PATRICK J. DUGGAN, District Judge.
Plaintiff Erik Berry, who is proceeding pro se, initiated this action against thirteen defendants, including Defendant Wells Fargo, in state court seeking to redress alleged improprieties in the foreclosure of his home. After removing the action to this Court, Wells Fargo filed a motion seeking dismissal of Plaintiff's Complaint pursuant to Federal Rule of Civil Procedure 12(b)(6), or in the alternative, a motion for summary judgment pursuant to Rule 56.
On January 31, 2012, Plaintiff accepted a $131,577 loan from Main Street Bank, and, in exchange, executed a promissory note secured by a mortgage on real property commonly known as 23735 West Newell Circle, Farmington Hills, Michigan. (Note, Def.'s Mot. Ex. 1; Mortgage, Def.'s Mot. Ex. 2.) The mortgage, executed in favor of Mortgage Electronic Registration Systems, Inc. ("MERS") as "the nominee for [Main Street Bank] ... and [Main Street Bank]'s successors and assigns[]" designates MERS "as Mortgagee." (Mortgage, Def.'s Mot. Ex. 2.) The mortgage was recorded with the Oakland County Register of Deeds on February 29, 2012, at Liber 4380, page 804. (Id.)
Main Street Bank subsequently assigned the mortgage to Wells Fargo and an assignment reflecting this transfer was recorded in the Oakland County Register of Deeds on February 15, 2013, at Liber 45371, page 431. (Assignment, Def.'s Mot. Ex. 3.) As evidenced by the allonge to the note, the note was endorsed and made payable to Wells Fargo. (Note, Def.'s Mot. Ex. 1 at 4.)
Plaintiff eventually defaulted on his loan obligations by failing to remit timely payments.
On January 9, 2013, Plaintiff, who is proceeding pro se, instituted this action by filing a complaint in the Circuit Court for Oakland County in Oakland County, Michigan.
Wells Fargo removed the action to this Court on July 31, 2013 and subsequently filed a "Motion to Dismiss and/for Summary Judgment." (ECF No. 4.) Plaintiff opposed this motion by filing a Response on August 26, 2013. (ECF No. 7.) Wells Fargo replied on September 6, 2013. (ECF No. 8.) Plaintiff filed another response opposing Wells Fargo's motion on September 23, 2013. (ECF No. 10.) Because this Court did not grant Plaintiff permission to file a sur-reply, the document filed on September 23, 2013 will not be considered by the Court.
Wells Fargo's Motion seeks dismissal of Plaintiff's Complaint, captioned as an "Action to Quiet Title," in its entirety. Plaintiff's Complaint contains five counts, although it is not entirely clear what the basis for each count is. As such, the Court briefly describes the allegations contained under each of the five headings:
A motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6) allows the Court to make an assessment as to whether a plaintiff's pleadings have stated a claim upon which relief may be granted. Fed.R.Civ.P. 12(b)(6). Under the Supreme Court's articulation of the Rule 12(b)(6) standard in Bell Atlantic Corporation v. Twombly, 550 U.S. 544, 555-56, 570, 127 S.Ct. 1955, 1964-65, 1974, 167 L.Ed.2d 929 (2007), the Court must construe the complaint in favor of the plaintiff and determine whether plaintiff's factual allegations present claims plausible on their face. This standard requires a claimant to put forth "enough fact[s] to raise a reasonable expectation that discovery will reveal evidence of" the requisite elements of their claims. Id. at 557, 127 S.Ct. at 1965. Even though the complaint need not contain "detailed" factual allegations, its "factual allegations must be enough to raise a right to relief above the speculative level." Ass'n of Cleveland Fire Fighters v. City of Cleveland, 502 F.3d 545, 548 (6th Cir.2007) (citing Twombly, 550 U.S. at 555, 127 S.Ct. at 1965) (internal citations omitted); see also Fed.R.Civ.P. 8(a)(2) ("A pleading that states a claim for relief must contain ... a short and plain statement of the claim showing that the pleader is entitled to relief[.]").
