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Colson v. Wilmington Savings Fund Society

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

January 10, 2018

GLENDORIA COLSON, Plaintiff,
v.
WILMINGTON SAVINGS FUND SOCIETY, and RUSHMORE LOAN MANAGEMENT, Defendants.

          Mona K. Majzoub Magistrate Judge

          OPINION AND ORDER ADOPTING REPORT AND RECOMMENDATION, OVERRULING PLAINTIFFS' OBJECTIONS, GRANTING MOTION TO DISMISS, AND DISMISSING AMENDED COMPLAINT WITH PREJUDICE

          DAVID M. LAWSON, UNITED STATES DISTRICT JUDGE.

         Plaintiff Glendoria Colson filed a six-count complaint alleging claims under federal and state law against defendants Wilmington Savings Fund Society and Rushmore Loan Management based on the defendants' actions in foreclosing the mortgage on the plaintiff's home. The complaint, filed pro se, asserts that Wilmington did not have the authority to foreclose the mortgage because it did not have an interest in the property, and the plaintiff seeks to quiet title in herself. She also alleges that the defendants violated the Fair Debt Collection Practices Act (FDCPA), and that defendant Rushmore violated the Real Estate Settlement Procedures Act (RESPA). The Court referred this case to Magistrate Judge Mona K. Majzoub for pretrial management. Thereafter, the defendants filed a motion to dismiss the complaint. The plaintiff also filed a motion for a preliminary injunction and a motion to amend her complaint. Judge Majzoub filed a report on September 19, 2017 recommending that the motion to dismiss be granted in part and all but the RESPA claims be dismissed. Judge Majzoub also recommended that the preliminary injunction motion be denied, but that the plaintiff be allowed to amend her complaint to clarify her RESPA claim. The plaintiff filed timely objections, and the matter is before the Court for de novo review. After considering the motions, the pleadings, and the magistrate judge's report in light of the objections filed, the Court finds that the magistrate correctly determined the issues. Therefore, the Court will adopt the report and recommendation and dismiss all but the RESPA claim. The plaintiff may amend her complaint.

         I.

         In February 2003, Colson granted a purchase money mortgage to non-party Citicorp Trust Bank, which was secured by her home in Detroit, Michigan. The mortgage was recorded at the Wayne County, Michigan Register of Deeds office. In September 2003, the mortgage was sold to the Christiana Trust, a division of Wilmington Savings Fund Society, FSB, as trustee for Palisades Mortgage Loan Trust, Series 2013-4. The loan was assigned to Rushmore for servicing on October 8, 2013. Colson received notice of the change of servicer on October 22, 2013.

         Colson alleges that on March 13, 2014, she sent Rushmore a Qualified Written Request (QWR) under the RESPA, in which she sought copies of the first 15 pages of the Trust's Pooling and Service Agreement (PSA) to determine 1) who was the real party in interest under the deed of trust; 2) were there any assignments made after the PSA specified closing date; 3) how many assignments were made after the PSA closing date; and 4) whether Rushmore maintained an interest in the indebtedness. On May 20, 2014, Rushmore responded to the plaintiff's QWR, claiming the plaintiff's request did not specify an error and that the request was duplicative, unduly burdensome, irrelevant, and overly broad. On May 29, 2014, the plaintiff sent a second QWR with five informational requests. Rushmore responded that the second request contemplated confidential, proprietary, and privileged information.

         Apparently the plaintiff fell behind on her mortgage payments. On April 26, 2016, Rushmore, as the servicer of her loan for Athene/Credit Suisse, sent Colson an offer to agree to a foreclosure judgment, wherein the owner of the loan would pay the plaintiff $2, 000 subject to several conditions. The offer was good for ten days.

