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Nino v. Flagstar Bank, FSB

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

March 30, 2018




         This dispute involves a mortgage modification. Plaintiff's active claims include: (1) violation of the Florida Deceptive and Unfair Trade Practices Act, Fla. Stat. § 501.204; (2) violation of the Real Estate Settlement Procedures Act, 12 U.S.C. § 2601; (3) breach of contract; (4) breach of covenant of good faith and fair dealing; and (5) fraud. See ECF 12 (alleging six counts); ECF 24 (withdrawing negligence count). The Court referred the matter to the Magistrate Judge, and then Defendant filed a motion to dismiss. ECF 14; ECF 15. The Magistrate Judge issued a Report and Recommendation ("Report") suggesting that the Court grant Defendant's motion, ECF 31, and Plaintiff objected, ECF 32. For the reasons set forth below, the Court will overrule the objections, adopt the Report, grant Defendant's motion, and dismiss the complaint.


         The Report properly details the underlying facts and procedural history. ECF 31, PgID 694-97. The Court therefore adopts and incorporates that portion of the Report.


         Federal Rule of Civil Procedure 72(b) governs the review of a magistrate judge's report. A district court's standard of review depends upon whether a party files objections. The Court need not undertake any review of portions of a report to which no party has objected. Thomas v. Arn, 474 U.S. 140, 154 (1985). De novo review is required, however, if the parties "serve and file specific written objections to the proposed findings and recommendations." Fed.R.Civ.P. 72(b)(2). In conducting a de novo review, "[t]he district judge may accept, reject, or modify the recommended disposition; receive further evidence; or return the matter to the magistrate judge with instructions." Fed.R.Civ.P. 72(b)(3).

         The Court may grant a Rule 12(b)(6) motion to dismiss if the complaint fails to allege facts "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)). 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). If "a cause of action fails as a matter of law, regardless of whether the plaintiff's factual allegations are true or not, " then the Court must dismiss. Winnett v. Caterpillar, Inc., 553 F.3d 1000, 1005 (6th Cir. 2009).


         The Report recommends dismissing all of Plaintiff's claims. See ECF 31, PgID 720. Plaintiff raised four objections, but none relate to the Report's analysis of the fraud claim. See ECF 32. The Court therefore adopts the fraud analysis without further review and will dismiss the claim. Thomas, 474 U.S. at 154. The Court will address Plaintiff's remaining claims in turn.

         I. Florida Deceptive and Unfair Trade Practices Act ("Trade Practices Act")

         The Court will dismiss Plaintiff's Trade Practices Act claim because the statute does not apply to Defendant. The Trade Practices Act states that it does not apply to "[b]anks, credit unions, and savings and loan associations regulated by federal agencies[.]" Fla. Stat. § 501.212(4)(c). It is undisputed that Defendant is a federally regulated bank. See ECF 12, PgID 257, ¶ 2; ECF 32, PgID 727-30. Plaintiff argues, however, that the statutory exemption should not apply because Defendant's underlying actions pertained to mortgage servicing instead of banking activity. ECF 32, PgID 727.

         Florida courts are split on how to interpret the exemption for federally regulated banks, and some case law supports Plaintiff's position. See, e.g., Larach v. Standard Chartered Bank Int'l (Americas) Ltd., 724 F.Supp.2d 1228, 1238 (S.D. Fla. 2010). But the Report thoroughly explains why Plaintiff's argument is ultimately unpersuasive, and the Court independently agrees with the Magistrate Judge's analysis. First, the majority view in Florida courts is that a federally regulated bank is exempt from the Trade Practices Act regardless of the nature of the underlying conduct. Regions Bank v. Legal Outsource PA, No. 2:14-cv-476-FtM-29MRM, 2015 WL 7777516, at *5 (M.D. Fla. Dec. 3, 2015) (collecting cases). Second (and perhaps more importantly), Plaintiff's argument contradicts the statutory text. The Trade Practices Act plainly states that it does not apply to banks "regulated by federal agencies." Fla. Stat. § 501.212(4)(c). The text does not suggest that there is an exception to the exemption based on the federally regulated bank's pertinent activity. And the Court will not add language to an unambiguous statute. Because Defendant is exempt from suit under the Trade Practice Act, the Court will dismiss Plaintiff's Trade Practices Act claim.

         II. Real Estate Practices Act

         The Court will dismiss Plaintiff's Real Estate Practices Act claim because it is barred by the statute of limitations. Plaintiff's claim pertains to Defendant's alleged failure to timely respond to a "qualified written request." ECF 12, PgID 269-70, ¶¶ 73 and 80; 12 U.S.C. § 2605(e). The statute of limitations for the claim is three years. 12 U.S.C. § 2614. The question is: When does the clock start running? And the statutory text provides the answer: "from the date of the occurrence of the violation[.]" Id.; see also Falcocchia v. Saxon Mortg., Inc., 709 F.Supp.2d 860, 868-69 (E.D. Cal. 2010) ("Because the conduct complained of is the failure to respond to the alleged qualified written request, the claim accrued, and the claim began to run, at the time of that failure."). The Report states that Defendant had until November 2013 to respond to Plaintiff's qualified written request, ECF 31, PgID 709, and Plaintiff does not object to ...

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