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Guevara v. Summit Mortgage

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

February 28, 2018

SUMMIT MORTGAGE, et al., Defendants.



         Plaintiff Regan Guevara claims she cannot get a straight answer on her debt. Faced with foreclosure, she brought the instant suit in the wake of her correspondence with entities involved in the ownership, servicing, and collection of the debt. Now before the Court are two motions for judgment, collectively filed by five of the seven defendants: Trott Law, Bosco Credit II Trust Series, Deutsche Bank National Trust Company, Franklin Credit Management Corporation, and Mortgage Electronic Registration Systems, Inc. ECF 22, 25.

         To begin, Guevara is mainly asserting state-law claims. The amended complaint has eight counts: (1) Quiet Title, (2) Common Law Slander of Title, (3) Statutory Slander of Title, (4) Innocent/Negligent Misrepresentation, (5) Fraud, (6) Violation of the Fair Debt Collection Practices Act (FDCPA), (7) Violation of the Michigan Debt Collection Practices Act (MDCPA), and (8) Violation of the Real Estate Settlement Procedures Act (RESPA). The first five counts are against all the defendants, while the FDCPA and MDCPA counts are exclusively against Defendants Trott and Franklin Credit, and the RESPA count is solely against Franklin Credit.

         In light of the limited federal nature of Guevara's suit, the Court will first evaluate whether the federal claims should be dismissed, and then determine whether the remaining action is more suitable for state-court adjudication.


         Defendants simultaneously move for summary judgment under Rule 56 and judgment on the pleadings under Rule 12(c). See ECF 22, PgID 697; ECF 25, PgID 1106. Although the portions of their motions addressing the FDCPA and RESPA counts do not specifically mention what rule Defendants rely upon, the relief they seek is "dismissal, " so the Court will construe these motions under Rule 12.

         The Court reviews a Rule 12(c) motion as it would a Rule 12(b)(6) motion, and focuses on a plaintiff's allegations. It may also consider "matters of public record, orders, items appearing in the record of the case, and exhibits attached to the complaint[.]" Barany-Snyder v. Weiner, 539 F.3d 327, 332 (6th Cir. 2008). A court may also consider exhibits not included in the complaint but attached to the motion, "so long as they are referred to in the Complaint and are central to the claims contained therein." Bassett v. Nat'l Collegiate Athletic Ass'n, 528 F.3d 426, 430 (6th Cir. 2008). If the exhibits are not referenced in the complaint, the court may still consider them, but must treat the motion as one for summary judgment under Rule 56 and "[a]ll parties must be given a reasonable opportunity to present all the material that is pertinent to the motion." Fed.R.Civ.P. 12(d).

         Defendants relied upon three relevant exhibits that were not attached to the Complaint. One (ECF 22-13) is a truth-in-lending document describing the terms of the debt-consolidation agreement referred to by Guevara in her affidavit and over which the debt-collection dispute arises. See ECF 23-2, PgID 1004, ¶ 9. The other two exhibits, however, are letters allegedly sent by Franklin Credit (ECF 22-27, 22-28). They are not referred to in the Complaint-although letters sent before and after them were. See ECF 23-2, PgID 1051-52 (Guevara's QWR letter), 1053-54 (Franklin Credit's final response to the QWR letter); ECF 23-2. Trott's motion does not rely upon the letters, but the other defendants' joint motion does. The Court may therefore consider the Trott motion under the Rule 12(c) standard, but must convert the other into a motion for summary judgment under Rule 56.

         I. The Rule 12(c) Standard

         When reviewing a motion under 12(c), the Court accepts as true all well-pleaded material allegations of the pleadings and draws reasonable factual inferences in favor of the non-moving party, but "need not accept as true legal conclusions or unwarranted factual inferences." JPMorgan Chase Bank, N.A. v. Winget, 510 F.3d 577, 581-82 (6th Cir. 2007) (quoting Mixon v. Ohio, 193 F.3d 389, 400 (6th Cir. 1999)). The complaint must "give the defendant fair notice of what the claim is and the grounds upon which it rests, " Nader v. Blackwell, 545 F.3d 459, 470 (6th Cir. 2008) (quoting Erickson v. Pardus, 551 U.S. 89, 93 (2007)), "raise a right to relief above the speculative level, and [] 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)). It is not enough to just offer "'labels and conclusions' or 'a formulaic recitation of the elements of a cause of action[.]'" Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at 555).

         II. The Rule 56 Standard

         The Court must grant summary judgment "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(a). The moving party must identify specific portions of the record "which it believes demonstrate the absence of a genuine issue of material fact." Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). Once the moving party has met its burden, the non-moving party may not simply rest on the pleadings, but must present "specific facts showing that there is a genuine issue for trial." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986) (quoting Fed.R.Civ.P. 56(e)) (emphasis omitted).

