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Brown v. Specialized Loan Servicing, LLC

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

April 5, 2018

RODERICK BROWN, Plaintiff,
v.
SPECIALIZED LOAN SERVICING, LLC, and COMPUTERSHARE USA, Defendants.

          DISTRICT JUDGE, SEAN F. COX

          REPORT AND RECOMMENDATION

          MONA K. MAJZOUB, UNITED STATES MAGISTRATE JUDGE

         Plaintiff Roderick Brown filed this pro se action seeking various forms of relief in connection with the foreclosure and sheriff's sale of his home in Oakland Township, Michigan, on November 15, 2016. (Docket no. 1.) The Court dismissed Plaintiff's claims against the originally named defendant, HSBC Bank USA (“HSBC”), but permitted Plaintiff to amend his complaint in order to assert claims of “dual tracking” and “mortgage servicing fraud” against Specialized Loan Servicing LLC (“SLS”), Computershare USA (“Computershare”). (Docket no. 27.) On August 25, 2017, Plaintiff filed his revised amended complaint (docket no. 34.), and on September 7, 2017, Defendants SLS and Computershare filed their answer and affirmative defenses (docket no. 38). On September 27, 2017, Plaintiff filed a motion to strike Defendants' affirmative defenses. (Docket no. 39.)

         This matter has been referred to the undersigned for all pretrial proceedings, including a hearing and determination of all non-dispositive matters pursuant to 28 U.S.C. § 636(b)(1)(A) and/or a report and recommendation on all dispositive matters pursuant to 28 U.S.C. § 636(b)(1)(B). (Docket no. 50.) The undersigned has reviewed the pleadings and dispenses with a hearing pursuant to Eastern District of Michigan Local Rule 7.1(f).

         I. RECOMMENDATION

         For the reasons that follow, it is recommended that the Court DENY Plaintiff's motion to strike Defendants' affirmative defenses (docket no. 39).

         II. REPORT

         A. Background

         As described above, this matter arises from the foreclosure of Plaintiff's home in Oakland Township, Michigan, on November 15, 2016. (Docket no. 1 at 5.) On March 3, 2005, Plaintiff granted a mortgage to Mortgage Electronic Registration Systems, Inc. (“MERS”), “acting solely as a nominee” for Encore Credit Corp. (Docket no. 9-1 at 3, 16.) On December 22, 2014, MERS executed and recorded in the Oakland County Register of Deeds an Assignment of Mortgage to HSBC. (Docket no. 9-2.)

         Defendant SLS is a “third party mortgage loan servicer.” (Docket no. 14, p. 51.) The servicing of Plaintiff's loan was transferred to SLS on April 1, 2015. (Id.) Shortly thereafter, Plaintiff began communicating with SLS regarding “loss mitigation options, ” including temporary forbearance of the loan. (Id.) On July 1, 2016, Plaintiff was approved for an “Unemployment Forbearance Program.” (Id.) Plaintiff requested an extension of that forbearance in August of 2016, but the extension request was “inadvertently identified as a new complete loss mitigation application, ” which was “manually cancelled” in October of 2016. (Id.) Shortly thereafter, HSBC initiated foreclosure proceedings, and Plaintiff's property was sold for $325, 828.20 on November 15, 2016. (Docket no. 9-3, p. 2.) The Sheriff's Deed evidencing the sale was recorded on December 12, 2016. (Id.)

         On January 3, 2017, Defendant HSBC recorded an “Affidavit to Expunge Sheriff's Deed, ” which provided that “the Sheriff's Deed is invalid and should be Expunged to allow time for re-review of forbearance plan.” (Docket no. 9-5, p. 2.) The Affidavit further provided that, “the Sheriff's Deed recorded December 12, 2016, . . . is void and of no effect and the mortgage recorded March 31, 2005, . . . is hereby restored to its condition, validity and priority as it existed immediately prior to sale.” (Id.)

         On August 25, 2017, Plaintiff filed his revised amended complaint, alleging that Defendants SLS and Computershare “contributed to the wrongful foreclosure sale” by practicing “dual tracking” and committing “mortgage servicing fraud.” (Docket no. 27.) On September 7, 2017, Defendants SLS and Computershare filed their answer and affirmative defenses (docket no. 38), and on September 27, 2017, Plaintiff filed a motion to strike Defendants' affirmative defenses (docket no. 39).

         B. Governing Law

         In responding to a pleading, a party must affirmatively state any avoidance or affirmative defense. Fed.R.Civ.P. 8(c). The rule's reference to “an avoidance or affirmative defense” encompasses two types of defensive allegations: those that admit the allegations of the complaint but suggest some other reason why there is no right of recovery, and those that concern allegations outside of the plaintiff's prima facie case that the defendant therefore cannot raise by a simple denial in the answer. 5 C. Wright & A. Miller, Federal Practice & Procedure ยง 1271 (3d ed.). A pleader, in order to avoid waiving an otherwise valid defense, often will decide to set up affirmatively a matter that technically may not be an affirmative defense but nonetheless might ...


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