GERALD E. ROSEN, District Judge.
Plaintiffs Richard and Gail Snell instituted this action in Wayne County Circuit Court in an attempt to prevent/forestall their eviction from their home in Livonia, Michigan following the foreclosure on their mortgage and the sheriff's sale of the property. In their Complaint, Plaintiffs allege only state law claims. Defendants Wells Fargo Bank and Federal Home Loans Mortgage Corporation ("Freddie Mac") removed the case to this Court alleging diversity of citizenship as the basis for federal court jurisdiction,
On March 23, 2007, Plaintiffs Gail and Richard Snell obtained a $183,500.00 loan from non-party Franklin American Mortgage Company ("Franklin American"). As security for the loan, on that same date, the Snells executed a real estate mortgage on their Livonia, Michigan home. Mortgage Electronic Registrations Systems, Inc. ("MERS") was the mortgagee under the mortgage, as nominee for the lender, Franklin American. MERS subsequently assigned the mortgage to Defendant Wells Fargo Bank ("Wells Fargo").
Plaintiffs defaulted on their loan repayment obligations, and, as a consequence, on February 18, 2010 Wells Fargo initiated foreclosure by advertisement pursuant to Michigan law. On October 21, 2010, the property was sold at a Sheriff's Sale to Defendant Freddie Mac for $193,208.71. A Sheriff's Deed was executed and recorded, along with the Sheriff's Affidavit of the sale. The Sheriff's Affidavit noted that the six-month redemption period provided under M.C.L. § 600.3240(8) would end on April 21, 2011.
On April 20, 2011 — one day before the statutory redemption period ended — Plaintiffs instituted this action in Wayne County Circuit Court. Defendants thereafter removed the action to this Court on May 9, 2011.
In their seven-count Complaint, Plaintiffs seek to "quiet title" to the property (Count I), and allege claims of unjust enrichment (Count II), fraud, misrepresentation and deception (Counts III, IV, and VII), and violation of M.C.L. § 600.3205 (Count VI).
Pursuant to Fed. R. Civ. P. 12(d), if on a Rule 12(b)(6) motion matters outside the pleadings are presented to the court, the motion must be treated as a motion for summary judgment under Rule 56. However, documents attached to a motion to dismiss that are referred to in the Complaint and central to the claim are deemed to form part of the pleadings. Greenberg v. Life Ins. Co. of Virginia, 177 F.3d 507, 514 (6th Cir. 1999); Armengau v. Cline, 7 Fed. Appx. 336, 344 (6th Cir. 2001).
In this case, Defendants have attached to their motion to dismiss documentary evidence of the mortgage, the assignment of mortgage, the notices of foreclosure, the sheriff's deed, the affidavit of MCL 600.3205 notice, and the affidavit of the purchaser. These exhibits and the information contained therein are referenced in Plaintiff's Complaint and are central to Plaintiff's claims. As such, they may be deemed to form part of the original complaint and should be considered in deciding Defendants' motion. Id. Thus, conversion to a Rule 56 motion is not required.
Count I of Plaintiff's Complaint is a claim to quiet title of the property in their favor. "In an action to quiet title, the plaintiffs have the burden of proof and must make out a prima facie case of title." Beulah Hoagland Appleton Qualified Personal Residence Trust v. Emmet County Road Com'n, 236 Mich.App. 546, 550, 600 N.W.2d 698, 700 (1999).
Plaintiffs' claim in this Count fails as a matter of law because, once the redemption period following the foreclosure of a property expired, their rights in, and title to, the property were extinguished, and they lost all standing to bring claims with respect to the property. This principle is well established in Michigan law.
In Piotrowski v. State Land Office Board, 302 Mich. 179, 4 N.W.2d 514 (1942), the Michigan Supreme Court specifically held that the mortgagors in that case had "lost all their rights, title, and interest in and to the property at the expiration of their right of redemption." Id. 302 Mich. at 185, 4 N.W.2d at 516. The Piotrowski standard has consistently been applied by Michigan state and federal courts to bar former owners from making any claims with respect to foreclosed property after the end of the redemption period. See e.g., Stein v. U.S. Bancorp, 2011 WL 740537 (E.D. Mich. Feb. 24, 2011); Overton v. Mortg. Elec. Registration Sys., 2009 WL 1507342 (Mich. App. May 28, 2009) (dismissing former owner's claim of fraud where redemption period had expired); Kama v. Wells Fargo Bank, 2010 WL 4386974, *2 (E.D. Mich., Oct. 29, 2010) (dismissing plaintiff's claims for violation of the foreclosure statute, to quiet title and for promissory estoppel because redemption period had expired); Moriarty v. BNC Mortg., Inc., 2010 WL 5173830 (E.D. Mich. Dec. 15, 2010) (dismissing action seeking a declaratory judgment voiding foreclosure proceedings).
