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Wiggins v. Ocwen Loan Servicing, LLC

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

February 6, 2017




         Plaintiff Tiffany Wiggins fell behind on her mortgage payments. She applied to the loan servicer, Defendant Ocwen Loan Servicing, LLC, for a loan modification. Ocwen denied her request. Wiggins tried to appeal, urging that Ocwen's denial letter had inflated her income and understated her monthly mortgage payment. When that failed, she sued Ocwen in Michigan state court to stop the then-pending foreclosure action, asserting claims under the Real Estate Settlement Procedures Act (RESPA) and state-law. After the case was removed here, Ocwen filed a motion to dismiss. For the reasons that follow, the Court agrees with Ocwen that Wiggins' Complaint fails to plausibly allege claims for which relief may be granted.


         This case surrounds Plaintiff Tiffany Wiggins' mortgage for her home on Maple Lawn Drive in Shelby Township, Michigan. The factual allegations of her Complaint explain very little about the underlying mortgage. But according to documentation attached to the Complaint, in November 2006, Wiggins executed an adjustable rate note for $516, 800.00 with a lender, Sebring Capital Partners, Limited Partnership. (R. 1, PID 87.) Along with the note, she executed a mortgage that conveyed a security interest in the property to Mortgage Electronic Registration Systems, Inc. (MERS). (Id.) The mortgage was recorded with the Macomb County Register of Deeds on June 11, 2007. (Id.) It is implicit in the Complaint that Defendant Ocwen Loan Servicing, LLC is the mortgage servicer.

         According to the Complaint, in “February 2015, ” Wiggins requested “a modification review” from Ocwen because she had lost income, was injured on the job, and her son was ill. (R. 1, PID 10 ¶ 2.)

         But the Complaint omits several key dates that are material to her claim that Ocwen violated federal mortgage servicing regulations by proceeding with foreclosure despite her pending loan modification application. According to an “Affidavit of Publication” Ocwen has attached to its motion, Ocwen first published notice of the foreclosure on February 19, 2015, indicating that the sale was scheduled for March 20. (See R. 9-19, PID 385.) Ocwen has also attached an “Affidavit of Posting, ” which indicates that notice of the foreclosure was posted on the door frame of Wiggins' property on February 26, 2015.[1] (See R. 9-19, PID 383.) Yet, according to Wiggins' application for loan modification, also attached to Ocwen's motion, she did not apply for loan modification until February 26, 2015-after Ocwen's first notice of foreclosure.[2] (See R. 9-11, PID 298.)

         Dates aside, Wiggins alleges that in an April 27, 2015 denial letter, Ocwen “returned an explanation that did not make sense.” (R. 1, PID 10 ¶ 2.) Specifically, Ocwen allegedly inflated Wiggins' monthly income, understated her monthly mortgage payment, and provided inconsistent values concerning the unpaid principal balance on the loan. (Id.)

         Wiggins appealed to Ocwen, pointing out the erroneous information. (R. 1, PID 11 ¶ 3.) Ocwen asked her to send a “new modification package, ” which she provided on June 19, 2015. (R. 1, PID 11 ¶ 4.)

         Wiggins claims that during the process, “numerous” Ocwen agents “assur[ed]” her that “her loan [would] be reviewed again for the modification.” (R. 1, PID 11 ¶ 5.) On August 12, 2015, Ocwen confirmed by letter that it had received Wiggins' appeal. (R. 1, PID 11 ¶ 6.) But the next day, Ocwen sent another letter denying her request for loan modification, again allegedly inflating Wiggins' income ($10, 294.33 instead of $6, 800) and understating her monthly payment ($2, 153.93 instead of $3, 080.20). (R. 1, PID 11 ¶ 7.)

         In response, Wiggins called Ocwen and spoke with an agent who informed her that Ocwen was “looking into the matter” but that the sheriff's sale scheduled for September 25, 2015 would proceed if no resolution was reached. (R. 1, PID 11 ¶ 8.) At the time of the Complaint, Wiggins says she was “still receiving calls from Defendant Ocwen regarding the loss mitigation process, yet [was] also being told the sale has already been scheduled and will not be postponed.” (R. 1, PID 11 ¶ 9.)

