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Marshall v. Nationstar Mortgage LLC

United States District Court, Western District of Michigan, Southern Division

March 10, 2015

NATIONSTAR MORTGAGE, LLC et al., Defendants.


JANET T. NEFF United States District Judge

This case is before the Court following removal from the Kent County, Michigan, Circuit Court on August 16, 2013. Plaintiff's First Amended Complaint (FAC) alleges several related causes of action against Defendants following the foreclosure and sheriff's sale of her home. Defendants have filed a Motion to Dismiss (Dkts 40, 41). Plaintiff has filed a Response (Dkt 44), and Defendants have filed a Reply (Dkt 42). Having fully considered the parties' briefs and the record, the Court concludes that oral argument is unnecessary to resolve the pending motion. See W.D. Mich. LCivR 7.2(d). The Court grants Defendants' Motion to Dismiss.

I. Facts

On April 4, 2007, Plaintiff obtained a $120, 150.00 loan (the "Loan") from Arbor Mortgage Corporation ("Lender") and executed a mortgage on her home in Wyoming, Michigan, in favor of Mortgage Electronic Registrations Systems, Inc. (MERS) (FAC ¶¶ 9, 10 & Ex. A; Defs. Mot. Br., Ex. 1). MERS assigned the mortgage to Defendant Nationstar Mortgage, LLC on March 2, 2011 (FAC ¶ 15; Defs. Mot. Br., Ex. 2).

In October 2010, Plaintiff experienced health problems that caused her to go on unpaid medical leave from her job; in early 2011, Plaintiff fell behind on her mortgage payments and defaulted on her loan (FAC ¶¶ 16-18). Nationstar commenced foreclosure proceedings; however, the May 11, 2011 foreclosure sale was subsequently adjourned, and Plaintiff was offered a loan modification trial period plan (TPP) (id. ¶¶ 28-30; Defs. Mot. Br., Ex. 3 at 4-5). Plaintiff made three TPP payments on the Mortgage to Defendant Nationstar; the first payment on June 30, 2011, in the amount of $850.00, the second payment on July 23, 2011, in the amount of $833.00, and the third payment on August 31, 2011 in the amount of $833.00 (FAC ¶ 32). No permanent loan modification was ever consummated; the Property was ultimately foreclosed and sold at a Sheriff's Sale on November 2, 2011 to Defendant Nationstar; and later transferred by quit-claim deed to Defendant Federal National Mortgage Association ("Fannie Mae") (id. ¶ 34; Defs. Br., Exs. 3 & 6). The redemption period expired six months after the foreclosure sale, on May 2, 2012 (Defs. Br., Ex. 3 at 9). Plaintiff did not redeem the Property.

After this case was removed to this Court, the parties attempted over the course of the next year to reach a settlement. Despite significant efforts, no resolution could be reached, and Defendants requested that the Court entertain a motion to dismiss. The Court conducted a pre- motion conference with counsel in December 2013, and granted Plaintiff's request to amend her complaint. On January 22, 2014, Plaintiff filed a First Amended Complaint (FAC) (Dkt 39), alleging four counts: (1) Breach of Contract (Note and Mortgage) (Count 1); (2) Breach of Contract (HAMP TPP) (Count 2); (3) Quiet Title Based on Void or Voidable Sheriff's Deed (Count 3); and (4) violation of the Michigan Mortgage Brokers, Lenders, and Servicers Act (MBLSA) (Count 4). The parties thereafter proceeded with briefing on the motion to dismiss.

