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Hogan v. Visio Financial Services, Inc.

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

June 2, 2015



DAVID R. GRAND, Magistrate Judge.


Plaintiff Phillip Wendell Hogan ("Hogan") commenced this action against defendant Visio Financial Services, Inc. ("Visio") seeking to invalidate the foreclosure sale of his property and compel defendant to engage in good faith negotiations of a loan modification. Before the Court is Visio's motion to dismiss the complaint. [7]. Hogan filed a response, to which Visio filed a reply. [12, 13]. The motion has been referred to this Court for a Report and Recommendation pursuant to 28 U.S.C. § 636(b)(1)(B). For the following reasons, the Court RECOMMENDS that Visio's motion [7] be GRANTED.


A. Background

On October 8, 2013, Hogan executed a mortgage loan with Visio in the amount of $28, 856. [1, Ex. 1, 2].[1] The mortgage was secured by Hogan's property located at 14035 Archdale in Detroit, Michigan. [ Id. ]. The mortgage was duly recorded in the Wayne County Register of Deeds on October 23, 2013 and provided that the mortgagee could sell the property in the event Hogan defaulted on the mortgage. [ Id., Ex. 2 at 8]. Since then, the mortgage changed hands several times as Visio initially assigned the mortgage to VFS Lending Services IV, LLC ("VFS") [ Id., Ex. 3], VFS assigned it to Atalaya Administrative, LLC [ Id., Ex. 4], and Atalaya finally assigned it back to Visio on May 7, 2014. [ Id., Ex. 5].

What happened next is not entirely clear. Hogan does not acknowledge whether he ever defaulted on the mortgage and, although he admits to making an unsuccessful attempt at some form of loan modification or loss mitigation, the record is devoid of any written correspondence between the parties substantiating these efforts. What is clear is that Visio commenced foreclosure proceedings by publishing the notice of foreclosure in the Wayne County Legal News for four weeks in a row, starting on July 25, 2014 [ Id., Ex. 7 at 2], and on September 4, 2014 Visio purchased the property at the foreclosure sale for $44, 199.61. [ Id., Ex. 7 at 1].

With the redemption period set to expire on March 4, 2015 [ id. ], Hogan filed this action in Wayne County Circuit Court on March 3, 2015, alleging causes of action for wrongful foreclosure under state law and the Real Estate Settlement Procedures Act ("RESPA")[2], breach of contract, and fraudulent representation. Hogan asserts, in part, that Visio initiated foreclosure proceedings while the parties were still negotiating a potential loan modification. In addition, Hogan requested an ex parte temporary restraining order to extend the redemption period. [ Id. at 62-63]. The state circuit court granted the requested relief and scheduled a show cause hearing on March 13, 2015. [ Id. at 68-71]. The day before the hearing, Visio removed this case to the United States District Court for the Eastern District of Michigan. [1]. Only Hogan's RESPA claim remains pending before this Court, since his state law claims were remanded to the Wayne County Circuit Court. [5]. In its motion to dismiss the complaint, Visio principally asserts that Hogan's RESPA claim lacks merit because the equitable relief that Hogan seeks is not available under the statute or its implementing regulations.

B. Legal Standard

A motion to dismiss pursuant to Fed.R.Civ.P. 12(b)(6) tests a complaint's legal sufficiency. "To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 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." Id. (citing Twombly, 550 U.S. at 556). The plausibility standard "does not impose a probability requirement at the pleading stage; it simply calls for enough facts to raise a reasonable expectation that discovery will reveal evidence of illegal [conduct]." Twombly, 550 U.S. at 556. Put another way, the complaint's allegations "must do more than create speculation or suspicion of a legally cognizable cause of action; they must show entitlement to relief." League of United Latin Am. Citizens v. Bredesen, 500 F.3d 523, 527 (6th Cir. 2007) (emphasis in original) (citing Twombly, 550 U.S. at 555-56).

In deciding whether a plaintiff has set forth a "plausible" claim, a reviewing court must accept the factual allegations in the complaint as true. Id.; see also Erickson v. Pardus, 551 U.S. 89, 94 (2007). This tenet, however, "is inapplicable to legal conclusions. Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice, " to prevent a complaint from being dismissed on grounds that it fails to sufficiently comport with basic pleading requirements. Iqbal, 556 U.S. at 678; see also Twombly, 550 U.S. at 555; Howard v. City of Girard, Ohio, 346 F.Appx. 49, 51 (6th Cir. 2009). Furthermore, a court is not required to "create a claim which [a plaintiff] has not spelled out in his pleading." Clark v. Nat'l Travelers Life Ins. Co., 518 F.2d 1167, 1169 (6th Cir. 1975). Ultimately, "[d]etermining whether a complaint states a plausible claim for relief will... be a context-specific task that requires the reviewing court to draw on its judicial experience and common sense." Iqbal, 556 U.S. at 679.

C. Analysis

Hogan's RESPA claim should be dismissed because the statute does not provide for the equitable relief that he seeks.

Pursuant to the regulations promulgated under RESPA, loan servicers must provide borrowers with an opportunity to submit a completed loan modification application before commencing foreclosure proceedings.[3] 12 C.F.R. § 1024.41(f)-(h). Borrowers may enforce these regulations pursuant to section 6(f) of RESPA, 12 U.S.C. § 2605(f), which limits the available remedies for any violations to actual damages and the borrower's costs and attorney fees. See Servantes v. Caliber Home Loans, Inc., No. 14-13324, 2014 U.S. Dist. LEXIS 170667, at *2 (E.D. Mich. Dec. 10, 2014) (dismissing RESPA claim where plaintiff sought equitable relief because the statute solely authorizes monetary damages); Fredericks v. Allquest Home Mortgage Corp., No. 15-10429, 2015 U.S. Dist. LEXIS 56447, at *7-8 (E.D. Mich. Apr. 30, 2015) (same). Because Hogan exclusively seeks equitable remedies in the form of a declaration that the foreclosure proceedings are null and void, an injunction to stop the foreclosure, and an order requiring Visio to negotiate a loan ...

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