Here, the redemption period expired on April 21, 2011. Plaintiffs have not alleged or pled any facts that indicate that they timely attempted to redeem the property. Because Plaintiffs failed to redeem the property before the redemption period expired, FreddieMac became vested with "all right, title and interest" in the property by operation of law. At that point, Plaintiffs, the former owners, lost standing to assert claims with respect to the property. Overton v. Mortgage Electronic Registration Sys., Inc., supra; Kama v. Wells Fargo Bank, supra.
This outcome is not altered by Plaintiffs' filing of this lawsuit on April 20, 2011, one day before the expiration of the redemption period. Overton, supra, 2009 WL 1507342 at * 1 (holding that the plaintiff's filing of his lawsuit one month before the expiration of the redemption period did not toll the redemption period and once that period expired, the plaintiff lacked standing to challenge the foreclosure proceedings). As the Michigan Court of Appeals explained in Overton:
Plaintiff's suit did not toll the redemption period. Plaintiff is simply trying to wage a collateral attack on the foreclosure of the property. Even if his assertions were true and the cases he cites indeed supported his arguments, plaintiff was required to raise the arguments when foreclosure proceedings began. Plaintiff made no attempt to stay or otherwise challenge the foreclosure and redemption sale. Although he filed his suit before the redemption period expired, that was insufficient to toll the redemption period. "The law in Michigan does not allow an equitable extension of the period to redeem from a statutory foreclosure sale in connection with a mortgage foreclosed by advertisement and posting of notice in the absence of a clear showing of fraud or irregularity."
Id. (citations omitted). See also Moriarity v. BNC Mortgage, Inc., 2010 WL 5173830 at * 2 (E.D. Mich., Dec. 15, 2010) (suit filed one month before the expiration of the redemption period expired, same); Napso v. Wells Fargo Bank, N.A., 2011 WL 1575372 (E.D. Mich, Apr. 26, 2011) (suit filed one day before the redemption period expired, same); Mitan v. Federal Home Loan Mtg. Corp., 2011 WL 4837502 at * 2(E.D. Mich., Sept. 22, 2011) (suit filed two weeks prior to expiration of the redemption period, same); Galati v. Wells Fargo Bank, 2011 WL 5178276 at ** 3-4 (E.D. Mich., Nov. 1, 2011) (suit filed three weeks before the expiration of the redemption period, same); Gendiar v. BAC Home Loans Servicing, L.P., 2012 WL 130139 (E.D. Mich., Jan. 17, 2012) (suit filed on day that redemption period expired, same); Dingeman v. OneWest Bank FSB, 2012 WL 884357 at ** 3-4 (E.D. Mich., Mar. 14, 2012) (plaintiffs' suit filed four days before the expiration of the redemption period did not toll the redemption period and plaintiffs' failure to redeem prior to the expiration of the period terminated their standing to assert defects in the foreclosure proceedings and/or the sheriff's sale).
In short, once the redemption period expired on April 21, 2011, Plaintiffs lost standing to maintain any action to quiet title or to assert any defect in the foreclosure proceedings.
While the redemption period can be tolled, "[t]he law in Michigan does not allow an equitable extension of the period to redeem from a statutory foreclosure sale in connection with a mortgage foreclosed by advertisement and posting of notice in the absence of a clear showing of fraud or irregularity." Schulthies v. Barron, 16 Mich.App. 246, 247-48, 167 N.W.2d 656 (2007); see also Sweet Air Investment, Inc, v. Kenney, 275 Mich.App. 492, 497, 729 N.W.2d 656 (2007) ("The Michigan Supreme Court has held that it would require a strong case of fraud or irregularity, or some peculiar exigency, to warrant setting a foreclosure sale aside." Id., quoting United States v. Garno, 974 F.Supp. 628, 633 (E.D.Mich., 1997), (citing Detroit Trust Co. v. Agozzinio, 280 Mich. 402, 405-406, 273 N.W. 747 (1937), and Calaveras Timber Co. v. Michigan Trust Co., 278 Mich. 445, 450, 270 N.W. 743 (1936)).)
