United States District Court, E.D. Michigan, Southern Division
For Kevin Franklyn, Plaintiff: Kevin W. Kevelighan, Kevelighan & Kevelinghan, Bingham Farms, MI.
For Federal National Mortgage Association, Defendant: Rana D. Razzaque, Trott Law, P.C., Farmington Hills, MI.
For Weltman, Weinburg, and Reis, Co., LPA, William Clos, Defendants: Stuart A. Best, Weltman, Weinberg, Troy, MI.
Honorable LAURIE J. MICHELSON, UNITED STATES DISTRICT JUDGE. Magistrate Judge David R. Grand.
OPINION AND ORDER GRANTING IN PART (1) WELTMAN, WEINBURG, AND REIS, CO., LPA'S MOTION TO DISMISS , (2) WILLIAM CLOS' MOTION TO DISMISS , AND (3) FEDERAL NATIONAL MORTGAGE ASSOCIATION'S MOTION FOR JUDGMENT ON THE PLEADINGS AND FOR SUMMARY JUDGMENT 
LAURIE J. MICHELSON, UNITED STATES DISTRICT JUDGE.
Plaintiff Kevin Franklyn has filed a 57-page, pro se complaint against six defendants alleging eighteen causes of action based on events stemming from his purchase of a house. Defendants Weltman, Weinburg, and Reis, Co., LPA (" WWR") and William Clos say that Franklyn's claims against them fail to state a claim for relief and thus should be dismissed pursuant to Federal Rule of Civil Procedure 12(b)(6). (Dkts. 7, 8.) Defendant Federal National Mortgage Association (" Fannie Mae") filed an answer but now moves under Rules 12(c) and 56 for judgment on the pleadings and summary judgment. (Dkt. 27.) Having reviewed the motions and associated briefing, the Court will proceed without oral argument. See E.D. Mich. LR 7.1(f). For the reasons that follow, WWR's, Clos', and Fannie Mae's motions will be granted in large part and denied in part.
Because Defendants seek judgment on the pleadings, the following summary presents as fact the non-conclusory allegations of Franklyn's Complaint (to the extent they can be deciphered).
In " early 2011, " Franklyn saw a for-sale sign posted on a house on 14617 Penrod in Detroit, Michigan (" Property"). (Compl. at 3.) The sign stated that monthly payments would be under $400 and provided a number to call if interested. (Id.) Franklyn called the number and someone associated with Defendant RECA Properties answered, checked Franklyn's qualifications, and then gave Franklyn a code to the lock on the door. (Compl. at 3-4.) Franklyn was also informed that if he liked the house, he should call back and would be dealing with Defendant Harbour Portfolio VI. (Id.)
Franklyn was interested in the property and sent an application packet and a $1, 000 deposit to " Defendants." (Compl. at 4.) On February 24, 2011, Franklyn entered into a mortgage with " Defendants." (Id.) But Franklyn notes that Harbour Portfolio did not have a license to do business in Michigan until " mid-2011." (Compl. at 5.)
Franklyn attempted to record the " Agreement for Deed/mortgage" but the register of deeds refused because Franklyn did not have the original. (Compl. at 4.) Franklyn then contacted " Defendants"; they told him " it was not their policy to register deeds with the county until the contract had been paid off." (Compl. at 4.)
In January 2013, " the Defendants" sent Franklyn a tax form (1098 INT), which led Franklyn to " read the contract more closely and he concluded that the contract contained a loan, which was secured by a mortgage." (Compl. at 5.) According to Franklyn, " [t]he contract on its face, appeared to be an agreement for deed, then a mortgage with a loan, then it also had a rental agreement." (Id.) The mortgage and associated loan documents are not part of the Complaint, nor has WWR, Clos, or Fannie Mae attached them to their motions.
In February 2013, Franklyn " was given a loan modification agreement." (Compl. at 5.)
Also " early in 2013" Franklyn was informed that the Property was located in " an empowerment zone" and thus eligible for a tax break based on certain improvements, including those Franklyn had made to the Property (e.g., thirty-year roof shingles). (Compl. at 6.) Franklyn tried to reduce his taxes in 2013, but learned that he could not negotiate his taxes due to the fact that the taxes on the Property were not " listed in his name." (Compl. at 7.) " The taxes for real property payable to the [C]ity of Detroit were and are currently listed as of January 2014 [as] paid by Fannie Mae." (Compl. at 7.) Franklyn says that had he been able to negotiate his taxes, they would be thirty-five to forty-five percent less. (Id.)
