Upshaw v. Green Tree Servicing LLC, Case No. 15-cv-13866

• Decision Date: 21 December 2015
• Docket Number: Case No. 15-cv-13866
• Parties: RAKAMAN Q. UPSHAW, and TRACY R. UPSHAW, Plaintiffs, v. GREEN TREE SERVICING LLC, and THE BANK OF NEW YORK MELLON, Defendants.
• Court: U.S. District Court — Eastern District of Michigan

RAKAMAN Q. UPSHAW, and TRACY R. UPSHAW, Plaintiffs, v. GREEN TREE SERVICING LLC, and THE BANK OF NEW YORK MELLON, Defendants.

Case No. 15-cv-13866

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF MICHIGAN SOUTHERN DIVISION

December 21, 2015

UNITED STATES DISTRICT COURT JUDGE GERSHWIN A. DRAIN

UNITED STATES MAGISTRATE JUDGE MONA K. MAJZOUB

OPINION AND ORDER GRANTING DEFENDANTS' MOTION TO DISMISS [4]

I. INTRODUCTION

On October 16, 2015, Rakaman and Tracy Upshaw (collectively "Plaintiffs") commenced this action in the Circuit Court of Macomb County, Michigan. Dkt. No. 1, p. 12 (Pg. ID No. 12). Plaintiffs' Complaint asserts multiple state law claims, including wrongful foreclosure, breach of contract, fraudulent misrepresentation, and slander of title. See id. at 19-29 (Pg. ID No. 19-29). The Bank of New York Mellon ("Mellon") and Green Tree Servicing (collectively "Defendants") removed the case to federal court on November 3, 2015. See id. at 1 (Pg. ID No. 1).

The matter is presently before the Court on Defendants' Motion to Dismiss [4], pursuant to Federal Rule of Civil Procedure 12(b)(6). Dkt. No. 4, p. 1 (Pg. ID No. 103). The motion was filed on November 6, 2015. Id. Plaintiffs have failed to respond and the time to respond has passed. For the reasons discussed herein, the Court GRANTS Defendants' Motion to Dismiss [4].

II. BACKGROUND

On May 25, 2004, Plaintiffs obtained a loan (the "Loan") in the amount of $208,000.00 from American Equity Mortgage, Inc., represented by a promissory note (the "Note"). Dkt. No. 1, p. 14, ¶ 10 (Pg. ID No. 14). Repayment of the Loan was secured by a mortgage (the "Mortgage") on Plaintiffs' property, located at 38011 Alcoy Drive, Sterling Heights, MI 48312 (the "Property). See id. at ¶¶ 4, 12. Defendant Mellon was assigned the Mortgage in late 2010. Id. at ¶ 13. Defendant Green Tree Servicing services the Mortgage. Id. at 14.

From June 2013 to January 2015, Plaintiffs did not submit their monthly payments, as required under the Note and Mortgage. Dkt. No. 4, p. 10 (Pg. ID No. 112); see also Dkt. No. 1, p. 15, ¶ 17 (Pg. ID No. 15). Plaintiffs claim to not have received the notice of default, send by Defendants to Plaintiffs' attorney¹ in January 2015. Compare Dkt. No. 1, p. 16, ¶ 19 (Pg. ID No. 16) with Dkt. No. 4, p. 10 (Pg. ID No. 112); Dkt. No. 4-2, p. 2 (Pg. ID No. 135). As Plaintiffs did not cure their default within 30 days of the notice, Defendant Mellon notified Plaintiffs in March 2015 that the Property was scheduled for foreclosure sale on April 17, 2015. Dkt. No. 4, p. 10 (Pg. ID No. 112); Dkt. No. 4-3, p. 2 (Pg. ID No. 140). Notice of the foreclosure sale was published in the Macomb County Legal News on March 17, March 24, March 31, and April 7, 2015. Dkt. No. 1, p. 62 (Pg. ID No. 62). Notice was also attached to the Property's front door on March 18, 2015. Id. at 63. Plaintiffs allege that they never saw the notices published and posted, and that they had no actual notice prior to the sale. Id. at p. 17, ¶¶ 28-31.

At the Sheriff's Sale on April 17, 2015, Defendant Mellon purchased the Property for $124,367.75. Id. at ¶ 34. Plaintiffs did not redeem the Property prior to the redemption period ending on October 17, 2015.² See id. at ¶ 35.

III. LEGAL STANDARD

Federal Rule of Civil Procedure 12(b)(6) authorizes dismissal of a complaint for "failure to state a claim upon which relief can be granted." To withstand a motion to dismiss pursuant to Rule 12(b)(6), a complaint must comply with the pleading requirements of Federal Rule of Civil Procedure 8(a). See Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). Rule 8(a)(2) requires "a short and plain statement of the claim showing that the pleader is entitled to relief, in order to give the defendant fair notice of what the . . . claim is and the grounds upon which it rests." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (quotation marks omitted) (quoting FED. R. CIV. P. 8(a)(2); Conley v. Gibson, 355 U.S. 41, 47 (1957)). To meet this standard, a complaint must contain sufficient factual matter, accepted as true, to "state a claim to relief that is plausible on its face." Twombly, 550 U.S. at 570; see also Iqbal, 556 U.S. at 678-80 (2009) (applying the plausibility standard articulated in Twombly).