In determining whether a plaintiff has set forth a "claim to relief that is plausible on its face," Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009) (quoting Twombly, 550 U.S. at 570, 127 S.Ct. at 1974), courts must accept the factual allegations in the complaint as true, Twombly, 550 U.S. at 556, 127 S.Ct. at 1965. This presumption, however, does not apply to legal conclusions. Iqbal, 556 U.S. at 678, 129 S.Ct. at 1949. Therefore, to survive a motion to dismiss, a plaintiff's pleading for relief must provide "more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Ass'n of Cleveland
Ultimately, "[d]etermining whether a complaint states a plausible claim for relief will ... be a context-specific task that requires the reviewing court to draw on its judicial experience and common sense. But where the well-pleaded facts do not permit the court to infer more than the mere possibility of [a legal transgression], the complaint has alleged — but it has not `show[n]' — `that the pleader is entitled to relief.'" Iqbal, 556 U.S. at 679, 129 S.Ct. at 1950 (quoting Fed.R.Civ.P. 8(a)(2)) (internal citations omitted). In conducting its analysis, the Court may consider the complaint and any exhibits attached thereto, public records, items appearing in the record of the case, and exhibits attached to defendant's motion to dismiss so long as they are referred to in the complaint and are central to the claims contained therein. Bassett v. NCAA, 528 F.3d 426, 430 (6th Cir.2008) (citing Amini v. Oberlin Coll., 259 F.3d 493, 502 (6th Cir.2001)). In the case at bar, the Court has considered documents, all of which are public, relating to the mortgage and the foreclosure.
Compared to formal pleadings drafted by lawyers, a generally less stringent standard is applied when construing the allegations pleaded in a pro se complaint. Haines v. Kerner, 404 U.S. 519, 520-21, 92 S.Ct. 594, 596, 30 L.Ed.2d 652 (1972); see also Erickson v. Pardus, 551 U.S. 89, 94, 127 S.Ct. 2197, 2200, 167 L.Ed.2d 1081 (2007) (reaffirming rule of more liberal construction with pro se complaints less than two weeks after issuing Twombly). The leniency with which courts construe pro se plaintiffs' complaints, however, does not abrogate the basic pleading requirements designed to ensure that courts do "not have to guess at the nature of the claim asserted." Wells v. Brown, 891 F.2d 591, 594 (6th Cir.1989). Pro se plaintiffs still must provide more than bare assertions of legal conclusions to survive a motion to dismiss. Grinter v. Knight, 532 F.3d 567, 577 (6th Cir.2008) (citing Scheid v. Fanny Farmer Candy Shops, Inc., 859 F.2d 434, 436 (6th Cir.1988)). However, because deficiencies in a pro se plaintiff's complaint are likely attributable to a lack of training, "courts typically permit the losing party leave to amend[,]" even in the absence of a specific request by the non-moving party. Brown v. Matauszak, 415 Fed.Appx. 608, 614-615 (6th Cir.2011) (unpublished) (McKeague, J.) (quotation omitted).
The Court finds that although Plaintiff's Complaint purports to contain five distinct causes of action, juridical interests require the Court to analyze Plaintiff's allegations in a framework other than the one Plaintiff has chosen. This decision, made after a close reading of Plaintiff's Complaint and Response, permits the Court to address Plaintiff's concerns in a more coherent fashion.
Significant portions of Plaintiff's Complaint and Response are dedicated to challenging the validity of the note, mortgage, and assignment. Although Plaintiff relies on case law from several states other than Michigan, the Court construes the Complaint as alleging that (1) the splitting of the note and mortgage rendered the assignment from MERS acting as nominee for Main Street Bank to Wells Fargo defective, (2) because the assignment was invalid, no record chain of title evidencing
With respect to the note-splitting argument, the Michigan Supreme Court has made it clear that under Michigan law a mortgage granted to MERS as nominee for lender and lender's successors and assigns is a valid and assignable mortgage. Residential Funding Co. v. Saurman, 490 Mich. 909, 910, 805 N.W.2d 183, 184 (2011) ("It has never been necessary that the mortgage should be given directly to the beneficiaries. The security is always made in trust to secure obligations, and the trust and the beneficial interest need not be in the same hands.") (citations omitted). In other words, case law from the Michigan Supreme Court, which this Court is bound to follow, provides that the note and mortgage may be split and held by different entities. See Savedoff v. Access Group, Inc., 524 F.3d 754, 762 (6th Cir.2008) (observing that the Erie doctrine requires federal courts hearing state law claims to apply the decisions of the state's highest court). Relatedly, any challenge Plaintiff endeavors to bring on the basis of the securitization of the loan is not cognizable and thus fails to state a claim. See Stafford v. Mortgage Elec. Registration Sys., at *3, 2012 WL 1564701 (E.D.Mich. May 2, 2012) (Cohn, J.) (collecting cases).
