AVERN COHN, District Judge.
This is another of one of many cases pending in this district involving a default on a mortgage and the subsequent foreclosure. The property subject to the mortgage has been sold at a foreclosure sale. The redemption period has not yet expired. Plaintiff Nancy Gardner is suing Quicken Loans, Inc. (Quicken), Flagstar bank, FSB (Flagstar), and Potestivo & Associates, P.C. (Potestivo). The complaint makes the following claims, phrased by plaintiff as follows:
Before the Court is Quicken and Potestivo's motion to dismiss under Fed. R. Civ. P. 12(b)(6). Flagstar concurs in the motion. For the reasons that follow, the motion will be granted and the case will be dismissed.
On May 18, 2007, plaintiff executed a note in the amount of $215,250.00 to obtain a loan from Flagstar to purchase real property commonly known as 7221 State Road, Burtchville, Michigan 48059. As security for the loan, plaintiff executed a mortgage on the property. The mortgage was recorded with the St. Clair County Register of Deeds on May 22, 2007, in Liber 3723, Page 10. Both the note and the mortgage were in favor of Flagstar, as the lender, with Mortgage Electronic Registration Systems, Inc. (MERS) acting solely as nominee for Flagstar and its successors and assigns. The mortgage also provides that MERS is the mortgagee under the mortgage.
On March 4, 2013, the mortgage was assigned from MERS as nominee for Flagstar, its successors and assigns, to Quicken. The assignment was recorded with the St. Clair County Register of Deeds on March 8, 2013, in Liber 4367, Page 526.
Plaintiff defaulted on the terms of the note by failing to make her required payments. Potestivo, a law firm acting on behalf of Quicken, began the foreclosure by advertisement process, as explained below.
On February 11, 2013, Potestivo served a pre-foreclosure notice on plaintiff, along with a list of approved housing counselors pursuant to M.C.L. § 600.3205a(1) and(2). The notice instructed plaintiff as follows:
On March 6, 2013, plaintiff responded to the notice, stating she requested a meeting to discuss a loan modification.
On March 12, 2013, Potestivo sent plaintiff a letter stating that it was the designee for Quicken with regard to the mortgage loan and enclosed paperwork and list of documents referenced in the February 11, 2013 letter. The letter stated that plaintiff needed to fill out the paperwork and send in the documents within 7 days so she could be evaluated for a possible loan modification. The letter also stated that the 90 day hold would expire on May 13, 2013.
On March 16, 2013, plaintiff wrote to Potestivo, asking for information regarding her loan and whether Potestivo had the legal right to negotiate with her. Plaintiff did not return the paperwork or documents Potestivo requested.
On March 25, 2013, Potestivo wrote to plaintiff, again asking for plaintiff to fill out the paperwork and supply the supporting documentation within 7 days in order to determine whether she was eligible for a loan modification. The letter again advised plaintiff that the 90 day hold would expire on May 13, 2013.
On April 8, 2013, Potestivo again wrote to plaintiff asking for the documentation, stating it must receive the documents by April 12, 2013.
On May 23, 2013, Potestivo wrote to plaintiff. The letter responded to plaintiff's request for information regarding her mortgage loan. Potestivo also attached copies of the note, mortgage, and assignment. The letter also informed plaintiff of the balance due on the loan and total pay off amount ($210,270.10). The letter also reminded plaintiff that a foreclosure sale was scheduled for May 30, 2013.
During this time because plaintiff did not provide the documents necessary to determine whether she was eligible for a modification, the foreclosure proceedings continued. The foreclosure notice was published for four consecutive weeks in the Port Huron Times Herald, with the first publication taking place on April 19, 2013, and the fourth and final publication taking place on May 10, 2013. The foreclosure notice was also posted in a conspicuous place on the Property on April 26, 2013. Ultimately, a Sheriffs Sale was held on May 30, 2013, at which Quicken was the highest bidder and received a Sheriffs deed to the property. The redemption period has not yet expired.
On June 19, 2013, plaintiff filed the instant action in St. Clair County Circuit Court. Defendants timely removed on the grounds that the complaint asserted a federal claim under the Real Estate Settlement Procedures Act.
A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) tests the sufficiency of a complaint. To survive a Rule 12(b)(6) motion to dismiss, the complaint's "factual allegations must be enough to raise a right to relief above the speculative level on the assumption that all of the allegations in the complaint are true."
In ruling on a motion to dismiss, the Court may consider the complaint as well as (1) documents referenced in the pleadings and central to plaintiff's claims, (2) matters of which a court may properly take notice, (3) public documents, and (4) letter decisions of government agencies may be appended to a motion to dismiss.
Specifically in contract cases such as this, "if the plaintiff fails to attach the written instrument upon which he relies, the defendant may introduce the pertinent exhibit," which is then considered part of the pleadings.
Here, the Court has considered documents relating to the mortgage, loan modification process, and the foreclosure which are referenced in the complaint and central to plaintiff's claims.
