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Strehle v. Citimortgage, Inc.

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

April 30, 2018

PHILLIP STREHLE, Plaintiff,
v.
CITIMORTGAGE, INC., GREEN TREE SERVICING LLC n/k/a/ DITECH FINANCIAL LLC, DITECH FINANCIAL, LLC, and MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC., Defendants.

          Honorable Nancy G. Edmunds, Judge.

         REPORT AND RECOMMENDATION TO GRANT DEFENDANT CITIMORTGAGE INC.'S MOTION FOR SUMMARY JUDGMENT [18], DEFENDANT DITECH FINANCIAL LLC'S MOTION FOR SUMMARY JUDGMENT [21], AND MORTGAGE ELECTRONIC REGISTRATION SYSTEMS INC.'S MOTION FOR JUDGMENT ON THE PLEADINGS [22]

          DAVID R. GRAND UNITED STATES MAGISTRATE JUDGE.

         Plaintiff Phillip Strehle (“Strehle”), an attorney, brings this action in pro per. Defendants CitiMortgage, Inc. (“CMI”), Green Tree Servicing LLC (“Green Tree”), DiTech Financial, LLC (“DiTech”), and Mortgage Electronic Registration Systems, Inc. (“MERS”) (collectively, “Defendants”) are entities that, at one time or another, were affiliated with a mortgage obtained by Strehle.[1] Strehle filed his complaint in the State of Michigan's 52nd District Court on May 5, 2017. (Doc. #1 at 9-42 (“Compl.”)). DiTech and MERS timely removed the case to federal court on June 5, 2017. (Doc. #1). CMI and DiTech filed motions for summary judgment on January 11 and 15, 2018, respectively. (Docs. #18, #22). MERS filed a motion for judgment on the pleadings on January 15, 2018. (Doc. #21). Strehle responded to each of these motions. (Docs. #30, #31, #29). CMI and DiTech each filed replies in support of their motions. (Docs. #32, #33). These motions were referred to this Court for a Report and Recommendation pursuant to 28 U.S.C. § 636(b)(1)(B). (Doc. #12).

         I. RECOMMENDATION

         For the reasons set forth below, IT IS RECOMMENDED that CMI's Motion for Summary Judgment (Doc. #18), DiTech's Motion for Summary Judgment (Doc. #22), and MERS' Motion for Judgment on the Pleadings (Doc. #21) be GRANTED.

         II. REPORT

         A. Factual and Procedural Background

         Strehle's claims arise out of a $99, 450.00 home loan he obtained on March 5, 2003 from Residential Loan Services. (Doc. #18-2). To secure repayment of the loan, Strehle granted a mortgage on real property located at 9318 Sherwood Drive in Davisburg, Michigan (the “Mortgage”). (Id.). The Mortgage named MERS as the mortgagee. (Id.). On March 1, 2004, CMI became the servicer of the Mortgage. (Doc. #18-3). As the servicer, CMI became the entity to which Strehle was required to send his monthly Mortgage payments. (Doc. #18-2 at ¶ 20). Strehle was notified of this change through a letter dated February 12, 2004. (Doc. #18-3). CMI serviced the Mortgage until April 1, 2014, when the servicing was transferred to Green Tree. (Doc. #18-4). Strehle was notified of this change in servicing via a letter dated March 17, 2014. (Id.). He admits that he received notice of this transfer. (Doc. #18-5 at 13).

         Strehle made his monthly Mortgage payments to Green Tree from April 1, 2014 to July 2015. (Compl. at ¶¶ 13, 14). However, Strehle abruptly stopped paying Green Tree after July 2015 because he had grown upset with Green Tree's servicing. (Id.). Strehle found Green Tree to be “incompetent and not professional” because it allegedly failed to properly apply his payments towards the Mortgage's principal and billed him for expenses which were calculated incorrectly. (Docs. #29 at 13, #31 at 15-16). Thus, after more than one year of what Strehle alleges was untenable servicing, he decided to take matters into his own hands.

