United States District Court, E.D. Michigan, Southern Division
OPINION AND ORDER GRANTING DEFENDANTS' MOTION TO
STEPHEN J. MURPHY, III United States District Judge.
Shaun and Delania Scott sued Defendants Wells Fargo Bank,
and Wells Fargo Home Mortgage, Inc. (collectively,
"Wells Fargo") for breach of contract, fraud,
innocent misrepresentation, silent fraud, slander of title,
and reformation of the parties' Loan Modification
Agreement ("LMA"). Before the Court is Wells
Fargo's motion to dismiss or, in the alternative, for
summary judgment. For the following reasons, the Court will
grant the motion and dismiss all claims.
2004, Plaintiffs Shaun and Delania Scott obtained three
mortgages to build a house at 5521 Oak Grove Road, Howell,
Michigan ("Oak Grove"). The Construction Loan
Company, Inc. provided the first mortgage, and it was later
assigned to Wells Fargo. TCF Bank provided the second and
third mortgages. ECF 2, PgID 69. In 2009, Plaintiffs suffered
financial difficulties, filed for bankruptcy, and obtained a
personal discharge of the debts secured by the three
mortgages. They then moved to North Carolina to seek better
job prospects. Id. Plaintiffs went into default on
their mortgages, and Oak Grove was foreclosed and sold at a
sheriff's sale to Wells Fargo on January 6, 2010.
Id. After the completion of the sale, a one-year
redemption period began pursuant to Mich. Comp. Laws §
600.3240-during which the Plaintiffs had the ability to
redeem the property.
months after the sheriff's sale, Plaintiffs'
financial status improved and they returned to Michigan.
Id. They contacted Trott and Trott, P.C.
(foreclosure counsel for Wells Fargo) and spoke with
"Jay" about the their loss mitigation options.
Id. Between April 2010 and March 2011, Plaintiffs
sent a series of "Hardship Letters" to Trott and
Trott requesting their "monthly payment be lowered"
and "a loan modification that involves payments of no
more than $1000 per month." ECF 4, PgID 82-87. On
January 6, 2011, the statutory redemption period ended
without action by the Plaintiffs; title to Oak Grove thus
vested in Wells Fargo, and all existing liens on the property
extinguished in accordance with Mich. Comp. Laws §
600.3236. Meanwhile, the parties continued with the loan
modification, and on July 29, 2011, Wells Fargo sent
Plaintiffs a letter confirming the modification of the Wells
Fargo mortgage and providing a Loan Modification Agreement
("LMA"). Id. at 89-102.
"amend[ed] and supplement[ed] that certain Note and
Mortgage or Deed of Trust dated 09/16/2004."
Id. at 99. It explained that Plaintiffs'
bankruptcy had discharged the debt resulting from the
original mortgage from Wells Fargo, but that Wells
Fargo's security interest and lien were still valid and
enforceable. Id. It also confirmed that Plaintiffs
were entering into the agreement freely, "for the sole
purpose of retaining the Property" and that Plaintiff
had "no personal obligation to repay the debt . . .
discharged in bankruptcy." Id. The agreement
allowed Plaintiffs to retain the property in exchange for
Plaintiffs paying Wells Fargo the debt secured by the Oak
Grove Property, "in the manner specified herein."
Id. at 100.
October 31, 2011, Lindsay Andersen of Wells Fargo executed an
"Affidavit to Expunge Sheriff's Deed on Mortgage
Sale." ECF 4, PgID 104-05. The affidavit "set aside
the sheriff's sale, " that had the effect of
reinstating the Wells Fargo lien and two TCF Bank mortgage
liens. Id. In 2016, Plaintiffs tried to refinance
their mortgage with Wells Fargo and "discovered the TCF
Bank mortgages on the title report." ECF 2, PgID 72.
Plaintiff's claim to have been unaware that the TCF liens
would continue to encumber the property after the parties
executed the LMA because Wells Fargo "represented to
[them] that its mortgage lien against Oak Grove was the only
encumbrance on the property, " and "that the TCF
mortgages would not encumber Oak Grove after the Modification
Agreement was executed." Id. at 70.
filed suit in a Michigan state court on September 2, 2016,
and Wells Fargo removed to the Court two weeks later.
Plaintiffs filed an amended complaint and the instant motion
Fargo moves to dismiss under Federal Rule of Civil Procedure
12(b)(6) or, in the alternative, for summary judgment under
Rule 56. As a preliminary matter, the Court must determine
under which rule to construe the motion.
Rule of Civil Procedure 12(b)(6) provides for dismissal of a
complaint for failure to state a claim upon which relief can
be granted. The Court may only grant a 12(b)(6) motion if the
allegations are not "sufficient 'to raise a right to
relief above the speculative level, ' and to 'state a
claim to relief that is plausible on its face.'"
Hensley Mfg. v. ProPride, Inc., 579 F.3d 603, 609
(6th Cir. 2009) (quoting Bell Atl. Corp. v. Twombly,
550 U.S. 544, 555, 570 (2007)). When evaluating a claim under
Rule 12(b)(6), the Court views the complaint in the light
most favorable to the plaintiff, presumes the truth of all
well-pled factual assertions, and draws every reasonable
inference in favor of the non-moving party. Bassett v.
Nat'l Collegiate Athletic Ass'n, 528 F.3d 426,
430 (6th Cir. 2008). Still, a "pleading that offers
'labels and conclusions' or 'a formulaic
recitation of the element of a cause of action will not
do.'" Ashcroft v. Iqbal, 556 U.S. 662, 678
(2009) (quoting Twombly, 550 U.S. at 555). If
"a cause of action fails as a matter of law" then
the Court may dismiss the case, "regardless of whether
the plaintiff's factual allegations are true or
not." Winnett v. Caterpillar, Inc., 553 F.3d
1000, 1005 (6th Cir. 2009).
Court will address Wells Fargo's motion under Rule
12(b)(6) rather than Rule 56. A decision on a Rule 12(b)(6)
motion must "ordinarily be undertaken without resort to
matters outside the pleadings." Gavitt v. Born,
835 F.3d 623, 640 (6th Cir. 2016). The Court may, however,
"consider exhibits attached to the complaint, 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.” Id. Here,
Plaintiffs have referred to and attached multiple exhibits to
their Amended Complaint which provide a sufficient basis for
a ruling on Wells Fargo's motion under Rule 12(b)(6).
Fargo claims that Plaintiffs have not stated a cause of
action for breach of contract, failed to plead their
fraud-related counts with sufficient particularity, and
failed to plead a sufficient factual basis for all other