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Sims v. Federal Home Loan Mortgage Corporation

United States District Court, E.D. Michigan, Southern Division

May 20, 2015

DONNIE SIMS, Plaintiff,
v.
FEDERAL HOME LOAN MORTGAGE CORPORATION and OCWEN LOAN SERVICING, LLC, Defendants.

REPORT AND RECOMMENDATION

R. STEVEN WHALEN, Magistrate Judge.

This is a mortgage foreclosure case. On August 15, 2014, Plaintiff Donnie Sims, through counsel, filed a civil complaint in the Oakland County Circuit Court. On September 2, 2014, Defendants Federal Home Loan Mortgage Corporation ("Freddie Mac") and Ocwen Loan Servicing, LLC ("Ocwen") removed the case to this Court. Before the Court is Defendants' Corrected Motion to Dismiss [Doc. #5], filed on October 10, 2014, which has been referred for a Report and Recommendation pursuant to 28 U.S.C. ยง 636(b)(1)(B). The Plaintiff has not filed a response. For the reasons discussed below, I recommend that the Defendants' motion be GRANTED and that the complaint be DISMISSED WITH PREJUDICE.

I. FACTS

On October 22, 2007, the Plaintiff received a $99, 900.00 loan from Shore Mortgage for the purchase of real property in Southfield, Michigan. The loan was secured by a mortgage granted to Mortgage Electronic Registration Systems, Inc. ("MERS"), as nominee for Shore Mortgage. On or about November 14, 2012, MERS assigned the mortgage to GMAC Mortgage, LLC ("GMAC"), and on or about September 3, 2014, GMAC assigned the mortgage to Ocwen.

Following the Plaintiff's default, Ocwen commenced foreclosure by advertisement proceedings, and on February 18, 2014, Freddie Mac purchased the property at a Sheriff's Sale. The statutory redemption period expired on August 18, 2014. The Plaintiff did not redeem the property.

In his complaint, the Plaintiff brings claims of wrongful foreclosure (Count I), breach of contract (Count II), and fraudulent misrepresentations (Count III). He asks that the Sheriff's Deed to Freddie Mac be set aside and that the matter proceed as a judicial foreclosure.

II. STANDARD OF REVIEW

Fed.R.Civ.P. 12(b)(6) provides for dismissal of a complaint "for failure of the pleading to state a claim upon which relief can be granted." Rule 12(b) also provides that if, on consideration of a motion under paragraph (6), "matters outside the pleadings are presented to and not excluded by the court, the motion shall be treated as one for summary judgment and disposed of as provided in Rule 56 (summary judgment)." In assessing a Rule 12(b)(6) motion, the court accepts the plaintiff's factual allegations as true, and asks whether, as a matter of law, the plaintiff is entitled to legal relief. Rippy v. Hattaway, 270 F.3d 416, 419 (6th Cir. 2001).

The United States Supreme Court has modified the standard for determining whether a complaint is subject to dismissal under Fed.R.Civ.P. 12(b)(6). In Bell Atlantic Corp. v. Twombley, 550 U.S. 544, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007), the Court, construing the requirements of Fed.R.Civ.P. 8(a)(2), held that although a complaint need not contain detailed factual allegations, its "[f]actual allegations must be enough to raise a right to relief above the speculative level... on the assumption that all the allegations in the complaint are true." Id., 127 S.Ct. at 1964-65 (internal citations and quotation marks omitted). Further, "a plaintiff's obligation to provide the grounds of his entitlement to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Id. (Internal citations and quotation marks omitted). See also Association of Cleveland Fire Fighters v. City of Cleveland, Ohio 502 F.3d 545, 548 (6th Cir. 2007). Stated differently, a complaint must "state a claim to relief that is plausible on its face." Twombley, at 1974.

In Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009), the Court explained and expanded on what it termed the "two-pronged approach" of Twombley. First, it must be determined whether a complaint contains factual allegations, as opposed to legal conclusions. "Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice." Id., 129 S.Ct. at 1949, citing Twombley, 550 U.S. at 555. Second, the facts that are pled must show a "plausible" claim for relief, which the Court described as follows:

"Determining whether a complaint states a plausible claim for relief will, as the Court of Appeals observed, be a context-specific task that requires the reviewing court to draw on its judicial experience and common sense. But where the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged-but it has not shown[n]"-that the pleader is entitled to relief.'" 129 S.Ct. at 1950 (Internal citations omitted).

III. DISCUSSION

The resolution of the Defendants' motion hinges on whether the complaint plausibly sets forth a claim that the foreclosure was defective. It does not.

Following the Sheriff's Sale, the Plaintiff failed to redeem the property within the six-month statutory redemption period, and therefore does not have standing to contest the foreclosure. In Michigan, the failure to redeem the property within the six-month period following a foreclosure by advertisement divests the former owner of all rights to the property. Piotrowski v. State Land Office Bd., 302 Mich. 179, 4 N.W.2d 514 (1942)(because "[p]laintiffs did not avail themselves of their right of redemption in the foreclosure proceedings, " all "rights in and to the property were ...


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