Yaldu v. Bank Of Am. Corp.

• Decision Date: 31 March 2010
• Docket Number: Case No. 09-12472.
• Citation: 700 F.Supp.2d 832
• Parties: Munther YALDU, Plaintiff,v.BANK OF AMERICA CORPORATION, doing business as Bank of America, and BAC Home Loan Servicing, limited partnership, Defendants.
• Court: U.S. District Court — Eastern District of Michigan

700 F.Supp.2d 832

Munther YALDU, Plaintiff,v.BANK OF AMERICA CORPORATION, doing business as Bank of America, and BAC Home Loan Servicing, limited partnership, Defendants.

Case No. 09-12472.

United States District Court,

E.D. Michigan,

Southern Division.

March 31, 2010.

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Scott J. Najor, Najor and Associates, PC, Southfield, MI, for Plaintiff.

Edward A. Frankfort, Bodman LLP, Troy, MI, for Defendants.

OPINION AND ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS' MOTION TO DISMISS AND GRANTING IN PART AND DENYING IN PART PLAINTIFF'S MOTION TO DISMISS WITHOUT PREJUDICE

DAVID M. LAWSON, District Judge.

Plaintiff Munther Yaldu filed this action against defendant Bank of America Corporation, the successor to Countrywide Financial Corporation which refinanced Yaldu's residential home mortgage, and defendant BAC Home Loans, the servicing agent for the loans. Yaldu alleges several claims based on irregularities in the refinancing process and contends that Countrywide engaged in predatory lending because it extended credit to Yaldu without any evidence that the loan could be repaid. The defendants filed a motion to dismiss for failure to state a claim. The plaintiff then filed his own motion to dismiss without prejudice, apparently because he cannot afford the legal fees necessary to prosecute his claim at the present time. The Court heard the parties' arguments in open court on November 10, 2009. The Court now concludes that several of the plaintiff's twelve counts must be dismissed under Federal Rule of Civil Procedure 12(b)(6). However, a few of those counts might survive the motion if the plaintiff is allowed an opportunity to amend his complaint to state claims with specificity. But because the plaintiff apparently chooses not to proceed with his case, the Court will dismiss those counts without prejudice.

I.

According to the complaint, in April 2007, the plaintiff, a manager at the McDougall Market in Detroit, purchased a house in Sterling Heights, Michigan for $307,500. He put down $80,000 and financed the balance with a new mortgage from Countrywide Financial. In February 2008, the plaintiff decided to refinance his $231,000 loan balance through Countrywide in order to obtain a more favorable interest rate. Although the plaintiff's reported income for the years 2006 through 2008 was $21,901, $16,380, and $21,350, respectively, he claims that the lender intentionally misrepresented on the Uniform Residential Loan Application that the plaintiff's monthly income was $4,850, which translated to an annual income of $58,200. According to the plaintiff, the bank intentionally misstated his salary so that the plaintiff could qualify for a loan he could not afford. The plaintiff adds that he was promised that “the financing scheme utilized was meant to be temporary and that [he] would be able to sell [his] property or refinance the loans if paying the monthly loan payments became problematic.” Compl. ¶ 21. The plaintiff alleges that this practice fit within the broader plan by the bank to “inflate[ ] the supposed market values of properties throughout the mortgage market in order to lend more money and sell the ill[-]begotten mortgage loans on the mortgage-backed securities ... market.” Id. ¶ 23.

The plaintiff defaulted on his payments and the defendants purportedly refused to make any accommodations. Countrywide was acquired by Bank of America, who currently owns the plaintiff's mortgage. Defendant BAC Home Loan Servicing, LP is the current servicer of the loan. The plaintiff preempted the defendants' foreclosure action and a potential eviction by filing the present case, initially brought in the Macomb County Circuit Court but timely removed to this Court.

The plaintiff's complaint states twelve counts: (1) accounting to confirm the plaintiff's belief that he does not owe any money to the defendants; (2) violation of the Home Ownership and Equity Protection Act (HOEPA), 15 U.S.C. § 1639, which prohibits extending credit without regard to payment ability of a consumer; (3) “predatory lending” based on the plaintiff's belief that the defendants extended credit to the plaintiff despite their knowledge that the plaintiff could not afford to repay; (4) violation of the Truth in Lending Act (TILA), 15 U.S.C. § 1601 et seq. based on false interest rate, fee, and monthly payment disclosures in connection with the closing; (5) fraudulent misrepresentation based on the defendants' exaggerated value of the plaintiff's property on the mortgage market; (6) negligent misrepresentation based on the same conduct; (7) defamation of credit and violation of the Fair Credit Reporting Act (FCRA), 15 U.S.C. § 1681 et seq. ; (8) rescission of notes and mortgages; (9) reformation of notes and mortgages; (10) violation of the Mortgage Brokers, Lenders, and Servicers Licensing Act, Mich. Comp. Laws § 445.1651 et seq. , based on the defendants' alleged deceit; (11) violation of the usury law, Mich. Comp. Laws § 438.31 et seq. ; and (12) temporary restraining order/preliminary injunction count. The plaintiff seeks an injunction preventing the defendants from evicting him and reporting negative credit information; rescission of the notes and mortgages; disgorgement of all interest paid to the defendants; reformation of the notes and mortgages to reflect a fair and equitable bargain; and costs and attorney's fees. In his response to the defendants' motion to dismiss, the plaintiff asserts his desire to “work” with the bank to adjust the value of his loan.