         A fact is material if proof of that fact would establish or refute an essential element of the cause of action or defense. Kendall v. Hoover Co., 751 F.2d 171, 174 (6th Cir. 1984). A dispute over material facts is genuine "if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). In considering a motion for summary judgment, the Court must view the facts and draw all reasonable inferences "in the light most favorable to the nonmoving party." 60 Ivy St. Corp. v. Alexander, 822 F.2d 1432, 1435 (6th Cir. 1987).


         I. The Origins of the Debts

         Guevara purchased 404 Laurie Dr. in Flushing, Michigan (the Property) for $145, 000 on November 5, 2004. ECF 23-2, PgID 988. The following June, she entered into an agreement to pay off her credit card debt and, in so doing, granted Summit Mortgage a security interest in the Property. ECF 22-13. Guevara, however, is hazy on the transaction. In her affidavit, she confirmed that she "spoke with a company about a possible debt consolidation loan, " that she took out a debt-consolidation loan to pay off her credit cards, and that she began making payments on the new loan in July 2005. ECF 23-2, PgID 1003-04. But she claims that "the only document [she] recall[s] signing" and having notarized was two pages in length and "was represented as just a notice and not anything binding." Id. at 1004. In any event, Guevara started making the new monthly payments on the debt in July 2005 and continued to make payments into 2012. ECF 23-2, PgID 1004, ¶ 9; ECF 23-2, PgID 1020-35.

         II. The Debt Collections

         Guevara's federal claims arise from correspondence about the 2005 debt that took place several years later, during 2016-17. The trouble began when Guevara received two letters, each dated April 21, 2016 and each informing her that she was in default on her mortgage. One letter was sent by Franklin[1] and demanded she pay $21, 183.23 by May 26, 2016 to cure her default and keep Franklin Credit from initiating a foreclosure. ECF 23-2, PgID 1043. The other letter was sent by Trott Law ("Trott"), which purported to represent Franklin Credit. Although the letter did not demand payment, it listed her "total indebtedness" as $54, 470.48. Id. at 1040. The Trott letter explained that unless Guevara notified Trott that she disputed the validity of the debt within 30 days of receiving the letter, Trott would assume the debt was valid. Id. The Franklin Credit letter did not give a timeline for disputing the debt, but did list a number to call if Guevara "wishe[ed] to dispute the delinquency" or "the calculation of amount of the delinquency and reinstatement amount[.]" Id. at 1046. The Trott letter stated at the top, "THIS FIRM IS A DEBT COLLECTOR ATTEMPTING TO COLLECT A DEBT" and the Franklin Credit letter likewise stated that "FRANKLIN CREDIT MANAGEMENT CORPORATION IS A DEBT COLLECTOR[.]" Id. at 1040, 1046.

         Guevara and her husband apparently sent a timely response to the Trott letter that included a summary of payments she made from December 2005 to May 2012. See ECF 23-2, PgID 1003 (affidavit of Guevara attesting that she sent a "debt validation demand letter"), 1017 (letter from Trott recognizing the receipt of a letter dated April 30, 2016), 1034-35 (the summary of payments). Trott, again on behalf of Franklin Credit, responded to Guevara's letter on May 20, 2016 and explained that Franklin Credit "hereby verifies that your debt is valid." Id. at 1017. The letter declared that a payment history "in support of [the debt's] validity" was enclosed. Id.

         Later that year, Franklin Credit sent a letter dated on November 4, 2016 (a Friday) that advised Guevara that it "agrees to release its deed of trust/lien on the above listed account for the minimum amount of $15, 000.00." Id. at 1064. The letter explained that the offer was only valid until Tuesday and that Guevara had to acknowledge her agreement "to the terms outlined in th[e] letter by signing" in the space provided. Id.

         Guevara also sent a letter to Franklin Credit, dated November 8, 2016, in which she stated, "Please allow this letter to serve as formal written request for a Qualified Written Statement pursuant to RESPA (Real Estate Settlement Procedures Act)[.]" Id. at 1053. She explained that she disputed the amount she allegedly owed on the account as well as "the servicing and false information" she had been given and consequently was "unclear as to who[m] this debt is owed to[.]" Id. She then requested several specific documents relating to her loans and credit reporting. Id. at 1053-54.

         Franklin Credit confirmed that it receive Guevara's written request in a letter dated November 21, ECF 22-27, and sent another letter dated December 14, 2016 in which it requested an additional time to respond, ECF 22-28. Franklin finally sent its full response to Guevara's November letter on January 6, 2017. The letter included many of the documents requested by Guevara and also informed her that as of November 30, 2005 (when Franklin began servicing the loan), "the loan was current and had an unpaid principal of $36, 920.20." ECF 23-2, PgID 1051. The letter also informed Guevara that a request "was sent to the credit ...

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