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Salewske v. Trott & Trott, P.C.

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

July 7, 2017

DAVID SALEWSKE, et al., Plaintiffs,
v.
TROTT & TROTT P.C., Defendant.

          ORDER OVERRULING OBJECTIONS, ADOPTING IN PART AND MODIFYING IN PART REPORT AND RECOMMENDATION, AND DENYING DEFENDANT'S MOTION TO DISMISS.

          THOMAS L. LUDINGTON United States District Judge.

         On August 10, 2016, Plaintiffs David and Shari Salewske initiated the above-captioned action against Defendant Trott & Trott, P.C. (also known as Trott Law, P.C.) by filing their complaint in the Western District of Michigan. Plaintiffs allege generally that Defendant violated the Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C. §§ 1692c(b), 1692d(4), and 1692e in the process of conducting a foreclosure by advertisement sale under Michigan law. Factually, Plaintiffs allege that Defendant violated the listed provisions of the FDCPA by placing Notices of Foreclosure Sales (the “Notices”) in newspapers and other public places, which included the following information: (1) that Defendant was a debt collector attempting to collect a mortgage secured debt; (2) the mortgager's name; (3) the amount of the mortgage; (4) the fact that Plaintiffs were in default, authorizing the exercise of the power of sale in the mortgage; and (5) a provision notifying Plaintiffs that if they were in active military service they should contact Defendant. See Compl. ECF No. 1. To the extent Defendant's Notices complied with Michigan law, Plaintiffs allege that Michigan Compiled Law § 600.3212 is preempted by the FDCPA's preemption clause, 15 U.S.C. § 1692n, and the Supremacy clause of the United States Constitution. The case was subsequently transferred to the Eastern District of Michigan on September 14, 2016, pursuant to the parties' stipulation. See ECF No. 2. Plaintiffs then filed a 17-page amended complaint on September 19, 2016, adding additional legal support for their claims. See Am. Compl. ECF No. 8.

         The matter was referred to Magistrate Judge Patricia T. Morris for pretrial management. See ECF No. 9. On October 5, 2016, Defendant moved to dismiss Plaintiffs' amended complaint pursuant to Federal Rule of Civil Procedure 12(b)(6), arguing that Plaintiffs had failed to state a claim under the FDCPA. See Mot. Dismiss, ECF No. 11. Rule 12(b)(6) allows a party to move for dismissal of a complaint on the basis that it “fail[s] to state a claim upon which relief can be granted.” The moving party bears the burden of showing that the opposing party has failed to adequately state a claim for relief. DirecTV, Inc. v. Treesh, 487 F.3d 471, 476 (6th Cir. 2007). Through its motion, Defendant argued that the Notices could not constitute communication in connection with the collection of a debt because they were required by Michigan law. Id. On March 16, 2017 the magistrate judge issued her report, recommending that Defendant's motion to dismiss be denied. See Rep. & Rec., ECF No. 16. The magistrate judge reasoned that, interpreting the facts in a light most favorable to Plaintiffs, a reasonable jury could find that the Notices were published in connection with Defendant's effort to collect a debt. Thus, the Notices could be governed by the FDCPA if, as addressed hereafter, Defendant's conduct in collecting the debt, the means they employed to collect the debt, or its communications violated the FDCPA. Defendant timely objected to that report. See ECF No. 17.

         I.

         Plaintiffs David and Shari Salewske are residents of Cheboygan, Michigan. See Am. Compl. ¶ 30. After Plaintiffs defaulted on certain mortgage payments, collection efforts were referred to Defendant Trott & Trott, which is a foreclosure law firm located in Farmington Hills, Michigan. Id. at ¶ 31. Plaintiffs allege that Defendant is in the business of “using the newspapers, internet, county buildings and mail to communicate the collection of consumer debts originally owed to others to sell the underlying mortgage debt.” Id.

         Defendant's practice of foreclosing mortgages by advertisement is permitted under Michigan law.[1] Specifically, § 600.3201 provides that “[e]very mortgage of real estate, which contains a power of sale, upon default being made in any condition of such mortgage, may be foreclosed by advertisement, in the cases and in the manner specified in this chapter.” Id. The statute requires that “[n]otice that the mortgage will be foreclosed by a sale of the mortgaged premises … shall be given by publishing the same for 4 successive weeks at least once in each week, in a newspaper published in the county where the premises included in the mortgage and intended to be sold … are situated.” Mich. Comp. Laws § 600.3208. The statute also requires that, “within 15 days after the first publication of the notice, a true copy shall be posted in a conspicuous place upon any part of the premises described in the notice.” Id. Such notice must include the following:

(a) The names of the mortgagor, the original mortgagee, and the foreclosing assignee, if any.
(b) The date of the mortgage and the date the mortgage was recorded.
(c) The amount claimed to be due on the mortgage on the date of the notice.
(d) A description of the mortgaged premises that substantially conforms with the description contained in the mortgage.
(e) For a mortgage executed on or after January 1, 1965, the length of the redemption period as determined under section 3240.1
(f) A statement that if the property is sold at a foreclosure sale under this chapter, under section 32782 the borrower will be held responsible to the person who buys the property at the mortgage foreclosure sale or to the mortgage holder for damaging the property during the redemption period.

Mich. Comp. Laws § 600.3212.

         While Plaintiffs' complaint is thin on facts, it appears that on July 22, 2016, Defendant sent Plaintiffs a notice foreclosure sale. See Am. Compl. Ex. 1. The notice first disclaimed that “THIS FIRM IS A DEBT COLLECTOR ATTEMPTING TO COLLECT A DEBT. ANY INFORMATION WE OBTAIN WILL BE USED FOR THAT PURPOSE.” Id. The letter then informed Plaintiffs that they had defaulted on a mortgage to Mortgage Electronic Registration Systems, Inc., later assigned to Wilmington Trust National Association as successor trustee to Bear Stearns Alt-A Trust. Id. The mortgage was dated May 25, 2006 and recorded on June 9, 2006. Id. The letter then expressed that “notice is hereby given that said mortgage will be foreclosed by a sale of the mortgaged premises, or some part of them, at public venue, at the place of holding circuit court within Cheboygan County, at 11:00 AM, on August 19, 2016.” Id. The notice contained a legal description of the mortgaged premise, the amount of default, and informed Plaintiffs that “[t]he redemption period shall be 6 months from the date of such sale, unless determined abandoned ….” Id. Plaintiffs do not allege that they responded to the initial notice letter.

         In compliance with §§ 600.3208 and 600.3212, Defendants then published Notice of the foreclosure sale in the local Cheboygan paper and Detroit Legal News, and at Cheboygan county buildings from July 22 through August 5, 2016. See Am. Compl. ¶ 39. Defendant also published the Notice at Plaintiff's residence on July 22, 2016. Id. The published Notice is substantially similar to the notice letter sent to Plaintiffs. See Am. Compl. Ex. 2. It contains the same initial disclaimer that “THE FIRM IS A DEBT COLLECTOR ATTEMPTING TO COLLECT A DEBT. ANY INFORMATION WE OBTAIN WILL BE USED FOR THAT PURPOSE.” The published Notice named the Salewskes as the mortgagors, stated the identity of the mortgagee, the amount of the debt, a legal description of the property, ...


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