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Jodway v. Orlans PC

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

March 30, 2018

Timothy Jodway et al., Plaintiffs,
Orlans PC et al., Defendants.

          Mona K. Majzoub, United States Magistrate Judge



         I. Introduction

         Plaintiffs Alaina Zanke-Jodway (“A. Jodway”) and Timothy Jodway (“T. Jodway”) initiated this action on April 19, 2017. Dkt. No. 1. Plaintiffs (collectively, the “Jodways”) are a married couple and are alleging violations of the Federal Debt Collection Practices Act (“FDCPA”), 15 U.S.C. § 1692 et seq., and the Michigan Collection Practices Act (“MCPA”), MCL 445.251 et seq. See Id. The Defendants are a law firm, Orlans PC, and two lawyers at that firm, Elizabeth Abood-Carroll and Christene Richter.

         On June 13, 2017, the Defendants moved to dismiss the Complaint. Dkt. No. 12. The Jodways responded to the motion on July 6, 2017, and the Defendants replied in support on July 24, 2017. See Dkt. Nos. 15, 16.

         Also on July 24, 2017, the Defendants filed a Motion for Sanctions against A. Jodway personally and as counsel for T. Jodway. Dkt. No. 17. A. Jodway responded to that motion on August 8, 2017. Dkt. No. 20. The Defendants have not replied in support of their request for sanctions.

         Presently before the Court are the Defendants' Motion to Dismiss the Complaint [12], and the Defendants' Motion for Sanctions [17]. The motions are sufficiently briefed, and pursuant to Eastern District of Michigan Local Rule 7.1(f)(2), the Court will decide the motions without a hearing. For the reasons described herein, the Court will GRANT the Defendants' Motion to Dismiss [12], and will also GRANT the Defendants' Motion for Sanctions [17].

         II. Background

         This case concerns the Jodways' mortgage on their second home, which is located at 324 Bay Street, Boyne City, Michigan. No. 1, p. 2 (Pg. ID 2). Litigation involving this mortgage has been ongoing since 2008 and has traversed between federal courts (in both the Western and Eastern Districts of Michigan), bankruptcy courts, and Michigan state courts. Given this long and complicated history, the Court will only discuss those facts necessary to resolve the motions.

         In the summer of 2005, Plaintiffs assumed a mortgage on their Boyne City home for $649, 000. Id. Fifth Third Bank initially held the mortgage and, on January 20, 2011, transferred it to Fifth Third Mortgage Company (“Fifth Third LLC”). Id. The Defendants were legal counsel for Fifth Third Bank and Fifth Third LLC in litigation regarding the mortgage. Id. Specifically, Orlans PC employed both Abood-Carroll and Richter at all relevant times; and Abood-Carroll litigated the bankruptcy proceedings discussed below, whereas Richter handled judicial foreclosure proceedings. See Dkt. No. 12, p. 13 (Pg. ID 552).

         A. Procedural History

         The first litigation involving the mortgage commenced on September 11, 2008. See Zanke-Jodway v. Capital Consultants, Inc., No. 1:08-cv-930, 2010 WL 776743 (W.D. Mich. March 3, 2010) (“Jodway I”). On that date, asserting negligence and fraud claims, the Jodways sued several parties in state court, including Fifth Third LLC. See Id. On October 3, 2008, that case was removed to the United States District Court for the Western District of Michigan. See Id. Because the Jodways failed to respond to Fifth Third LLC's summary judgment motion, the court dismissed their claims for failure to prosecute under Federal Rule of Civil Procedure 41(b). See Id. Several courts, including this one, have held that this decision was an adjudication on the merits as to the formation of the mortgage. See, e.g., Jodway v. Fifth Third Mortg. Co., 557 B.R. 560, 564-66 (E.D. Mich. 2016) (“Jodway II”); see also Fifth Third Mortg. Co. v. Jodway, No. 333926, 2017 WL 5473513, at *4-5 (Mich. Ct. of App. Nov. 14, 2017) (“Jodway III”).

         1. T. Jodway's Bankruptcy Proceeding, June 26, 2014

         In 2010, after Jodway I, Plaintiffs defaulted on the mortgage. See Jodway III, 2017 WL 5473513, at *2. Orlans PC therefore initiated a foreclosure by advertisement-on behalf of Fifth Third LLC-in June 2014. Dkt. No. 1, p. 4 (Pg. ID 4). The sale was scheduled for June 27, 2014, but one day prior, T. Jodway filed for bankruptcy. Id. His bankruptcy filing, of course, stayed the foreclosure. Id.

         On March 15, 2015, Defendant Abood-Carroll, acting for Fifth Third LLC, moved for relief from the automatic stay and co-debtor stay in T. Jodway's bankruptcy case. See Dkt. No. 12-14. The bankruptcy court granted the motion on April 2, 2015. See Dkt. No. 12-16.

         Plaintiffs complain of certain conduct by the Defendants in that bankruptcy proceeding. They allege Abood-Carroll filed a Proof of Claim on September 16, 2014 that was false or made with reckless disregard of the truth. Dkt. No. 1, p. 4 (Pg. ID 4). Specifically, they argue the Proof of Claim was false because it represented that Fifth Third LLC has a valid mortgage on the Jodways' property. Id. at p. 3 (Pg. ID 3). The mortgage is not valid, Plaintiffs maintain, because A. Jodway's signature was illegally obtained. Id.

         A. Jodway's signature was obtained in violation of the Equal Credit Opportunity Act (“ECOA”), [1] according to the Plaintiffs, as she was forced to sign the mortgage although she was not a joint applicant for the loan.[2] Id. She further contends that she did not sign the loan application which allegedly served as the basis for Fifth Third Bank's approval of the loan-an application dated August 3, 2005. Id. Jodway claims a Fifth Third Bank loan officer falsely declared on May 22, 2009 that, instead, a July 2005 joint application secured the mortgage loan. Id.

         In addition, Plaintiffs contend the Defendants failed to disclose during the bankruptcy proceedings the August 2005 loan application and ...

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