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Sequoia Financial Solutions, Inc. v. Stewart

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

January 11, 2017

SEQUOIA FINANCIAL SOLUTIONS, INC., Plaintiff,
v.
DONALD E. STEWART, et al., Defendants.

          OPINION AND ORDER GRANTING IN PART AND DENYING IN PART PLAINTIFF'S MOTION FOR DEFAULT JUDGMENT [30]

          STEPHEN J. MURPHY, III United States District Court Judge.

         Plaintiff Sequoia Financial Solutions, Inc. filed an amended complaint against Defendants Donald and Heather Stewart, CitiMortgage, Inc, the Michigan Homeowner Assistance Nonprofit Housing Corporation ("MHA"), and Capital One Bank [USA] N.A. Am.

         Compl., ECF No. 16. Sequoia alleges that the Stewarts failed to make payments on a note, secured by a mortgage (the "Instruments"), for 4352 Ninth Street, Luna Pier, Michigan (the "Property"). Id. Sequoia and MHA entered a valid resolution of the case. Order, ECF No.

         21. The remaining Defendants did not answer the amended complaint. Sequoia received Clerk's Entries of Default against them, and now moves for Default Judgment. Mot., ECF No. 30. For the reasons stated below, the Court will grant the motion.

         BACKGROUND

         Title to the Property vested in Donald Stewart by a Warranty Deed dated August 23, 2002. ECF No. 30-1. That day, he executed a promissory note for $96, 640.00 to Mortgage Electronic Registration Systems ("MERS"), nominee for Household Bank, see ECF No. 30-2, and a mortgage to MERS with the Property serving as collateral ("First Instruments"). See ECF No. 30-3. That same day, he and Heather Stewart, married before 2002, executed a purchase money mortgage for $24, 160.00 to MERS with the Property serving as collateral ("Second Instruments”). See Am. Compl. ¶ 14, ECF No. 16.

         On February 22, 2003, MERS assigned the First Instruments to CitiFinancial. ECF No. 30-4. On January 10, 2003, MERS assigned the Second Instruments to CitiFinancial per a recorded assignment which erroneously lists their principal balance as $241, 600.00. See Am. Compl. ¶ 17, ECF No. 16. CitiFinancial subsequently merged into Defendant CitiMortgage and acquired both sets of Instruments. Id. ¶ 18.

         On September 17, 2010, Capital One obtained judgment for $1, 456.54 against Donald Stewart, Monroe Circuit Court Case No. 10-M-20B-GC, recorded on the Property. Id. ¶ 19. On February 27, 2012, CitiFinancial assigned the First Instruments to Granite Loan Acquisition, see ECF No. 30-5, which assigned them to Sequoia on April 24, 2012, see ECF No. 30-6.

         On August 15, 2012, the Stewarts executed a Loan Modification Agreement ("the Agreement") with Sequoia in which Donald Stewart stipulated that the principal balance of the First Instruments was $82, 133.80, with total arrears of $13, 423.63, due since July 23, 2011. ECF No. 30-7. Pursuant to the Agreement, the Stewarts agreed to make payments on the Instruments on a modified principal balance of $64, 000.00, and to maintain homeowners insurance on the Property, providing a copy of the policy to and designating Sequoia as the beneficiary of any applicable insurance proceeds. Id. at 1-2. The Stewarts also agreed not to take certain actions like incurring additional debt and/or other enforcement of a secured interest - including a home equity loan, second mortgage, tax lien, judgment or other encumbrance against the Property. Id. at 3.

         In the Agreement, Sequoia reserved the right to accept or reject payments, without prejudice to its other rights under the Agreement, in the event that the Stewarts breached the Agreement and/or the First Instruments. Id. Sequoia's acceptance of funds would not constitute a waiver of default or of acceleration of the First Instruments. Id. at 3. The Stewarts agreed that their failure to comply with the Agreement and/or First Instruments would constitute a breach of the Agreement, which would be deemed null and void allowing Sequoia to pursue all remedies available under the First Instruments, including the original amounts due under them, and rights in the Property. Id.

         On September 19, 2013, the Stewarts executed a note for $17, 900.34 with MHA, secured by a mortgage on the Property as collateral. See Am. Compl. ¶ 30, ECF No. 16.

         The loan went into default and Sequoia filed suit to enforce the Instruments against the Defendants. Id. Sequoia accelerated the entire principal balance of the First Instruments, plus costs and fees, for the below amounts as of the date of suit:

         Principal:

Principal Balance:

$82, 133.80

Less post-suit, partial borrower payments from 3/9/16 to 8/4/16:

$3, 712.18

Total principal balance:

$78, 421.62

Date of Last Payment:

11/6/15

Late Charges:

$77.34

Force Placed Insurance Market Amer. Ins., Policy No. FP99801974 $45, 000.00 coverage Premiums paid 6/5/13 - present:

$1, 383.75

Mot. Def. 5-6, ECF No. 30; see Verification, ECF No. 30-8.

         Sequoia now seeks declaratory relief, rescission of the Agreement, judicial foreclosure, and related relief (Count I), possession of the Property (Count II), and judgment as to Donald Stewart (Count III). Am. Compl., ECF No. 16.

         LEGAL ...


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