Moreover, and as Wells Fargo points out, Plaintiff cannot challenge the validity of the assignment because "a litigant who is not a party to an assignment lacks standing to challenge that assignment." Livonia Prop. Holdings, L.L.C. v. 12840-12976 Farmington Road Holdings, L.L.C., 717 F.Supp.2d 724, 737 (E.D.Mich. 2010), aff'd, 399 Fed.Appx. 97, 102 (6th Cir.2010). To the extent Plaintiff challenges the record chain of title on the basis that the defective assignment corrupted the chain of title thus depriving Wells Fargo of statutory authority to foreclose the property, the Court finds the Sixth Circuit's opinion in Livonia Properties instructive. After preliminarily providing that Livonia had "presented no authority for the proposition that the record chain of title is destroyed by an irregularity affecting the validity of a transfer[,]" the Court explained that "[e]ven if the transfer were invalidated, the public record would remain as it is, and the record chain of title would not be disturbed." Livonia Props., 399 Fed.Appx. at 102. While parties subject to foreclosure may "challenge whether a lender holds record chain of title, [] that determination is limited to an examination of the public records." Id. at 103. In other words, a party challenging the record chain of title may not "go beyond the statutory requirements to inspect every contract or agreement in the history of the loan." Id. (internal quotation marks and citation omitted).
Here, the record chain of title as reflected in public records shows Main Street Bank, acting via MERS (named as mortgagee in the mortgage and acting as nominee for Main Street Bank) assigned the mortgage to Wells Fargo.
While Plaintiff has standing to challenge whether Wells Fargo held record chain of title, Plaintiff "lacks standing to challenge that assignment." Livonia Props., 399 Fed.Appx. at 102; see also Yuille v. Am. Home Mortgage Servs., Inc., 483 Fed. Appx. 132, 135 (6th Cir.2012) (explaining that the borrower, "as a stranger to the assignment, lacked standing to challenge [the] validity" of an assignment). This is particularly true where "any defect in the assignment of the mortgage would make no difference where both parties to the assignment ratified the assignment by their subsequent conduct in honoring its terms[.]" Yuille, 483 Fed.Appx. at 135. Here, Plaintiff ratified the assignment by remitting payment and is therefore not entitled to challenge the assignment.
Plaintiff also appears to contest the validity of the foreclosure based on Wells Fargo's alleged failure to comply with Article 3, which governs negotiable instruments and Article 9, which governs secured transactions, of the Uniform Commercial Code (the "UCC"). This argument does not carry the day as several courts in this district have held that the UCC does not apply to mortgage foreclosures. See, e.g., Gardner v. Quicken Loans, Inc., No. 13-12720, 2013 WL 4533085, at *3, 2013 U.S. Dist. LEXIS 121586, at *9 (E.D.Mich. Aug. 27, 2013) (Cohn, J.) (dismissing plaintiff's UCC claim as failing to state a plausible claim for relief); Schare v. Mortgage Elec. Registration Sys., Inc., No. 11-11889, 2012 WL 2031958, at *2, 2012 U.S. Dist. LEXIS 78580, at *3-6 (E.D.Mich. June 6, 2012) (Rosen, C.J.) (holding that "Article 3 of the UCC does not apply to mortgages because Article 3 applies only to negotiable instruments and a mortgage instrument is not a negotiable instrument since it does not contain an unconditional promise to pay a sum certain [but] merely secures payment of the negotiable instrument") (citing Jaboro v. Wells Fargo Bank, N.A., No. 10-11686, 2010 WL 5296939 at *6, 2010 U.S. Dist. LEXIS 134672, at *16 (E.D.Mich. Dec. 20, 2010) (Duggan, J.)); Pace v. Bank of Am., N.A., No. 12-12014, 2012 WL 5929931, at *2, 2012 U.S. Dist. LEXIS 167557, at *5 (E.D.Mich. Nov. 27, 2012) (O'Meara, J.) ("Article 9 of the UCC applies to personal property, not real property."). Accordingly, any challenge Plaintiff brings against Wells Fargo based upon a violation of the UCC fails to state a viable claim for relief and must, therefore, be dismissed.