When considering a Rule 12(b)(6) motion to dismiss, the Court must construe the complaint in a light most favorable to the plaintiff and accept all of his or her factual allegations as true. Lambert v. Hartman, 517 F.3d 433, 439 (6th Cir. 2008). However, the Court need not accept mere conclusory statements or legal conclusions couched as factual allegations. See Iqbal, 556 U.S. at 678.

In ruling on a motion to dismiss, the Court may consider "the Complaint and any exhibits attached thereto, public records, items appearing in the record of the case and exhibits attached to defendant's motion to dismiss so long as they are referred to in the Complaint and are central to the claims contained therein." Bassett v. Nat'l Collegiate Athletic Ass'n, 528 F.3d 426, 430 (6th Cir. 2008). The Court may also consider "documents incorporated into the complaint by reference, and matters of which a court may take judicial notice." Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 322 (2007). This may include "documents relating the note, mortgage, assignment, loan modification process, and foreclosure that are referenced in the complaint and integral to [plaintiff's] claims." Gardner v. Quicken Loans, Inc., 567 F. App'x 362, 365 (6th Cir. 2014).

IV. DISCUSSION

A. Plaintiffs' Failure to Timely Respond to Defendants' Motion to Dismiss

The Court begins by noting that Plaintiffs failed to file a timely response to Defendants' motion. The motion was filed on November 6, 2015 and as of the date of this decision, Plaintiffs still had not responded. "A plaintiff must oppose a defendant's motion to dismiss or otherwise respond or he waives opposition to the motion." Moody v. CitiMortgage, Inc., 32 F. Supp. 3d 869, 875 (W.D. Mich. 2014) (stating that a homeowner had waived his opposition to his mortgage servicer's motion to dismiss by failing to respond to it); see also Humphrey v. United States Attorney Gen.'s Office, 279 Fed. App'x. 328, 331 (6th Cir. 2008) (holding that where a "plaintiff has not raised arguments in the district court by virtue of his failure to oppose defendants' motions to dismiss, the arguments have been waived."); Scott v. State of Tenn., 878 F.2d 382, 1989 WL 72470, at *2 (6th Cir. 1989) ("[I]f a plaintiff fails to respond or to otherwiseoppose a defendant's motion, then the district court may deem the plaintiff to have waived opposition to the motion.").

Nonetheless, the Court will review Plaintiffs' claims due to contrary Sixth Circuit precedent. See Bangura v. Hansen, 434 F.3d 487, 497 (6th Cir. 2006) (finding that a district court abused its discretion in dismissing a plaintiff's claims solely because the plaintiff failed to respond to the defendant's motion to dismiss).

B. The Court Will Dismiss Plaintiffs' Wrongful Foreclosure Claim

Plaintiffs allege in Count I of their Complaint that Defendants' foreclosure of the property violated state and federal statutes, rules, and procedures, including: (1) failing to provide Plaintiffs with the Notice of Default; (2) causing a foreclosure proceeding to commence while Plaintiffs were being considered for foreclosure alternatives; (3) failing to notify Plaintiffs about the change in creditor; (4) failing to notify the Plaintiffs of the change in the Loan's servicer. Dkt. No. 1, p. 20-24 (Pg. ID No. 20-24). As relief for this claim, Plaintiffs seek to set aside the sheriff's deed, order Defendants to evaluate Plaintiff for home retention options, and obtain various types of damages and costs. Id. at 24-25.

"[D]efects or irregularities in a foreclosure proceeding result in a foreclosure that is voidable, not void ab initio." Kim v. JPMorgan Chase Bank, N.A., 493 Mich. 98, 115, 825 N.W.2d 329, 336 (2012). A plaintiff must show that she was prejudiced by a defendant's failure to comply with Mich. Comp Laws § 600.3201, et seq., to set aside a foreclosure sale. Id. To establish prejudice, plaintiffs must show that "they would have been in a better position to preserve their interest in the property absent defendant's noncompliance with the statute." Id. at 337. Such prejudice may be shown if the plaintiff demonstrates an ability to redeem the property prior to the end of the redemption period. See Derbabian v. Bank of Am., N.A., 587 F. App'x949, 956 (6th Cir. 2014). "When 'the mortgagor would have been in no better position had notice been fully proper and the mortgagor lost no potential opportunity to preserve some or any portion of his interest in the property,' courts uphold a completed foreclosure sale." Lessl v. CitiMortgage, Inc., 515 F. App'x 467, 469 (6th Cir. 2013) (quoting Jackson Inv. Corp. v. Pittsfield Products, Inc., 162 Mich. App. 750, 756 (1987)).

First, Plaintiffs allege that Defendants failed to provide notice to them of their default and foreclosure, in violation of Mich. Comp. Laws § 600.3201, et. seq. However, Defendants submitted evidence, which Plaintiffs failed to rebut, illustrating that notice of default was sent to Plaintiffs' attorney several months prior to the foreclosure sale. See Dkt. No. 4-2, p. 4 (Pg. ID No. 137). Additionally, the exhibits Plaintiffs themselves attached to the Complaint provide evidence that Michigan's notice of foreclosure procedures were followed, as Defendants published notice of foreclosure for four weeks in the Macomb County Legal News and posted notice on the Property's front door. See Dkt. No. 1, pp. 62-63 (Pg. ID No. 62-63). Michigan law does not dictate that mortgagors have actual notice, only that notice procedures are followed. Plaintiffs have failed to provide any evidence that Defendants failed to comply with Michigan's Foreclosure of Mortgages by Advertisement statute.

Second, Plaintiffs allege that Defendants violated the...