II. Legal Standard

Fed.R. Civ. P. 12(b)(6) authorizes the court to dismiss a complaint if it "fail[s] to state a claim upon which relief can be granted[.]" In deciding a motion to dismiss for failure to state a claim, the court must construe the complaint in the light most favorable to the plaintiff and accept all well-pleaded factual allegations in the complaint as true. Thompson v. Bank of Am., N.A., 773 F.3d 741, 750 (6th Cir. 2014). "[D]ocuments attached to the pleadings become part of the pleadings and may be considered on a motion to dismiss." Commercial Money Ctr., Inc. v. Ill. Union Ins. Co., 508 F.3d 327, 335-36 (6th Cir. 2007) (citing Fed.R.Civ.P. 10(c)). The court may also consider documents referred to in the pleadings that are integral to the claims, as well as matters of public record, without converting a motion to dismiss into one for summary judgment. Id. at 336; Greenberg v. Life Ins. Co. of Va., 177 F.3d 507, 514 (6th Cir. 1999).[1]

To survive a motion to dismiss, the complaint must present "enough facts to state a claim to relief that is plausible on its face." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 557, 570 (2007). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). This is "a context-specific task that requires the reviewing court to draw on its judicial experience and common sense." Id. at 679. "The plausibility standard is not akin to a ‘probability requirement, ' but it asks for more than a sheer possibility that a defendant has acted unlawfully." Id. at 678 (quoting Twombly, 550 U.S. at 556).

III. Analysis

Defendants advance several independent bases for dismissal and have submitted a number of documents to support their contentions, including public records and other documents relating to the loan, mortgage, foreclosure and sale of the Property at issue. These exhibits include the signed recorded mortgage (Ex. 1), the recorded Assignment of Deed of Trust (Ex. 2), the recorded Sheriff's Deed (Ex. 3), a May 11, 2011 loan modification Trial Period Plan/Notice with letters to Plaintiff (Ex. 4), a permanent loan modification agreement and mail label to Plaintiff (Ex. 5), and a recorded Quit Claim Deed (Ex. 6). Defendants assert these documents are properly considered with their motion to dismiss because the documents were relied upon or referenced in Plaintiff's complaint and are central to her claims. See Commercial Money Ctr., 508 F.3d at 336; Greenberg, 177 F.3d at 514 (the court may consider documents referred to in the pleadings that are integral to the claims, as well as matters of public record, without converting a motion to dismiss into one for summary judgment).

Plaintiff objects to the Court considering these documents. Plaintiff asserts that "Defendants attempt to rely on cherry-picked documents in a manner that would override the facts set forth in Plaintiff's First Amended Complaint" (Pl. Resp. at 5-6). Plaintiff argues that the rule permitting consideration of such documents "assumes that the parties agree that the attached document is the one referred to in the complaint and is central to the plaintiff's claims" (id. at 5). Plaintiff states that the accuracy and existence of the documents must also be undisputed, as must the facts asserted in any public document (id. at 7-8). Plaintiff asserts that the Trial Period Plan and permanent modification submitted by Defendants are different from those referenced in her complaint. Plaintiff concedes that the recorded documents are public records, which may be relied upon in deciding Defendants' motion to dismiss, but she argues that "the facts asserted in the records identified by Defendants remain in dispute, " and since they are contrary to the facts asserted by Plaintiff in her First Amended Complaint, this Court cannot rely upon them in deciding a Rule 12(b)(6) motion (id. at 9).

The Court finds little, if any, merit in Plaintiff's arguments that the Court should not consider these documents or the facts to the extent documented therein merely because Plaintiff's allegations in her complaint are to the contrary. On a Rule 12(b)(6) motion, the Court is not bound to accept as true "unwarranted" allegations or factual inferences in the complaint, including allegations "contradicted by public records and other evidentiary materials of which the Court may take judicial notice." McGee v. City of Cincinnati Police Dep't, No. 1:06-CV-726, 2007 WL 1169374, at *2 (S.D. Ohio Apr. 18, 2007); see also Moon v. Harrison Piping Supply, 465 F.3d 719, 728 (6th Cir. 2006) (the court draws all reasonable inferences in favor of the nonmoving party (emphasis added)).

Plaintiff's allegations in her complaint and her legal claims necessarily hinge on the relevant public records and other loan, mortgage and foreclosure related documents. Plaintiff attached nothing more than an unsigned note and mortgage to her First Amended Complaint, and attached only a differently-copied version of the same document to her Response (Dkt 39, Ex. A; Dkt 44, Ex. A). Although Plaintiff alleges defects in the foreclosure process that purportedly render the sheriff's sale voidable, she relies on nothing more than bare, unsupported allegations. Plaintiff does not claim that the documents attached by Defendants are false or fraudulent, and she points to no particular facts therein that are erroneous or misrepresentations.