Moreover, Plaintiff appears to challenge the foreclosure based on the assertion that he was entitled to a copy of the original note before Wells Fargo was permitted to foreclose. Plaintiff, however, has not pointed to a single legal authority to support his assertion (made elsewhere in the Complaint as well) that he is entitled to receive or inspect the note. Courts in this district have held to the contrary. See, e.g., Aliahmad v. U.S. Bank N.A., No. 12-11844, 2012 WL 3639282, at *5, 2012 U.S. Dist. LEXIS 120627, at *13-14 (E.D.Mich. Aug. 24, 2012) (Edmunds, J.) (explaining that "there is no statutory requirement that the original note or the so-called `wet-ink' mortgage be presented"); Jozlin v. U.S. Bank N.A., No 11-12749, 2012 WL 12760, at *3, 2012 U.S. Dist. LEXIS 511, at *7-8 (E.D.Mich. Jan. 4, 2012) (Cook, J.) ("Inasmuch as [Michigan's foreclosure by advertisement] statute does not require presentation of the original note or a `wet ink' mortgage, this allegation by [plaintiffs] fails to state a claim upon which relief can be granted."). As such, Plaintiff's allegations relating the presentment of the note fail to state a claim upon which relief can be granted.
Wells Fargo contends that the allegations contained in Plaintiff's "Third Cause of Action" fail to satisfy the basic pleading requirements of Federal Rule of Civil Procedure 8. The Court agrees as the allegations are completely devoid of the factual enhancement necessary to survive a motion to dismiss. For example, Plaintiff alleges that Main Street Bank "materially altered the contract without the consent of" Plaintiff and committed fraud thus "rendering the transaction illegal." (Compl., ECF No. 1, Pg ID 19.) Moreover, Main Street Bank and Wells Fargo "deliberately hid and falsified material facts about the true nature of the loan agreements and concealed those material facts thereby depriving [Plaintiff] the opportunity to abort the contract[.]" (Id.) These
Plaintiff's fourth cause of action purports to state a claim for fraud. While Plaintiff's allegations span several pages, it seems as though Plaintiff's fraud claim relies on his contention that Main Street Bank never actually loaned him money but rather unlawfully created currency so as to deceive Plaintiff. (Compl., ECF No. 1, Pg ID 20-22.) Apparently, this currency was created when "Berry deposit[ed] the promissory note and [] Main Street Bank[] returned the same as a loan and charged [Plaintiff], the alleged borrow, interest to boot." (Id. at Pg ID 20, ¶ 4.) In other words, Main Street Bank defrauded Plaintiff by making him believe he was receiving a loan even though no loan ever existed. From what the Court is able to discern, Plaintiff suggests that Wells Fargo is liable for this fraud in its capacity as an assignee of the mortgage.
Wells Fargo argues that this claim is subject to dismissal because the allegations lack the requisite specificity to withstand a motion to dismiss. The Court agrees.
In order to state a prima facie claim of fraud under Michigan law, "a plaintiff must establish that: (1) the defendant made a material representation; (2) the representation was false; (3) when the representation was made, the defendant knew that it was false, or made it recklessly, without knowledge of its truth, and as a positive assertion; (4) the defendant made it with the intention that the plaintiff should act upon it; (5) the plaintiff acted in reliance upon the representation; and (6) the plaintiff thereby suffered injury." Roberts v. Saffell, 280 Mich.App. 397, 403, 760 N.W.2d 715, 719 (2008).