As indicated, in the present case, Plaintiffs made no attempt to redeem the property during the period of redemption and the redemption period expired on April 21, 2011. Thus, unless Plaintiffs can make a "clear showing" of fraud or irregularity, no equitable extension of the redemption period is permitted and Plaintiffs will lack the necessary standing to challenge the foreclosure or eviction from the property.
In order to establish a claim for fraud or misrepresentation under Michigan law, a plaintiff must satisfy the following requisite elements:
(1) that the defendant made a material misrepresentation;
(2) that it was false;
(3) that when the defendant made it, he knew that it was false, or made it recklessly, without any knowledge of its truth, and as a positive assertion;
(4) that he made it with the intention that it should be acted upon by the plaintiff;
(5) that the plaintiff acted in reliance upon the false misrepresentation; and
(6) that the plaintiff thereby suffered injury.
Aerospace America, Inc. v. Abatement Technologies, Inc., 738 F.Supp. 1061, 1068 (E.D. Mich. 1990) (citing Hi-Way Motor Co. v. International Harvester Co., 398 Mich. 330, 247 N.W.2d 813, 816 (1976)). Each of the above elements must be established proven by the plaintiff by clear, satisfactory and convincing evidence. Id.; Youngs v. Tuttle Hill Corp., 373 Mich. 145, 147, 128 N.W.2d 472 (1964); Hi-Way Motor Co. supra, 398 Mich. at 336, 247 N.W.2d 813. Further, all of the elements must be found to exist; the absence of any one of them is fatal to recovery. Hi-Way Motor Co, supra.
In seeking to avoid the bar of the running of the redemption period, Plaintiffs here make only the bald assertion that they were misled into believing that Wells Fargo would comply with M.C.L. § 600.3205(c) to determine whether they qualified for a loan modification. Section 3205c provides, in pertinent part:
M.C.L. § 600.3205c(1).
However, Plaintiffs never timely sought a meeting with Wells Fargo's designate as provided in M.C.L. § 600.3205b(1). See Defendants' Ex. 3 at ¶ 7 of 8. Section 3205b(1) provides:
M.C.L. § 600.3205b(1).
Plaintiffs have failed to present any evidence showing that they ever contacted a housing counselor. The only evidence they attached to their Response Brief is a three-page excerpt from a document which is presumably is a call history of some unidentified telephone which appears to indicate that on January 22, 2010 and February 23, 2010, four telephone calls were made to (248) 642-2515 a Birmingham, Michigan phone number. See Plaintiffs' Ex. 2, According to the letterhead on Plaintiffs' Ex. 1, this is the phone number of the headquarters of Trott & Trott, P.C. See 1/20/12 letter to Gail Snell, Plaintiffs' Ex. 1. However, as provided in the letter, Trott & Trott informed Plaintiffs that to attempt to work out a modification of their mortgage loan Plaintiffs were not to call their Birmingham headquarters; rather, they were directed to call one of the housing counselors on the list of housing counselors prepared by the Michigan State Housing Development Authority which was included with the January 20 correspondence, or to call Wells Fargo's designated agent at (248) 593-1309, or fax a written request to (248) 205-4112 and reference T&T #305578F01. See Plaintiffs' Ex. 1. Plaintiffs have provided no evidence showing that they timely contacted a MSHDA housing counselor or Wells Fargo's designated agent, and their bare assertions that they were fraudulently misled by Defendants do not come close to the required strong showing of fraud necessary to toll the expiration of the period of redemption. Therefore, Defendants' motion to dismiss will be granted on Count I of Plaintiffs' Complaint.