         Starting on August 22, 2015, Strehle began sending his Mortgage payments to CMI - i.e., the entity he knew to be his former Mortgage servicer. (Doc. #18-6). To several of these payments Strehle attached letters where he explained he was aware CMI was no longer his servicer, but that he had grown so frustrated with Green Tree that he would no longer recognize it as his servicer. (Id. at 24-38). In the end, Strehle submitted a total of thirteen checks to CMI between August 22, 2015 and April 15, 2016. (Id.). When CMI received these payments from Strehle, the checks were returned, and CMI sent him a letter stating: “As you are aware, the servicing of your mortgage account transferred to Green Tree Servicing LLC effective April 1, 2014. All correspondence relating to the servicing of your mortgage loan should now be directed solely to Green Tree Servicing LLC.” (Doc. #18-7).[2] Nonetheless, Strehle persisted and continued trying to make payments to CMI, telling them: “You have two choices: you can service the contract yourself or you can hire someone else to properly service the contract.” (Doc. #18-6). Strehle also told CMI: “[b]ecause you returned my checks after I properly tendered them, I will not pay any penalties, interest, or any other amount arising out of your return of these [] checks . . . it is your fault and not mine that you did not accept it.” (Id.).

         On November 9, 2015, MERS assigned the Mortgage itself - not merely the servicing - to DiTech, which by this time had absorbed Green Tree. (Docs. #22-8, #22-9); see also note 1. Thus, while DiTech (then operating as Green Tree) became Strehle's servicer on April 1, 2014, DiTech also became the mortgagee on November 9, 2015. Accordingly, by November 9, 2015, DiTech was both the Mortgage's servicer and the mortgagee. (Doc. #22-8).

         In late November 2015, Strehle stopped sending checks to CMI and began making his Mortgage payments to DiTech. (Doc. #1-11 at ¶ 25). While no new transfers or assignments took place after this date - either in regard to the Mortgage or the servicing - this did not mark the end of Strehle's disagreements arising under the Mortgage. During the period of time when Strehle had refused to make payments to his assigned servicer, he had been assessed several charges which he believes he was not required to pay.

         On August 27, 2015, DiTech (operating as Green Tree in its capacity as the servicer of the Mortgage) became aware that Strehle had overdue property taxes, and that the local assessor had turned over the unpaid taxes to the Oakland County Treasurer for collection. (Doc. #22-6). After disbursing a total of $1, 253.36 to the Oakland County Treasurer to cover this expense, DiTech proceeded to notify Strehle that pursuant to the terms of the Mortgage agreement, it would be establishing an escrow account to ensure reimbursement for this amount. (Doc. #22-5). DiTech later notified Strehle that his new Mortgage payment was being increased so as to account for the escrow payments which Strehle had to make. (Doc. #22-7).

         However, Strehle believes that he did not have to make the higher Mortgage payment. Though the monthly payment due to DiTech had risen from roughly $700.00 to $777.26, Strehle only paid the amount he believed he owed under the Mortgage, sending checks for $699.10 in November 2015 and for $700.10 in December 2015. (Docs. #1, #22-7). These insufficient payments ultimately left Strehle's account past due in the amount of $1, 017.94. (Doc. #22-5 at ¶ 22). In turn, this triggered an important provision in the Mortgage contract. (Doc. #22-2 at ¶ 2). Under the Mortgage, DiTech has the right, when the Mortgage is overdue, to accept any payment or partial payment insufficient to bring the loan current, and to hold those funds in an unapplied funds account until the loan is made current. (Id.). When DiTech did just that, Strehle faulted all of the defendants for their interconnected roles in allegedly creating this dispute. Specifically, Strehle believes that CMI's refusal to accept his payments was improper, and that because any unpaid expenses were attributable to CMI's inaction, the steps that DiTech subsequently took against him were unjustified.

