MATTHEW F. LEITMAN, District Judge.
In this action, Plaintiff Theodore Rider alleges, among other things, that Defendant Wells Fargo Bank, N.A., wrongly foreclosed on his home in Clinton Township, Michigan. (See Compl., ECF #1-2.) Rider asserts the following claims against Wells Fargo: quiet title, wrongful foreclosure, unjust enrichment, fraud, conversion to judicial foreclosure, and injunctive relief. (See id.)
On September 22, 2017, Wells Fargo moved to dismiss Rider's Complaint. (See Mot., ECF #6.) The assigned Magistrate Judge has issued a thorough and well-reasoned Report and Recommendation (the "R&R") in which he suggests that the Court grant Wells Fargo's motion in part and dismiss all of Rider's claims except for his unjust enrichment claim. (See R&R, ECF #17.) Both Rider and Wells Fargo filed timely objections to the R&R. (See ECF ## 18, 19.) For the reasons explained below, Rider's objections are
As the Magistrate Judge aptly observed in the R&R, the facts of this mortgage foreclosure case are unusual. (See R&R, ECF #17 at Pg. ID 349-51.) The Magistrate Judge offered the following accurate summary of the facts:
(Id.; footnotes omitted).
Rider filed this action in the Macomb County Circuit Court on July 19, 2017. (See Compl., ECF #1-2.) In Rider's Complaint, he asserts the following claims against Wells Fargo: quiet title, wrongful foreclosure, unjust enrichment, fraud, conversion to judicial foreclosure, and injunctive relief. (See id.) Wells Fargo subsequently removed Rider's action to this Court (see Not. of Removal, ECF #1), and it moved to dismiss the action. (See Mot., ECF #6.)
The Magistrate Judge issued the R&R on June 6, 2018. (See R&R, ECF #17.) The Magistrate first concluded that the Court should dismiss "Rider's claims for quieting title [], conversion to judicial foreclosure [], and injunctive relief . . . because they are all remedies, not separate causes of action."
Next, the Magistrate Judge addressed Rider's unjust enrichment claim. (See id. at Pg. ID 357-59.) The Magistrate did his best to understand this claim, and he acknowledged that "the specific nature of Rider's unjust enrichment claim could have been spelled out more clearly in his complaint." (Id. at Pg. ID 359 n.6.) Nonetheless, the Magistrate concluded that "[Rider] alleges (and has shown) that Wells Fargo received and retained the $74,972 [from Rider's bankruptcy estate], and [that] . . . Rider was never liable on the Note [or Mortgage] to begin with. Taking all reasonable inferences in Rider's favor, as the Court must do at this stage of the proceedings, those two facts alone are sufficient to preclude dismissal of Rider's unjust enrichment claim." (Id.) The Magistrate further determined that there were "questions of fact" as to whether Wells Fargo's retention of the funds it was paid from Rider's bankruptcy estate was inequitable. (Id.) For all of these reasons, the Magistrate recommended that the Court deny Wells Fargo's motion with respect to Rider's unjust enrichment claim.
Finally, the Magistrate Judge addressed Rider's fraud claim. (See id. at Pg. ID 360-62.) The Magistrate recommended that the Court dismiss this claim because, among other things, (1) Rider did not suffer an "`injury in fact' as a result of the foreclosure proceedings" because he was not a party to the Mortgage or the Note, (2) "Rider failed to identify any material misrepresentation that Wells Fargo actually made to him," and (3) Wells Fargo could not "have deceived Rider about whether he was or was not a party to the Mortgage or Note as that information was always known to Rider." (Id. at Pg. ID 361.)
Rider and Wells Fargo each filed timely objections to the R&R on June 20, 2018. (See ECF ## 18, 19.) The Court held a hearing on Wells Fargo's objections on September 24, 2018. The Court will address each of the parties' objections in turn below.