         On May 16, 2016, Colson apparently sent Rushmore another QWR, stating that Rushmore obtained servicing rights to her mortgage through defective means. She challenged the timeliness of the notice she received on October 22, 2013, because she said that the mortgage was transferred on September 6, 2013, and the notification failed to comply with the 15-day notice requirement mandated by federal law whenever ownership of a mortgage loan secured by a principal dwelling is sold, transferred, or assigned. It appears, however, that Colson has conflated the date her mortgage was assigned to Christiana Trust with the date Rushmore notified her that it would be servicing her loan. She also stated in the QWR that any assignments of the mortgage had not been recorded properly. She asked for information about the alleged notice and timing error.

         Rushmore replied to the plaintiff's QWR on May 26, 2016, stating that the correspondence was under review and Rushmore would issue a response within 30 business days. It also stated that the current owner of the plaintiff's loan was U.S. Bank NA. According to the complaint, Rushmore never identified the assignee of the mortgage loan or showed a valid right to service. Rushmore also did not identify properly the trustee of the trust that owned the plaintiff's mortgage loan.

         On May 23, 2016, the mortgage was assigned to the defendant Wilmington, solely as a trustee for RPMLT 2014-1 T, Series 2014-1. Later, the mortgage was recorded in the Wayne County Records. The complaint alleges that RPMLT 2014-1, Series 201401 was not an active trust, thereby dispossessing it of legal title to the mortgage. Colson's mortgage included a power of sale, which was triggered when she defaulted. On June 1, 2016, defendant Wilmington notified Colson that her mortgage would be foreclosed by sale of the mortgaged premises and the period for redemption was six months from the date of sale. On June 30, 2016, the house was sold at a sheriff's sale for $41, 000. The plaintiff did not redeem the property.

         After the redemption period expired, Wilmington filed an action against the plaintiff in Michigan's Thirty-Sixth District Court for possession of the plaintiff's property. The court entered a judgment of possession on January 18, 2017, and the judgment was affirmed on appeal.

         On May 1, 2017, the plaintiff filed a six-count complaint, alleging violations of RESPA by Rushmore, and violations of 12 C.F.R. 1024.33 and 1026.39 by Rushmore and Wilmington (Count 1); a violation of the foreclosure-by-advertisement statute, Mich. Comp. Laws § 600.3204(3) (Count 2); a violation of the FDCPA (Count 3); slander of title (Count 4); quiet title under Mich. Comp. Laws § 600.2932(1) (Count 5); and lack of admissibility of copies of the mortgage and note under FRE 1002 (Count 6). On July 3, 2017, the defendants filed a motion to dismiss. On August 1, 2017, the plaintiff filed a motion for leave to file first amended complaint, followed by an ex parte emergency motion for preliminary injunction on August 29, 2017.

         Judge Majzoub filed her report and recommendation on September 19, 2017 addressing all three pending motions. She suggested that Counts 2 through 6 ought to be dismissed for failure to state a claim. The plaintiff could not state a plausible claim in Count 2 because Michigan's foreclosure-by-advertisement statute, Mich. Comp. Laws § 600.3204, required only that the “record chain of title” exist at the time of the foreclosure, and that requirement was satisfied here because Wilmington's ownership of the mortgage is evidenced by five recorded assignments in the public record. Because the claims to quiet title and for slander of title relied on the premise of the foreclosure's invalidity, they failed as well, so Counts 4 and 5 should be dismissed. Judge Majzoub suggested that the FDCPA claim (Count 3) failed because Rushmore was not a “debt collector” within the meaning of the Act, as the mortgage was not in default when Rushmore took over as servicer, and therefore it was attempting to collect its own debt. The magistrate judge summarily disposed of the plaintiff's claim under Federal Rule of Evidence 1002 (Count 6), because it merely posited an evidentiary issue that would be resolved at a trial.

         Judge Majzoub suggested that the plaintiff should not be allowed to amend her complaint to remedy defects on those counts, because the attempts would be futile. Likewise, she recommended that the preliminary injunction motion be denied because the plaintiff could not demonstrate a likelihood of success on the merits. However, Judge Majzoub found that the plaintiff stated a viable RESPA violation ...


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