         Despite what appears to be Strehle's confusion over the difference between a claim and remedy, he asserts six counts in his complaint: Count I) a declaratory judgment that CMI and DiTech cannot withhold applying mortgage payments to the Mortgage's principal and interest, create an escrow account, keep an escrow amount after declaring it terminated, or refuse to collect payments that Strehle made to a previous servicer; Count II) a claim for breach of the Mortgage contract against CMI, DiTech, and MERS[3]; Count III) a claim for negligence against CMI, DiTech, and MERS; Count IV) an accounting by Green Tree only[4]; Count V) a claim against DiTech only for violation of the Fair Credit Reporting Act (“FCRA”), in particular 15 U.S.C. §§ 1681n, 1681o, 1681p, and 1681s-2(a); and Count VI) “respondeat superior/vicarious liability” against MERS only. (Doc. #1). As noted above, CMI and DiTech filed motions for summary judgment, and MERS filed a motion for judgment on the pleadings. (Docs. #18, #21, #22). Each requested that all of the counts brought against them be dismissed. (Id.).

         In its motion, CMI asserts: 1) Count I must be dismissed because declaratory relief is not a valid cause of action; 2) summary judgment should be granted as to Count II because the breach of contract claim against CMI stems from a period of time when CMI was no longer affiliated with Strehle's Mortgage, meaning CMI could not and did not commit a breach; and 3) summary judgment should be granted as to the negligence claim in Count III because CMI did not owe a duty of care outside of the obligations it previously owed under the contract. (Doc. #18).

         In its own summary judgment motion, DiTech makes the same argument as CMI regarding Count I, and asserts that summary judgment should also be granted as to the remaining counts as: 1) DiTech did not breach its contract with Strehle as alleged in Count II given all of its actions were in accord with the contract's express terms, and in any event, Strehle was the first party to breach the contract which bars his claim; 2) Strehle's negligence claim against DiTech alleged in Count III is barred because their relationship was governed exclusively by a contract; and 3) Strehle's FCRA claim in Count V relies on a provision which does not confer a private right of action. (Doc. #22).

         Finally, MERS argues in its motion for judgment on the pleadings that because respondeat superior and vicarious liability are not independent causes of action, Count VI for “respondeat superior/vicarious liability” must be dismissed. (Doc. #21).

         B. Applicable Standards

         1. Summary Judgment Standard Pursuant to Fed.R.Civ.P. 56

         Summary judgment is proper if the moving party 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). A dispute is “genuine” if a reasonable jury could return a verdict in favor of the nonmoving party, and a fact is “material” if it has the potential to affect the outcome of the suit. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). Viewing the evidence in a light most favorable to the nonmoving party, the court's task is to determine “whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law.” Id. at 251-52.

         The party seeking summary judgment bears the initial burden of informing the court of the basis for its motion, and must identify particular portions of the record that demonstrate the absence of a genuine dispute as to any material fact. See Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986). Once this occurs, the nonmoving party must counter with specific facts upon which a reasonable jury could find in its favor. Vereecke v. Huron Valley Sch. Dist., 609 F.3d 392, 399 (6th Cir. 2010) (citing Anderson, 477 U.S. at 252). A mere scintilla of proof or some metaphysical doubt as to a material fact is insufficient to forestall summary judgment. Sierra Club v. ICG Hazard, LLC, 781 F.3d 281, 284 (6th Cir. 2015). “Conclusory statements unadorned with supporting facts are insufficient to establish a factual dispute that will defeat summary judgment.” Alexander v. Caresource, 576 F.3d 551, 560 (6th Cir. 2009) (citing Lewis v. Phillip Morris, Inc., 355 F.3d 515, 533 (6th Cir. 2004)).