When a party has objected to portions of a Magistrate Judge's R&R, the Court reviews those portions de novo. See Fed. R. Civ. P. 72(b)(3); see also Lyons v. Comm'r of Soc. Sec., 351 F.Supp.2d 659, 661 (E.D. Mich. 2004). The Court has no duty to conduct an independent review of the portions of the R&R to which a party has not objected. See Thomas v. Arn, 474 U.S. 140, 149 (1985).
"To survive a motion to dismiss" under Rule 12(b)(6), "a complaint must contain sufficient factual matter, accepted as true, to `state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007)). A claim is facially plausible when a plaintiff pleads factual content that permits a court to reasonably infer that the defendant is liable for the alleged misconduct. See id. When assessing the sufficiency of a plaintiff's claim, a district court must accept all of a complaint's factual allegations as true. See Ziegler v. IBP Hog Mkt., Inc., 249 F.3d 509, 512 (6th Cir. 2001). "Mere conclusions," however, "are not entitled to the assumption of truth. While legal conclusions can provide the complaint's framework, they must be supported by factual allegations." Iqbal, 556 U.S. at 664. A plaintiff must therefore provide "more than labels and conclusions," or "a formulaic recitation of the elements of a cause of action." Twombly, 550 U.S. at 556. "Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice." Iqbal, 556 U.S. at 678.
In addition, where, as here, a plaintiff brings a fraud claim, the plaintiff must "state with particularity the circumstances constituting fraud or mistake" under Rule 9b of the Federal Rules of Civil Procedure. Fed. Rule Civ. Proc. 9(b). Under this rule, a plaintiff "must (1) specify the statements that [he] contends were fraudulent, (2) identify the speaker, (3) state where and when the statements were made, and (4) explain why the statements were fraudulent. At a minimum, [a] [p]laintiff[] must allege the time, place and contents of the misrepresentations upon which [he] relied." Frank v. Dana Corp., 547 F.3d 564, 570 (6th Cir. 2008) (internal punctuation and citations omitted).
The Court begins with Rider's objections. Rider first objects to the Magistrate Judge's determination that he lacks standing to challenge the foreclosure because he is not a party to either the Note or the Mortgage. (See Rider's Objections, ECF #19 at Pg. ID 457-458.) But in this section of Rider's objections, titled "Plaintiff has Standing to Challenge the Foreclosure," Rider does not make any actual argument as to why he has standing. Instead, Rider simply quotes boilerplate law related to standing, without ever explaining how that law applies to him under the circumstances that exist here. As Rider has not made any argument explaining how he has standing to contest the foreclosure in light of the fact that he is not a party to either the Note or the Mortgage, the Court
Rider next argues that even though he is not a party to either the Note or the Mortgage, Wells Fargo should be "estopped" from denying that he has standing to challenge the foreclosure. (See id. at Pg. ID 458-60.) Rider insists that he "relied on [Wells Fargo's] failure to contest [his] Bankruptcy" and that Wells Fargo led him to believe that it "accepted [him] as the debtor to the mortgage loan and arrears" when it "accept[ed] $74,972.08 in total from payments made by [Rider] to [the Bankruptcy] Trustee." (Id. at Pg. ID 458-59.)
The Court declines to consider this objection because Rider did not raise his estoppel theory in response to Wells Fargo's motion to dismiss, and therefore the Magistrate Judge never had an opportunity to consider it. "The Magistrate Judge Act . . . does not allow parties to raise at the district court stage new arguments or issues that were not presented to the magistrate" absent "compelling reasons." Murr v. United States, 200 F.3d 895, 902 n.1 (6th Cir. 2000) (holding that party had "waive[d]" claim not presented to Magistrate Judge). See also Steele v. Jenkins, 2018 WL 2144073, at *4 (6th Cir. Mar. 5, 2018) (same).
