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Zwerican v. PennyMac Loan Services, LLC

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

February 9, 2017

JAMES ZWERICAN, and SABRINA ZWERICAN, Plaintiffs,
v.
PENNYMAC LOAN SERVICES, LLC, and FNBN 1, LLC, Defendants.

          DISTRICT JUDGE, THOMAS LUDINGTON

          MAGISTRATE JUDGE'S REPORT AND RECOMMENDATION ON DEFENDANTS' MOTIONS TO DISMISS (DOC. 3)

          PATRICIA T. MORRIS, UNITED STATES MAGISTRATE JUDGE

         I. RECOMMENDATION

         For the reasons set forth below, IT IS RECOMMENDED that Defendants' Motion To Dismiss, (Doc. 3), be GRANTED, and that Plaintiffs' Complaint, (Doc. 1, Ex. 1, Pls.' Compl.), be DISMISSED.

         II. REPORT

         A. Introduction

         On June 19, 2016, Plaintiffs James and Sabrina Zwerican (“Plaintiffs”) filed suit in the Circuit Court for the County of Tuscola against Defendants PennyMac Loan Services, LLC (“PennyMac”) and FNBN I, LLC (“FNBN”). Defendants removed the case to this federal district court on September 6, 2016. (Doc. 1.) District Judge Thomas L. Ludington referred all pretrial matters to the undersigned Magistrate Judge on September 12, 2016. (Doc. 3). Thereafter, Defendants filed the instant Motion To Dismiss on September 13, 2016, (Doc. 3), and Plaintiffs filed a response on October 27, 2016, (Doc. 6), to which Defendants replied, (Doc. 8).

         On November 9, 2006, Plaintiffs and non-party Mortgage Electronic Registration Systems, Inc. (“MERS”)-acting as nominee for National Banking Association- executed the note and mortgage at issue. (Doc. 1, Ex. 1, Pls.' Compl. at 2); (Doc. 3, Ex. A). The mortgage included a power of sale clause, granting the mortgagee power to sell the property by advertisement upon default of the mortgagor. (Doc. 3, Ex. A). On November 29, 2006, the mortgage was recorded in the Tuscola County Records. (Doc. 1, Ex. 1, Pls.' Compl. at 2). MERS assigned the mortgage to PennyMac on January 18, 2010, (Doc. 3, Ex. D), and PennyMac in turn assigned the mortgage to FNBN, (Doc. 3, Exs. B-C).

         In 2014, Plaintiffs allege that they applied for a loan modification, and that on March 16, 2015, PennyMac mailed “a Modification Agreement” to them, which they subsequently executed and sent back to PennyMac. (Doc. 1, Ex. 1, Pls.' Compl. at 3); (Doc. 1, Ex. 1, Pls.' Compl., Ex. A). Plaintiffs allege that they “mailed multiple payments to PennyMac, pursuant to the terms of the Modification Agreement, ” but that “each and every payment that was mailed . . . was returned.” (Doc. 1, Ex. 1, Pls.' Compl. at 3). In January 2016, Plaintiff retained counsel and contacted “KJ Miller”-who serves as counsel for Defendants-and Miller indicated that “there appeared to be an open loan modification on file and that all Plaintiffs needed to do was sign the documents and submit it to PennyMac to accept.” (Id.). Plaintiffs' counsel “asked [Miller] what would need to be drafted since the documents appeared stale having been executed almost a year prior, ” and Miller said that Plaintiffs' counsel would need “to work with foreclosure counsel toward a resolution.” (Id.). The foreclosure counsel directed Plaintiffs' counsel to “contact PennyMac directly to attempt to work toward a resolution.” (Doc. 1, Ex. 1, Pls.' Compl. at 4). “Plaintiff's counsel has been attempting to obtain some answers with respect to the Modification Agreement executed by Plaintiffs, but thus far, has been unsuccessful.” (Id.).

         According to the sheriff's deed on record, Plaintiffs defaulted under the terms of the mortgage, and the property was sold at a sheriff's sale on January 21, 2016. (Doc. 3, Ex. E). Plaintiff's dispute their default. (Doc. 1, Ex. 1, Pls.' Compl. at 4) (“Plaintiffs were not in default of the modified agreement.”). Information contained in the affidavits of posting and purchase also shows that the date to redeem the property expired on July 21, 2016, and that Defendants furnished the requisite notices of the foreclosure sale before it occurred. (Id.).

         B. Motion To Dismiss Standard

         A motion to dismiss under Rule 12(b)(6) challenges the legal sufficiency of the complaint with regard to whether it states a claim upon which relief can be granted. When deciding a motion under this subsection, “[t]he court must construe the complaint in the light most favorable to the plaintiff, accept all the factual allegations as true, and determine whether the plaintiff can prove a set of facts in support of its claims that would entitle it to relief.” Bovee v. Coopers & Lybrand C.P.A., 272 F.3d 356, 360 (6th Cir. 2001). As the Supreme Court held in Bell Atlantic Corp. v. Twombly, a complaint must be dismissed pursuant to Rule 12(b)(6) for failure to state a claim upon which relief can be granted if the complaint does not plead “enough facts to state a claim to relief that is plausible on its face.” 550 U.S. 544, 570 (2007) (rejecting the traditional Rule 12(b)(6) standard set forth in Conley v. Gibson, 355 U.S. 41, 45-46 (1957)). Under Rule 12(b)(6), “a plaintiff's obligation to provide the ‘grounds' of his ‘entitlement to relief' requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Twombly, 550 U.S. at 555 (citations omitted). Even though a complaint need not contain “detailed” factual allegations, its “[f]actual allegations must be enough to raise a right to relief above the speculative level on the assumption that all the allegations in the complaint are true (even if doubtful in fact).” Id. (citations omitted).

         The Supreme Court has explained that the “tenet that a court must accept as true all of the allegations contained in the complaint is inapplicable to legal conclusions.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (finding assertions that one defendant was the “principal architect” and another defendant was “instrumental” in adopting and executing a policy of invidious discrimination insufficient to survive a motion to dismiss because they were “conclusory” and thus not entitled to the presumption of truth). Although Rule 8 “marks a notable and generous departure from the hyper-technical, code-pleading regime of a prior era, ” it “does not unlock the doors of discovery for a plaintiff armed with nothing more than conclusions.” Id. “Determining 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.” Id. at 679. Thus, “a court considering a motion to dismiss can choose to begin by identifying pleadings that, because they are no more than conclusions, are not entitled to the assumption of truth . . . . When there are well-pleaded factual allegations, a court should assume their veracity and then determine whether they plausibly give rise to an entitlement to relief.” Id.

         “In determining whether to grant a Rule 12(b)(6) motion, the court primarily considers the allegations in the complaint, although matters of public record, orders, items appearing in the record of the case, and exhibits attached to the complaint, also may be taken into account.” Nieman v. NLO, Inc., 108 F.3d 1546, 1554 (6th Cir. 1997) (quoting 5A Charles A. Wright & Arthur R. Miller, Federal Practice and Procedure § 1357 (2d ed. 1990)). This circuit has further “held that ‘documents that a defendant attaches to a motion to dismiss are considered part of the pleadings if they are referred to in the plaintiff's complaint and are central to [the plaintiff's] claim.'” Weiner v. Klais & Co., 108 F.3d 86, 89 (6th Cir. 1997) (quoting Venture Assoc. Corp. v. Zenith Data Sys. Corp., 987 F.2d 429, 431 (7th Cir. 1993)); Yeary v. Goodwill Industries-Knoxville, Inc., 107 F.3d 443, 445 (6th Cir. 1997) (finding ...


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