Regarding property taxes, Franklyn states that during the " entire life of the mortgage between [himself] and Harbour Portfolio VI, LP, " Harbour Portfolio did not pay any property taxes. (Compl. at 7.) Instead, Franklyn paid taxes, and submitted them to Defendants " RECA/National Asset Advisors." (Compl. at 7-8.) Franklyn says that " [t]his deception" made it clear to Franklyn that either Harbour Portfolio diverted the funds he submitted to pay property taxes " or the [P]roperty may not be owned by [Fannie Mae]." (Compl. at 8.)
Franklyn also makes much of how the Property came to be Harbour Portfolio's. In October 2009, the Property was purchased at a sheriff's sale by non-party BAC Home Loans Servicing, L.P., for about $92, 000. (FNMA's Mot. at PID 213, Sheriff's Deed.) BAC then deeded the home--Franklyn stresses that BAC did so for only $1.00 (Compl. at 8, 21)--to Fannie Mae on November 4, 2009. (FNMA's Mot. at PID 220, Quit Claim Deed.) Then on January 27, 2011, Fannie Mae deeded the Property to Harbour Portfolio for $4, 958. (FNMA's Mot. at PID 223, Covenant Deed.) Franklyn says that the deed identified Fannie Mae as Grantor but did not identify the Grantee, which is " the first known document fraud between Defendants." (Compl. at 14.) Although the deed does not identify the Grantee, it does say that Fannie Mae " conveys and warrants" the Property to " Harbour Portfolio VI, LP." (FNMA's Mot. at PID 223, Covenant Deed (capitalization altered).)
Franklyn maintains that BAC and Fannie Mae transferred the Property and associated loan as part of a scheme to eliminate poor-performing loans from their books and therefore appear financially fit. (Compl. PP 16-17.) It appears that Franklyn maintains that, under this scheme, unwitting investors, like him, maintain the home and provide for its upkeep while BAC and Fannie Mae somehow profit. (Compl. PP 23, 29.) Franklyn points to a statement on National Asset Advisors' website: " Strategy is to keep holding costs, such as real estate taxes, yard care and home maintenance, to a minimum, while generating revenue as quickly as possible." (Compl. at 14.) He also says that Fannie Mae and BAC " intend to use" Harbour Portfolio " to manage low end, non-performing loans while technically removing them from their respective balance sheets, " (Compl. P 15), and Harbour Portfolio " and its partners dupe the customers into a mortgage where the customers assume the responsibility and upkeep of the property" (Compl. P 27). He says that " [t]he fraud is misleading of the customer into caring for the asset secures it for the A/B entity, . . . knowing [full] well that the holding entity never means to complete the selling transaction." (Compl. P 29.)
Franklyn says that " Defendants'" " ill will" was evident when on August 13, 2013, Defendant Clos, an attorney employed with Defendant WWR, filed a suit in Michigan's 36th District Court " for possession after land contract forfeiture." (Compl. at 8.) Franklyn says, " This complaint contained a principal balance due of $4, 711, 094.00." (Id.) The state-court complaint sought to recover possession of the Property and " listed a material breach of contract violation for nonpayment of taxes and insurance." (Compl. at 9.) The complaint also listed Franklyn's address as 15871 Kentucky in Detroit, Michigan, rather than the address of the Property. (Compl. at 9-10.) " The complaint for possession after land contract forfeiture never lists . . . Penrod Detroit, MI . . . as the address of the home in question." (Compl. at 10.) None of Franklyn, WWR, Clos, or Fannie Mae has provided the Court with a copy of the state-court complaint.
Apparently as a result of Clos' use of the 15871 Kentucky address, Franklyn was not served with the complaint, and the state court entered a default judgment against him for his non-appearance. ( See Compl. at 11.) " [O]n or about August 30, 2013, " Franklyn checked the mail at 15871 Kentucky and found a copy of the judgment. (Id.)
Franklyn then sought to set the default judgment aside. (Id.) At the hearing on Franklyn's motion, Franklyn asserted that the $4.7 million figure was error and that the 36th District Court lacked jurisdiction given that amount-in-controversy. (Compl. at 11-12.) The state court denied Franklyn's motion. (Compl. at 12.) Franklyn appealed. (Compl. at 12.) The appeal was dismissed on Harbour Portfolio's motion. (Compl. at 12-13.)
In March 2014, Franklyn filed this suit naming six defendants: Federal National Mortgage Association; Harbour Portfolio VI, LP; National Asset Advisors, LLC; RECA Properties, LLC; Weltman Weinburg, and Reis, Co., LPA; and William Clos. ( See generally Compl.)
In April 2014, WWR and Clos each filed a motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6). Following its May 2014 answer, Fannie Mae filed a motion for judgment on the pleadings ...