Here, Rider had a full opportunity to raise his estoppel theory before the Magistrate Judge in response to Wells Fargo's motion to dismiss, and he has not offered any "compelling reason" why he failed to do so. The Court will not consider this theory for the first time in an objection to the R&R. Accordingly, the Court considers Rider's estoppel argument waived, and it
Rider next objects to the recommendation that the Court dismiss his wrongful foreclosure claim to the extent that the claim seeks to set aside the Sheriff's Sale. (See Rider's Objections. ECF #19 at Pg. ID 460-65.) In support of this objection, Rider incorporated his arguments, described above, that he had standing to challenge the foreclosure and that Wells Fargo should be "estopped" from arguing that he lacked such standing. (Id. at Pg. ID 460.) But because, as stated above, Rider has not presented the Court any authority to support his standing argument, and because the Court considers his estoppel argument waived, Rider has not persuaded the Court that he had standing to contest the Sheriff's Sale. Nor has Rider identified any authority to support his contention that even though he was not a party to the Note or the Mortgage, he nevertheless had the right to stop or set aside the Sheriff's Sale. Accordingly, the Court
Finally, Rider objects to the recommendation that the Court dismiss his fraud claim. (See id. at Pg. ID 466-70.) As noted above, in order to state a valid fraud claim in this Circuit, a plaintiff 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, 547 F.3d at 569-70. Rider has not identified any specific statements that Wells Fargo made to him that were fraudulent, nor who made them, when they were made, or where they were made. Indeed, Rider repeatedly says that Wells Fargo refused to speak to him because he was not a party to either the Note or the Mortgage. (See, e.g., Compl. at ¶¶ 10-11, 15, 19, ECF #1-2 at Pg. ID 15-16.) Rider has therefore not pleaded a sufficient claim for fraud.
Rider insists that Wells Fargo is nonetheless liable for fraud because it "received and accepted $74,972.08 from [Rider's bankruptcy] estate, thereby acknowledging [Rider's] interest in the subject property." (Rider's Objections, ECF #19 at Pg. ID 470.) But Rider has failed to sufficiently explain how the acceptance of those funds satisfies any of the elements of his fraud claim or satisfies his duty to plead fraud with particularity. The Court sees no basis on which Rider's argument undermines the Magistrate Judge's conclusion that Rider's failed to state a cognizable fraud claim. Accordingly, this objection is
The Court now turns to Wells Fargo's objection. Wells Fargo challenges the Magistrate Judge's recommendation that the Court deny its motion to dismiss with respect to Rider's unjust enrichment claim. (See Wells Fargo's Objections, ECF #18.) For the reasons explained below, and in light of the course of action chosen by the Court, the Court deems this objection to be moot.
As the Court explained during the hearing on Wells Fargo's objections, the Court agrees with the Magistrate Judge that Rider's unjust enrichment claim "could have been spelled out more clearly in [Rider's] complaint." (R&R, ECF #17 at Pg. ID 359 n.6.) Indeed, the Court has reviewed the claim and has had trouble discerning the basis of the claim. Moreover, the claim as pleaded differs from the claim as explained by Rider during the hearing on Wells Fargo's objections.
During that hearing, Rider's counsel said that if given the opportunity to amend the unjust enrichment claim, he would be able to add additional allegations to clarify and bolster this claim. The Court accepts the representations of Rider's counsel, and it therefore concludes that it would be inappropriate to dismiss Rider's unjust enrichment claim with prejudice at this juncture. Instead of dismissing Rider's unjust enrichment claim, the Court will provide Rider the opportunity to amend it through the filing of a First Amended Complaint. In such a pleading, Rider shall assert only a claim for unjust enrichment, and in the context of that claim, he shall plead with specificity, among other things:
Rider shall also plead, with as much specific detail as possible, any other facts that could support and clarify his unjust enrichment claim. The Court will not be inclined to allow Rider to amend his unjust enrichment claim again to add additional facts that he could add in his First Amended Complaint.
Because the Court will allow Rider to amend his unjust enrichment claim, it will
For all of the reasons stated above,
