails to present evidence which is "sufficient to establish the existence of an element essential to its case, and on which it will bear the burden of proof at trial." Celotex, 477 U.S. at 322.
The Court initially notes that the Defendants filed their motion to dismiss pursuant to Fed. R. Civ. P. 12(b)(6) after having filed an answer, thereby rendering it untimely. See 5B Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 1357 (3d ed. 2004) (). The Sixth Circuit Court of Appeals has treated post-answer Rule 12(b)(6) motions as requests for the entry of judgments on the pleadings under Fed. R. Civ. P. 12(c).1 See, e.g., Satkowiak v. Bay Cnty. Sheriff'sDep't., 47 Fed. Appx. 376, 377 n.1 (6th Cir. 2002). Moreover, Fed. R. Civ. P. 12(h)(2) provides that a contention by the defense that an adversary had failed to state a claim upon which relief can be granted "may be raised... by a motion under Rule 12(c)." Accordingly, the Court will treat this motion to dismiss as a motion for judgment on the pleadings under Fed. R. Civ. P. 12(c).
The standard of review for a motion for judgment on the pleadings for failure to state a claim upon which relief can be granted under Federal Rule of Civil Procedure 12(c) is the same as that which should be undertaken when evaluating a motion brought pursuant to Rule 12(b)(6). Albrecht v. Treon, 617 F.3d 890, 893 (6th Cir. 2010). Thus, a district court must accept the plaintiffs well-pleaded allegations as true and construe each of them in a light that is most favorable to it. Bennett v. MIS Corp., 607 F.3d 1076, 1091 (6th Cir. 2010). However, this assumption of truth does not extend to the plaintiff's legal conclusions because "[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice." Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949-50 (2009). The complaint "must contain either direct or inferential allegations respecting all material elements to sustain a recovery under some viable legal theory." Bishop v. Lucent Techs., Inc., 520 F.3d 516, 519 (6th Cir. 2008) (citation and internal quotation marks omitted).
In order to survive an application for dismissal, the complaint must allege "enough facts to state a claim to relief that is plausible on its face." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007). To meet this standard, the "plai...
To continue reading
Request your trial