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Zaher v. Argent Mortgage Co., LLC

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

January 18, 2017




         Plaintiff Houda Ali Zaher (“Plaintiff”), through counsel, initiated this action against Defendants Argent Mortgage Company LLC (“Argent”), AMC Mortgage Services, Inc. (“AMC”), Citi Residential Lending Inc. (“Citi”), American Home Mortgage Servicing, Inc. (“AHMSI”), AH Mortgage Acquisition Co. Inc. (“AH Mortgage”), Homeward Residential Inc. (“Homeward”), and Ocwen Loan Servicing, LLC (“Ocwen”) in state court on or about March 7, 2014, alleging that Defendants misapplied the payments she made toward her residential mortgage loan and wrongfully claimed she was in default on the loan. Plaintiff filed a First Amended Complaint on May 1, 2014. Defendants timely removed the action to this Court on May 8, 2014 on the basis of diversity jurisdiction, 28 U.S.C. § 1332. Presently before the Court is Defendants' motion to dismiss Plaintiff's First Amended Complaint, filed pursuant to Federal Rule of Civil Procedure 12(b)(6). (ECF No. 27.) Finding the facts and legal arguments sufficiently presented in the parties' briefs, the Court dispensed with oral argument pursuant to Eastern District of Michigan Local Rule 7.1(f). For the reasons that follow, the Court grants Defendants' motion and dismisses the action with prejudice.

         I. Standard for Motion to Dismiss

         A motion to dismiss pursuant to Rule 12(b)(6) tests the legal sufficiency of the complaint. RMI Titanium Co. v. Westinghouse Elec. Corp., 78 F.3d 1125, 1134 (6th Cir. 1996). Under Federal Rule of Civil Procedure 8(a)(2), a pleading must contain a “short and plain statement of the claim showing that the pleader is entitled to relief.” To survive a motion to dismiss, a complaint need not contain “detailed factual allegations, ” but it must contain more than “labels and conclusions” or “a formulaic recitation of the elements of a cause of action . . ..” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007). A complaint does not “suffice if it tenders ‘naked assertions' devoid of ‘further factual enhancement.' ” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at 557).

         As the Supreme Court provided in Iqbal and Twombly, “[t]o 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.' ” Id. (quoting Twombly, 550 U.S. at 570). “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.

         In deciding whether the plaintiff has set forth a “plausible” claim, the court must accept the factual allegations in the complaint as true. Erickson v. Pardus, 551 U.S. 89, 94 (2007). This presumption is not applicable to legal conclusions, however. Iqbal, 556 U.S. at 668. Therefore, “[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Id. (citing Twombly, 550 U.S. at 555).

         Ordinarily, the court may not consider matters outside the pleadings when deciding a Rule 12(b)(6) motion to dismiss. Weiner v. Klais & Co., Inc., 108 F.3d 86, 88 (6th Cir. 1997) (citing Hammond v. Baldwin, 866 F.2d 172, 175 (6th Cir. 1989)). A court that considers such matters must first convert the motion to dismiss to one for summary judgment. See Fed. R. Civ. P 12(d). However, “[w]hen a court is presented with a Rule 12(b)(6) motion, it may consider the [c]omplaint and any exhibits attached thereto, public records, items appearing in the record of the case and exhibits attached to [the] defendant's motion to dismiss, so long as they are referred to in the [c]omplaint and are central to the claims contained therein.” Bassett v. Nat'l Collegiate Athletic Ass'n, 528 F.3d 426, 430 (6th Cir. 2008). Thus, a court may take judicial notice of “other court proceedings” without converting a motion to dismiss into a motion for summary judgment. Buck v. Thomas M. Cooley Law Sch., 597 F.3d 812, 816 (6th Cir. 2010) (citing Winget v. J.P. Morgan Chase Bank, N.A., 537 F.3d 565, 575 (6th Cir. 2008)).

         II. Factual and Procedural Background

         On August 6, 2004, Plaintiff secured a residential mortgage loan from Defendant Argent related to real property located at 756 Dover Street, Dearborn Heights, Michigan (“Property”). (Amend. Compl. ¶ 19.) In connection with the transaction, Plaintiff executed a Fixed Rate Note in favor of Argent in the amount of $198, 000.00. (ECF No. 27-2 at Pg ID 802.) To secure repayment of the loan, Plaintiff granted a mortgage (“Mortgage”) on the Property to Argent, as mortgagee. (ECF No. 1-4 at Pg ID 77.) The mortgage was recorded in the Wayne County Register of Deeds on September 10, 2004. (Id.)

         Argent transferred the servicing rights to Ameriquest Mortgage Company, LLC on or about August 11, 2004.[1] (ECF No. 27-4 at Pg ID 807.) Next, AMC transferred its servicing rights to Defendant Citi on October 1, 2007. (ECF No. 27-5 at Pg ID 811.) The third transfer of service occurred on February 11, 2009, when Citi transferred its servicing rights to Defendant American Home Mortgage Servicing, Inc., which later changed its name to Homeward Residential, Inc. (“Homeward”). (ECF No. 27-6 at Pg ID 813; see also Amend. Compl. ¶¶ 43-45.)

         Both parties agree that no late fees or penalties were assessed by Defendants Argent, AMC, or Citi. (See Amend. Compl. ¶¶ 22, 25, 29; ECF No. 27 at Pg ID 780.) Plaintiff alleges that she was first unjustly charged with late payment fees by Defendant Homeward. (Amend. Compl. ¶ 35, 44.) Plaintiff reached out to Defendant Homeward, advising them to correct their accounting and requesting an accounting history. (Id., ¶¶ 36, 37.) Plaintiff did not receive a response. (Id. , ¶ 38.) Plaintiff continued to receive late fee charges along with letters stating that her payments were late until July 2012. (Id., ¶ 44.)