The defendants move to dismiss count 1 because there is no allegation that the parties engaged in a series of transactions necessitating an accounting and the plaintiff has an adequate remedy at law. They argue that counts 2 under HOEPA and 4 under TILA are time-barred, and the TILA count does not plead fraud with the requisite specificity, a defect shared by the fraud and negligent misrepresentation counts and the Mortgage Brokers, Lenders, and Servicers Licensing Act count, counts 5, 6 and 10. The defendants contend that count 3-predatory lending-is not a recognized cause of action. The FCRA count (count 7) suffers from a variety of defects, including the failure to plead that reported information was false, and the failure of the plaintiff to notify a credit reporting agency of a dispute. Counts 8, 9, and 12 seeking rescission, reformation, and a preliminary injunction present no independent causes of action, but rather they are remedies. And count 11 under the Michigan usury statute must be dismissed because the loan at issue is exempted from the Michigan usury statute.

II.

Motions to dismiss are governed by Rule 12(b) of the Federal Rules of Civil Procedure and allow for dismissal for “failure to state a claim upon which relief can be granted.” Fed.R.Civ.P. 12(b)(6). “The purpose of Rule 12(b)(6) is to allow a defendant to test whether, as a matter of law, the plaintiff is entitled to legal relief even if everything alleged in the complaint is true.” Mayer v. Mylod, 988 F.2d 635, 638 (6th Cir.1993). When deciding a motion under that rule, the court must construe the complaint in the light most favorable to the plaintiff, accept all factual allegations as true, and determine whether the complaint contains “enough facts to state a claim to relief that is plausible on its face.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). “[A] judge may not grant a Rule 12(b)(6) motion based on a disbelief of a complaint's factual allegations.” Columbia Natural Res., Inc. v. Tatum, 58 F.3d 1101, 1109 (6th Cir.1995). “However, while liberal, this standard of review does require more than the bare assertion of legal conclusions.” Ibid. Federal Rule of Civil Procedure 8(a) requires that the complaint give the defendant fair notice of the nature of the claim and the factual grounds upon which it rests. Twombly, 550 U.S. at 555, 127 S.Ct. 1955. Therefore, “[w]hile a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, a plaintiff's obligation to provide the ‘grounds' of his ‘entitle[ment] to relief’ requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Ibid. (citation omitted). “In practice, ‘a ... complaint must contain either direct or inferential allegations respecting all the material elements to sustain a recovery under some viable legal theory.’ ” Allard v. Weitzman (In re DeLorean Motor Co.), 991 F.2d 1236, 1240 (6th Cir.1993) (quoting Car Carriers, Inc. v. Ford Motor Co., 745 F.2d 1101, 1106 (1984)); see also Ana Leon T. v. Fed. Reserve Bank, 823 F.2d 928, 930 (6th Cir.1987) (per curiam) (mere conclusions are not afforded liberal Rule 12(b)(6) review).

In assessing the viability of a complaint the pleads both factual allegations and conclusions, courts must undertake a “two-pronged approach.” Ashcroft v. Iqbal, --- U.S. ----, 129 S.Ct. 1937, 1950, 173 L.Ed.2d 868 (2009). First, because conclusory allegations are not entitled to a presumption of correctness, the court must “identify[ ] the allegations in the complaint that are not entitled to the assumption of truth.” Id. at 1951. “[B]are assertions,” such as those that “amount to nothing more than a ‘formulaic recitation of the elements' ” of a claim, can provide context to the factual allegations, but are insufficient to state a claim for relief, and must be disregarded. Ibid. (quoting Twombly, 550 U.S. at 555, 127 S.Ct. 1955). “It is the conclusory nature of [these] allegations, rather than their extravagantly fanciful nature, that disentitles them to the presumption of truth.” Ibid.

After identifying the well-pleaded factual allegations, the Court must scrutinize these facts to see if they “plausibly suggest an entitlement to relief.” Ibid. Although even “unrealistic or nonsensical” factual allegations must be credited, the Court now...