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Buttermore v. Nationstar Mortgage LLC

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

May 26, 2017



          Paul D. Borman United States District Judge.

         In this 16-count lawsuit, Plaintiff Stephen Buttermore alleges that Defendants Nationstar Mortgage LLC (“Nationstar”) and Federal National Mortgage Association (“Fannie Mae”) violated various state and federal laws in connection with the servicing of (and ultimately foreclosure on) his mortgage.

         Now before the Court is Defendants' Motion to Dismiss. (ECF No. 7, Defs.' Mot.) For the reasons that follow, the Court will grant Defendants' Motion and dismiss this action with prejudice.

         I. BACKGROUND

         A. Factual Allegations

         In the fall of 2006, Plaintiff purchased real property located at 1601 Marylestone Drive in West Bloomfield, Michigan (the “subject property”), via a warranty deed executed on September 27, 2006. (ECF No. 1 Ex. 1 at Pg ID 36-126 (“Compl.”) ¶¶ 4, 9; Compl. Ex. 1 at Pg ID 67-69, Warranty Deed.) To fund the purchase, Plaintiff borrowed $128, 000 from non-party Quicken Loans, Inc., as represented by a September 27, 2006 promissory note. (Compl. ¶ 11; ECF No. 7, Defs.' Mot. Ex. A, Note.)[1] That loan was secured by a mortgage dated September 27, 2006. (Compl. ¶ 14; Compl. Ex. 2 at Pg ID 70-86, Mortgage.) On February 17, 2015, Quicken Loans, Inc. assigned the mortgage to Nationstar. (Compl. ¶ 15; Compl. Ex. 3 at Pg ID 87-88, Assignment of Mortgage.)

         Plaintiff alleges that after staying current on his loan payments for several years, he suffered an injury that caused him to fall behind on them. (Compl. ¶ 33.) He then contacted Nationstar regarding loss mitigation options, including loan modification, whereupon a Nationstar representative conducted an initial interview with Plaintiff, determined that he qualified for mortgage assistance, and instructed him to forward various forms and documents to Nationstar. (Compl. ¶¶ 54-55.) Plaintiff alleges that he sent Nationstar an initial loss mitigation application as well as supplemental documents as needed, but that Nationstar “routinely lost documents, misrepresented payment figures and account information, misapplied payments, failed to accurately maintain Plaintiff's Mortgage account and charged Plaintiff with excessive fees and interest.” (Compl. ¶¶ 56-58.) Although Plaintiff relied on Nationstar's assurance that he would be given a “permanent loan modification, in exchange for various payments of money, and other actions to be undertaken by Plaintiff[, ]” Nationstar never permanently modified Plaintiff's loan as promised, and instead initiated foreclosure proceedings. (Compl. ¶¶ 60-62.) Plaintiff alleges that Nationstar never gave Plaintiff a decision on his loss mitigation application. (Compl. ¶ 59.)

         The Complaint further alleges that although Plaintiff “watched diligently for any notices with respect to the Mortgage in the mail, on the Subject Property, and by telephone[, ]” he did not receive any notices from Nationstar regarding default, acceleration, or remedies. (Compl. ¶¶ 34-35.) Nationstar “wrongfully accelerated the debt, thus effectively nullifying Plaintiff's ‘right to cure' and leaving Plaintiff with only the right either (a) to pay the amount required to reinstate the loan or, (b) to pay the entire accelerated loan balance in full.” (Compl. ¶ 36.)

         On January 14, 2016, Nationstar published a foreclosure notice regarding the subject property. The foreclosure notice stated that the amount still owed by Plaintiff on the mortgage was $127, 525.55; that the subject property would be sold at a sheriff's sale on February 16, 2016; and that “[t]he redemption period shall be 6 months from the date of such sale, unless determined abandoned in accordance with MCLA 600.3241a, in which case the redemption period shall be 30 days from the date of such sale.” (Compl. ¶¶ 39-40; Compl. Ex. 5 at Pg ID 96-97, Foreclosure Notice.) There is nothing to indicate that the subject property was abandoned, and so the redemption period ended on August 16, 2016.[2]

         Per the Complaint, on or about January 22, 2016, a notice of the sheriff's sale was “allegedly” posted on the door of the residence on the subject property, where Plaintiff was residing. (Compl. ¶ 43.) In addition, a notice of sale was “allegedly” published in an Oakland County newspaper on January 14, 21, and 28, and on February 4, 2016. (Compl. ¶ 44.) Regardless, Plaintiff asserts that he “was never given any other notice that would have advised him of the fact that [Nationstar] had scheduled a foreclosure sale of his home[, ]” and that he “had no actual notice of the sale prior to the sale.” (Compl. ¶¶ 46-47.)

         On February 16, 2016, Defendant Fannie Mae purchased the subject property at the sheriff's sale for $96, 572. (Compl. ¶ 16; Compl. Ex. 4 at Pg ID 90-95, Sheriff's Deed.)