Beyond containing each of the aforementioned elements, claims of fraudulent conduct must adhere to the heightened pleading requirements of Federal Rule of Civil Procedure 9(b), which provides that "[i]n alleging fraud or mistake, a party must state with particularity the circumstances constituting fraud or mistake." To satisfy Rule 9(b)'s particularity requirement, a complaint must "(1) specify the statements that the plaintiff contends were fraudulent, (2) identify the speaker, (3) state where and when the statements were made, and (4) explain why the statements were fraudulent." Frank v. Dana Corp., 547 F.3d 564, 569-70 (6th Cir.2008) (internal quotation marks and citation omitted); see also Sanderson v. HCA-The Healthcare Co., 447 F.3d 873, 877 (6th Cir.2006) ("As a sister circuit has phrased it," Rule 9(b) requires a plaintiff to "specify the `who, what, when, where, and how' of the alleged fraud.") (quoting United States ex rel. Thompson v. Columbia/HCA Healthcare Corp., 125 F.3d 899, 903 (5th Cir. 1997)).
Even assuming that Plaintiff's Complaint does contain language referencing each element of a prima facie claim of
Having determined that Plaintiff's Complaint falls short of the notice pleading requirements embodied in Rule 8, it necessarily follows that the allegations fail to satisfy Rule 9(b)'s heightened pleading requirements. The Complaint fails to include the "who, what, when, where, and how" of the alleged fraud. Because Plaintiff's Complaint falls woefully short of stating his fraud claims with particularity, the Court dismisses Plaintiff's fraud count.
As an initial matter, the Court notes that quiet title actions are remedies, not independent causes of action. Goryoka v. Quicken Loan, Inc., 519 Fed.Appx. 926, 928-29 (6th Cir.2013) (per curiam) (noting that district court properly dismissed plaintiff's quiet title count because it is not a cause of action but rather a remedy). Michigan law does, however, provide a statutory mechanism for quieting title, which the Court addresses in the interest of completeness.
Michigan Compiled Laws § 600.2932(1) provides, in pertinent part:
This statutory language requires a plaintiff seeking to quiet title to establish a substantive right in the property superior to others claiming an inconsistent interest. Beach v. Twp. of Lima, 489 Mich. 99, 110, 802 N.W.2d 1, 8 (2011). Plaintiff bears the initial burden of proof and must establish a prima facie case of title. Stinebaugh v. Bristol, 132 Mich.App. 311, 316, 347 N.W.2d 219, 221 (1984) (citation omitted). "Establishing a prima facie case of title requires a description of the chain of title through which ownership is claimed." Sembly v. U.S. Bank, N.A., No. 11-12322, 2012 WL 32737, at *3, 2012 U.S. Dist. LEXIS 1440, at *9 (E.D.Mich. Jan. 6, 2012) (Rosen, C.J.).
Because the statutory redemption period has not yet lapsed, Plaintiff retains legal title on the property. Wells Fargo's claim to the property is in equity as it holds a lien on the property by virtue of Plaintiff's default. Although Plaintiff asserts that there is no legitimate mortgage on the property, (Compl., ECF No. 1, Pg ID 18), the record chain of title suggests otherwise. Plaintiff does not contest that he failed to pay and defaulted under the terms of the loan, although, he does make convoluted arguments devoid of any factual support that no loan was ever extended to him. Despite this argument, however, the fact that the Court has rejected each of Plaintiff's arguments challenging the validity of the lien on his property (the mortgage) means that this Court is unable to quiet title in his favor. Yuille, 483 Fed. Appx. at 135.
On the basis of the foregoing, the Court finds that Plaintiff has failed to state a viable claim for the relief he seeks.
For the reasons set forth above, Wells Fargo's Motion to Dismiss is
Plaintiff appears to have objected to the removal in the state court as Defendant filed a "Response to Plaintiff's Objection to Federal Removal" with this Court on August 19, 2013. (ECF No. 6.) Plaintiff's pro se status does not excuse him from failing to file a motion objecting to the removal and seeking remand in the proper venue. A motion to remand on "the basis of any defect other than lack of subject matter jurisdiction must be made within 30 days after the filing of the notice of removal under section 1446(a)." 28 U.S.C. § 1447(c). Because Plaintiff did not seek remand in this Court within thirty days after removal on July 31, 2013, the Court need not address Plaintiff's objections to the removal.
