United States District Court, E.D. Michigan, Southern Division
OPINION AND ORDER GRANTING IN PART AND DENYING IN
PART PLAINTIFF'S MOTION FOR DEFAULT JUDGMENT
STEPHEN J. MURPHY, III United States District Court Judge.
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]
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.
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.
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
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.
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.
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.
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.
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.
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:
Less post-suit, partial borrower payments from
3/9/16 to 8/4/16:
Total principal balance:
Date of Last Payment:
Force Placed Insurance Market Amer. Ins.,
Policy No. FP99801974 $45, 000.00 coverage
Premiums paid 6/5/13 - present:
Mot. Def. 5-6, ECF No. 30; see Verification, ECF No.
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.