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McGhee v. Ditech Financial LLC

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

September 18, 2017

ANTHONY MCGHEE and KELLY MCGHEE, Plaintiffs,
v.
DITECH FINANCIAL LLC and THE BANK OF NEW YORK MELLON FKA THE BANK OF NEW YORK, TRUSTEE FOR THE BENEFIT OF THE CERTIFICATEHOLDERS OF THE CWABS, INC. ASSET-BACKED CERTIFICATES SERIES 2004-5, Defendants.

          OPINION AND ORDER GRANTING DEFENDANTS' MOTION TO DISMISS [4]

          STEPHEN J. MURPHY, III UNITED STATES DISTRICT JUDGE.

         Plaintiffs Anthony and Kelly McGhee filed the instant foreclosure-related action in a Michigan Circuit Court. Defendants removed the case and filed a motion to dismiss. ECF 4. The Court has reviewed the briefs and finds that oral argument is unnecessary. See E.D. Mich. LR 7.1(f)(2). For the reasons below, the Court will grant the motion and dismiss the case.

         BACKGROUND

         In 2003, the McGhees executed a mortgage secured by a home in Highland Park (the Property). The mortgage was eventually assigned to Defendant Bank of New York Mellon (the Bank) and Defendant Ditech serviced the mortgage. ECF 1, PgID 10. The McGhees apparently defaulted on their mortgage obligations, so a sheriff's sale was scheduled for December 3, 2015. Id. But they claim that in November 2015, they "faxed a completed loan modification application with supplementary documents to Ditech." Id. They also claim that Kelly McGhee contacted Ditech and someone named Anthony told her their documents had been received, that the modification would be reviewed, and that the sale was adjourned until January 4, 2016. This was the last they ever heard from Anthony.

         The sheriff's sale was held on January 7, 2016, and the Bank bought the property. ECF 4-1, PgID 52.[1] Later that month, the McGhees received a letter from Ditech dated January 18, 2016. ECF 1, PgID 15. The letter thanked them for their "interest in the Home Affordable Modification Program ('HAMP')", noted that they "were evaluated for mortgage payment assistance" but that they were ineligible for HAMP because their home had been foreclosed upon and they were no longer the owners. Id. The letter went on to explain that their account might be:

referred to foreclosure during this time, or any pending foreclosure action may continue. However, no foreclosure sale will be conducted and you will not lose your home during this 30-day period or any longer period required for us to review supplemental material you may provide in response to this Notice.

Id.

         Pursuant to Michigan law, the statutory redemption period expired on July 7, 2016. See Mich. Comp. Laws § 600.3240.[2] The McGhees filed their state-court complaint four months later.

         STANDARD OF REVIEW

         Federal Rule of Civil Procedure 12(b)(6) provides for dismissal of a complaint for failure to state a claim upon which relief may be granted. Fed.R.Civ.P. 12(b)(6). The Court may only grant a 12(b)(6) motion to dismiss 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)). In evaluating the motion, the Court presumes the truth of all well-pled factual assertions. Bishop v. Lucent Techs. Inc., 520 F.3d 516, 519 (6th Cir. 2008). Moreover, the Court must draw every reasonable inference in favor of the non-moving party. Dubay v. Wells, 506 F.3d 422, 427 (6th Cir. 2007). But a "pleading that offers 'labels and conclusions' or 'a formulaic recitation of the elements of a cause of action will not do.'" Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at 555).

         DISCUSSION

         The McGhees' complaint contains a single count of "wrongful foreclosure" but the real cause of action is unclear. The complaint seeks "redress under Michigan law"; the wrongdoing alleged, however, is predicated on a violation of federal law. ECF 1, PgID 9, 11-12. Defendants addressed both avenues for relief in their briefs: they argue that the McGhees have failed to plead the necessary elements to set aside the foreclosure under Michigan law, and that federal law does not authorize the relief they seek. Upon review, the Court finds that no matter how the Complaint is construed, it fails to state a claim for which relief may be granted.

         I. Relief Under Michigan Law

         Foreclosures by advertisement-like the one at issue here-are governed by Michigan statute. Conlin v. Mortg. Elec. Registration Sys., Inc., 714 F.3d 355, 359 (6th Cir. 2013). Michigan law balances the need to "impose order on the foreclosure process while still giving security and finality to purchasers of foreclosed properties." Id. To that end, it "provides certain steps that the mortgagee must go through in order to validly foreclose" and "also controls the rights of both the mortgagee and the mortgagor once the sale is completed." Id. (internal citations omitted). Accordingly, a mortgagor has a fixed period of time to redeem property after a sheriff's sale. Mich. Comp. Laws § 600.3240(8). But once the redemption period expires, "all of plaintiff's rights in and title to the property [are] extinguished." Overton v. Mortg. Elec. Registration Sys., No. 284950, 2009 WL 1507342, at *1 (Mich. Ct. App. May 28, 2009) (citing Piotrowski v. State Land Office Bd., 302 Mich. 179, 187 (1942) and Mich. Comp. Laws ยง 600.3236). Thus, a plaintiff who fails to timely redeem his or her ...


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