         On August 16, 2016, Plaintiff's attorney sent a letter to Nationstar on Plaintiff's behalf, purporting to be a “qualified written request” under the Real Estate Settlement Procedures Act (“RESPA”), 12 U.S.C. § 2605(e). (Compl. ¶ 72; Compl. Ex. 6 at Pg ID 98-106, 08/16/16 Letter to Nationstar Mortgage, LLC (QWR).) In the letter, Plaintiff's attorney disputed the debt that Nationstar claimed Plaintiff owed, and requested various documents related to the debt, including a copy of the original promissory note, contact information for various persons connected to the loan, a complete audit history, statements of advances and escrow, and other documents. Nationstar received the letter on August 23, 2016. (Compl. ¶ 80; Compl. Ex. 7 at Pg ID 107-109, United States Post Office Tracking Information for August 16, 2016 QWR.)

         Plaintiff alleges that Nationstar did not respond to the letter. On October 12, 2016, Plaintiff's attorney sent a second letter to Nationstar, which noted that it was the second attempt to procure the requested information, but was otherwise identical to the first letter. (Compl. ¶ 84; Compl. Ex. 8 at Pg ID 110-118, 10/12/16 Letter to Nationstar Mortgage, LLC (QWR).)

         Nationstar received the second letter on October 17, 2016. (Compl. ¶ 85; Compl. Ex. 9 at Pg ID 119-121, United States Post Office Tracking Information for October 12, 2016 QWR.) In a response dated the same day, Nationstar acknowledged receipt of the second letter, and stated that Nationstar's “goal is to provide a response no later than October 26, 2016” but that “responses are generally provided in less than ten days from receipt of the correspondence.” (Compl. ¶ 86; Compl. Ex. 10 at Pg ID 122-126, October 17, 2016 Letter from Nationstar.) Plaintiff alleges that this was the only correspondence he received from Nationstar, that nothing in that response corresponded to any of the requests in his letters, and at no point did Nationstar provide any of the information he requested. (Compl. ¶¶ 86-87, 89.) Plaintiff also alleges that Nationstar engaged in negative reporting regarding his credit, both before and after the August 16 letter. (Compl. ¶¶ 69, 91.)

         Plaintiff alleges broadly that he suffered damages in unspecified amounts and in various categories, including emotional distress, by virtue of the misconduct alleged in the Complaint. (Compl. ¶¶ 67-68.)

         B. Procedural History

         Plaintiff filed the Complaint in the Circuit Court of Oakland County on November 4, 2016, and Defendants timely removed the action to this Court. (ECF No. 1, Notice of Removal.)

         After reciting the factual allegations summarized above, the Complaint sets forth a total of 16 counts. Through Count I, Plaintiff seeks declaratory relief as to both Defendants. Two claims are pled against Fannie Mae only: Quiet Title (Count II) and Slander of Title (Count XIII). The remaining claims-and thus the bulk of the lawsuit-are pled against Nationstar: three Illegal Foreclosure claims (Counts III-V); one claim under the Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C. § 1692 et seq. (Count VI); three claims under RESPA, as implemented by 12 C.F.R. § 1024.41 (“Regulation X”) (Counts VII, IX and X); one claim under the Truth in Lending Act (“TILA”), 15 U.S.C. § 1601 et seq., as implemented by 12 C.F.R. § 226.1 et seq. (“Regulation Z”) (Count VIII); one Breach of Contract claim (Count XI); one Intentional Misrepresentation and Fraud claim (Count XII); one claim for declaratory relief invoking the equitable doctrine of “unclean hands” (Count XIV); one claim under the Michigan Consumer Protection Act (“MCPA”), Mich. Comp. Laws § 445.901 et seq. (Count XV); and one claim requesting that the foreclosure, if it is not found to be invalid, be converted to a judicial foreclosure under Michigan law (Count XVI).

         Defendants filed the present Motion to Dismiss on January 11, 2017. (ECF No. 7, Defs.' Mot.) After two stipulated orders to extend time (ECF Nos. 9-10), Plaintiff filed a Response on February 22, 2017 (ECF No. 11, Pl.'s Resp.). Defendants filed a timely Reply. (ECF No. 12, Defs.' Repl.)


         Federal Rule of Civil Procedure 12(b)(6) allows for the dismissal of a case where the complaint fails to state a claim upon which relief can be granted. When reviewing a motion to dismiss under Rule 12(b)(6), a court must “construe the complaint in the light most favorable to the plaintiff, accept its allegations as true, and draw all reasonable inferences in favor of the plaintiff.” Handy-Clay v. City of Memphis, 695 F.3d 531, 538 (6th Cir. 2012).

         To state a claim, a complaint must provide a “short and plain statement of the claim showing that the pleader is entitled to relief.” Fed.R.Civ.P. 8(a)(2). “[T]he complaint ‘does not need detailed factual allegations' but should identify ‘more than labels and conclusions.'” Casias v. Wal-Mart Stores, Inc., 695 F.3d 428, 435 (6th Cir. 2012) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007)). The court “need not accept as true a legal conclusion couched as a factual allegation, or an unwarranted factual inference.” Handy-Clay, 695 F.3d at 539 (internal citations and quotation marks omitted).