         Wiggins filed her Complaint against Ocwen in Macomb County Circuit Court on September 23, 2015, and the case was removed to this Court on December 3, 2015. (R. 1.) The Complaint includes four counts. Count I asserts a claim that Ocwen violated the Regulation X under the Real Estate Settlement Procedures Act (RESPA). Count II asserts a claim of “Illegal Foreclosure in Violation of MCL 600.3204.” Count III asserts a claim of negligence, and Count IV is labelled as a claim for “exemplary damages.”

         Shortly after the Complaint was filed, the Court referred the parties to an early settlement conference, but the case was not resolved. (R. 3.) According to the sheriff's deed attached to Ocwen's motion, a sheriff's sale was executed on May 27, 2016 for $692, 302.25. (R. 19-19, PID 384.) Ocwen then filed a “Motion to Dismiss And/Or for Summary Judgment” on June 29, 2016. (R. 9.) Though Ocwen did not file a reply to Wiggins' response, Wiggins filed a motion for a sur reply on December 17, 2016. (R. 13.) After careful consideration of the briefs and thorough review of the record, the Court finds that oral argument will not aid in resolving the pending motions. See E.D. Mich. LR 7.1(f)(2).



         A threshold issue is what to make of Ocwen's dual-labelled motion: Is it a motion to dismiss or a summary-judgment motion?

         Ocwen filed what it calls a “Motion to Dismiss And/Or for Summary Judgment.” (R. 9.) The motion cites the controlling standards for motions under Federal Rule of Civil Procedure 12(b)(6) and for summary-judgment motions under Rule 56. The brief's headings indicate that each count of the Complaint fails to state a claim for which relief may be granted-consistent with a Rule 12(b)(6) motion. But attached to the motion are certain documents that were not included with the Complaint, with no explanation of which, if any, of the documents can be appropriately considered in connection with a Rule 12(b)(6) motion.

         Wiggins' response does not make anything easier. She too cites the standards for both motions and, unfortunately, relies on the now-repudiated Conley v. Gibson, 355 U.S. 41 (1957), “no set of facts” standard for Rule 12(b)(6) motions. (See R. 10, PID 448.)

         But more problematic for Wiggins is that she has attached to her response a host of documents, including an affidavit and other materials, which tell an entirely different story from the narrative in the Complaint. As discussed, the Complaint centers on her February 2015 application for loan modification, referring to it-misleadingly, as it turns out-as her “first modification package.” (See R. 1, PID 10 ¶ 2.) In contrast, her response brief attempts to show that Ocwen violated RESPA through its handling of her loan modification requests dating back as early as February 2012.

         The Court sees no reason to consider Wiggins' prior loan modification attempts. She obviously knew the underlying facts when she filed her Complaint, yet chose to omit them. And she has not requested to amend her Complaint to tell this new narrative. Considering this information now would be tantamount to allowing Wiggins to amend her Complaint through her response brief, but “[i]t is a basic principle that the complaint may not be amended by the briefs in opposition to a motion to dismiss[.]” See Agnew v. Nat'l Collegiate Athletic Ass'n, 683 F.3d 328, 348 (7th Cir. 2012) (first alteration in original).[3] Thus, the Court will not consider the documentation of Wiggins' loan modification attempts predating the February 2015 application at the center of the Complaint.

         As the Court believes that this case can be resolved on the pleadings, it will treat Ocwen's motion as a Rule 12(b)(6) motion and consider only the documents appropriate for that posture. The Court thus excludes from consideration all of the documents attached to the parties' briefing not otherwise attached to the Complaint except for the sheriff's deed and the accompanying affidavit of posting and affidavit of publication, as discussed above. See Fed. R. Civ. P. 12(d) (“If, on a motion under Rule 12(b)(6) or 12(c), matters ...

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