Defendants say that none of the counts of the complaint state a plausible claim for relief. Each count is addressed in turn below.
Count I of the complaint appears to assert multiple claims. None of the claims are viable. First, plaintiff's main challenge to the foreclosure sale appears to be based on defendants' alleged failure to comply with the Article 3 and Article 9 of the Michigan Uniform Commercial Code (UCC). This argument does not carry the day. Multiple courts in this district have held that the UCC does not apply to mortgage foreclosures.
Moreover, plaintiff also appears to contend that defendants, particularly Quicken and Potestivo, lack "standing" to foreclosure on her mortgage because of a failure to "endorse" the note or be a holder in due course of the note. Plaintiff is mistaken in her assertion. There is no Michigan statutory requirement to foreclose by advertisement that the underlying note evidencing the indebtedness has to be endorsed to the foreclosing party (Quicken) or that the foreclosing party (Quicken) be a holder or holder-in-due-course of the note.
In Count I, plaintiff also appears to challenge the foreclosure based on the assertion that she was entitled to a copy of the original note before Quicken could foreclose. Plaintiff, however, has not provided any authority to support her assertion that she is entitled to receive or inspect the note, or that the note itself is required in order to foreclose on the mortgage. Indeed, courts have held to the contrary.
Plaintiff also includes a reference to the Real Estate Settlement Procedures Act (RESPA) under Count I. Paragraph 12 states: "[Flagstar] sold [the note] shortly after it was originated, (without notifying Plaintiff of it ownership, in violation of RESPA Section 6 (12 USC 2605)) and thereby disclaimed any rights in the Mortgage Note." Plaintiff's RESPA claim fails. First, RESPA does not require notification to the borrower that the note may be transferred or that the note has been transferred. Rather, RESPA requires that, at the time of application for the loan, the original lender provide the notice that the "servicing of the loan" may be transferred. 12 U.S.C. § 2605(a). It also requires that when the servicing rights are transferred, each servicer shall notify the borrower of the transfer. 12 U.S.C. § 2605(b),(c). Therefore, Plaintiffs reliance on section 2605 to argue that Flagstar was required to provide her with notice of the sale of the note is misplaced.
Second, the mortgage clearly provides that the note can be sold without notice to the borrower. Paragraph 20 of the mortgage provides:
Thus, plaintiff was advised of the possibility of transfers of the note and changes of the loan servicer and describes the notice a borrower may receive related to such changes of the loan servicer. Thus, there was no requirement that plaintiff be notified of the sale or transfer of the note.
Third, courts in this district have held that in order to maintain a RESPA claim, a plaintiff must allege that the violation resulted in actual pecuniary damages.
In Count II, plaintiff alleges that the mortgage is a contract of adhesion, and should thus be held unenforceable. This claim fails to state a plausible claim for relief.
Under Michigan law, even a contract of adhesion "is simply that: a contract. It must be enforced according to its plain terms unless one of the traditional contract defenses applies."
Here, plaintiff does not say that she had no choice but to obtain the mortgage from Flagstar. To the contrary, as pointed out in defendants' papers, there are well over 500 mortgage brokers in the state of Michigan. Plaintiff simply could have gone elsewhere. Moreover, plaintiff does not say which particular provisions of the note and/or mortgage are substantially unreasonable. Thus, plaintiff has not alleged a plausible claim for a contract of adhesion.
In Count III, plaintiff asserts a claim of quiet title. This assertion fails to state a claim upon which relief may be granted. In order to properly make a quiet title claim, plaintiff must meet the requirements set forth in M.C.R. § 3.411, or, for a federal cause of action, 28 U.S.C. § 2409a(d). These provisions require that plaintiff properly allege her ownership interest in the property. M.C.R. § 3.411(B) states, "(2) The complaint must allege, (a) the interest the plaintiff claims in the premises; (b) the interest the defendant claims in the premises; and (c) the facts establishing the superiority of the plaintiff's claim." 28 U.S.C. § 2409a(d) states,"[t]he complaint shall set forth with particularity the nature of the right, title, or interest which the plaintiff claims in the real property, the circumstances under which it was acquired, and the right, title, or interest claimed by the United States." Moreover, plaintiff must show that he has title to the property superior to claims by others with an interest in the property.
Here, plaintiff has not said how she has a greater interest in the property than any of the defendants. Moreover, plaintiff has not denied that she failed to make timely payments under the note and mortgage. Although she disputes that she is in "default," the fact that she failed to make payments militates against quieting title to her. See
Plaintiff's quiet title also fails because the Sixth Circuit has recently held that a quiet title claim is a remedy, and not a separate cause of action.
Overall, plaintiff is not entitled to any relief under Count III.
For the reasons stated above, plaintiff has not established that the foreclosure should be set aside. The record shows that plaintiff knew she was in default on the mortgage and was aware of the foreclosure and sale. Plaintiff's challenges to the process are not sustainable.
Accordingly, defendants' motion to dismiss is GRANTED. This case is DISMISSED.
SO ORDERED.