         In other words, a plaintiff must provide more than “formulaic recitation of the elements of a cause of action” and his or her “[f]actual allegations must be enough to raise a right to relief above the speculative level.” Twombly, 550 U.S. at 555-56. The Sixth Circuit has recently reiterated that “[t]o survive a motion to dismiss, a litigant must allege enough facts to make it plausible that the defendant bears legal liability. The facts cannot make it merely possible that the defendant is liable; they must make it plausible.” Agema v. City of Allegan, 826 F.3d 326, 331 (6th Cir. 2016) (citing Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)).

         A court ruling on a Rule 12(b)(6) motion to dismiss “may consider the Complaint and any exhibits attached thereto, public records, items appearing in the record of the case and exhibits attached to defendant's motion to dismiss so long as they are referred to in the Complaint and are central to the claims contained therein.” Bassett v. Natl Collegiate Athletic Ass'n, 528 F.3d 426, 430 (6th Cir. 2008) (quoting Amini v. Oberlin Coll., 259 F.3d 493, 502 (6th Cir. 2001)).

         III. ANALYSIS

         One of the sixteen counts in the Complaint is pled against both Defendants, two are pled against Fannie Mae, and the rest are pled against Nationstar. For the reasons articulated below, none of the claims has merit, and the Court will grant Defendants' Motion to Dismiss as to all of them.

         A. Declaratory Judgment (Counts I and XIV)

         Plaintiff seeks declaratory relief in Counts I and XIV-the former against both Defendants and the latter against Nationstar only. Count I requests a general declaration of the parties' rights and interests, while Count XIV invokes the doctrine of “unclean hands” as a basis for a finding that Nationstar “is not entitled to the equitable relief of foreclosure.”[3] (Compl. ¶ 189.)

         “[Declaratory relief is a remedy [ ], not a claim.” Radske v. Fed. Nat'l Mortg. Ass'n, No. 15-14107, 2016 WL 3667957, at *7 (E.D. Mich. July 11, 2016) (Borman, J.) (quoting Mettler Walloon, L.L.C v. Melrose Twp., 281 Mich.App. 184, 220 (Mich. Ct. App. 2008)). As discussed below, Plaintiff has not stated a claim that would justify any remedy, and so the Court will dismiss Count I of the Complaint.

         The “unclean hands” claim alleged in Count XIV has been repeatedly dismissed in other cases filed by Plaintiff's counsel in this District.[4] This Court explained in one such case that “the doctrine of unclean hands is not a claim; rather the ‘clean-hands doctrine closes the doors of equity to one tainted with inequitableness or bad faith to the matter in which he or she seeks relief, regardless of the improper behavior of the defendant.'” Radske, 2016 WL 3667957, at *7 (quoting Richards v. Tibaldi, 272 Mich.App. 522, 537 (Mich. Ct. App. 2006)); see also Watts v. Mortg. Bridge Sols., LLC, No. 16-10552, 2016 WL 8188768, at *11-12 (E.D. Mich. Dec. 7, 2016) (“Plaintiffs inclusion of a count premised on the doctrine of unclean hands is puzzling in that it is generally pled as an affirmative defense, not as a cause unto itself.”); Trudell v. Carrington Mortg. Servs., L.L.C., 2016 WL 6080822, at *9-10 (E.D. Mich. Sept. 27, 2016) (“Where title acquired through foreclosure was based in law (in a statute) . . . the unclean hands doctrine is inapplicable. Plaintiffs attempt to raise unclean hands as an affirmative claim must fail since unclean hands is a defense and not an independent cause of action to undo a foreclosure by advertisement [.]”) (internal citations and quotation marks omitted). The claim is no more cognizable now than it was in prior cases filed by Plaintiffs counsel, and will therefore be dismissed.

         For these reasons, the Court will dismiss Counts I and XIV.

         B. Claims Against Defendant Nationstar

         The bulk of the claims in this action are brought against Nationstar. For the reasons set forth below, none of these claims are sufficient to avoid dismissal, and the Court will dismiss them accordingly.

         1. Illegal Foreclosure (Counts III-V)

         “Michigan courts have held that once the statutory redemption period lapses, they can only entertain the setting aside of a foreclosure sale where the mortgagor has made ‘a clear showing of fraud, or irregularity.'” Conlin v. Mortg. Elec. Registration Sys., Inc., 714 F.3d 355, 359 (6th Cir. 2013) (quoting Schulthies v. Barron, 16 Mich.App. 246, 248 (Mich. Ct. App. 1969)). Plaintiffs seeking to set aside foreclosures by advertisement in Michigan must also show “that they were prejudiced by defendant's failure to comply” with the governing statutory provisions. Conlin, 714 F.3d at 361 (quoting Kim v. JPMorgan Chase Bank, N.A., 493 Mich. 98, 115-16 (2012)). “To ...

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