Plaintiffs claims of unjust enrichment in Count II, and for fraud, misrepresentation and deception in Counts III, IV, and VII, are similarly predicated upon Defendant Wells Fargo's alleged promise to determine their eligibility for, and enter into, a Section 3205 Loan Modification Agreement and forebear proceeding with the sheriff's sale of their property. As indicated above, however, Plaintiffs have failed to demonstrate that they were entitled to consideration for a Loan Modification agreement and failed to satisfy the requisite elements to establish fraud or misrepresentation.
Furthermore, to the extent that they rely on any alleged promises to enter into a loan modification agreement or forebear proceeding with the sheriff's sale of their property, the statute of frauds requires certain types of agreements to be in writing before they can be enforced. Michigan's statute of frauds, M.C.L. § 566.132, provides, in relevant part:
M.C.L. § 566.132(2), (3) (emphasis added).
The intent of the Michigan Legislature in adding the provisions in subsection (2) of the statute was to address an area of concern in the banking industry, i.e., oral promises made in connection with lending and credit activities. Crown Technology Park v. D&N Bank, FSB, 242 Mich.App. 538, 549, 619 N.W.2d 66, 71 (2000). The language of the statutory amendment is intentionally broad. Id. As the court observed in Crown Technology, under the broad, unambiguous language in the statute, "a party is precluded from bringing a claim — no matter its label — against a financial institution to enforce the terms of an oral promise. . . ." 242 Mich. App. at 550, 619 N.W.2d at 72 (emphasis added).
The court explained:
Id. 242 Mich. App. at 550-53, 619 N.W.2d at 72-3(emphasis in original).
In Crown Technology the court determined that the statute of frauds barred an action brought against a bank for promissory estoppel that was predicated on oral promises made in connection with a mortgage loan refinancing transaction. In subsequent cases, Michigan courts determined that fraud and misrepresentation claims against financial institutions that are based on oral promises are likewise barred. See e.g., Republic Bank v. Britton Estates, 2006 WL 445916 (Mich. App. 2006) (affirming trial court's grant of summary disposition on the appellants' claims of fraud and misrepresentation holding that the claims were "precluded by the statute of frauds, the applicability of which is not dependent on the label attached to appellants' cause of action." Id.); see also Manire v. American Equity Mortgage, Inc., 2005 WL 2173679 at *2 (E.D. Mich. 2005) (misrepresentation claim precluded); LaSalle Bank Nat'l Ass'n v. Ray, 2011 WL 576661 at **3-4 (E.D. Mich. 2011) (same).
The foregoing authorities establish that Plaintiffs' claims of violation of M.C.L. § 600.3205 and for fraud and misrepresentation in Counts II, III, IV and VII are not actionable. Therefore, Defendants' motion to dismiss will be granted on these counts.
With respect to that portion of Count VII in which Plaintiffs contend that Defendant Wells Fargo foreclosed the mortgage by advertisement in violation of M.C.L. § 600.3204, Complaint ¶ 86, Plaintiff argues that Wells Fargo's foreclosure of their property was void ab initio because Wells Fargo was the assignee of the nominee of the original debt owner, not of the debt owner itself.
In so arguing, Plaintiffs rely on the Michigan Court of Appeals' decisions in Residential Funding Co., LLC v. Saurman, et al., 292 Mich.App. 321, 807 N.W.2d 412 (2011), and Bakri v. Mortg. Elec. Registration Sys., et al., No. 297962, 2011 WL 3476818 (Mich. Ct. App. Aug. 9, 2011) (unpublished decision). In Saurman, the Court of Appeals held that MERS lacked the authority to foreclose by advertisement and in Bakri, relying on Saurman, the court held that a MERS assignee stands in the shoes of MERS and, as such, has no authority to foreclose by advertisement, either.
However, the Michigan Supreme Court REVERSED the Court of Appeals' ruling in Saurman. See Residential Funding Co., L.L.C. v. Saurman, 490 Mich. 909, 805 N.W.2d 183 (2011). The Supreme Court found that the Court of Appeals erroneously construed the Michigan foreclosure by advertisement statute and determined that MERS is authorized under MCL § 600.3204(d)(1)
For all of the foregoing reasons,
IT IS HEREBY ORDERED that Defendants Motion to Dismiss
IT IS FURTHER ORDERED that Plaintiffs' Complaint be, and hereby is, DISMISSED, IN ITS ENTIRETY.
Let Judgment be entered accordingly.
12 U.S.C. § 1452(f).