         2. Judgment on the Pleadings Standard Pursuant to Fed.R.Civ.P. 12(c)

         Fed. R. Civ. P. 12(c) provides that, “[a]fter the pleadings are closed . . . a party may move for judgment on the pleadings.” A Rule 12(c) motion is designed to provide a means of disposing of cases when the material facts are not in dispute between the parties and judgment on the merits can be achieved by focusing on the content of the competing pleadings, attached exhibits, matters incorporated into the pleadings, and any facts of which the court may take judicial notice. 5C Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 1367 (2009). For a Rule 12(c) motion, all well-pleaded material allegations of the pleadings of the opposing party must be taken as true and the motion may be granted only of the moving party is nevertheless clearly entitled to judgment. Tucker v. Middleburg-Legacy Place, 539 F.3d 545, 549 (6th Cir. 2008). The court, however, need not accept as true legal conclusions or unwarranted factual inferences. Barany-Snyder v. Weiner, 539 F.3d 327, 332 (6th Cir. 2008). A Rule 12(c) motion is appropriately granted when no material issue of fact exists and the moving party is entitled to judgment as a matter of law. Tucker, 539 F.3d at 549. In this sense, it is similar to a motion under Rule 56(c).

         A motion under 12(c) is also analyzed similarly to a motion under Rule 12(b)(6), in that the outcome turns exclusively on the pleadings. See Id. at 550; Sensations, Inc. v. City of Grand Rapids, 526 F.3d 291, 295 (6th Cir. 2008). “The manner of review of Fed.R.Civ.P. 12(c) is the same as review under Rule 12(b)(6).” Jelovsek v. Bredesen, 545 F.3d 341, 434 (6th Cir. 2008). Rule 12(b)(6) requires that a complaint “contain something more . . . than . . . a statement of facts that merely creates a suspicion [of] a legally cognizable right of action.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007) (internal citation omitted). A “plaintiff's obligation to provide the ‘grounds' of his ‘entitlement to relief' requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Id. Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements do not suffice. Ashcroft v. Iqbal, 556 U.S. 662, 678-79 (2009). As is the case when ruling on a motion to dismiss, the Court may consider “documents relating to the note, mortgage, assignment, loan modification process, and foreclosure that are referenced in the complaint and integral to” a plaintiff's claims. Gardner v. Quicken Loans, Inc., 567 Fed.Appx. 362, 365 (6th Cir. 2014).

         C. Analysis

         1. CMI's Motion for Summary Judgment

         CMI argues in its motion that Count I (declaratory relief) should be dismissed, and that summary judgment should be granted in its favor as to Count II (breach of contract) and Count III (negligence). In each instance, the Court agrees.

         a. Count I: Declaratory Relief

         CMI argues that Strehle's claim for declaratory relief in Count I “merits dismissal pursuant to Fed.R.Civ.P. 12(c) because declaratory relief is a form of relief, and not a cause of action.” (Doc. #18 at 6). In his response, Strehle contends that “[t]he only way to get [declaratory] relief before a court is to put it in a pleading in order to initiate a civil action, as that is the only way for invoking the jurisdiction of the Court.” (Doc. #30 at 17). While a party may only be able to obtain declaratory relief by requesting it in a complaint, Strehle's argument does not address the crucial fact that “declaratory relief” is not a claim which can stand on its own.

         It is well-settled that “[d]eclaratory relief is a remedy . . . not a claim.” McCann v. U.S. Bank, N.A., 873 F.Supp.2d 823, 848 (E.D. Mich. 2012) (citing Mettler Walloon, L.L.C. v. Melrose Twp., 281 Mich.App. 184, 221 (2008)); see also Wiggins v. City of Burton, 291 Mich.App. 532, 561 (2011) (“Although it has become commonplace in this state for a plaintiff to assert a request for declaratory relief as a separately labeled cause of action within his or her complaint, this is technically improper because declaratory relief is a remedy, not a claim.”). “Nevertheless, a complaint must be read as a whole, and it is well settled that this Court will look beyond the mere procedural labels used in the pleadings.” Wiggins, 291 Mich.App. at 536 (quoting Adams v. Adams (on reconsideration), 276 Mich.App. 704, 710-711, 742 N.W.2d 399 (2007).

         Under the foregoing case law, Count I against CMI should be dismissed.

         b. Count II: ...


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