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Carter v. Crosscountry Mortgage, Inc.

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

August 21, 2019

DANIEL R. CARTER, Plaintiff,


          Denise Page Hood United States District Court Judge.

         I. BACKGROUND

         A. Procedural Background

         On or about March 7, 2017, Plaintiff Daniel R. Carter (“Carter”) commenced this action in the 30th Circuit Court for Ingham County, Michigan. (Doc # 1, Pg ID 2) On August 14, 2017, Carter amended his Complaint and named CrossCountry Mortgage, Inc. (“CrossCountry”) as a defendant and alleged two state law claims: (1) Breach of Contract; and (2) Breach of Fiduciary Duty. (Id.) The parties involved in the action stipulated to change the venue of the case to the 4th Circuit Court for the County of Jackson, Michigan on October 11, 2017. (Id. at 1-2.) CrossCountry removed this action to federal court on August 30, 2018. (Doc # 1-3, Pg ID 27)

         On September 19, 2018, CrossCountry filed a Motion to Dismiss Carter's Amended Complaint (Doc # 2), which the Court granted on February 11, 2019 (Doc # 15). In the Court's Order granting CrossCountry's Motion to Dismiss (Doc # 2), it gave Carter the ability to amend his Amended Complaint, but ordered that he could only pursue his Breach of Contract claim. (Doc # 15, Pg ID 470-471) Carter filed his Third Amended Complaint on February 21, 2019, alleging: (1) Breach of Contract (Common Law) (Count I); and Breach of Contract (the Real Estate Settlement Procedures Act (“RESPA”), 12 U.S.C. § 2601 et seq. and Regulation X, 12 C.F.R. § 1024) (Count II). (Doc # 16) CrossCountry filed a Motion to Dismiss Carter's Third Amended Complaint on March 14, 2019. (Doc # 18) Carter filed his Response on April 4, 2019 (Doc # 20) and CrossCountry filed its Reply on April 18, 2019 (Doc # 21). This Motion is currently before the Court.

         B. Factual Background

         On January 9, 2016, Carter purchased a home at 12950 Cooper Road, Leslie, Michigan 49251 (“subject property”). (Doc # 16, Pg ID 474) The funds used to purchase the subject property were provided by CrossCountry pursuant to a Mortgage Agreement. (Doc # 16, Pg ID 474; Doc # 16-2) Following the execution of the Mortgage Agreement, CrossCountry paid a one-year property insurance premium of $1, 010.00 to State Farm Insurance (“State Farm”) through the title company out of escrowed funds. (Doc # 16, Pg ID 474; Doc # 16-3) According to the escrow and property insurance provisions of the Mortgage Agreement, Carter's monthly payments included sums that were to be held in escrow by CrossCountry for property insurance premiums. (Doc # 16, Pg ID 474)

         On January 14, 2016, State Farm notified CrossCountry that there would be a property insurance premium increase of $642.00. (Doc # 16, Pg ID 475; Doc # 16-5) CrossCountry neglected to pay the $642.00 property insurance premium increase even though the terms of the Mortgage Agreement and RESPA dictated that CrossCountry was obligated to pay any increased premiums. (Doc # 16, Pg ID 475) On July 13, 2016, State Farm sent CrossCountry a Notice of Cancellation as a result of CrossCountry's failure to pay the premium increase. (Doc # 16, Pg ID 475; Doc # 16-6) The Notice of Cancellation was effective beginning August 17, 2016, and on that date, Carter's State Farm coverage was terminated. (Doc # 16, Pg ID 475-476)

         Carter's residence was destroyed by fire on December 18, 2016. (Id. at 476.) The destruction of Carter's house caused him to suffer various financial losses. (Id.) Carter alleges that these losses include: $252, 000.00 in “structure loss”; $189, 000.00 in “personal property loss”; $7, 000.00 in “debris removal”; and an unlimited amount in the “loss of the use” of his residence. (Id.) Carter now asks the Court to find that CrossCountry breached the Mortgage Agreement, which he claims was the direct and proximate cause of his financial losses.

         II. ANALYSIS

         A. Standard of Review

         Rule 12(b)(6) of the Federal Rules of Civil Procedure provides for a motion to dismiss for failure to state a claim upon which relief can be granted. Fed.R.Civ.P. 12(b)(6). This type of motion tests the legal sufficiency of the plaintiff's complaint. Davey v. Tomlinson, 627 F.Supp. 1458, 1463 (E.D. Mich. 1986). When reviewing a motion to dismiss under Rule 12(b)(6), a court must “construe the complaint in the light most favorable to the plaintiff, accept its allegations as true, and draw all reasonable inferences in favor of the plaintiff.” Directv Inc. v. Treesh, 487 F.3d 471, 476 (6th Cir. 2007). A court, however, need not accept as true legal conclusions or unwarranted factual inferences.” Id. (quoting Gregory v. Shelby Cnty., 220 F.3d 443, 446 (6th Cir. 2000)). “[L]egal conclusions masquerading as factual allegations will not suffice.” Edison v. State of Tenn. Dep't of Children's Servs., 510 F.3d 631, 634 (6th Cir. 2007).

         As the Supreme Court has explained, “a plaintiff's obligation to provide the ‘grounds' of his ‘entitle[ment] to relief' requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do. Factual allegations must be enough to raise a right to relief above the speculative level… .” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007) (citations omitted); see LULAC v. Bresdesen, 500 F.3d 523, 527 (6th Cir. 2007). To survive dismissal, the plaintiff must offer sufficient factual allegations to make the asserted claim plausible on its face. Ashcroft v. Iqbal, 556 U.S. 662, 663 (2009). “A claim has facial plausibility when the pleaded factual content allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id.

         B. Breach of ...

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