The Court finds the cases cited by Plaintiff inapposite. See Pl. Resp. at 6-8, citing, e.g., Wilson v. Trumbull Cnty. Dept. of Job & Family Servs., No. 4:12 CV 02163, 2013 WL 3776743, at *4 (N.D. Ohio July 17, 2013) (court declined to consider a police report authored by one of the defendants, which contained that defendant's version of the incident in question and descriptions of conversations he claimed to have had with the plaintiffs); Harrison v. PNC Fin'l Servs. Group, 928 F.Supp.2d 934, 944 (S.D. Ohio 2013) (the defendants almost exclusively referenced the seven exhibits they attached to motion to dismiss to present the "facts" of the case with little reference to what the plaintiff had stated in his amended complaint). "[I]n general a court may only take judicial notice of a public record whose existence or contents prove facts whose accuracy cannot reasonably be questioned." Passa v. City of Columbus, 123 F.Appx. 694, 697 (6th Cir. 2005). "[T]he majority of the cases which do not allow a court to take judicial notice of the contents of a public record do so because there is no way for an opposing party, prior to the issuance of the court's decision, to register his or her disagreement with the facts in the document of which the court was taking notice." Id. That does not appear to be the situation here. Plaintiff essentially disputes the surrounding circumstances and that she received certain documents.

The Court finds no basis for indiscriminately disregarding the documentary evidence submitted by Defendants. The Court will consider the documents in evaluating Plaintiff's claims in accordance with the standards for deciding a Rule 12(b)(6) motion. To the extent Plaintiff asserts facts different from those evidenced in the documents, the Court will accept all plausible well-pleaded factual allegations in the complaint as true, and draw all reasonable inferences in Plaintiff's favor. See Thompson, 773 F.3d at 750; Lutz v. Chesapeake Appalachia, L.L.C., 717 F.3d 459, 464 (6th Cir. 2013) (emphasis added). As noted above, "[a] claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Iqbal, 556 U.S. at 678.

A. Counts 1, 3 and 4

Defendants argue that Plaintiff's claims are barred due to the expiration of the redemption period. Further, Plaintiff's assertions regarding alleged notice defects are wrong, and in any event, do not permit setting aside the sale. Defendants therefore contend that Counts 1, 3, and 4 fail to state claims as a matter of law.

Plaintiff responds that she has stated claims based on wrongful foreclosure. She characterizes Defendants' argument as primarily that Plaintiff lacks standing to challenge the foreclosure. She states that the standing issue is a "red herring" that has been routinely rejected by the Courts, including this Court.

Defendants, in turn, reply that their primary argument was not that Plaintiff lacked standing. And regardless how the issue is framed, the expiration of the redemption period still bars a plaintiff's claim if she cannot make the requisite showing of fraud and prejudice. See Conlin v. Mortg. Elec. Registration Sys., Inc., 714 F.3d 355 (6th Cir. 2013); Kim v. JP Morgan Chase Bank, N.A., 825 N.W.2d 329 (Mich. 2012).

This Court has previously addressed the standing issue in the context of a foreclosure challenge, and this point need not be belabored here. See Lamie v. Fed. Home Loan Mortg. Corp., No. 1:11–cv–156, 2012 WL 1835243, at *3-4 (W.D. Mich. May 21, 2012). Standing is not the proper theory on which to seek dismissal of a foreclosure challenge after the expiration of the redemption period. Id. Instead, courts look to the merits of the challenge for which the standard is well-established. "[O]nce the redemption period has expired, a plaintiff must meet a high standard for a federal court to invalidate or set aside a mortgage foreclosure by advertisement in Michigan. In particular, a plaintiff must show both fraud related to the foreclosure process itself and that he or she was prejudiced by the defendant's failure to comply ...

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