United States District Court, Eastern District of Michigan, Southern Division
OPINION AND ORDER DENYING IN PART AND GRANTING IN PART DEFENDANT’S MOTION TO DISMISS
Hon. John Corbett O’Meara United States District Judge
Before the court is Defendant’s motion to dismiss, filed January 5, 2015, and which has been fully briefed. For the reasons discussed below, Defendant’s motion is denied in part and granted in part.
On April 2, 2004, Plaintiff, Earma Starr, and her now-deceased husband, James Starr, obtained a loan from Flagstar Bank in the amount of $155, 200. The loan was evidenced by a note and secured by a mortgage on their home on Santa Rose Drive in Detroit, where Plaintiff has lived for forty years. The mortgage was assigned to Nationstar Mortgage LLC on February 22, 2013, and recorded on March 4, 2013. Defendant Federal National Mortgage Association (“Fannie Mae”) is the successor in interest to Nationstar.
In 2012, Plaintiff missed two mortgage payments. She then learned about Detroit Non Profit Corporation (DNPC), an agency that provides housing counseling and mortgage assistance to prevent foreclosure. DNPC approved Plaintiff for mortgage assistance to cure her arrearage. DNPC sent a check to Nationstar that cured her arrearage in October 2012. See Pl.’s Compl. at Ex. 4; Pl.’s Affidavit. Plaintiff then attempted to resume making her monthly payments but Nationstar refused to accept her check. Despite the fact that someone at Nationstar had signed for the check, Nationstar told Plaintiff that it never received the check from DNPC and that she would need to modify her loan. Id.; Pl.’s Ex. 6.
Plaintiff worked with DNPC and Step Forward Michigan to modify her loan. Plaintiff contends that she sent documents over and over again to Nationstar for almost a year, to no avail. Pl’s Affidavit at ¶ 10. In November 2013, she received a letter from Step Forward Michigan indicating that they could not help her because her home had been sold at a sheriff’s sale. Id. Plaintiff contends that she only received notice of the sale after calling Nationstar to inquire about homeowners insurance for the property. Id. at ¶ 11. After the sale, Nationstar sent Plaintiff a check back in the amount that DNPC had paid to cure her arrearage. Id. at ¶ 12.
Defendant contends that Plaintiff was in default “by failing to make each and every monthly payment as they came due.” Nationstar proceeded with foreclosure by advertisement. On October 24, 2013, Defendant purchased the property at the sheriff’s sale for $139, 631.93. The redemption period expired on April 24, 2014, and Plaintiff did not redeem the property.
On May 2, 2014, Defendant Fannie Mae initiated summary proceedings to recover possession of the property in 36th District Court. On May 22, 2014, Plaintiff filed an answer and counterclaim. The counterclaim (now the complaint) was severed from the summary proceedings and removed to Wayne County Circuit Court. The complaint was then removed to this court by Fannie Mae. Plaintiff’s complaint alleges claims for breach of contract, promissory estoppel, illegal foreclosure, and exemplary damages.
LAW AND ANALYSIS
I. Standard of Review
Defendant seeks dismissal of Plaintiffs’ claims pursuant to Fed.R.Civ.P. 12(b)(6). To survive a motion to dismiss, the plaintiff must allege facts that, if accepted as true, are sufficient “to raise a right to relief above the speculative level” and to “state a claim to relief that is plausible on its face.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007). See also Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949-50 (2009). “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.” Id. at 1949. See also Hensley Manuf. v. Propride, Inc., 579 F.3d 603, 609 (6th Cir. 2009).
II. Standing to Challenge Foreclosure Sale
Defendant argues that, because the redemption period has expired, Plaintiff lacks statutory standing to challenge the foreclosure sale. Plaintiff contends that the foreclosure is voidable as a result of an irregularity in the foreclosure process, that is, Plaintiff was not in default because her arrearage had been promptly cured.
Foreclosures by advertisement are governed by statute under Michigan law. See M.C.L. § 600.3201 et seq. The applicable statute provides that the mortgagor has six months after the sheriff’s sale to redeem the property. M.C.L. § 600.3240. “If a mortgagor fails to avail him or herself of the right of redemption, all the mortgagor’s rights in and to the property are ...