         In a letter dated February 22, 2013, Plaintiff was notified that Defendant Homeward would transfer the servicing rights to the mortgage loan to Defendant Ocwen Loan Servicing, LLC (“Ocwen”) effective on March 11, 2013. (ECF No. 27-7 at Pg ID 816.) Plaintiff alleges that she received letters from Defendant Ocwen “stating payments were allegedly not being made timely, threatening to foreclose on the mortgage and added late fee charges” until December 2013. (Amend. Compl. ¶ 52.)

         Plaintiff filed a First Amended Complaint (“Amended Complaint”) on May 1, 2014, in which she asserts the following claims: (I) “Negligent Accounting and Assessment of Late Fees” against Defendants American Home Mortgage Servicing, Inc.; AH Mortgage Acquisition Company, Inc.; and Homeward Residential, Inc; (II) “Negligent Accounting and Assessment of Late Fees” against Defendant Ocwen Loan Servicing, LLC; (III) “Breach of Contract” for wrongful foreclosure against all Defendants; (IV) fraud and misrepresentation against all Defendants; (V) violation of the Michigan Consumer Protection Act, Mich. Comp. Laws §445.901; (VI) violations of the Michigan Collection Practices Act, Mich. Comp. Laws §§ 339.918 and 339.915(e); (VII) negligence against Defendant Argent; (VIII) civil conspiracy; and (IX)[2] quiet title. Defendants filed a motion to dismiss the First Amended Complaint on April 5, 2016, requesting that this Court dismiss Plaintiff's amended complaint with prejudice and award Defendants their costs and attorneys' fees. (ECF No. 27 at Pg ID 798.)

         Defendants present seven arguments in favor of dismissal. First, Defendants argue that “negligent accounting” is not a cause of action. Alternatively, if Plaintiff is requesting an accounting, Plaintiff fails to state a claim for accounting and Plaintiff's claims regarding an alleged violation of the Michigan Mortgage Brokers, Lenders, and Servicers Licensing Act fail. (Id. at Pg ID 783.) Second, Defendants argue that Plaintiff fails to state a claim for either breach of contract or for wrongful foreclosure. (Id. at Pg ID 785-87.) Third, Defendants allege that Plaintiff has failed to allege fraud with the particularity required under the Federal Rules of Civil Procedure. (Id. at Pg ID 787.) Fourth, Defendants state that they did not violate the Michigan Consumer Protection Act or the Michigan Collection Practices Act. (Id. at Pg ID 788-90.) Fifth, Defendants argue they do not owe a separate duty to Plaintiff outside of the mortgage loan agreement. (Id. at Pg ID 792.) Sixth, Defendants contend that Plaintiff fails to properly allege a civil conspiracy. (Id. at Pg ID 794.) Seventh, Defendants claim that Plaintiff has failed to allege a prima facie case to quiet title. (Id. at Pg ID 795.)

         III. Applicable Law and Analysis

         A. Negligent Accounting

         Plaintiff alleges that Defendants Homeward and Ocwen were negligent in failing to adhere to “ethical and legal guidelines of accounting standards….” (Amend. Compl. ¶¶ 58, 68.) In particular, Plaintiff argues that Defendants violated their duty to provide Plaintiff with accurate accounting statements. (ECF No. 32 at Pg ID 923.) Plaintiff requests an accounting between Plaintiff and Defendants from 2004 until the present date and an award in damages exceeding $25, 000, because “the precise sum of the mortgage is unknown to Plaintiff.” (ECF No. 32 at Pg ID 924.) Defendants contend that there is no cause of action for “negligent accounting” and in the alternative, Plaintiff cannot state a claim for accounting. (ECF No. 27 at Pg ID 783.)

         An accounting is “an extraordinary remedy, and like other equitable remedies, is available only when legal remedies are inadequate.” Bradshaw v. Thompson, 454 F.2d 75, 79 (6th Cir. 1972); see also Alshaibani v. Litton Loan Servicing, L.P., No. 2:12-CV-063, 2012 WL 3239088, at *4 (S.D. Ohio Aug. 7, 2012), aff'd, 528 F. App'x 462 (6th Cir. 2013). The burden of proof rests with Plaintiff to demonstrate that legal remedies are inadequate. Sower v. Chase Home Finance, L.L.C., No. 13-15274, 2016 WL 4446589 at *6 (E.D. Mich. Aug. 24, 2016). An accounting is deemed unnecessary “where discovery is sufficient to determine the amounts at issue.” Barkho v. Homecomings Fin., LLC, 657 F.Supp.2d 857, 865 (E.D. Mich. 2009) (quoting Cyril J. Burke, Inc. v. Eddy & Co., Inc., 51 N.W.2d 238, 239 (Mich. 1952)).

         Here, Plaintiff's accounting claim is based on the amount due under the mortgage note. Plaintiff fails to indicate why discovery would be inadequate to determine the precise sum of the mortgage. Because Plaintiff has failed to show that legal remedies are inadequate, Plaintiff's claim for negligent accounting under Counts I and II are dismissed for failure to state a claim pursuant to Rule 12(b)(6).

         B. Michigan Mortgage Brokers, Lenders, and ...

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